CONTROL BIONICS LIMITED — Interim / Quarterly Report 2023

Feb 22, 2023

Control Bionics Limited ABN 45 115 465 462 Appendix 4D and Interim Report FOR THE HALF YEAR ENDED 31 DECEMBER 2022

Control Bionics Limited Appendix 4D Interim report

1. Company details

Name of entity:	Control Bionics Limited
ABN:	45 115 465 462
Reporting period:	For the half year ended 31 December 2022
Previous period:	For the half year ended 31 December 2021
2. Results for announcement to the market
			$
Revenues from ordinary activities	up	23% to	2,898,931
Loss from ordinary activities after tax attributable to the owners of Control
Bionics Limited	down	4% to	3,001,366
Loss for the half year attributable to the owners of Control Bionics Limited down		4% to	2,960,958

Dividends

There were no dividends paid, recommended or declared during the half year period.

Comments

The loss for the Group after providing for income tax amounted to $3,001,366 (31 Dec 2021: $3,129,841). Further details about results and operations during the period can be found in the Directors’ Report in the Control Bionics Limited Interim Report.

3. Net tangible assets

Net tangible assets per ordinary security	31 Dec 2022 Cents 0.06	30 June 2022 Cents 0.09

4. Control gained over entities

Not applicable.

5. Loss of control over entities

Not applicable.

6. Details of associates and joint venture entities

Not applicable.

Control Bionics Limited Appendix 4D Half year report

7. Audit qualification or review

Details of audit/review dispute or qualification (if any):

The financial statements were subject to a review by the auditors and the review report is attached as part of the Interim Report. An unmodified opinion has been issued.

8. Attachments

Details of attachments (if any):

The Interim Report of Control Bionics Limited for the half year ended 31 December 2022 is attached.

9. Signed

==> picture [230 x 53] intentionally omitted <==

----- Start of picture text -----

Signed _________
----- End of picture text -----

Date: 23 February 2023

Mr Roger David Hawke Chairman Sydney

Control Bionics Limited

ABN 45 115 465 462

Interim Report - 31 December 2022

Control Bionics Limited Directors' report 31 December 2022

The directors present their report, together with the financial statements, on the consolidated entity ('Group' or ‘Control Bionics’) consisting of Control Bionics Limited ('Company' or 'Parent Entity') and the entities it controlled at the end of, or during, the half year ended 31 December 2022.

Directors

The following persons were directors of Control Bionics Limited during the whole of the financial half year and up to the date of this report, unless otherwise stated:

Roger Hawke – Chairman Robert Wong - Resigned 19 January 2023 Peter Ford Damian Lismore Lindsay Phillips Jeremy Steele - Appointed CEO and Managing Director 19 January 2023

Principal activities

During the half year, the principal activities of the Group continued to be the development, commercialisation and sale of assistive communications technology systems within the disability sector. The Groups’ core systems include NeuroNode Trilogy, NeuroNode Duo and Eye-gaze Duo. These systems allow people with speech and movement difficulties to control a computer for speech generation, electronic communications (e.g. email, social media), entertainment and external control of other devices.

No significant change in the nature of these activities occurred during the half year .

Review of Financials

The loss for the Group after providing for income tax amounted to $3,001,366 (31 December 2021: $3,129,841). Key components include:

• $2.90 million in total revenue (1H FY22 $2.45 million);

• Normalised EBITDA Loss $(2.59) million (1H FY22 Loss $(2.90) million)

• $0.28 million for advertising and marketing expenses (1H FY22 $0.45 million);

• $1.21 million for raw materials and production costs (1H FY22 $0.99 million);

• $2.82 million for total employee expenses (1H FY22 $2.36 million); and

• $1.43 million other expenses including general administration, travel, R&D expenses, legal costs and depreciation expenses (1H FY22 $1.79 million).

• $0.15 million for non-cash adjustment to account for potential impairment of Director loan receivable

Since IPO in December 2020, the Company has embarked on a considered investment strategy to build out the business platform that maximises the long-term sales potential of the NeuroNode technology in the Australian, North American and more recently Japanese assistive technology markets, and we are now open and ready for business in all of these markets. Great progress has been made with the fundamental plan by investing in:

• growing and training specialist sales teams and expanding regions where we were not represented across Australia, North America, Japan and Singapore;

• launching in Japan in April 2022;

• appointing senior talent to lead critical operational aspects of the business;

• market awareness of NeuroNode technology and brand with key specifiers in key regions;

• building out quality scalable support systems and resources to assist the business across international multi-language markets;

• building an insurance funding team in preparation for more insurance funded sales;

• strengthening the product offering with improvements to the NeuroNode range, and augmenting the range with new products like COSMOS Connect and UNO Touch; and

• Investment in R&D projects for future products and revenue streams.

Most of these investments are now in place, and we expect to see solid growth in sales and productivity gains throughout FY23.

1

Control Bionics Limited Directors' report 31 December 2022

Review of operations

The key highlights for the half year and up to the date of this Directors’ Report:

• Revenue for the half year to 31 December 2022 of $2,898,931 representing 23% growth over the same period (31 December 2021: $2,361,786).

• Cash receipts from customers for the half year to 31 December 2022 of $3,531,360 representing 94% growth over the same period (31 December 2021: $1,849,351).

• Continued focus on improving operating net cashflow through sales growth, expense mitigation and prompt collection of receivables,

• YTD financial results remain consistent with the full year forecasts

• Rental model activity in Australia continues to deliver additional recurring revenue streams and provides a potential model for entry to other international markets.

• Cash as at 31 December 2022 was $3,026,105 (30 June 2022: $5,214,003).

Operations

• North America

North American sales operations remain consistent with internal forecasts, with 24% growth in sales over the same period in FY22, and further growth expected in 2H FY23.

• Australia

Australian sales operations continue to deliver results consistent with forecasts, including 18% growth in sales over the same period in FY22. This includes a growing proportion of rental sales which have a revenue tail in subsequent quarters. The Australian operations are expected to generate positive operating cash flows in FY23.

• International markets

We continue our development activities in Japan, Singapore and Canada in conjunction with our local distribution partners. Our Japanese distributor, Double R&D, has hired dedicated sales resources for our products.

• Group research and development

The Group continued to develop and extend its product range in order to target expanded sales opportunities and new user groups. Key programs and activities pursued during the half-year were;

• The Company continues to develop new products based on its market leading NeuroNode technology. A miniaturized platform is already in use in specialised disability applications and is adding to our sales pipeline. New features are being developed and tested to enable a range of new applications within existing disability focused markets, and beyond to other med tech and consumer-oriented markets.

• The wheelchair self-drive controller developed in collaboration with Deakin University has successfully completed in-home client trials and has achieved provisional patent status. We expect to release this new product in the Australian market later this quarter and in other markets once regulatory approvals have been received.

• COVID-19 Impact

COVID-19 restrictions which have impacted the industry’s ability to access specifiers of the product (e.g. speech language pathologists) and potential end users due to travel and other restrictions have eased significantly. The directors continue to monitor the impact of any re-introduction of COVID-19 restrictions on business operations and the financial performance of the Group.

Outlook

Group management expects to see solid growth in sales opportunities and productivity gains. Full year forecasts remain unchanged. The Group continues to review its cash position and options for raising new capital.

2

Control Bionics Limited Directors' report 31 December 2021

Significant changes in the state of affairs

There were no significant changes in the state of affairs of the Group during the financial half year.

Rounding of amounts

The Group is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to 'rounding-off'. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar.

Events Subsequent to the end of the reporting period

In January 2023 the Group announced the appointment of Jeremy Steele as CEO and Managing Director replacing Robert Wong, who retired due to an ongoing medical condition.

No other matter or circumstance has arisen since 31 December 2022 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.

Auditor's independence declaration

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

This report is made in accordance with a resolution of directors, pursuant to section 306(3)(a) of the Corporations Act 2001.

On behalf of the directors

==> picture [200 x 44] intentionally omitted <==

_________ Mr Roger David Hawke Chairman

23 February 2023 Sydney

3

Tel: +61 3 9603 1700 Collins Square, Tower Four Fax: +61 3 9602 3870 Level 18, 727 Collins Street www.bdo.com.au Melbourne VIC 3008 GPO Box 5099 Melbourne VIC 3001 Australia

==> picture [78 x 31] intentionally omitted <==

DECLARATION OF INDEPENDENCE BY KATHERINE ROBERTSON TO THE DIRECTORS OF CONTROL BIONICS LIMITED

As lead auditor for the review of Control Bionic Limited for the half-year ended 31 December 2022, I declare that, to the best of my knowledge and belief, there have been:

1. No contraventions of the auditor independence requirements of the Corporations Act 2001 relation to the review; and

2. No contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Control Bionic Limited and the entities it controlled during the period.

==> picture [155 x 31] intentionally omitted <==

Katherine Robertson Director

BDO Audit Pty Ltd

Melbourne, 23 February 2023

BDO Audit Pty Ltd ABN 33 134 022 870 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 Audit 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.

Control Bionics Limited Contents 31 December 2022

Consolidated Statement of profit or loss and other comprehensive income Consolidated Statement of financial position Consolidated Statement of changes in equity Consolidated Statement of cash flows Notes to the financial statements 10 Directors' declaration 16 Independent auditor's review report to the members of Control Bionics Limited 17

General information

The financial statements cover Control Bionics Limited as a Group consisting of Control Bionics Limited and the entities it controlled at the end of, or during, the half year. The financial statements are presented in Australian dollars, which is Control Bionics Limited’s functional and presentation currency.

Control Bionics Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business are:

Registered office Principal place of business Suite 5.01, Level 5 Suite 5.01, Level 5 697 Burke Road 697 Burke Road Camberwell Camberwell VIC 3124 VIC 3124

A description of the nature of the Group’s operations and its principal activities are included in the directors’ report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of directors, on 23 February 2023. The directors have the power to amend and reissue the financial statements.

5

Control Bionics Limited Consolidated Statement of profit or loss and other comprehensive income For the half year ended 31 December 2022

Note Revenue 3 Other income Expenses Raw materials and consumables used Employee benefits expense General and administrative expense Depreciation and amortisation expense Marketing and promotion Research & development costs Legal fees, patents and insurance Corporate travel Professional fees IPO costs Foreign exchange gain/(loss) Finance costs Impairment of receivables 5 Loss before income tax expense Income tax expense Loss after income tax expense for the half year Other comprehensive income Items that may be reclassified subsequently to profit or loss Foreign currency translation Other comprehensive income for the half year, net of tax Total comprehensive loss for the half year Total comprehensive loss for the half year is attributable to: Owners of Control Bionics Limited	Consolidated 31 Dec 2022 31 Dec 2021 $ $ 2,898,931 2,361,786 83,791 91,687 (1,214,566) (986,286) (2,821,842) (2,358,491) (452,545) (688,402) (224,994) (224,822) (279,058) (449,811) (81,098) (81,356) (207,438) (205,798) (184,684) (203,435) (260,546) (315,425) - (33,750) 19,248 (31,710) (35,372) (4,028) (241,193) - (3,001,366) (3,129,841) - - (3,001,366) (3,129,841) 40,408 42,185 40,408 42,185 (2,960,958) (3,087,656) (2,960,958) (3,087,656) Cents Cents (3.3) (3.7) (3.3) (3.7)	Consolidated 31 Dec 2022 31 Dec 2021 $ $ 2,898,931 2,361,786 83,791 91,687 (1,214,566) (986,286) (2,821,842) (2,358,491) (452,545) (688,402) (224,994) (224,822) (279,058) (449,811) (81,098) (81,356) (207,438) (205,798) (184,684) (203,435) (260,546) (315,425) - (33,750) 19,248 (31,710) (35,372) (4,028) (241,193) - (3,001,366) (3,129,841) - - (3,001,366) (3,129,841) 40,408 42,185 40,408 42,185 (2,960,958) (3,087,656) (2,960,958) (3,087,656) Cents Cents (3.3) (3.7) (3.3) (3.7)	Consolidated 31 Dec 2022 31 Dec 2021 $ $ 2,898,931 2,361,786 83,791 91,687 (1,214,566) (986,286) (2,821,842) (2,358,491) (452,545) (688,402) (224,994) (224,822) (279,058) (449,811) (81,098) (81,356) (207,438) (205,798) (184,684) (203,435) (260,546) (315,425) - (33,750) 19,248 (31,710) (35,372) (4,028) (241,193) - (3,001,366) (3,129,841) - - (3,001,366) (3,129,841) 40,408 42,185 40,408 42,185 (2,960,958) (3,087,656) (2,960,958) (3,087,656) Cents Cents (3.3) (3.7) (3.3) (3.7)
	-
	(3,001,366) 40,408
	40,408
	(2,960,958)
	(2,960,958)
Basic earnings per share Diluted earnings per share	Cents (3.3) (3.3)		Cents (3.7) (3.7)

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

6

Control Bionics Limited Consolidated Statement of financial position As at 31 December 2022

Note Assets Current assets Cash and cash equivalents Trade and other receivables Inventories Other Assets 5 Total current assets Non-current assets Property, plant and equipment Intangibles Right-of-use assets 4 Other non-current assets 5 Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Employee benefits Lease liabilities 4 Borrowings 6 Total current liabilities Non-current liabilities Employee benefits Lease liabilities 4 Total non-current liabilities Total liabilities Net assets Equity Issued capital 7 Reserves 8 Accumulated losses Total equity	Consolidated 31 Dec 2022 30 Jun 2022 $ $ 3,026,105 5,214,003 1,493,580 1,764,567 1,011,383 923,961 555,336 706,792 6,086,404 8,609,323 690,454 501,457 4,070,074 4,071,721 178,016 232,443 19,89721,186 4,958,4414,826,807 11,044,845 13,436,130 782,688 854,224 323,259 346,611 104,359 112,050 -48,196 1,210,306 1,361,081 34,734 26,738 79,469 124,578 114,203 151,316 1,324,509 1,512,397 9,720,336 11,923,733 30,371,640 29,266,524 84,298 391,445 (20,735,602) (17,734,236) 9,720,336 11,923,733
	6,086,404
	690,454 4,070,074 178,016 19,897
	4,958,441
	11,044,845
	782,688 323,259 104,359 -
	1,210,306
	34,734 79,469
	114,203
	1,324,509
	9,720,336
	30,371,640 84,298 (20,735,602)
	9,720,336

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

7

Control Bionics Limited Consolidated Statement of changes in equity For the half year ended 31 December 2022

Consolidated Balance at 1 July 2021 Loss after income tax expense for the half year Other comprehensive income for the half year, net of tax Total comprehensive loss for the half year Transactions with owners in their capacity as owners: Share based payments Shares issued during the period, net of transaction costs Exercise of options Balance at 31 December 2021 Consolidated Balance at 1 July 2022 Loss after income tax expense for the half year Other comprehensive income for the half year, net of tax Total comprehensive income/(loss) for the half year Transactions with owners in their capacity as owners: Share based payments Shares issued during the period, net of transaction costs Exercise of options Balance at 31 December 2022	Issued Accumulated Foreign currency translation Share option Total equity Capital Losses Reserve Reserve $ $ $ $ $ 28,174,654 (11,633,012) (66,103) 687,369 17,162,908 - (3,129,841) - - (3,129,841) - - 42,185 - 42,185
	- (3,129,841) 42,185 - (3,087,656) - - - 46,519 46,519 720,838 - - - 720,838 371,032 - - (371,032)
	29,266,524(14,762,853) (23,918) 362,856 14,842,609
	Issued Accumulated Foreign currency translation Share option Total equity Capital Losses Reserve Reserve $ $ $ $ $ 29,266,524 (17,734,236) 23,405 368,040 11,923,733 - (3,001,366) - - (3,001,366) - - 40,408 - 40,408
	- (3,001,366) 40,408 - (2,960,958) - - - 8,311 8,311 749,250 - - - 749,250 355,866 - - (355,866)
	30,371,640(20,735,602) 63,813 20,485 9,720,336

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

8

Control Bionics Limited Consolidated Statement of cash flows For the half year ended 31 December 2022

Note Cash flows from operating activities Receipts from customers Receipts from government grants Payments to suppliers and employees Interest and other finance costs paid Interest Received Net cash used in operating activities Cash flows from investing activities Payments for property, plant and equipment Net cash used in investing activities Cash flows from financing activities Guarantee paid on new lease arrangements Repayment of borrowings Proceeds from exercises and issue of shares, net of transaction costs Repayment of lease liabilities Net cash generated / (used in) from financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the financial half year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the financial half year Non-cashflows from financing activities Exercise of options through issuance of director loans (refer to note 5)	Consolidated 31 Dec 2022 31 Dec 2021 $ $ 3,531,360 1,849,351 - 88,928 (5,944,275) (5,520,602) (20,254) (3,564) 10,812 964 (2,422,357) (3,584,923)	Consolidated 31 Dec 2022 31 Dec 2021 $ $ 3,531,360 1,849,351 - 88,928 (5,944,275) (5,520,602) (20,254) (3,564) 10,812 964 (2,422,357) (3,584,923)
	(2,422,357)	(3,584,923)
	(334,233)	(122,478) (122,478) (56,145) (24,138) 14,046 (30,266) (96,504) (3,803,904) 12,331,109 - 8,527,205 706,792
	(334,233)
	- (48,196) 749,250 (52,800) 648,254
	(2,108,336) 5,214,003 (79,562)
	3,026,105
	-

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

9

Control Bionics Limited Notes to the financial statements 31 December 2022

Note 1. Significant accounting policies

These general purpose financial statements for the interim half year reporting period ended 31 December 2022 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'.

These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2022 and any public announcements made by the Group during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 .

The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated.

Going Concern

The Group's financial statements have been prepared on the basis of continuity of operations, the realisation of assets and the satisfaction of liabilities in the ordinary course of business. As disclosed in the financial statements, the Group has incurred a net loss after taxes of $3,001,366 and had net cash outflows from operating activities of $2,422,357 for the interim half year reporting period ended 31 December 2022. These events and conditions represent a material uncertainty that may cast significant doubt on the ability of the Group to continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.

The future viability of the Group is largely dependent on the number and timing of sales, and on its ability to raise capital to finance its operations. The Group's level of sales in FY23 and ability to raise capital as and when needed could have a negative impact on its financial condition and its ability to pursue its business strategies. If adequate funds are not available to the Group, the Group may be required to delay, reduce or eliminate research and development programs, reduce costs or eliminate commercialisation efforts, raise new equity or pursue merger or acquisition strategies. The Group had cash on hand balances available as at 31 December 2022 of $3,026,105. The Group believes that it has sufficient liquidity and options available to prepare the financial statements on a going concern basis at this time.

The financial statements do not include adjustments relating to the recoverability and classification of recorded assets amounts, nor to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.

New or amended Accounting Standards and Interpretations adopted

The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

Note 2. Operating segments

Identification of reportable operating segments

Segment information is based on the information that management uses to make decisions about operating matters and allows users to review operations through the eyes of management. Operating segments represent the information reported to the chief operating decision makers (CODM), being the executive management team, for the purposes of resource allocation and assessment of segment performance.

The Group has identified one operating segment as the sale of assistive communications technology systems within the disability sector. The segment reported a loss before income tax of $2,849,910 for the half year ended 31 December 2022 (31 December 2021: $3,129,841 loss). The segment currently has operations in two geographical locations: Australia and North America. This is consistent with the internal reporting provided to the CODM and is aligned to the one major revenue stream.

The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements.

The information reported to the CODM is on a monthly basis.

10

Control Bionics Limited Notes to the financial statements 31 December 2022

Note 2. Operating segments (continued)

Types of products and services

The principal products and services of each of the geographical locations within the operating segment are as follows:

Australia Sales of Trilogy units and components in Australia North America Manufacture and sales of Trilogy units and components in North America

Geographical information

Geographical information
Australia North America	Sales to external customers 31 Dec 2022 31 Dec 2021 $ $ 716,927 606,375 2,182,004 1,755,411 2,898,931 2,361,786
	2,898,931	2,361,786

Segment assets and liabilities

The internal management reporting presented to key business decision makers report total assets and liabilities on the basis consistent with that of the consolidated financial statements. These reports do not allocate assets and liabilities based on the operations of each segment or by geographical location.

Under the current management reporting framework, total assets are not reviewed to a specific reporting segment or geographical location.

Note 3. Revenue

Revenue from contracts with customers Sale of goods Technical trials and support Total Sales and Technical support Lease of goods (rental) Total Lease rental Total Revenue	Consolidated 31 Dec 2022 31 Dec 2021 $ $ 2,722,201 2,305,846 31,993 34,106
	2,754,194 2,339,952 144,737 21,834
	144,737 21,834
	2,898,931 2,361,786

11

Control Bionics Limited Notes to the financial statements 31 December 2022

Note 3. Revenue (continued)

Disaggregation of revenue

The disaggregation of revenue from contracts with customers is as follows:

Consolidated – 31 Dec 2022 Revenue from contracts with customers Timing of revenue recognition Goods transferred at a point in time Services transferred over time Consolidated – 31 Dec 2021 Revenue from contracts with customers Timing of revenue recognition Goods transferred at a point in time Services transferred over time	North Australia America Total $ $ $ 716,927 2,182,004 2,898,931
	540,197 2,182,004 2,722,201 176,730 - 176,730
	716,927 2,182,004 2,898,931
	North Australia America Total $ $ $ 606,375 1,755,411 2,361,786
	550,435 1,755,411 2,305,846 55,940 - 55,940
	606,375 1,755,411 2,361,786

Note 4. Leases

Right of use assets

Right of use assets
Premises - right-of-use Less: Accumulated depreciation Reconciliation Opening balance at 1 July 2022 FX movement Depreciation charge	Consolidated 31 Dec 2022 30 June 2022 $ $ 318,148 315,139 (140,132) (82,696) 178,016 232,443 $ 232,443 3,009 (57,436) 178,016
	178,016

12

Control Bionics Limited Notes to the financial statements 31 December 2022

Note 4. Leases (continued)

Lease Liabilities

Current Non-current Maturity analysis Less than one year One to five years Note 5. Other assets Current Related party receivable on exercise of options Non-current Other	Consolidated 31 Dec 2022 30 June 2022 $ $ 104,359 112,050 79,469 124,578 183,828 236,628	Consolidated 31 Dec 2022 30 June 2022 $ $ 104,359 112,050 79,469 124,578 183,828 236,628
	183,828	236,628
	104,359 79,469	112,050 124,578
	183,828	236,628
	Consolidated 31 Dec 2022 30 June 2022 $ $ 555,336 706,792 555,336 706,792 19,897 21,186 19,897 21,186

Related party receivable on exercise of options

On 23 December 2016, Rob Wong, CEO, was granted options with an exercise price of $0.21 and an expiry date of 23 December 2021. In line with listing rule requirements, these options and any shares issued on exercise became escrowed until 7 December 2022, being 2 years after the date that Control Bionics Limited listed on the ASX.

On 18 December 2021, CEO Rob Wong entered into an arrangement with Control Bionics Limited to facilitate the exercising of the above 3,365,678 restricted employee options. These options were exercised on 23 December 2021 prior to expiry at $0.21 per share, resulting in the total subscription amount outstanding of $706,792. Per the terms of the agreement, the shares are held in escrow until such time that the loan is repaid.

The money owing under this facility is to be the lesser of this amount, and the market value of the shares as calculated at the closing price on the termination date. At 31 December 2022, the shares of the Company are trading at $0.17 per share, being below the $0.21 per share issue price. In line with good accounting practice, the loan is restated in line with the balance date share price, which results in an impairment charge of $151,456.

The amount owing under the arrangement is to be paid on or before 7 March 2023.

Interest is to be accrued annually at the “benchmark interest rate” prescribed by the ATO from time to time in relation to fringe benefits tax.

13

Control Bionics Limited Notes to the financial statements 31 December 2022

Note 6. Current liabilities – borrowings

Bank of Queensland funding arrangement	Consolidated 31 Dec 2022 30 June 2022 $ $ - 48,196

Bank of Queensland funding arrangement

On 3 December 2021, Control Bionics Limited entered into a funding arrangement with Bank of Queensland (‘BOQ’) whereby BOQ provided funding to allow Control Bionics Limited to renew its Directors’ and Officers’ insurance and its InfoTech liability insurance for the following calendar year. The Group has not renewed the funding arrangement.

Total secured liabilities

There are no secured liabilities (current and non-current) at the reporting date.

Assets pledged as security

There are no assets pledged as security across the group.

Note 7. Equity - issued capital

Note 7. Equity - issued capital
31 Dec 2022 Shares Ordinary shares - fully paid 90,479,028 Movements in ordinary share capital Details Date Balance 30 June 2022 Issue of shares – exercise of options 25 July 2022 Transfer of expense from share-based payment reserve 25 July 2022 Balance 31 December 2022	31 Dec 2022 Shares 90,479,028		Consolidated 30 June 2022 31 Dec 2022 Shares $ 86,911,168 30,371,640		30 June 2022 $ 29,266,524
			Shares 86,911,168 3,567,860 -	Issue price 0.21	$ 29,266,524 749,250 355,866 30,371,640
			90,479,028

Note 8. Equity - reserves

Share option reserve Foreign currency translation reserve	Consolidated 31 Dec 2022 30 June 2022 $ $ 20,485 368,040 63,813 23,405 84,298 391,445	Consolidated 31 Dec 2022 30 June 2022 $ $ 20,485 368,040 63,813 23,405 84,298 391,445
	84,298	391,445

14

Control Bionics Limited Notes to the financial statements 31 December 2022

Note 8. Equity – reserves (continued)

Share option reserve

The option reserve relates to share options granted by the Group to its employees under the arrangements disclosed in the 30 June 2022 Annual Report.

On 25 July 2022, Peter Ford, CEO, exercised 3,567,860 options. The exercise event has resulted in the historical cost of these options of $355,866 being transferred from the Share Based Payment Reserve to Issued Capital.

Foreign currency translation reserve

The foreign currency translation reserve records exchange differences arising from translating non- monetary assets and liabilities at the current rate at the end of the reporting period rather than at historical rates.

Movements in reserves

Movements in each class of reserve during the current and previous financial year are set out below:

Consolidated Balance at 30 June 2022 Share based payments Exercise of options Foreign currency translation Balance at 31 December 2022	Share Option $ 368,040 8,311 (355,866) -	Foreign currency $ 23,405 - - 40,408	Total $ 391,445 8,311 (355,866) 40,408 84,298
	20,485	63,813

Note 9. Commitments and contingent liabilities

The group has no material commitments or contingent liabilities at 31 December 2022 (2021: nil).

Note 10. Related party transactions

Parent entity

Control Bionics Limited is the parent entity. Refer to the 2022 Annual Report for details of subsidiaries and key management personnel during the period.

Transactions with related parties

During the half year period, payments of $365,260 were made for employment services to key management personnel of Control Bionics Limited and their related parties.

Amounts receivable from related parties

On 18 December 2021, CEO Rob Wong entered into a subscription agreement of $706,792 with Control Bionics Limited to facilitate the exercising of restricted employee options. The subscription agreement requires payment of the amount outstanding on or before 7 March 2023 unless repaid prior to this date. Interest is to be accrued annually at the “benchmark interest rate” prescribed by the ATO from time to time in relation to fringe benefits tax. Further details are outlined in note 5.

Note 11. Events after the reporting period

In January 2023 the Group announced the appointment of Jeremy Steele as CEO and Managing Director replacing Robert Wong, who retired due to an ongoing medical condition.

No other matter or circumstance has arisen since 31 December 2022 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.

15

Control Bionics Limited Directors’ declaration 31 December 2022

In the directors' opinion:

• the attached financial statements and notes comply with the Corporations Act 2001, Australian Accounting Standard AASB 134 'Interim Financial Reporting', the Corporations Regulations 2001 and other mandatory professional reporting requirements;

• the attached financial statements and notes give a true and fair view of the Group's financial position as at 31 December 2022 and of its performance for the financial half year ended on that date; and

• there are reasonable grounds to believe that the Group will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of directors made pursuant to section 303(5)(a) of the Corporations Act 2001.

On behalf of the directors

==> picture [179 x 45] intentionally omitted <==

_________ Mr Roger David Hawke Chairman

23 February 2023 Sydney

16

Tel: +61 3 9603 1700 Collins Square, Tower Four Fax: +61 3 9602 3870 Level 18, 727 Collins Street www.bdo.com.au Melbourne VIC 3008 GPO Box 5099 Melbourne VIC 3001 Australia

==> picture [78 x 31] intentionally omitted <==

INDEPENDENT AUDITOR’S REVIEW REPORT

To the members of Control Bionics Limited

Report on the Half-Year Financial Report

Conclusion

We have reviewed the half-year financial report of Control Bionics Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 December 2022, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the halfyear ended on that date, a summary of significant accounting policies and other explanatory information, and the directors’ declaration.

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the accompanying half-year financial report of the Group does not comply with the Corporations Act 2001 including:

• (i) Giving a true and fair view of the Group’s financial position as at 31 December 2022 and of its financial performance for the half-year ended on that date; and

• (ii) Complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

Basis for conclusion

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity . Our responsibilities are further described in the Auditor’s Responsibilities for the Review of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to the audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001 which has been given to the directors of the Company, would be the same terms if given to the directors as at the time of this auditor’s review report.

Material uncertainty relating to going concern

We draw attention to Note 1 in the financial report which describes the events and/or conditions which give rise to the existence of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern and therefore the Group may be unable to realise its assets and discharge its liabilities in the normal course of business. Our conclusion is not modified in respect of this matter.

BDO Audit Pty Ltd ABN 33 134 022 870 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 Audit 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.

==> picture [78 x 31] intentionally omitted <==

Responsibility of the directors for the financial report

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

Auditor’s responsibility for the review of the financial report

Our responsibility is to express a conclusion on the half-year financial report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 31 December 2022 and its performance for the half-year ended on that date, and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

BDO Audit Pty Ltd

==> picture [153 x 57] intentionally omitted <==

Katherine Robertson Director

Melbourne, 23 February 2023