ARTRYA LIMITED — Capital/Financing Update 2021

Nov 23, 2021

Supplementary Prospectus

Artrya Limited (ACN 624 005 741)

Important information

This supplementary prospectus is dated 10 November 2021 ( Supplementary Prospectus ) and was lodged with the Australian Securities and Investments Commission ( ASIC ) on that date. It supplements a prospectus dated 15 October 2021 issued by Artrya Limited (ACN 624 005 741) ( Artrya ) offering fully paid ordinary shares in Artrya ( Prospectus ).

This Supplementary Prospectus must be read together with the Prospectus. It is an important document and should be read in its entirety. If you do not understand this document, you should seek professional advice from your accountant, financial adviser, stockbroker, lawyer or other professional adviser.

A term with a defined meaning in the Prospectus has the same meaning in this Supplementary Prospectus.

This Supplementary Prospectus will be issued with the Prospectus as an electronic prospectus, copies of which can be downloaded from the website of the Company at https://www.artrya.com/investor-centre/.

None of ASIC, ASX or their respective officers take any responsibility for the contents of this Prospectus or the merits of the Offer.

Other than the changes set out below, all other details in the Prospectus remain unchanged.

The Company has received very strong support from investors (including major institutional investors) that has resulted in a significant amount of oversubscriptions in relation to the Offer. The Directors believe that the changes in this Supplementary Prospectus are not materially adverse from the point of view of an investor. Accordingly, no action needs to be taken if you have already subscribed for new Shares under the Prospectus.

Purpose of this document

The purpose of this Supplementary Prospectus is to provide additional information to investors as set out below following feedback from ASX.

ASX has provided confirmation that the terms of the Company’s Performance Options (as defined below) are appropriate and equitable for the purpose of ASX Listing Rule 6.1. ASX has also granted a waiver from ASX Listing Rule 1.1 condition 12 to the extent necessary to permit the Company to have the Performance Options (each of which have a nominal exercise price) on issue.

Amendments to the Prospectus

(a) New Attachment 5 ( Independent Expert’s Report )

A new Attachment 5 is included in the Prospectus which contains an independent expert’s report ( IER ), as annexed as Annexure 1 to this Supplementary Prospectus.

The IER is required under ASX Guidance Note 19 as the performance securities on issue at the date of admission to quotation on ASX will convert, in aggregate, if the applicable milestones are achieved, to greater than 10% of the number of ordinary shares the Company will have on issue at the date of its admission to quotation on ASX.

The Company’s performance securities on issue at the date of admission to quotation on ASX will convert, in aggregate, if the applicable milestones are achieved, to 9,286,752 Shares, being 11.89% of the number of Shares the Company will have on issue at the

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date of its admission to quotation on ASX. Details of those performance securities are set out in the table in section (b)(1) of this Supplementary Prospectus.

The Company considers that the grant of the performance securities has served an important role in allowing the Company to achieve critical milestones since the date of grant. The effectiveness of the grant of the performance securities has been evidenced by the rapid development of the Company since its incorporation and the retention of the Company’s key management personnel.

The IER opines on whether those performance securities are fair and reasonable to Shareholders who are not holders of performance securities. The IER has concluded that certain performance securities are fair and reasonable and other performance securities are not fair but reasonable to non-participating shareholders.

Where an opinion of " not fair " has been concluded, this is because, even though each of the milestones would likely result in value accretion in the opinion of the Independent Expert, the Independent Expert is unable to quantify the extent of the value uplift nor the timing of achieving it. Because of this inability to quantify uplift and timing, by default, those performance securities are considered to be "not fair".

Please refer to the IER contained in Annexure 1 of this Supplementary Prospectus for further information.

(b) Section 8.4(I) ( Former Employee Option Plan )

Following feedback from ASX and in order to comply with ASX Guidance Note 19, the Company has entered into side letters with each Existing Optionholder to clarify certain terms and vesting conditions, and amend certain expiry dates attaching to the Options. The terms of the Options, as amended, are set out in the table and corresponding paragraphs below. No additional Options have been issued or agreed to be issued.

Accordingly, the table set out in Section 8.4(I) of the Prospectus and the words “Options issued under the Former EOP are set out in the table below” is deleted and replaced with the following:

Options issued under and prior to the Former EOP are set out in the tables in sections (1) and (2) below:

(1) Options — Performance Options

The Options described in the table below are considered “performance securities” for the purposes of ASX Guidance Note 19 ( Performance Options ).

The IER opines on whether the Performance Options are fair and reasonable to Shareholders who are not holders of the Performance Options. As set out in the last column below, the IER has concluded that certain Performance Options are fair and reasonable and other Performance Options are not fair but reasonable to nonparticipating shareholders.

Where an opinion of " not fair " has been concluded, this is because, even though each of the milestones would likely result in value accretion in the opinion of the Independent Expert, the Independent Expert is unable to quantify the extent of the value uplift nor the timing of achieving it. Because of this inability to quantify uplift and timing, by default, those Performance Options are considered to be "not fair".

Please refer to the IER contained in Attachment 5 of this Prospectus for further information.

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Name	Number of	Tranches	Exercise	Expiry		Vesting Conditions	IER
					Grant Date
	Options		Price	Date			conclusion
John Barrington atf BHT Family Trust (Managing Director)	3,000,000	2,000,000	$0.001	25 March 2024	25 March 2019	The Company generating the first sales revenue of any amount from a contracted customer for use of the Software as a Service (SaaS) Salix Coronary Anatomy (SCA) product, as evidenced by the existence of a fully executed customer agreement and as recorded in audited financial statements of the Company, with such revenue being directly attributable to sales of the SCA product to customers.	Not fair but reasonable
		1,000,000				The Company generating the first sales revenue of any amount from a contracted customer for use of the Software as a Service (SaaS) Salix Coronary Anatomy (SCA) product, as evidenced by the existence of a fully executed customer agreement and as recorded in audited financial statements of the Company, with such revenue being directly attributable to sales of the SCA product to customers outside of Australia.	Not fair but reasonable
Erika Konstantopoulo s atf IEMK Family Trust A/C (spouse of John Konstantopoulo s, Executive Director)	3,000,000	2,000,000	$0.001	25 March 2024	25 March 2019	The Company generating the first sales revenue of any amount from a contracted customer for use of the Software as a Service (SaaS) Salix Coronary Anatomy (SCA) product, as evidenced by the existence of a fully executed customer agreement and as recorded in audited financial statements of the Company, with such revenue being directly attributable to sales of the SCA product to customers.	Not fair but reasonable
		1,000,000				The Company generating the first sales revenue of any amount from a contracted customer for use of the Software as a Service (SaaS) Salix Coronary Anatomy (SCA) product, as evidenced by the existence of a fully executed customer agreement and as recorded in audited financial statements of the Company, with such revenue being directly attributable to sales of the SCA product to customers outside of Australia.	Not fair but reasonable
Dr Julien Flack (Chief Technology Officer)	540,000	135,000	$0.075	10 January 2025	10 January 2020	Remain employed with the Company on 31 August 2020 and on or before 31 January 2020 the Company completes delivery of a beta product of Salix Coronary Anatomy (SCA) comprising a report that includes identification of four biomarkers, including perivascular information. This milestone was successfully completed by 31 January 2020 and the Performance Options have vested.1	Fair and reasonable
		135,000				Remain employed with the Company as at 31 December 2021 and on or before 15 February 2021 the Company has completed development of the Salix Coronary Anatomy (SCA) product that has a User Interface, reports Vulnerable Plaque biomarkers Low Attenuating Plaque (LAP), spotty calcification and positive remodelling alpha version Fractional Flow Reserve (FFR). This milestone was successfully completed by 15 February 2021.2 Dr Flack will need to remain employed with Artrya until 31 December 2021 for vesting to occur.	Fair and reasonable
		135,000				Remain employed with the Company as at 31 December 2022 and on or before 31 December 2021 the Company completes delivery of the Salix Coronary Anatomy (SCA) product that includes the display of the following biomarkers that indicate the presence of Vulnerable Plaque: Low Attenuating Plaque (LAP) greater than or equal to 80% accuracy; positive remodelling assessment greater than or equal to 80% accuracy; and, spotty calcification assessment greater than or equal to 80% accuracy. Part of this milestone has already been delivered, being the display of three biomarkers (above) identifying Vulnerable Plaque.3 The threshold accuracy levels are yet to be achieved. Dr Flack will need to remain employed with Artrya until 31 December 2022 for vesting to occur.	Fair and reasonable
		135,000				Remain employed with the Company as at 31 December 2023 and on or before 31 December 2022 the Company has completed development of a patient risk score based on the composite findings of the Salix Coronary Anatomy (SCA) product (principally Vulnerable Plaque but also including calcification and stenosis) and Salix Coronary Flow Fractional Flow Reserve (FFR) measurement. The combination of these data points is to generate a risk score	Not fair but reasonable

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Name	Number of	Tranches	Exercise	Expiry		Vesting Conditions	IER
					Grant Date
	Options		Price	Date			conclusion
						that is superior to the current CAD-RADS score (being an international standardised reporting method for coronary CT angiography).
Jack Joyner (Senior Data Scientist)	220,000	55,000	$0.075	27 November 2025	27 November 2020	Remain employed with the Company as at 31 December 2021 and on or before 28 February 2021 the Company completes development of SCA version 1.1, comprising the User Interface, 3D heart model, calcium score, stenosis and CAD-RADS score, curved and straightened multiplanar reformation (MPR). This milestone was successfully completed by 28 February 2021.4 Mr Joyner will need to remain employed with Artrya until 31 December 2021 for vesting to occur.	Fair and reasonable
		55,000				Remain employed with the Company as at 31 December 2022 and on or before 31 December 2021 the Company completes development of the Salix Coronary Flow (SCF) product. This requires the calculation of the Fractional Flow Reserve (FFR) measurement to determine the ratio between the maximum achievable blood flow in a diseased coronary artery and the theoretical maximum flow in a healthy vessel. The FFR result is to be displayed as part of the Salix User Interface.	Not fair but reasonable
		55,000				Remain employed with the Company as at 31 December 2023 and on or before 15 December 2021 the Company completes delivery of the Salix Coronary Anatomy (SCA) product that includes the display of the following biomarkers that indicate the presence of Vulnerable Plaque: Low Attenuating Plaque (LAP) greater than or equal to 80% accuracy; positive remodelling assessment greater than or equal to 80% accuracy; and, spotty calcification assessment greater than or equal to 80% accuracy. Part of this milestone has already been delivered, being the display of three biomarkers (above) identifying Vulnerable Plaque.5 The threshold accuracy levels are yet to be achieved. Mr Joyner will need to remain employed with Artrya until 31 December 2023 for vesting to occur.	Fair and reasonable
		55,000				Remain employed with the Company as at 31 December 2024 and on or before 15 December 2022 the Company has completed development of a patient risk score based on the composite findings of the Salix Coronary Anatomy (SCA) product (principally Vulnerable Plaque but also including calcification and stenosis) and Salix Coronary Flow Fractional Flow Reserve (FFR) measurement. The combination of these data points is to generate a risk score that is superior to the current CAD-RADS score (being an international standardised reporting method for coronary CT angiography).	Not fair but reasonable
Dr Abdul Rahman Ihdayhid (Medical Technical Officer)	1,226,752	784,384	$0.075	31 December 2025	4 February 2021	Vest immediately.	Fair and reasonable
		442,368	$0.075	31 December 2025	4 February 2021	Vest on 31 December 2021 provided on or before 28 February 2021 the Company has completed development of the Salix Coronary Anatomy (SCA) product that has a User Interface, reports Vulnerable Plaque biomarkers Low Attenuating Plaque (LAP), spotty calcification and positive remodelling. This milestone was successfully completed by 28 February 2021.6 The Performance Options will vest on 31 December 2021.	Fair and reasonable
Professor Girish Dwivedi via PGTA	1,300,000	784,384	$0.056	23 September 2025	23 September 2020	Vest immediately.	Fair and reasonable

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Name	Number of Options	Tranches	Exercise Price	Expiry Date	Grant Date	Vesting Conditions	IER conclusion
Family Pty Ltd atf PGTA Family Trust (Chief Medical Officer)		515,616	$0.056	23 September 2025	23 September 2020	Vest on 31 December 2021 provided on or before 15 February 2021 the Company has completed development of the Salix Coronary Anatomy (SCA) product that has a User Interface, reports Vulnerable Plaque biomarkers Low Attenuating Plaque (LAP), spotty calcification and positive remodelling. This milestone was successfully completed by 15 February 2021.7 The Performance Options will vest on 31 December 2021.	Fair and reasonable
Notes: The below notes (which correspond to the footnote references in the table above) describe the role of each Optionholder in achieving the relevant milestone. 1. As Chief Technology Officer, Dr Julien Flack both supervised and actively participated in the software design, project planning, algorithm development, testing and documentation of the SCA code base. SCA was developed by Dr Flack and his team using “agile” methodologies in which detailed planning of the technical work to be completed was carried out ahead of a series of 2-week “sprints”, following which the code was demonstrated, subsequently tested and made available for User Acceptance Testing by clinicians including radiologists, cardiologists and radiographers. 2. Dr Flack was responsible for writing and developing the deep learning and machine learning algorithms relating to the SCA code base and was also intimately involved in the design, project planning, testing and documentation of the SCA code base. Dr Flack worked with Jack Joyner to develop the code to detect and report LAP, spotty calcification and to deliver the alpha version of FFR. 3. Dr Flack wrote the code in conjunction with Mr Joyner to detect and report LAP and spotty calcification. As above, Dr Flack was also responsible for additional code development, documentation, algorithm training and testing and overall team hiring, management and reporting.

4. As Senior Data Scientist, Mr Joyner developed and tested the deep learning and machine learning algorithms to analyse CCTA scans to automatically generate a 3D model representing coronary arteries, calculate a calcium score, assess stenosis and enable curved and multiplanar representations of the coronary arteries.

5. Mr Joyner developed and tested the deep learning and machine learning algorithms to identify LAP, positive remodelling and spotty calcification in the coronary arteries from CCTA scans. In addition, Mr Joyner was responsible for code documentation and has been involved in testing of the algorithms.

6. Dr Abdul Rahman Ihdayhid is a practicing cardiologist and qualified CCTA scan reader. As Medical Technical Officer, he provided input into the SCA product design and was extensively involved in product testing to ensure clinical validity. Dr Ihdayhid also annotated CCTA scans on which the deep learning and machine learning algorithms were trained.

7. Professor Girish Dwivedi is a practicing cardiologist and qualified CCTA scan reader. As Chief Medical Officer, he provided input into the SCA product design and was extensively involved in the product testing to ensure clinical validity. Professor Dwivedi also annotated CCTA scans on which the deep learning and machine learning algorithms were trained.

Each Optionholder plays a critical role in meeting the performance milestones of the Performance Options to which they have been granted, specifically:

• John Barrington and John Konstantopoulos, as co-founders of the Company who jointly defined the Company's vision, purpose, strategy and product, are fundamental to the development, sales and customer implementation of the product. Mr Barrington and Mr Konstantopoulos are intimately involved with product development activities, general marketing and specific sales activities to ensure success at product level and overall Company progression at the strategic level.

• Dr Julien Flack, Artrya’s Chief Technology Officer, is responsible for developing the deep learning and machine learning algorithms that comprise the SCA product. As Chief Technology Officer, Dr Flack is also responsible for product planning, team scheduling, testing, documentation and user acceptance testing of the SCA product.

• Jack Joyner, as Artrya’s Senior Data Scientist, is responsible for writing deep learning and machine learning algorithms and is actively involved in the training and testing of the artificial intelligence algorithms.

• Dr Abdul Rahman Ihdayhid, as Artrya’s Medical Technical Officer, is responsible for clinical guidance, preparation of training images for the deep learning and machine learning algorithms, and clinical testing of the SCA product using patient CCTA scans.

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• Professor Girish Dwivedi, as Artrya’s Chief Medical Officer, holds overall responsibility for the clinical acceptability of the SCA product and leads the clinical research program that evaluates and reports the accuracy of the SCA product output.

(2) Options — other

The following Options are not considered “performance securities” for the purposes of ASX Guidance Note 19:

Name	Number of Options	Exercise	Expiry Date	Grant Date	Vesting Conditions
		Price
John Barrington atf BHT Family Trust (Managing Director)	1,000,000	$1.00	9 July 2026	9 July 2021	Upon listing of the Company on the ASX.
	1,000,000	$1.00	9 July 2026	9 July 2021	Execution of binding customer agreements relating to the use of Salix Coronary Anatomy (SCA) with radiology practices, cardiology practices, public hospitals or private hospitals that have a primary place of business outside of Australia, where the total aggregate consideration payable to the Company under those contracts is at least US$10 million as recorded in audited financial statements of the Company.
Erika Konstantopoulos atf IEMK Family Trust A/C (spouse of John Konstantopoulos, Executive Director)	1,000,000	$1.00	9 July 2026	9 July 2021	Upon listing of the Company on the ASX.
	1,000,000	$1.00	9 July 2026	9 July 2021	Execution of binding customer agreements relating to the use of Salix Coronary Anatomy (SCA) with radiology practices, cardiology practices, public hospitals or private hospitals that have a primary place of business outside of Australia, where the total aggregate consideration payable to the Company under those contracts is at least US$10 million as recorded in audited financial statements of the Company.
Wear Services Pty Ltd atf Pegasus Trust A/C (an entity controlled by Bernie Ridgeway, Chair)	500,000	$1.00	23 April 2026	23 April 2021	Vest immediately.
	750,000	$1.00	9 July 2026	9 July 2021	Upon listing of the Company on the ASX and provided Mr Ridgeway remains a Director of Artrya at that time.
	750,000	$1.00	9 July 2026	9 July 2021	Execution of binding customer agreements relating to the use of Salix Coronary Anatomy (SCA) with radiology practices, cardiology practices, public hospitals or private hospitals that have a primary place of business outside of Australia, where the total aggregate consideration payable to the Company under those contracts is at least US$10 million as recorded in audited financial statements of the Company, and provided Mr Ridgeway remains a Director of Artrya at that time.

In addition, the following words are inserted under table (1) in Section 8.4(I) of the Prospectus:

• (a) In relation to the Performance Options, the references to revenue in the performance milestones are to sales revenue resulting from a fully executed customer agreement for the use of the Artrya product suite. Any performance milestone tied to revenue or profit for a particular period expressly exclude:

• one-off or extraordinary revenue items;

• revenue received in the form of government grants, allowances, rebates or other hand-outs; and

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• revenue or profit that has been “manufactured” to achieve the performance milestone.

• (b) The Performance Options:

• are not transferable (other than in limited circumstances to allow the Optionholder to appropriately manage the manner in which the Options are held) and, consequently, will not be quoted on ASX or any other exchange;

• do not confer any right to vote, except as otherwise required by law;

• do not confer any entitlement to a dividend, whether fixed or at the discretion of the Directors;

• do not confer any right to a return of capital, whether in a winding up, upon a reduction of capital or otherwise;

• do not confer any right to participate in the surplus profit or assets of the entity upon a winding up; and

• do not confer any right to participate in new issues of securities such as bonus issues or entitlement issues,

unless and until the applicable performance milestone is achieved and the performance security converts into ordinary shares.

• (c) Each Performance Option is converted into one fully paid ordinary share on achievement of the relevant milestone.

• (d) If the relevant class of Performance Options is not converted into a share by the relevant expiry date then all the Performance Options of that class lapse.

• (e) In assessing the achievement of the outstanding performance milestones, the Company will take a considered and objective approach and seek independent verification where appropriate.

• (f) Each Performance Option contains a term that if a reorganisation of the issued capital of the Company occurs (including a return of capital, bonus issue, share split, or other similar action), the rights of the Optionholder will be changed to the extent necessary to comply with the ASX Listing Rules applying to a reorganisation of capital at the time of the reorganisation.

• (g) Unless otherwise provided for under the terms of the Performance Options, the Optionholder has no right to change the exercise price of the Performance Options or to change the number of underlying securities over which the Performance Options can be exercised.

• (c) New Section 8.9 ( Additional information relating to Performance Options )

A new Section 8.9 is inserted in the Prospectus to contain the following:

“ 8.9 Additional information relating to Performance Options

The following additional information is provided with respect to the Performance Options issued to the Existing Optionholders (see table (1) in Section 8.4(I) of the Prospectus for further details):

• (a) The Performance Options were issued to the Existing Optionholders as part of their respective remuneration packages, in order to link part of the remuneration payable to the recipients to the specific performance milestones set out in table (1) in Section 8.4(I) of the Prospectus.

• (b) The Existing Optionholders consist of directors, employees and contractors of the Company. A summary of the relationship between the

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Company and the Existing Optionholders is set out in table (1) in Section 8.4(I) of the Prospectus.

• (c) Details of the existing total remuneration package for each Director Optionholder are disclosed at Sections 8.4(C) and (H) of the Prospectus. The aggregate remuneration paid to the non-Director Existing Optionholders ( Employee Holders ) in FY21 was $451,427.23.

• (d) Details of the security holdings in the Company of each Director Optionholder are disclosed in Section 8.4(G) of the Prospectus. Additionally, the consideration paid for those securities by each Director was as follows:

Director Consideration paid for securities

• 500,000 Shares acquired by Keeble Nominees Pty Ltd as trustee

• Bernard (Bernie) for the Ridgeway Self-Managed Super Fund on 15 April 2019 at an

• William Ridgeway, issue price of $0.100 per Share.

• Non-Executive  500,000 Shares acquired by Keeble Nominees Pty Ltd as trustee Chair for the Ridgeway Self-Managed Super Fund on 18 June 2020 at an issue price of $0.400 per Share.

• 113,637 Shares acquired by Keeble Nominees Pty Ltd as trustee for the Ridgeway Self-Managed Super Fund on 19 April 2021 at an issue price of $0.880 per Share.

• 962,698 Shares intended to be acquired by Wear Services Pty Ltd as trustee for the Pegasus Trust under the Offer at an issue price of $1.35 per Share.

• 73,328 Shares intended to be acquired by Wear Services Pty Ltd as trustee for the Pegasus Trust prior to Listing from an Existing Shareholder at an issue price of $1.35 per Share.

John Windsor Barrington AM,		6,000,000 Shares acquired by Mr Barrington as trustee of the BHT Family Trust on 13 September 2018 at an issue price of $0.0000002 per Share.
Managing Director		1,000,000 Shares acquired by Mr Barrington as trustee of the BHT
		Family Trust on 30 June 2020 at an issue price of $0.001 per
		Share.
		340,910 Shares acquired by Mr Barrington as trustee of the BHT
		Family Trust on 19 April 2021 at an issue price of $0.880 per
		Share.
		185,185 Shares intended to be acquired by Mr Barrington as
		trustee of the BHT Family Trust under the Offer at an issue price of
		$1.35 per Share.
John Konstantopoulos,		6,000,000 Shares acquired by Erika Konstantopoulos as trustee for the IEMK Family Trust on 13 September 2018 at an issue price of $0.0000002 per Share.
Executive Director – Product		1,000,000 Shares acquired by Erika Konstantopoulos as trustee for the IEMK Family Trust on 30 June 2020 at an issue price of
		$0.001 per Share.

• (e) The Employee Holders do not hold any other securities in the Company (other than the Performance Options).

• (f) The Company considers it necessary and appropriate to further remunerate and incentivise the Existing Optionholders to achieve the applicable performance milestones for the following reasons:

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• the issue of Performance Options to the Existing Optionholders aligns the interests of the Existing Optionholders with those of Shareholders;

• the issue of the Performance Options is a reasonable and appropriate method to provide cost effective remuneration as the non-cash form of this benefit allowed the Company to spend a greater proportion of its cash reserves on its operations than it would if alternative cash forms of remuneration were given to the Existing Optionholders; and

• it is not considered that there are any significant opportunity costs to the Company or benefits foregone by the Company in granting the Performance Options.

• (g) The number of Performance Options issued to each Existing Optionholder was determined by the Board, having regard to:

• the Existing Optionholder’s experience and seniority, the demand for their services, and their role and contribution within the Company’s business;

• the desire of the Company to attract and retain an effective team; and

• the status of the Company at the time the Performance Options were issued, noting that many Performance Options were issued during the early stages of Company’s development.

• (h) The Board considers the number of Performance Options to be appropriate and equitable for the following reasons:

• the Performance Options are consistent with ASX’s policy regarding the base requirements for performance securities, which are detailed in section 9 of ASX Guidance Note 19;

• the number of Shares into which the Performance Options will convert if the performance milestones are achieved is fixed (one for one) which allows investors and analysts to readily understand and have reasonable certainty as to the impact on the Company’s capital structure if the performance milestones are achieved;

• there is an appropriate and demonstrable nexus between the performance milestones and the purposes for which the Performance Options are being issued, and the performance milestones are clearly articulated by reference to objective criteria;

• there is an appropriate link to the benefit of Shareholders and the Company at large through the achievement of the performance milestones, which have been constructed so that satisfaction of the milestones will be aligned with the Company’s business plan — further information regarding the specific elements of the business plan that relate to the outstanding milestones is set out in Section 4 of the Prospectus; and

• the Performance Options have an expiry date by which the relevant performance milestones are to be achieved and, if the milestones are not achieved by that date, the Performance Options will lapse.

• (i) Further, and in addition to the above, the Company confirms that:

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• it will make an announcement immediately upon the satisfaction of any performance milestones, the conversion of any of the Performance Options and the expiry of any of the Performance Options;

• the terms and conditions of the Performance Options, including without limitation the relevant performance milestones that have to be satisfied before each Performance Option is converted into an ordinary share, are not to be changed without the prior approval of ASX and the Company’s Shareholders;

• upon conversion of the Performance Options into Shares, the Company will apply to the ASX for quotation of the Shares within the requisite time period; and

• the Company will disclose the following in the notes to the statement of financial position in its annual report, preliminary financial report and half-year report in respect of any period during which any of the Performance Options remain on issue or were converted or cancelled:

• the number of Performance Options on issue at the balance date of the report;

• a summary of the terms and conditions of the Performance Options, including without limitation the number of Shares into which they are convertible and the relevant milestones;

• whether any of the Performance Options were converted or cancelled during that period; and

• whether any performance milestones relating to the Performance Options were met during the period.

(d) Sections 8.4(G) ( Directors’ shareholdings )

Since the Prospectus Date, Mr Ridgeway has stated an intention to purchase an additional 73,328 Shares in the Company at a price of $1.35 from an Existing Shareholder. Mr Ridgeway has also confirmed he expects to apply for an additional 76,336 Shares as part of the Offer, meaning he currently expects to apply for a total of 962,698 Shares as part of the Offer.

Accordingly, the second row in the table set out in Section 8.4(G) of the Prospectus is deleted and replaced with the table and related information set out below:

Director	Shares	Options
Bernard (Bernie) William Ridgeway,	1,113,637 Shares1 (held by Keeble Nominees Pty Ltd as trustee for the Ridgeway Self-Managed	2,000,000 Options (held by Wear Services Pty Ltd as trustee for the
Non-Executive	Super Fund)	Pegasus Trust)
Chair	_962,698 Shares2 _
	(to be held by Wear Services Pty Ltd
	as trustee for the Pegasus Trust)
	73,328 Shares intended to be acquired
	_from an Existing Shareholder3 _
	(to be held by Wear Services Pty Ltd
	as trustee for the Pegasus Trust)

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1. Shares held as at the Prospectus Date.

2. Shares expected to be applied for under the Offer at the Offer Price per Share.

3. Acquisition expected to occur prior to Listing.

(e)

Section 8.8 ( Interests of advisers )

Section 8.8 of the Prospectus is amended to include the following after the last paragraph:

BDO Corporate Finance (WA) Pty Ltd has acted as Independent Expert and has prepared the Independent Expert’s Report on Options which is included in Attachment 5. The Company estimates it will pay BDO Corporate Finance (WA) Pty Ltd approximately $40,000 (excluding GST and out-of-pocket expenses) for these services. During the 24 months preceding lodgement of this Prospectus with the ASIC, BDO Corporate Finance (WA) Pty Ltd has not received fees from the Company for any other services.

(f) Section 10.8 ( Consent to be named and statement of disclaimers of responsibility )

Section 10.8 of the Prospectus is amended to include the following after the last paragraph:

BDO Corporate Finance (WA) Pty Ltd has given its written consent to be named in this Prospectus in the form and context in which it is named and to the inclusion of its Independent Expert’s Report in this Prospectus contained in Attachment 5 of this Prospectus.

(g) Attachment 1 ( Glossary )

The Glossary in Attachment 1 of the Prospectus is amended to include the following definitions in alphabetical order:

Independent Expert means BDO Corporate Finance (WA) Pty Ltd.

Independent Expert’s Report or IER means the report prepared by the Independent Expert as annexed at Attachment 5.

Performance Option means an Option set out in Table 1 (Options – Performance Options) of section 8.4(I) of this Prospectus.

Consents

The Company confirms that as at the date of this Supplementary Prospectus, each of the parties that have been named as having consented to being named in the Prospectus have not withdrawn that consent.

Update on Offer

As at the date of this Supplementary Prospectus, the Company confirms that applications for the full amount of $40 million under the Offer have been received.

Having considered the nature of the amendments set out in this Supplementary Prospectus and the disclosures set out in the Prospectus, the Directors have formed the opinion that the changes to the Prospectus set out in this Supplementary Prospectus are not materially adverse from the point of view of an investor and none of these changes alter the material information an investor had available to it at the time of making its investment decision. The Offer closed on Friday, 29 October 2021 and has not been extended. Accordingly, no action is required from investors who have already applied under the Prospectus as a result of this Supplementary Prospectus.

Upon the lodgement of this Supplementary Prospectus, the Company expects to continue the process of meeting all outstanding conditions of the ASX and proceeding to listing on the ASX at the earliest opportunity.

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Statement of Directors

This Supplementary Prospectus is authorised by each Director who has consented to the lodgement of this supplementary prospectus with ASIC and the issuance of this Supplementary Prospectus, and has not withdrawn that consent.

For and on behalf of the directors of Artrya Limited (ACN 624 005 741) in accordance with section 351 of the Corporations Act 2001 (Cth)

Bernie Ridgeway Non-Executive Chair

page 12

Annexure 1

Independent Expert’s Report

page 13

ARTRYA LIMITED Independent Expert’s Report

4 November 2021

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Financial Services Guide

4 November 2021

BDO Corporate Finance (WA) Pty Ltd ABN 27 124 031 045 (‘ we ’ or ‘ us ’ or ‘ ours ’ as appropriate) has been engaged by Artrya Limited (‘ Artrya’ or ‘ the Company’ ) to provide an independent expert’s report in relation to the performance securities that have been issued by Artrya.

You are being provided with a copy of our report because you are a shareholder of, or prospective shareholder in, Artrya and this Financial Services Guide (‘ FSG ’) is included in the event you are also classified under the Corporations Act 2001 (‘ the Act ’) as a retail client.

Our report and this FSG accompanies the Company’s supplementary prospectus. Australian Securities Exchange Guidance Note 19 Performance Securities requires our Report to be included in the supplementary prospectus to assist non-participating security holders of the Company in understanding whether the performance securities on issue as at the date of the Company’s admission to quotation are fair and reasonable.

You are being provided with this Financial Services Guide (‘ FSG ’) in the event you are also classified under the Corporations Act 2001 (‘ the Act ’) as a retail client.

Financial Services Guide

This FSG is designed to help retail clients make a decision as to their use of our general financial product advice and to ensure that we comply with our obligations as a financial services licensee.

This FSG includes information about:

• Who we are and how we can be contacted;

• The services we are authorised to provide under our Australian Financial Services Licence No. 316158;

• Remuneration that we and/or our staff and any associates receive in connection with the general financial product advice;

• Any relevant associations or relationships we have; and

• Our internal and external complaints handling procedures and how you may access them.

Information about us

We are a member firm of the BDO network in Australia, a national association of separate entities (each of which has appointed BDO (Australia) Limited ACN 050 110 275 to represent it in BDO International). The financial product advice in our report is provided by BDO Corporate Finance (WA) Pty Ltd and not by BDO or its related entities. BDO and its related entities provide professional services primarily in the areas of audit, tax, consulting, mergers and acquisition, and financial advisory services.

We and BDO (and its related entities) might from time to time provide professional services to financial product issuers in the ordinary course of business and the directors of BDO Corporate Finance (WA) Pty Ltd may receive a share in the profits of related entities that provide these services.

Financial services we are licensed to provide

We hold an Australian Financial Services Licence that authorises us to provide general financial product advice for securities to retail and wholesale clients, and deal in securities for wholesale clients. The authorisation relevant to this report is general financial product advice.

When we provide this financial service we are engaged to provide an expert report in connection with the financial product of another person. Our reports explain who has engaged us and the nature of the report we have been engaged to provide. When we provide the authorised services we are not acting for you.

General Financial Product Advice

We only provide general financial product advice, not personal financial product advice. Our report does not take into account your personal objectives, financial situation or needs. You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice. If you have any questions, or don’t fully understand our report you should seek professional financial advice.

BDO CORPORATE FINANCE (WA) PTY LTD

Page 2

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Financial Services Guide

Fees, commissions and other benefits that we may receive

We charge fees for providing reports, including this report. These fees are negotiated and agreed with the person who engages us to provide the report. Fees are agreed on an hourly basis or as a fixed amount depending on the terms of the agreement. The fee payable to BDO Corporate Finance (WA) Pty Ltd for this engagement is approximately $40,000.

Except for the fees referred to above, neither BDO, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the report and our directors do not hold any shares in Artrya.

Remuneration or other benefits received by our employees

All our employees receive a salary. Our employees are eligible for bonuses based on overall productivity but not directly in connection with any engagement for the provision of a report. We have received a fee from Artrya for our professional services in providing this report. That fee is not linked in any way with our opinion as expressed in this report.

Referrals

We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we are licensed to provide.

Complaints resolution

Internal complaints resolution process

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. Complaints can be in writing addressed to The Complaints Officer, BDO Corporate Finance (WA) Pty Ltd, 38 Station Street, Subiaco Perth WA 6008 or, by telephone or email using the contact details within the following report.

When we receive a complaint we will record the complaint, acknowledge receipt of the complaint in writing within 1 business day or, if the timeline cannot be met, then as soon as practicable and investigate the issues raised. As soon as practical, and not more than 30 days after receiving the complaint, we will advise the complainant in writing of our determination.

Referral to External Dispute Resolution Scheme

If a complaint is made and the complainant is dissatisfied with the outcome of the above process, or our determination, the complainant has the right to refer the matter to the Australian Financial Complaints Authority Limited (‘ AFCA ’).

AFCA is an independent company that has been established to impartially resolve disputes between consumers and participating financial services providers.

Our AFCA Membership Number is 12561. Further details about AFCA are available on its website www.afca.org.au or by contacting it directly via the details set out below.

Australian Financial Complaints Authority Limited GPO Box 3 Melbourne VIC 3001 AFCA Free call: 1800 931 678 Website: www.afca.org.au Email: info@afca.org.au

You may contact us using the details set out on page 1 of the accompanying report.

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TABLE OF CONTENTS

1.	Introduction	1
2.	Summary and Opinion	1
3.	Scope of the Report	6
4.	Outline of the Performance Securities	8
5.	Profile of Artrya	16
6.	Life Cycle of a Medical Device	17
7.	Economic Analysis	20
8.	Valuation approach adopted and assessment	21
9.	Are the Performance Securities fair?	25
10.	Are the Performance Securities reasonable?	27
11.	Conclusion	31
12.	Sources of information	31
13.	Independence	32
14.	Qualifications	33
15.	Disclaimers and consents	33

Appendix 1 – Glossary and copyright notice

Appendix 2 – Valuation Methodologies

© 2021 BDO Corporate Finance (WA) Pty Ltd

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4 November 2021

The Directors Artrya Limited Suite 14A, Level 3, 88 Broadway Crawley WA 6009

Dear Directors

INDEPENDENT EXPERT’S REPORT

1. Introduction

The directors of Artrya Limited ( ‘Artrya’ or ‘the Company’ ) have requested that BDO Corporate Finance (WA) Pty Ltd ( ‘BDO’ ) prepare an independent expert’s report ( ‘IER’ or ‘our Report’ ) to express an opinion on whether the performance securities on issue at the date of the Company’s admission to quotation ( ‘Performance Securities’ ) are fair and reasonable to the prospective and non-participating security holders of Artrya ( ‘Security Holders’ ).

The prospectus in relation to the initial public offering ( ‘IPO’ ) of Artrya shares was issued on 15 October 2021 ( ‘the Prospectus’ ). The Prospectus relates to the issue of 29,629,630 shares at $1.35 per share to raise $40 million ( ‘the Offer’ ). Our Report has been prepared to be included in a supplementary prospectus which should be read by investors in conjunction with the Prospectus.

Our assessment of whether the Performance Securities are fair and reasonable is pursuant to the requirements of Australian Securities Exchange ( ‘ASX’ ) Guidance Note 19 Performance Securities ( ‘ASX GN 19’ ). The vesting conditions of each of the Performance Securities are detailed in section 4 of our Report.

All currencies in our Report are quoted in Australian Dollars unless otherwise stated.

2. Summary and Opinion

2.1 Requirement for the report

The directors of Artrya have requested that BDO prepare an IER to express multiple opinions as to whether the Performance Securities on issue as at the date of the Company’s admission to quotation, comprising:

• Milestone 1 Performance Securities;

• Milestone 2 Performance Securities;

• Milestone 3 Performance Securities;

• Milestone 4 Performance Securities;

• Milestone 5 Performance Securities;

• Milestone 6 Performance Securities;

BDO Corporate Finance (WA) Pty Ltd ABN 27 124 031 045 AFS Licence No 316158 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Corporate Finance (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.

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• Milestone 7 Performance Securities;

• Milestone 8 Performance Securities; and

• The Performance Securities that vest immediately on issue,

are fair and reasonable to the Security Holders.

Our Report is required to meet the requirements of ASX GN 19 and is to be included in the Supplementary Prospectus.

We have been advised that the options with an exercise price of $1.00 are not considered Performance Securities for the purposes of ASX GN 19. As such, our Report does not include an opinion as to whether these options are ‘fair and reasonable’ to the Security Holders.

2.2 Approach

Our Report has been prepared having regard to ASX GN 19 and Australian Securities and Investments Commission (‘ ASIC ’) Regulatory Guides 111 Content of Expert’s Reports (‘ RG 111 ’), RG 112 Independence of Experts ( ‘RG 112’ ) and RG 170 Prospective financial information ( ‘RG 170’ ).

In arriving at our opinion, we have assessed the milestones and terms of the Performance Securities as outlined in the body of our Report and have considered:

• The value of an Artrya share as at the date of the Prospectus compared to the value of an Artrya share following the achievement of the performance milestone, and therefore the vesting of the Performance Securities;

• Whether there are sufficient reasonable grounds on which to assess the value of an Artrya share prior to and following the achievement of each respective milestone;

• Other factors which we consider to be relevant to Security Holders in their assessment of whether the Performance Securities are fair and reasonable; and

• The position of Security Holders should the Performance Securities not have been issued.

2.3 Opinion

We have considered the terms of the Performance Securities as outlined in the body of our Report, with our opinion for each milestone summarised in the table below.

Performance Condition	Ref	Opinion
Milestone 1 8.2.1 Fair and reasonable
Milestone 2 8.2.3 Not fair but reasonable
Milestone 3 8.2.2 Fair and reasonable
Milestone 4 8.2.3 Not fair but reasonable
Milestone 5 8.2.1 Fair and reasonable
Milestone 6 8.2.1 Fair and reasonable
Milestone 7 8.2.3 Not fair but reasonable

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Performance Condition	Ref	Opinion
Milestone 8 8.2.3 Not fair but reasonable
Vest immediately on issue 8.2.1 Fair and reasonable

Where an opinion of not fair but reasonable has been given, we note that, although the achievement of the milestones are likely to be value accretive, there is insufficient reasonable grounds on which to assess the quantum of the value uplift or its timing. Therefore, because of this inability to quantify uplift and timing, by default, the Performance Securities are considered to be not fair.

We note that following the provision of a draft report to the Company on 28 October 2021, we were provided with additional information in relation to the current status of the Company’s performance relative to the achievement of Milestone 3. Given the proximity to the measurement date (15 December 2021 and 31 December 2021 depending on the holder) and advice from the Company in relation to the testing required in order to satisfy this technical milestone, we concluded that we now have sufficient reasonable grounds to assume that offer price of $1.35 is likely to represent the value associated with meeting this performance milestone. As such, by demonstrating reasonable grounds in relation to the value uplift associated with the achievement of Milestone 3, we have changed our opinion in relation to the Milestone 3 Performance Securities, from “not fair but reasonable” to “fair and reasonable”.

Further, following the provision of our draft report dated 28 October 2021 to the Company, the Company received advice from ASX that the options vesting on the achievement of Milestone 9 were not considered “Performance Securities” for the purposes of ASX GN 19. As such, we have removed our analysis and opinion in relation to the options vesting on the achievement of Milestone 9.

2.4 Fairness

In our opinion, as detailed in Section 9 and having regard to the guidance set out in ASX GN 19, RG 111 and RG 170, our opinion in relation to whether each of the following Performance Securities are fair to Security Holders is set out below. The table below also includes a summary of the basis for our fairness opinion.

Additional detail in relation to the basis for our opinion can be found in Section 9 of our Report.

Performance
	Summary of Basis for Opinion	Conclusion
Condition
Milestone 1	Given the technical performance milestone has been achieved, the value of an	Fair
	Artrya share as at the date of the Prospectus already reflects the value
	associated with the achievement of the technical performance milestone as
	well as the meeting of the service condition. Therefore, the value of a share in
	Artrya as at the date of the Prospectus is equivalent to the value of a share
	followingthe vestingof the Performance Securities(ceterisparibus).
Milestone 2	There are currently insufficient reasonable grounds on which to assess the	Not Fair
	quantum of the value uplift associated with achieving the technical
	performance milestone. As such we are unable to conclude on fairness.

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Performance
	Summary of Basis for Opinion	Conclusion
Condition
Milestone 3	The technical performance milestone has largely been satisfied because the	Fair
	product can display the three biomarkers identifying vulnerable plaque.
	However, the only remaining aspect of this technical performance milestone is
	that 80% accuracy levels be achieved, which requires further refinement and
	testing. Further, the required date for satisfaction of this technical
	performance milestone is 15 December 2021 or 31 December 2021 (depending
	on the holder), so given the close proximity of this vesting date to the proposed
	date of listing, we consider the achievement of this condition to be reflected in
	the market price of an Artrya share as at the date of the Prospectus.
	Therefore, we have sufficient reasonable grounds to assume that the value of
	an Artrya share following the vesting of the Milestone 3 Performance Securities
	is equivalent to or greater than the value of an Artrya share as at the date of
	the Prospectus.
Milestone 4	There are currently insufficient reasonable grounds on which to assess the	Not Fair
	quantum of the value uplift associated with achieving the technical
	performance milestone. As such we are unable to conclude on fairness.
Milestone 5	Given the technical performance milestone has been achieved, the value of an	Fair
	Artrya share as at the issue date of the Prospectus already reflects the value
	associated with the achievement of the technical performance milestone as
	well as the meeting of the service condition (where applicable). Therefore, the
	value of a share in Artrya as at the issue date of the Prospectus is equivalent to
	the value of a share following the vesting of the Performance Securities
	(ceterisparibus).
Milestone 6	Given the technical performance milestone and the service condition have	Fair
	been achieved, the value of an Artrya share as at the issue date of the
	Prospectus already reflects the value associated with the achievement of the
	milestones. Therefore, the value of a share in Artrya as at the issue date of the
	Prospectus is equivalent to the value of a share following the vesting of the
	Performance Securities(ceterisparibus).
Milestone 7	There are currently insufficient reasonable grounds on which to assess the	Not fair
	quantum of the value uplift associated with achieving the performance
	milestone. As such we are unable to conclude on fairness.
Milestone 8	There are currently insufficient reasonable grounds on which to assess the	Not fair
	quantum of the value uplift associated with achieving the performance
	milestone. As such we are unable to conclude on fairness.
Vesting immediately	Given that there are no milestones attached to the Performance Securities that	Fair
on issue	vest immediately on issue, the value of an Artrya share as at the issue date of
	the Prospectus already reflects the vesting of these securities and the
	associated dilutionary impact of future exercise. Therefore, the value of a
	share in Artrya as at the issue date of the Prospectus is equivalent to the value
	of a share followingthe vestingof the Performance Securities(ceterisparibus).

Source: BDO analysis

Further details of our fairness assessment are detailed in Section 9 of our Report.

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Where a conclusion of not fair has been reached, we note that, although the achievement of the milestones are likely to be value accretive, there is insufficient reasonable grounds on which to assess the quantum of the value uplift or its timing. Therefore, because of this inability to quantify value uplift and timing, by default, the Performance Securities are considered to be not fair.

2.5 Reasonableness

We have undertaken the analysis of reasonableness as set out in Section 10 of our Report by considering the advantages and disadvantages of issuing the Performance Securities as well as by presenting alternatives that would have been available to the Company at the time of issue. Further, we have considered the potential consequences that may have arisen, should the Performance Securities not have been issued.

The respective advantages and disadvantages considered are summarised below:

ADVANTAGES AND DISADVANTAGES	ADVANTAGES AND DISADVANTAGES
Section	Advantages Section	Disadvantages
10.1	The Milestone 1 Performance Securities, the Milestone 3 Performance Securities, the Milestone 5 Performance Securities, the Milestone 6 Performance Securities, and the Performance Securities that vest immediately on issue are fair 10.2	Dilution of Security Holders’ interests, notwithstanding the value of Security Holders’ interests is likely to increase
10.1	The issue of the Performance Securities aligns the interests of KMP with the interests of Security Holders
10.1	The minimum service conditions of the Performance Securities will assist in the retention of KMP
10.1	By issuing remuneration in the form of Performance Securities, it allowed the Company to retain KMP and use its cash for investment in the development of its technology
10.1	The issue and subsequent vesting of the Performance Securities may increase the value of Security Holders’ interests

In Section 10.3 of our Report, we have also considered the alternatives available to the Company at the time of issuing the Performance Securities, as summarised below:

• The Company could have increased the cash remuneration paid to its key management personnel (‘ KMP ’);

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• The Company could have issued other forms of equity incentives such as call options with an exercise price that is not considered ‘nominal’ for the purposes of ASX GN 19; and

• The Company could have granted a royalty, based on a percentage of revenue or profit attributable to a product.

After assessing the alternatives available to Artrya at the time of issuing the Performance Securities, we consider it unlikely that the Company and therefore Security Holders would be any better off if KMP were remunerated using the above alternatives.

Accordingly, in the absence of any other relevant information, we believe that the Performance Securities are reasonable.

3. Scope of the Report

3.1 Purpose of the Report

ASX Listing Rule 6.1 requires that the terms that apply to each class of equity securities must, in ASX’s opinion, be appropriate and equitable. ASX GN 19 requires an expert to be commissioned to prepare an IER that complies with RG 111, to express an opinion on whether the Performance Securities on issue as at the date of the Company’s admission to quotation are fair and reasonable.

Relevantly, under ASX GN 19 the requirement for an IER arises if:

1. The entity is applying for quotation on the ASX; and

2. It has, or proposes to have performance securities on issue at the date of its admission to quotation; and

3. The number of ordinary shares into which those performance securities will convert in aggregate if the applicable milestone is achieved is greater than 10% of the number of ordinary shares the entity proposes to have on issue at the date of its admission to quotation (taking into account any ordinary shares that the entity may be issuing in connection with its listing).

The Directors of Artrya have engaged BDO as an independent expert, as the Performance Securities on issue at the date of its admission to quotation to the ASX will together represent in excess of 10% of the issued capital of Artrya (see Section 4).

3.2 Regulatory guidance

Neither the Listing Rules nor the Corporations Act defines the meaning of ‘fair and reasonable’. In determining whether the Performance Securities on issue are fair and reasonable, we have had regard to the views expressed by ASIC in RG 111 which provides guidance as to what matters an independent expert should consider to assist security holders to make informed decisions about transactions.

We have also been required to have regard to ASX GN 19 which states:

“in determining their opinion on fairness and reasonableness, ASX would expect the independent expert to assume that the relevant performance milestone(s) have been met, assess the impact that would have on the value of the entity compared to the situation if the relevant performance milestone(s) were not met, and then determine whether the resulting number of ordinary shares to be issued by the entity to the holder of the performance shares is fair and reasonable in the circumstances.

…

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ASX would have no objection to an independent expert expressing a broader view on an issue of performance securities, for example, a statement that while the expert is not able to conclude that the issue is fair or reasonable (as applicable), they regard it as being in the interests of the entity and nonparticipating security holders to proceed with the issue.”

3.3 Adopted basis of evaluation

RG 111 states that a transaction is fair if the value of the offer price or consideration is equal to or greater than the value of the securities subject of the offer.

Typically, where a company is seeking shareholder approval for the issue of performance securities pursuant to ASX GN 19, the expert would compare the value of a share in the company prior to meeting a performance milestone with the value of a share following the meeting the performance milestone. This comparison should be made assuming a knowledgeable and willing, but not anxious buyer, and a knowledgeable and willing, but not anxious seller acting at arm’s length. Following this, ASX GN 19 states that the expert must consider, based on the results of the above comparison, whether the resulting number of shares to be issued to the holder of the performance shares is fair and reasonable. However, in the instance of Artrya, the Performance Securities have already been issued and the Company is not seeking shareholder approval for their issue. Rather, the Company is required to commission an IER because the performance securities that are on issue exceed 10% of the issued capital at the time of listing.

Therefore, in order to provide an opinion on whether the Performance Securities are fair, we have sought to assess how the value of an Artrya share as at the date of the Prospectus compares to the value of an Artrya share following the achievement of each respective milestone.

Further to this, RG 111 states that a transaction is reasonable if it is fair. It might also be reasonable if despite being ‘not fair’ the expert believes that there are sufficient reasons for security holders to accept the offer in the absence of any alternate options. Using this principle, we have considered other qualitative factors in assessing whether the Performance Securities are reasonable to Security Holders.

Having regard to the above, BDO has completed this comparison in two parts:

• Assessment of fairness using various fairness tests in line with ASX GN 19 (fairness – see Section 9 ‘Are the Performance Securities Fair?’); and

• An investigation into other significant factors to which the Security Holders might give consideration, after reference to the assessment derived above (reasonableness – see Section 10 ‘Are the Performance Securities Reasonable?’).

This assignment is a Valuation Engagement as defined by Accounting Professional & Ethical Standards Board professional standard APES 225 ‘Valuation Services’ (‘ APES 225 ’).

A Valuation Engagement is defined by APES 225 as follows:

‘an Engagement or Assignment to perform a Valuation and provide a Valuation Report where the Valuer is free to employ the Valuation Approaches, Valuation Methods, and Valuation Procedures that a reasonable and informed third party would perform taking into consideration all the specific facts and circumstances of the Engagement or Assignment available to the Valuer at that time.’

This Valuation Engagement has been undertaken in accordance with the requirements set out in APES 225.

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4. Outline of the Performance Securities

The Performance Securities relate to options issued prior to and under the Company’s 2019 Employee Option Plan which was approved on 25 November 2019 to provide ongoing incentives to the Performance Security Holders.

Throughout our Report, we refer to the performance conditions relating to the development of the Salix suite of products and the sale of those products, as ‘ technical milestones ’, whilst the conditions requiring the holder of the Performance Securities to remain employed by the Company at a certain date are referred to as ‘ service conditions ’.

The table below summarises the status of the technical milestones and service conditions relating to the Performance Securities. A tick indicates that the relevant milestone or condition has been achieved, whilst a cross indicates that it has yet to be achieved.

Item	Technical Milestone	Service Condition
Milestone 1 Performance Securities  
Milestone 2 Performance Securities  
Milestone 3 Performance Securities  
Milestone 4 Performance Securities  
Milestone 5 Performance Securities  1
Milestone 6 Performance Securities  
Milestone 7 Performance Securities  n/a
Milestone 8 Performance Securities  n/a
Performance Securities vesting immediately on issue2 n/a n/a

Source: Artrya management, BDO analysis

1We note that only the Milestone 5 Performance Securities that were issued to Dr Julien Flack (‘ Dr Flack ’) have a service condition of 31 December 2021.

2The Performance Securities vesting immediately on issue exclude those options that are exercisable at $1.00, as these are not deemed to be Performance Securities under ASX GN 19.

4.1 Terms of the Performance Securities

Milestone 1 Performance Securities (55,000 on issue)

The ‘ Milestone 1 Performance Securities ’ vest subject to the holder remaining employed with the Company as at 31 December 2021, and on or before 28 February 2021 the Company completing the development of Salix Coronary Anatomy (‘ SCA ’) version 1.1, comprising the user interface, 3D heart model, calcium score, stenosis and coronary artery disease reporting and data system score (‘ CAD-RADS ’), and curved and straightened multiplanar reformation. Upon vesting, the Milestone 1 Performance Securities are exercisable at $0.075.

Multiplanar reformation is the process of converting data from an imaging modality into another plane, making the data easier to integrate into the clinical process.

The technical milestone attached to the Milestone 1 Performance Securities was successfully completed by 28 February 2021, and as such, upon achievement of the service condition, the Milestone 1 Performance Securities will vest to the holder.

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Milestone 2 Performance Securities (55,000 on issue)

The ‘ Milestone 2 Performance Securities ’ vest subject to the holder remaining employed with the Company as at 31 December 2022, and on or before 31 December 2021 the Company completing development of the Salix Coronary Flow (‘ SCF ’) product. This requires the calculation of the fractional flow reserve (‘ FFR ’) measurement, which is to be displayed as part of the Salix user interface. Upon vesting, the Milestone 2 Performance Securities are exercisable at $0.075.

The FFR measurement determines the ratio between the maximum achievable blood flow in a diseased coronary artery and the theoretical maximum flow in a healthy vessel.

Neither the technical milestone nor the service condition attached to the Milestone 2 Performance Securities have been achieved as at the date of our Report.

Milestone 3 Performance Securities (190,000 on issue)

The ‘ Milestone 3 Performance Securities ’ vest subject to the holder remaining employed with the Company as at 31 December 2022 or 31 December 2023 (different service condition for different holders), and on or before 15 December 2021 or 31 December 2021 (different performance test date for different holders) the Company completing the delivery of the SCA product that includes the display of the following biomarkers that indicate the presence of vulnerable plaque: low attenuating plaque (‘ LAP ’) greater than or equal to 80% accuracy; positive remodelling assessment greater than or equal to 80% accuracy; and, spotty calcification assessment greater than or equal to 80% accuracy. Upon vesting, the Milestone 3 Performance Securities are exercisable at $0.075.

LAP is a non-calcified, unstable plaque that is prone to rupture. It is one of four features of vulnerable plaque. Similarly, spotty calcification is another feature of vulnerable plaque, and is the existence of lesions less than four millimetres in length, and containing an arc in calcification greater than 90 degrees.

Neither the technical milestone nor the service condition attached to the Milestone 3 Performance Securities have been achieved as at the date of our Report.

Milestone 4 Performance Securities (190,000 on issue)

The ‘ Milestone 4 Performance Securities ’ vest subject to the holder remaining employed with the Company as at 31 December 2023 or 31 December 2024 (different service condition for different holders), and on or before 15 December 2022 or 31 December 2022 (different performance test date for different holders) the Company completing development of a patient risk score based on the composite findings of the SCA product (principally vulnerable plaque but also including calcification and stenosis) and SCF FFR measurement. The combination of these data points is to generate a risk score that is superior to the current CAD-RADS score. Upon vesting, the Milestone 4 Performance Securities are exercisable at $0.075.

Neither the technical milestone nor the service condition attached to the Milestone 4 Performance Securities have been achieved as at the date of our Report.

Milestone 5 Performance Securities (1,092,984 on issue)

The ‘ Milestone 5 Performance Securities ’ vest subject to the Company completing development of the SCA product that has a user interface, reports vulnerable plaque biomarkers LAP, spotty calcification and positive remodelling alpha version FFR on or before 15 February 2021 or 28 February 2021 (different performance test date for different holders). There exists a service condition for some holders of the

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Milestone 5 Performance Securities, in which the holder must remain employed with the Company as at 31 December 2021, however, there is no service condition for Dr Abdul Ihdayhid and Professor Girish Dwivedi.

Upon vesting, the exercise price for the Milestone 5 Performance Securities is $0.056 or $0.075, varying for different holders.

The technical milestone was successfully completed by 15 February 2021.

Milestone 6 Performance Securities (135,000 on issue)

The ‘ Milestone 6 Performance Securities ’ vest subject to the holder remaining employed with the Company on 31 August 2020, and on or before 31 January 2020 the Company completing delivery of a beta product of SCA comprising a report that includes identification of four biomarkers, including perivascular information. Upon vesting, the Milestone 6 Performance Securities are exercisable at $0.075.

Perivascular information is information regarding coronary perivascular adipose tissue that surrounds the major arteries of the heart, which exhibit properties that can initiate and progress coronary artery disease (‘ CAD ’).

The technical milestone and the service condition attached to the Milestone 6 Performance Securities were completed by the relevant dates, and as such, the Milestone 6 Performance Securities have vested to the holder.

Milestone 7 Performance Securities (4,000,000 on issue)

The ‘ Milestone 7 Performance Securities ’ vest subject to the Company generating the first sales revenue of any amount from a contracted customer for use of the software-as-a-service (‘ SaaS ’) SCA product, as evidenced by the existence of a fully executed customer agreement and as recorded in audited financial statements of the Company, with such revenue being directly attributable to sales of the SCA product to customers. Upon vesting, the Milestone 7 Performance Securities are exercisable at $0.001.

The technical milestone attached to the Milestone 7 Performance Securities has not been achieved as at the date of our Report.

Milestone 8 Performance Securities (2,000,000 on issue)

The ‘ Milestone 8 Performance Securities ’ vest subject to the Company generating the first sales revenue of any amount from a contracted customer for use of the SaaS SCA product, as evidenced by the existence of a fully executed customer agreement and as recorded in audited financial statements of the Company, with such revenue being directly attributable to sales of the SCA product to customers outside of Australia. Upon vesting, the Milestone 8 Performance Securities are exercisable at $0.001.

The technical milestone attached to the Milestone 8 Performance Securities has not been achieved as at the date of our Report.

Performance Securities vesting immediately on issue (1,568,768 on issue)

The Performance Securities that vest immediately on issue are exercisable at $0.056 or $0.075, varying for different holders. We note that as outlined below, there are also outstanding options that vest immediately on issue that are exercisable at $1.00, which are not deemed to be Performance Securities for the purpose ASX GN 19. As such, our assessment of the Performance Securities that vest immediately on issue is restricted to those exercisable at $0.056 and $0.075.

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Options exercisable at $1.00 (6,000,000 on issue)

In addition to the above, there are currently on issue:

• options that vest immediately on issue (with an exercise price of $1.00);

• options that vest upon listing of Artrya on the ASX (some of which have a service condition); and

• options that vest subject to the execution of binding customer agreements relating to the use of SCA with radiology practices, cardiology practices, public hospitals or private hospitals that have a primary place of business outside of Australia, where the total aggregate consideration payable to the Company under those contracts is at least US$10 million as recorded in the audited financial statements of the Company (‘ Milestone 9 ’). Upon vesting, these options are all exercisable at $1.00.

Milestone 9 has not been achieved as at the date of our Report, however given the exercise price is not considered notional, these are not considered to be performance securities for the purposes of ASX GN 19. As such, our Report does not include an opinion as to whether the options with an exercise price of $1.00 are ‘fair and reasonable’ to the Security Holders of Artrya.

4.2 Summary by individual

Equity instruments held by John Barrington AM atf BHT Family Trust

John Barrington (‘ Mr Barrington ’) is a Co-Founder and Managing Director of Artrya with over 30 years of experience at an executive and board level. Mr Barrington serves on the boards of the Harry Perkins Institute of Medical Research, Creative Partnerships Australia, and John Curtain Gallery. Mr Barrington has extensive experience in the information technology industry, as well as a knowledge of commercialisation and start-up companies. In 2019, Mr Barrington was awarded a Member of the Order of Australia for significant services to the community of Western Australia.

John Barrington AM atf BHT Family Trust (Managing Director) will hold 5,000,000 options (including 3,000,000 Performance Securities) at the date of the Company’s admission to quotation, which comprise the following:

• 2,000,000 Milestone 7 Performance Securities granted on 25 March 2019, and exercisable at $0.001 prior to 25 March 2024;

• 1,000,000 Milestone 8 Performance Securities granted on 25 March 2019, and exercisable at $0.001 prior to 25 March 2024;

• 1,000,000 options vesting upon the achievement of Milestone 9 granted on 9 July 2021, and exercisable at $1.00 prior to 9 July 2026; and

• 1,000,000 options that vest upon the listing of the Company on the ASX, granted on 9 July 2021, and exercisable at $1.00 prior to 9 July 2026.

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A summary of Mr Barrington’s equity instrument holdings are outlined in the table below:

	Number of Securities
Securities held at the date of our Report	7,340,910
Securities expected to be applied for under the offer	185,185
Milestone 7 Performance Securities	2,000,000
Milestone 8 Performance Securities	1,000,000
Options with an exercise price of $1.00	2,000,000
Total number of securities	12,526,095

Source: Artrya Prospectus

Equity instruments held by Erika Konstantopoulos atf IEMK Family Trust A/C

John Konstantopoulos (‘ Mr Konstantopoulos ’) is a Co-Founder and Executive Director of Artrya, where he leads the clinical and commercial development of Artrya’s Salix suite of products. Mr Konstantopoulos has over 20 years of global experience providing strategic advice to the electronics and healthcare sectors, shown by his previous role as Global Industry Leader for Electronics at IBM. Additionally, Mr Konstantopoulos serves on the Faculty Advisory Council for Engineering and Science at Curtin University.

Erika Konstantopoulos (spouse of John Konstantopoulos) atf IEMK Family Trust A/C will hold 5,000,000 equity instruments (including 3,000,000 Performance Securities) at the date of the Company’s admission to quotation, which comprise the following:

• 2,000,000 Milestone 7 Performance Securities granted on 25 March 2019, and exercisable at $0.001 prior to 25 March 2024;

• 1,000,000 Milestone 8 Performance Securities granted on 25 March 2019, and exercisable at $0.001 prior to 25 March 2024;

• 1,000,000 options vesting upon the achievement of Milestone 9 granted on 9 July 2021, and exercisable at $1.00 prior to 9 July 2026; and

• 1,000,000 options that vest upon the listing of the Company on the ASX, granted on 9 July 2021, and exercisable at $1.00 prior to 9 July 2026.

A summary of Mr Konstantopoulos’ equity instrument holdings is outlined in the table below:

	Number of
	Securities
Securities held at the date of our Report	7,000,000
Securities expected to be applied for under the offer	-
Milestone 7 Performance Securities	2,000,000
Milestone 8 Performance Securities	1,000,000
Options with an exercise price of $1.00	2,000,000
Total number of securities	12,000,000

Source: Artrya Prospectus

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Equity instruments held by Wear Services Pty Ltd atf Pegasus Trust A/C

Bernard Ridgeway (‘ Mr Ridgeway ’) is the Non-Executive Chair of Artrya and has 37 years of experience in private and ASX-listed companies. Mr Ridgeway was previously the Managing Director of Imdex Limited, an ASX-listed mining technology company, for 20 years. During this time, Imdex’s annual revenue grew from approximately $20 million per annum to over $270 million, now operating globally in over 100 countries. Wear Services Pty Ltd is an entity controlled by Mr Ridgeway.

Wear Services Pty Ltd atf Pegasus Trust A/C will hold 2,000,000 equity instruments (nil Performance Securities) at the date of the Company’s admission to quotation which, comprise the following:

• 750,000 options vesting upon the achievement of Milestone 9 and subject to Mr Ridgeway remaining a director of Artrya granted on 9 July 2021, and exercisable at $1.00 prior to 9 July 2026;

• 750,000 options that vest upon the listing of the Company on the ASX and subject to Mr Ridgeway remaining a director of Artrya, granted on 9 July 2021, and exercisable at $1.00 prior to 9 July 2026; and

• 500,000 options that vest immediately, granted on 23 April 2021, and exercisable at $1.00 prior to 23 April 2026.

We note that for the purpose ASX GN 19, the equity instruments held by Mr Ridgeway are not deemed to be Performance Securities. A summary of Mr Ridgeway’s holding of equity instruments is outlined in the table below:

	Number of Securities
Securities held at the date of our Report	1,113,637
Securities expected to be applied for under the offer	962,698
Options with an exercise price of $1.00	2,000,000
Total number of securities	4,076,335

Source: Artrya Prospectus

Performance Securities held by Dr Julien Flack

Dr Flack is the Company’s Chief Technology Officer focussing on the delivery of commercial software solutions for Artrya. Dr Flack has a broad range of software engineering skills and technical leadership, with almost 30 years of experience across the industry.

Dr Flack will hold 540,000 Performance Securities at the date of the Company’s admission to quotation which, comprise the following:

• 135,000 Milestone 3 Performance Securities exercisable at $0.075;

• 135,000 Milestone 4 Performance Securities exercisable at $0.075;

• 135,000 Milestone 5 Performance Securities exercisable at $0.075; and

• 135,000 Milestone 6 Performance Securities exercisable at $0.075.

The above Performance Securities held by Dr Flack were granted on 10 January 2020 and expire on 10 January 2025.

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Performance Securities held by Jack Joyner

Jack Joyner (‘ Mr Joyner ’) is a senior data scientist for Artrya, and will hold 220,000 Performance Securities at the date of the Company’s admission to quotation which, comprise the following:

• 55,000 Milestone 1 Performance Securities exercisable at $0.075;

• 55,000 Milestone 2 Performance Securities exercisable at $0.075;

• 55,000 Milestone 3 Performance Securities exercisable at $0.075; and

• 55,000 Milestone 4 Performance Securities exercisable at $0.075.

The above Performance Securities held by Mr Joyner were granted on 27 November 2020 and expire on 27 November 2025.

Performance Securities held by Dr Abdul Rahman Ihdayhid

Dr Abdul Rahman Ihdayhid (‘ Dr Ihdayhid ’) is the Medical Technical Officer of Artrya. Dr Rahman is also a cardiologist and interventional cardiology fellow at MonashHeart, Monash Health, with additional prior experience across Western Australian hospitals.

Dr Ihdayhid will hold 1,226,752 Performance Securities at the date of the Company’s admission to quotation which, comprise the following:

• 784,384 Performance Securities that vest immediately on issue, exercisable at $0.075; and

• 442,368 Milestone 5 Performance Securities exercisable at $0.075.

The Performance Securities held by Dr Ihdayhid were granted on 4 February 2021 and expire on 31 December 2025.

Performance Securities held by Professor Girish Dwivedi

Girish Dwivedi (‘ Mr Dwivedi ’) is the Chief Medical Officer of Artrya, with a multimodality image training and accreditation background. Mr Dwivedi is also the Wesfarmers Chair in Cardiology at the University of Western Australia (Harry Perkins Institute of Medical Research) and Consultant Cardiologist at Fiona Stanley Hospital. He has a PhD in non-invasive cardiac imaging with the University of Manchester and has global experience in collaboration with world-leading researchers and clinicians.

Mr Dwivedi will hold 1,300,000 Performance Securities at the date of the Company’s admission to quotation which, comprise the following:

• 784,384 Performance Securities that vest immediately on issue, exercisable at $0.056 ; and

• 515,616 Milestone 5 Performance Securities exercisable at $0.056.

The Performance Securities held by Mr Dwivedi were granted on 23 September 2020 and expire on 23 September 2025.

Capital Structure

In the event that the milestones attached to the Performance Securities are met, the number of ordinary shares into which the Performance Securities will convert equates to approximately 11.89% of the number of ordinary shares that is proposed to be on issue at the date of the Company’s admission to quotation, as outlined in the table below.

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Description	Number of Shares
Issued shares at date of our Report	48,482,960
Offer shares to be issued	29,629,630
Number of ordinary shares Artrya proposes to have on issue at the date of its admission to quotation (a)	78,112,590
Milestone 1 Performance Securities	55,000
Milestone 2 Performance Securities	55,000
Milestone 3 Performance Securities	190,000
Milestone 4 Performance Securities	190,000
Milestone 5 Performance Securities	1,092,984
Milestone 6 Performance Securities	135,000
Milestone 7 Performance Securities	4,000,000
Milestone 8 Performance Securities	2,000,000
Performance Securities vesting immediately on issue	1,568,768
Total number of Performance Securities (b)	9,286,752
Number of ordinary shares into which the Performance Securities will convert as a % of
the number of shares that are proposed to be on issue at the date of Artrya's admission	11.89%
to quotation (b / a)

Source : BDO analysis

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5. Profile of Artrya

Artrya is a medical technology company that is focussed on the development and commercialisation of Salix, a cloud-based software solution used to improve the detection and management of CAD. Artrya was incorporated by Mr Barrington and Mr Konstantopoulos in January 2018, and its head office is located in Perth, Western Australia.

The Company’s board of directors are:

• Bernard Ridgeway – Non-Executive Chair;

• John Barrington – Managing Director; and

• John Konstantopoulos – Executive Director.

The Company’s proprietary software, Salix, is an artificial intelligence (‘ AI ’) powered image-analysis software solution that interprets data from Coronary Computed Tomography Angiography (‘ CCTA ’) scans to detect vulnerable plaque, stenosis and other biomarkers, allowing for the timely evaluation and diagnosis of CAD. Salix is comprised of two solutions, SCA and SCF.

SCA is a cloud-based SaaS solution that is patented by Artrya, and provides for the identification and reporting of vulnerable plaque, which is a strong predictor and common cause of cardiac illness. Vulnerable plaque can be attached to the wall of a coronary artery, and is prone to rupture, which can lead to the formation of blood clots and the causation of heart attacks. SCA can identify and reveal the presence of vulnerable plaque and other biomarkers within 15 minutes of a CCTA scan, providing clinicians with information to better evaluate their patients, and seek further clinical assessment if required.

SCF is an AI software solution that is currently in development, and will be utilised to provide a noninvasive blood flow assessment from a CCTA scan in order to identify the existence of any significant blood flow restrictions caused by stenosis. SCF rivals traditional, invasive procedures, which require wires to be inserted into a patient’s limbs, and further directed through the heart in order to assess blood flow. The Company aims to enter a validation and testing phase for its SCF product in early 2022, in order to commence regulatory assessment in the latter half of 2022.

In November 2020, SCA was included in the Australian Register of Therapeutic Goods (‘ ARTG ’) as a Class 1 medical device after being approved for commercialisation. Envision Medical Imaging Pty Ltd, a Perthbased radiology practice, is currently piloting SCA, with the Company intending to extend these pilot sites across Australia in the foreseeable future. In October 2021, after entering into the relevant framework agreement with the United Kingdom National Health Service Shared Business Services Limited, SCA was placed on a list of approved suppliers from which public organisations (including 1,250 NHS hospitals) can commission services from.

Artrya has applied for regulatory clearance from the US Food and Drug Administration (‘ FDA ’) and Health Canada in the US and Canadian markets, respectively. The Company has also recently applied for regulatory approval in Europe and the United Kingdom.

Further information on the Company’s operations can be found in section 4 of the Prospectus, with the regulatory status of the Company’s products detailed in section 5 of the Prospectus. The financial information of the Company can be found in section 6 of the Prospectus.

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6. Life Cycle of a Medical Device

Artrya is a medical technology company operating through its proprietary software, Salix. As at November 2020, SCA was included in the ARTG as a Class 1 medical device. As such, we have presented an overview of the life cycle of a medical device, with reference to the regulatory requirements across the life of a medical device outlined by the Australian Therapeutic Goods Administration (‘ TGA ’), and other relevant regulatory bodies.

The life cycle of a medical device can be divided into six distinct phases, being concept, planning, design, validation, launch and post market, as outlined below.

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Concept

The first phase of a medical device’s life cycle is the concept phase, in which the initial evaluation of the device’s potential development is undertaken. At this stage, the medical device exists only as an idea or solution to an existing medical problem. Manufacturers will determine a number of factors relating to the initial feasibility of the device, such as the intended use of the device, the size of the potential target market, barriers to entry, and regulatory requirements, amongst other considerations.

It is important to consider the potential classification of a medical device in the concept phase, as devices are regulated differently depending on their risk classification. According to the TGA, for devices in lower risk categories there is typically a greater emphasis on regulation after it is included in the ARTG, whereas for higher risk categories there is more extensive regulation prior to the inclusion on the ARTG. As such, each subsequent phase will require a different level of reporting and regulatory activity depending on the risk category that the proposed medical device is expected to be placed in.

Planning

The next phase of the medical device life cycle is the planning phase where companies will further develop their initial concept in finer detail, and plan the objectives of the medical device to a point where the product can be manufactured. Manufacturers can also look to raise capital to fund the development of prototypes, which are often developed at this phase of the life cycle. The development of prototypes allow manufacturers to better understand user requirements, and as such, can seek to provide

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these in the final product. Testing of prototypes, user feedback, and the development of a regulatory strategy and a quality management system are all part of this phase of the life cycle.

At the planning phase, a medical device will be classified into a risk category based on TGA regulations. Class 1 medical devices are typically non-invasive devices with a low impact on the overall health of a patient, and as such are subject to the fewest number of regulatory hurdles. Class 2 devices have a moderate risk associated with use, whilst Class 3 medical devices are increasingly more invasive, and pose a greater risk to patient health. Accordingly, Class 2 and Class 3 devices are subject to greater regulatory requirements, and can take substantially longer to be approved by the relevant regulatory body. These considerations will all be factored in at the planning phase of the life cycle.

Design

The third phase of the medical device life cycle is the design phase, in which the product design, manufacturing process, verification and initial validation is undertaken. In this phase, manufacturers will undertake many iterations of the design, whilst simultaneously collecting feedback. It is reported that the design and testing phase typically takes between two to three years, and can cost up to $20 million. These barriers to entry make it difficult for manufactures to complete the design phase without substantial support from investors or venture capitalists.

An important factor of the design phase is the initial verification and validation process, in which a manufacturer will assess whether the design output matches the specified design input in parallel with the manufacture of the individual components of the medical device. This allows the manufacturer to remain compliant with regulations, and apply the appropriate procedures in development. Once the components of a medical device have been manufactured and verified, the manufacturer can progress to the final validation phase.

Validation

Following the successful design of the medical device, the manufacturer can enter the validation phase, in which the final validation and testing of the medical device is undertaken. This process involves the validation of device processes, clinical validation, product claims, and the preparation of the product for introduction to the market. Submissions are made to the relevant regulatory bodies to be permitted to market the medical device.

The concept, planning, design and validation phases of the life cycle broadly relate to the pre-market classification by the TGA. Pre-market regulation consists of the following:

• The manufacturer applying appropriate conformity assessment procedures, being procedures to determine that the safety, quality and performance of a device are adequate. The manufacturer must then make an Australian Declaration of Conformity, which is a legal declaration that the required evidence exists and that Australian regulatory requirements have been complied with;

• A sponsor submitting the conformity assessment evidence to the TGA (not applicable for Class 1 non-sterile devices);

• The TGA evaluating the available evidence for high risk devices; and

• The device being included on the ARTG. In order to be included in the ARTG, a manufacturer must apply for market authorisation following the manufacturing of the device, which consists of an application fee, and the provision of data across the life cycle thus far.

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Over the course of the pre-market period, data must continuously be compiled relating to the quality, safety, efficacy and performance of a medical device. An exception to this is lower risk medical devices, which can be admitted to the ARTG without a submission of data to the TGA. Alternatively, for higher risk devices, a significant amount of data may be required to be provided. As such, there is a greater emphasis on pre-market regulation for higher risk medical devices, whereas post-market regulation is emphasised with low risk medical devices.

It should be noted that the valuation of pre-market stage medical devices can be problematic, as the application of the market or income valuation approaches is difficult in the absence of sufficient financial information. As medical devices in the design phase (and earlier) typically have not achieved regulatory approvals, and devices in the validation phase will likely be seeking approvals, no revenue can be generated from the sale or third-party use of the medical device. Mercer Capital suggests that the market approach is the preferred valuation approach when appropriate data is available and in sufficient quantity and quality, which is not the case with devices at this phase of the life-cycle.

In order to generate revenue from the international market, a medical device must first achieve approvals from international regulatory bodies in the relevant jurisdictions. The FDA and Health Canada are the regulatory bodies in USA and Canada, respectively, whilst manufacturers can also seek to achieve a United Kingdom (‘ UK ’) Conformity Assessed marking in the UK, and a CE mark across Europe. As above, approvals vary in difficulty to obtain based on the risk class of the medical device.

In the USA, the FDA regulates the sale of medical devices, and monitors the safety of all medical products. There are three processes to achieve FDA approval for medical devices, being pre-market approval, the pre-market notification process and the humanitarian device exemption. Following the application and receipt of FDA approval, a manufacturer must register the business that will produce and distribute the device within the US, prior to the sale of the approved medical device.

Launch

Following the receipt of the relevant approvals, a medical device can be launched to market. The product can be sold or contracted for use to the relevant provider, being clinics, hospitals, or other healthcare providers, in which it is up to the manufacturer to provide the training and support required for the use of the device. All marketing of the medical device must remain compliant with the TGA advertising code, which ensures that the marketing and advertising of therapeutic goods is conducted in a manner that promotes the quality use of the product, is socially responsible and does not mislead or deceive the consumer.

The launch phase represents the first phase of the life cycle in which a medical device manufacturer can typically begin to generate revenue for the use of the device.

Post market

In the final phase of the life cycle, post market surveillance is performed to ensure that the device is still suitable for use. Companies will follow-up on the clinical performance of their device, identify and resolve any complaints and adverse effects, and begin to plan improvements. Post-market phase medical devices can be substantially improved from those at the launch phase, based on the improvements processed after initially being launched to the market. If the product is successful, it is possible that it will reach a wider market.

Post-market regulation consists of the following:

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• The manufacturer maintaining current conformity assessment evidence to support the device;

• The manufacturer monitoring ongoing performance and safety; and

• The TGA conducting both random and targeted assessments of medical devices included on the ARTG.

Once a medical device enters the market, there are a number of different factors which impact the success of the device and its ability to generate revenue, including the size of the user market, patents, barriers to entry, market share, and licenses to operate in certain jurisdictions, amongst others.

Sources: Australian Department of Health; Therapeutic Goods Administration, BSI; Medical Device Product Lifecycle, TWI Global, Mercer Capital, Van Norman; Drugs, Devices and the FDA, U.S. Food & Drug Administration.

7. Economic Analysis

Overview

The Coronavirus pandemic (‘ COVID-19 ’) has led to the largest contraction in global economic activity since the 1930s. Labour markets and financial markets have been severely disrupted. The easing of containment measures in some nations led to a new surge in infections, postponing a fuller and faster economic recovery.

Globally, financial market conditions have rebounded from the period of dislocation in March 2020, and over the past few months financial conditions have improved and remained accommodative due to the successful development of COVID-19 vaccines, historically low interest rates and asset prices, including housing prices, mostly increasing. The expectation that significant fiscal and monetary stimulus will be provided for an extended period is supporting sentiment in financial markets.

The pandemic has had a significant impact on the Australian economy and financial system, along with creating considerable volatility in financial markets. Measures taken by the Australian government and the Reserve Bank of Australia (‘ RBA ’) have improved stability in equity and bond markets over recent months.

Western Australia

The West Australian domestic economy grew by 4.3% in 2020-2021, outperforming the other Australian states and territories. Mining, construction and healthcare services were among the largest contributors to Western Australia’s Gross State Product. Border restrictions helped the state to achieve some of the lowest COVID cases numbers and death rates in the world and allowed business to remain open, which underpinned consumer and business confidence.

Western Australia had record employment in July 2021, with the unemployment rate falling to 4.6%, the lowest unemployment rate in almost eight years. Closed international and domestic borders have contributed to labour supply shortages in the West Australian Market. The September 2021, Business Confidence Survey released by the Chamber of Commerce and Industry WA (‘ CCIWA ’), noted that skilled labour shortages remain the biggest challenge for the West Australian business community, with companies competing for workers from a limited talent pool. The survey found that 71% of West Australian businesses identified that they are struggling to fill a skilled occupation.

According to the Australian Bureau of Statistics Job Vacancy Survey, Western Australia had 52,100 job vacancies in the September quarter 2021, 5,900 more than in the previous quarter and 19,900 more than a year ago. The high level of job vacancies in Western Australia reflects the increased activity generated by

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the pandemic and associated economic stimulus measures (retail trade, healthcare and construction), in addition to labour shortages, caused by overseas and interstate travel restrictions.

Excess labour demand could bring about faster wage growth earlier than expected, and consequently, accelerate consumer price inflation ahead of the national rate. The risk of multispeed wage growth and consumer inflation will likely persist while Western Australian labour market conditions continue to tighten. According to the Business Confidence Survey released by the CCIWA, approximately half of the businesses surveyed are boosting their existing employees’ base wage and providing sign-bonuses or other incentives to new employees.

Source: September 2021 Business Confidence Survey, Chamber of Commerce and Industry WA, Western Australia State Budget 20212022, Western Australia Economic Profile September 2021 – Department of Jobs, Tourism and Science and Innovation, Australian Bureau of Statistics Job Vacancy Survey

8. Valuation approach adopted and assessment

As detailed in Section 4 of our Report, the technical milestones for the Performance Securities are as follows:

• Milestone 1: Completion of the development of SCA version 1.1;

• Milestone 2: Completion of the Salix SCF product;

• Milestone 3: Delivery of the SCA product that includes the display of vulnerable plaque biomarkers;

• Milestone 4: Creation of a patient risk score;

• Milestone 5: Development of the SCA product that has a user interface, reports vulnerable plaque biomarkers LAP, spotty calcification and positive remodelling alpha version FFR;

• Milestone 6: Delivery of a beta product of SCA comprising a report that includes identification of four biomarkers, including perivascular information;

• Milestone 7: Revenue generation from sales of the SCA product; and

• Milestone 8: Revenue generation from an international market.

We note that the Performance Securities that vest immediately on issue do not have a technical milestone attached.

ASX GN 19 states:

“in determining their opinion on fairness and reasonableness, ASX would expect the independent expert to assume that the relevant performance milestone(s) have been met, assess the impact that would have on the value of the entity compared to the situation if the relevant performance milestone(s) were not met, and then determine whether the resulting number of ordinary shares to be issued by the entity to the holder of the performance shares is fair and reasonable in the circumstances.”

Under RG 111.91, an expert’s opinion should be based on reasonable grounds, with the grounds being set out in the report. Similarly, RG 111.112 states that an expert should not include forward-looking information unless there are reasonable grounds for the forward-looking information.

We note that RG 170 ordinarily relates to prospective financial information, however RG 111.114 states that RG 170 provides useful guidance for the inclusion of forward-looking information that does not fall

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within the definition of ‘prospective financial information’. RG 170.17 states that the making of a forward-looking statement must have reasonable grounds or it will be taken to be misleading.

In order to compare the value of Artrya prior to and after meeting a milestone, we must consider whether there are reasonable grounds to make forward-looking assumptions underpinning the future value of the Company. If there are sufficient reasonable grounds to do so, an assessment as to how the change in value of Artrya compares to the value of the Company’s shares as at the date of the Prospectus can be undertaken and hence an assessment of fairness can be derived. However, if there are insufficient reasonable grounds to make forward-looking assumptions on value, we are unable to express an opinion on value and therefore by default, the Performance Securities would be considered to be not fair.

8.1 Valuation of an Artrya share at the Issue Date of the Prospectus

In our assessment of the value of an Artrya share at the issue date of the Prospectus, we have chosen to employ a market based assessment as our valuation methodology. The market approach involves determining the value of an Artrya share by considering recent or prospective market sales and precedent transactions involving the sale of the Company’s shares, commonly in the form of a placement or other capital raising.

A key factor in determining the appropriateness of using this methodology is whether the acquirer of the shares is an unrelated third party and whether the level of interest subscribed for in the company’s equity is substantial enough to reflect the underlying value of the company. These factors need to fulfil the definition of an arm’s length transaction between a willing buyer and willing seller for the shares in that company.

We consider the market based assessment to be an appropriate valuation methodology at the issue date of the Prospectus, due to the IPO and offer of up to 29,629,630 shares in the Company at an issue price of $1.35 each to raise up to $40 million. Immediately following the completion of the IPO, Artrya will have 78,112,590 shares on issue.

We consider that the IPO and offer of Artrya’s shares under the Prospectus will represent an arm’s length transaction between a large number of willing buyers and a willing seller, in which the price subscribed for under the offer is a strong indicator of market value. In addition, we note that the offer is fully underwritten by the lead manager, and reached completion to the proposed subscription level, closing oversubscribed. Further, on an undiluted basis, the number of shares subscribed for under the public offer equates to an interest of approximately 37.93%, which we consider to be substantial enough for it to reflect the Company’s fair value. Therefore, we have determined that the offer price of $1.35 per share is the best indicator of the fair value of an Artrya share upon quotation on the ASX.

• 8.2 Valuation of an Artrya share following the achievement of the performance milestones

8.2.1. Milestone 1, 5 and 6 Performance Securities and the Performance Securities that vested on issue

The technical milestones attached to the Milestone 1 Performance Securities, Milestone 5 Performance Securities and the Milestone 6 Performance Securities have been achieved prior to the issue date of the Prospectus. Given the technical milestones of the above Performance Securities have already been achieved, the value of an Artrya share as at the issue date of the Prospectus already reflects the value

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associated with the achievement of the milestone. Additionally, the Milestone 6 Performance Securities have vested to the holders.

We note that the Milestone 1 Performance Securities and some of the Milestone 5 Performance Securities have service based vesting conditions whereby the holder must remain employed until 31 December 2021. For those Milestone 5 Performance Securities that do not have a minimum service condition, the vesting date for these will also be 31 December 2021. Given the technical milestone has already been achieved, we consider it reasonable to assume that a market participant will assume that the service condition will be achieved and therefore, the expected dilution arising from the vesting of the Milestone 1 Performance Securities and the Milestone 5 Performance Securities are already reflected in the offer price of $1.35. Therefore, we consider the value of a share in Artrya following the vesting of the Milestone 1 Performance Securities, Milestone 5 Performance Securities and the Milestone 6 Performance Securities to be $1.35, which is equivalent to the value of an Artrya share as at the issue date of the Prospectus.

In addition, the Performance Securities that vest immediately on issue have vested to the holders. Similarly, the expected dilution relating to these Performance Securities will be included in investors’ perception of the market price. As such, we consider the value of a share in Artrya following the vesting of the Performance Securities that vest immediately on issue to be $1.35, equivalent to the value of a share at the issue date of the Prospectus.

8.2.2. Milestone 3 Performance Securities

The technical milestone required for the Milestone 3 Performance Securities has largely been satisfied because the product can display the three biomarkers identifying vulnerable plaque. However, the only remaining aspect of this technical milestone is that 80% accuracy levels be achieved, which requires further refinement and testing. Further, the required date for satisfaction of this technical milestone is 15 December 2021 or 31 December 2021 (depending on the holder), so given the close proximity of this vesting date, we consider the achievement of this condition to be reflected in the market price of an Artrya share as at the date of the Prospectus. As such, for the reasons detailed in section 8.2.1, we have utilised the offer price as the valuation approach in valuing an Artrya share following vesting of the Milestone 3 Performance Securities.

8.2.3. Milestone 2, 4, 7 and 8 Performance Securities

Neither the technical milestone nor the service condition attached to the Milestone 2, 4, 7 and 8 Performance Securities have been achieved as at the date of our Report.

A summary of the technical milestones for each of the Performance Securities is set out below:

• Milestone 2: Completion of the Salix SCF product;

• Milestone 4: Creation of a patient risk score;

• Milestone 7: Revenue generation from sales of the SCA product; and

• Milestone 8: Revenue generation from an international market.

We have considered the terms of each of these milestones and have determined that we have insufficient reasonable grounds, in accordance with RG170, to quantify any uplift in value to Artrya from any of these milestones.

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We understand that the products contemplated by the Milestone 2 and Milestone 4 Performance Securities are currently being piloted across the Australian market, however, there is likely still some time before they begin generating revenue. As such, it was not possible for Artrya at the relevant time of grant to set a revenue target as the pricing model and pricing strategy had not been established. Therefore, it is not possible to utilise a valuation approach using comparable trading and transactions multiples for the above Performance Securities. We have considered whether it would be appropriate to apply historical premiums realised by health technology companies’ pre and post-commercialisation or other relevant milestones, however we determined this would not be an appropriate valuation approach for the following reasons:

• Typically a number of announcements are made in the lead up to commercialisation or the generation of revenue, therefore there is rarely one identifiable point that can be used as a reference point on which to calculate a premium, rather there is a number of smaller milestones contributing to these milestones;

• The premium observed will be dependent on the end user of the technology, the terms on which the technology will be delivered and the quantum of the sales;

• The premium observed will be dependent on how broadly the technology can be used and any alternative uses for the technology;

• The premium observed will depend on the size of the end user market on which the technology can be used and the barriers to entry for competitors including the strength of any patents (where applicable);

• The premium observed will depend on the expected margin on commercialising the technology, i.e. the expected sales price less the cost of production or operation of the technology; and

• the level of public interest involved in the application of the technology.

We note that while each of these milestones would likely result in value accretion, we are unable to quantify the extent of the value uplift, nor the timing of achieving it (should it be achieved). Given that there are currently insufficient reasonable grounds on which to assess the quantum of the value uplift associated with achieving each of the performance milestone, we are unable to conclude on fairness.

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9. Are the Performance Securities fair?

Having regard to the guidance set out in ASX GN 19, RG 111 and RG 170, our opinion in relation to whether each of the following Performance Securities are fair to Security Holders is set out below.

In arriving at our opinion on whether each of the Performance Securities are fair we have assessed the value of an Artrya share at the issue date of the Prospectus and compared it to the value of an Artrya share following the vesting of each tranche of the Performance Securities. As detailed in section 8, for each of the Performance Securities, we consider the value of an Artrya share as at the issue date of the Prospectus to be $1.35, being the IPO offer price.

Where an opinion of not fair but reasonable has been given, we note that, although the achievement of the milestones are likely to be value accretive, there is insufficient reasonable grounds on which to assess the quantum of the value uplift or its timing. Therefore, because of this inability to quantify the value uplift and timing, by default, the Performance Securities are considered to be not fair.

FAIRNESS ASSESSMENT	FAIRNESS ASSESSMENT	FAIRNESS ASSESSMENT	FAIRNESS ASSESSMENT
Performance
	Fairness Test	Description	Conclusion
Condition
Milestone 1	Compares the value of a share in	Given the technical performance milestone has been	Fair
	Artrya as at the issue date of the	achieved, the value of an Artrya share as at the issue
	Prospectus with the value of a share	date of the Prospectus already reflects the value
	in Artrya following the achievement of	associated with the achievement of the technical
	the performance milestones	performance milestone. Further, our view is that the
		price at which market participants are willing to
		invest will include the expected dilution associated
		with the issue of ordinary shares following the
		holders of the Performance Securities meeting the
		required service conditions. Therefore, the value of
		a share in Artrya as at the issue date of the
		Prospectus is equivalent to the value of a share
		following the vesting of the Performance Securities
		(ceteris paribus).
Milestone 2	Compares the value of a share in	There are currently insufficient reasonable grounds	Not Fair
	Artrya as at the issue date of the	on which to assess the quantum of the value uplift
	Prospectus with the value of a share	associated with achieving the technical performance
	in Artrya following the achievement of	milestone. As such we are unable to conclude on
	the performance milestones	fairness.
Milestone 3	Compares the value of a share in	The technical performance milestone has largely	Fair
	Artrya as at the issue date of the	been satisfied because the product can display the
	Prospectus with the value of a share	three biomarkers identifying vulnerable plaque.
	in Artrya following the achievement of	However, the only remaining aspect of this technical
	the performance milestones	performance milestone is that 80% accuracy levels be
		achieved, which requires further refinement and
		testing. Further,the required date for satisfaction of

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FAIRNESS ASSESSMENT	FAIRNESS ASSESSMENT	FAIRNESS ASSESSMENT	FAIRNESS ASSESSMENT
Performance
	Fairness Test	Description	Conclusion
Condition
		this technical performance milestone is 15 December
		2021 or 31 December 2021 (depending on the
		holder), so given the close proximity of this vesting
		date, we consider the achievement of this condition
		to be reflected in the market price of an Artrya
		share as at the date of the Prospectus. Therefore,
		we have sufficient reasonable grounds to assume
		that the value of an Artrya share following the
		vesting of the Milestone 3 Performance Securities is
		equivalent to or greater than the value of an Artrya
		share as at the date of the Prospectus.
Milestone 4	Compares the value of a share in	There are currently insufficient reasonable grounds	Not Fair
	Artrya as at the issue date of the	on which to assess the quantum of the value uplift
	Prospectus with the value of a share	associated with achieving the technical performance
	in Artrya following the achievement of	milestone. As such we are unable to conclude on
	the performance milestones	fairness.
Milestone 5	Compares the value of a share in	Given the technical performance milestone has been	Fair
	Artrya as at the issue date of the	achieved, the value of an Artrya share as at the issue
	Prospectus with the value of a share	date of the Prospectus already reflects the value
	in Artrya following the achievement of	associated with the achievement of the technical
	the performance milestones	performance milestone. Further, our view is that the
		price at which market participants are willing to
		invest will include the expected dilution associated
		with the issue of ordinary shares following the
		holders of the Performance Securities meeting the
		required service conditions (where applicable).
		Therefore, the value of a share in Artrya as at the
		issue date of the Prospectus is equivalent to the
		value of a share following the vesting of the
		Performance Securities (ceteris paribus). We note
		that for some holders of the Milestone 5 Performance
		Securities, there is no service condition, and as such,
		those Milestone 5 Performance Securities have
		vested to the holder.
Milestone 6	Compares the value of a share in	Given the technical performance milestone has been	Fair
	Artrya as at the issue date of the	achieved, the value of an Artrya share as at the issue
	Prospectus with the value of a share	date of the Prospectus already reflects the value
	in Artrya following the achievement of	associated with the achievement of the technical
	the performance milestones	performance milestone. We note that the minimum
		service condition for the Milestone 6 Performance

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FAIRNESS ASSESSMENT	FAIRNESS ASSESSMENT	FAIRNESS ASSESSMENT	FAIRNESS ASSESSMENT
Performance
	Fairness Test	Description	Conclusion
Condition
		Securities have also been met, therefore the
		expected dilution associated with the issue of
		ordinary shares following vesting is reflected in the
		IPO offer price. Therefore, the value of a share in
		Artrya as at the issue date of the Prospectus is
		equivalent to the value of a share following the
		vesting of the Performance Securities (ceteris
		paribus).
Milestone 7	Compares the value of a share in	There are currently insufficient reasonable grounds	Not fair
	Artrya as at the issue date of the	on which to assess the quantum of the value uplift
	Prospectus with the value of a share	associated with achieving the performance
	in Artrya following the achievement of	milestone. As such we are unable to conclude on
	the performance milestones	fairness.
Milestone 8	Compares the value of a share in	There are currently insufficient reasonable grounds	Not fair
	Artrya as at the issue date of the	on which to assess the quantum of the value uplift
	Prospectus with the value of a share	associated with achieving the performance
	in Artrya following the achievement of	milestone. As such we are unable to conclude on
	the performance milestones	fairness.
Vest	Compares the value of a share in	Given that there are no milestones attached to the	Fair
immediately	Artrya as at the issue date of the	Performance Securities that vest immediately on
on issue	Prospectus with the value of a share	issue, the value of an Artrya share as at the issue
	in Artrya following the achievement of	date of the Prospectus already reflects the vesting of
	the performance milestones	these securities and the associated dilutionary
		impact of future exercise. Therefore, the value of a
		share in Artrya as at the issue date of the Prospectus
		is equivalent to the value of a share following the
		vesting of the Performance Securities (ceteris
		paribus).

10. Are the Performance Securities reasonable?

In assessing whether the Performance Securities are reasonable for Security Holders, we have considered the advantages associated with issuing the Performance Securities, the alternatives that would have been available to the Company and the potential consequences that may have arisen, should the Performance Securities not have been issued.

Giving consideration to each of the points set out below, we consider the Performance Securities to be reasonable.

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10.1 Advantages of issuing the Performance Securities

The Milestone 1 Performance Securities, the Milestone 3 Performance Securities, the Milestone 5 Performance Securities, the Milestone 6 Performance Securities, and the Performance Securities that vest immediately on issue, are fair

As detailed in section 8, the Milestone 1 Performance Securities, the Milestone 3 Performance Securities, the Milestone 5 Performance Securities, the Milestone 6 Performance Securities, and the Performance Securities that vest immediately on issue are fair for Shareholders. Therefore, in accordance with the principles of RG 111, if the Performance Securities are fair, they are reasonable.

The issue of the Performance Securities aligns the interests of KMP with the interests of Security Holders

Performance securities are widely considered to be a method of remuneration that aligns the interests of management with the shareholders of a company. It is evident from our research in relation to the life cycle of a medical device company as well as our experience in valuing start up technology companies, that the achievement of the milestones set for each of the Performance Securities are likely to be value accretive for the Company. As detailed throughout our report, we do not have reasonable grounds in accordance with RG 170 to quantify the value uplift that is likely to occur following the achievement of certain of the performance milestones. By incentivising KMP to achieve these milestones and create value, which will result in the vesting of the Performance Securities, it aligns the interests of Security Holders and KMP, which is likely to be beneficial for Security Holders.

The minimum service conditions of the Performance Securities will assist in the retention of KMP

The milestones for the Performance Securities include technical milestones, which if achieved are likely to create value. However, the Performance Securities also have a minimum service condition that must be met in order for the Performance Securities to vest. The minimum service conditions for each tranche of Performance Securities can be found in section 4 of our Report. By including these minimum service conditions, it increases the likelihood of the Company being able to retain its KMP for a period after which the technical milestone has been achieved. As is evident from our economic analysis and overview of the labour market in Western Australia, there can be significant costs involved with hiring skilled labour, therefore this retention element to the Performance Securities represents a significant advantage to the Company and therefore Security Holders.

By issuing remuneration in the form of Performance Securities, it allowed the Company to retain KMP and use its cash for investment in the development of its technology

Artrya is operating in a highly competitive labour market in Western Australia with labour supply constraints increasing the cost of labour, in particular for professional, skilled labour. Further detail on the current state of the Western Australian labour market can be found in section 7 of our Report.

Given the pre-commercialisation stage of Artrya, the Company is unable to compete with larger, more established companies in terms of cash remuneration packages. It is common practice for start-up organisations to retain its cash for investment into developing its product rather than remunerating its key management personnel. This represents an optimal investment strategy and increases the likelihood of the Company creating value for its shareholders.

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The issue and subsequent vesting of the Performance Securities may increase the value of Security Holders’ interests

Notwithstanding that the Security Holders will be diluted upon vesting of the Performance Securities, the achievement of the remaining performance milestones are likely to be value accretive. Therefore, despite Security Holders’ interests in the Company reducing, the value of their interest is likely to increase. Set out below is a table which illustrates the minimum increase in value that would need to be observed in order for the value of Security Holders’ interests to be maintained.

Our assessment is that value of an Artrya share as at the issue date of the Prospectus is $1.35. Based on the 78,112,590 ordinary shares expected to be on issue immediately following the IPO, the indicative market capitalisation of the Company will be $105.45 million.

Class of Security on Issue	Number of securities on issue	Number of securities on issue following milestone achievement (in isolation)	Minimum value uplift required to maintain Security Holder value	Market capitalisation following value uplift Value per share
Ordinary Shares 78,112,590 - - $105,451,997* $1.35
Milestone 2 Performance Securities 55,000 78,167,590 $74,250 $105,526,247 $1.35
Milestone 4 Performance Securities 190,000 78,302,590 $256,500 $105,708,497 $1.35
Milestone 7 Performance Securities 4,000,000 82,112,590 $5,400,000 $110,851,997 $1.35
Milestone 8 Performance Securities 2,000,000 80,112,590 $2,700,000 $108,151,997 $1.35
TOTAL (Achievement of all above Milestones) 84,357,590 $8,430,750 $113,882,747 $1.350

Source: BDO analysis

*calculated based on 78,112,590 shares on issue at the Issue Date of the Prospectus multiplied by $1.35 per share, being the offer price for the IPO.

Outlined in the table above are the Performance Securities in which, by default, we have formed an opinion of “not fair”. This shows that collectively, if all of the milestones attached to the above Performance Securities are met, in order to maintain the value of Security Holders’ interests as at the issue date of the Prospectus, the achievement of the performance milestones would have to result in a collective $8.4 million increase in value. Based on the life cycle of a medical device company and the Company’s progress to date, it is likely that the value accretion on achieving these milestones could exceed $8.4 million. We note that as detailed in section 8, we have insufficient reasonable grounds in accordance with RG 170, to quantify this uplift and have therefore included this analysis under our assessment of whether the Performance Securities are reasonable.

10.2 Disadvantages of issuing the Performance Securities

Dilution of Security Holders’ interests

The impact of issuing the Performance Securities is that if the performance milestones are met, Security Holders’ interests in the Company will be diluted. The Performance Securities (if vested) will represent 11.89% of the Company’s issued capital (on an undiluted basis), therefore on a collective basis, if all Performance Securities are converted to shares, then Security Holders’ interests will be diluted from 100% to 88.11%. As detailed above, we note that despite the interests of Security Holders decreasing following vesting of the Performance Securities, it is likely that the value of their interest will increase. Further, we

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note that following the vesting of the Performance Securities, no individual holder of Performance Securities will obtain control, therefore there is no change of control implications associated with the vesting of the Performance Securities.

10.3 Alternatives available to the Company

In determining whether the Performance Securities are reasonable, we consider it appropriate to assess the alternatives that are available to the Company, some of which are outlined below.

• The Company could have increased the cash remuneration that was paid to its KMP in order to attract and retain the people required to achieve the Company’s goals. This does not represent an optimal investment strategy for a start-up technology company. Given the pre-commercialisation stage of the Company it is unlikely that debt funding from unrelated parties would have been available to the Company at the time of issuing the Performance Securities, and seed capital investors would expect that where possible most of the seed capital is invested into developing the technology, rather than paying cash salary costs;

• The Company could have issued other forms of equity incentives such as call options with an exercise price that is not considered ‘nominal’ for the purposes of ASX GN 19. Under the assumption that the recipients of the Performance Securities negotiated their remuneration packages with the Company in good faith and on arm’s length terms, the value equivalent of other equity instruments would still need to be issued to KMP in order to retain them. An option with an exercise price in excess of an amount that is considered ‘nominal’ for the purposes of ASX GN 19, is likely to have a lower value than a performance security, depending on the probability that is assigned to the performance condition being met, the exercise price and the volatility used for the option valuation. Therefore, in order to maintain the level of remuneration required to retain the Company’s KMP, it is likely that more options would need to be issued, therefore potentially having a greater dilutive impact to the interests of Security Holders.

• The Company could have incentivised KMP through the granting of a royalty, which could have been payable based on a percentage of future revenue. This would have the benefit of motivating KMP to commercialise the product, which would likely be value accretive. We note that an issue with revenue royalties more broadly is that it can motivate management to prioritise the development of a product to commercialisation without the requisite focus on cost control. To overcome this shortfall, an alternative would be for the Company to grant the royalty over a profit measure rather than revenue, thereby incentivising management to deliver a product profitably. A common shortfall of issuing a royalty is the level of uncertainty associated with the quantum of the revenue that a royalty would ultimately be calculated on. This represents a risk to the Company in that if the product’s use or application exceeds expectations at the time of negotiating the royalty, the Company may end up granting value in excess of a market rate of remuneration. Conversely, a royalty that is calculated with reference to a profit measure, introduces additional risk for the recipient of the royalty, and therefore may result in management seeking to negotiate a higher royalty rate to compensate them for bearing the additional risk. Despite the above considerations regarding granting of royalties as an alternative to the issue of Performance Securities, assuming that the Company and its KMP negotiated the terms of its remuneration in good faith and on arm’s length terms, we would expect that the value of any alternative royalty would be comparable to the value of the Performance Securities,

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therefore by granting a royalty instead of the Performance Securities, Security Holders are unlikely to be any better off.

Consequences of not issuing the Performance Securities

As detailed in section 4, there are a number of the performance milestones that have been achieved, the success of which may have been a result of the attraction and retention of KMP. By having these Performance Securities on issue it is likely that KMP have been motivated throughout the founding and initial development stage of the Company’s technology. Therefore, it is possible that if these Performance Securities were not issued, the Company may not have retained the people, nor provided the motivation for the people to help the Company achieve the progress that it has to date.

Further, as detailed above in the alternatives and advantages of issuing the Performance Securities, in the event that the Performance Securities were not issued, alternative forms of remuneration would likely have been required to be issued. The impact of these alternative forms of KMP remuneration are unlikely to be any more advantageous to the Company in terms of it maximising its value.

11. Conclusion

We have considered the terms of the Performance Securities as outlined in the body of our Report, with our opinion for each milestone summarised in the table below.

Performance Condition	Opinion
Milestone 1	Fair and reasonable
Milestone 2	Not fair but reasonable
Milestone 3	Fair and reasonable
Milestone 4	Not fair but reasonable
Milestone 5	Fair and reasonable
Milestone 6	Fair and reasonable
Milestone 7	Not fair but reasonable
Milestone 8	Not fair but reasonable
Vest immediately on
	Fair and reasonable
issue

Where an opinion of not fair but reasonable has been given, we note that, although the achievement of the milestones are likely to be value accretive, there is insufficient reasonable grounds on which to assess the quantum of the value uplift or its timing. Therefore, because of this inability to quantify the value uplift and timing, by default, the Performance Securities are considered to be not fair.

12. Sources of information

This report has been based on the following information:

• Prospectus dated 15 October 2021;

• Supplementary Prospectus to be dated on or around 10 November 2021;

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• Audited financial statements of Artrya for the years ended 30 June 2019, 30 June 2020 and 30 June 2021;

• S&P Capital IQ;

• Bloomberg;

• Australian Department of Health;

• Therapeutic Goods Administration;

• BSI; Medical Device Product Lifecycle;

• TWI Global;

• Mercer Capital;

• Van Norman; Drugs, Devices and the FDA;

• U.S. Food & Drug Administration;

• Hampleton M&A Market Report;

• Cogent Valuation June 2021 Quarterly Industry Update;

• September 2021 Business Confidence Survey, Chamber of Commerce and Industry WA;

• Western Australia State Budget 2021-2022;

• Western Australia Economic Profile September 2021 – Department of Jobs, Tourism and Science and Innovation;

• Australian Bureau of Statistics Job Vacancy Survey;

• Share registry information;

• Information in the public domain; and

• Discussions with Directors and Management of Artrya.

13. Independence

BDO Corporate Finance (WA) Pty Ltd is entitled to receive a fee of $40,000 (excluding GST and reimbursement of out of pocket expenses). The fee is not contingent on the conclusion, content or future use of this Report. Except for this fee, BDO Corporate Finance (WA) Pty Ltd has not received and will not receive any pecuniary or other benefit whether direct or indirect in connection with the preparation of this report.

BDO Corporate Finance (WA) Pty Ltd has been indemnified by Artrya in respect of any claim arising from BDO Corporate Finance (WA) Pty Ltd’s reliance on information provided by the Artrya, including the nonprovision of material information, in relation to the preparation of this report.

Prior to accepting this engagement BDO Corporate Finance (WA) Pty Ltd has considered its independence with respect to Artrya and the Performance Security Holders and any of their respective associates with reference to ASIC Regulatory Guide 112 ‘Independence of Experts’. In BDO Corporate Finance (WA) Pty Ltd’s opinion it is independent of Artrya and the Performance Security Holders and their respective associates.

Neither the two signatories to this report nor BDO Corporate Finance (WA) Pty Ltd, have had within the past two years any professional relationship with Artrya, or their associates, other than in connection with the preparation of this report.

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A draft of this report was provided to Artrya and its advisors for confirmation of the factual accuracy of its contents. Other than the changes detailed in section 2.3 of our Report, no significant changes were made to this report as a result of this review.

BDO is the brand name for the BDO International network and for each of the BDO Member firms.

BDO (Australia) Ltd, an Australian company limited by guarantee, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of Independent Member Firms. BDO in Australia, is a national association of separate entities (each of which has appointed BDO (Australia) Limited ACN 050 110 275 to represent it in BDO International).

14. Qualifications

BDO Corporate Finance (WA) Pty Ltd has extensive experience in the provision of corporate finance advice, particularly in respect of takeovers, mergers and acquisitions.

BDO Corporate Finance (WA) Pty Ltd holds an Australian Financial Services Licence issued by the Australian Securities and Investments Commission for giving expert reports pursuant to the Listing rules of the ASX and the Corporations Act.

The persons specifically involved in preparing and reviewing this report were Sherif Andrawes, Adam Myers and Ashton Lombardo of BDO Corporate Finance (WA) Pty Ltd. They have significant experience in the preparation of independent expert reports, valuations and mergers and acquisitions advice across a wide range of industries in Australia and were supported by other BDO staff.

Sherif Andrawes is a Fellow of the Institute of Chartered Accountants in England & Wales and a Fellow of Chartered Accountants Australia & New Zealand. He has over 30 years’ experience working in the audit and corporate finance fields with BDO and its predecessor firms in London and Perth. He has been responsible for over 400 public company independent expert’s reports under the Corporations Act or ASX Listing Rules and is a CA BV Specialist. These experts’ reports cover a wide range of industries in Australia with a focus on companies in the natural resources sector. Sherif Andrawes is the Corporate Finance Practice Group Leader of BDO in Western Australia, the Global Head of Natural Resources for BDO and a former Chairman of BDO in Western Australia.

Adam Myers is a member of Chartered Accountants Australia & New Zealand and the Joint Ore Reserves Committee. Adam’s career spans over 20 years in the Audit and Assurance and Corporate Finance areas. Adam is a CA BV Specialist and has considerable experience in the preparation of independent expert reports and valuations in general for companies in a wide number of industry sectors.

Ashton Lombardo is a member of the Australian Institute of Chartered Accountants. Ashton has over ten years of experience in Corporate Finance and has facilitated the preparation of numerous independent expert’s reports and valuations. Ashton has a Bachelor of Economics and a Bachelor of Commerce from the University of Western Australia and has completed a Graduate Diploma of Applied Corporate Governance with the Governance Institute of Australia.

15. Disclaimers and consents

This report has been prepared at the request of Artrya for inclusion in the Prospectus. Artrya engaged BDO Corporate Finance (WA) Pty Ltd to prepare an independent expert's report to consider whether the Performance Securities on issue as at the date of the Company’s admission to quotation are fair and reasonable.

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BDO Corporate Finance (WA) Pty Ltd hereby consents to this report accompanying the above Prospectus. Apart from such use, neither the whole nor any part of this report, nor any reference thereto may be included in or with, or attached to any document, circular resolution, statement or letter without the prior written consent of BDO Corporate Finance (WA) Pty Ltd.

BDO Corporate Finance (WA) Pty Ltd takes no responsibility for the contents of the Prospectus other than this report.

We have no reason to believe that any of the information or explanations supplied to us are false or that material information has been withheld. It is not the role of BDO Corporate Finance (WA) Pty Ltd acting as an independent expert to perform any due diligence procedures on behalf of the Company. The Directors of the Company are responsible for conducting appropriate due diligence in relation to the interests to be held in Artrya by the Performance Security Holders. BDO Corporate Finance (WA) Pty Ltd provides no warranty as to the adequacy, effectiveness or completeness of the due diligence process.

The opinion of BDO Corporate Finance (WA) Pty Ltd is based on the market, economic and other conditions prevailing at the date of this report. Such conditions can change significantly over short periods of time.

With respect to taxation implications it is recommended that individual Shareholders obtain their own taxation advice, in respect of the Performance Securities, tailored to their own particular circumstances. Furthermore, the advice provided in this report does not constitute legal or taxation advice to the Security Holders, or any other party. It also does not consider the position of individual shareholders or investors. In this regard, we recommend they seek their own personal advice.

The statements and opinions included in this report are given in good faith and in the belief that they are not false, misleading or incomplete.

The terms of this engagement are such that BDO Corporate Finance (WA) Pty Ltd is required to provide a supplementary report if we become aware of a significant change affecting the information in this report arising between the date of this report and prior to the date of the meeting or during the offer period.

Yours faithfully

BDO CORPORATE FINANCE (WA) PTY LTD

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Sherif Andrawes

Director

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Adam Myers

Director

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A endix 1 – Glossar of Terms pp y

Reference	Definition
$A	Australian Dollar
The Act	The Corporations Act 2001 Cth
AFCA	Australian Financial Complaints Authority
AI	Artificial Intelligence
APES 225	Accounting Professional & Ethical Standards Board professional standard APES 225
	‘Valuation Services’
ARTG	Australian Register of Therapeutic Goods
Artrya	Artrya Limited
ASIC	Australian Securities and Investments Commission
ASX	Australian Securities Exchange
ASX GN 19	ASX Guidance Note 19 'Performance Securities'
BDO	BDO Corporate Finance (WA) Pty Ltd
CAD	Coronary artery disease
CAD-RADS	Coronary artery disease reporting and data system score
CCTA	Coronary Computed Tomography Angiography
The Company	Artrya Limited
Corporations Act	The Corporations Act 2001 Cth
DCF	Discounted Future Cash Flows
Dr Flack	Dr Julien Flack
Dr Ihdayhid	Dr Abdul Rahman Ihdayhid
EBIT	Earnings before interest and tax
EBITDA	Earnings before interest, tax, depreciation and amortisation

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Reference	Definition
FDA	US Food and Drug Administration
FFR	Fractional Flow Reserve
FME	Future Maintainable Earnings
FSG	Financial Services Guide
IER	Independent expert’s report
IPO	Initial Public Offering
KMP	Key Management Personnel
LAP	Low Attenuating Plaque
Milestone 1 Performance	Performance Securities that vest subject to the holder remaining employed with the
Securities	Company as at 31 December 2021, and on or before 28 February 2021 the Company
	completes the development of SCA version 1.1, comprising the user interface, 3D
	heart model, calcium score, stenosis and CAD-RADS, and curved and straightened
	multiplanar reformation.
Milestone 2 Performance	Performance Securities that vest subject to the holder remaining employed with the
Securities	Company as at 31 December 2022, and on or before 31 December 2021 the Company
	completes development of the SCF product. This requires the calculation of the FFR
	measurement, which is to be displayed as part of the Salix user interface.
Milestone 3 Performance	Performance Securities that vest subject to the holder remaining employed with the
Securities	Company as at 31 December 2022 or 31 December 2023 (different service condition
	for different holders), and on or before 15 December 2021 or 31 December 2021
	(different performance test date for different holders) the Company completes the
	delivery of the SCA product that includes the display of the following biomarkers
	that indicate the presence of vulnerable plaque: LAP greater than or equal to 80%
	accuracy; positive remodelling assessment greater than or equal to 80% accuracy;
	and, spotty calcification assessment greater than or equal to 80% accuracy.
Milestone 4 Performance	Performance Securities that vest subject to the holder remaining employed with the
Securities	Company as at 31 December 2023 or 31 December 2024 (different service condition
	for different holders), and on or before 15 December 2022 or 31 December 2022
	(different performance test date for different holders) the Company completes
	development of a patient risk score based on the composite findings of the SCA
	product (principally vulnerable plaque but also including calcification and stenosis)
	and SCF FFR measurement. The combination of these data points is to generate a
	risk score that is superior to the current CAD-RADS score.

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Reference	Definition
Milestone 5 Performance	Performance Securities that vest subject to the Company completing development
Securities	of the SCA product that has a user interface, reports vulnerable plaque biomarkers
	LAP, spotty calcification and positive remodelling alpha version FFR on or before 15
	February 2021 or 28 February 2021 (different performance test date for different
	holders). There exists a service condition for some holders of the Milestone 5
	Performance Securities, in which the holder must remain employed with the
	Company as at 31 December 2021, however, there is no service condition for Dr
	Abdul Ihdayhid and Professor Girish Dwivedi.
Milestone 6 Performance	Performance Securities that vest subject to the holder remaining employed with the
Securities	Company on 31 August 2020, and on or before 31 January 2020 the Company
	completes delivery of a beta product of SCA comprising a report that includes
	identification of four biomarkers, including perivascular information.
Milestone 7 Performance	Performance Securities that vest subject to the Company generating the first sales
Securities	revenue of any amount from a contracted customer for use of the SaaS SCA product,
	as evidenced by the existence of a fully executed customer agreement and as
	recorded in audited financial statements of the Company, with such revenue being
	directly attributable to sales of the SCA product to customers.
Milestone 8 Performance	Performance Securities that vest subject to the Company generating the first sales
Securities	revenue of any amount from a contracted customer for use of the SaaS SCA product,
	as evidenced by the existence of a fully executed customer agreement and as
	recorded in audited financial statements of the Company, with such revenue being
	directly attributable to sales of the SCA product to customers outside of Australia.
Milestone 9	The execution of binding customer agreements relating to the use of SCA with
	radiology practices, cardiology practices, public hospitals or private hospitals that
	have a primary place of business outside of Australia, where the total aggregate
	consideration payable to the Company under those contracts is at least US$10
	million as recorded in audited financial statements of the Company.
Mr Barrington	John Windsor Barrington AM
Mr Dwivedi	Professor Girish Dwivedi
Mr Joyner	Jack Joyner
Mr Konstantopoulos	John Konstantopoulos
Mr Ridgeway	Bernard (Bernie) William Ridgeway
NAV	Net Asset Value
Offer	The issue of 29,629,630 shares at $1.35 per share to raise $40 million

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Reference Definition	Reference Definition
Performance Securities The Performance Securities relate to options issued prior to and under the Company’s 2019 EOP (as classified under ASX GN 19) which was approved on 25 November 2019 to provide ongoing incentives to the Performance Security Holders.
Prospectus The Prospectus relating to the IPO of Artrya shares on the ASX issued on 15 October 2021
QMP Quoted market price
RBA Reserve Bank of Australia
Regulations Corporations Act Regulations 2001 (Cth)
Our Report This Independent Expert’s Report prepared by BDO
RG 111 Content of expert reports (March 2011)
RG 112 Independence of experts (March 2011)
RG 170 Prospective Financial Information (March 2011)
SaaS Software-as-a-Service
SCA Salix Coronary Anatomy
SCF Salix Coronary Flow
Security Holders	Prospective and non-participating security holders of Artrya
Sum-of-Parts	A combination of different methodologies used together to determine an overall value where separate assets and liabilities are valued using different methodologies
TGA	Australian Therapeutic Goods Administration
Trading Multiples	Enterprise value to revenue multiples of publicly traded comparable companies
Transaction Multiples	Revenue multiples implied from comparable transactions
UK	United Kingdom
Valuation Engagement An Engagement or Assignment to perform a Valuation and provide a Valuation Report where the Valuer is free to employ the Valuation Approaches, Valuation Methods, and Valuation Procedures that a reasonable and informed third party would perform taking into consideration all the specific facts and circumstances of the Engagement or Assignment available to the Valuer at that time.

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Reference Definition	Reference Definition
WA	Western Australia

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A endix 2 – Valuation Methodolo ies pp g

Methodologies commonly used for valuing assets and businesses are as follows:

1 Net asset value (‘NAV’) Asset based methods estimate the market value of an entity’s securities based on the realisable value of its identifiable net assets. Asset based methods include:

• Orderly realisation of assets method

• Liquidation of assets method

• Net assets on a going concern method

The orderly realisation of assets method estimates fair market value by determining the amount that would be distributed to entity holders, after payment of all liabilities including realisation costs and taxation charges that arise, assuming the entity is wound up in an orderly manner.

The liquidation method is similar to the orderly realisation of assets method except the liquidation method assumes the assets are sold in a shorter time frame. Since wind up or liquidation of the entity may not be contemplated, these methods in their strictest form may not be appropriate. The net assets on a going concern method estimates the market values of the net assets of an entity but does not take into account any realisation costs.

Net assets on a going concern basis are usually appropriate where the majority of assets consist of cash, passive investments or projects with a limited life. All assets and liabilities of the entity are valued at market value under this alternative and this combined market value forms the basis for the entity’s valuation.

Often the FME and DCF methodologies are used in valuing assets forming part of the overall Net assets on a going concern basis. This is particularly so for exploration and mining companies where investments are in finite life producing assets or prospective exploration areas.

These asset based methods ignore the possibility that the entity’s value could exceed the realisable value of its assets as they do not recognise the value of intangible assets such as management, intellectual property and goodwill. Asset based methods are appropriate when an entity is not making an adequate return on its assets, a significant proportion of the entity’s assets are liquid or for asset holding companies.

2 Quoted Market Price Basis (‘QMP’) A valuation approach that can be used in conjunction with (or as a replacement for) other valuation methods is the quoted market price of listed securities. Where there is a ready market for securities such as the ASX, through which shares are traded, recent prices at which shares are bought and sold can be taken as the market value per share. Such market value includes all factors and influences that impact upon the ASX. The use of ASX pricing is more relevant where a security displays regular high volume trading, creating a liquid and active market in that security.

3 Capitalisation of future maintainable earnings (‘FME’) This method places a value on the business by estimating the likely FME, capitalised at an appropriate rate which reflects business outlook, business risk, investor expectations, future growth prospects and other entity specific factors. This approach relies on the availability and analysis of comparable market data.

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The FME approach is the most commonly applied valuation technique and is particularly applicable to profitable businesses with relatively steady growth histories and forecasts, regular capital expenditure requirements and non-finite lives.

The FME used in the valuation can be based on net profit after tax or alternatives to this such as earnings before interest and tax (‘ EBIT ’) or earnings before interest, tax, depreciation and amortisation (‘ EBITDA ’). The capitalisation rate or ‘earnings multiple’ is adjusted to reflect which base is being used for FME.

4 Discounted future cash flows (‘DCF’)

The DCF methodology is based on the generally accepted theory that the value of an asset or business depends on its future net cash flows, discounted to their present value at an appropriate discount rate (often called the weighted average cost of capital). This discount rate represents an opportunity cost of capital reflecting the expected rate of return which investors can obtain from investments having equivalent risks.

Considerable judgement is required to estimate the future cash flows which must be able to be reliably estimated for a sufficiently long period to make this valuation methodology appropriate.

A terminal value for the asset or business is calculated at the end of the future cash flow period and this is also discounted to its present value using the appropriate discount rate.

DCF valuations are particularly applicable to businesses with limited lives, experiencing growth, that are in a start-up phase, or experience irregular cash flows.

5 Market Based Assessment

The market based approach seeks to arrive at a value for a business by reference to comparable transactions involving the sale of similar businesses. This is based on the premise that companies with similar characteristics, such as operating in similar industries, command similar values. In performing this analysis it is important to acknowledge the differences between the comparable companies being analysed and the company that is being valued and then to reflect these differences in the valuation.

6 Revenue Multiple

A revenue multiple can be used to measure the equity value or enterprise value of a business based on the revenue that it generates. The revenue multiple is often used as a valuation multiple for business acquisitions, as it can be used to compare companies within the same industry. Revenue multiples can also be used to value companies that are not yet generating profits. Generally revenue multiples are most suitably used to value early stage businesses. The revenue multiple does have the potential to overstate the value of a low margin business and understate the value of a high margin business, as a businesses operating costs are not considered when using this valuation methodology.

7 Announced Premium Assessment

The announced premium approach is a market based assessment that effectively utilises the assessed premiums experienced by comparable companies at more advanced stages of the life cycle. The relative change in market value of a listed company based on the announcement of an industry specific company event can be applied as an estimate of the premium that a separate company will experience in a similar circumstance. For the reasons outlined in Section 8 of our Report, this can be an unreliable valuation methodology.

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