MYFIZIQ LIMITED ACN 602 111 115

ANNUAL REPORT

FOR THE YEAR ENDED 30 JUNE 2017

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Corporate Directory

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Directors Auditors Peter Wall (Non-Executive Chairman) HLB Mann Judd Vlado Bosanac (Executive Director and CEO) Level 4, 130 Stirling Street Katherine Iscoe (Executive Director) Perth WA 6000 Company Secretary Share Registry Kevin Hart Automic Registry Services Level 2, 267 St Georges Terrace Registered Office Perth WA 6000 Suite 8, 7 The Esplanade Telephone : +61 8 9324 2099 Mt Pleasant WA 6153 Facsimile : +61 8 9321 2337 Telephone : +61 8 9316 9100 Facsimile : + 61 8 9315 5475 ASX Code MYQ Principal Place of Business Unit 5, 71-73 The Esplanade Website and email addresses South Perth WA 6151 www.myfiziq.com admin@myfiziq.com Securities Exchange Listing The Company’s shares are quoted on the Australian Securities Exchange. The home exchange is Perth, Western Australia. Company Information The Company is domiciled in Australia. Corporate Governance The Company has adopted the 3rd Edition of the ASX Corporate Governance Recommendations. A summary statement of which has been approved by the Board together with current policies and charters is available on the Company Website: www.myfiziq.com. .

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Contents Page

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Page

Directors’ Report 3-18

Auditor’s Independence Declaration 19

Statement of Profit or Loss and Other Comprehensive Income 20

Statement of Financial Position 21

Statement of Changes in Equity 22

Statement of Cash Flows 23

Notes to the Financial Statements 24-45

Directors’ Declaration 46

Independent Auditor’s Report 47-50

Additional ASX information 51-53

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Directors’ Report

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The Directors present the financial statements of MyFiziq Limited (“MyFiziq” or “the Company”) for the year ended 30 June 2017.

Directors The following persons were directors of MyFiziq during or since the end of the year and up to the date of this report, and were in office for this entire period unless stated otherwise:

Mr Peter Wall - B.Com, LLB, MAppFin FFin

(Non-Executive Chairman – Appointed 25 May 2015)

Mr Wall is a corporate lawyer and has been a Partner at Steinepreis Paganin (Perth based corporate law firm) since July 2005. Mr Wall graduated from the University of Western Australia in 1998 with a Bachelor of Laws and Bachelor of Commerce (Finance). He has also completed a Masters of Applied Finance and Investment with FINSIA.

Mr Wall has a wide range of experience in all forms of commercial and corporate law, with a particular focus on technology companies, resources (hard rock and oil/gas), equity capital markets and mergers and acquisitions. He also has significant experience in dealing in cross border transactions.

Mr Wall is currently non-executive chairman of ASX listed companies Activistic Limited, MMJ Phytotech Ltd, Zyber Holdings Limited, Sky and Space Global Ltd, Transcendence Technologies Limited, Minbos Resources Limited, Burrabulla Corporation Limited and a non-executive director of Ookami Limited.

In the 3 years immediately before the end of the 2017 financial period, Mr Wall served as non-executive chairman of Zinc of Ireland NL (resigned 21 July 2016), TV2U International Limited (resigned 9 February 2016) and Brainchip Holdings Ltd (resigned 3 August 2015).

Mr Vlado Bosanac

(Executive Director and CEO – Appointed 17 October 2016)

Mr Bosanac is the co-founder of MyFiziq. He has over 30 years’ experience in transaction origination and negotiation and prior to his appointment to the Board, acted as a consultant to the Company since it listed on the ASX. Mr Bosanac has a strong track record in delivering results and his skill sets will help the Company to move towards commercialisation of the MiFiziq app.

Mr Bosanac has not served as a director of any other listed companies, in the 3 years immediately before the end of the 2017 financial year.

Dr Katherine Iscoe - B.A, MSc, PhD

(Executive Director– Appointed 1 October 2014; Resigned as CEO on 17 October 2016)

Dr Katherine Iscoe is the co-founder of MyFiziq and the Dr Katherine brand. She holds numerous scholarships and awards and has completed a Bachelor of Arts in Kinesiology, Masters of Science in Exercise Physiology and Health Sciences and a Doctorate in Exercise Physiology and Biochemistry. Dr Iscoe has been published in several international peer-reviewed journals, literature as well as mainstream media. She has also been a guest speaker on various health based television shows and news programs.

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Directors (continued)

Prior to founding MyFiziq, Dr Iscoe ran her own consulting company, ”Deliciously Fitt”, which provided nutritional and wellbeing advice to clients concerned about weight control, body image and physical wellbeing.

Dr Iscoe has not served as a director of any other listed companies, in the 3 years immediately before the end of the 2017 financial year.

Dr Cyril Donnelly - MSc., PhD

(Non -Executive Director – Appointed 25 May 2015; Resigned 31 July 2017)

Dr Donnelly is a Lecturer of Biomechanics, within the School of Sport Science, Exercise and Health at the University of Western Australia. Dr Donnelly’s research is focused on unravelling the principles and mechanics of human movement and how they relate to best-practice injury prediction, injury-prevention prescription and rehabilitation principles. With the vast majority of his published works among the top quartile of peer reviewed journals, his research is recognised internationally as world-leading. With a growing international research network, which includes leading universities across Australia and the UK, USA and Japan, Dr Donnelly continually strives towards the development of reliable, biomechanically-informed clinical tools to a) help sustain an individual’s health related quality of life and b) accelerate patient rehabilitation following injury.

Dr Donnelly has not served as a director of any other listed companies, in the 3 years immediately before the end of the 2017 financial year.

Mr Evan Cross - CA, FAICD

(Executive Director – Finance – Resigned 31 October 2016)

Mr Cross has been a member of Chartered Accountants Australia and New Zealand for over 30 years, and is a Fellow of the Australian Institute of Company Directors. Mr Cross has extensive corporate finance experience in investment banking both in Australia and the US and has held key finance or executive director roles in a number of private and ASX-listed companies in a wide range of industries including technology, healthcare, mining and the food and beverage industries.

In the 3 years immediately before the end of the 2017 financial year, Mr Cross has served as a non-executive director of Sun Biomedical Limited (resigned 3 July 2015) and Activistic Limited (resigned 30 April 2017) and is currently a non-executive director of Dreamscape Networks Limited.

Company Secretary

Kevin Hart - B.Com, FCA

(Appointed 1 May 2015)

Mr Hart is a Chartered Accountant and was appointed to the position of Company Secretary on 1 May 2015. He has over 30 years’ experience in accounting and the management and administration of public listed entities.

He is currently a partner in an advisory firm, Endeavour Corporate, which specialises in the provision of company secretarial and accounting services to ASX listed entities.

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Directors’ Report

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Interests in the Shares and Options of the Company

The following relevant interests in shares, options and performance rights of the Company were held by the directors as at the date of this report:

Director Number of fully

paid ordinary shares

Number of Performance Shares –

Class A

Number of Performance Shares –

Class B

Number of Performance Rights

P Wall 2,500,000 - - - V Bosanac 391,864 - - 10,000,000 K Iscoe 16,900,000 11,925,000 11,925,000 -

None of the performance shares or rights above are currently vested and exercisable. Further details of the vesting conditions applicable to these performance shares or rights are disclosed in the remuneration report section of this directors’ report. Equity Securities on Issue

Class of Security 30 June 2017 30 June 2016

Ordinary fully paid shares 79,038,555 78,500,000 Performance Shares – Class A 15,000,000 15,000,000 Performance Shares – Class B 15,000,000 15,000,000 Options over unissued shares 9,000,000 - Performance rights over unissued shares 12,500,000 -

Ordinary Fully Paid Shares

During the year ended 30 June 2017, the Company issued 538,555 ordinary fully paid shares under a Consultancy Agreement with Sensape GmbH. No shares have been issued between the end of the financial year and the date of this report.

There are no unpaid amounts on the shares issued.

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Directors’ Report

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Equity Securities on Issue (continued)

Options over Ordinary Shares

During the year ended 30 June 2017, the Company issued 10,750,000 unlisted options under the MyFiziq Incentive Option Plan. Each option entitles the holder to subscribe for and be allotted one ordinary share. No options were exercised during the year. During the year ended 30 June 2017, 1,750,000 unlisted options exercisable at $0.10 each, expired as the holder ceased to be an eligible participant of the Company’s Incentive Option Plan. No options have been issued, vested, exercised or cancelled between the end of the financial year and the date of this report. At the date of this report unissued ordinary shares of the Company under option are:

Date granted Number of options granted

Exercise price (cents)

Vesting date Expiry date

21 Dec 2016 1,000,000 20 30 Sept 2017 30 Sept 2020 21 Dec 2016 1,750,000 10 31 Dec 2017 31 Dec 2020 21 Dec 2016 1,000,000 30 30 Sept 2018 30 Sept 2021 21 Dec 2016 500,000 10 26 Oct 2018 31 Dec 2020 21 Dec 2016 1,250,000 10 31 Dec 2018 31 Dec 2021 21 Dec 2016 1,000,000 40 30 Sept 2019 30 Sept 2022 21 Dec 2016 500,000 10 26 Oct 2019 30 Dec 2021 21 Dec 2016 1,000,000 50 30 Sept 2020 30 Sept 2023 21 Dec 2016 1,000,000 60 30 Sept 2021 30 Sept 2024

Total 9,000,000 Under the terms of the Options, holders of options are not entitled to any voting rights nor may they participate in any share issue of the Company. Performance Rights over Ordinary Shares

During the year ended 30 June 2017, the Company issued 12,500,000 performance rights. Each performance right entitles the holder the right to acquire one ordinary share subject to satisfaction of vesting criteria. No performance rights vested, were cancelled or converted to ordinary shares during the year. No performance rights have been issued, vested, converted or cancelled between the end of the financial year and the date of this report.

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Directors’ Report

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Dividends

No dividends have been paid or declared since the start of the financial year and the directors do not recommend the payment of a dividend in respect of the financial year. Principal Activities

The principal activity of the Company during the financial year was the ongoing development of its mobile application technology and launching of the MyFiziq app in the Apple Store.

There have been no significant changes in the nature of these activities during the financial year.

Significant Changes in the State of Affairs

There were no significant changes in the state of affairs of the Company during the year.

Review of Operations Operating results and financial position

The net loss after income tax for the financial year was $2,189,609 (2016: $2,040,653), which includes $134,365 (2016: $189,515) in respect of brand development and patent costs expensed.

Cash assets at the end of the financial year were $1,159,789 (2016: $3,674,697).

Summary of Activities

MyFiziq is an early stage technology company. During the financial year under review, the Company has been focussed on continuing the development of a proprietary software application that is intended to convert photos of the human body, taken on a Smart Phone or other digital device (a camera for example), into a 3D image of the human body, also known as the personal Avatar. The personal Avatar created is returned to the user’s Smart Phone where they will be able to view and rotate the image and measure major body parts, such as the chest, hips, thighs and biceps.

The key objective of developing the technology is to allow users to track changes in their body shape and dimension over time to assess the impact of their weight loss / weight gain or fitness program on their physical appearance over a time period chosen by them.

The application of the technology is designed to enhance and extend the information available to users of mobile applications and platforms. Currently users of these mobile applications and platforms lack the ability to track their change and MyFiziq gives the user this capability. This removes the need to use a scale which only delivers mass measure and the tape measure which is open to human error.

The MyFiziq App will allow users to maintain a history of their personal 3D Avatars to record body dimension changes over time and to act as an incentive in their desired fitness goals (weight loss / weight gain / body change from fitness).

During the financial year under review, the Company’s focus has been two-fold; commencing discussions with potential B2B (Business 2 Business) partners and readying the app for commercialisation.

In readying the app for commercialisation, MyFiziq released a number of app updates to the Australian Apple iOS app store, the most noteworthy being:

1) In-app image inspection and a user specific body contour, which resulted in a 700% increase in successful avatars being created, and

2) Release of the MyFiziq Software Development Kit for iOS (SDK), enabling partners to include the MyFiziq Avatar Creation Process in their own native apps, wearable platforms and device offerings.

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Review of Operations (continued) Summary of Activities (continued)

Throughout the year six data collection studies were undertaken with over 1,000 avatars collected of volunteers across Australia from diverse backgrounds, age groups, body types and fitness goals. These studies validated that the MyFiziq app circumference measurement accuracy and repeatability are comparable to the accuracy and repeatability of ISAK (International Society for the Advancement of Kinanthropometry) approved anthropometric tape circumference measurements taken by qualified ISAK experts*. *Mean MyFiziq accuracy and repeatability in comparison to ISAK approved anthropometric tape measurements captured under controlled conditions.

MyFiziq has also brought all app development in-house which has resulted in a two-fold benefit; an approximate 60% saving in app development costs, and the implementation of a continuous integration deployment model.

Additionally, MyFiziq conducted a number of Proof Of Concept’s (POC) throughout the year. The most noteworthy being that a machine learning Proof Of Concept (POC) was completed by MyFiziq in partnership with German machine learning experts Sensape with the goal of further optimising circumference measurements accuracy and repeatability, the outcome of which will lead to the commencement of two key commercialisation pieces of work which are well underway and scheduled for release in the next financial year. The first piece of work being a serverless, scalable multiple tenancy backend architecture to support avatar high processing of multiple customers, and the second being the integration of the smart phone front camera to enable the user to create an avatar without the need for a second person.

During the financial year, MyFiziq commenced discussions with a number of businesses to licence the MyFiziq app. In July 2017 due diligence was completed under a binding term sheet with Gold Quay Capital Pte Ltd, Singapore (GQC). The purpose of the term sheet was to create a joint venture that will develop a revolutionary diagnostic tool based on MyFiziq Technology for the medical and insurance markets. Under the terms of the joint venture, GQC will, through its investor network, provide up to $5m of funding to the joint venture. Of this, MyFiziq will receive an upfront license fee of $1.5m with a further $2m development capital being allocated to the JV Company for development of the new application. The joint venture will be owned 50% by GQC & 50% MYQ. MYQ will receive a further $500,000 in licence payment when the balance of the $1.5m is injected into the JV Company.

Several other companies have been approached and have shown a high degree of interest in the app.

The Company was pleased to also make several key executive and consulting appointments during the period to assist with its strategic direction and business development.

Mr Vlado Bosanac was appointed as an Executive Director and Chief Executive Officer. Mr Bosanac has over 30 years’ experience in transaction origination and negotiation, providing the skill sets required for the company to move to commercialisation of the MyFiziq app. Mr Bosanac has a strong track record in delivering results, driving change and identifying partner requirements to enhance company value.

Mr Gary Smith was appointed as Vice President – North America in advance of commercialisation of the MyFiziq app. Mr Smith has significant business development experience in a range of sectors, including the online Health and Wellness sector and nutritional supplements manufacturing and distribution. Mr Smith has operated at both Chief Executive Officer and Chief Operating Officer levels and has significant experience in change management within the organisations he has worked for.

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Review of Operations (continued) Summary of Activities (continued)

Concurrent with Mr Bosanac’s appointment, Dr Katherine Iscoe stepped down from the role of CEO. Now an Executive Director, the change in role has enabled Dr Iscoe to focus her full time attention to the commercialisation of the Dr Katherine business. This has resulted in the creation of new Dr Katherine brand sales verticals of workshops, talks, retreats and training courses.

As Dr Katherine brand awareness increases, book sales and consultation appointments have risen steadily with various future events being waitlisted. Next steps include expanding talks and workshops to the East Coast (Sydney, Melbourne) and potentially into the US.

Events Subsequent to the Reporting Date

On 5 July 2017 due diligence required under a binding term sheet with Gold Quay Capital Pte Ltd, Singapore (GQC) was completed.

On 31 July 2017 Dr Cyril Donnelly resigned as Non-Executive Director of the Company in order to take up a key executive role with the joint venture with Gold Quay Capital Pte Limited of Singapore.

Other than the above, there has not arisen in the interval between the end of the reporting period and the date of this report, any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company to affect substantially the operations of the Company, the results of those operations or the state of affairs of the Company in subsequent financial years.

On 20 September 2017 the Company entered into a convertible loan agreement with NCMAO Investments Pty Ltd as trustee for NCMAO Investments Trust (NCMAO). Under the terms of the facility, the Company may draw down up to $2 million at any time prior to 31 December 2019, at which time the facility is repayable. If the loan has not been repaid at such time, any amount owing (including interest) will be converted to shares at an issue price the greater of $0.30 and the 14 trading day volume weighted average price (VWAP) of the Company’s shares at 31 December 2019. The facility attracts interest at 8% per annum.

Likely Developments and Expected Results

As outlined above, the Company is continuing with the completion of the new serverless, scalable multiple tenancy backend architecture to support avatar high processing of multiple customers as well as the integration of the smart phone front camera to enable the user to create an avatar without the need for a second person.

Environmental Regulation and Performance

The Company is not subject to significant environmental regulation in respect of its operations.

Officers’ Indemnities and Insurance

During the year the Company paid an insurance premium to insure certain officers of the Company. The officers of the Company covered by the insurance policy include the Directors named in this report.

The Directors and Officers Liability insurance provides cover against all costs and expenses that may be incurred in defending civil or criminal proceedings that fall within the scope of the indemnity and that may be brought against the officers in their capacity as officers of the Company. The insurance policy does not contain details of the premium paid in respect of individual officers of the Company. Disclosure of the nature of the liability cover and the amount of the premium is subject to a confidentiality clause under the insurance policy.

The Company has not provided any insurance for an auditor of the Company.

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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.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001. Directors’ Meetings

The following table sets out the number of directors’ meetings held during the financial year and the number of meetings attended by each director. During the financial year, the Company held four board meetings.

Director Board of Directors’ Meetings Number Eligible to Attend Number Attended

P Wall 4 4 K Iscoe 4 3 V Bosanac (appointed 17 October 2016) 3 3 C Donnelly (resigned 31 July 2017) 4 4 E Cross (resigned 31 October 2016) 1 1

Non-audit Services

During the period HLB Mann Judd the Company’s auditor, has not performed any other services in addition to their statutory duties.

The Board considers any non-audit services provided during the year by the auditor and satisfies itself that the provision of any non-audit services during the year by the auditor is compatible with, and does not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:

all non-audit services are reviewed by the Board to ensure they do not impact the impartiality and objectivity of the auditor; and

the non-audit services provided do not undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants, as they do not involve reviewing or auditing the auditor’s own work, acting in a management or decision making capacity for the Company, acting as an advocate for the Company or jointly sharing risks and rewards.

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Remuneration Report (Audited)

Remuneration paid to Directors and Officers of the Company is set by reference to such payments made by other ASX listed companies of a similar size and operating in a similar industry. In addition reference is made to the specific skills and experience of the Directors and Officers.

Details of the nature and amount of remuneration of each Director, and other Key Management Personnel if applicable, are disclosed annually in the Company’s Annual Report.

Remuneration Committee

The Board has adopted a formal Remuneration Committee Charter which provides a framework for the consideration of remuneration matters.

The Company does not have a separate remuneration committee and as such all remuneration matters are considered by the Board as a whole, with no Member deliberating or considering such matter in respect of their own remuneration.

In the absence of a separate Remuneration Committee, the Board is responsible for:

1. Setting remuneration packages for Executive Directors, Non-Executive Directors and other Key Management Personnel; and

2. Implementing employee incentive and equity based plans and making awards pursuant to those plans.

Non-Executive Remuneration

The Company’s policy is to remunerate Non-Executive Directors, at rates comparable to other ASX listed companies in the same industry, for their time, commitment and responsibilities.

Non- Executive Remuneration is not linked to the performance of the Company, however to align Directors’ interests with shareholders’ interests, remuneration may be provided to Non-Executive Directors in the form of equity based long term incentives.

1. Fees payable to Non-Executive Directors are set within the aggregate amount approved by shareholders at the Company’s Annual General Meeting;

2. Non-Executive Directors’ fees are payable in the form of cash and superannuation benefits; 3. Non-Executive superannuation benefits are limited to statutory superannuation entitlements; and 4. Participation in equity based remuneration schemes by Non-Executive Directors is subject to consideration

and approval by the Company’s shareholders.

The maximum annual Non-Executive Directors fees, payable in aggregate are approved by Shareholders at the Company’s Annual General Meeting.

Executive Director and Other Key Management Personnel Remuneration

Executive remuneration consists of base salary, plus other performance incentives to ensure that:

1. Remuneration packages incorporate a balance between fixed and incentive pay, reflecting short and long term performance objectives appropriate to the Company’s circumstances and objectives; and

2. A proportion of remuneration is structured in a manner to link reward to corporate and individual performances.

Executives are offered a competitive level of base salary at market rates (based on comparable ASX listed companies) and are reviewed regularly to ensure market competitiveness.

To date the Company has not engaged external remuneration consultants to advise the Board on remuneration matters.

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Remuneration Report (continued)

Incentive Plans

The Company provides long term incentives to Directors and Employees pursuant to the MyFiziq Limited Incentive Option Plan (approved by shareholders on 25 October 2016) or the MyFiziq Limited Incentive Performance Rights Plan (approved by shareholders on 16 February 2017).

The Board, acting in remuneration matters, will:

1. Ensure that incentive plans are designed around appropriate and realistic performance targets and provide rewards when those targets are achieved;

2. Review and improve existing incentive plans established for employees; and

3. Approve the administration of the incentive plans, including receiving recommendations for, and the consideration and approval of grants pursuant to such incentive plans.

Engagement of Non-Executive Directors

Non-Executive Directors conduct their duties under the following terms:

1. A Non-Executive Director may resign from his/her position and thus terminate their contract on written notice to the Company; and

2. A Non-Executive Director may, following resolution of the Company’s shareholders, be removed before the expiration of their period of office (if applicable). Payment is made in lieu of any notice period if termination is initiated by the Company, except where termination is initiated for serious misconduct.

In consideration of the services provided by Mr Peter Wall as Non-Executive Chairman, the Company will pay him $60,000 per annum.

In consideration of the services provided by Dr Cyril Donnelly as Non-Executive Director, the Company will pay him $40,000 plus statutory superannuation per annum. Dr Donnelly resigned as a director on 31 July 2017.

Messrs Wall and Donnelly are also entitled to fees for other amounts as the Board determines where they perform special duties or otherwise perform extra services or make special exertions on behalf of the Company.

During the financial year ended 30 June 2017, the Company incurred no such additional costs.

Engagement of Executive Directors

Dr Katherine Iscoe

The Company has a formal executive services agreement with Dr Katherine Iscoe, the terms of which are summarised below.

In respect of her engagement as executive director, Dr Iscoe received effective 1 July 2016, a base salary of $229,950 per annum inclusive of statutory superannuation (Total Fixed Remuneration, TFR).

Dr Iscoe may also receive a short term performance based reward in the form of a cash bonus up to 100% of the TFR, the performance criteria, assessment and timing of which are determined at the discretion of the Board. The Board has not yet determined this performance criteria, assessment or timing but when it has, this will apply prospectively.

Dr Iscoe has not been granted any equity based remuneration. For

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Remuneration Report (continued)

Engagement of Executive Directors (continued)

Mr Vlado Bosanac

The Company has agreed terms with Mr Vlado Bosanac in relation to his role as Executive Director and Chief Executive Officer, effective 17 October 2016. The terms, which are summarised below, are included in a formal executive services agreement.

In respect of his engagement as Executive Director and CFO, commencing 17 October 2016, Mr Bosanac will be paid a base salary of $295,650 per annum inclusive of statutory superannuation (Total Fixed Remuneration, or TFR). The TFR is subject to annual review by the Board of Directors and any increase in salary is subject to the discretion of the Board.

Mr Bosanac may also receive a short term performance based reward in the form of a cash bonus up to 100% of the TFR, the performance criteria, assessment and timing of which are determined at the discretion of the Board. The Board has not yet determined this performance criteria, assessment or timing but when it has, this will apply prospectively.

Under the executive services agreement, Mr Bosanac is entitled to performance based remuneration of 10,000,000 Performance Rights subject to shareholder approval. Approval was obtained on 19 February 2017 and Mr Bosanac was granted the following Performance Rights under the MyFiziq Limited Incentive Performance Rights Plan:

2,000,000 Upon signing first commercial transaction where the party or organisation has 5m or more active subscribers/followers. Expiry date: 03.03.2018

2,000,000 50,000 users or $500k annualised revenue. Expiry date: 03.03.2019

2,000,000 100,000 users or $1m annualised revenue. Expiry date: 03.03.2020

2,000,000 200,000 users or $2.5m annualised revenue. Expiry date: 03.03.2021

2,000,000 250,000 users or $5m annualised revenue. Expiry date: 03.03.2022

The executive services agreement can be terminated without cause with 3 months written notice or the provision of 3 month’s salary in lieu of notice.

Mr Evan Cross

The Company had agreed terms with Mr Evan Cross in relation to his role as Executive Director - Finance, effective 1 May 2015. The terms, which are summarised below, are included in a formal executive services agreement.

In respect of his engagement as director and CFO, effective 1 May 2016 Mr Cross received a base salary of $262,800 per annum inclusive of statutory superannuation (Total Fixed Remuneration, or TFR).

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Remuneration Report (continued)

Engagement of Executive Directors (continued)

Mr Cross may also receive a short term performance based reward in the form of a cash bonus up to 100% of the TFR, the performance criteria, assessment and timing of which are determined at the discretion of the Board.

Mr Cross has not been granted any equity based remuneration. Mr Cross resigned as a director on 31 October 2016.

Short Term Incentive Payments

The Board may, at its sole discretion, set the Key Performance Indicators (KPIs) for the Executive Directors or other Executive Officers. The KPIs are chosen to align the reward of the individual Executives to the strategy and performance of the Company.

Performance objectives, which may be financial or non-financial, or a combination of both, are determined by the Board.

No Short Term incentives are payable to Executives where it is considered that the actual performance has fallen below the minimum requirement.

No performance evaluation in respect of the year ended 30 June 2017 has taken place in accordance with this process, and accordingly no short term incentive payments have been paid or are payable to Executives in respect of the financial year ended 30 June 2017.

The CEO sets the KPIs for other members of staff, monitors actual performance and may recommend payment of short term bonuses to certain employees to the Board for approval.

Shareholding Qualifications

The Directors are not required to hold any shares in MyFiziq under the terms of the Company’s constitution.

Consequences of Company Performance on Shareholder Wealth

In considering the Company’s performance and benefits for shareholder wealth, the Board provide the following indices in respect of the current financial year:

2017 2016

Loss for the period attributable to shareholders $2,189,609 $2,040,653

Closing share price at 30 June $0.065 $0.062

Remuneration Disclosures

Directors and Key Management Personnel of the Company have been identified as:

Mr Peter Wall Non-Executive Chairman Mr Vlado Bosanac Executive Director and Chief Executive Officer (appointed 17 October 2016) Dr Katherine Iscoe Executive Director Dr Cyril Donnelly Non-Executive Director (resigned 31 July 2017) Mr Evan Cross Executive Director – Finance (resigned 31 October 2016)

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Remuneration Report (continued)

The details of the remuneration of each Director and member of Key Management Personnel of the Company are as follows:

30 June 2017

Short Term Post

Employment

Base Salary and

Consulting Fees

$

Short Term

Incentive

$

Superannuation Contributions

$

Value of Share Based

Payments (Options and

Rights) (i)

$

Total

$

Proportion Performance

Related

%

Current Directors and Key Management Personnel:

P Wall 60,000 - - - 60,000 -

V Bosanac 190,886 - 18,134 68,470 277,490 -

K Iscoe 210,000 - 19,950 - 229,950 -

C Donnelly (ii) 40,000 - 3,800 - 43,800 -

E Cross (ii) 80,000 - 7,600 - 87,600 -

Total 580,886 - 49,484 68,470 698,840 -

(i) The fair value of Performance Rights is calculated at the date of grant using a binomial option

pricing model and allocated to each reporting period evenly over the period from grant date to vesting date. The value disclosed in the above tables is the portion of the fair value of the performance rights recognised in the reporting period.

(ii) E Cross resigned on 31 October 2016; C Donnelly resigned on 31 July 2017.

30 June 2016

Short Term Post

Employment

Base Salary and

Consulting Fees

$

Short Term

Incentive

$

Superannuation Contributions

$

Value of Share Based

Payments (Options and

Rights)

$

Total

$

Proportion Performance

Related

%

Current Directors and Key Management Personnel:

P Wall 54,795 - 5,205 - 60,000 -

K Iscoe 127,000 - 12,065 - 139,065 -

C Donnelly 44,110 - 4,190 - 48,300 -

E Cross 160,000 - 15,200 - 175,200 -

Total 385,905 - 36,660 - 422,565 -

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Directors’ Report

16

Remuneration Report (continued)

Details of Short Term Performance Related Remuneration

There have been no Short Term Incentive payments made to Directors or Key Management Personnel of the Company during the financial year ended 30 June 2017.

Options Granted as Remuneration

There were no options over unissued shares issued to Directors or Key Management Personnel of the Company during the financial year ended 30 June 2017.

Exercise of Options Granted as Remuneration

There were no ordinary shares issued on the exercise of options previously granted as remuneration to Directors or Key Management Personnel of the Company during the financial year ended 30 June 2017.

Equity instrument disclosures relating to key management personnel

Option holdings No options have been issued, exercised or held by Key Management Personnel during or since the end of the financial year ended 30 June 2017. Performance share holdings Key Management Personnel have the following interests in performance shares of the Company.

2017

Name

Balance at start of the

year

Received during the year as

remuneration

Other changes

during the year

Balance at the end of the year

Vested and exercisable at the end of the

year P Wall - - - - - V Bosanac - - - - - K Iscoe 23,850,000 - - 23,850,000 - E Cross (i) 3,900,000 - (3,900,000) - - C Donnelly 1,000,000 - - 1,000,000 -

Director Number of

Performance Shares – Class A

Number of Performance Shares –

Class B P Wall - - V Bosanac - - K Iscoe 11,925,000 11,925,000 C Donnelly 500,000 500,000

(i) E Cross resigned on 31 October 2016.

Performance Shares are convertible into fully paid ordinary shares in the Company, within five years of the date of issue, pursuant to satisfaction of the following performance milestones:

Class A Performance Share Milestone will be taken to have been satisfied upon the Company’s gross revenue exceeding $1,250,000 per quarter for four consecutive quarters, where a quarter is defined as a period of three consecutive calendar months.

Class B Performance Share Milestone will be taken to have been satisfied upon the Company achieving Earnings Before Interest Tax Depreciation and Amortisation of not less than $1,250,000 per quarter for four consecutive quarters, where a quarter is defined as a period of three consecutive calendar months.

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Directors’ Report

17

Remuneration Report (continued)

Performance Rights holdings On 3 March 2017, the Company granted 10,000,000 performance rights to Director Mr Vlado Bosanac under the terms of the Executive Services Agreement with Mr Bosanac. Each performance right entitles the holder the right to acquire one ordinary share subject to satisfaction of vesting criteria as follows:

No of Rights

Grant Date Expiry Date

Fair Value per Right at Grant

Date

Vesting Criteria

2,000,000 03.03.2017 03.03.2018 $0.046 Upon signing first commercial transaction where the party or organisation has 5m or more active subscribers/followers

2,000,000 03.03.2017 03.03.2019 $0.046 50,000 users or $500k annualised revenue 2,000,000 03.03.2017 03.03.2020 $0.046 100,000 users or $1m annualised revenue 2,000,000 03.03.2017 03.03.2021 $0.046 200,000 users or $2.5m annualised revenue 2,000,000 03.03.2017 03.03.2022 $0.046 250,000 users or $5m annualised revenue

Key Management Personnel have the following interests in performance rights of the Company:

2017

Name

Balance at start of the

year

Received during the year as

remuneration

Other changes

during the year

Balance at the end of the year

Vested and exercisable at the end of the

year V Bosanac - 10,000,000 - 10,000,000 -

Share holdings The number of shares in the Company held during the financial period by key management personnel of the Company, including their related parties are set out below. There were no shares granted during the reporting period as compensation.

2017

Name Balance at start of

the period Acquisitions pursuant

to share placements

Other changes during the

period

Balance at the end of the

period P Wall (i) 1,500,000 - 1,000,000 2,500,000 V Bosanac (i) 240,000 - 151,864 391,864 K Iscoe 16,900,000 - - 16,900,000 C Donnelly - - - - E Cross (ii) 5,000,000 - (5,000,000) -

(i) Other changes during the period relate to on market purchases. (ii) E Cross resigned on 31 October 2016.

Loans made to key management personnel

No loans were made to key personnel, including personally related entities during the reporting period. Other transactions with key management personnel

During the financial year ended 30 June 2017, the Company paid $23,361 to Steinepreis Paganin, an entity associated with Mr Peter Wall, for legal services. No amounts were owing to Steinepreis Paganin as at 30 June 2017.

In the comparative period ended 30 June 2016, there were no transactions with, and no amounts owing to or owed by Key Management Personnel.

End of Remuneration Report

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Directors’ Report

18

Auditor’s Independence Declaration

A copy of the Auditor’s Independence Declaration as required under Section 307C of the Corporations Act is set out on the following page. This report is made in accordance with a resolution of the Directors. DATED at Perth this 28th day of September 2017.

Vlado Bosanac Executive Director and Chief Executive Officer

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HLB Mann Judd (WA Partnership) ABN 22 193 232 714

Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 6849 | Telephone +61 (08) 9227 7500 | Fax +61 (08) 9227 7533

Email: mailbox@hlbwa.com.au | Website: www.hlb.com.au

Liability limited by a scheme approved under Professional Standards Legislation 19

HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of the financial report of MyFiziq Limited for the year ended 30 June 2017, I declare that to the best of my knowledge and belief, there have been no contraventions of:

a) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

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

HLB Mann Judd

Chartered Accountants

L Di Giallonardo

Partner

Perth, Western Australia

28 September 2017

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Statement of Profit or Loss and Other

Comprehensive Income For the financial year ended 30 June 2017

20

Note Year Ended 30 June

2017

Year Ended 30 June

2016 $ $ Income Other income 3 90,431 59,075 Interest income 50,313 101,384 Total revenue 140,744 160,459 Expenses Employee expenses 3 (1,615,053) (1,015,199) Consulting and advisory (355,005) (254,424) Brand development and patent costs (134,365) (189,515) Marketing and publicity (268,980) (120,692) Telecommunications & IT (120,863) (147,049) Project expenditure - (99,158) Occupancy costs (111,690) (190,273) Financing costs (2,295) (422) Depreciation expense (13,850) (7,074) Administration and other expenses (344,605) (247,442) Total expenses (2,966,706) (2,271,248) Loss before income tax (2,825,962) (2,110,789) Income tax benefit 4 636,353 70,136 Net loss for the year attributable to members of the Company

(2,189,609) (2,040,653)

Other comprehensive income - - Total comprehensive loss for the year attributable to the members of the Company

18

(2,189,609)

(2,040,653)

Loss per share Cents cents Basic and diluted loss per share 5 (2.8) (2.7)

The notes to the financial statements form part of this Statement of Profit or Loss and Other Comprehensive Income.

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Statement of Financial Position

As at 30 June 2017

21

Note 30 June 2017 30 June 2016 $ $ Current assets Cash and cash equivalents 7 1,159,789 3,674,697 Trade and other receivables 8 31,560 62,665 Prepayments 9 48,694 15,939 Inventories 10 14,445 18,000 Total current assets 1,254,488 3,771,301 Non-current assets Other financial assets 11 37,500 42,900 Property, plant and equipment 12 34,021 28,131 Intangible assets-application development costs 13 1,552,629 875,438 Total non-current assets 1,624,150 946,469 Total assets 2,878,638 4,717,770 Current liabilities Trade and other payables 14 299,523 203,027 Employee leave liabilities 15 96,531 25,018 Total current liabilities 396,054 228,045 Total liabilities 396,054 228,045 Net Assets

2,482,584

4,489,725

Equity Issued capital 16 7,212,356 7,187,044 Equity compensation reserve 17 157,156 - Accumulated losses 18 (4,886,928) (2,697,319) Total Equity

2,482,584

4,489,725

The notes to the financial statements form part of this Statement of Financial Position.

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Statement of Changes in Equity

For the financial year ended 30 June 2017

22

Issued capital Accumulated losses

Equity compensation

reserve

Total

$ $ $ $

At 1 July 2015 1,793,270 (656,666) - 1,136,604 Net loss for the year - (2,040,653) - (2,040,653) Other comprehensive income - - - - Comprehensive loss for the year - (2,040,653) - (2,040,653 Transactions with owners:

Shares issued 6,000,000 - - 6,000,000 Capital raising costs (606,226) - - (606,226)

At 30 June 2016

7,187,044

(2,697,319)

-

4,489,725

Issued capital Accumulated losses

Equity compensation

reserve

Total

$ $ $ $

At 1 July 2016 7,187,044 (2,697,319) - 4,489,725 Net loss for the year - (2,189,609) - (2,189,609) Other comprehensive income - - - - Comprehensive loss for the year - (2,189,609) - (2,189,609) Transactions with owners:

Shares issued - - - - Capital raising costs - - - -

Share based payments Suppliers 25,312 - - 25,312 Employees - - 157,156 157,156

At 30 June 2017

7,212,356

(4,886,928)

157,156

2,482,584

The notes to the financial statements form part of this Statement of Changes in Equity.

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Statement of Cash Flows

For the financial year ended 30 June 2017

23

Note Year Ended

30 June 2017

Year Ended

30 June 2016 $ $ Cash flows from operating activities

Other income 91,355 61,371 Research & Development tax incentive 636,353 70,136 Interest received 59,917 91,316 Interest paid (2,295) (422) Payments to suppliers and employees (2,457,137) (1,811,336) Payments for brand development and patents (142,797) (344,683)

Net cash flows used in operating activities 7 (1,814,604) (1,933,618) Cash flows from investing activities

Payments for security deposits 5,400 (5,400) Payments for property, plant and equipment (18,071) (29,086) Payments for application development costs (687,633) (797,328)

Net cash flows used in investing activities (700,304) (831,814) Cash flows from financing activities

Proceeds from the issue of shares - 6,000,000 Payments for share issue and initial public offer costs - (462,453)

Net cash flows from financing activities - 5,537,547 Net (decrease) / increase in cash assets (2,514,908) 2,772,115 Cash at the beginning of the financial year/period 7 3,674,697 902,582 Cash at the end of the financial year/period

7

1,159,789

3,674,697

The notes to the financial statements form part of this Statement of Cash Flows.

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Notes to the Financial Statements

For the financial year ended 30 June 2017

24

Note 1 Summary of Significant Accounting Policies

(a) Basis of preparation of financial report

These financial statements are general purpose financial statements, which have been prepared in accordance with requirements of the Corporations Act 2001 and comply with other requirements of the law.

The accounting policies below have been consistently applied to all of the periods presented unless otherwise stated.

The financial statements have been prepared on a historical cost basis, except for available for sale investments and derivative financial instruments which have been measured at fair value. Cost is based on the fair values of consideration given in exchange for assets.

The financial statements are presented in Australian dollars.

These financial statements have been prepared on the going concern basis which contemplates the continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business. At 30 June 2017 the Company has net tangible assets $929,955 (2016: $3,614,287). The Company is expecting a significant Research & Development Tax payment (2016: $636,353) to be received for the financial year 2017. In addition, under the joint venture with Gold Quay Capital Pte Ltd the Company will be receiving an upfront licence fee of $1.5m in the short term with a further $0.5m to be received in due course.

The financial report of the Company was authorised for issue in accordance with a resolution of Directors on 28th September 2017.

Statement of Compliance The financial report of MyFiziq Limited complies with Australian Accounting Standards, which include Australian Equivalents to International Financial Reporting Standards (AIFRS), in their entirety. Compliance with AIFRS ensures that the financial report also complies with International Financial Reporting Standards (IFRS) in their entirety. MyFiziq Limited is a for profit entity for the purpose of preparing the financial statements.

Material accounting policies adopted in the presentation of these financial statements are presented below:

(b) Income tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Deferred income tax is provided on all temporary differences at reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except:

• when the deferred income tax liability arises from the initial recognition of goodwill or of 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 profit nor taxable profit or loss; or

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

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except:

• when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or

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Notes to the Financial Statements

For the financial year ended 30 June 2017

25

Note 1 Summary of Significant Accounting Policies (continued)

(b) Income tax (continued)

• when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement of profit or loss and other comprehensive income.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

(c) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense.

Receivables and payables are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing and financing activities that are recoverable from or payable to the ATO are classified as operating cash flows.

(d) Impairment of tangible and intangible assets other than goodwill

The company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset’s value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease).

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Notes to the Financial Statements

For the financial year ended 30 June 2017

26

Note 1 Summary of Significant Accounting Policies (continued)

(d) Impairment of tangible and intangible assets other than goodwill (continued)

An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimate used to determine the assets recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in previous years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such reversal the depreciation charge is adjusted in future periods to allocate the assets revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

(e) Impairment of financial assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease).

(f) Intangible assets

An intangible asset arising from externally acquired intellectual property and development expenditure on an internal project is recognised only when the Company can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible asset during its development. Following the initial recognition, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses.

The amortisation method and useful life 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.

(g) Revenue and other income

Revenue is measured at the fair value of the consideration received or receivable and is recognised when it is probable that the economic benefit will flow to the Company. Amounts disclosed as revenue are net of returns, trade allowances and duties and taxes paid.

i. Sale of goods Revenue from sale of goods is recognised when the risks and rewards of the ownership of goods are transferred to the customer. This occurs upon delivery of the goods. ii. Services and rental Revenue from a contract to provide services or rental is recognised as and when the service or rental is provided. Amounts billed in advance are recorded as a current liability until such time as the service is performed.

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Notes to the Financial Statements

For the financial year ended 30 June 2017

27

Note 1 Summary of Significant Accounting Policies (continued)

iii. Interest received Interest income is recognised when it is probable that the economic benefits will flow to the Company and the amount of revenue can be reliably measured.

All revenue is stated net of the amount of goods and services tax.

(h) Cash and cash equivalents

Cash and short-term deposits in the statement of financial position comprise cash at bank and in hand. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. (i) Trade and other receivables

Trade receivables, which generally have 30–90 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An allowance for doubtful debts is made when there is objective evidence that the Company will not be able to collect the debts. Bad debts are written off when identified. (j) Inventories

Inventories are valued at the lower of cost and net realisable value. Net realisable value represents the estimated selling price less all estimated costs of completion and costs necessary to make the sale. (k) Property, Plant and Equipment

Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. The carrying amount of plant and equipment is reviewed annually to ensure it is not in excess of the recoverable amount from these assets.

Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows:

Class of Asset Useful Life Office Equipment 3 – 5 years Furniture & Fixtures 5 – 7 years

The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end. (l) Trade and other payables

Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the Company prior to the end of the financial period that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services. (m) Issued capital

Ordinary shares are classified as equity. 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.

Performance shares are classified as equity and are convertible into fully paid ordinary shares of the Company on successful achievement of certain predetermined key performance indicators. Refer to note 16 for details of key performance indicators applying to performance shares currently on issue.

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Notes to the Financial Statements

For the financial year ended 30 June 2017

28

Note 1 Summary of Significant Accounting Policies (continued)

(n) Share Based Payments

Equity Settled Transactions:

The Company provides benefits to employees (including senior executives) of the Company in the form of share based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).

The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value of Options is determined by using an appropriate valuation model. Share rights are valued at the underlying market value of the ordinary shares over which they are granted.

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the underlying Shares (market conditions) if applicable.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period).

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects: (i) the extent to which the vesting period has expired; and (ii) the Company’s best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The income statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition.

If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification that increases the total fair value of the share based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.

If an equity-settled award is cancelled, the cumulative expense recognised in respect of that award is transferred from its respective reserve to accumulated losses. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled award and new awards are treated as if they were a modification of the original award, as described in the previous paragraph.

(o) Critical accounting estimates and judgements

The preparation of financial reports requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates.

Estimation of useful life of assets

The Company determines the estimated useful lives and related depreciation and amortisation charges for its finite life intangible assets. The useful lives could change significantly as a result of technical innovation or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

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Notes to the Financial Statements

For the financial year ended 30 June 2017

29

Note 1 Summary of Significant Accounting Policies (continued)

(p) Adoption of new and revised accounting standards

In the financial year ended 30 June 2017, the Company has reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for annual reporting periods beginning on or after 1 July 2016. It has been determined by the Company that, there is no impact, material or otherwise, of the new and revised standards and interpretations on its business and therefore no change is necessary to Company accounting policies.

The Company has also reviewed all new Standards and Interpretations that have been issued but are not yet effective for the financial year ended 30 June 2017. As a result of this review the Directors have determined that other than the requirement in AASB 16 Leases to capitalise operating leases (including the lease of business premises which the Company occupies), there is no impact, material or otherwise, of the new and revised Standards and Interpretations on its business and, therefore, no change necessary to Company accounting policies.

Note 2 Segment Information

The Company has identified its operating segments based on the internal reports that are reviewed and used by the board of directors in assessing performance and determining the allocation of resources.

Reportable segments disclosed are based on aggregating operating segments, where the segments have similar characteristics. The Company’s sole activity is mobile application and technology development wholly within Australia, therefore it has aggregated all operating segments into the one reportable segment being technological development.

The reportable segment is represented by the primary statements forming these financial statements.

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Notes to the Financial Statements

For the financial year ended 30 June 2017

30

Year ended

30 June 2017

Year ended

30 June 2016 $ $

Note 3 Revenue and Expenses

Loss for the period includes the following specific income and expenses:

Income: Rental income 55,555 59,075 Dr Katherine consultancy income 31,958 - Sponsorship income 2,918 -

90,431 59,075

Operating Expenses:

Office rent 109,681 182,597 Website development 1,303 78,543 Non-executive directors’ fees 100,000 104,110 Legal expenses 22,010 19,495 Travel & accommodation 205,612 104,166

438,606 488,911

Employee expenses:

Salaries and wages 585,439 350,994 Director salary and consulting 480,886 302,200 Defined contribution superannuation 103,071 72,229 Consultant expenses 79,113 240,000 Share based payments expense (Note 17) 157,156 - Payroll tax and insurances 79,804 16,594 Other employment expenses 129,584 33,182

1,615,053 1,015,199

Note 4 Income Tax

a) Income tax expense Current income tax:

Current income tax charge (benefit) (703,777) (613,165) Current income tax not recognised 703,777 613,165

Research and development tax concession (636,353) (70,136) Deferred income tax:

Relating to origination and reversal of timing differences 1,291,911 886,872 Deferred income tax benefit not recognised (1,291,911) (886,872)

Income tax benefit reported in the Statement of profit or loss and other comprehensive income (636,353) (70,136)

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Notes to the Financial Statements

For the financial year ended 30 June 2017

31

Year ended 30 June 2017

Year ended

30 June 2016 $ $

Note 4 Income Tax (continued)

b) Reconciliation of income tax expense to prima facie tax payable

Loss from continuing operations before income tax expense (2,825,962) (2,110,789)

Tax at the Australian rate of 27.5% (2016: 30%) (777,140) (633,237)

Capital raising costs claimed (39,431) (43,016) Non-deductible expenses 57,470 56,855 Research and development tax concession (636,353) (70,136) Unused tax losses and temporary differences not recognised as deferred tax assets 759,101 619,398

Tax (benefit)/expense (636,353) (70,136)

c) Deferred tax – Statement of Financial Position Liabilities

Accrued income (128) (3,020) Prepaid expenses (13,391) (4,782)

(13,519) (7,802) Assets

Revenue losses available to offset against future taxable income

1,151,176

724,285

Accrued expenses and leave provisions 31,083 14,823 Deductible equity raising costs 103,171 155,566

1,285,430 894,674

Net deferred tax asset 1,271,911 886,872

Deferred tax assets have been recognised to the extent that they extinguish deferred tax liabilities of the Company as at the reporting date.

Net deferred tax assets have not been recognised, in either reporting period, in respect of amounts in excess of deferred tax liabilities.

The deferred tax benefit of tax losses not brought to account will only be obtained if: (i) The Company derives future assessable income of a nature and an amount sufficient to enable the benefit

from the tax losses to be realised; (ii) The Company continues to comply with the conditions for deductibility imposed by tax legislation; and (iii) No changes in tax legislation adversely affect the Company realising the benefit from the deduction of the

losses.

All unused tax losses of $4,186,095 were incurred by Australian entities.

.

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Notes to the Financial Statements

For the financial year ended 30 June 2017

32

Year ended 30 June 2017

$

Year ended

30 June 2016 $

Note 5 Loss per Share

a) Basic loss per share Loss attributable to ordinary equity holders of the Company (cents) (2.8) (2.7)

b) Diluted loss per share Loss attributable to ordinary equity holders of the Company (cents) (2.8) (2.7)

c) Loss used in calculation of basic and diluted loss per share

$

$ Loss after tax from continuing operations (2,189,609) (2,040,653)

d) Weighted average number of shares used as the denominator

No.

No. Weighted average number of shares used as the denominator in calculating basic and dilutive loss per share

78,676,066

75,361,148

Note 6 Dividends

No dividends were paid or proposed during the financial years ended 30 June 2017 and 30 June 2016. The Company has no franking credits available as at 30 June 2017 and 2016.

2017

$

2016

$ Note 7 Cash and Cash Equivalents

Cash at bank1 459,660 674,697 Deposits at call2 700,129 3,000,000

1,159,789 3,674,697

1 Cash at bank earns interest at floating rates based on daily deposit rates. 2 Short term deposits are made for varying periods of between 3 to 6 months depending upon the immediate cash requirements of the Company, and earn interest at the respective short term interest rates.

At 30 June 2017 and 30 June 2016 the Company had no undrawn committed borrowing facilities.

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Notes to the Financial Statements

For the financial year ended 30 June 2017

33

Year ended

30 June 2017 $

Year ended

30 June 2016 $

Note 7 Cash and Cash Equivalents (continued)

Reconciliation to the Statement of Cash Flows:

For the purposes of the Statement of Cash Flows, cash and cash equivalents comprise cash on hand and at bank and investments in money market instruments, net of any outstanding bank overdrafts.

Cash and cash equivalents as shown in the Statement of Cash Flows is reconciled to the related items in the Statement of Financial Position as follows:

Cash and cash equivalents 1,159,789 3,674,697

Non-cash financing and investing activities:

During the year ended 30 June 2017, 538,555 fully paid ordinary shares were issued under a Consultancy Agreement with Sensape GmbH of Germany (Sensape). Sensape provided labour services for application development (2016: Nil).

Cash balances not available for use:

There are no amounts included in cash and cash equivalents not available for use as at 30 June 2017 (30 June 2016: Nil).

Reconciliation of loss after tax to net cash outflow from operating activities:

Loss from ordinary activities after income tax

(2,189,609)

(2,040,653)

Adjustments for non-cash items: Depreciation 13,850 7,074 Share based payments expense 157,156 -

Movement in assets and liabilities:

Decrease/(increase) in prepaid expenses (32,755) 2,981 Decrease/(increase) in inventories 3,555 (18,000) Decrease/(increase) in other receivables 16,515 8,941 Increase in employee leave provisions 71,513 21,468 Increase in trade and other payables 145,171 84,571

Net cash flow used in operating activities (1,814,604) (1,933,618)

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Notes to the Financial Statements

For the financial year ended 30 June 2017

34

2017 $

2016 $

Note 8 Trade and Other Receivables

Current assets

GST receivable 29,071 48,597 Other receivables 2,025 4,000 Accrued income 464 10,068

31,560 62,665

The Company has no trading activity and as such has no trading receivables. The Company does not consider any of its current receivables to be subject to impairment.

2017 $

2016 $

Note 9 Prepayments

Current assets

Prepaid lease costs 8,712 2,933 Prepaid insurance costs 27,920 13,006 Prepaid patent costs 12,062 -

48,694 15,939

Note 10 Inventories

Current assets

Finished goods – Dr Kat cookbooks - at cost 14,445 18,000

In the financial year inventories of $3,555 (2016: nil) was recognised as an expense during the year.

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Notes to the Financial Statements

For the financial year ended 30 June 2017

35

2017

$

2016

$

Note 11 Other Financial Assets

Non-current assets

Security Bonds and Deposits:

Balance at the start of the financial year 42,900 37,500 Security deposits (refunded)/paid during the financial year (5,400) 5,400

Balance at the end of the financial year 37,500 42,900

A security deposit of $37,500 is in place in respect of the lease on the Company’s offices. Refer note 20.

Note 12 Property, Plant and Equipment

Carrying values Office Equipment: Cost 41,421 23,743 Depreciation (16,444) (5,145)

24,977 18,598 Fixtures and fittings: Cost 13,524 11,462 Depreciation (4,480) (1,929)

9,044 9,533

34,021 28,131

Reconciliation of movements Office Equipment: Opening net book value 18,598 - Additions 17,678 23,743 Depreciation (11,299) (5,145) Closing net book value 24,977 18,598 Fixtures and Fitting: Opening net book value 9,533 5,722 Additions 2,062 5,740 Depreciation (2,551) (1,929) Closing net book value 9,044 9,533

34,021 28,131

No assets included in property, plant and equipment have been pledged as security in respect of liabilities. For

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Notes to the Financial Statements

For the financial year ended 30 June 2017

36

2017

$

2016

$

Note 13 Intangible assets – Application Development Costs

Balance at the start of the financial year 875,438 65,425 Application development costs incurred during the year 677,191 810,013

Balance at the end of the financial year 1,552,629 875,438

The recoupment of costs carried forward in relation to intangible assets is dependent upon the successful development or commercial exploitation or sale of the application technology.

Note 14 Trade and other payables

Current liabilities

Trade payables 65,861 56,678 Accrued expenses 16,500 24,394 Employment related payables 217,162 121,955 299,523 203,027

Trade payables are non-interest bearing and normally settled on 30 day terms. See note 19 for financial instrument disclosures relating to trade and other payables.

Note 15 Employee leave liabilities

Current liabilities

Annual leave liability 96,531 25,018

Note 16 Issued Capital

a) Ordinary shares The Company is a public company limited by shares. The Company was incorporated in Perth, Western Australia. The Company’s shares are limited whereby the liability of its members is limited to the amount (if any) unpaid on the shares respectively held by them.

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

Ordinary shares have no par value. There is no limit to the authorised share capital of the Company.

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Notes to the Financial Statements

For the financial year ended 30 June 2017

37

Note 16 Issued Capital (continued)

2017 2016 2017 2016 No. No. $ $ b) Share capital Issued capital-ordinary shares 79,038,555 78,500,000 7,212,056 7,186,744 Issued capital-performance shares 30,000,000 30,000,000 300 300 Issued share capital 109,038,555 108,500,000 7,212,356 7,187,044

c) Share movements during the year – ordinary shares

Balance at the start of the financial year/period

78,500,000

48,500,000

7,186,744

1,792,970

Share placement @ $0.20 - 30,000,000 - 6,000,000 Share issue – Sensape GmbH 538,555 25,312 Less share issue costs - - - (606,226) Balance at the end of the financial year/period

79,038,555

78,500,000

7,212,056

7,186,744

d) Share movements during the year – performance shares

Balance at the start of the financial year/period

30,000,000

30,000,000

300

300

Class A performance shares issued @ $0.00001

-

-

-

-

Class B performance shares issued @ $0.00001

-

-

-

-

Balance at the end of the financial year/period

30,000,000

30,000,000

300

300

Performance Shares are convertible into fully paid ordinary shares in the Company, within five years of the date of issue (2 October 2014), pursuant to satisfaction of the following performance milestones:

Class A Performance Share Milestone will be taken to have been satisfied upon the Company’s gross revenue exceeding $1,250,000 per quarter for four consecutive quarters, where a quarter is defined as a period of three consecutive calendar months.

Class B Performance Share Milestone will be taken to have been satisfied upon the Company achieving Earnings Before Interest Tax Depreciation and Amortisation of not less than $1,250,000 per quarter for four consecutive quarters, where a quarter is defined as a period of three consecutive calendar months.

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Notes to the Financial Statements

For the financial year ended 30 June 2017

38

Note 17 Share Based Payments

(i) Options The Company adopted an Incentive Option Plan Following Shareholder approval in October 2016. Options over unissued share are issued at the discretion of the Board.

a) Options granted, exercised and lapsed during the year

During the reporting period the following options were granted: Date granted Number of options

granted Exercise price

(cents) Vesting date Expiry date

21 Dec 2016 1,000,000 20 30 Sept 2017 30 Sept 2020 21 Dec 2016 2,750,000 10 31 Dec 2017 31 Dec 2020 21 Dec 2016 1,000,000 30 30 Sept 2018 30 Sept 2021 21 Dec 2016 500,000 10 26 Oct 2018 31 Dec 2020 21 Dec 2016 2,000,000 10 31 Dec 2018 31 Dec 2021 21 Dec 2016 1,000,000 40 30 Sept 2019 30 Sept 2022 21 Dec 2016 500,000 10 26 Oct 2019 30 Dec 2021 21 Dec 2016 1,000,000 50 30 Sept 2020 30 Sept 2023 21 Dec 2016 1,000,000 60 30 Sept 2021 30 Sept 2024

Total 10,750,000

During the reporting period the following options were cancelled due to the holder ceasing to be an eligible participant under the Incentive Option Plan:

Date granted Number of options Cancelled

Exercise price (cents)

Vesting date Expiry date

21 Dec 2016 1,000,000 10 31 Dec 2017 31 Dec 2020 21 Dec 2016 750,000 10 31 Dec 2018 31 Dec 2021

Total 1,750,000

No options vested or were exercised during the financial year.

b) Options on issue at balance date

The number of options outstanding over unissued ordinary shares at 30 June 2017 is 9,000,000 as follows:

Date granted Number of options granted

Exercise price (cents)

Vesting date Expiry date

21 Dec 2016 1,000,000 20 30 Sept 2017 30 Sept 2020 21 Dec 2016 1,750,000 10 31 Dec 2017 31 Dec 2020 21 Dec 2016 1,000,000 30 30 Sept 2018 30 Sept 2021 21 Dec 2016 500,000 10 26 Oct 2018 31 Dec 2020 21 Dec 2016 1,250,000 10 31 Dec 2018 31 Dec 2021 21 Dec 2016 1,000,000 40 30 Sept 2019 30 Sept 2022 21 Dec 2016 500,000 10 26 Oct 2019 30 Dec 2021 21 Dec 2016 1,000,000 50 30 Sept 2020 30 Sept 2023 21 Dec 2016 1,000,000 60 30 Sept 2021 30 Sept 2024

Total 9,000,000

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Notes to the Financial Statements

For the financial year ended 30 June 2017

39

Note 17 Share Based Payments (continued)

During the current period the following movements in options over unissued shares occurred:

2017 2017 2016 2016 No. WAEP No WAEP Outstanding at 1 July - - - Granted during the year 10,750,000 $0.240 - - Forfeited/cancelled during the year (1,750,000) $0.100 - - Outstanding at 30 June 9,000,000 $0.267 - - Exercisable at 30 June - - - -

The range of exercise prices for options outstanding at the end of the year was $0.10 to $0.60 (2016: nil).

c) Subsequent to balance date

Subsequent to the reporting date and to the date of signing this report, no options have been granted, exercised or cancelled.

d) Basis and assumptions used in the valuation of options

The 10,750,000 options that were issued during the financial year have been valued and included in the financial statements over the periods that they vest. The share based payments expense for the period of $39,171 (2016: $nil) relates to the fair value of options apportioned over their respective vesting periods.

The options issued during the current reporting period were valued using the Black-Scholes option valuation methodology, as follows:

Date granted Number of options granted

Exercise price

(cents)

Expiry date Risk free interest

rate used

Volatility applied

Value per Option (cents)

21 Dec 2016 1,000,000 20 30 Sept 2020 2.03% 89% 1.0 21 Dec 2016 3,250,000 10 31 Dec 2020 2.03% 89% 1.5 21 Dec 2016 1,000,000 30 30 Sept 2021 2.29% 89% 1.1 21 Dec 2016 2,500,000 10 31 Dec 2021 2.29% 89% 1.8 21 Dec 2016 1,000,000 40 30 Sept 2022 2.29% 89% 1.2 21 Dec 2016 1,000,000 50 30 Sept 2023 2.82% 89% 1.3 21 Dec 2016 1,000,000 60 30 Sept 2024 2.82% 89% 1.5

Historical volatility has been used as the basis for determining expected share price volatility, as it is assumed that this is an indicator of future share price performance, which may not eventuate. A discount of 30% in respect of a lack of marketability has been applied to the Black-Scholes option valuation to reflect the non-negotiability and non-transferability of the unlisted options granted.

e) Purpose of Equity Compensation Reserve

This reserve is used to record the value of equity benefits provided to employees (including directors) and suppliers for services rendered.

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Notes to the Financial Statements

For the financial year ended 30 June 2017

40

Note 17 Share Based Payments (continued)

(ii) Performance Rights The Company adopted an Incentive Performance Rights Plan Following Shareholder approval in February 2017.

a) Performance rights granted, vested and lapsed during the year

During the reporting period the following performance rights were granted: Grant Date No of

Rights Expiry Date

Fair Value per Right at Grant

Date

Vesting

03.03.2017 2,000,000 03.03.2018 $0.046 Subject to various performance criteria 03.03.2017 2,000,000 03.03.2019 $0.046 Subject to various performance criteria 03.03.2017 2,000,000 03.03.2020 $0.046 Subject to various performance criteria 03.03.2017 2,000,000 03.03.2021 $0.046 Subject to various performance criteria 03.03.2017 2,000,000 03.03.2022 $0.046 Subject to various performance criteria 03.03.2017 1,000,000 30.09.2017 $0.046 Subject to various performance criteria 03.03.2017 500,000 30.11.2017 $0.046 Subject to various performance criteria 03.03.2017 500,000 31.01.2018 $0.046 Subject to various performance criteria 03.03.2017 500,000 31.07.2018 $0.046 Subject to various performance criteria Total 12,500,000

No performance rights vested, lapsed or were cancelled during the year and at 30 June 2017 there were 12,500,000 performance rights outstanding.

b) Basis and assumptions used in the valuation of performance rights

The 12,500,000 performance rights that were issued during the financial year have been valued and included in the financial statements over the periods that they vest. The share based payments expense for the period of $117,985 (2016: $nil) relates to the fair value of the performance rights.

The rights were valued using a binomial option pricing model with inputs as follows:

2017 2016 Share price $0.046 - Exercise price Nil - Expected future volatility 90% - Risk free rate * 1.82% – 2.24% -

* The risk free rate is based on the yields of Commonwealth bonds using two, three and five year bonds, based on the period which most closely corresponds to the respective lives of the performance rights.

Note 18 Accumulated Losses

2017 2016 $ $

Balance at the beginning of the financial year (2,697,319) (656,666) Loss for the year (2,189,609) (2,040,653)

Balance at the end of the financial year (4,886,928) (2,697,319)

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Notes to the Financial Statements

For the financial year ended 30 June 2017

41

Note 19 Financial Instruments

The Company has exposure to a variety of risks arising from its use of financial instruments. This note presents information about the Company’s exposure to the specific risks, and the policies and processes for measuring and managing those risks. The Board of Directors has the overall responsibility for the risk management framework and has adopted a Risk Management Policy. (a) Credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from transactions with customers and investments. Trade and other receivables The nature of the business activity of the Company does not yet result in trading receivables. The receivables that the Company does experience through its normal course of business are short term and the most significant recurring by quantity is currently receivable from the Australian Taxation Office. The risk of non-recovery of receivables from this source is considered to be negligible. Cash deposits The Directors believe any risk associated with the use of predominantly only one bank is addressed through the use of at least an A-rated bank as a primary banker and by the holding of a portion of funds on deposit with alternative A-rated institutions. Except for this matter the Company currently has no significant concentrations of credit risk.

The Directors do not consider that the Company’s financial assets are subject to anything more than a negligible level of credit risk, and as such no disclosures are made. (b) Liquidity risk Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

The Company manages its liquidity risk by monitoring its cash reserves and forecast spending. Management is cognisant of the future demands for liquid finance resources to finance the Company’s current and future operations, and consideration is given to the liquid assets available to the Company before commitment is made to future expenditure or investment.

Liquidity risk The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements:

Carrying amount

Contractual cash flows

6 months

or less

6-12 months

1-2 years

2-5 years

More than 5 years

$ $ $ $ $ $ $ 2017 Trade and other payables 299,523 299,523 299,523 - - - - 299,523 299,523 299,523 - - - -

2016

Trade and other payables 203,027 203,027 203,027 - - - - 203,027 203,027 203,027 - - - -

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Notes to the Financial Statements

For the financial year ended 30 June 2017

42

Note 19 Financial Instruments (continued)

(c) Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising any return.

Interest rate risk The Company has significant cash assets which may be susceptible to fluctuations in changes in interest rates. Whilst the Company requires the cash assets to be sufficiently liquid to cover any planned or unforeseen future expenditure, which prevents the cash assets being committed to long term fixed interest arrangements; the Company does mitigate potential interest rate risk by entering into short to medium term fixed interest investments.

The Company does not have any direct contact with foreign exchange or equity risks other than their effect on the general economy.

At the reporting date the interest profile of the Company’s interest-bearing financial instruments was: Carrying value ($)

30 June 2017 $

30 June 2016 $

Fixed rate instruments

Financial assets - - Variable rate instruments Financial assets 1,159,789 3,674,697

Cash flow sensitivity analysis for variable rate instruments A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables remain constant.

Profit or loss Equity 1% 1% 1% 1% increase decrease increase decrease 2017 Variable rate instruments 11,598 (11,598) 11,598 (11,598) 2016 Variable rate instruments 36,747 (36,747) 36,747 (36,747)

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Notes to the Financial Statements

For the financial year ended 30 June 2017

43

Note 19 Financial Instruments (continued)

d) Fair values

Fair values versus carrying amounts The fair values of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position are as follows:

2017 2016 Carrying

amount Fair value Carrying

amount Fair value

$ $ $ $ Cash and cash equivalents 1,159,789 1,159,789 3,674,697 3,674,697 Trade and other receivables 31,560 31,560 62,665 62,665 Trade and other payables (299,523) (299,523) (203,027) (203,027) Net financial assets 891,826 891,826 3,534,335 3,534,335

e) Impairment losses

The Directors do not consider that any of the Company’s financial assets are subject to impairment at the reporting date.

No impairment expense or reversal of impairment charge has occurred during the reporting period.

Note 20 Commitments 2017 2016 $ $

a) Operating lease commitments: Due within 1 year 81,120 78,000 Due after 1 year but not more than 5 years 84,365 165,485 Due after more than 5 years - -

165,485 243,485

The Company has entered into a lease for its principal place of business at Unit 5, 71-73 South Perth Esplanade in Western Australia (Lease). The material terms of the Lease are as follows: 1. The term of the Lease is four years (expiring on 30 June 2019), with the option to extend for a further

term of 4 years. The rent for the first year of the Lease is $6,250 per month. 2. The Landlord allowed the Company early access to the premises with rent and outgoings payable from 1

July 2015. 3. On each anniversary of the Lease commencement date, the rent will be increased by a fixed rate of 4%.

The rent is subject to a rent review prior to the commencement of any extended term, being the greater of the market rent and CPI as at the date of review.

4. The Company must pay all costs for services and rates in respect of the premises (including electricity, gas, water, council rates and any other services provided to the premises), plus a contribution to the operating expenses of the Landlord for the premises (including cleaning and maintenance, security, and management expenses).

5. The Lease is secured by a cash bond in favour of the Landlord for the amount of $37,500. The Lease otherwise contains terms considered standard for a document of this nature.

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Notes to the Financial Statements

For the financial year ended 30 June 2017

44

Note 20 Commitments (continued)

b) Finance lease commitments:

The Company has no finance lease commitments contracted for as at 30 June 2017 (30 June 2016: Nil).

c) Capital commitments The Company has no capital commitments contracted for as at 30 June 2017 (30 June 2016: Nil).

Note 21 Contingencies

a) Contingent liabilities

There are no material contingent liabilities at the reporting date.

b) Contingent assets

There are no material contingent assets at the reporting date.

Note 22 Key Management Personnel

(a) Directors and key management personnel

The following persons were directors of MyFiziq Limited during the current financial year:

Mr Peter Wall Non-Executive Chairman Mr Vlado Bosanac Executive Director and CEO (appointed 17 October 2016) Dr Katherine Iscoe Executive Director Mr Evan Cross Executive Director and CFO (resigned 31 October 2016) Dr Cyril Donnelly Non-Executive Director (resigned 31 July 2017) There were no other persons employed by or contracted to the Company during the financial year, having responsibility for planning, directing and controlling the activities of the Company, either directly or indirectly.

(b) Key management personnel compensation Details of key management personnel remuneration are contained in the Audited Remuneration Report in the

Directors’ Report. A summary of total compensation paid to key management personnel during the year/period is as follows:

Year ended

30 June 2017

Year ended

30 June 2016 $ $ Total short-term employment benefits 580,886 385,905 Total share based payments 68,470 - Total post-employment benefits 49,484 36,660 698,840 422,565

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Notes to the Financial Statements

For the financial year ended 30 June 2017

45

Note 23 Related Party Disclosures

During the year 30 June 2017, the Company paid $23,361 to Steinepreis Paganin, an entity associated with Mr Peter Wall, for legal services. All services provided by Steinepreis Paganin were done so on an arm’s length basis and on normal commercial terms. No amounts were owing to Steinepreis Paganin as at 30 June 2017.

Other than the key management personnel related party disclosure in the Remuneration Report and in Note 22, there were no related party transactions to report for the financial year ended 30 June 2017.

Note 24 Events Subsequent to the Reporting Date

On 5 July 2017 due diligence required under a binding term sheet with Gold Quay Capital Pte Ltd, Singapore (GQC) was completed.

On 31 July 2017 Dr Cyril Donnelly resigned as Non-Executive Director of the Company in order to take up a key executive role with the joint venture with Gold Quay Capital Pte Limited of Singapore.

Other than the above, there has not arisen in the interval between the end of the reporting period and the date of this report, any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company to affect substantially the operations of the Company, the results of those operations or the state of affairs of the Company in subsequent financial years.

On 20 September 2017 the Company entered into a convertible loan agreement with NCMAO Investments Pty Ltd as trustee for NCMAO Investments Trust (NCMAO). Under the terms of the facility, the Company may draw down up to $2 million at any time prior to 31 December 2019, at which time the facility is repayable. If the loan has not been repaid at such time, any amount owing (including interest) will be converted to shares at an issue price the greater of $0.30 and the 14 trading day volume weighted average price (VWAP) of the Company’s shares at 31 December 2019. The facility attracts interest at 8% per annum.

Note 25 Auditor’s Remuneration

Total remuneration paid or payable to auditors during the financial year/period: 2017 2016 $ $ Audit and review of the Company’s financial statements

24,000

24,000

Other services - -

Total 24,000 24,000

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Directors’ Declaration

46

In the opinion of the directors of MyFiziq Limited (the ‘Company’):

a. The accompanying financial statements and notes are in accordance with the Corporations Act 2001, including:

i. give a true and fair view of the Company’s financial position as at 30 June 2017 and of its performance for the year then ended; and

ii. comply with Australian Accounting Standards, the Corporations Regulations 2001, professional reporting requirements and other mandatory requirements.

b. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

c. The financial statements and notes thereto are in accordance with International Financial Reporting Standards issued by the International Accounting Standards Board.

This declaration has been made after receiving the declarations required to be made to the directors in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2017.

This declaration is signed in accordance with a resolution of the Board of Directors.

DATED at Perth this 28th day of September 2017.

Vlado Bosanac Executive Director and Chief Executive Officer

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1HLB Mann Judd (WA Partnership) ABN 22 193 232 714

Level 4 130 Stirling Street Perth WA 6000 | PO Box 8124 Perth BC WA 6849 | Telephone +61 (08) 9227 7500 | Fax +61 (08) 9227 7533

Email: mailbox@hlbwa.com.au | Website: www.hlb.com.au

Liability limited by a scheme approved under Professional Standards Legislation 47

HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers

INDEPENDENT AUDITOR’S REPORT

To the Members of MyFiziq Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of MyFiziq Limited (“the Company”) which comprises the statement of financial position as at 30 June 2017, the statement of profit or loss and other comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, 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 Company is in accordance with the Corporations Act 2001, including:

a) giving a true and fair view of the Company’s financial position as at 30 June 2017 and of its financial 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 under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (“the Code”) that are relevant to our audit of the financial report in Australia. We have also 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 basis for our opinion.

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

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Key audit matter How our audit addressed the key audit matter

Carrying amount of intangible assets – application

development costs

Note 13 of the financial report

At 30 June 2017, the Company had capitalised $1,552,629 in application development costs in relation to its mobile application technology. In accordance with AASB 136 Impairment of Assets, the Company was required to assess at balance date whether there was any indication that this asset may have been impaired and if any such indication existed, the Company was required to estimate the recoverable amount of the asset.

The result of the Company’s assessment was that it did not consider that there was any indication that this asset may have been impaired at balance date.

Our audit focussed on the Company’s assessment as to whether there was any indication that this asset may have been impaired, as the asset is one of the most significant assets of the Company. We planned our work to address the audit risk that the asset may have been impaired.

Our procedures included but were not limited to the following: We obtained an understanding of the key

processes associated with the Directors’ assessment as to whether there was any indication that this asset may have been impaired at balance date;

We enquired with management, reviewed ASX announcements and reviewed minutes of Directors’ meetings to satisfy ourselves whether any indicators of impairment existed; and

We examined the disclosures made in the financial report.

Information other than the financial report and auditor’s report thereon

The directors are responsible for the other information. The other information comprises the information included in the Company’s annual report for the year ended 30 June 2017, but does not 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 not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report 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 this other 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 a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

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

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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 is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

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

Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

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

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

Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern.

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

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

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably 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 the directors’ report for the year ended 30 June 2017.

In our opinion, the remuneration report of MyFiziq Limited for the year ended 30 June 2017 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 the remuneration report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

HLB Mann Judd

Chartered Accountants

L Di Giallonardo

Partner

Perth, Western Australia

28 September 2017

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51

Pursuant to the Listing Requirements of the Australian Securities Exchange, the shareholder information set out below was applicable as at 27 September 2017. A. Distribution of Equity Securities Analysis of numbers of shareholders by size of holding:

Ordinary Fully Paid Shares

Distribution Number of shareholders Securities held 1 – 1,000 21 1,666 1,001 – 5,000 7 24,678 5,001 – 10,000 75 686,270 10,001 – 100,000 104 4,978,201 More than 100,000 77 73,347,740 Totals 284 79,038,555

There are 47 shareholders holding less than a marketable parcel of ordinary shares.

Class A Performance Shares – Unquoted Class

Distribution Number of shareholders Securities held 1 – 1,000 Nil Nil 1,001 – 5,000 Nil Nil 5,001 – 10,000 Nil Nil 10,001 – 100,000 Nil Nil More than 100,000 5 15,000,000 Totals 5 15,000,000

Holders of more than 20% of Class A Performance Shares:

Holder Number Held % Held MAD SCIENTIST PTY LTD 11,925,000 79.5%

Class B Performance Shares – Unquoted Class

Distribution Number of shareholders Securities held 1 – 1,000 Nil Nil 1,001 – 5,000 Nil Nil 5,001 – 10,000 Nil Nil 10,001 – 100,000 Nil Nil More than 100,000 5 15,000,000 Totals 5 15,000,000

Holders of more than 20% of Class B Performance Shares:

Holder Number Held % Held MAD SCIENTIST PTY LTD 11,925,000 79.5%

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B. Substantial Shareholders

An extract of the Company’s Register of Substantial Shareholders (who hold 5% or more of the issued capital) is set out below:

Issued Ordinary Shares

Shareholder Name Number of shares % of shares MAD SCIENTIST PTY LTD 16,900,000 21.38% MR NICHOLAS JOHN BLAIR PROSSER 4,918,472 6.22% NATIONAL NOMINEES LIMITED <DB A/C> 4,184,084 5.29%

C. Twenty Largest Shareholders The names of the twenty largest holders of the quoted class of shares are listed below:

Ordinary Shares Shareholder Name Number of shares % of Shares MAD SCIENTIST PTY LTD 16,900,000 21.38% MR NICHOLAS JOHN BLAIR PROSSER 4,918,472 6.22% NATIONAL NOMINEES LIMITED <DB A/C> 4,184,084 5.29% BNP PARIBAS NOMINEES PTY LTD <IB AU NOMS RETAILCLIENT

3,099,828 3.92%

JV CORPORATE PTE LTD 3,000,000 3.80% SANTE HOLDINGS PTY LTD <DEC FAMILY A/C> 3,000,000 3.80% MR JOHN ZACCARIA <THE ZACCARIA SHARE A/C> 2,725,000 3.45% PHEAKES PTY LTD 2,500,000 3.16% FOSTER STOCKBROKING NOMINEES PTY LTD <NO 1 ACCOUNT> 2,260,000 2.86% SOHEILA TAEBI 2,100,000 2.66% IFM PTY LIMITED 2,066,667 2.61% HARLIN PTY LTD <DOUGLAS SUPERANNUATION A/C> 1,869,841 2.37% MR EVAN GEORGE CROSS & MRS DONNA SHARON CROSS <DEC

1,500,000 1.90%

MR JOANNE EDGAR & MS PAUL CROSSIN <DYNASYNC SUPER

1,156,936 1.46% BOND STREET CUSTODIANS LIMITED <HARSUT - V24271 A/C> 1,085,000 1.37% GOLD RESOURCES LIMITED 1,066,667 1.35% BANNABY INVESTMENTS PTY LTD <BANNABY SUPER FUND

1,066,666 1.35%

MR BRENDON SIMON DAVIS & MRS LISA DAVIS <JADE SUPER

1,000,000 1.27% EQUITAS NOMINEES PTY LTD <3069550 A/C> 1,000,000 1.27% MR NEVILLE MALEY & MRS ERICA MALEY 974,000 1.23% Total 57,473,161 72.72%

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D. Unquoted Options and Performance Rights

Options:

No of Options Exercise Price Expiry Date No of Holders 1,000,000 $0.20 30 September 2020 1 2,250,000 $0.10 31 December 2020 2 1,000,000 $0.30 30 September 2021 1 1,750,000 $0.10 31 December 2021 2 1,000,000 $0.40 30 September 2022 1 1,000,000 $0.50 30 September 2023 1 1,000,000 $0.60 30 September 2024 1

Performance Rights:

No of Performance Rights Expiry Date No of Holders 1,000,000 30 September 2017 1 500,000 30 November 2017 1 500,000 31 January 2018 1 500,000 31 July 2018 1

2,000,000 3 March 2018 1 2,000,000 3 March 2019 1 2,000,000 3 March 2020 1 2,000,000 3 March 2021 1 2,000,000 3 March 2022 1

E. Voting Rights

Ordinary Fully Paid Shares In accordance with the Company’s Constitution, voting rights in respect of ordinary shares are on a show of hands at a meeting of shareholders, whereby each member present in person or by proxy shall have one vote and upon a poll, each share will have one vote.

Class A and Class B Performance Shares Holders of Class A and Class B Performance Shares shall have no right to vote on any resolutions proposed at a meeting of shareholders, subject to the Corporations Act. Unlisted Options and Performance Rights Holders of unlisted options and performance rights shall have no right to vote on any resolutions proposed at a meeting of shareholders, unless and until the option or performance right is exercised and ordinary shares are held.

F. Restricted Securities

The Company has no restricted securities on issue at 27 September 2017:

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