Immuron Ltd — Annual Report 2023

Aug 29, 2023

Immuron Ltd 0

Immuron Limited Appendix 4E 30 June 2023

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Name of entity: Immuron Limited ABN: 80 063 114 045 Year ended: 30 June 2023 Previous period: 30 June 2022

Results for announcement to the market

Results for announcement to the market
				$
Revenue from ordinary activities	Up	135.8%	to	1,804,705
Loss from ordinary activities after tax attributable to members	Up	32.7%	to	(3,786,507)
Net loss for the period attributable to members	Up	32.7%	to	(3,786,507)

Distributions

No dividends have been paid or declared by the company for the current financial year. No dividends were paid for the previous financial year.

Explanation of results

The reported after tax loss of the current financial year of $3,786,507 (2022: $2,854,254) is after fully expensing the company’s research and development expenditure of $2,592,145 incurred during the year (2022: $657,715). Of which, $2,158,936 (2022: $369,045) was funded by the R&D grant from Medical Technology Enterprise Consortium (MTEC). Research and development expenses increased by $1,934,430 from the financial year 2022 to 2023. The increase in the research and development expenditure reflects the recommencement of research and development activities following a short-term delay during the Covid-19 pandemic.

The revenue from contracts with customers for the year was $1,804,705, which is an increase of 135.8% from the prior financial year (2022: $765,193), primarily due to the sales recovery in the Australian, U.S. and North ® ® American markets for Travelan . We anticipate that revenues from sales of our Travelan product will continue to increase in the future.

As at 30 June 2023 the company’s cash position was $17,159,764 (30 June 2022: $22,110,278). The company had trade and other receivables of $417,420 (30 June 2022: $662,896). This receivables amount includes future receivables from the Australian Government under the R&D Tax Incentive program mentioned above.

The preliminary financial report follows, with the further details to be included in the audited financial statements to be released by 29 September 2023.

Immuron Limited Appendix 4E 30 June 2023 (continued)

Net tangible assets per security

Net tangible assets per security
	2023	2022
	Cents	Cents
Net tangible asset backing (per security)	8.53	10.08

Changes in controlled entities

There have been no changes in controlled entities during the year ended 30 June 2023.

Other information required by Listing Rule 4.2A

Other information required by Listing Rule 4.2A
a. Details of individual and total dividends or distributions and	dividend or distribution	payments:	N/A
b. Details of any dividend or distribution reinvestment plans:			N/A
c. Details of associates and joint venture entities:
	Place of business/
	country of	Ownership interest held
Name of entity	incorporation	by the group
			30 June 2023
			%
Ateria Health Limited	United Kingdom		17.5

On 25 November 2022, Immuron has been allotted 800,767 shares in Ateria Health Limited (Ateria), representing 17.5% of the issued share capital of Ateria post the group’s upfront cash investment, following satisfaction of conditions precedent for the transaction, including completion of Immuron confirmatory due diligence and Ateria shareholder approval. As at 30 June 2023, Immuron has a 17.5% interest and one board seat in Ateria. Immuron is deemed to have significant influence over Ateria. For further information, please refer to the interim financial report for the half-year 31 December 2022.

d. Other information N/A

Audit

The financial statements are currently in the process of being audited. The audited financial statements along with the independent auditor report for the year end 30 June 2023 will be provided in the due course.

Immuron Limited Consolidated statement of profit or loss and other comprehensive income For the year ended 30 June 2023

Notes Revenue from contracts with customers 1 Cost of goods sold Gross profit Other income 2(a) Fair value gains/(losses) to financial assets Net foreign exchange gains/(losses) Movement in inventory provision 2(b) General and administrative expenses 2(c) Research and development expenses 2(c) Selling and marketing expenses 2(c) Operating loss Finance income Finance expenses Finance costs - net Share of profit/(loss) from associates Loss before income tax Income tax expense Loss for the year Other comprehensive income Items that may be reclassified to profit or loss: Exchange differences on translation of foreign operations 4(b) Total comprehensive loss for the year Loss per share for loss attributable to the ordinary equity holders of the company: Basic and diluted loss per share	2023 $ 2022 $ 1,804,705 765,193 (495,558) (241,691)
	1,309,147 523,502 2,591,498 957,725 (523,666) - 363,724 247,558 430,932 - (4,220,905) (3,524,388) (2,592,145) (657,715) (927,423) (416,537)
	(3,568,838) (2,869,855)
	116,323 21,785 (9,652) (6,184)
	106,671 15,601 (324,340) -
	(3,786,507) (2,854,254) - -
	(3,786,507) (2,854,254) (1,012) 6,708
	(3,787,519) (2,847,546)
	Cents Cents (1.66) (1.25)

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

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Immuron Limited

Notes ASSETS Current assets Cash and cash equivalents 3(a) Trade and other receivables 3(b) Inventories Financial assets 3(c) Other current assets Total current assets Investments accounted for using the equity method Property, plant and equipment Inventories Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables Provision for sales returns Employee benefit obligations Other current liabilities Deferred income 3(d) Total current liabilities Non-current liabilities Employee benefit obligations Other non-current liabilities Total non-current liabilities Total liabilities Net assets EQUITY Share capital 4(a) Other reserves 4(b) Accumulated losses Total equity	Immuron Limited Consolidated balance sheet As at 30 June 2023 2023 $ 2022 $ 17,159,764 22,110,278 417,420 662,896 839,968 326,578 1,834,034 - 158,151 572,400
	20,409,337 23,672,152
	159,066 - 200,133 226,736 1,219,646 956,936
	1,578,845 1,183,672
	21,988,182 24,855,824
	1,192,769 1,160,893 - 95,931 289,408 211,776 38,767 34,376 698,195 -
	2,219,139 1,502,976
	1,882 36 150,325 175,411
	152,207 175,447
	2,371,346 1,678,423
	19,616,836 23,177,401
	88,436,263 88,436,263 3,235,969 3,166,419 (72,055,396) (68,425,281)
	19,616,836 23,177,401

The above consolidated balance sheet should be read in conjunction with the accompanying notes.

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Immuron Limited

Immuron Limited Consolidated statement of changes in equity For the year ended 30 June 2023

Notes Balance at 1 July 2022 Loss for the year Other comprehensive income Total comprehensive loss for the year Transactions with owners in their capacity as owners: Options and warrants issued/expensed 4(b) Options and warrants lapsed/expired 4(b) Performance rights issued/expensed 4(b) Balance at 30 June 2023 Notes Balance at 1 July 2021 Loss for the year Other comprehensive income Total comprehensive income/(loss) for the year Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs and tax 4(a) Options and warrants issued/expensed Options and warrants lapsed/expired Balance at 30 June 2022	Attributable to owners of Immuron Limited Share capital $ Other reserves $ Accumulated losses $ Total equity $ 88,436,263 3,166,419 (68,425,281) 23,177,401
	- - (3,786,507) (3,786,507) - (1,012) - (1,012)
	- (1,012) (3,786,507) (3,787,519)
	- 104,753 - 104,753 - (156,392) 156,392 - - 122,201 - 122,201
	- 70,562 156,392 226,954
	88,436,263 3,235,969 (72,055,396) 19,616,836
	Attributable to owners of Immuron Limited Share capital $ Other reserves $ Accumulated losses $ Total equity $ 88,361,303 3,466,642 (65,932,888) 25,895,057
	- - (2,854,254) (2,854,254) - 6,708 - 6,708
	- 6,708 (2,854,254) (2,847,546)
	74,960 - - 74,960 - 54,930 - 54,930 - (361,861) 361,861 -
	74,960 (306,931) 361,861 129,890
	88,436,263 3,166,419 (68,425,281) 23,177,401

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

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Immuron Limited

Immuron Limited Consolidated statement of cash flows For the year ended 30 June 2023

Notes Cash flows from operating activities Receipts from customers Payments to suppliers and employees Australian R&D tax incentive refund Government grants and other grants received Net cash (outflow) from operating activities Cash flows from investing activities Payments for property, plant and equipment Payment for acquisition of associate Interest received Net cash (outflow) inflow from investing activities Cash flows from financing activities Principal elements of lease payments Interest and other costs of finance paid Net cash (outflow) from financing activities Net (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of year 3(a)	2023 $ 2022 $ 1,912,689 696,603 (7,842,052) (4,629,139) 251,986 306,154 3,082,182 478,589
	(2,595,195) (3,147,793)
	(7,739) (10,048) (2,729,863) - 116,323 21,785
	(2,621,279) 11,737
	(35,015) (36,264) (9,652) (6,184)
	(44,667) (42,448)
	(5,261,141) (3,178,504) 22,110,278 25,047,281 310,627 241,501
	17,159,764 22,110,278

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

Immuron Limited

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Immuron Limited Notes to the financial statements 30 June 2023

1 Revenue from contract with customers

(a) Disaggregation of revenue from contracts with customers

The group derives revenue from the transfer of hyperimmune products at a point in time in the following major product lines and geographical regions:

2023 Hyperimmune products revenue Revenue from external customers 2022 Hyperimmune products revenue Revenue from external customers	Travelan Protectyn Australia United States Canada Australia Total $ $ $ $ $ 1,100,725 642,819 1,201 59,960 1,804,705
	1,100,725 642,819 1,201 59,960 1,804,705
	Travelan Protectyn Australia United States Canada Australia Total $ $ $ $ $ 143,378 501,228 63,172 57,415 765,193
	143,378 501,228 63,172 57,415 765,193

2 Other income and expense items

(a) Other income

Australian R&D tax incentive refund MTEC R&D grant HJF R&D grant Other income EMDG grant	2023 $ 2022 $ 392,877 257,500 2,158,936 369,045 - 306,595 11,685 24,585 28,000 -
	2,591,498 957,725

(i) Fair value of R&D tax incentive

The group's research and development (R&D) activities are eligible under an Australian government tax incentive for eligible expenditure. Management has assessed these activities and expenditure to determine which are likely to be eligible under the incentive scheme. Amounts are recognised when it has been established that the conditions of the tax incentive have been met and that the expected amount can be reliably measured. For the year ended 30 June 2023, the group has included an item in other income of $398,391 offset by an overestimation from the prior period of $5,514 (2022: $257,500) to recognise income over the year necessary to match the R&D tax incentive on a systematic basis with the costs that they are intended to compensate.

(b) Movement in inventory provision

The gains of $430,932 from the movement in inventory provision during the period reflect the write back resulting from the change in accounting estimate driven from the sales recovery in the Australian, U.S. and North American markets for Travelan as compared to the prior period.

Immuron Limited

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Immuron Limited Notes to the financial statements 30 June 2023 (continued)

2 Other income and expense items (continued)

(c) Breakdown of expenses by nature

(c) Breakdown of expenses by nature
General and administrative expenses Accounting and audit Bad debts Consulting Depreciation Employee benefits Expected credit losses Insurance Investor relations Legal Listing and share registry Share-based payment expenses - options Share-based payment expenses - performance rights Superannuation Travel and entertainment Other Research and development expenses Consulting Project research and development Selling and marketing expenses Selling Marketing Distribution costs	2023 $ 2022 $ 657,970 499,331 2,376 - 23,241 226,710 48,662 42,606 1,874,963 1,212,721 19,111 8,809 434,699 401,121 194,754 38,567 233,243 520,698 152,954 164,949 104,753 94,891 122,201 - 141,539 62,647 105,535 9,459 104,904 241,879
	4,220,905 3,524,388
	111,530 230,684 2,480,615 427,031
	2,592,145 657,715
	192,878 57,854 474,926 113,472 259,619 245,211
	927,423 416,537

3 Financial assets and financial liabilities

(a) Cash and cash equivalents

Current assets Cash at bank and in hand	2023 $ 2022 $ 17,159,764 22,110,278

(i) Classification as cash equivalents

Term deposits are presented as cash equivalents if they have a maturity of three months or less from the date of acquisition and are repayable with 24 hours notice with no loss of interest.

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Immuron Limited

Immuron Limited Notes to the financial statements 30 June 2023

(continued)

3 Financial assets and financial liabilities (continued)

(b) Trade and other receivables

Notes Trade receivables Loss allowance Accrued income - Australian R&D tax incentive refund Other income receivables - R&D grants Total trade and other receivables	2023 2022 Current $ Non- current $ Total $ Current $ Non- current $ Total $ 46,949 - 46,949 217,154 - 217,154 (27,920) - (27,920) (8,809) - (8,809)
	19,029 - 19,029 208,345 - 208,345
	398,391 - 398,391 257,500 - 257,500 - - - 197,051 - 197,051
	398,391 - 398,391 454,551 - 454,551
	417,420 - 417,420 662,896 - 662,896

(i) Classification as trade receivables

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 30 days and therefore are all classified as current. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they contain significant financing components, when they are recognised at fair value. The group holds the trade receivables with the objective to collect the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method.

(ii) Accrued receivables

These amounts primarily comprise receivables from the Australian Taxation Office in relation to the R&D tax incentive.

(iii) Fair value of trade and other receivables

Due to the short-term nature of the current receivables, their carrying amount is considered to be the same as their fair value.

(c) Financial assets

The group classifies the following as financial assets recognised at fair value through profit or loss (FVPL) as part of Immuron's strategic investment in Ateria:

• Immuron is entitled to 735,000 share options with a total exercise price of £1,470,000, expiring on 31 July 2023; and

• Immuron may receive up to 457,577 shares in Ateria based on performance targets which is deemed highly probable as at 30 June 2023.

Immuron Limited

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Immuron Limited Notes to the financial statements 30 June 2023

(continued)

3 Financial assets and financial liabilities (continued)

(c) Financial assets (continued)

Financial assets mandatorily measured at FVPL include the following:

Current assets Share options Contingent shares (d) Deferred income Current liabilities Other deferred income	2023 $ 2022 $ 221,620 - 1,612,414 -
	1,834,034 -
	2023 $ 2022 $ 698,195 -

(d) Deferred income

For the year ended 30 June 2023, the group has received $2,857,131 R&D grant from Medical Technology Enterprise Consortium (MTEC) in cash. However, the group has recognised $2,158,936 R&D grant from MTEC as other income over the year necessary to match the grants on a systematic basis with the costs that they are intended to compensate. The remaining balance of $698,195 of cash received from MTEC was recognised as other deferred income as at 30 June 2023 (30 June 2022: nil).

4 Equity

(a) Share capital

Notes 2023 Shares 2022 Shares 2023 $ 2022 $ Ordinary shares Fully paid 4(a)(i) 227,798,346 227,798,346 88,436,263 88,436,263 227,798,346 227,798,346 88,436,263 88,436,263 (i) Movements in ordinary shares: Details Number of shares Total $ Balance at 1 July 2021 227,246,596 88,361,303 Issue at $0.12 under ESOP Plan (2021-11-05) 333,000 39,960 Issue at $0.16 in lieu of payment for services (2021-12-17) 218,750 35,000 Less: Transaction costs arising on share issues - - Balance at 30 June 2022 227,798,346 88,436,263 Less: Transaction costs arising on share issues - - Balance at 30 June 2023 227,798,346 88,436,263	Notes 2023 Shares 2022 Shares 2023 $ 2022 $ Ordinary shares Fully paid 4(a)(i) 227,798,346 227,798,346 88,436,263 88,436,263 227,798,346 227,798,346 88,436,263 88,436,263 (i) Movements in ordinary shares: Details Number of shares Total $ Balance at 1 July 2021 227,246,596 88,361,303 Issue at $0.12 under ESOP Plan (2021-11-05) 333,000 39,960 Issue at $0.16 in lieu of payment for services (2021-12-17) 218,750 35,000 Less: Transaction costs arising on share issues - - Balance at 30 June 2022 227,798,346 88,436,263 Less: Transaction costs arising on share issues - - Balance at 30 June 2023 227,798,346 88,436,263	Notes 2023 Shares 2022 Shares 2023 $ 2022 $ Ordinary shares Fully paid 4(a)(i) 227,798,346 227,798,346 88,436,263 88,436,263 227,798,346 227,798,346 88,436,263 88,436,263 (i) Movements in ordinary shares: Details Number of shares Total $ Balance at 1 July 2021 227,246,596 88,361,303 Issue at $0.12 under ESOP Plan (2021-11-05) 333,000 39,960 Issue at $0.16 in lieu of payment for services (2021-12-17) 218,750 35,000 Less: Transaction costs arising on share issues - - Balance at 30 June 2022 227,798,346 88,436,263 Less: Transaction costs arising on share issues - - Balance at 30 June 2023 227,798,346 88,436,263
	227,798,346 227,798,346	88,436,263 88,436,263
		Number of shares Total $ 227,246,596 88,361,303 333,000 39,960 218,750 35,000 - -
		227,798,346 88,436,263
		- -
		227,798,346 88,436,263

(i) Movements in ordinary shares:

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Immuron Limited

Immuron Limited Notes to the financial statements 30 June 2023

(continued)

4 Equity (continued)

(a) Share capital (continued)

(ii) Ordinary shares

Ordinary shares entitle the holder to participate in dividends, and to share in the proceeds of winding up the company in proportion to the number of and amounts paid on the shares held.

On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.

Ordinary shares have no par value and the company does not have a limited amount of authorised capital.

(b) Other reserves

The following table shows a breakdown of the consolidated balance sheet line item ‘other reserves’ and the movements in these reserves during the year. A description of the nature and purpose of each reserve is provided below the table.

Notes At 1 July 2021 Currency translation differences Other comprehensive income Transactions with owners in their capacity as owners Options and warrants issued/expensed 4(b)(ii) Options and warrants lapsed/expired 4(b)(ii) At 30 June 2022 Notes At 1 July 2022 Currency translation differences Other comprehensive income Transactions with owners in their capacity as owners Options and warrants issued/expensed 4(b)(ii) Options and warrants lapsed/expired 4(b)(ii) Performance rights issued/expensed 4(b)(ii) At 30 June 2023	Share-based payments $ Foreign currency translation $ Total other reserves $ 3,360,128 106,514 3,466,642 - 6,708 6,708
	- 6,708 6,708 54,930 - 54,930 (361,861) - (361,861)
	3,053,197 113,222 3,166,419
	Share-based payments $ Foreign currency translation $ Total other reserves $ 3,053,197 113,222 3,166,419 - (1,012) (1,012)
	- (1,012) (1,012) 104,753 - 104,753 (156,392) - (156,392) 122,201 - 122,201
	3,123,759 112,210 3,235,969

(i) Nature and purpose of other reserves

Share-based payments

The share-based payment reserve records items recognised as expenses on valuation of share options and warrants issued to key management personnel, other employees and and eligible contractors.

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Immuron Limited

Immuron Limited Notes to the financial statements 30 June 2023

(continued)

4 Equity (continued)

(b) Other reserves (continued)

Foreign currency translation

Exchange differences arising on translation of foreign controlled entities are recognised in other comprehensive income as described in note and accumulated in a separate reserve within equity. The cumulative amount is reclassified to profit or loss when the net investment is disposed of.

• (ii) Movements in options, warrants and performance rights:

Details Balance at 1 July 2021 Lapse of unexercised options at $0.50 (2021-07-01) Issue of ESOP unlisted options at $0.25 (2021-11-05) Lapse of unexercised options at $1.94 (2021-11-30) Lapse of unexercised options at $1.94 (2022-06-14) Unlisted options granted in previous year at $0.12 Balance at 30 June 2022 Share-based payment expenses - options Lapse of unexercised options Share-based payment expenses - performance rights Balance at 30 June 2023*	Number of options or performance rights Total $ 45,309,478 3,360,128 (1,200,000) (188,400) 500,000 18,624 (14,493) (28,813) (24,721,108) (144,648) - 36,306
	19,873,877 3,053,197
	1,430,000 104,753 (8,424,157) (156,392) - 122,201
	12,879,720 3,123,759

• 1,688,839 performance rights were subsequently issued on 12 July 2023.

5 Events occurring after the reporting period

On 30 June 2023, the company announced the transition of Mr. Paul Brennan from Non-Executive Director to Chairman, effective 1 July 2023. Dr. Roger Aston will continue on the Board, transitioning from Chairman to Non-Executive Director.

Immuron elected to not exercise its option to acquire 735,000 Ateria shares prior to the option expiry date of 31 July 2023.

On 9 August 2023, the Therapeutic Goods Administration (TGA) has given GMP Clearance for Immuron’s packaging supplier allowing Travelan® to be released for sale in Australia to retail pharmacy wholesalers and other customers.

No other matter or circumstance has occurred subsequent to year end that has significantly affected, or may significantly affect, the operations of the group, the results of those operations or the state of affairs of the group or economic entity in subsequent financial years.

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Immuron Limited

PH: FAX:

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Immuron Ltd
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