CONTROL BIONICS LIMITED — Interim / Quarterly Report 2023

Jan 29, 2023

30 January 2023

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ASX ANNOUNCEMENT (ASX:CBL)

QUARTERLY ACTIVITIES REPORT & APPENDIX 4C QUARTER ENDED 31 DECEMBER 2022

Highlights

• Q2 FY23 Cash Receipts from sales of $1.43m, up from $0.91m in Q2 FY22

• Australian Q2 Sales revenue up around 30% over previous quarter

• Key financial metrics remain consistent with FY forecast

• Operating cash outflows reduced by 18% relative to previous quarter

• $3.03m cash at 31 December 2022

• Appointment of new CEO Jeremy Steele

Control Bionics Limited (ASX: CBL), is pleased to announce its Activity Report and Appendix 4C for the quarter ended 31 December 2022.

Commenting on the quarter, Control Bionics CEO, Jeremy Steele said:

“I am excited to join CBL at an inflection point where sales are growing strongly, and new products and markets are creating additional growth opportunities. My initial focus will be to ensure we maximise the revenue opportunity and continue to manage expenses prudently to reduce cash outflows and deliver against our FY forecast. We are already seeing substantial reductions in cash outflows as a result of existing programs.

I expect that CBL will also continue to introduce new products such as the autonomous wheelchair controller that will deliver additional growth in subsequent years. User trials were successful and we expect to launch in Australia this quarter. We have also lodged a provisional patent for this unique product.

Operational Performance

(a) North America

Q2 FY23 sales through North American operations remain consistent with FY forecast at A$0.93m.

(b) Australia

Q2 FY23 sales for the Australian operations were A$0.40m, an increase of around 30% over Q1. The Sales pipeline in Australia remains strong.

Control Bionics Limited Registered Office: Level 5, Suite 5.01, 697 Burke Road, Camberwell, Victoria, 3124, Australia T: +61 3 9897 3576 W: www.controlbionics.com

ABN: 45 115 465 462

The recently introduced rental plan strategy is providing a strong flow of revenue that would otherwise be tied up in a more lengthy approval period.

(c) New Market Development

We continue our development activities in both Japan and Singapore in conjunction with our local distribution partners.

Our Japanese distributor Double R&D has now hired an additional dedicated sales resource for our products.

(d) Product development

The Company continues to develop and extend its product range in order to target expanded sales opportunities and new user groups. Notable actions in the quarter included:

• The Company continues to develop new products based on its market leading NeuroNode technology. A miniaturised 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.

Quarterly cashflows and cash at bank

The Group results reflected the following:

• Total operating cash outflows of $1.22m, down 18% on the previous quarter.

• Cash balance as at 31 December 2022 was $3.03m.

Business Strategy

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.

ASX Additional information

(a) Expenditure on business activities

Pursuant to Listing Rule 4.7C.1, a summary of the expenditure incurred on the above business activities for the quarter:

Expenditure Category	Amount $’000
Staff costs	1,212
Product manufacturing	988
Administration and corporate	184
Research and development	122
Advertising and marketing	107
Leased assets	38

(b) App 4C

The amount included in section 6.1 of the Appendix 4C is the payment of fees to directors.

This ASX announcement has been approved for release by the Board of Directors of Control Bionics Limited.

About Control Bionics:

Control Bionics is a medical device company assisting patients whose ability to communicate verbally or via text and social media is compromised by illnesses such as Motor Neurone Disease (MND)/ Amyotrophic Lateral Sclerosis (ALS), Spinal Cord Injury, Traumatic Brain Injury and Cerebral Palsy among others. Our core patented NeuroNode technology is a wireless wearable device that detects minute signals sent from the brain to any skeletal muscle and is captured as Electromyography (EMG) signals which are processed on personal computers, smartphones and tablet to generate text, text to speech, email and other computer controlled functions. Our technology is integrated with eye gaze technology whereby the eye gaze enables a cursor to be moved about a computer screen, driven much like a mouse, and the NeuroNode acts as like the mouse button. Control Bionics produces the only system to harness three modalities – touch, eye movement and EMG control – which combined yield unique benefits in terms of the ability of patients to express themselves with significantly faster speed and less fatigue.

Control Bionics operates in North America, Australia, Singapore and Japan.

Investors and Media

Brett Crowley - Company Secretary brettcrowley@controlbionics.com

For further information visit the website: https://www.controlbionics.com/

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Name of entity

Name of entity	Name of entity
Control Bionics Limited
ABN 45 115 465 462	**Quarter ended (“current quarter”) **
45 115 465 462	31 December 2022

Consolidated statement of cash flows	Current quarter ($A’000)	Year to date (6 months) ($A’000)
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) research and development (b) product manufacturing and operating costs (c) advertising and marketing (d) leased assets (e) staff costs (f) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives 1.8 Other (provide details if material)1 1.9 Net cash from / (used in) operating activities	1,431 (122) (988) (107) (38) (1,212) (184) - 7 (9) - - -	2,998 (204) (2,046) (177) (87) (2,671) (513) - 11 (25) - - -
	(1,222)	(2,714)

2. Cash flows from investing activities 2.1 Payments to acquire or for: (a) entities (b) businesses (c) property, plant and equipment (d) investments (e) intellectual property (f) other non-current assets 2.2 Proceeds from disposal of: (a) entities (b) businesses (c) property, plant and equipment (d) investments (e) intellectual property (f) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities	- - (42) - (35) - - - - - - - - - -	- - (118) - (35) - - - - - - - - - -
	(77)	(153)
3. Cash flows from financing activities 3.1 Proceeds from issues of equity securities (excluding convertible debt securities) 3.2 Proceeds from issue of convertible debt securities 3.3 Proceeds from exercise of options 3.4 Transaction costs related to issues of equity securities or convertible debt securities 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material)1 3.10 Net cash from / (used in) financing activities	- - - - - - - - -	- - 749 - - (48) - - -
	-	701

4. 4.1 4.2 4.3 4.4 4.5 4.6	Net increase / (decrease) in cash and cash equivalents for the period Cash and cash equivalents at beginning of period Net cash from / (used in) operating activities (item 1.9 above) Net cash from / (used in) investing activities (item 2.6 above) Net cash from / (used in) financing activities (item 3.10 above) Effect of movement in exchange rates on cash held Cash and cash equivalents at end of period	4,352 (1,222) (77) - (27)	5,214 (2,714) (153) 701 (22)	5,214 (2,714) (153) 701 (22)
		3,026	3,026
5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts		Current quarter $A’000		Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)		3,026 - - -		4,351 - - -
		3,026		4,351
6. Payments to related parties of the entity and their associates			Current quarter $A’000
6.1 Aggregate amount of payments to related parties and their associates included in item 1 6.2 Aggregate amount of payments to related parties and their associates included in item 2 Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a explanation for, such payments.			139
			-
			description of, and an

7. 7.1 7.2 7.3 7.4 7.5 7.6	Financing facilities Note: the term “facility’ includes all forms of financing arrangements available to the entity. Add notes as necessary for an understanding of the sources of finance available to the entity. Total facility amount at quarter end $A’000 Amount drawn at quarter end $A’000 Loan facilities - - Credit standby arrangements - - Other (please specify) – see below - - Total financing facilities - - Unused financing facilities available at quarter end - Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well.	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
		-	-
		-	-
		-	-
		-	-

8.	Estimated cash available for future operating activities	$A’000
8.1 8.2 8.3 8.4 8.5 8.6	Net cash from / (used in) operating activities (item 1.9) (1,222) Cash and cash equivalents at quarter end (item 4.6) 3,026 Unused finance facilities available at quarter end (item 7.5) - Total available funding (item 8.2 + item 8.3) 3,026 Estimated quarters of funding available (item 8.4 divided by item 8.1) 2.47 Note: if the entity has reported positive net operating cash flows in item 1.9, answer item 8.5 as “N/A”. Otherwise, a figure for the estimated quarters of funding available must be included in item 8.5. If item 8.5 is less than 2 quarters, please provide answers to the following questions: 8.6.1 Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?	(1,222) 3,026 -
		3,026
		2.47
	Answer: Not applicable
	8.6.2 Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?
	Answer: Not applicable
	8.6.3 Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis?
	Answer: Not applicable
	Note: where item 8.5 is less than 2 quarters, all of questions 8.6.1, 8.6.2 and 8.6.3 above must be answered.

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Date: 30 January 2023

Authorised by: By the Board

(Name of body or officer authorising release – see note 4)