Announcement PDF Appendix 4D Half year report ASX Appendix 4D Half-Year Financial Report to 31 December 2017 1. Details of reporting period Name of Entity ABN Reporting Period Previous Corresponding Period 2. Race Oncology Limited (“the Company”) 61 149 318 749 31 December 2017 31 December 2016 Results for announcement to the market 31 December 2017 31 December 2016 Increase/ (decrease) Amount change $ - - - - Loss for the half-year (3,488,470) (2,081,351) 68% (1,407,119) Total comprehensive loss for the half-year attributable to members (3,488,271) (2,081,351) 68% (1,406,920) Key information Revenues from ordinary activities Amount Per Security Franked Amount Per Security Final Dividend Nil Nil Interim Dividend Nil Nil Previous Corresponding Period Nil Nil Record Date for Determining Entitlements Not Applicable Brief explanation of any of the figures reported above necessary to enable figures to be understood: For further information, refer to the review of operations contained in the directors’ report, which forms part of the attached condensed consolidated financial statements. 3. Net tangible asset backing Net tangible backing per ordinary security 4. 31 December 2017 31 December 2016 2.58 cents 5.92 cents Details of entities over which control has been gained or lost during the period On 6 October 2017, the Company incorporated a new subsidiary in Belgium, (Race Oncology, Company Number 0682664917). There have been no signfiicant financial transactions through the subsidiary at 31 December 2017. 5. Details of Dividends No dividend has been paid or recommended to be paid for the half-year ended 31 December 2017. Appendix 4D Page 1 Appendix 4D Half year report 6. Details of dividend reinvestment plans N/A 7 Details of associate and joint venture entities On 10 July 2017, the Company announced that it had executed a Letter of Intent with TargImmune Therapeutics AG (Basel, Switzerland) to enter into a joint venture between the two companies. The joint venture, to be called Race Immunotherapeutics (RITX), will focus on developing new and improved cancer therapies based on combining Bisantrene with TargImmune’s targeted cancer therapy technology. The RITX joint venture will be a 50:50 partnership between Race and TargImmune, and all new intellectual property created by RITX will be equally co-owned by the parties through their ownership of the joint venture. The joint venture agreement had not yet been finalised at 31 December 2017. 8. Foreign entities N/A 9. Audit This report has been based on accounts that have been subject to an audit review. There are no items of dispute with the auditor and the audit review is not subject to qualification. Peter Molloy Managing Director 20 February 2018 Appendix 4D Page 2 The information contained in this condensed report is to be read in conjunction with Race Oncology’s 2017 annual report and announcements to the market made by Race Oncology Limited RACE ONCOLOGY LIMITED ACN 149 318 749 INTERIM FINANCIAL REPORT 31 DECEMBER 2017 CONTENTS Page Directors’ Report 3 Auditor’s Independence Declaration 5 Financial Report 6 Directors’ Declaration 19 Independent Auditor’s Review Report 20 Corporate Directory Directors Peter Molloy – Managing Director William Garner – Non Executive Chairman Brendan De Kauwe – Non Executive Director Chris Ntoumenopoulos – Non Executive Director Company Secretary Peter Webse Registered office Level 2 710 Collins Street Docklands Victoria 3008 Ph: +3 9097 1656 Website: www.raceoncology.com Auditor Bentleys Audit & Corporate (WA) Pty Ltd Level 3 216 St Georges Terrace PERTH WA 6000 Share Registry Automic Registry Services Level 2 267 St Georges Terrace Perth WA 6000 Ph: + 8 9324 2099 Securities Exchange Listing Australian Securities Exchange Limited Level 40, Central Park 152-158 St Georges Terrace Perth, WA, 6000 ASX Code – RAC Page 2 of 21 RACE ONCOLOGY LIMITED ACN 149 318 749 INTERIM FINANCIAL REPORT 31 DECEMBER 2017 DIRECTORS’ REPORT Your directors present the financial report of the Company for the half-year ended 31 December 2017. DIRECTORS The names and the particulars of the Directors of the Company during the half year and to the date of this report are: Name Status Appointed Peter Molloy Managing Director Appointed 1 July 2016 William Garner Non-Executive Chairman Appointed 1 July 2016 Brendon de Kauwe Non-Executive director Appointed 21 April 2016 Chris Ntoumenopoulos Non-Executive director Appointed 21 April 2016 REVIEW OF OPERATIONS Race’s plan is to bring Bisantrene to market by seeking FDA approval in the longer term while in the shorter term, making the drug available for sale under a Named Patient Program (NPP). This plan has not changed since our listing in July 2016 and Race made further strides towards these two outcomes during the half year. On 4 July 2017, the Company secured an agreement with National Cancer Institute (NCI) in the United States. Under the agreement, the Company was granted the right to use all the NCI data on Bisantrene and associated regulatory filings in support of the Bisantrene IND (Investigational New Drug Application) and obtaining approval for Bisantrene. On 12 September 2017, the Company announced the production of the first batch of Bisantrene under GMP (Good Manufacturing Practice). Two batches have been subsequently released for sale and will be available for supply to hospitals in various countries under a Named Patient Program (NPP) for treatment of Acute Myeloid Leukaemia. In addition to driving forward the Bisantrene production, regulatory and NPP programs, on 10 July 2017, the Company executed a letter of intent with TargImmune Therapeutics AG (Basel, Switzerland) to enter into a 50:50 joint venture. The joint venture is intended to focus on developing new and improved cancer therapies based on combining Bisantrene with TargImmune’s targeted immune-therapy technology. The Company raised some additional funding during the year to support its operations: On 20 July 2017, the Company successfully completed a placement of 12.5 million ordinary shares at an issue price of $0.20, raising $2.5 million. The placement shares were issued via two tranches: • First tranche of 11.25 million shares was within the Company’s existing 15% and 10% placement capacity and was issued on 20 July 2017. • Second tranche of 1.25 million shares and the 6.25 million free attaching options were issued after approval of shareholders obtained at the General Meeting (GM) on 30 August 2017. Following the share placement, the Company agreed to issue 2,000,000 unlisted options each to its corporate advisors, Merchant Capital Markets Pty Ltd (now Nascent Capital Partners) and 708 Capital Pty Ltd, exercisable at $0.30 each on or before 30 September 2018. On 1 August 2017, the vesting conditions of 135,000 of the total 200,000 options issued to DEL Biopharma LLC exercisable at $0.256 each on or before 1 August 2021, had been met. The balance of the 65,000 options have lapsed. FINANCIAL PERFORMANCE The loss for the six months ended 31 December 2017 was $3,488,470 this was inclusive of non-cash share based payments of $1,324,046 (2016: loss $2,081,351). SIGNIFICANT EVENTS AFTER THE BALANCE SHEET DATE On 24 January 2018, the Company announced the receipt of a $170,262 R&D tax incentive refund for the 2016/2017 financial year. The R&D tax incentive is an important Australian Government program that refunds up to 45% of eligible expenditure on research and development. On 29 January 2018, the Company announced that a key Bisantrene patent has received “Notice of Allowance” in the US. Once ‘allowed’ in a jurisdiction, a patent can proceed to a ‘granted’ patent. The patent titled, “Combination Methods to Improve the Therapeutic Benefit of Bisantrene and Analogs and Derivative Thereof,” is one of two Bisantrene patents filed in the US, Europe and five other key countries. Page 3 of 21 RACE ONCOLOGY LIMITED ACN 149 318 749 INTERIM FINANCIAL REPORT 31 DECEMBER 2017 On 9 February 2018, the Company issued 56,250 shares following the exercise of unlisted options exercisable at $0.30 and expiring on the 30 September 2018. AUDITOR’S INDEPENDENCE DECLARATION The auditor’s independence declaration is included on page 5 of the financial report. Signed in accordance with a resolution of directors made pursuant to s306(3) of the Corporations Act 2001. On behalf of the Directors Managing Director Melbourne, Victoria Dated: 20 February 2018 Page 4 of 21 To the Board of Directors Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 As lead audit director for the review of the financial statements of Race Oncology Limited for the period ended 31 December 2017, I declare that to the best of my knowledge and belief, there have been no contraventions of: the auditor independence requirements of the Corporations Act 2001 in relation to the review; and any applicable code of professional conduct in relation to the review. Yours faithfully BENTLEYS Chartered Accountants Dated at Perth this 20th day of February 2018 DOUG BELL CA Director Race Oncology Limited Financial Report for the half-year ended 31 December 2017 CONDENSED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 31 DECEMBER 2017 Note 31 December 31 December 2017 2016 $ $ Revenue Interest received 9,783 15,817 R&D tax incentive 170,262 - Salaries and employee benefits expense (76,058) (82,365) Accounting and audit fees (31,608) (47,161) (125,000) (83,333) Business development (347,318) (303,528) Corporate advice fees (110,559) (43,100) Director fees (105,750) (103,000) (1,146,051) (497,027) (1,324,046) (795,500) Travel and accommodation (167,246) (86,728) Other expenses (234,879) (55,426) (3,488,470) (2,081,351) Income tax expense - - Loss for the period (3,488,470) (2,081,351) Amortisation 3 Research and development expense Share based payment expense Results from operating activities 7 Loss before income tax Items that may be reclassified subsequently to profit or loss Foreign currency translation (net of tax) 199 - Total comprehensive loss for the period net of tax (3,488,271) (2,081,351) Basic and diluted loss per share (cents per share) (5.47) (3.95) The above condensed statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes. Page 6 of 21 Race Oncology Limited Financial Report for the half-year ended 31 December 2017 CONDENSED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2017 31 December 30 June 2017 2017 $ $ 1,634,526 1,696,834 172,068 1,815 42,801 52,212 1,849,395 1,750,861 4,125,000 4,250,000 TOTAL NON CURRENT ASSETS 4,125,000 4,250,000 TOTAL ASSETS 5,974,395 6,000,861 150,341 353,572 Provision 16,250 10,000 TOTAL CURRENT LIABILITIES 166,591 363,572 TOTAL LIABILITIES 166,591 363,572 5,807,804 5,637,289 10,828,040 8,493,301 (8,245,430) (4,756,960) Note CURRENT ASSETS Cash and cash equivalents Trade and other receivables 2 Other assets TOTAL CURRENT ASSETS NON CURRENT ASSETS Intangible assets 3 CURRENT LIABILITIES Trade and other payables 4 NET ASSETS SHAREHOLDERS’ EQUITY Issued capital 5 Accumulated losses Reserve shares 5b (800,000) (800,000) Reserve 6 4,025,194 2,700,948 5,807,804 5,637,289 SHAREHOLDERS’ EQUITY The above condensed financial position should be read in conjunction with the accompanying notes. Page 7 of 21 Race Oncology Limited Financial Report for the half-year ended 31 December 2017 CONDENSED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 31 DECEMBER 2017 Issued Capital $ Accumulated Losses $ Reserves $ Total $ 4,663,301 (585,405) - 4,077,896 Loss attributable to members - (2,081,351) - (2,081,351) Other comprehensive income for the period - - - - Total comprehensive income for the period - (2,081,351) - (2,081,351) Note Balance at 1 July 2016 Transactions with owners, in their capacity as owners and other transfers Shares issued pursuant to acquisition of Update Pharma 5 3,000,000 - - 3,000,000 Share based payments 7 - - 2,295,500 2,295,500 Shares issued pursuant to loan plan 5 800,000 - (800,000) - 8,463,301 (2,666,756) 1,495,500 7,292,045 Issued Capital $ Accumulated Losses $ Reserves $ Total $ 8,463,301 (4,756,960) 1,900,948 5,637,289 Loss attributable to members - (3,488,470) - (3,488,470) Other comprehensive income for the period - - 199 199 Total comprehensive income for the period - (3,488,470) 199 (3,488,271) BALANCE AT 31 DECEMBER 2016 Note Balance at 1 July 2017 Transactions with owners, in their capacity as owners and other transfers Issue of share capital net of costs 5 2,334,739 - - 2,334,739 Share based payments 7 - - 1,332,187 1,332,187 Extinguishment of options 5 - - (8,140) (8,140) 10,828,040 (8,245,430) 3,225,194 5,807,804 BALANCE AT 31 DECEMBER 2017 The condensed statement of changes in equity should be read in conjunction with the accompanying notes. Page 8 of 21 Race Oncology Limited Financial Report for the half-year ended 31 December 2017 CONDENSED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2017 31 December 2017 $ 31 December 2016 $ CASH FLOWS FROM OPERATING ACTIVITIES Interest received 9,783 15,817 Payments to suppliers and employees (825,469) (425,986) Payments for research and development (1,223,202) (383,576) Payments for advertising and marketing (348,332) (369,795) Net cash used in operating activities (2,387,220) (1,163,540) Loans repaid from unrelated entity - 100,673 Net cash provided by investing activities - 100,673 - (5,246) Proceeds from shares issued 2,500,000 - Capital raising costs (154,327) (264,000) Net cash (used in)/provided by financing activities 2,345,673 (269,246) Net (decrease) in cash held (41,547) (1,332,113) Foreign currency translation (20,761) 27,781 Cash at beginning of the period 1,696,834 4,349,342 Cash at end of the period 1,634,526 3,045,010 CASH FLOWS FROM INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACITIVITIES Payments to lender The condensed statement of cash flows should be read in conjunction with the accompanying notes. Page 9 of 21 Race Oncology Limited Financial Report for the half-year ended 31 December 2017 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES a) Statement of compliance The half-year financial statements are general purpose financial statements prepared in accordance with the requirements of the Corporations Act 2001, applicable accounting standards including AASB 134 ‘Interim Financial Reporting’, Accounting Interpretations and other authoritative pronouncements of the Australian Accounting Standards Board (‘AASB’). Compliance with AASB 134 ensures compliance with IAS 34 ‘Interim Financial Reporting’. The interim financial report was issued on 20 February 2018 by the directors of the Company. The half-year report does not include full disclosures of the type normally included in an annual financial report. Therefore, it cannot be expected to provide as full an understanding of the financial performance, financial position and cash flows of the Company as in the full financial report. It is recommended that this half-year financial report be read in conjunction with the annual financial report for the year ended 30 June 2017 and any public announcements made by Race Oncology during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001. b) Basis of preparation The condensed financial statements have been prepared on a historical cost basis. Cost is based on the fair value of the consideration given in exchange for assets. The company is domiciled in Australia and all amounts are presented in Australian dollars, unless otherwise noted. The financial statements have been prepared on a going concern basis. The accounting policies and methods of computation adopted in the preparation of the half-year financial report are consistent with those adopted and disclosed in the Company’s 2017 annual financial report for the financial year ended 30 June 2017, except for the Standards and Interpretations described below. These accounting policies are consistent with Australian Accounting Standard and with International Financial Reporting Standards. Going Concern The half year financial report has been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the ordinary course of business. The Company incurred a loss for the half year ended 31 December 2017 of $3,488,470 (2016: $2,081,351) and net cash outflows from operating activities of $2,387,220 (2016: $1,163,540). The ability of the Company to continue as a going concern is principally dependent upon the ability of the Company successfully raising additional capital and managing cashflows in line with available funds. The Directors have prepared a cash flow forecast which indicates that the Company will have sufficient cash flows to meet all commitments and working capital requirements for the 12 months period from the date of signing this financial report. Based on the cash flow forecast and other factors referred to above, the directors are satisfied that the going concern basis of preparation is appropriate. In particular, given the Company’s history of raising capital to date, the directors are confident of the Company’s ability to raise additional funds as and when they are required. Should the Company be unable to continue as a going concern it may be required to realise its assets and extinguish its liabilities other than in the normal course of business and at amounts different to those stated in the financial statements. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or to the amount and classification of liabilities that might result should the Company be unable to continue as a going concern and meet its debts as and when they fall due. Intangible assets Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred. Page 10 of 21 Race Oncology Limited Financial Report for the half-year ended 31 December 2017 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates and adjusted on a prospective basis. The amortisation expense on intangible assets with finite lives is recognised in the statement of comprehensive income. Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of comprehensive income when the asset is derecognised. Research and development costs Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Company can demonstrate: • • • • • • The technical feasibility of completing the intangible asset so that the asset will be available for use or sale Its intention to complete and its ability to use or sell the asset How the asset will generate future economic benefits The availability of resources to complete the asset The ability to measure reliably the expenditure during development The ability to use the intangible asset generated Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future benefit. During the period of development, the asset is tested for impairment annually. Patents The Company made upfront payments to purchase patents. The patents have been granted for a period of 20 years by the relevant government agency. As a result, those patents are amortised on a straight-line basis over the period of the patent. Amendments to AASBs and the new Interpretation The Company has adopted all the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current half-year. New and revised Standards and amendments thereof and Interpretations effective for the current half-year that is relevant to the Company include: • AASB 2014-1: Amendments to Australian Accounting Standards (Part D); • AASB 2014-3: Amendments to Australian Accounting Standards – Accounting for Acquisitions of Interests in Joint Operations; • AASB 2014-4: Amendments to Australian Accounting Standards – Clarification of Acceptable Methods of Depreciation and Amortisation; • AASB 2014-6: Amendments to Australian Accounting Standards – Agriculture: Bearer Plants; Page 11 of 21 Race Oncology Limited Financial Report for the half-year ended 31 December 2017 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) • AASB 2014-9: Amendments to Australian Accounting Standards – Equity Method in Separate Financial Statements; • AASB 2015-1: Amendments to Australian Accounting Standards – Annual Improvements to Australian Accounting Standards 2012–2014 Cycle; • AASB 2015-2: Amendments to Australian Accounting Standards – Disclosure Initiative: Amendments to AASB 101; • AASB 2015-5: Amendments to Australian Accounting Standards – Investment Entities: Applying the Consolidation Exception; and • AASB 2015-9: Amendments to Australian Accounting Standards – Scope and Application Paragraphs. The adoptions of the above standards have not had a material impact on this half year financial report. Critical accounting estimates and judgements Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances. The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are discussed below. Share-based payments The value attributed to share options and remuneration shares issued is an estimate calculated using an appropriate mathematical formula based on Black-Scholes option pricing model. The choice of models and the resultant option value require assumptions to be made in relation to the likelihood and timing of the conversion of the options to shares and the value and volatility of the price of the underlying shares. Details of share-based payments assumptions are detailed in Note 7. Amortisation of patents Costs incurred in acquiring patents and licenses are capitalised and amortised on a straight line basis over the life of the patent. Costs include only those costs directly attributable to the acquisition of the patents and licences. The recoverability of the carrying amount of the capitalised patent costs is dependent on the ability of the Company to generate positive cash inflows from the future development and sale of its pharmaceutical products. c) Segment Information AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Company that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. For the current reporting period, the Company is operated in one segment, being research into oncology drug, Bisantrene. Accordingly the financial information reported elsewhere in this financial report is representative of the nature and financial effects of the business activities in which it engages and the economic environment in which it operates. e) Equity-settled compensation The Company operates a supplier share and option plan. Share-based payments to suppliers are measured at the fair value of the instruments issued and amortised over the vesting periods. The fair value of performance right options is determined using the satisfaction of certain performance criteria (Performance Milestones). The number of shares option and performance rights expected to vest is reviewed and adjusted at the end of each reporting period such that the amount recognised for services received as consideration for the equity instruments granted is based on the number of equity instruments that eventually vest. The fair value is determined using either a black-scholes or monte-carlo simulation model depending on the type of share-based payment. Page 12 of 21 Race Oncology Limited Financial Report for the half-year ended 31 December 2017 NOTE 2. TRADE AND OTHER RECEIVABLES 31 December 17 30 June 17 170,262 - 1,806 1,815 172,068 1,815 31 December 17 30 June 17 At cost 4,500,000 4,500,000 Accumulated amortisation (375,000) (250,000) Total intangible assets 4,125,000 4,250,000 R&D tax incentive refund GST Total trade and other receivables NOTE 3. INTANGIBLE ASSETS Movement during the half-year Intellectual Property Balance at 1 July 2017 4,250,000 Amortisation expense (125,000) Balance at 31 December 2017 4,125,000 Intellectual property totalling $4,500,000 comprises patents and licenses initially acquired through Update Pharma pertaining to the oncology drug, called Bisantrene. The intellectual property is supported by 2 patents and will be expire in year 2034. The patent useful life has been aligned to the patent term and as a result, those patents are amortised on a straight-line basis over the period of the patent. NOTE 4. TRADE AND OTHER PAYABLES 31 December 17 30 June 17 Trade and other payables 77,314 192,643 Accruals 73,027 160,929 Total trade and other payables 150,341 353,572 31 December 17 30 June 17 Opening balance 8,493,301 4,663,301 Shares issued during the half year 2,500,000 - Called up capital on partly paid shares received - - Shares applied for but unissued - (4,300,000) Issued capital – Pursuant to prospectus - 4,300,000 Issued capital – Consideration for acquisition of Update Pharma - 3,000,000 Issued capital – Loan shares to related party - 800,000 Issued capital - Pursuant to 3rd party service agreement - 30,000 (165,261) - 10,828,040 8,493,301 NOTE 5. ISSUED AND UNISSUED CAPITAL Less: transaction costs arising from issued of shares The Company has issued share capital amounting to 65,337,501 ordinary shares (30 June 2017: 52,687,501 ordinary shares) of no par value and the Company does not have a limited amount of authorised capital. Page 13 of 21 Race Oncology Limited Financial Report for the half-year ended 31 December 2017 NOTE 5. a. ISSUED AND UNISSUED CAPITAL (continued) Ordinary shares – Fully Paid No. of shares 31 December 17 30 June 17 At beginning of year 52,837,501 12,187,501 Shares issued during the half year 12,500,000 - Issued capital – Pursuant to prospectus - 21,500,000 Issued capital – Consideration for acquisition of Update Pharma - 15,000,000 Issued capital – Loan shares to related party - 4,000,000 Issued capital – Pursuant to 3rd party service agreement - 150,000 65,337,501 52,837,501 At end of the period/year At the shareholders meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. Reserve Shares Date Reserve shares (loan shares) 1 July 2016 b. Balance at 31 December 2017 Quantity 4,000,000 4,000,000 Unit Price $ $0.20 Total $ 800,000 800,000 Employee Loan Shares During the comparative half-year ended 31 December 2016, remuneration in the form of Employee Loan Shares were issued to the Managing Director, Peter Molloy, upon settlement of the Company’s acquisition of intellectual property from Update Pharma Inc. The acquisition of intellectual property was completed on 1 July 2016. The Loan Shares represent an option arrangement. Due to vesting conditions attached to the loan shares, these shares will be expensed over the vesting per