lifespot health ltd for personal use only - asx · 2018. 4. 2. · name: tilo brandis title:...

Lifespot Health Ltd

ACN 611 845 820

Annual Report - 31 December 2017

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Lifespot Health Ltd Corporate directory 31 December 2017

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Directors Heinrich Emden Francesco Cannavo Justyn Stedwell Company secretary Justyn Stedwell Registered office 1B 205/207 Johnston Street Fitzroy VIC 3065 Ph : 03 9191 0135 Principal place of business 1B 205/207 Johnston Street Fitzroy VIC 3065 Share register Computershare Investor Services Pty Ltd 452 Johnston Street Abbbotsford Vic 3067 Ph : 03 9415 5000 Auditor HLB Mann Judd (Vic Partnership) Level 9 575 Bourke Street Melbourne VIC 3000 Stock exchange listing Lifespot Health Ltd shares are listed on the Australian Securities Exchange (ASX

code: LSH) Corporate Governance Statement Refer to www.lifespot-health.com

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Lifespot Health Ltd Directors' report 31 December 2017

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The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of Lifespot Health Ltd (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 31 December 2017.

Directors The following persons were directors of Lifespot Health Ltd during the whole of the financial year and up to the date of this report, unless otherwise stated: David Mandel - Chairman (appointed 31 October 2017 and resigned on 29 March 2018) Heinrich Emden - Executive Director Francesco Cannavo - Non-Executive Director Philip Bekhor - Non-Executive Director ( resigned 31 August 2017) Mark Talbot - Executive Director (resigned 31 October 2017) Tilo Brandis - Non-Executive Chairman (resigned 31 August 2017) Phillipa Lewis - Non-Executive Chairman (appointed 1 September 2017 and resigned 31 October 2017) Justyn Stedwell - Non-Executive Director (appointed 29 March 2018)

Principal activities During the financial year the principal continuing activities of the consolidated entity consisted of: ● commercialising the BodyTel system and the Lifespot Skin System. A large majority of the consolidated entity's operations are conducted in Germany.

Our Business Model and Objectives The consolidated entity’s strategy is to continue development of the existing BodyTel business in Germany, and commercialise the BodyTel System and the Lifespot Skin System in Australia, and where possible, in other international markets. The consolidated entity’s objective is to deliver increases in shareholder value, by delivering against the key elements of the strategy and business model. There is a clear orientation towards growing the existing businesses within the consolidated entity, however, a disciplined approach to evaluating other investment opportunities is maintained. For the purpose of the ASX Listing Rules the company confirms it has used its cash and assets in a form readily convertible to cash that it had at the time of admission in a way consistent with its business objectives.

Dividends There were no dividends paid, recommended or declared during the current or previous financial year.

Review of operations The loss for the consolidated entity after providing for income tax amounted to $2,746,076 (31 December 2016: $348,364). During the year the consolidated entity's entity primary focus has been the development of the BodyTel platform. On 21 March 2018, the company announced that its wholly owned subsidiary BodyTel has released its patient self-management system for metabolic syndrome and diabetes to the market, and is now engaged in negotiations to commercialise the platform. During the year ,the company also invested $120,000 in Seng Vital which is developing the Cannamed inhaler which will provide a healthy means of delivering medicinal cannabis. This technology integrates with the company's existing BodyTel platform.

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Significant changes in the state of affairs During the year, the company gained significant influence over Seng Vital. It contributed $3,911 to the company's loss for the year. There were no other significant changes in the state of affairs of the consolidated entity during the financial year.

Matters subsequent to the end of the financial year On 21 March 2018, the company announced that its wholly owned subsidiary BodyTel has released its patient self-management system for metabolic syndrome and diabetes to the market. On 29 March 2018, David Mandel resigned as a director of the company and was replaced by Justyn Stedwell. No other matter or circumstance has arisen since 31 December 2017 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.

Likely developments and expected results of operations Information on likely developments in the operations of the consolidated entity and the expected results of operations have not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the consolidated entity.

Environmental regulation The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State law.

Information on directors Name: David Mandel Title: Chairman (appointed 31 October 2017 and resigned on 29 March 2018) Experience and expertise: David is currently a non-executive director at the Royal Children’s Hospital, Chair of

the Finance & Audit Committee of Commonwealth Games Australia, non-executive Director at GPP Health and President of Squash Australia, where he has been instrumental in building the sport and implementing clear corporate governance and auditing oversights. Prior to his non-executive director roles, David was the Managing Director of Riverwood Cartons, the Australian subsidiary of the NYSE listed paper & packaging company Riverwood International, with global assets of over US$2 billion and 6,500 employees. David was instrumental in the sale of the Australian business to Carter Holt Harvey in 1998 and played a key role in building the business in Australia and in the USA.

Other current directorships: Nil Former directorships (last 3 years): Nil Interests in shares: Nil

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Name: Heinrich Emden Title: Executive Director Qualifications: Master's Degree in Computing Science Experience and expertise: Heinrich Emden has worked for BodyTel since 2013. He coordinates all internal and

external developer teams and is responsible for the constant evolution and development of the BodyTel System. Prior to joining BodyTel, Heinrich gained valuable experience at several multinational organisations including IBM, Continental AG, Symrise and ATOS. During his tenure at these organisations, Heinrich’s role was largely focused on telecommunication and information technology development. Heinrich’s professional expertise relevantly encompasses the upcoming ‘Big Data’, data warehousing and mobile application industries.

Other current directorships: Nil Former directorships (last 3 years): Nil Interests in shares: Nil Interests in options: 200,000 options with an exercise price of 30 cents that expire on 24 October 2019 Name: Fracesco Cannavo Title: Non-Executive Director Experience and expertise: Francesco Cannavo is an experienced public company director with significant

business and investment experience working with companies operating across various industries, and has been instrumental in assisting several listed and unlisted companies achieve their growth strategies through the raising of investment capital and the acquisition of assets. Francesco is an entrepreneur with a strong network of investors and industry contacts in the public company sector throughout the Asia-Pacific region and has extensive experience in capital raisings, investment activities and IPO’s.

Other current directorships: WONHE Multimedia Commerce Ltd (ASX:WMC) and I-Global Holdings Limited (NSX : IGH)

Former directorships (last 3 years): GBM Resources Ltd (ASX:GBZ, resigned 25 November 2015) Interests in shares: Nil Interests in options: Nil Name: Philip Bekhor Title: Non-Executive Director (resigned 31 August 2017) Experience and expertise: Dr Bekhor is a graduate of the University of Melbourne and a Fellow of the Australasian

College of Dermatologists. He trained both in Melbourne and Toronto, Canada. He is a specialist in procedural dermatology, which involves the laser and surgical management of skin disorders including cosmetic dermatology.

Other current directorships: N/A Former directorships (last 3 years): N/A Interests in shares: N/A Name: Mark Talbot Title: Executive Director (resigned 31 October 2017) Experience and expertise: Mark Talbot has been involved in the delivery of technology projects for over 25 years.

This has seen him working for several multinationals such as Bechtel, Aloca, Broadspectrum and Ford. Mark was instrumental in the development of the Imunexus core strategy and implementation whilst sitting on the board. Mark has been involved in other Bio tech companies including his role as a non-executive director at Liquitab systems. After seeing the need for a bridge from the investor to the commercial world, Mark’s interest in new start-up ventures began 15 years ago with his involvement in the development of concept ideas when working for a small boutique consultancy.

Other current directorships: N/A Former directorships (last 3 years): N/A Interests in shares: N/A

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Name: Tilo Brandis Title: Non-Executive Chairman (resigned 31 August 2017) Experience and expertise: Tilo Brandis studied mechanical engineering at the Technical Universities of

Braunschweig and Hamburg-Harburg as well as business administration at the University of Stirling before moving into management consulting. He has held General management and CEO roles at Siemens transportation and automotive divisions for 11 years, and has held the position of managing director at Rail-One, Track-Tec and B2X Care Solutions.

Other current directorships: N/A Former directorships (last 3 years): N/A Interests in shares: N/A Name: Phillipa Lewis Title: Non Executive Chair - (appointed 1 September 2017 and resigned 31 October 2017) Experience and expertise: Philippa Lewis has over 20 years experience within the Medtech and healthcare

industries. During this time she has founded multiple private and publicly listed start-up enterprises and held roles as professional company director, corporate advisor and as a global health and aged care industry specialist. Lewis has valuable experience in digital consumer healthcare commercialisation with a diverse set of corporate skills and capabilities in the areas of licensing, mergers and acquisitions, capital management, intellectual property, media and communications, international joint ventures and big data. Lewis is currently Chairman of Karista Pty Ltd and The Big Smoke Media Group.

Other current directorships: N/A Former directorships (last 3 years): N/A Interests in shares: N/A Name: Justyn Stedwell Title: Non-Executive Director (appointed 29 March 2018) Experience and expertise: Justyn Stedwell has over 10 years’ experience as a Company Secretary of ASX-listed

companies in a wide range of industries including biotechnology, agriculture, mining and exploration, information technology and telecommunications. Justyn’s qualifications include a Bachelor of Commerce (Economics and Management) from Monash University, a Graduate Diploma of Accounting at Deakin University and a Graduate Diploma in Applied Corporate Governance at the Governance Institute of Australia. He is currently Company Secretary of several ASX-listed companies.

Other current directorships: Axxis Technology Group Limited (ASX:AYG) and I-Global Holdings Limited (NSX:IGH) Former directorships (last 3 years): None Interests in shares: Nil Interests in options: Nil 'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. 'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated.

Company secretary Justyn Stedwell has over 10 years’ experience as a Company Secretary of ASX-listed companies in a wide range of industries including biotechnology, agriculture, mining and exploration, information technology and telecommunications. Justyn’s qualifications include a Bachelor of Commerce (Economics and Management) from Monash University, a Graduate Diploma of Accounting at Deakin University and a Graduate Diploma in Applied Corporate Governance at the Governance Institute of Australia. He is currently Company Secretary of several ASX-listed companies.

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Meetings of directors The number of meetings of the company's Board of Directors ('the Board') held during the year ended 31 December 2017, and the number of meetings attended by each director were: Full Board Attended Held David Mandel 1 1 Heinrich Emden 5 5 Francesco Cannavo 5 5 Philip Bekhor 2 2 Mark Talbot 4 4 Tilo Brandis 1 2 Phillipa Lewis 1 1 Held: represents the number of meetings held during the time the director held office.

Remuneration report (audited) The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in accordance with the requirements of the Corporations Act 2001 and its Regulations. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors. The remuneration report is set out under the following main headings: ● Principles used to determine the nature and amount of remuneration ● Details of remuneration ● Share-based compensation ● Additional information ● Additional disclosures relating to key management personnel

Principles used to determine the nature and amount of remuneration The remuneration policy of Lifespot Health Ltd has been designed to align key management personnel (KMP) objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key performance areas affecting the consolidated entity’s financial results. The Board of Lifespot Health Ltd believes the remuneration policy to be appropriate and effective in its ability to attract and retain high-quality KMP to run and manage the consolidated entity, as well as creating goal congruence between directors, executives and shareholders. The Board’s policy for determining the nature and amount of remuneration for KMP of the consolidated entity is as follows: ● The remuneration policy is to be developed by the Board; ● All KMP receive a base salary (which is based on factors such as length of service and experience), superannuation,

fringe benefits, options and performance incentives; ● Performance incentives are generally only paid once predetermined key performance indicators (KPIs) have been met; ● Incentives paid in the form of options or rights are intended to align the interests of the directors and company with

those of the shareholders. In this regard, KMP are prohibited from limiting risk attached to those instruments by use of derivatives or other means; and

● The Board reviews KMP packages annually by reference to the consolidated entity’s performance, executive performance and comparable information from industry sectors.

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The performance of KMP is measured against criteria agreed biannually with each executive and is based predominantly on the forecast growth of the consolidated entity’s profits and shareholders’ value. All bonuses and incentives must be linked to predetermined performance criteria. The Board may, however, exercise its discretion in relation to approving incentives, bonuses and options. Any change must be justified by reference to measurable performance criteria. The policy is designed to attract the highest calibre of executives and reward them for performance results leading to long-term growth in shareholder wealth. KMP do not receive any other retirement benefits other than any applicable statutory superannuation. Upon retirement, KMP are paid employee benefit entitlements accrued to the date of retirement. All remuneration paid to KMP is valued at the cost to the company and expensed. The Board’s policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The Board determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. The maximum aggregate amount of fees that can be paid to non-executive directors is subject to approval by shareholders at the annual general meeting. ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general meeting. The most recent determination was at the Annual General Meeting held on 30 May 2017, where the shareholders approved a maximum annual aggregate remuneration of $300,000. Performance-based remuneration KPIs are set annually, with a certain level of consultation with KMP. The measures are specifically tailored to the area each individual is involved in and has a level of control over. The KPIs target areas the Board believes hold greater potential for group expansion and profit, covering financial and non-financial as well as short and long-term goals. The level set for each KPI is based on budgeted figures for the consolidated entity and respective industry standards. Performance in relation to the KPIs is assessed annually, with bonuses being awarded depending on the number and deemed difficulty of the KPIs achieved. Following the assessment, the KPIs are reviewed by the Board in light of the desired and actual outcomes, and their efficiency is assessed in relation to the consolidated entity’s goals and shareholder wealth, before the KPIs are set for the following year. In determining whether or not a KPI has been achieved, the company bases the assessment on audited figures; however, where the KPI involves comparison of the consolidated entity, or a division within the consolidated entity, to the market, independent reports are obtained from organisations such as Standard & Poor’s. Consolidated entity performance and link to remuneration The remuneration policy has been tailored to increase goal congruence between shareholders, directors and executives. The method applied to achieve this aim, was a performance-based bonus based on KPIs. The company believes this policy will be effective in increasing shareholder wealth. Use of remuneration consultants No remuneration consultant was engaged to assess remuneration this period. Voting and comments made at the company's 2017 Annual General Meeting ('AGM') At the 30 May 2017 AGM, 100% of the votes received supported the adoption of the remuneration report for the year ended 31 December 2017. The company did not receive any specific feedback at the AGM regarding its remuneration practices.

Details of remuneration Amounts of remuneration Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.

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Short-term benefits

Post-employment

benefits

Post employment

benefits

Share-based

payments

Cash salary Cash Non- Super- Termination Equity- and fees bonus monetary annuation settled Total Year ended Dec 2017 $ $ $ $ $ $ $ Non-Executive Directors: F Cannavo 48,000 - - - - - 48,000 D Mandel 10,300 - - - - - 10,300 T Brandis 11,250 - - - - - 11,250 P Bekhor 28,550 - - - - - 28,550 P Lewis 42,092 - - - - - 42,092 Executive Directors: H Emden 176,578 - - - - - 176,578 M Talbot 162,041 - - - - - 162,041 Other Key Management Personnel:

S Schraps * 84,128 - - - 52,978 - 137,106

562,939 - - - 52,978 - 615,917

* The amount of $52,978 represents the company's best estimate of the termination benefits payable to S Schraps.

Short-term benefits

Post-employment

benefits

Long-term benefits

Share-based

payments

Cash salary

Cash

Non-

Super-

Long service

Equity-

and fees bonus monetary annuation leave settled Total Period ended Dec 2016 $ $ $ $ $ $ $ Non-Executive Directors: F Cannavo 80,000 - - - - - 80,000 M Talbot - - - - - 27,500 27,500 P Bekhor - - - - - 27,500 27,500 Executive Directors: H Emden - - - - - 22,000 22,000 Other Key Management Personnel:

S Schraps - - - - - 33,000 33,000

80,000 - - - - 110,000 190,000

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The proportion of remuneration linked to performance and the fixed proportion are as follows: Fixed remuneration At risk - STI At risk - LTI

Name Year ended

Dec 2017 Period ended

Dec 2016 Year ended


Dec 2016 Year ended


Dec 2016 Non-Executive Directors: F Cannavo 100% 100% - - - - D Mandel 100% - - - - - M Talbot 100% 100% - - - - T Brandis 100% 100% - - - - P Bekhor 100% 100% - - - - Executive Directors: H Emdem 100% 100% - - - - Other Key Management Personnel:

S Schraps - 100% - - - -

Share-based compensation Issue of shares There were no shares issued to directors and other key management personnel as part of compensation during the year ended 31 December 2017. Options The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows: Fair value per option Grant date Expiry date Exercise price at grant date 25 October 2016 24 October 2019 $0.3000 $0.110 Options granted carry no dividend or voting rights. There were no options over ordinary shares granted to or vested by directors and other key management personnel as part of compensation during the year ended 31 December 2017.

Additional information The earnings of the consolidated entity for the two years to 31 December 2017 are summarised below: 2017 2016 $ $ Sales revenue 535,523 747 Loss after income tax (2,746,076) (348,364) The factors that are considered to affect total shareholders return ('TSR') are summarised below: 2017 2016 Share price at financial year end ($) * 0.14 - Basic earnings per share (cents per share) (3.66) (1.35) * The company was admitted to the ASX on 10 January 2017.

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Additional disclosures relating to key management personnel Shareholding The number of shares in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below: Balance at Received Balance at the start of as part of Disposals/ the end of the year remuneration Additions other the year Ordinary shares Tilo Brandis * 300,000 - - (300,000) -

300,000 - - (300,000) -

* resigned during the year. Option holding The number of options over ordinary shares in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below: Balance at Expired/ Balance at the start of forfeited/ the end of the year Granted Exercised other the year Options over ordinary shares Tilo Brandis * 1,000,000 - - (1,000,000) - Heinrich Emden 200,000 - - - 200,000 Mark Talbot * 250,000 - - (250,000) - Stefan Schraps * 300,000 - - (300,000) - Philip Bekhor * 250,000 - - (250,000) -

2,000,000 - - (1,800,000) 200,000

* resigned during the year, but still holds the options. There have been no other transactions involving equity instruments apart from those disclosed in the above tables. There have been no options granted to key management personnel over unissued shares during or since the end of the reporting period. There have also been no loans made to key management personnel during or since the end of the reporting period.

This concludes the remuneration report, which has been audited.

Loans to directors and executives There have been no loans made to directors and executives during the current financial year.

Shares under option Unissued ordinary shares of Lifespot Health Ltd under option at the date of this report are as follows: Exercise Number Grant date Expiry date price under option 25 October 2016 25 October 2019 $0.3000 6,550,000 28 December 2016 28 December 2019 $0.3000 1,000,000

7,550,000

No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the company or of any other body corporate. No options have been granted over unissued shares during or since the end of the reporting period.

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Shares issued on the exercise of options There were no ordinary shares of Lifespot Health Ltd issued on the exercise of options during the year ended 31 December 2017 and up to the date of this report.

Other transactions with key management personnel There have been no other transactions between the consolidated entity and key management personnel or their related parties other than those disclosed above relating to equity, compensation and loans that were conducted other than in accordance with normal employees, customers or supplier relationships on terms no more favourable than those reasonably expected under arm's length dealings with unrelated persons.

Indemnity and insurance of officers The consolidated entity has indemnified the directors and executives of the company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

Indemnity and insurance of auditor The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor. During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity.

Proceedings on behalf of the company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.

Non-audit services Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 19 to the financial statements. The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are of the opinion that the services as disclosed in note 19 to the financial statements do not compromise the external auditor's independence requirements of the Corporations Act 2001 for the following reasons: ● all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity

of the auditor; and ● none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code

of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards.

Officers of the company who are former partners of HLB Mann Judd There are no officers of the company who are former partners of HLB Mann Judd.

Auditor's independence declaration A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors' report.

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Auditor HLB Mann Judd continues in office in accordance with section 327 of the Corporations Act 2001.

This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001. On behalf of the directors

___________________________ Justyn Stedwell Director 1 April 2018

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AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of the consolidated financial report of Lifespot Health Ltd (“the Company”) for the year ended 31 December 2017, I declare that, to the best of my knowledge and

belief, there have been no contraventions of:

(a) the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

(b) any applicable code of professional conduct in relation to the audit.

This declaration is in relation to the Company and the entities it controlled during the period.

HLB Mann Judd Jude Lau Chartered Accountants Partner

Melbourne 1 April 2018

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Lifespot Health Ltd Contents 31 December 2017

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Statement of profit or loss and other comprehensive income 15 Statement of financial position 16 Statement of changes in equity 17 Statement of cash flows 18 Notes to the financial statements 19 Directors' declaration 43 Independent auditor's report to the members of Lifespot Health Ltd 44 Shareholder information 49

General information The financial statements cover Lifespot Health Ltd as a consolidated entity consisting of Lifespot Health Ltd and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Lifespot Health Ltd's functional and presentation currency. Lifespot Health Ltd is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: Unit 1B, Level 1 205 Johnston Street Fitzroy VIC 3065 A description of the nature of the consolidated entity's operations and its principal activities are included in the directors' report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of directors, on 1 April 2018. The directors have the power to amend and reissue the financial statements.

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Lifespot Health Ltd Statement of profit or loss and other comprehensive income For the year ended 31 December 2017

Consolidated

Note Year ended


Dec 2016 $ $

The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

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Revenue 5 535,523 747 Expenses Direct project costs (226,934) - Directors' fees and costs (127,339) (190,000) Travel expenses (111,567) (42,761) Employee benefits expense (1,401,017) - Entertainment expenses (1,517) (35,461) Depreciation and amortisation expense (143,575) - Write off of intangible assets 11 (84,261) - Rent and office costs (88,027) - Computer costs - (26,616) Consulting costs (638,033) (15,000) Corporate expenses (142,874) - Marketing expenses (67,680) - Share of associate losses accounted for using equity method 9 (3,911) - Other expenses (297,988) (39,273)

Loss before income tax benefit (2,799,200) (348,364) Income tax benefit 6 53,124 -

Loss after income tax benefit for the year attributable to the owners of Lifespot Health Ltd

(2,746,076)

(348,364)

Other comprehensive loss Items that may be reclassified subsequently to profit or loss Foreign currency translation (60,458) -

Other comprehensive loss for the year, net of tax (60,458) -

Total comprehensive loss for the year attributable to the owners of Lifespot Health Ltd

(2,806,534)

(348,364)

Cents Cents Basic earnings per share 29 (3.66) (1.35) Diluted earnings per share 29 (3.66) (1.35)

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Lifespot Health Ltd Statement of financial position As at 31 December 2017

Consolidated Note 2017 2016 $ $

The above statement of financial position should be read in conjunction with the accompanying notes 16

Assets Current assets Cash and cash equivalents 7 4,516,016 7,610,505 Trade and other receivables 8 248,589 614,480 Other 9,747 -

Total current assets 4,774,352 8,224,985

Non-current assets Investments accounted for using the equity method 9 116,089 - Property, plant and equipment 10 54,429 27,003 Intangibles 11 141,166 323,440 Total non-current assets 311,684 350,443

Total assets 5,086,036 8,575,428

Liabilities Current liabilities Trade and other payables 12 553,725 1,185,337

Total current liabilities 553,725 1,185,337

Non-current liabilities Deferred tax 13 25,787 77,033

Total non-current liabilities 25,787 77,033

Total liabilities 579,512 1,262,370

Net assets 4,506,524 7,313,058

Equity Issued capital 14 8,018,190 8,018,190 Reserves 15 (417,226) (356,768) Accumulated losses (3,094,440) (348,364) Total equity 4,506,524 7,313,058

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Lifespot Health Ltd Statement of changes in equity For the year ended 31 December 2017

The above statement of changes in equity should be read in conjunction with the accompanying notes 17

Issued Reserves Accumulated Total equity capital losses

Consolidated $ $ $ $ Balance at 13 April 2016 - - - - Loss after income tax expense for the period - - (348,364) (348,364) Other comprehensive income for the period, net of tax - - - -

Total comprehensive loss for the period - - (348,364) (348,364) Acquisition under common control (note 23) - (576,768) - (576,768) Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs (note 14) 8,018,190 - - 8,018,190 Share-based payments (note 30) - 220,000 - 220,000 Balance at 31 December 2016 8,018,190 (356,768) (348,364) 7,313,058

Issued Reserves Accumulated

Total equity capital losses Consolidated $ $ $ $ Balance at 1 January 2017 8,018,190 (356,768) (348,364) 7,313,058 Loss after income tax benefit for the year - - (2,746,076) (2,746,076) Other comprehensive loss for the year, net of tax - (60,458) - (60,458)

Total comprehensive loss for the year - (60,458) (2,746,076) (2,806,534)

Balance at 31 December 2017 8,018,190 (417,226) (3,094,440) 4,506,524

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Lifespot Health Ltd Statement of cash flows For the year ended 31 December 2017

Consolidated

Note Year ended


Dec 2016 $ $

The above statement of cash flows should be read in conjunction with the accompanying notes 18

Cash flows from operating activities Receipts from customers 562,880 747 Payments to suppliers and employees (3,147,631) (229,772)

(2,584,751) (229,025) Interest received 24,386 -

Net cash used in operating activities 28 (2,560,365) (229,025)

Cash flows from investing activities Payment for purchase of subsidiary, net of cash acquired 23 - (435,107) Payments for property, plant and equipment (59,371) - Payments for intangibles (13,617) (14,400) Payments for investments in associate (120,000) - Repayment of loan by Lifespot Capital AG 206,664 -

Net cash from/(used in) investing activities 13,676 (449,507)

Cash flows from financing activities Proceeds from issue of shares 14 - 8,289,037 Share issue transaction costs (547,800) -

Net cash from/(used in) financing activities (547,800) 8,289,037

Net increase/(decrease) in cash and cash equivalents (3,094,489) 7,610,505 Cash and cash equivalents at the beginning of the financial year 7,610,505 -

Cash and cash equivalents at the end of the financial year 7 4,516,016 7,610,505

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Lifespot Health Ltd Notes to the financial statements 31 December 2017

19

Note 1. Significant accounting policies The principal accounting policies adopted in the preparation of the financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. New or amended Accounting Standards and Interpretations adopted The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Comparative information The company was incorporated on 13 April 2016 and the comparative information covers the period from that date until 31 December 2016. Basis of preparation These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB'). Historical cost convention The financial statements have been prepared under the historical cost convention, except for, where applicable, the revaluation of available-for-sale financial assets, financial assets and liabilities at fair value through profit or loss, investment properties, certain classes of property, plant and equipment and derivative financial instruments. Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 2. Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 24. Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Lifespot Health Ltd ('company' or 'parent entity') as at 31 December 2017 and the results of all subsidiaries for the year then ended. Lifespot Health Ltd and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'. Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

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Note 1. Significant accounting policies (continued)

20

Operating segments Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance. Foreign currency translation The financial statements are presented in Australian dollars, which is Lifespot Health Ltd's functional and presentation currency. Foreign currency transactions Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Foreign operations The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity. The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of. Revenue recognition Revenue is recognised when it is probable that the economic benefit will flow to the consolidated entity and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. Rendering of services Rendering of services revenue is recognised upon delivery of the service to the customer, based on chargeable hours at agreed rates. Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Other revenue Other revenue is recognised when it is received or when the right to receive payment is established. Income tax The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: ● When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a

transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or

● When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

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The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset. Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously. Current and non-current classification Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current. A liability is classified as current when: it is either expected to be settled in the consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets and liabilities are always classified as non-current. Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Trade and other receivables Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that the consolidated entity will not be able to collect all amounts due according to the original terms of the receivables. Other receivables are recognised at amortised cost, less any provision for impairment. Associates Associates are entities over which the consolidated entity has significant influence but not control or joint control. Investments in associates are accounted for using the equity method. Under the equity method, the share of the profits or losses of the associate is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Investments in associates are carried in the statement of financial position at cost plus post-acquisition changes in the consolidated entity's share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Dividends received or receivable from associates reduce the carrying amount of the investment. When the consolidated entity's share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term receivables, the consolidated entity does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. The consolidated entity discontinues the use of the equity method upon the loss of significant influence over the associate and recognises any retained investment at its fair value. Any difference between the associate's carrying amount, fair value of the retained investment and proceeds from disposal is recognised in profit or loss.

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Investments and other financial assets Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. They are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on the purpose of the acquisition and subsequent reclassification to other categories is restricted. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are carried at amortised cost using the effective interest rate method. Gains and losses are recognised in profit or loss when the asset is derecognised or impaired. Impairment of financial assets The consolidated entity assesses at the end of each reporting period whether there is any objective evidence that a financial asset or group of financial assets is impaired. Objective evidence includes significant financial difficulty of the issuer or obligor; a breach of contract such as default or delinquency in payments; the lender granting to a borrower concessions due to economic or legal reasons that the lender would not otherwise do; it becomes probable that the borrower will enter bankruptcy or other financial reorganisation; the disappearance of an active market for the financial asset; or observable data indicating that there is a measurable decrease in estimated future cash flows. The amount of the impairment allowance for loans and receivables carried at amortised cost is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. If there is a reversal of impairment, the reversal cannot exceed the amortised cost that would have been recognised had the impairment not been made and is reversed to profit or loss. Property, plant and equipment Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows: Plant and equipment 3-7 years The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date. An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss. Any revaluation surplus reserve relating to the item disposed of is transferred directly to retained profits. Intangible assets Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period. Intellectual property Significant costs associated with intellectual property are deferred and amortised on a straight-line basis over the period of their expected benefit.

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Patents and trademarks Significant costs associated with patents and trademarks are deferred and not amortised as they are not said to have a finite life. Research and development Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is probable that the project will be a success considering its commercial and technical feasibility; the consolidated entity is able to use or sell the asset; the consolidated entity has sufficient resources; and intent to complete the development and its costs can be measured reliably. Capitalised development costs are amortised on a straight-line basis over the period of their expected benefit, once the technology is ready for use. Impairment of non-financial assets Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit. Trade and other payables These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. Employee benefits Share-based payments Equity-settled and cash-settled share-based compensation benefits are provided to employees. Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price. The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions. The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied. Issued capital Ordinary shares are classified as equity.

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Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of Lifespot Health Ltd, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. Goods and Services Tax ('GST') and other similar taxes Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 31 December 2017. The consolidated entity's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the consolidated entity, are set out below. AASB 9 Financial Instruments This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and Measurement'. AASB 9 introduces new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost, if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows, which arise on specified dates and solely principal and interest. All other financial instrument assets are to be classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive income ('OCI'). For financial liabilities, the standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk management activities of the entity. New impairment requirements will use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment will be measured under a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. The standard introduces additional new disclosures. The consolidated entity will adopt this standard from 1 January 2018. An assessment has been made and the impact of its adoption is not expected to be material.

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AASB 15 Revenue from Contracts with Customers This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or implied) to be identified, together with the separate performance obligations within the contract; determine the transaction price, adjusted for the time value of money excluding credit risk; allocation of the transaction price to the separate performance obligations on a basis of relative stand-alone selling price of each distinct good or service, or estimation approach if no distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied. Credit risk will be presented separately as an expense rather than adjusted to revenue. For goods, the performance obligation would be satisfied when the customer obtains control of the goods. For services, the performance obligation is satisfied when the service has been provided, typically for promises to transfer services to customers. For performance obligations satisfied over time, an entity would select an appropriate measure of progress to determine how much revenue should be recognised as the performance obligation is satisfied. Contracts with customers will be presented in an entity's statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Sufficient quantitative and qualitative disclosure is required to enable users to understand the contracts with customers; the significant judgements made in applying the guidance to those contracts; and any assets recognised from the costs to obtain or fulfil a contract with a customer. The consolidated entity will adopt this standard from 1 January 2018. An assessment has been made and the impact of its adoption is not expected to be material. AASB 16 Leases This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB 117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in profit or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either operating or financing activities) component. For lessor accounting, the standard does not substantially change how a lessor accounts for leases. The consolidated entity will adopt this standard from 1 July 2019. An assessment has been made and the impact of its adoption is not expected to be material.

Note 2. Critical accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below. F

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Note 2. Critical accounting judgements, estimates and assumptions (continued)

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Impairment of intangible assets The consolidated entity tests annually, or more frequently if events or changes in circumstances indicate intangible assets may have suffered an impairment, in accordance with the accounting policies stated in note 1. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require significant use assumptions and estimates by management, including estimated discount rates based on the current cost of capital and growth rates of the estimated future cash flows. Management completed the annual impairment review and concluded that no impairment was required except as outlined in note 11 in respect of the assets held by Lifespot AG. Share-based payment transactions The consolidated entity measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Research and development expenditure The consolidated entity has not capitalised research and development expenditure incurred during the current financial year because they do not believe that the expenditure incurred met the recognition criteria of AASB 138 Intangible Assets. Estimation of useful lives of assets The consolidated entity determines depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets, based on management estimates of their expected useful lives. Recovery of deferred tax assets Deferred tax assets are recognised for deductible temporary differences only if the consolidated entity considers it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax assets have been recognised to the extent permissible in accordance with the stated accounting policies in respect of losses available to the German subsidiaries in order to offset the deferred tax liabilities attributed to the German subsidiaries.

Note 3. Differences between preliminary and final report There are material differences between the preliminary financial report dated 28 February 2018 and this financial report relating to the carrying value of intangible assets. The preliminary report included capitalised expenditure in relation to development of the BodyTel platform. Since completing the preliminary report, the Board has further reviewed this treatment and did not believe that the expenditure incurred up to 31 December 2017 meets the recognition criteria of AASB 138 Intangible Assets. The Board therefore believed it was more prudent and appropriate to expense the incurred. The preliminary financial report included $702,778 of labour costs that had been capitalised which have been expensed in this report. As a result there has been a $702,778 reduction in intellectual property at cost and a corresponding increase in employee benefit expense. The preliminary report included a $117,129 amortisation expense in relation to the above intellectual property which has now been reversed. The overall effect is an increased loss before tax and after tax of $585,649. There are also other immaterial differences that have not been outlined above.

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Note 4. Operating segments Identification of reportable operating segments The consolidated entity is organised into one operating segments: being development of BodyTel and Lifespot System Technology. These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources. Major customers The consolidated entity does not have any major customers. Geographical information

Revenue from external

customers

Revenue external

customers

Geographical non-current

assets

Year ended


Dec 2016

2017

2016 $ $ $ $ Australia 38,735 747 116,089 14,400 Germany 496,788 - 195,595 336,043

535,523 747 311,684 350,443

Note 5. Revenue Consolidated

Year ended


Dec 2016 $ $ Sales revenue Sales 493,305 -

Other revenue Interest 38,735 - Other revenue 3,483 747 42,218 747

Revenue 535,523 747

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Note 6. Income tax benefit Consolidated

Year ended


Dec 2016 $ $ Income tax benefit Deferred tax - origination and reversal of temporary differences (53,124) -

Aggregate income tax benefit (53,124) -

Deferred tax included in income tax benefit comprises: Decrease in deferred tax liabilities (note 13) (53,124) -

Numerical reconciliation of income tax benefit and tax at the statutory rate Loss before income tax benefit (2,799,200) (348,364)

Tax at the statutory tax rate of 27.5% (2016: 30%) (769,780) (104,509) Tax effect amounts which are not deductible/(taxable) in calculating taxable income:

Tax effect of IPO costs (allowable) - (369,093) Non deductible costs 13,804 10,683 Tax effect of German subsidiary losses 489,346 - Movement in deferred tax (53,124) - Less deductible and non assessable items (49,547) - Tax losses not bought to account 316,177 462,919

Income tax benefit (53,124) -

Consolidated

Year ended


Dec 2016 $ $ Tax losses not recognised Unused tax losses for which no deferred tax asset has been recognised 1,914,638 764,903 Potential tax benefit @ 27.5% (2016: 30%) 526,525 229,471

The above potential tax benefit for tax losses has not been recognised in the statement of financial position. These tax losses can only be utilised in the future if the continuity of ownership test is passed, or failing that, the same business test is passed.

Note 7. Current assets - cash and cash equivalents Consolidated 2017 2016 $ $ Cash at bank 4,516,016 7,610,505

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Note 8. Current assets - trade and other receivables Consolidated 2017 2016 $ $ Trade receivables 137,551 203,385 Other receivables 3,330 3,588 Loan - Lifespot Capital AG 92,245 298,909 Interest receivable 14,349 - GST receivable 1,114 108,598

248,589 614,480

Past due but not impaired There were no trade receivable balances past due but not impaired at the end of the current or previous financial reporting period. Amounts are considered as "past due" when the debt has not been settled with the terms and conditions agreed between the consolidated entity and the customer to the transaction. Receivables that are past due are assessed for impairment by ascertaining solvency of the debtors and are provided for where there are specific circumstances indicating that the debt may not be fully repaid to the group.

Note 9. Non-current assets - investments accounted for using the equity method Consolidated 2017 2016 $ $ Investment in associate 116,089 -

Reconciliation Reconciliation of the carrying amounts at the beginning and end of the current and previous financial year are set out below:

Opening carrying amount - - Investment before share off loss 120,000 - Consolidated entity's share of associate's loss (3,911) -

Closing carrying amount 116,089 -

Refer to note 26 for further information on interests in associates. During the year, the company gained significant influence over Seng Vital Pty Ltd. Seng Vital Pty Ltd is a private entity which is developing the Cannamed inhaler which will provide a healthy means of delivering medicinal cannabis. The consolidated entity's interest in the company represents a strategic interest investment that will provide synergies with the existing BodyTel platform. As at 31 December 2017, Seng Vital Pty Ltd had net assets of $36,340 and made a loss of $37,660 for the year ended on that date. Refer to Note 26. The technology is intended to provide a healthy means of delivery and is intended to be able to integrate with the consolidated entity's BodyTel platform, which is now ready for commercialisation. For these reasons the board consider that there is potential for revenue generation once the technology is developed, and will continue to invest in its development. Under the contract, the company can pay a further $80,000 to increase its holding by 2,000,000 shares upon completion of the functional testing of the software. This payment is at the company's discretion. There are no other commitments of contingencies.

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Note 10. Non-current assets - property, plant and equipment Consolidated 2017 2016 $ $ Plant and equipment - at cost 110,772 51,401 Less: Accumulated depreciation (56,343) (24,398)

54,429 27,003

Plant & equipment Total Consolidated $ $ Balance at 13 April 2016 - - Additions through commonly controlled acquisitions 27,003 27,003

Balance at 31 December 2016 27,003 27,003 Additions 59,371 59,371 Depreciation expense (31,945) (31,945)

Balance at 31 December 2017 54,429 54,429

Note 11. Non-current assets - intangibles Consolidated 2017 2016 $ $ Intellectual property / software - at cost * 592,509 592,509 Less: Accumulated amortisation (381,482) (283,469) Less: Impairment (69,861) - 141,166 309,040

Licences and trademarks - at cost

-

14,400

141,166 323,440

Trademarks Intellectual

& Licences property

software

Total Consolidated $ $ $ Balance at 13 April 2016 - - - Additions 14,400 - 14,400 Acquisition through common control transaction - 309,145 309,145 Amortisation expense - (105) (105)

Balance at 31 December 2016 14,400 309,040 323,440 Additions - 13,617 13,617 Write off of assets* (14,400) (69,861) (84,261) Amortisation expense - (111,630) (111,630)

Balance at 31 December 2017 - 141,166 141,166

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Note 11. Non-current assets - intangibles (continued)

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* Trademarks and intellectual property have been written off during the current period in relation to Lifespot Skin because the consolidated entity has opted to not proceed with the technology.

Note 12. Current liabilities - trade and other payables Consolidated 2017 2016 $ $ Trade payables * 117,958 1,170,337 Other payables * 435,767 15,000

553,725 1,185,337

Refer to note 17 for further information on financial instruments. * all trade and other payables are unsecured

Note 13. Non-current liabilities - deferred tax Consolidated 2017 2016 $ $ Deferred tax liability comprises temporary differences attributable to: Amounts recognised in profit or loss:

Intangible assets 25,787 77,033

Deferred tax liability 25,787 77,033

Movements: Opening balance 77,033 - Credited to profit or loss (note 6) (53,124) - Additions through business combinations - 77,033 Foreign exchange differences 1,878 -

Closing balance 25,787 77,033

Note 14. Equity - issued capital Consolidated 2017 2016 2017 2016 Shares Shares $ $ Ordinary shares - fully paid 74,940,173 74,940,173 8,018,190 8,018,190

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Note 14. Equity - issued capital (continued)

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Movements in ordinary share capital Details Date Shares Issue price $ Balance 13 April 2016 - - Issue of shares - Lifespot Capital AG 13 April 2016 20,000,000 $0.0182 364,545 Issue of shares - seed capital 21 May 2016 3,150,000 $0.0979 308,483 Issue of shares - seed capital 2 October 2016 4,100,000 $0.0979 401,517 Issue of shares - advisor/promoter 2 October 2016 5,000,000 $0.0001 500 Issue of shares - Lead IPO Manager 27 December 2016 690,173 $0.1985 137,000 Issue of shares - Lifespot Capital AG 27 December 2016 2,000,000 $0.0182 36,455 IPO shares - issued after balance date 40,000,000 $0.2000 8,000,000 Capital raising costs - $0.0000 (1,230,310)

Balance 31 December 2016 74,940,173 8,018,190

Balance 31 December 2017 74,940,173 8,018,190

Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital. On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Capital risk management The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital. Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents. In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to the current company's share price at the time of the investment. The consolidated entity is not actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies. The consolidated entity is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the financial year. The capital risk management policy remains unchanged from the 31 December 2016 Annual Report. F

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Note 15. Equity - reserves Consolidated 2017 2016 $ $ Foreign currency reserve (60,458) - Share-based payments reserve (Note 30) 220,000 220,000 Other reserves (Note 23) (576,768) (576,768)

(417,226) (356,768)

Foreign currency reserve The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign operations. Share-based payments reserve The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and other parties as part of their compensation for services. Other reserves This reserve is used to account for commonly controlled acquisitions, and the reserve represents the excess of the purchase price over the identifiable fair value of net assets acquired from German subsidiaries. Movements in reserves Movements in each class of reserve during the current and previous financial year are set out below: Foreign Share-based Other currency payments Total Consolidated $ $ $ $ Balance at 13 April 2016 - - - - Share based - 220,000 - 220,000 Commonly controlled acquisition (Refer to note 23) - - (576,768) (576,768)

Balance at 31 December 2016 - 220,000 (576,768) (356,768) Foreign currency translation (60,458) - - (60,458)

Balance at 31 December 2017 (60,458) 220,000 (576,768) (417,226)

Note 16. Equity - dividends There were no dividends paid, recommended or declared during the current or previous financial year.

Note 17. Financial instruments Financial risk management objectives The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit risk. Risk management is carried out by the board. These policies include identification and analysis of the risk exposure of the consolidated entity and appropriate procedures, controls and risk limits.

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Note 17. Financial instruments (continued)

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Market risk Foreign currency risk The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations. The consolidated entity does not hedge. Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and cash flow forecasting. The consolidated entity is exposed to foreign currency risk in relation to the operations of its German subsidiaries, however based on the balances in the below table the consolidated entity's exposure is not material. The carrying amount of the consolidated entity's foreign currency denominated financial assets and financial liabilities at the reporting date were as follows: Assets Liabilities 2017 2016 2017 2016 Consolidated $ $ $ $ Euros 197,342 207,177 451,744 592,392

Price risk The consolidated entity is not exposed to any significant price risk. Interest rate risk The consolidated entity's is exposed to interest rate risk in relation to its cash holdings, but has no interest bearing liabilities. Basis points increase Basis points decrease

Consolidated - 2017

Basis points

change

Effect on profit before

tax

Effect on

equity

Basis points

change


tax

Effect on

equity Cash at bank 100 44,511 44,511 100 (44,511) (44,511)

Basis points increase Basis points decrease

Consolidated - 2016

Basis points

change


tax

Effect on

equity

Basis points

change


tax

Effect on

equity Cash at bank 100 76,005 76,005 100 (76,005) (76,005)

The applicable weighted average effective interest rates were 0.64% (2016 : 0%) Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity. The consolidated entity has a small number of reliable customers and has not experienced any issues with collectability of debts. All cash balances are held with reputable financial institutions. The consolidated entity's exposure to credit risk for receivables at the end of each reporting period per region is summarised below:-

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Note 17. Financial instruments (continued)

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Consolidated 2017 2016 $ $ Australia 107,708 401,641 Germany 140,881 203,839

248,589 605,480

Liquidity risk Liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash equivalents). The consolidated entity manages liquidity risk by maintaining adequate cash reserves continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities. Remaining contractual maturities The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.

Weighted average

interest rate

1 year or less

Between 1 and 2 years


Over 5 years

Remaining contractual maturities

Consolidated - 2017 % $ $ $ $ $ Non-derivatives Non-interest bearing Trade and other payables - 553,725 - - - 553,725

Total non-derivatives 553,725 - - - 553,725

Weighted average

interest rate

1 year or less



Over 5 years

Remaining contractual maturities

Consolidated - 2016 % $ $ $ $ $ Non-derivatives Non-interest bearing Trade other payables - 1,185,337 - - - 1,185,337

Total non-derivatives 1,185,337 - - - 1,185,337 The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. Fair value of financial instruments Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. F

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Note 18. Key management personnel disclosures Compensation The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below: Consolidated

Year ended


Dec 2016 $ $ Short-term employee benefits 562,939 80,000 Termination benefits 52,978 - Share-based payments - 110,000

615,917 190,000

Note 19. Remuneration of auditors During the financial year the following fees were paid or payable for services provided by HLB Mann Judd, the auditor of the company, and its network firm: Consolidated

Year ended


Dec 2016 $ $ Audit services - HLB Mann Judd Audit or review of the financial statements 39,570 25,750 Other services - HLB Mann Judd Due diligence - 49,500

39,570 75,250

Audit services - HLB network firm Audit or review of the financial statements 15,804 -

Note 20. Contingent asset and liabilities The consolidated entity had no contingent assets and liabilities at the end of the current or prior financial year.

Note 21. Commitments The consolidated entity had no commitments at the end of the current or prior financial year, other than those disclosed in Note 8.

Note 22. Related party transactions Parent entity Lifespot Health Ltd is the parent entity. Subsidiaries Interests in subsidiaries are set out in note 25.

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Note 22. Related party transactions (continued)

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Associates Interests in associates are set out in note 26. Key management personnel Disclosures relating to key management personnel are set out in note 18 and the remuneration report included in the directors' report. Directors Francesco Cannavo and Justyn Stedwell are also directors of I-Global Holdings Limited, a company listed on the NSX. Its Singapore subsidiary I-Global Holdings Pte Ltd holds 500,000 shares in Lifespot Health Limited. There have been no transactions between these related party entities. Transactions with related parties There were no transactions with related parties during the current and previous financial year. Receivable from and payable to related parties There were no trade receivables from or trade payables to related parties at the current and previous reporting date. Loans to/from related parties There were no loans to or from related parties at the current and previous reporting date.

Note 23. Purchase consideration for controlled entities – common control transaction On 8 November 2016, the Company entered into a Share Purchase Agreement with Lifespot Capital AG (Lifespot Capital) to acquire 100% of the issued share capital in BodyTel, Gmbh (Bodytel) and Lifespot AG (Lifespot Skin). The Agreement was conditional on certain conditions precedent being satisfied or waived by 30 June 2017. These conditions were met on 28 December 2016 and the Company obtained control of BodyTel GmbH and Lifespot AG. The consideration was payable in 2 steps, in a first step, Lifespot Capital receive 20,000,000 shares in the company upon its incorporation as part payment of the purchase price payable. In a second step, Lifespot Capital received 2 million shares at a deemed issue price of 20 cents per share in the Company and cash consideration of EUR 300,000 (adjusted for any debt and cash held by BodyTel and Lifespot Skin) upon conditions precedent being satisfied or waived. In determining the accounting treatments to be applied, the Directors considered the following:- 1 .Lifespot Skin did not meet the definition of a business as outlined in AASB 3 Business Combinations. It was assessed that Lifespot Skin, given its early stage of development did not meet the definition of a business and will be accounted for as an asset acquisition, and 2. The company, BodyTel and Lifespot Skin were controlled by Lifespot Capital AG before and after the acquisition. In respect of BodyTel and Lifespot Skin, it was assessed that their acquisitions met the definition of a transaction between entities under common control as outlined in AASB 3. As a ‘transaction between entities under common control’ the acquisition did not meet the definition of a business combination as per AASB 3 Business Combinations. As a result, the Company incorporated the assets and liabilities of the entities acquired at their pre-combination carrying amounts without any fair value uplift. This accounting is applied on the basis that there is no substantive change arising from the transaction. No goodwill has been recorded as part of the transaction, instead, any difference between the cost of the transaction and the carrying value of the net assets acquired is recorded in equity as ‘Other Reserves’. The details of the acquisition are outlined below. F

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Note 23. Purchase consideration for controlled entities – common control transaction (continued)

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Consolidated

Year ended


Dec 2016 $ $ Total consideration comprised of:- Cash paid and payable - 439,329 Working capital - (299,909) Fair value of shares issued - 401,000

Total consideration - 540,420

The assets and liabilities recognised as a result of the acquisition are as follows:- Consolidated

Year ended


Dec 2016 Cash and cash equivalents - 4,222 Trade receivables and prepayments - 210,864 Property plant and equipment - 27,109 Intangible assets - 309,145 Trade and other payables - (510,655) Deferred tax - (77,033)

Net identifiable liabilities assumed - (36,348)

Consolidated 2017 2016 $ $ Excess of net assets over purchase consideration paid recognised as reserve Total consideration (refer above) - 540,420 Add : Net identifiable liabilities assumed (refer above) - 36,348 Total recognised in reserves - 576,768

Consolidated 2017 2016 Reconciliation of net cash contributed Cash paid - (439,329) Cash acquired - 4,222

Net cash paid - (435,107)

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Note 24. Parent entity information Set out below is the supplementary information about the parent entity. Statement of profit or loss and other comprehensive income Parent

Year ended


Dec 2016 $ $ Loss after income tax (1,019,763) (335,541)

Total comprehensive loss (1,019,763) (335,541)

Statement of financial position Parent 2017 2016 $ $ Total current assets 4,573,624 8,017,808 Total assets 6,984,868 8,572,628

Total current liabilities 101,981 669,979 Total liabilities 101,981 669,979

Equity

Issued capital 8,018,190 8,018,190 Share-based payments reserve (Note 30) 220,000 220,000 Accumulated losses (1,355,303) (335,541)

Total equity 6,882,887 7,902,649

Guarantees entered into by the parent entity in relation to the debts of its subsidiaries The parent entity has provided letters of financial support to enable its German subsidiaries to prepare their financial statements on the going concern basis. Contingent liabilities The parent entity had no contingent liabilities as at the end of the current and prior financial year. Contractual commitments The parent entity had no commitments as at the end of the current and prior financial year, other than those disclosed in Note 8. Significant accounting policies The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1, except for the following: ● Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. ● Investments in associates are accounted for at cost, less any impairment, in the parent entity.

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Note 25. Interests in subsidiaries The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 1: Ownership interest Principal place of business / 2017 2016 Name Country of incorporation % % Body Tel GmbH Germany 100.00% 100.00% Lifespot AG Germany 100.00% 100.00% Significant restrictions There are no significant restrictions over the consolidated entity's ability to access or use assets, and settle liabilities of the consolidated entity.

Note 26. Interests in associates Interests in associates are accounted for using the equity method of accounting. Information relating to associates that are material to the consolidated entity are set out below: Ownership interest Principal place of business / 2017 2016 Name Country of incorporation % % Seng Vital Pty Ltd Incorporated in Australia, but

business carried out in Germany

37.50%

- Summarised financial information of Seng Vital Pty Ltd and its controlled entity Seng Vital 2017 2016 $ $ Summarised consolidated statement of financial position Current assets 103,106 -

Total assets 103,106 -

Non-current liabilities 66,766 -

Total liabilities 66,766 -

Net assets 36,340 -

Summarised consolidated statement of profit or loss and other comprehensive income Revenue 2,286 - Expenses (39,946) -

Loss before income tax (37,660) - Other comprehensive income - -

Total comprehensive loss (37,660) -

For further details on Seng Vital Pty Ltd, refer to Note 9.

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Note 27. Events after the reporting period On 21 March 2018, the company announced that its wholly owned subsidiary BodyTel has released its patient self-management system for metabolic syndrome and diabetes to the market. On 29 March 2018, David Mandel resigned as a director of the company and was replaced by Justyn Stedwell. No other matter or circumstance has arisen since 31 December 2017 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.

Note 28. Reconciliation of loss after income tax to net cash used in operating activities Consolidated

Year ended


Dec 2016 $ $ Loss after income tax benefit for the year (2,746,076) (348,364) Adjustments for: Depreciation and amortisation 143,575 - Impairment of intangibles 84,261 - Share of loss - associates 3,911 - Share-based payments - 110,000 Change in operating assets and liabilities:

Decrease/(increase) in trade and other receivables 159,227 (104,711) Increase in other operating assets (9,747) - Increase/(decrease) in trade and other payables (142,392) 114,050 Decrease in deferred tax liabilities (53,124) -

Net cash used in operating activities (2,560,365) (229,025)

Note 29. Earnings per share Consolidated

Year ended


Dec 2016 $ $ Loss after income tax attributable to the owners of Lifespot Health Ltd (2,746,076) (348,364)

Number Number Weighted average number of ordinary shares used in calculating basic earnings per share 74,940,173 25,837,783

Weighted average number of ordinary shares used in calculating diluted earnings per share 74,940,173 25,837,783

Cents Cents Basic earnings per share (3.66) (1.35) Diluted earnings per share (3.66) (1.35)

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Note 30. Share-based payments During the prior period, 7.55 million share options were granted to directors, the IPO Lead Manager and promoters and advisers by the company. The options hold no voting or dividend rights and are not transferable. These options vested immediately. Further details of these options are provided in the directors’ report. Of these options, 2 million options were share based payments with a fair value of $220,000. This fair value was assessed adopting the Binomial model using the following inputs: Set out below are the options exercisable at the end of the financial year: 2017 2016 Grant date Expiry date Number Number 25/10/2016 24/10/2019 6,550,000 6,550,000 28/12/2016 27/12/2019 1,000,000 1,000,000

7,550,000 7,550,000

For the options granted during the prior financial year, the valuation model inputs used to determine the fair value at the grant date, are as follows: Share price Exercise Expected Dividend Risk-free Fair value Grant date Expiry date at grant date price volatility yield interest rate at grant date 25/10/2016 24/10/2019 $0.2000 $0.3000 100.00% - 1.56% $0.110 28/12/2016 27/12/2019 $0.2000 $0.3000 100.00% - 1.56% $0.110

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Lifespot Health Ltd Directors' declaration 31 December 2017

43

In the directors' opinion: ● the attached financial statements and notes comply with the Corporations Act 2001, the Australian Accounting

Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; ● the attached financial statements and notes comply with International Financial Reporting Standards as issued by the

International Accounting Standards Board as described in note 1 to the financial statements; ● the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as at

31 December 2017 and of its performance for the financial year ended on that date; and ● there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due

and payable. The directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the directors

___________________________ Justyn Stedwell Director 1 April 2018

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Independent Auditor’s Report to the Members of Lifespot Health Limited

REPORT ON THE AUDIT OF THE FINANCIAL REPORT

Opinion

We have audited the financial report of Lifespot Health Limited (“the Company”) and its controlledentities (“the Group”), which comprises the statement of financial position as at 31 December 2017,the statement of profit or loss and other comprehensive income, the statement of changes in equityand the statement of cash flows for the year then ended, and notes to the financial statements,including a summary of significant accounting policies, and the directors’ declaration.

In our opinion, the accompanying financial report of the Group is in accordance with theCorporations Act 2001, including:

a) giving a true and fair view of the Group’s financial position as at 31 December 2017 and of itsfinancial performance for the year then ended; and

b) complying with Australian Accounting Standards and the Corporations Regulations 2001.

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities underthose standards are further described in the Auditor’s Responsibilities for the Audit of the FinancialReport section of our report. We are independent of the Group in accordance with the auditorindependence requirements of the Corporations Act 2001 and the ethical requirements of theAccounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for ProfessionalAccountants (“the Code”) that are relevant to our audit of the financial report in Australia. We havealso fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance inour audit of the financial report of the current period. These matters were addressed in the contextof our audit of the financial report as a whole, and in forming our opinion thereon, and we do notprovide a separate opinion on these matters.

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Key Audit Matter How our audit addressed the key auditmatter

Accounting for capitalised development costs and impairment assessmentRefer to Note 11 Non-current assets - Intangibles

During the year ended 31 December 2017, the Groupcontinued to develop its patient self-managementsystem for metabolic syndrome and diabetes held byone of its subsidiaries Body Tel GmbH, while adecision was made to discontinue development of theLifespot Skin technology held by Lifespot AG.Subsequent to year end, it was announced that thesystem held by Body Tel is ready to be released andused.

The directors considered the requirements of AASB138 Intangible Assets to assess if the expenditureincurred during the year met the definition of“development” costs as per the requirements of thestandard. The directors concluded that theexpenditure incurred during the year did not meet thedevelopment criteria of AASB 138 paragraph 57 andtherefore such expenditure was expensed as incurred.

The directors also assessed whether there was anyindication that the carried forward capitalisedintangible in respect of the Body Tel technology maybe impaired and concluded that no impairment wasnecessary. In addition, the directors concluded thatthe intangible assets associated with the Lifespot AGwere impaired.

Due to the significant judgement required indetermining the satisfaction of the developmentcriteria within AASB 138, and in assessing theintangible asset for impairment in accordance withAASB 136, the capitalisation of development costs andassociated impairment considerations was assessed tobe a key audit matter.

We assessed management’s evaluation ofthe adopted accounting treatment andperformed the following procedures,amongst others:

Reviewed management’s processesand procedures in place todetermine if costs are to becapitalised as development costs;

Assessed whether costs incurredmet the conditions for capitalising orexpensing in accordance with AASB138 Intangible Assets;

Tested, on a sample basis, the valueof research and developmentexpenditure incurred; and

Reviewed and evaluatedmanagement’s assessment forimpairment and evaluated thereasonableness of the factorsconsidered in conjunction with ourknowledge of the business.

Information Other than the Financial Report and Auditor’s Report Thereon

The directors are responsible for the other information. The other information comprises theinformation included in the Group’s annual report for the year ended 31 December 2017, but doesnot include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do notexpress any form of assurance conclusion thereon.

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In connection with our audit of the financial report, our responsibility is to read the other informationand, in doing so, consider whether the other information is materially inconsistent with the financialreport or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of thisother information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the Directors for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives atrue and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001and for such internal control as the directors determine is necessary to enable the preparation of thefinancial report that gives a true and fair view and is free from material misstatement, whether dueto fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the Groupto continue as a going concern, disclosing, as applicable, matters related to going concern and usingthe going concern basis of accounting unless the directors either intend to liquidate the Group or tocease operations, or have no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole isfree from material misstatement, whether due to fraud or error, and to issue an auditor’s report thatincludes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee thatan audit conducted in accordance with Australian Auditing Standards will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and are considered materialif, individually or in the aggregate, they could reasonably be expected to influence the economicdecisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professionaljudgement and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial report, whether due tofraud or error, design and perform audit procedures responsive to those risks, and obtain auditevidence that is sufficient and appropriate to provide a basis for our opinion. The risk of notdetecting a material misstatement resulting from fraud is higher than for one resulting fromerror, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or theoverride of internal control.

Obtain an understanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the Group’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by the directors.

Conclude on the appropriateness of the directors’ use of the going concern basis of accountingand, based on the audit evidence obtained, whether a material uncertainty exists related toevents or conditions that may cast significant doubt on the Group’s ability to continue as a goingconcern. If we conclude that a material uncertainty exists, we are required to draw attention in

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our auditor’s report to the related disclosures in the financial report or, if such disclosures areinadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained upto the date of our auditor’s report. However, future events or conditions may cause the Groupto cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial report, including thedisclosures, and whether the financial report represents the underlying transactions and eventsin a manner that achieves fair presentation.

Obtain sufficient appropriate audit evidence regarding the financial information of the entities orbusiness activities within the Group to express an opinion on the financial report. We areresponsible for the direction, supervision and performance of the Group audit. We remain solelyresponsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timingof the audit and significant audit findings, including any significant deficiencies in internal control thatwe identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethicalrequirements regarding independence, and to communicate with them all relationships and othermatters that may reasonably be thought to bear on our independence, and where applicable, relatedsafeguards.

From the matters communicated with the directors, we determine those matters that were of mostsignificance in the audit of the financial report of the current period and are therefore the key auditmatters. We describe these matters in our auditor’s report unless law or regulation precludes publicdisclosure about the matter or when, in extremely rare circumstances, we determine that a mattershould not be communicated in our report because the adverse consequences of doing so wouldreasonably be expected to outweigh the public interest benefits of such communication.

REPORT ON THE REMUNERATION REPORT

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 6 to 10 of the directors’ report for theyear ended 31 December 2017.

In our opinion, the Remuneration Report of Lifespot Health Limited for the year ended 31 December2017 complies with section 300A of the Corporations Act 2001.

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Responsibilities

The directors of the Company are responsible for the preparation and presentation of theRemuneration Report in accordance with section 300A of the Corporations Act 2001. Ourresponsibility is to express an opinion on the Remuneration Report, based on our audit conducted inaccordance with Australian Auditing Standards.

HLB Mann Judd Jude LauChartered Accountants Partner

Melbourne1 April 2018

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Lifespot Health Ltd Shareholder information 31 December 2017

49

The shareholder information set out below was applicable as at 20 March 2018. Distribution of equitable securities Analysis of number of equitable security holders by size of holding: Number of holders of ordinary shares 1 to 1,000 7 1,001 to 5,000 141 5,001 to 10,000 143 10,001 to 100,000 303 100,001 and over 83

677

Holding less than a marketable parcel 83

Equity security holders Twenty largest quoted equity security holders The names of the twenty largest security holders of quoted equity securities are listed below: Ordinary shares % of total shares Number held issued LIFESPOT CAPITAL AG 22,000,000 29.36 BNP PARIBAS NOMINEES PTY LTD (IB AU NOMS RETAILCLIENT DRP) 6,782,866 9.05 MEDICAL HEALTH EQUITY LTD 2,900,000 3.87 PYXIS HOLDINGS PTY LTD (THE MAPLETREE ACCOUNT) 2,080,000 2.78 AET SFS PTY LTD (PEAK OPPORTUNITIES FUND) 1,397,500 1.86 MR NIV DAGAN 1,257,809 1.68 J P MORGAN NOMINEES AUSTRALIA LIMITED 1,152,000 1.54 FREEDOM TRADER PTY LTD 1,089,407 1.45 BUSINESS ANGEL CLUB LTD 1,000,000 1.33 MS MERLE SMITH + MS KATHRYN SMITH (THE MINI PENSION FUND A/C) 1,000,000 1.33 MS LOO PING YEO 1,000,000 1.33 MR TONY GANDEL + MRS HELEN GANDEL 870,000 1.16 SACCO DEVELOPMENTS AUSTRALIA PTY LIMITED (THE SACCO FAMILY A/C) 865,700 1.16 MR SUFIAN AHMAD (SIXTY TWO CAPITAL A/C) 790,000 1.05 MDC FUNDS PTY LTD 700,000 0.93 ROGUE INVESTMENTS PTY LTD 700,000 0.93 FREEDOM TRADER PTY LTD 690,173 0.92 MR YING WAH YOONG + MRS MAY AH TIEW YOONG 517,000 0.69 BUEGGE FAMILY SUPER FUND PTY LTD (THE P&L BUEGGE S/F A/C) 508,744 0.68 I-GLOBAL HOLDINGS PTE LTD 500,000 0.67 47,801,199 63.77

Unquoted equity securities A total of 7,550,000 options are on issue with 5,550,000 options are on issue to 9 holders of ordinary securities. A further 2,000,000 options are on issue to 5 former and current directors and employees.

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Lifespot Health Ltd Shareholder information 31 December 2017

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Substantial holders Substantial holders in the company are set out below: Ordinary shares % of total shares Number held issued LIFESPOT CAPITAL AG 22,000,000 29.36 Voting rights The voting rights attached to ordinary shares are set out below: Ordinary shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Options Option holders have no voting rights.

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lifespot health ltd for personal use only - asx · 2018. 4. 2. · name: tilo brandis title:...

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