Immuron Ltd — Interim / Quarterly Report 2010

Feb 24, 2010

Immuron Limited ABN: 80 063 114 045 ASX Half year information – 31 December 2009.

Lodged with the ASX under Listing Rule 4.2A. This information should be read in conjunction with the 30 June 2009 Annual Report.

Contents

Results for Announcement to the Market (Appendix 4D item 2) 2 Half-year report (ASX Listing rule 4.2A1) 3

1

Immuron Limited Half-year ended 31 December 2009 (Previous corresponding period: Half-year ended 31 December 2008)

Results for Announcement to the Market

				$
Revenue from ordinary activities (Appendix 4D item 2.1)	Up	13.6%	to	250,224
Profit/ (loss) from continuing activities after tax attributable to members (Appendix 4D item 2.2)	Down	30.01%	to	(1,118,330)
Net profit/ (loss) for the period attributable to members (Appendix 4D item 2.3)	Down	21.21%	to	(1,118,330)
Dividends/distributions (Appendix 4D item 2.4)	Amount per security		Franked amount per security
Final dividend_(prior year)_	Nil		Nil
Interim dividend	Nil		Nil
Record date for determining entitlements to the	interim dividend
			N/A

2

Immuron Limited Interim financial report for the half year ended 31 December 2009

Contents	Page
Directors’ Report	4
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
Directors’ Declaration	17
Independent Auditor’s review report to the members	18

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2009 and any public announcements made by Immuron Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 . The Directors have the power to amend and reissue the condensed interim financial report.

3

Immuron Limited Directors’ Report 31 December 2009

Your directors present their report on Immuron Limited for the half-year ended 31 December, 2009.

Directors

The following persons were directors of Immuron Limited during the half-year and up to the date of this report:

Prof. Colin B Chapman (Chairman) Prof. Roy Robins-Browne Arie L. Nudel Simon S Sallka Dr Elane Zelcer (Appointed 19 November 2009) Dr Zeil Rosenberg (Resigned 17 July 2009)

Review of operations

Revenues from all sources reduced by 9% in the current period when compared with the corresponding 2008 period. Within this overall reduction of 9%, revenues from the sale of hyperimmune products and services increased by 13.6% to $250,224, with other income reducing by 40%, to $97,270. This reduction in other income reflects the reduced level of R & D grant income received in Australia as a number of the research projects have been completed in the current period or are close to being completed.

In Australia the Company’s main project is the ongoing research into providing a cure and prevention for influenza with the current preclinical research being conducted by the University of Melbourne. Some of the funding for this project is provided direct to the University under the terms of an ARC grant.

With the acquisition of the oral immunology IP from Hadasit Medical Research Services & Development Limited (Hadasit), at a cost of $1,460,587( refer Note1), in August 2009, the Company’s main R & D activity has been conducted by Hadasit using the facilities of the Hadassah Medical Centre at Jerusalem in Israel.

The Company had prepaid $598,683($US 500,000) to Hadasit for the R & D services to be performed in respect of the initial research into preclinical and clinical trials in respect of anti insulin antibodies in patients with type 2 diabetes and Nonalcoholic Steatohepatitis (NASH- which is a common cause of chronic liver disease strongly associated with insulin resistance), and hepatoma and HCV (Hepatitis C).

At 31 December, $302,471 has been spent on preclinical services in respect of some of the above projects. This amount is included in the amount of external research and development expense of $534,639 as set out in the statement of comprehensive income for the six months. The balance of the prepaid amount, $296,212, will be expensed in the following period as it is utilised to meet future preclinical and clinical costs as they arise.

In terms of other operating expenses there has been a reduction of approximately $607,000 in the current six months when compared with the corresponding 2008 period.

This reduction has essentially been in employee benefits which have reduced by $550,000. The main contributor to this reduction was the closure of the USA office in May 2009, with the direct employment and other related expenditures for that office amounting to approximately $447,000 in the 31 December 2008 period.

4

Auditor’s Independence Declaration

A copy of the auditors’ independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 6.

Signed in accordance with a resolution of the Directors.

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C B Chapman S Sallka Director Director

Melbourne, 24 February, 2010

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PricewaterhouseCoopers ABN 52 780 433 757

Freshwater Place 2 Southbank Boulevard SOUTHBANK VIC 3006 GPO Box 1331L MELBOURNE VIC 3001 DX 77 Telephone 61 3 8603 1000 Facsimile 61 3 8603 1999 Website:www.pwc.com/au

Auditor’s Independence Declaration

As lead auditor for the audit of Immuron Limited for the half year ended 31 December 2009, I declare that, to the best of my knowledge and belief, there have been:

• a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• b) no contraventions of any applicable code of professional conduct in relation to the review .

This declaration is in respect of Immuron Limited during the period.

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Lisa Harker Partner PricewaterhouseCoopers

Melbourne 24 February 2010

6

Liability limited by a scheme approved under Professional Standards Legislation

Immuron Limited Statement of Comprehensive Income for the half year ended 31 December 2009

Notes Revenue from continuing operations Other income Raw materials and consumables used Employee benefits expense Depreciation Research and development – external Directors’ fees Shareholder relations Travel expenses Product marketing & export development Consultants costs Corporate and administrative expenses Loss before income tax Income tax benefit Loss from continuing operations 4 Profit from discontinued operations 3 Net loss for the half year Total comprehensive loss for the half year Basic earnings per share (Loss) from continuing operations attributable to the ordinary equity holders of the company Profit from discontinued operations (Loss) attributable to the ordinary equity holders of the company Diluted earnings per share (Loss) from continuing operations attributable to the ordinary equity holders of the company Profit from discontinued operations (Loss) attributable to the ordinary equity holders of the company NTA Backing Net tangible asset backing per ordinary share	Half year 2009 2008 $ $ 250,224 220,290 97,270 162,016 (134,565) (78,177) (177,816) (728,136) (19,344) (113,446) (534,639) (442,267) (111,306) (154,612) (73,537) (40,010) (22,779) (64,671) (19,056) (57,588) (171,379) (123,869) (201,403) (177,461) (1,118,330) (1,597,931) - - (1,118,330) (1,597,931) 178,600 (1,118,330) (1,419,331) (1,118,330) (1,419,331) Cents Cents (0.45) (1.23) - 0.14 (0.45) (1.09) (0.45) (1.23) - 0.14 (0.45) (1.09) Cents Cents 0.36 0.37	Half year 2009 2008 $ $ 250,224 220,290 97,270 162,016 (134,565) (78,177) (177,816) (728,136) (19,344) (113,446) (534,639) (442,267) (111,306) (154,612) (73,537) (40,010) (22,779) (64,671) (19,056) (57,588) (171,379) (123,869) (201,403) (177,461) (1,118,330) (1,597,931) - - (1,118,330) (1,597,931) 178,600 (1,118,330) (1,419,331) (1,118,330) (1,419,331) Cents Cents (0.45) (1.23) - 0.14 (0.45) (1.09) (0.45) (1.23) - 0.14 (0.45) (1.09) Cents Cents 0.36 0.37
		(1,597,931) -
		(1,597,931) 178,600
		(1,419,331)
		(1,419,331)
		Cents (1.23) 0.14 (1.09) (1.23) 0.14 (1.09) Cents 0.37

The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

7

Immuron Limited Statement of Financial Position 31 December 2009

Notes ASSETS CURRENT ASSETS Cash & cash equivalents Trade & other receivables Inventories Other assets 2 TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, plant and equipment Intangible assets 1 Investments TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade & other payables Provisions Other TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Accumulated losses TOTAL EQUITY	31 December 2009 $ 802,858 108,296 40,162 447,950 1,399,266 51,539 1,460,587 31 1,512,157 2,911,423 312,554 55,500 46,978 415,032 14,750 14,750 429,782 2,481,641 25,202,610 484,102 (23,205,071) 2,481,641	30 June 2009 $ 149,670 27,662 96,376 148,407
		422,115
		70,883 - 31
		70,914
		493,029
		595,547 33,172 46,978
		675,697
		2,203
		2,203
		677,900
		(184,871)
		21,458,898 442,972 (22,086,741)
		(184,871)

The above Statement of Financial Position should be read in conjunction with the accompanying notes.

8

Immuron Limited Statement of Changes in Equity For the half-year ended 31 December 2009

Balance at 1 January 2009 Total comprehensive loss for the half year Transactions with owners in their capacity as owners Contributions of equity, net of transaction costs Employee share options Balance 30 June 2009 Balance 1 July 2009 Total comprehensive loss for the half year Transactions with owners in their capacity as owners Contributions of equity, net of transaction costs Employee share options Balance 31 December 2009	Contributed equity $ Reserves $ 21,364,008 357,934 - - 94,890 - - 85,038	Accumulated losses $ Total $ (21,188,258) 533,684 (898,483) (898,483) - 94,890 - 85,038
	21,458,898 442,972	(22,086,741) (184,871)
	21,458,898 442,972 - - 3,743,712 - - 41,130	(22,086,741) (184,871) (1,118,330) (1,118,330) - 3,373,712 - 41,130
	25,202,610 484,102	(23,205,071) 2,481,641

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

9

Immuron Limited Statement of Cash Flows For the half year ended 31 December 2009

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers (inclusive of goods and services tax) Payments to suppliers and employees (inclusive of goods and services tax) Interest received Grants received Interest paid Net Cash (outflow) from Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment Net Cash inflow/(outflow) from Investing Activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares & other equities Share placement costs Net Cash inflow from Financing Activities Net increase/(decrease) in cash & cash equivalents Cash and cash equivalents at beginning of financial year Cash and cash equivalents at the end of the half-year	Half year 2009 2008 Inflow / Inflow / (Outflow) (Outflow) $ $ 231,140 420,385 (1,891,433) (1,912,809) (1,660,293) (1,492,424) 23,270 17,348 - 144,668 (2,758) - (1,639,781) (1,330,408) - - - - 2,333,930 742,784 (40,961) (2,373) 2,292,969 740,411 653,188 (589,997) 149,670 1,090,824 802,858 500,827	Half year 2009 2008 Inflow / Inflow / (Outflow) (Outflow) $ $ 231,140 420,385 (1,891,433) (1,912,809) (1,660,293) (1,492,424) 23,270 17,348 - 144,668 (2,758) - (1,639,781) (1,330,408) - - - - 2,333,930 742,784 (40,961) (2,373) 2,292,969 740,411 653,188 (589,997) 149,670 1,090,824 802,858 500,827
		(1,492,424) 17,348 144,668 -
		(1,330,408)
		-
		-
		742,784 (2,373)
		740,411
		(589,997) 1,090,824
		500,827

The above Statement of Cash Flows should be read in conjunction with the accompanying notes.

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Immuron Limited Notes to the financial statements 31 December 2009

Note 1. Summary of significant accounting policies

Basis of preparation

This general purpose financial report for the half-year reporting period ended 31 December, 2009 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report of the year ended 30 June, 2009 and any public announcements made by Immuron Limited during the interim reporting period with the continuous disclosure requirements of the Corporations Act 2001.

Change in accounting policies

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period with the following exceptions.

Presentation of financial statements

The Company has applied revised AASB101 Presentation of Financial Statements to this condensed interim financial report. As a result, the Company presents all non-owner changes in equity in the statement of comprehensive income, whereas all owner changes in equity are presented in the statement of changes in equity, previously presented as a note to the financial statements.

Comparative information has been re-presented so that it is also in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects of the condensed interim financial report, there is no impact on the financial results of the Company.

Segment reporting

As of 1 July 2009, the Company determines and presents operating segments based on the information that is internally provided to the Company’s chief operating decision maker which has been identified as the Management Executive Team (MET). The MET consists of the Chief Executive Officer and other Senior Executives of the Company. The MET provides the strategic direction and management oversight of the day to day activities of the entity in terms of monitoring results, providing approval for research and development expenditure decisions and challenging and approving strategic planning for the business.

The change in accounting policy is due to the application of AASB8 Operating Segments which requires a “management approach”, under which segment information is presented on the same basis as that used for internal reporting purposes. Comparative segment information has been re-presented in conformity with the transition requirements of AASB 8. Note 4 provides further information regarding the change in accounting policy in respect of operating segment disclosures. As the change only impacts presentation and disclosure aspects of the condensed interim financial report, there is no impact on the financial results of the Company.

Intangible assets – Intellectual property

During the current period the Company acquired certain provisional patent intellectual property from Hadasit Medical Research Services & Development Limited (Hadasit) at a cost of $1,460,587 which has been capitalised and appears in the balance sheet as an intangible asset. The acquisition cost of $1,460,587 represents the value attributed to the 56,484,023 fully paid ordinary shares issued to Hadasit in full satisfaction for the provisional patents.

The realisation of the value attributed to this intangible asset will depend on the successful commercialisation of Immuron’s potential products. The Directors note that there is always significant risk involved in the commercialisation of such products given the required commitment to contribute ongoing development and precommercialisation expenditures in respect of the specific science associated with the provisional patents. As the useful life of the intangible asset is considered to be highly judgemental at this point of time, the Directors will, at each future reporting date, assess the economic useful life, when considering whether the value of the intellectual property is impaired.

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Immuron Limited Notes to the financial statements 31 December 2009

Note 1 Summary of significant accounting policies (continued)

Going concern

At 31 December 2009 and 30 June 2009, the Company’s cash and investments were $802,858 and $149,670, respectively, and for the half year’s ended 31 December 2009 and 31 December 2008, the Company experienced operating losses of $1,118,330 and $1,419,331, and operating net cash outflows of $1,639,781 and $1,330,408, respectively. These outflows arose from expenses associated with research and development programs and commercialisation initiatives. As a result of the continuing losses and cash outflows from operations, the Directors have assessed the Company's ability to continue as a going concern and to pay its debts as and when they fall due. The Company's ability to fund its operations is dependent upon obtaining income from the commercialisation of its research and development projects, supplemented by the receipt of funds from various grants, and from the raising of additional capital through new sources of financing. Ultimately, the Company's continuation as a going concern is dependent upon achieving profitable operations through the successful commercialisation of its products and technology.

As a result of the difficulty in predicting the timing and quantum of income from the commercialisation of its products and technology, there is significant uncertainty whether the Company will be able to continue as a going concern and realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.

However, the directors are also confident that the Company's ability to raise further capital. The company has had a successful history of obtaining research grants and the Directors are confident that, along with the ongoing receipts from existing grants, the Company will be successful in obtaining new grants.

Accordingly, the Directors have prepared the financial statements on a going concern basis. As such, the financial statements do not include any adjustments as to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the Company not continue as a going concern.

Note 2 Other assets

Included in other assets of $447,950 is a prepayment to Hadasit of $296,212. This represents the balance of $598,683 ($US500, 000) paid to Hadasit in August 2009 as prepaid research and development costs in accordance with the service agreement with Hadasit. The balance of the prepaid expense, $ 296,212, will be utilised in the current financial year to meet ongoing preclinical and clinical trial costs in accordance with the service agreement and will be reflected in the statement of comprehensive income as the expenditure is incurred

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Immuron Limited Notes to the financial statements 31 December 2009

Note 3 Discontinued operations

On 22 February 2008 the Company sold its contract manufacturing division. In the period to 31 December 2008 the income received represented a share of the earn out profits for the six month period. The final share of those profits was earned in the six months to 30 June 2009.

The financial performance and cash flow information for the comparative six monthly periods is a follows

( 1 ) Financial performance Profit attributable to discontinued operations were as follows: Revenue Expenses Profit / (Loss ) before income tax Income tax expense Profit / ( Loss ) after income tax of discontinued operations Gain on sale of division before income tax Income tax expense Gain on sale after income tax Profit from discontinued operations ( 2 ) Cash flow information Net cash flow from operating activities Net cash inflow (outflow) from investing activities Net cash from financing activities Net increase in cash generated by the division	Half year 31 December 2009 $ - - - - - - - - - - - - -	Half year 31 December 2008 $ - -
		-
		-
		178,600 -
		178,600
		178,600
		- - -
		-

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Immuron Limited Notes to the financial statements 31 December 2009

Note 4. Segment information

The Company has applied AASB 8 Operating Segments from 1 July 2009. Management has determined that the business segments of research and development, hyperimmune products are the main business segments used for internal reporting purposes to the Management Executive Team. Other items of income and expense not directly attributable to those two segments are disclosed as a corporate cost segment.

(a) Primary reporting format- business segments

2009 Half year Total segment revenue Total segment other income Revenue and other income from external customers EBITDA Total assets 2008 Half year Total segment revenue Total segment other income Revenue and other income from external customers EBITDA Total assets	R & D $ Hyper Immune Products $ Corporate $ Total Continuing Operations $ Discontinued Operations $ Total $ 229,380 20,844 250,224 - 250,224 74,000 - 23,270 97,270 - 97,,270
	74,000 229,380 44,114 347,494 - 347,494
	(612,011) 75,836 (542,187) (1,078,362) - (1,078,362)
	1,830,800 127,091 953,532 2,911,423 2,911,423
	- 220,290 220,290 220,290 144,668 - 17,348 162,016 - 162,016 144,668 220,290 17,348 382,306 - 382,306
	(671,031) (50,840) (694,924) (1,416,795) 178,600 (1,238,195)
	- 229,360 890,575 1,119,935 - 1,119,935

A reconciliation of earnings before interest, tax, depreciation and amortisation (EBITDA) to net loss for the half year is as follows:

EBITDA loss Interest revenue Finance costs Depreciation and loss on disposal of fixed assets Amortisation of share option costs Loss for half year from continuing operations	Half year 2009 $ Half year 2008 $ (1,078,362) (1,238,195) 23,270 17,357 (2,758) (9) (19,350) (113,446) (41,130) (85,038)
	(1,118,330) (1,419,331)

The significant increase in total assets in the R & D segment in the 2009 half year reflects the cost of the patents acquired from Hadasit,$1,460,587, together with the balance of the prepaid future services, $296,212, to be supplied by Hadasit subsequent to 31 December 2009.

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Immuron Limited Notes to the financial statements 31 December 2009

Note 5. Equity movements

Note 5. Equity movements
	2009	2008	2009	2008
( 1 ) Contributed equity	Shares	Shares	$	$
Contributed equity at beginning of half year		126,732,766	21,458,898	20,583,347
	144,569,108
Issue of ordinary shares and options during the half-year
Shares issued under Shareholder Share Purchase Plan at $0.03
per share on 21 August 2009	43,370,625	-	1,301,119	-
Shares issued to Hadasit Medical Research Services &
Development Limited at $0.0259 per share on 27 August 2009 in
accordance with the Acquisition and Licence Agreement	46,966,139	-	1,214,470	-
Issue of shares for cash on 1 September2009 at $0.0494 per share	3,600,000	-	177,811	-
Issues of shares on 8 September 2009:
• Issued for cash at $0.025 per share	34,200,000	-	855,000	-
• Issued to Directors in lieu of Directors fees at $0.03 per
share	337,500	-	10,125	-
• Issued to Hadasit Medical Research Services &
Development Limited at $0.0259 per share in accordance
with the Deed of Variation	8,745,625	-	226,148	-
•
Issue of shares for cash at $0.05 per share on 10 November 2008	-	7,705,950	-	385,297
Issue of shares to Director in lieu of salary at $0.05 per share as	-	805,000	-	40,250
Issue of shares for cash at $0.05 per share on 16 December 2008	-	7,516,674	-	375,834
Lesscosts associated with equity raisings	-		(40,961)	(20,720)
	137,219,889	16,027,624	3,743,712	780,661
Contributed equity at end of half year	281,788,997	142,760,390	25,202,610	$21,364,008
(2) Reserves
			$
Options Reserves
Balance of reserve at 1 July 2009		442,972
Option expense - options issued to employees			41,130
Balance 31 December 2009		**484,102 **
No options were issued during the half year.
The total value of options issued to former employees as part of their
employment contracts amounted to		337,837
The amount expensed from the granting of options up to 31	December 2009
amounted to		337,837
Balance of options cost still to be amortised at 31 December 2009			Nil
The options issued to former employees are fully vested and lapse on 1 October 2010.

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Immuron Limited Notes to the financial statements 31 December 2009

Note 6 Contingencies

Contingent liability $ 168,676

The Company has received, or is due to receive, grant funds totalling $168,676 from the State Government of Victoria under the terms of the Vistech Grant. Of this amount $74,000 has been included as other income in the Statement of Comprehensive Income for the six months to 31 December 2009 .The balance of $94,676 has been received prior to 30 June 2009.

Under the terms of the grant agreement, the Company has the obligation to repay the grant monies received upon the receipt of any funds from the commercial exploitation of the technology developed under the grant project. Therefore, a contingent liability exists in respect of the amount up to $168,676 if the Company receives any future proceeds from the commercialisation of the grant technology.

Note 7 Events occurring after the reporting period

Subsequent to 31 December 2009 the Company has issued 7,003.443 fully paid shares and 237,500 options to take up fully paid shares. The options issued expire on 19 July 2011 and are exercisable at $0.08892 per share.

The details of these issues are as follows:

Issued for cash: Issued at $0.055 per share Issued at $0.08892 per share Shares issued to Hadasit Medical Research Services & Development Limited as an adjustment of the August acquisition cost. Issued at $0.0259 per share Issued to Director in lieu of Directors fees at $0.0741 per share Issues to employees under the Executive Share Plan at $0.0892 per share	Number of shares 4,820,455 950,000 772,259 60,729 400,000 7,003,443	$ 265,125 84,474 19,969 4,500 35,568
		$409,636

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Immuron Limited Directors’ Declaration

In the Directors’ opinion:

• (a) the financial statements and notes set out on pages 7 to 16 are in accordance with the Corporations Act 2001 , including;

• complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

• giving a true and fair view of the Company’s financial position as at 31 December 2009 and of its performance for the half year ended on that date; and

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

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

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C B Chapman S Sallka Director Director Melbourne 24 February, 2010

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PricewaterhouseCoopers ABN 52 780 433 757

Independent auditor’s review report to the members of Immuron Limited

Freshwater Place 2 Southbank Boulevard SOUTHBANK VIC 3006 GPO Box 1331 MELBOURNE VIC 3001 DX 77 Telephone 61 3 8603 1000 Facsimile 61 3 8603 1999 Direct Phone 61 3 8603 2147 Direct Fax 61 3 8613 3270 Website:www.pwc.com/au

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial statements of Immuron Limited, which comprise the statement of financial position as at 31 December 2009, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the halfyear ended on that date, other selected explanatory notes and the directors’ declaration for Immuron Limited.

Directors’ responsibility for the half-year financial report

The directors of the company are responsible for the preparation and fair presentation of the halfyear financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the entity’s financial position as at 31 December 2009 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 . As the auditor of Immuron Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

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. It also includes reading the other information included with the financial report to determine whether it contains any material inconsistencies with the financial report. 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.

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Liability limited by a scheme approved under Professional Standards Legislation

While we considered the effectiveness of management’s internal controls over financial reporting when determining the nature and extent of our procedures, our review was not designed to provide assurance on internal controls.

Our review did not involve an analysis of the prudence of business decisions made by directors or management.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.

Conclusion

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

• (a) giving a true and fair view of the entity’s financial position as at 31 December 2009 and of its performance for the half-year ended on that date; and

• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

Significant Uncertainty Regarding Continuation as a Going Concern

Without qualifying our opinion, we draw attention to Note 1 in the interim financial report which indicates that the company incurred a net loss of $1.1 million and net cash outflows from operating activities of $1.6 million during the half year ended 31 December 2009. These conditions, along with other matters as set forth in Note 1, indicate the existence of a significant uncertainty which may cast significant doubt about the company’s ability 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.

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PricewaterhouseCoopers

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Lisa Harker Partner

Melbourne 24 February 2010

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