ELSIGHT LIMITED — Interim / Quarterly Report 2017

Jun 6, 2017

ELSIGHT LIMITED ABN 98 616 435 753

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION) TO 28 FEBRUARY 2017

ABN 98 616 435 753

ELSIGHT LIMITED

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

TO 28 FEBRUARY 2017

TABLE OF CONTENTS

	Page
Corporate Directory	1
Directors’ Report	2
Auditor’s Independence Declaration	6
Statement of Comprehensive Income	7
Statement of Financial Position	8
Statement of Changes in Equity	9
Statement of Cash Flows	10
Notes to the Financial Statements	11
Director’s Declaration	24
Independent Auditor’s Report	25

ELSIGHT LIMITED ABN 98 616 435 753

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

TO 28 FEBRUARY 2017

CORPORATE DIRECTORY

Board of Directors

Mr Howard Digby (Non-Executive Chairman) Dr Anton Uvarov (Non-Executive Director) Mr Nathan Barbarich (Non-Executive Director)

Company Secretary

Mr Stephen Buckley Mr Peter Webse

Principal Place of Business/ Registered Office

Level 2, 46-50 Kings Park Rd West Perth WA 6005 Phone: +61 8 6189 1155

Postal Address

PO Box 271 West Perth WA 6872

Auditors

BDO Audit (WA) Pty Ltd 38 Station Street Subiaco WA 6008

Lawyers

Steinepreis Paganin Level 4, The Read Building 16 Milligan Street Perth WA 6001

Bankers

National Australia Bank (NAB)

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ELSIGHT LIMITED ABN 98 616 435 753

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

TO 28 FEBRUARY 2017

DIRECTORS’ REPORT

Your Directors present their report pertaining to Elsight Limited (“the Company” or “Elsight”) for the period from 13 December 2016 (date of incorporation) to 28 February 2017 (“the Period”).

BOARD OF DIRECTORS

The names and details of the Company’s Directors in office during the Period and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

Name	Position	Appointed
Mr Howard Digby	Non-Executive Chairman	13-Dec-16
Dr Anton Uvarov	Non-Executive Director	13-Dec-16
Mr Nathan Barbarich	Non-Executive Director	13-Dec-16

INFORMATION ON DIRECTORS

Mr Howard Digby Non-Executive Chairman (Appointed 13 December 2016)

Qualification BE (Hons) Experience Howard Digby began his career at IBM and has spent over 25 years managing technology related businesses in the Asia Pacific region, of which 12 years were spent in Hong Kong. More recently, he was with The Economist Company as Regional Managing Director. Prior to this he held senior regional management roles at Adobe and Gartner. Upon returning to Perth, Mr Digby served as Executive Editor of WA Business News and now spends his time as an advisor and investor having played key roles in a number of M&A and reverse takeover transactions.

Mr Digby has held a number of executive and non-executive director positions with ASX listed companies. Mr Digby is a non-executive Director of Estrella Resources (ASX:ESR) and 4DS Memory Limited (ASX:4DS) and Non-Executive Chairman of HearMeOut Limited (ASX:HMO). Mr Digby is currently an advisor to a number of private and start up technology businesses. Mr Digby holds a Bachelor of Engineering (Mechanical) Honours, from The University of Western Australia

Dr Anton Uvarov Non-Executive Director (Appointed 13 December 2016)

Qualification PhD BioChem.Med.Gen, MBA Experience Dr. Uvarov has significant experience as an equity analyst both domestically and internationally. Prior to moving to Australia he was with CitiCompany Global Markets where he spent two years as a member of New York based Healthcare team. Dr. Uvarov's technical expertise and company knowledge spreads across variety of industries and spectrum of market capitalizations with his particular interest in early stage start-ups.

Dr. Uvarov holds a PhD degree from the University of Manitoba, Canada and an MBA degree from the University of Calgary, Canada. He is currently a non-executive Director of Actinogen Medical Limited (ASX.ACW) and HearMeOut Limited (ASX.HMO).

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ABN 98 616 435 753

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

ELSIGHT LIMITED

TO 28 FEBRUARY 2017

DIRECTORS’ REPORT

INFORMATION ON DIRECTORS (CON’T)

Mr Nathan Barbarich Non-Executive Director (Appointed 13 December 2016) Qualification B Com, LLB Experience After studies in Commerce, Law and Property at University Nathan built a successful career in Commercial Property.

Nathan started his career in Stockbroking with ABN Amro in the 1990’s and has since held several Director and Managing Director positions in Investment Banking and Corporate Finance leading many recognisable transactions over those nearly 20 years.

Nathan has been responsible for listing many companies onto the ASX, AIM and LSE markets and has been Lead Manager to Capital Raisings in the many hundreds of millions of dollars. With a particular focus on the small to mid-cap sectors Nathan has been mandated by Companies in the Resources, Energy, Technology and Industrial sectors and has held a number of Non-Executive Director positions across his career.

DIRECTORS’ SECURITY HOLDINGS

As at the date of this report, the interests of the Directors in the shares of the Company are listed in the table below. Some of the Directors also hold Convertible Notes which, on completion of the Initial Public Offer and the Company's admission to the Australian Securities Exchange (“ASX”) Official List, will automatically convert into fully paid ordinary shares, each at a price of $0.12 per Share (40% discount to the Offer issue price).

Name Mr Howard Digby Dr Anton Uvarov Mr Nathan Barbarich Total	Fully paid ordinary shares Convertible note - $25,000 10,000,000 $25,000 - -
	10,000,000 $50,000

DIRECTORS’ MEETINGS

The following table sets out the number of meetings of the Company’s Directors held while each Director was in the office and the number of meetings attended by each Director.

Director	Number of meetings available to attend	Number of meetings attended
Mr Howard Digby	1	1
Dr Anton Uvarov	1	1
Mr Nathan Barbarich	1	1

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ELSIGHT LIMITED

ABN 98 616 435 753

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

TO 28 FEBRUARY 2017

DIRECTORS’ REPORT

COMPANY SECRETARY

Mr Stephen Buckley was appointed as the Company Secretary on 13 December 2016. Mr Peter Webse was appointed as the Joint Company Secretary on 1 February 2017.

PRINCIPAL ACTIVITIES

Elsight Limited was recently incorporated as an Australian public company for the purpose of being listed on the Australian Securities Exchange (“ASX”) and to become the parent company of El sight Ltd (“Elsight Israel”) (a company incorporated in Israel).

Subject to the execution of a Share Swap Agreement and various conditions precedent being met, Elsight Limited will acquire 100% of the issued capital of Elsight Israel; and any intellectual property rights attached to Elsight will be assigned to the Company.

REVIEW OF OPERATIONS

Elsight Limited had a loss of ($102,108) for the period from 13 December 2016 (incorporation date) to 28 February 2017. Elsight Limited had a net liability position of ($102,107) as at 28 February 2017. All expenditure during the period was related to corporate advisor and professional fees.

DIVIDENDS

No amounts have been paid or declared by way of dividend since the date of incorporation.

OPTIONS

No options over issued shares or interests in the company or the controlled entity were granted during or since the end of the Period, and there were no options outstanding as at the date of this report.

No shares were issued during or since the end of the Period as a result of the exercise of an option over unissued shares or interests.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

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

EVENTS SUBSEQUENT TO THE END OF THE PERIOD

By way of a prospectus yet to be issued, the Company is offering 22,500,000 Shares at an offer price of $0.20 each to raise a Minimum Subscription amount of $4,500,000 (before costs of the Offer). Oversubscriptions of a further 10,000,000 Shares at an offer price of $0.20 each to raise a further $2,000,000 may be accepted (“Offer”). A Maximum Subscription amount of $6,500,000 may be accepted under the Offer.

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ABN 98 616 435 753

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

ELSIGHT LIMITED

TO 28 FEBRUARY 2017

DIRECTORS’ REPORT

EVENTS SUBSEQUENT TO THE END OF THE PERIOD (CONTINUED)

Other than what has been mentioned above, no matters or circumstances have arisen since the end of the Period which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of the Company in subsequent financial periods.

LIKELY DEVELOPMENTS AND EXPECTED RESULTS

Likely developments in the operations of the Company and the expected results of those operations in future financial periods have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the Company.

INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS

During the Period, the Company entered in to Deeds of Indemnification with the Directors and Officers of the Company. However, there have been no premiums paid to insure the Directors and Officers of the Company. The Company will look to insure the Directors and Officers of the Company.

PROCEEDINGS ON BEHALF OF THE COMPANY

No person has applied for leave of Court, under section 237 of the Corporations Act 2001, to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is party for the purpose of taking responsibility on behalf of the Company for all or part of these proceedings. The Company was not a party to any such proceedings during the Period.

ENVIRONMENTAL REGULATIONS

The Company's operations are not subject to significant environmental regulation under the Australian Commonwealth or State law.

AUDITOR’S INDEPENDENCE DECLARATION

The Auditor’s Independence Declaration as required under section 307C of the Corporations Act 2001 for the Period ended 28 February 2017 forms a part of the Directors’ Report and can be found on page 6.

No officer of the Company is or has been a partner/director of any auditor of the Company.

Signed in accordance with a resolution of the Board of Directors.

Dr Anton Uvarov Non-Executive Director Perth, Western Australia Date: 7 April 2017

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ELSIGHT LIMITED ABN 98 616 435 753

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

TO 28 FEBRUARY 2017

AUDITOR’S INDEPENDENCE DECLARATION

6

Tel: +61 8 6382 4600 38 Station Street Fax: +61 8 6382 4601 Subiaco, WA 6008 www.bdo.com.au PO Box 700 West Perth WA 6872 Australia

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DECLARATION OF INDEPENDENCE BY PHILLIP MURDOCH TO THE DIRECTORS OF ELSIGHT LIMITED

As lead auditor of Elsight Limited for the period ended 28 February 2017, 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 in relation to the audit; and

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

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Phillip Murdoch

Director

BDO Audit (WA) Pty Ltd

Perth, 7 April 2016

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 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 (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, other than for the acts or omissions of financial services licensees.

ELSIGHT LIMITED

ABN 98 616 435 753

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION) TO 28 FEBRUARY 2017

STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

Note Revenue Accounting fees Audit fee Company secretary fees Corporate advisor fees Legal fees Other Loss before income tax Income tax benefit/ (expense) Loss for the year Other comprehensive income for the period net of tax Total comprehensive loss for the period	For the period from 13 December 2016 (date of incorporation) to 28 February 2017 $ - (7,488) (1,500) (10,000) (57,000) (26,026) (94)
	(102,108) -
	(102,108) -
	(102,108)

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

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ELSIGHT LIMITED ABN 98 616 435 753

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION) TO 28 FEBRUARY 2017

STATEMENT OF FINANCIAL POSITION

Note Current assets Cash and cash equivalents 5 Trade and other receivables Loan receivable 8 Total current assets Total assets Current liabilities Trade and other payables 9 Convertible notes 10 Total current liabilities Total liabilities Net assets Equity Issued capital 11 Accumulated losses Total equity	As at 28 February 2017 $ 151,345 5,924 499,900
	657,169
	657,169
	59,276 700,000
	759,276
	759,276
	(102,107)
	1 (102,108)
	(102,107)

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

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ELSIGHT LIMITED

ABN 98 616 435 753

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

TO 28 FEBRUARY 2017

STATEMENT OF CHANGES IN EQUITY

Balance as at 13 December 2016 (date of incorporation) Loss for the period Other comprehensive income Total comprehensive income for the period Transactions with equity holders in their capacity as equity holders: Shares issued during the period net of costs Balance as at 28 February 2017	Contributed Equity $ Accumulated Losses $ Total $ 1 - 1 - (102,108) (102,108) - - -
	- (102,108) (102,108) - - -
	1 (102,108) (102,107)

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

9

ELSIGHT LIMITED ABN 98 616 435 753

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION) TO 28 FEBRUARY 2017

STATEMENT OF CASH FLOWS

Note Cash flows from operating activities Payments to suppliers 6 Net cash inflow/ (outflow) from operating activities Cash flows from financing activities Proceeds from issue of shares Proceeds from issue of convertible notes Loan provided Net cash inflow/ (outflow) from financing activities Net increase/ (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of period Cash and cash equivalents at the end of period 5	For the period from 13 December 2016 (date of incorporation) to 28 February 2017 $ (48,756)
	(48,756) 1 700,000 (499,900)
	200,101 151,345 -
	151,345

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

10

ELSIGHT LIMITED

ABN 98 616 435 753 FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

TO 28 FEBRUARY 2017

NOTES TO THE FINANCIAL STATEMENTS

1. CORPORATE INFORMATION

The financial statements and notes represent those of Elsight Limited (“the Company” or “Elsight”) for the period from 13 December 2016 through to 28 February 2017 (“the Period”); and were authorised in accordance with a resolution of Directors on 7 April 2017.

The Company is a public company limited by shares incorporated and domiciled in Australia. The nature of operations and principal activities of the Company are described in the Directors’ Report.

Going concern

The Directors have prepared the financial statements on the going concern basis which contemplates continuity of normal business activities and realisation of assets and settlement of liabilities in the normal course of business. The Company recognises it incurred a loss of ($102,108) for the period from 13 December 2016 (date of incorporation) through to 28 February 2017 and has a net asset deficit of ($102,107). The Company will require further funding in order to meet its day to day obligations and successfully progress commercialising its products, this requirement for further funding gives rise to a material uncertainty that may cast significant doubt about the company’s ability to continue as a going concern and therefore be able to realise its assets and discharge its liabilities in the normal course of business at the amounts stated in the financial report.

The Directors are satisfied that further funding will be able to be obtained through further equity contributions from investors or from debt. The Company is in the process of preparing a Prospectus under which the Company is looking to raise $5,000,000 thought the issue of 25,000,000 shares. Should the Company not be able to continue as a going concern, it may be required to realise its assets and discharge its liabilities other than in the ordinary course of business, and at amounts that differ from those stated in the financial statements. The financial report does not include any adjustments relating to the recoverability and classification of recorded assets or liabilities that might be necessary should the Company not continue as a going concern.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these financial statements are set out below:

(a) Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, and the Corporations Act 2001. The financial statements have been prepared on a going concern basis.

The financial statements, except for cash flow information, have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. The amounts presented in the financial statements have been rounded off to the nearest dollar unless stated otherwise.

(b) Compliance with AASB & IFRS

Australian Accounting Standards set out accounting policies that the Australian Accounting Standards Board has concluded would result in financial statements containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of the financial statements are presented below and have been consistently applied unless stated otherwise.

(c) Historical cost convention

These financial statements have been prepared under the historical cost convention.

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ELSIGHT LIMITED

ABN 98 616 435 753 FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

TO 28 FEBRUARY 2017

NOTES TO THE FINANCIAL STATEMENTS

(d) Critical accounting estimates

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the Company’s accounting policies. There are no areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements.

(e) Cash and cash equivalents

For the purpose of the Statement of Cash Flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, high liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value and bank overdrafts.

(f) Trade receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for impairment. Trade receivables are generally due for settlement within 30 days.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

The amount of the impairment loss is recognised in the statement of comprehensive income within impairment losses – financial assets. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against impairment losses – financial assets in the statement of comprehensive income.

(g) Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(h) Contributed equity

Ordinary issued share capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction in share proceeds received.

(i) Trade and other payables

Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Company. Interest, when charged by the lender, is recognised as an expense on an accrual basis.

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ELSIGHT LIMITED ABN 98 616 435 753 FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

TO 28 FEBRUARY 2017

NOTES TO THE FINANCIAL STATEMENTS

(j) Financial Liabilities

Convertible notes are issued by the Company and automatic conversion is contingent on completion of an initial public offering and the Company’s admission to the ASX’s Official List. The number of shares to be issued does not vary with changes in their fair value. The liability component of the convertible note is recognised at the fair value of a similar liability that does not have an equity conversion option. Refer to Note 10 for further details of the terms of the convertible notes.

(k) New accounting standards and interpretations not yet adopted

Certain new accounting standards and interpretations have been published that are not mandatory for the current reporting periods and have not been early adopted by the Company. These new standards and interpretations are set out below.

New/revised pronouncement	Explanation of amendments	Application Date of Standard	Application Date of Group
AASB 9 Financial Instruments	AASB 9 (December 2014) is a new standard which replaces AASB 139. This new version supersedes AASB 9 issued in December 2009 (as amended) and AASB 9 (issued in December 2010) and includes a model for classification and measurement, a single, forward-looking ‘expected loss’ impairment model and a substantially- reformed approach to hedge accounting. AASB 9 is effective for annual periods beginning on or after 1 January 2018. However, the Standard is available for early adoption. The own credit changes can be early adopted in isolation without otherwise changing the accounting for financial instruments. Classificationand measurement AASB 9 includes requirements for a simpler approach for classification and measurement of financial assets compared with the requirements of AASB 139. There are also some changes made in relation to financial liabilities. The main changes are described below. Financialassets a) Financial assets that are debt instruments will be classified based on (1) the objective of the entity's business model for managing the financial assets; (2) the characteristics of the contractual cash flows. b) Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument. c) Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases.	1 January 2018	1 July 2018

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ABN 98 616 435 753

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

ELSIGHT LIMITED

TO 28 FEBRUARY 2017

NOTES TO THE FINANCIAL STATEMENTS

New/revised pronouncement	Explanation of amendments	Application Date of Standard	Application Date of Group
	Financial liabilities Changes introduced by AASB 9 in respect of financial liabilities are limited to the measurement of liabilities designated at fair value through profit or loss (FVPL) using the fair value option. Where the fair value option is used for financial liabilities, the change in fair value is to be accounted for as follows: • The change attributable to changes in credit risk are presented in other comprehensive income (OCI) • The remaining change ispresentedinprofitor loss AASB 9 also removes the volatility in profit or loss that was caused by changes in the credit risk of liabilities elected to be measured at fair value. This change in accounting means that gains or losses attributable to changes in the entity’s own credit risk would be recognised in OCI. These amounts recognised in OCI are not recycled to profit or loss if the liability is ever repurchased at a discount. Impairment The final version of AASB 9 introduces a new expected-loss impairment model that will require more timely recognition of expected credit losses. Specifically, the new Standard requires entities to account for expected credit losses from when financial instruments are first recognised and to recognise full lifetime expected losses on a more timely basis.
AASB 15 Revenue from Contracts with Customers	AASB 15 Revenue from Contracts with Customers replaces the existing revenue recognition standards AASB 111 Construction Contracts, AASB 118 Revenue and related interpretations (Interpretation 13 Customer Loyalty Programs, Interpretation 15 Agreements for the Construction of Real Estate, Interpretation 18 Transfers of Assets from Customers, Interpretation 131 Revenue – Barter Transactions Involving Advertising Services and Interpretation 1042 Subscriber Acquisition Costs in the Telecommunications Industry). AASB 15 incorporates the requirements of IFRS 15 Revenue from Contracts with Customers issued by the International Accounting Standards Board (IASB) and developed jointly with the US Financial Accounting Standards Board (FASB).	1 January 2018	1 July 2018
AASB 16 Leases	The key features of AASB 16 are as follows: Lessee accounting: • Lessees are required to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying assets is of low value. • A lessee measures right-of-use assets similarly to other non-financial assets and lease liabilities similarly to other financial liabilities. • Assets and liabilities arising from a lease are initially measured on present value basis. The measurement includes non-cancellable lease payments (including inflation-linked payments), and alsoincludes payments to	1 January 2019	1 July 2019

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ELSIGHT LIMITED

ABN 98 616 435 753

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

TO 28 FEBRUARY 2017

NOTES TO THE FINANCIAL STATEMENTS

New/revised pronouncement	Explanation of amendments	Application Date of Standard	Application Date of Group
	be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease, or not to exercise an option to terminate the lease. • AASB 16 contains disclosure requirements for lessees. Lessor accounting: • AASB 16 substantially carries forward the lessor accounting requirements in AASB 117. Accordingly, a lessor continues to classify its leases as operating leases or finance leases, and to account for those two types of leases differently. • AASB 16 also requires enhanced disclosures to be provided by lessors that will improve information disclosed about a lessor’s risk exposure, particularly to residual value risk. AASB 16 supersedes: (a) AASB 117 Leases (b) Interpretation 4 Determining whether an Arrangement contains a Lease (c) SIC-15 Operating Leases-Incentives SIC-27 Evaluating the Substance of Transaction Involving the Legal Form of a Lease.

* Designates the beginning of the applicable annual reporting period unless otherwise stated.

The impact of the adoption of all of these new and revised standards and interpretations has not yet been assessed by the Company.

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ELSIGHT LIMITED

ABN 98 616 435 753

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

TO 28 FEBRUARY 2017

NOTES TO THE FINANCIAL STATEMENTS

3. FINANCIAL RISK MANAGEMENT

The Company’s activities expose to market risk, credit risk and liquidity risk. The Company’s overall risk in these areas is not significant enough to warrant a formalised specific risk management program.

Risk management is carried out by the Board of Directors in their day to day function as the overseers of the business.

Set out below is an overview of the financial instruments held by the Company as at 28 February 2017:

Financial assets Cash and cash equivalents Trade and other receivables Loan receivable Total current Total assets Financial liabilities Trade and other payables Convertible note payable Total current Total liabilities Net exposure	Cash and cash equivalents $ Other assets and liabilities $ Total $ 151,345 - 151,345 - 5,924 5,924 - 499,900 499,900
	151,345 505,824 657,169
	151,345 505,824 657,169
	- 59,276 59,276 - 700,000 700,000
	- 759,276 759,276
	- 759,276 759,276
	151,345 (253,452) (102,107)

(a) Market Risk

(i) Interest rate risk

The Company’s main interest rate risk exposure relates primarily to the Company’s cash at bank that is held with variable interest rates. The Company does not rely on the generation of interest on cash and cash equivalents to provide for working capital and as a result does not consider this to be material. The Company therefore has not undertaken any further analysis of exposure.

(b) Credit risk

Credit risk is the risk of financial loss to the Company if a counter party to a financial instrument fails to meet its contractual obligations. The Company’s main credit risk exposure relates to the financial assets of the Company, which comprise cash and cash equivalents and trade and other receivables. The Company’s exposure to credit risk arises from potential default of the counter party, with the maximum exposure equal to the carrying amount of these instruments.

The carrying amount of financial assets included in the statement of financial position represents the Company’s maximum exposure to credit risk in relation to those assets. The Company does not hold any credit

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ELSIGHT LIMITED

ABN 98 616 435 753 FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

TO 28 FEBRUARY 2017

NOTES TO THE FINANCIAL STATEMENTS

derivatives to offset its credit exposure. The Company trades only with recognised, credit worthy third parties and as such collateral is not requested nor is it the Company’s policy to securitise its trade and other receivables. Receivable balances are monitored on an ongoing basis with the result that the Company does not have a significant exposure to bad debts. The Company has no significant concentrations of credit risk except for cash held with National Australia Bank and various receivables with recognised third parties.

(i) Cash

The Directors believe that there is negligible credit risk with the Company’s cash and cash equivalents, as funds are held at call with National Australia Bank, a reputable Australian Banking institution.

(ii) Trade and other receivables

While the Company has policies in place to ensure that transactions with third parties have an appropriate credit history, the management of current and potential credit risk exposures is limited as far as is considered commercially appropriate. Up to the date of this report, the Board has placed no requirement for collateral on existing debtors. No debtors are past their due date.

(c) Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial liabilities as and when they fall due. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Company manages liquidity risk by continuously monitoring forecast and actual cash flows. Surplus funds are generally only invested at call or in bank bills that are highly liquid and with maturities of less than six months.

(i) Financing arrangements:

The Company does not have any financing arrangements.

(ii) Maturities of financial liabilities:

The Company’s debt relates to trade payables, whereby payments are generally due within 30 days, and a convertible note liability which on completion of the Initial Public Offering and the Company's admission to the ASX’s Official List (refer to the Company’s Prospectus), the Convertible Notes will automatically convert into 5,833,338 Shares, each at a price of $0.12 per Share (40% discount to the Offer issue price). If this is not completed within six months of the issue of the convertible notes, the convertible note will convert into shares in Elsight Israel at a 20% discount upon the dated which Elsight Israel completes a capital raising of at least US$1,000,000. The Convertible Note will not be repayable in cash at any time.

(d) Fair Value Measurements

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

Accounting standards require disclosure of fair value measurements by level of the following fair value measurement hierarchy:

(a) quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);

(b) inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2); and

17

ELSIGHT LIMITED ABN 98 616 435 753 FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

TO 28 FEBRUARY 2017

NOTES TO THE FINANCIAL STATEMENTS

(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).

The Company holds no available-for-sale financial assets or liabilities as at 28 February 2017.

(e) Fair Values

Set out below is a comparison of the carrying amounts and fair values of financial instruments as at 28 February 2017. The carrying value of trade receivables and trade payables are assumed to approximate their fair value due to their short-term nature.

	Carrying Value	Fair Value
	$	$
Financial assets
Cash and cash equivalents	151,345	151,345
Trade and other receivables	5,924	5,924
Loan receivable	499,900	499,900
Total current	657,169	657,169
Total financial assets	657,169	657,169
Financial liabilities
Trade and other payables	59,276	59,276
Convertible note payable	700,000	700,000
Total current	759,276	759,276
Total financial liabilities	759,276	759,276
4. INCOME TAX
		As at 28 February	2017
			$
Numerical reconciliation of income tax to prima facie tax payable
Operating loss before income tax		(102,108)
Tax benefit at the Australian tax rate of 28.5%		(29,101)
Tax effect of amounts that are not tax deductible/ taxable in calculating taxable
income:
Future income tax befit not brought to account		29,101
Income tax income/ (expense)			-
Tax losses
Unused tax losses for which no deferred tax asset has been recognised		(102,108)
Potential tax benefit at 28.5%		29,101
			-

18

ELSIGHT LIMITED

ABN 98 616 435 753

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

TO 28 FEBRUARY 2017

NOTES TO THE FINANCIAL STATEMENTS

The tax benefit of tax losses and other temporary differences will only arise in the future where the Company derives sufficient net taxable income and is able to satisfy the carried forward tax loss recoupment rules. The Directors believe that the likelihood of the Company achieving sufficient taxable income in the future is not probable and the tax benefit of these tax losses and other temporary differences have not been recognised.

5. CASH AND CASH EQUIVALENTS

Note Cash at bank Total cash and cash equivalents 6. CASH FLOW INFORMATION Note Loss for the period Changes in assets and liabilities: (Increase) in trade receivables Increase in trade payables Net cash inflow/ (outflow) from operating activities	As at 28 February 2017 $ 151,345
	151,345
	For the period from 13 December 2016 (date of incorporation) to 28 February 2017 $ (102,108) (5,924) 59,276
	(48,756)

Non cash financing & investing activities

No non-cash financing and investing activities occurred during the Period.

Financing facilities available

As at 28 February 2017, the Company had no financing facilities available. For the purposes of the statement of cash flows, cash includes cash on hand and in banks.

Interest rate risk exposure

The Company’s exposure to interest rate risk is discussed in Note 3.

Credit risk exposure

The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of cash and cash equivalents mentioned above.

19

ELSIGHT LIMITED

ABN 98 616 435 753

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

TO 28 FEBRUARY 2017

NOTES TO THE FINANCIAL STATEMENTS

7. TRADE AND OTHER RECEIVABLES

Note GST receivable Total trade and other receivables	As at 28 February 2017 $ 5,924
	5,924

(a) Goods and services tax receivable

This amount relates to good and services tax (GST) paid or payable for the period since incorporation date that is refundable to the Company by the Australian Tax Office.

8. LOAN RECEIVABLE

Note Loan receivable Total loan receivable	As at 28 February 2017 $ 499,900
	499,900

During the Period the Company raised $700,000 through the issue of Convertible Notes (Refer to Note 10). Of this amount raised, $499,900 was loaned by the Company to Elsight Israel to be used for various working capital.

Subject to various conditions precedent being met, including the execution of a Share Swap Agreement, the completion of an initial public offering and the Company's admission to the ASX’s Official List, Elsight Limited will become the subsidiary of the Company.

Should the conditions precedent not be met, however, the obligation to repay the Loan will be novated to Elsight Israel and the Company will be released and have no further obligation to the convertible note holders.

9. TRADE AND OTHER PAYABLES

Note Trade payables Accruals Total trade and other payables	As at 28 February 2017 $ 16,500 42,776
	59,276

Trade and other payables are non-interest bearing liabilities stated at cost and settled within 30 days.

10. CONVERTIBLE NOTE LIABILITY

Note Convertible note Total convertible note	As at 28 February 2017 $ 700,000
	700,000

The Company has $700,000 worth of Convertible Notes on issue, which were issued during the period. No interest is payable on the Convertible Notes and the Convertible notes are unsecured.

20

ELSIGHT LIMITED

ABN 98 616 435 753 FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

TO 28 FEBRUARY 2017

NOTES TO THE FINANCIAL STATEMENTS

Subject to completion of an initial public offering and the Company's admission to the ASX’s Official List, the Convertible Notes will automatically convert into 5,833,338 Shares, each at a price of $0.12 per Share (40% discount to the Offer issue price). If this is not completed within six months of the issue of the convertible notes, the convertible note will convert into shares in Elsight Israel at a 20% discount upon the dated which Elsight Israel completes a capital raising of at least US$1,000,000. The Convertible Note will not be repayable in cash at any time.

11. CONTRIBUTED EQUITY

Note Fully paid ordinary shares Total contributed equity	As at 28 February 2017 $ 1
	1

(a) Share Capital

Ordinary shares: These shares entitle the holder to participate in dividends and the proposed winding up of the Company in proportion to the number and amount paid on the share held. Effective 1 July 1998 the Corporations legislation in place abolished the concepts of authorised capital and par share values. Accordingly, the Company does not have authorised capital or par value in respect of its issued shares.

(b) Movement of fully paid ordinary shares during the period were as follows:

Incorporation shares Share Split (10,000:1) Share Split (1,000:1) Balance at 28 February 2017	Date Quantity Unit Price ($) Total ($) 13/12/2016 1 1.00 1 14/01/2017 18/02/2017
	1 1

(c) Share Options

As at the date of this report, there were no unissued ordinary shares under option.

12. COMMITMENTS

The only commitment that Elsight Limited holds is to the holders of the Convertible Note. Refer to Note 10 for further information. Other than this commitment, the Company has no future commitments existing as at 28 February 2017.

13. CONTINGENCIES

The Directors are not aware of any contingent liabilities or assets as at 28 February 2017.

21

ELSIGHT LIMITED

ABN 98 616 435 753 FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION) TO 28 FEBRUARY 2017

NOTES TO THE FINANCIAL STATEMENTS

14. KEY MANAGEMENT PERSONNEL DISCLOSURES

Key management personnel of Elsight Limited are listed below:

Name	Position	Appointed
Mr Howard Digby	Non-Executive Chairman	13/12/2016
Dr Anton Uvarov	Non-Executive Director	13/12/2016
Mr Nathan Barbarich	Non-Executive Director	13/12/2016
Mr Stephen Buckley	Joint Company Secretary	13/12/2016
Mr Peter Webse	Joint Company Secretary	01/02/2017

(a) Key Management Personnel Compensation:

(a) Key Management Personnel Compensation:
Note Short-term employee benefits Post-employment benefits Share based payments Total key management personnel compensation	As at 28 February 2017 $ 10,000 - -
	10,000

There were no benefits paid out during the Period to Key Management Personnel. Directors’ fees will only be accrued from date of listing. A total of $10,000 has been accrued for company secretarial services provided by Messrs Webse and Buckley for their services as Joint Company Secretary.

As at the date of this report, the interests of the Directors in the shares of the Company are listed in the table below. Some of the Directors also hold Convertible Notes which, on completion of the Initial Public Offer and the Company's admission to the Australian Securities Exchange (“ASX) Official List, will automatically convert into fully paid ordinary shares, each at a price of $0.12 per Share (40% discount to the Offer issue price). For further information refer to Note 10.

Name Mr Howard Digby (a) Dr Anton Uvarov (b) Mr Nathan Barbarich Total	Fully paid ordinary shares Convertible note - $25,000 10,000,000 $25,000 - -
	10,000,000 $50,0000

(a) Mr Digby was appointed on 13 December 2016 and holds $25,000 convertible notes which will convert into 208,334 ordinary fully paid shares, upon successful completion on an IPO and listing on the ASX.

(b) Dr Uvarov was appointed on 13 December 2016 and holds $25,000 convertible notes which will convert into 208,334 ordinary fully paid shares, upon successful completion on an IPO and listing on the ASX.

22

ELSIGHT LIMITED

ABN 98 616 435 753

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

TO 28 FEBRUARY 2017

NOTES TO THE FINANCIAL STATEMENTS

15. RELATED PARTY TRANSACTIONS

(a) Transactions with Key Management Personnel

During the period under review there were two transactions with RM Corporate Finance Pty Ltd, a related party of Mr Nathan Barbarich totalling to $57,000 (plus GST).

Other than what is mentioned above and in Note 14, there were no other transactions with Key Management Personnel.

16. REMUNERATION OF AUDITOR

Note Amounts paid or payable to BDO Audit (WA) Pty Ltd for: - Audit or review of the financial statements of the entity Total amounts paid or payable to the auditor	For the period from 13 December 2016 (date of incorporation) to 28 February 2017 $ 1,500
	1,500

17. EVENTS OCCURRING AFTER THE REPORTING PERIOD

By way of a prospectus yet to be issued, the Company is offering 22,500,000 Shares at an offer price of $0.20 each to raise a Minimum Subscription amount of $4,500,000 (before costs of the Offer). Oversubscriptions of a further 10,000,000 Shares at an offer price of $0.20 each to raise a further $2,000,000 may be accepted (“Offer”). A Maximum Subscription amount of $6,500,000 may be accepted under the Offer.

Other than what has been mentioned above, no matters or circumstances have arisen since the end of the Period which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of the Company in subsequent financial periods.

23

ELSIGHT LIMITED ABN 98 616 435 753

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

TO 28 FEBRUARY 2017

DIRECTOR’S DECLARATION FOR THE PERIOD FROM 13 DECEMBER 2016 TO 28 FEBRUARY 2017

In the Directors opinion:

1. The financial statements and notes set out on pages 7 to 23, are in accordance with the Corporations Act 2001 including:

2. (a) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

3. (b) giving a true and fair view of the Company’s financial position as at 28 February 2017 and of its performance for the Period ended on that date;

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

5. The Company has included in the notes to the financial statements an explicit and unreserved statement of compliance with International Financial Reporting Standards.

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

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Dr Anton Uvarov Non-Executive Director Perth, Western Australia Date: 7 April 2017

24

ELSIGHT LIMITED ABN 98 616 435 753

FINANCIAL STATEMENTS FOR THE PERIOD FROM 13 DECEMBER 2016 (INCORPORATION)

TO 28 FEBRUARY 2017

INDEPENDENT AUDITOR’S REPORT

25

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au

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INDEPENDENT AUDITOR'S REPORT

To the members of Elsight Limited

Report on the Audit of the Financial Report

Opinion

We have audited the financial report of Elsight Limited (the Company), which comprises the statement of financial position as at 28 February 2017, the statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to the financial report, including a summary of significant accounting policies, and the directors’ declaration.

In our opinion the accompanying financial report of Elsight Limited, is in accordance with the Corporations Act 2001 , including:

• (i) Giving a true and fair view of the Company’s financial position as at 28 February 2017 and of its financial performance for the year ended on that date; and

• (ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Company in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

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

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

Material uncertainty related to going concern

Without modifying our opinion, we draw attention to Note 1 in the financial report, which indicates that the ability of the company to continue as a going concern is dependent upon the future successful raising of necessary funding through equity and debt. These conditions, along with other matters as set out in Note 1, indicate the existence of a material uncertainty that may cast significant doubt about the company’s ability to continue as a going concern and therefore, the company may be unable to realise its assets and discharge its liabilities in the normal course of business.

Other information

The directors are responsible for the other information. The other information obtained at the date of this auditor’s report is information included in the directors report, but does not include the financial report and our auditor’s report thereon.

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 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 (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 other than for the acts or omissions of financial services licensees

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

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

If, based on the work we have performed on the other information obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the Financial Report

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

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

Auditor’s responsibilities for the audit of the Financial Report

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

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:

http://www.auasb.gov.au/auditors_files/ar3.pdf.

This description forms part of our auditor’s report.

BDO Audit (WA) Pty Ltd

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Phillip Murdoch

Director

Perth, 7 April 2017