Immuron Ltd — Regulatory Filings 2013

Feb 27, 2013

Immuron Limited ABN: 80 063 114 045 ASX Half year information – 31 December 2012.

Lodged with the ASX under Listing Rule 4.2A.

This information should be read in conjunction with the 30 June 2012 Annual Report.

Contents

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

Immuron Limited Half-year ended 31 December 2012 (Previous corresponding period: Half-year ended 31 December 2011)

Results for Announcement to the Market

				\$
Revenue from ordinary activities (Appendix 4D item 2.1)	Down	23.8%	to	160,488
Net (loss) from continuing activities after tax attributable to members (Appendix 4D item 2.2)	Up	13.0%	to	(1,479,105)
Net profit/ (loss) for the period attributable to members (Appendix 4D item 2.3)	Up	13.0%	to	(1,479,105)

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

The attached Half –Year Financial Report for the period ended 31 December 2012 contains an independent auditor's report which includes an emphasis of matter paragraph in regard to the existence of a material uncertainty that may cast significant doubt about the Company's ability to continue as a going concern. Additional disclosure has been included in Note 1 to the financial statements.

N/A

Immuron Limited Interim financial report for the half year ended 31 December 2012

Contents	Page
Directors' Report	4
Auditor's Independence Declaration	6
Statement of Comprehensive Income	7
Balance Sheet	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 2012 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.

Immuron Limited Directors Report 31 December 2012

Your Directors present their report on Immuron Limited for the half-year ended 31 December, 2012.

Directors

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

Dr Roger Aston – (Chairman from 8 October 2012) Dr Elane Zelcer Dr Stewart Washer Joseph Baini Daniel Pollock – Appointed 11 October 2012 Prof. Colin B Chapman (Former Chairman – Resigned 8 October 2012)

Review of operations

The loss for the six months of \$1,479,105 was \$170,587 greater than that for the corresponding 2011 period. This increase reflects a number of items of income and expenditure which were considered to be one off in the comparative periods and which can be summarised as follows.

	2012 \$'000	2011 \$'000
Loss for half year as reported in the Statement of Comprehensive Income	(1,479)	(1,309)
Income
Licence fee received from Paladin Labs Inc. in respect of the Canadian, Latin
American and sub – Saharan territories	-	(480)
Expenses
Legal and other costs directly related to Paladin licence fee	-	75
Amortisation of Intellectual Property	360	-
Effective interest expense on financial liabilities	117	-
Costs associated with lodging NASH IND application with the US Federal Drug
Administration in November 2011	-	192
Unrealised financial instruments gain re Paladin Labs Inc. secured convertible
debenture loan	(43)	-
Net effect to (increase) decrease loss for period	434	(213)
Comparable loss for respective reporting periods after adjusting for the above	(1,045)	(1,522)

Income for the six months from hyperimmune products represents the sale of Travelan to Takeda Pharmaceuticals Australia (Takeda), formally Nycomed Pharmaceuticals. Whilst there was a reduction in the value of sales in the current six months, Takeda are on target to achieve their budgeted sales for the 2013 financial year.

Registration of Travelan in Canada is progressing and whereas we originally anticipated that the product would be launched in the June 2013 quarter, delays beyond Paladin and our control in the registration process has resulted in the launch being delayed to the September quarter.

In May 2012 we announced that we had entered into a number of licence agreements for the distribution of Travelan in nine South East Asian countries. Each of those licensees is in the process of registering the product in their respective territories however sales in the second six months of the 2013 financial year are not expected to be significant.

With the exception of essential expenditures in respect of certain R & D programs and direct costs associated with continued negotiations with potential distributors of Travelan in the United States, the Company continued its expense containment policy introduced in the latter half of the 2012 financial year.

Note 4 to the accounts provides an analysis of the main expense items. R & D expenditure for the six months essentially focused on the influenza and Clostridium Difficile (C. difficile) programs with our research partners, the Universities of Melbourne and Monash respectively, with the support of grants from the Australian Government.

The pre-clinical C.difficile studies being conducted by Monash University are showing encouraging results in both preventing transmission and treatment of the C.difficile infection. An update report on the studies to date was made to the ASX on 17 December 2012.

Corporate

During the six months the company made a bonus issue of options to shareholders on the Company's register at 23 July 2012. This resulted in the issue 116,024,381 options with an exercise price of \$0.04 and an expiry date of 30 April 2015.

Subsequent to 31 December the Company drew down an additional \$CAD 500,000 under the Secured Convertible Debenture facility with Paladin Labs Inc. (Paladin). Those funds were received on 19 February 2013.

Note 9 to the accounts sets out the details of the transaction and the options available to Paladin to convert the funds into fully paid ordinary shares in the Company.

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.

E Zelcer R Aston Director Director

Melbourne 28 February 2013

Auditor's Independence Declaration

As lead auditor for the review of Immuron Limited for the half year ended 31 December 2012, 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.

$S.17$

Jon Roberts Partner PricewaterhouseCoopers

Melbourne 28 February 2013

PricewaterhouseCoopers, ABN 52 780 433 757 Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001 T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au

.......................................

Liability limited by a scheme approved under Professional Standards Legislation.

Immuron Limited Statement of Comprehensive Income for the half year ended 31 December 2012

			Half year
	Notes	2012	2011
		\$	\$
Revenue from continuing operations		160,488	210,728
Other income	3	6,172	489,926
Other gains/(losses)	3	42,949	-
Raw materials and consumables used		(127,400)	(162,271)
Employee and consultants costs	4	(543,466)	(498,639)
Depreciation and amortisation	4	(371,712)	(6,449)
Research and commercialisation	4	(174,790)	(620,461)
Directors' fees		(104,918)	(104,935)
Shareholder relations		(58,379)	(83,996)
Product marketing & export development		(8,626)	(69,652)
Corporate and administrative	4	(177,677)	(447,129)
Finance costs	4	(121,746)	(15,640)
Loss before income tax		(1,479,105)	(1,308,518)
Income tax expense		-	-
Loss for half year attributable to members of Immuron Limited		(1,479,105)	(1,308,518)
Total Comprehensive loss for the half year		(1,479,105)	(1,308,518)
Basic earnings per share		\$	\$
(Loss) from continuing operations attributable to the ordinary equity holders of the company (Loss) attributable to the ordinary equity holders of the		(0.004)	(0.004)
company		(0.004)	(0.004)
Diluted earnings per share
(Loss) from continuing operations attributable to the ordinary equity holders of the company (Loss) attributable to the ordinary equity holders of the		(0.004)	(0.004)
company		(0.004)	(0.004)
NTA Backing
Net tangible asset backing per ordinary share		(0.001)	0.0002

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

Immuron Limited Balance Sheet 31 December 2012

	Notes	31 December 2012	30 June 2012
		\$	\$
ASSETS
CURRENT ASSETS
Cash & cash equivalents		435,590	1,443,928
Trade & other receivables		189,941	204,752
Inventories		314,359	214,400
Other assets		34,652	356,131
TOTAL CURRENT ASSETS		974,542	2,219,211
NON-CURRENT ASSETS
Property, plant and equipment		13,945	18,457
Intangible assets	5	1,040,587	1,400,587
Investments		1	31
TOTAL NON-CURRENT ASSETS		1,054,533	1,419,075
TOTAL ASSETS		2,029,075	3,638,286
LIABILITIES
CURRENT LIABILITIES
Trade & other payables		758,511	947,545
Financial liabilities	6	38,237	81,186
TOTAL CURRENT LIABILITIES		796,748	1,028,731
NON-CURRENT LIABILITIES
Financial liabilities	6	628,271	559,574
TOTAL NON-CURRENT LIABILITIES		628,271	559,574
TOTAL LIABILITIES		1,425,019	1,588,305
NET ASSETS		604,056	2,049,981
EQUITY
Contributed equity	7	30,024,787	30,024,787
Reserves	7	940,239	907,059
Accumulated losses		(30,360,970)	(28,881,865)
TOTAL EQUITY		604,056	2,049,981

The above Balance Sheet should be read in conjunction with the accompanying notes.

Immuron Limited Statement of Changes in Equity For the half-year ended 31 December 2012

	Contributed equity \$	Reserves \$	Accumulated losses \$	Total \$
Balance at 1 July 2011	27,721,517	595,207	(26,584,345)	1,732,379
Total comprehensive loss for the half year	-	-	(1,308,518)	(1,308,518)
Transactions with owners in their capacity as owners Contributions of equity, net of
transaction costs	1,010,053	78,508	-	1,088,561
Employee share options- value of employee services	-	8,616	-	8,616
Balance 31 December 2011	28,731,570	682,331	(27,892,863)	1,521,038
Balance 1 July 2012	30,024,787	907,059	(28,881,865)	2,049,981
Total comprehensive loss for the half year	-	-	(1,479,105)	(1,479,105)
Transactions with owners in their capacity as owners
Employee and consultants share options- value of consultants and employee services	-	33,180	-	33,180
Balance 31 December 2012	30,024,787	940,239	(30,360,970)	604,056

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

Immuron Limited Statement of Cash Flows For the half year ended 31 December 2012

		Half year
	2012	2011
	Inflow /	Inflow /
	(Outflow)	(Outflow)
	\$	\$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers (inclusive of goods and services tax)	191,348	640,478
Payments to suppliers and employees (inclusive of goods
and services tax)	(1,405,891)	(1,541,334)
	(1,214,543)	(900,856)
Interest received	6,172	9,710
R & D tax offset receipt	254,508	-
Interest paid	(47,275)	(15,640)
Net Cash (outflow) from Operating Activities	(1,001,138)	(906,786)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(7,200)	(1,849)
Net Cash inflow/(outflow) from Investing Activities	(7,200)	(1,849)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of shares & other equities	-	861,952
Share issue transaction costs	-	(30,996)
Net Cash inflow from Financing Activities	-	830,956
Net increase/(decrease) in cash & cash equivalents		(77,679)
	(1,008,338)
Cash and cash equivalents at beginning of the half year	1,443,928	750,814
Cash and cash equivalents at the end of the half-year	435,590	673,135

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

Note 1. Summary of significant accounting policies

Basis of preparation

This condensed interim financial report for the half-year reporting period ended 31 December, 2012 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.

This condensed 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, 2012 and any public announcements made by Immuron Limited during the interim reporting period with the continuous disclosure requirements of the Corporations Act 2001.

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

Going concern

At 31 December 2012, the Company's cash and cash equivalents were \$435,590 (30 June 2012: \$1,443,928), for the half year ended 31 December 2012, the Company experienced an operating loss of \$1,479,105 (31 December 2011: \$1,308,518), and a net cash outflow of \$1,001,138 (31 December 2011: \$906,786) from operating activities and expenses associated with research and product development programs. For the 12 months from the date of this report, the company has budgeted for operating cash outflows to exceed its operating cash inflows.

Subsequent to 31 December 2012 the Company drew down the balance of \$CAD 500,000 (\$AU479,255) available under the convertible debenture facility entered into in December 2011 with Paladin Labs Inc. Details of the terms of the draw down are set out in note 9 of the financial statements.

In order to fund the budgeted cash outflows for the period, from the 12 months of the date of this report, the Directors will need to achieve the following milestones;

• complete a capital raising by April 2013 the terms of which are currently being finalised and will be announced to the market in due course,
• generate new Travelan sales, in line with forecast, through licences entered into in the previous financial year and which are currently seeking regulatory approval in the various jurisdictions,
• enter into a new licensing agreement or option for licensing agreement, which will include an upfront payment, for the distribution of Travelan in the United States. Subsequent to this new licensing agreement significant sales are forecast to the United States market during the forecast period, and
• achieve production and delivery schedules in order to meet forecast Travelan sales over the coming 12 month period in existing and new markets.

Should the company not be successful in achieving the objectives outlined above within the timeframe forecasted or at values below that currently forecast, the company will seek to reduce uncommitted expenditures to operate within available funding and if required the directors will seek additional sources of funding above that already available.

There are significant risks associated with product development and regulatory approvals required by biotechnology companies, it is difficult to predict the timing and quantum of income from the commercialisation of products and technology and there are inherent uncertainties involved in raising funds from investors within forecasted timelines. As a result of these matters there is material uncertainty that may cast significant doubt as to 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 confident that the Company's planned initiatives will be successfully achieved and these will continue to provide adequate access to financial resources.

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 entity not continue as a going concern.

Note 2. Segment information

Management has determined that the business segments of research, development and commercialisation (R & D) and hyperimmune products are the main business segments used for internal reporting purposes to the Management Executive Team. Income from license fees is classified as income from commercialisation activities and is included in the R & D segment. 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

		Hyper
		Immune
2012 Half year	R &D	Products	Corporate	Total
	\$	\$	\$	\$
Total segment revenue	-	160,488	-	160,488
Total segment other income	-	-	49,121	49,121
Revenue and other income from
external customers	-	160,488	49,121	209,609
EBITDA	(457,750)	33,088	(576,926)	(1,001,588)
Total assets	1,042,984	522,630	463,461	2,029,075
2011 Half year
Total segment revenue	-	210,728	-	210,728
Total segment other income	480,215	-	9,711	489,926
Revenue and other income from
external customers	480,215	210,728	9,711	700,654
EBITDA	(481,712)	48,457	(854,268)	(1,287,523)
Total assets	1,468,898	419,467	720,783	2,609,148

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

	Half year 2012	Half year 2011
	\$	\$
EBITDA loss	(1,001,588)	(1,287,523)
Interest revenue	6,172	9,710
Finance costs	(121,746)	(15,640)
Depreciation and loss on disposal of fixed assets	(11,712)	(6,449)
Amortisation of intellectual property	(360,000)	-
Amortisation of share option costs	(33,180)	(8,616)
Unrealised financial instruments gain	42,949	-
Loss for half year from continuing operations	( 1,479,105)	(1,308,518)

Note 3.	Other Income	2012 \$	2011 \$
Licence fees received		-	480,215
Interest received		6,172	9,711
	Unrealised financial instruments gain	42,949	-
		49,121	489,926
Note 4.	Expenses
	The loss for the half year includes the following expenses items:
	Employee and consultants costs
	Employment and consultants costs	519,066	472,408
	Defined contribution superannuation expense	5,024	4,462
	Other employment related expenses	19,376	21,769
	Total employee and consultants costs	543,466	498,639
	Research and commercialisation Patent registration costs	56,995	182,000
	Research projects in - Australia	43,264	25,000
	- Israel	24,110	122,535
	International regulatory registrations	28,454	38,695
	NASH FDA IND application	-	191,555
	Other research and commercialisation costs	21,967	60,676
	Total research and commercialisation expenses	174,790	620,461
	Corporate and administrative
	Audit and taxation services	50,459	44,731
Legal services		10,215	80,224
	Corporate and product development consultants	52,403	127,644
	Shares and options issued to external consultants	-	70,000
	Net foreign exchange losses (gains)	(5,774)	18,826
Other corporate costs	Rental expense relating to operating leases	16,639 53,735	21,769 83,935
	Total corporate and administrative expenses	177,677	447,129
	Depreciation and amortisation
	Depreciation of plant, equipment and furnishings	8,578	6,449
	Amortisation of intellectual property	360,000	-
	Loss on disposal of plant and office equipment	3,134	-
	Total depreciation and amortisation	371,712	6,449
Finance
	Interest paid/payable on financial liabilities and other payables Exchange losses on foreign currency borrowings	117,483 4,263	15,640 -
Total finance expenses		121,746	15,640

Note 5. Intangible Assets

	31 December 2012 \$	30 June 2012 \$
Intellectual property, at cost Accumulated amortisation	1,460,587 (420,000)	1,460,587 (60,000)
	1,040,587	1,400,587

Note 6. Current and Non-Current Liabilities- Financial liabilities

Convertible debenture
Current liability- Value of convertible debenture derivative	38,237	81,186
Non-current liability – Host debt borrowings	628,271	559,574
Total secured financial liabilities	666,508	640,760

The face value of the convertible debenture at 31 December 2012 is \$AUD968,017 (\$CAD1.0M) which may (at the option of the holder) be converted into equity at a price of AUD 4.73 cents per share which is higher than the share price as at 31 December 2012. Based on the face value of \$AUD968,017, approximately 20,465,470 fully paid ordinary shares would be issued on the full conversion of borrowing into equity which would approximate 4.9% of the ordinary shares on issue at 31 December 2012.

The maturity date for repayment of the borrowing, or the conversion into equity, is no later than 23 December 2014. Interest is payable on the borrowing at a fixed rate of 10% per annum.

The convertible debenture is secured by a fixed and floating charge over certain of the Company's assets and future milestone and royalty receipts under existing and future licence and distribution agreements. The respective values of the assets pledged as security as at 31 December 2012 are as follows:

Fixed charge

Cash and cash equivalents	435,590
Floating charge
Trade receivables and other assets (excluding IP) Inventories	210,728 314,359
	525,087

Note 7. Equity movements

( 1 ) Contributed equity	2012 Shares	2011 Shares	2012 \$	2011 \$
Contributed equity at beginning of half year	414,096,557	325,714,800	30,024,787	27,721,517
Issue of ordinary shares and options during the half year
Shares and options issued for cash at 7.0 cents on 25 August 2011	-	7,380,000	-	516,600
Value of options issued transferred to options reserve Shares and options issued under non-renounceable share				(27,552)
issue to shareholders at 7.0 cents on 8 November 2011	-	7,613,663	-	532,957
Value of options issued transferred to options reserve Shares and options issued to consultants in lieu of fees	-	1,010,504	-	(50,956) 70,000
Less costs associated with equity raisings	-	-	-	(30,996)
Contributed equity at end of half year	414,096,557	341,718,967	30,024,787	28,731,570
(2) Reserves
Share – based payments reserve			\$	\$
Balance 1 July 2012			907,059	595,207
Value attributable to options attaching to shares Option expense			-	78,508

Balance 31 December 2012 940,239

Note 8 Contingencies

Contingent liability \$ 142,016

The Company has received grant funds totalling \$142,016 from the State Government of Victoria under the terms of the Vistech Grant. 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 \$142,016 if the Company receives any future proceeds from the commercialisation of the grant technology.

Options issued to employees and consultants 33,180 8,616

682,331

Note 9 Events occurring after the reporting period

The Company announced on 19 February 2013 that it had finalised a drawdown of \$CAD500,000 (tranche 2) under the terms of the Secured Senior Convertible Debenture with Paladin Labs Inc. (Paladin). This brings the total funds advanced under this facility to \$CAD1,500,000.

The funds provided by Paladin are for working capital purposes and will be used to continue the international expansion of Travelan.

A summary of the terms of the tranche 2 drawdown is as follows:

• The maturity date for repayment is 23 December 2014 unless Paladin converts all or part of tranche 2 into fully paid ordinary shares prior to that date.
• The terms of the conversion of the tranche 2 funds into ordinary shares of Immuron Limited are as follows:
• A conversion price of \$AUS0.0473 per share.
• There are also two automatic conversion events that will give rise to a conversion of the tranche 2 funds into equity. Those events being:
  • (i) if the capitalised value of Immuron reaches a particular trigger point at a conversion price of \$AU0.0473 per share; and
  • (ii) If the Company raises a minimum of \$1.5M in its 2013 fund raising the total of tranche 2 funds will convert to equity on the same terms as that offered to investors in the 2013 fund raising
• The security for the tranche 2 funds is a charge over the Company's bank accounts, receivables and inventories, and future revenue streams from royalty and licence receipts.
• Interest on the funds advanced under the tranche 2 facility is payable at the rate of 10% per annum and is payable monthly.

The tranche 2 debenture will be accounted for as a financial liability with an embedded written option due to the Company's obligation to deliver variable shares at a future date. This option will be valued in accordance with Australian Accounting Standards and any changes to the value of the option due to movements in the Company's share price and foreign exchange movements will be taken through the profit and loss account.

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;

• 1. complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
• 1. giving a true and fair view of the Company's financial position as at 31 December 2012 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.

E Zelcer Director

R Aston Director

Melbourne 28 February, 2013

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

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Immuron Limited (the company). which comprises the balance sheet as at 31 December 2012, the statement of comprehensive income. statement of changes in equity and statement of cash flows for the half-year ended on that date, selected explanatory notes and the directors' declaration for the company.

Directors' responsibility for the half-year financial report

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

Auditor's responsibility

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 a 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 company's financial position as at 31 December 2012 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. 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.

Independence

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

.......................................

PricewaterhouseCoopers, ABN 52 780 433 757 Freshwater Place, 2 Southbank Boulevard, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001 T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

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 2012 and of its performance for the half-year ended on that date; and
• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

Material Uncertainty Regarding Continuation as a Going Concern

Without qualifying our conclusion, we draw attention to Note 1 in the financial report. Note 1 comments on the company being dependent on a capital raising by April 2013 to fund budgeted cash outflows. This condition, along with other matters as set forth in Note 1, indicate the existence of a material uncertainty which may cast significant doubt about the company's ability to continue as a going concern, and therefore the entity may be unable to realise its assets and discharge its liabilities in the normal course of business and at the amounts stated in the financial report.

Pricewaterhow Gosper

PricewaterhouseCoopers

$S(1)$

Jon Roberts Partner

Melbourne 28 February 2013