MACH7 TECHNOLOGIES LIMITED — Interim / Quarterly Report 2024

Feb 28, 2024

Mach7 Technologies Limited Appendix 4D Half-year report

1. Company details

Name of entity: Mach7 Technologies Limited ABN: 26 007 817 192 Reporting period: For the half-year ended 31 December 2023 Previous period: For the half-year ended 31 December 2022

2. Results for announcement to the market

			$
Revenues from ordinary activities	down	18.8% to	13,332,313
Loss from ordinary activities after tax attributable to the owners of Mach7
Technologies Limited	up	3454.9% to	(4,634,590)
Loss for the half-year attributable to the owners of Mach7 Technologies
Limited	up	3454.9% to	(4,634,590)

Dividends

There were no dividends paid, recommended or declared during the current financial period.

Comments

The loss for the consolidated entity after providing for income tax amounted to $4,634,590 (31 December 2022: $130,371).

Please refer to the “Operating and Financial Review” in the Directors’ Report for a detailed explanation and analysis of the Group’s performance for the six months ended 31 December 2023.

3. Net tangible assets

Net tangible assets per ordinary security	Reporting period Cents 9.65	Previous period Cents 8.22

4. Control gained over entities

Not applicable.

5. Loss of control over entities

Not applicable.

6. Dividends

Current period

There were no dividends paid, recommended or declared during the current financial period.

Previous period

There were no dividends paid, recommended or declared during the previous financial period.

Mach7 Technologies Limited Appendix 4D Half-year report

7. Dividend reinvestment plans

Not applicable.

8. Details of associates and joint venture entities

Not applicable.

9. Foreign entities

Details of origin of accounting standards used in compiling the report:

Not applicable.

10. Audit qualification or review

Details of audit/review dispute or qualification (if any):

The financial statements were subject to a review by the auditors and the review report is attached as part of the Half Year Report.

11. Attachments

Details of attachments (if any):

The Half Year Report of Mach7 Technologies Limited for the half-year ended 31 December 2023 is attached.

12. Signed

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Signed _________

Date: 29 February 2024

Robert Bazzani Chairman Melbourne

Mach7 Technologies Limited ABN 26 007 817 192

Half Year Report - 31 December 2023

Mach7 Technologies Limited Directors' report 31 December 2023

The Directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of Mach7 Technologies Limited (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled at the end of, or during, the half-year ended 31 December 2023.

Directors

The following persons were Directors of the Company during the whole of the financial half-year and up to the date of this report, unless otherwise stated:

Mr Robert Bazzani - Chairman (Independent Non-Executive Director until 16 November 2023 and appointed Chairman effective 16 November 2023)

Mr Eliot Seigel, MD - Independent Non-Executive Director

Mr Michael Lampron - Managing Director and Chief Executive Officer

Ms Rebecca Thompson - Independent Non-Executive Director (Appointed effective 16 November 2023) Mr David Chambers - Chairman (Resigned effective 16 November 2023)

Mr Philippe Houssiau - Independent Non-Executive Director (Resigned effective16 November 2023)

Principal activities

The principal activity of the Company is the development and commercialisation of medical imaging and data management software solutions for global healthcare enterprises.

Operating and financial review Financial position

At 31 December 2023, the Group reported net current assets of $19.12 million (30 June 2023: $20.06 million), which includes cash on hand of $22.73 million (30 June 2023: $23.39 million) and customer contract assets of $3.25 million (30 June 2023: $3.89 million).

Review of operations

Revenue from continuing operations

Revenue recognised for the current reporting period was $13.33 million (half-year 31 December 2022: $16.41 million).

The Group has reported a record $49.5 million in sales orders (total contract value) for this half-year of which 87% is related to Subscription and Support and Maintenance sales as customers increasingly opt for the Subscription rather than Capital model. The ongoing transition to a predominantly subscription model will ultimately result in higher quality recurring revenue which will provide greater predictability and less volatility around future earnings and cash. However, there will be a short-term revenue impact due to the 12-to-18-month lag between signing a sales order and the achievement of First Productive Use which is when the recurring revenue from Subscription orders can start being recognised.

As a result, Group revenue has decreased by $3.08 million (19%) compared to the previous corresponding period (“PCP”). Recurring revenue which is comprised of Subscription revenue and Support and Maintenance revenue increased by 21% on PCP to $9.89 million for the half-year. Software license revenue which represents capital software sales orders that are generally contracted over a 5-year term was $1.73 million for the half-year, a decline of $5.42 million compared to PCP as customers moved away from capital licences. Professional Services revenue for the half-year was $1.71 million, a 55% increase compared to PCP.

Sales orders continue to be the best measure of Mach7’s financial progress as the timing of cash receipts and revenue can be affected by contract milestones, revenue recognition rules and the mix of Capital and Subscription agreements.

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Mach7 Technologies Limited Directors' report 31 December 2023

The table below provides a breakdown of revenue recognised by product/service (table 1):

Subscription revenue Support and maintenance revenue Total recurring revenue Software license revenue Professional service revenue**	31 December 2023 $ 3,993,550 5,900,389	31 December 2022 $ 3,201,485 4,959,543	Change Change $ % 792,065 25% 940,846 19% 1,732,911 21% (5,419,050) (76%) 605,712 55% (3,080,427) (19%)
	9,893,939	8,161,028
	1,730,970 1,707,404	7,150,020 1,101,692
	13,332,313	16,412,740

• Subscription and software licence revenue above comprises the total software license revenue amounting to $5,724,520 as disclosed in note 4 to these financial statements.

• ** Represents combination of implementation & training services and migration services disclosed in note 4 to these financial statements.

Expenses from operations

Operating expenses increased by $1.16 million or 9%

Despite the first six months of the fiscal year traditionally being the more expensive half for the Company due to the timing of trade shows and other operating expenses, operating expenses increased by 9% reflecting careful cost management (halfyear 31 December 2022: increased by 28%).

Operating expenditure (excluding Right-of-use lease liability interest expense, share-based payments expense, foreign exchange (losses)/gains and depreciation & amortisation) is presented in the following table:

Employment and related expenses Professional fees and corporate expenses Marketing and investor relations expenses Travel and related expenses General administration and office expenses	31 December 2023 $ 11,062,153 710,523 508,294 715,971 1,139,801	31 December 2022 $ 9,963,756 841,880 583,091 615,615 969,048	Change Change $ % 1,098,397 11% (131,357) (16%) (74,797) (13%) 100,356 16% 170,753 18% 1,163,352 9%
	14,136,742	12,973,390

• excluding Right-of-use lease liability interest expense, share-based payments expense, foreign exchange (losses)/gains and depreciation & amortisation.

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Mach7 Technologies Limited Directors' report 31 December 2023

Profitability

NPATA* of ($1.25) million

The Group has reported EBITDA (on an adjusted basis) of ($1.57) million for the half-year (half-year 31 December 2022: $3.09 million). The decrease in EBITDA (adjusted) is primarily due to the decrease in revenue (down 19% from PCP). This reflects the short-term revenue impact arising from the accelerating transition to a Subscription model and 12-to-18 month delay in the recognition of recurring revenue. This is set out in the table below:

Revenue from contracts with customers Distributor and licence fees Gross Margin Operating expenditure Net foreign exchange (losses)/gains (realised) Other income/expenses (net) EBITDA Adjusted Interest income Net foreign exchange (losses)/gains (unrealised) Share-based payments expense (non-cash) Right-of-use lease liability interest expense Depreciation (non-cash) Income tax benefit (non-cash) NPATA Amortisation (non-cash) Loss for the year**	31 December 2023 $ 13,332,313 (660,667)	31 December 2022 $ 16,412,740 (325,255)	Change Change $ % (3,080,427) (19%) (335,412) 103% (3,415,839) (21%) (1,163,352) 9% (77,220) (103%) (12,872) 13% (1,253,444) 10% (4,669,283) (151%) 387,787 777% (209,307) (567%) (806,999) (307%) 5,301 (15%) (26,105) 11% (175,933) (16%) (5,494,539) (129%) 990,320 (23%) (4,504,219) 3455%
	12,671,646	16,087,485
	(14,136,742) (2,553) (108,439)	(12,973,390) 74,667 (95,567)
	(14,247,734)	(12,994,290)
	(1,576,088) 437,712 (172,371) (544,171) (29,986) (259,845) 896,699	3,093,195 49,925 36,936 262,828 (35,287) (233,740) 1,072,632
	(1,248,050) (3,386,540)	4,246,489 (4,376,860)
	(4,634,590)	(130,371)

• NPATA (Net Profit After Tax and before Amortisation) is NPAT adjusted for amortisation of acquired intangibles

** Adjusted EBITDA (Earnings Before Interest, Tax, Depreciation, Amortisation) is EBITDA adjusted for unrealised foreign exchange (losses)/gains and non-cash item share-based payments expense.

Matters subsequent to the end of the financial half-year

No matter or circumstance has arisen since 31 December 2023 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.

Contingent liability

Mach7 Technologies, Inc., a wholly-owned subsidiary of Mach7 Technologies Limited, received a patent infringement claim from AI Visualize. This case was dismissed by the Federal Court and subsequently AI Visualize filed an appeal. The appeal was heard on 5 October 2023 and a summary judgement is still pending. The Company will continue to strongly defend the matter.

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Mach7 Technologies Limited Directors' report 31 December 2023

Outlook

Mach7’s innovative and interoperable products are the foundation of an enterprise imaging strategy that provides both hospital networks and private practices with a consolidated image data management solution with diagnostic image viewing from any location.

Mach7 continues to benefit from market dynamics influencing the adoption of enterprise imaging with buying decisions increasingly being made by the C-suite or CIO for the whole hospital system and outpatient practice or enterprise rather than the radiology department.

The Company is well positioned to take advantage of a highly fragmented market for medical imaging and the ongoing shift in demand from acute to ambulatory settings. The Company has a strong sales pipeline which reflects opportunities with new and existing customers across multiple regions, care settings and product combinations.

The record sales orders achieved in the first half of FY24 reflected the ongoing shift to subscription sales, especially in North America, and a large renewal program which demonstrated strong retention among existing customers. The changing customer preference for subscription licencing is expected to have a short-term revenue impact but will ultimately provide Mach7 with a more predictable and scalable business model.

Significant changes in the state of affairs

There were no significant changes in the state of affairs of the Company during the financial half-year.

Auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this Directors' Report.

This report is made in accordance with a resolution of Directors, pursuant to section 306(3)(a) of the Corporations Act 2001 (Cth).

On behalf of the Directors

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_________ Robert Bazzani Chairman

29 February 2024

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RSM Australia Partners

Level 27, 120 Collins Street Melbourne VIC 3000 PO Box 248 Collins Street West VIC 8007 T +61 (0) 3 9286 8000 F +61 (0) 3 9286 8199

www.rsm.com.au

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the review of the financial report of Mach7 Technologies Limited and its controlled entities for the half year ended 31 December 2023, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

• (i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• (ii) any applicable code of professional conduct in relation to the review.

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RSM AUSTRALIA PARTNERS

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M PARAMESWARAN

Partner

Dated: 29 February 2024 Melbourne, Victoria

THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING

RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036

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Liability limited by a scheme approved under Professional Standards Legislation

Mach7 Technologies Limited Contents 31 December 2023

Statement of profit or loss and other 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	20
Independent auditor's review report to the members of Mach7 Technologies Limited	21

6

Mach7 Technologies Limited Statement of profit or loss and other comprehensive income For the half-year ended 31 December 2023

Note Revenue from contracts with customers 4 Other income Expenses Employment and related expenses Depreciation and amortisation Professional fees and corporate expenses General administration and office expenses Distributor and license fees Marketing and investor relations expenses Travel and related expenses Right-of-use lease liability interest expense Other expenses Share-based payments expense (non-cash) Net foreign exchange (losses)/gains Loss before income tax benefit Income tax benefit Loss after income tax benefit for the half-year attributable to the owners of Mach7 Technologies Limited Other comprehensive income Items that may be reclassified subsequently to profit or loss Foreign currency translation Other comprehensive income for the half-year, net of tax Total comprehensive income for the half-year attributable to the owners of Mach7 Technologies Limited Basic and diluted earnings per share 5	Consolidated 31 December 2023 31 December 2022 $ $ 13,332,313 16,412,740 443,492 55,409 (11,062,153) (9,963,756) (3,646,385) (4,610,600) (710,523) (841,880) (1,139,801) (969,048) (660,667) (325,255) (508,294) (583,091) (715,971) (615,615) (29,986) (35,287) (114,219) (101,051) (544,171) 262,828 (174,924) 111,603	Consolidated 31 December 2023 31 December 2022 $ $ 13,332,313 16,412,740 443,492 55,409 (11,062,153) (9,963,756) (3,646,385) (4,610,600) (710,523) (841,880) (1,139,801) (969,048) (660,667) (325,255) (508,294) (583,091) (715,971) (615,615) (29,986) (35,287) (114,219) (101,051) (544,171) 262,828 (174,924) 111,603
	(5,531,289) 896,699	(1,203,003) 1,072,632
	(4,634,590) (1,146,456)	(130,371) (794,271)
	(1,146,456)	(794,271)
	(5,781,046)	(924,642)
	Cents (1.9)	Cents (0.1)

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

7

Mach7 Technologies Limited Statement of financial position As at 31 December 2023

Note Assets Current assets Cash and cash equivalents Trade and other receivables 6 Customer contract assets 7 Other assets Total current assets Non-current assets Customer contract assets 7 Property, plant and equipment Right-of-use assets Intangibles 8 Deferred tax asset Other assets Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Customer contract liabilities 9 Lease liabilities Total current liabilities Non-current liabilities Lease liabilities Deferred tax liability Total non-current liabilities Total liabilities Net assets Equity Issued capital 10 Reserves Accumulated losses Total equity	Consolidated 31 December 2023 30 June 2023 $ $ 22,729,147 23,394,568 4,770,999 6,707,403 3,247,580 3,897,609 952,409 890,916	Consolidated 31 December 2023 30 June 2023 $ $ 22,729,147 23,394,568 4,770,999 6,707,403 3,247,580 3,897,609 952,409 890,916
	31,700,135	34,890,496
	4,290,674 757,882 1,028,288 31,191,809 4,047,887 771,193	5,005,951 815,602 1,181,128 35,466,096 4,153,583 793,131
	42,087,733	47,415,491
	73,787,868	82,305,987
	2,439,386 9,925,849 213,594	3,397,681 11,223,534 209,614
	12,578,829	14,830,829
	855,356 5,932,659	991,039 7,000,453
	6,788,015	7,991,492
	19,366,844	22,822,321
	54,421,024	59,483,666
	116,223,871 6,019,344 (67,822,191)	115,697,098 7,312,323 (63,525,755)
	54,421,024	59,483,666

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

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Mach7 Technologies Limited Statement of changes in equity For the half-year ended 31 December 2023

Consolidated Balance at 1 July 2022 Loss after income tax benefit for the half-year Other comprehensive income for the half-year, net of tax Total comprehensive income for the half-year Transactions with owners in their capacity as owners: Issue of shares upon exercise of options Share-based payments (note 15) Balance at 31 December 2022 Consolidated Balance at 1 July 2023 Loss after income tax benefit for the half-year Other comprehensive income for the half-year, net of tax Total comprehensive income for the half-year Transactions with owners in their capacity as owners: Issue of shares upon exercise of options Share-based payments (note 15) Transfers upon exercise of options/rights Transfers upon lapse of options/rights Shares issued as remuneration Balance at 31 December 2023	Issued Capital $ 115,295,443 - -	Share Based Payment Reserves $ 4,080,659 - -	Foreign Exchange Translation Reserve $ 2,494,548 - (794,271)	Accumulated Losses $ (63,495,432) (130,371) -	Total Equity $ 58,375,218 (130,371) (794,271)
	- 184,450 -	- (70,841) (262,828)	(794,271) - -	(130,371) - -	(924,642) 113,609 (262,828)
	115,479,893	3,746,990	1,700,277	(63,625,803)	57,301,357
	Issued Capital $ 115,697,098 - -	Share Based Payment Reserves $ 3,923,857 - -	Foreign Exchange Translation Reserve $ 3,388,466 - (1,146,456)	Accumulated Losses $ (63,525,755) (4,634,590) -	Total Equity $ 59,483,666 (4,634,590) (1,146,456)
	- 174,233 - 118,540 - 234,000	- - 310,171 (118,540) (338,154) -	(1,146,456) - - - - -	(4,634,590) - - - 338,154 -	(5,781,046) 174,233 310,171 - - 234,000
	116,223,871	3,777,334	2,242,010	(67,822,191)	54,421,024

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

9

Mach7 Technologies Limited Statement of cash flows For the half-year ended 31 December 2023

Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers (inclusive of GST) Interest received Income taxes paid Net cash used in operating activities Cash flows from investing activities Payments for property, plant and equipment Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Repayment of lease liabilities Net cash from/(used in) financing activities Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the financial half-year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the financial half-year	Consolidated 31 December 2023 31 December 2022 $ $ 15,481,106 8,947,782 (15,766,904) (14,226,488)	Consolidated 31 December 2023 31 December 2022 $ $ 15,481,106 8,947,782 (15,766,904) (14,226,488)
	(285,798) 226,044 (133,241)	(5,278,706) 35,075 -
	(192,995)	(5,243,631)
	(63,483)	(89,893)
	(63,483)	(89,893)
	174,233 (106,465)	113,383 (126,555)
	67,768	(13,172)
	(188,710) 23,394,568 (476,711)	(5,346,696) 25,747,608 203,852
	22,729,147	20,604,764

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

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Mach7 Technologies Limited Notes to the financial statements 31 December 2023

Note 1. Corporate information

The financial report of Mach7 Technologies Limited (the “Company” or the “Parent”) for the half-year ended 31 December 2023 was authorised for issue in accordance with a resolution of the Directors on 29 February 2024 .

Mach7 Technologies Limited is a company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on the Australian Securities Exchange (ASX:M7T). The nature of the operations and principal activities of Mach7 Technologies Limited and its consolidated entities (the “Group”) are described in the Directors’ Report.

Note 2. Material accounting policy information

These general purpose financial statements for the interim half-year reporting period ended 31 December 2023 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001 (Cth), as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'.

These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2023 and any public announcements made by the Company during the interim reporting period in accordance 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, unless otherwise stated.

New or amended Accounting Standards and Interpretations adopted

The Company has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

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Mach7 Technologies Limited Notes to the financial statements 31 December 2023

Note 3. Operating segments

Description of segments and principal activities

Mach7 Technologies is a global provider of enterprise imaging solutions for healthcare institutions, predominantly throughout the North America, Asia Pacific, and the Middle East region. The Group’s performance is monitored and reported for one main segment, which is enterprise imaging. In addition, revenue is monitored at a regional and product/services level. This information is presented in Note 4.

Profit or Loss

The Group’s profit and loss is managed as a whole and is the same as what is presented in the statement of financial performance and other comprehensive income. In addition, management and the directors monitor Gross Margins, Earnings Before Interest, Tax and Depreciation (EBITDA), and EBITDA adjusted for non-cash items. This is presented below:

Revenue from contracts with customers Distributor and licence fees Operating expenditure Net foreign exchange (losses)/gains (realised) Other income/expenses (net) EBITDA – before the following items Share-based payments expense (non-cash) Net foreign exchange(losses)/gains (unrealised) EBITDA Depreciation and amortisation expense Right-of-use lease liability interest expense Interest income Income tax benefit Net loss after tax	Consolidated 31 December 2023 31 December 2022 $ $ 13,332,313 16,412,740 (660,667) (325,255) (14,136,742) (12,973,390) (2,553) 74,667 (108,439) (95,567)	Consolidated 31 December 2023 31 December 2022 $ $ 13,332,313 16,412,740 (660,667) (325,255) (14,136,742) (12,973,390) (2,553) 74,667 (108,439) (95,567)
	(1,576,088)	3,093,195
	(544,171) (172,371)	262,828 36,936
	(2,292,630) (3,646,385) (29,986) 437,712 896,699	3,392,959 (4,610,600) (35,287) 49,925 1,072,632
	(4,634,590)	(130,371)

Segment assets and liabilities

The Group’s chief decision makers review and monitor assets and liabilities as a whole.

Geographical non-current tangible assets*

North America Asia	Consolidated 31 December 2023 30 June 2023 $ $ 10,508,392 11,553,773 387,532 395,622	Consolidated 31 December 2023 30 June 2023 $ $ 10,508,392 11,553,773 387,532 395,622
	10,895,924	11,949,395

*Non-current assets excluding the intangible assets of the Group.

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Mach7 Technologies Limited Notes to the financial statements 31 December 2023

Note 4. Revenue from contracts with customers

Disaggregation of revenue from contracts with customers

Mach7 is a global provider of medical imaging software solutions. Every software sale, or provision of services, is subject to a software license agreement, statement of work and/or order form. The Group derives revenue from the transfer of goods and services over time and at a point in time in the following major product lines and geographical regions:

Software License Revenue (major segment) Professional Services Revenue: - implementation & training services - migration services Support and maintenance (recurring revenue) Geographical segment revenues North America Asia Pacific Middle East Europe and other regions Timing of revenue recognition* Revenue recognised at a point in time Revenue recognised over time	Consolidated 31 December 2023 31 December 2022 $ $ 5,724,520 10,351,505 1,489,303 954,086 218,101 147,606 5,900,389 4,959,543	Consolidated 31 December 2023 31 December 2022 $ $ 5,724,520 10,351,505 1,489,303 954,086 218,101 147,606 5,900,389 4,959,543
	13,332,313	16,412,740
	10,717,823 1,724,121 421,603 468,766	13,612,395 2,250,457 407,589 142,299
	13,332,313	16,412,740
	1,730,970 11,601,343	7,150,020 9,262,720
	13,332,313	16,412,740

*Software License Revenue is comprised of Subscription Revenue (annual recurring revenue) and Capital Software License Revenue (recognised upfront upon delivery of software and is recurring at the end of each term, which is normally 5 years).

Note 5. Earnings per share

Basic earnings per share (“EPS”) is calculated by dividing the net loss for the half-year attributable to ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the half-year. The income and share data used in the calculations of basic and diluted EPS is as follows:

Basic and diluted earnings per share for loss Loss after income tax attributable to the owners of Mach7 Technologies Limited Weighted average number of ordinary shares used in calculating basic and diluted earnings per share Basic and diluted earnings per share	Consolidated 31 December 2023 31 December 2022 $ $ (4,634,590) (130,371)	Consolidated 31 December 2023 31 December 2022 $ $ (4,634,590) (130,371)
	Number 240,554,891	Number 239,073,820
	Cents (1.9)	Cents (0.1)

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Mach7 Technologies Limited Notes to the financial statements 31 December 2023

Note 6. Trade and other receivables

Trade receivables Less: Allowance for expected credit losses Interest receivable Sales tax receivable Other receivables	Consolidated 31 December 2023 30 June 2023 $ $ 4,663,335 6,618,876 - (74,366)	Consolidated 31 December 2023 30 June 2023 $ $ 4,663,335 6,618,876 - (74,366)
	4,663,335	6,544,510
	78,242 20,909	54,359 74,628
	99,151	128,987
	8,513	33,906
	4,770,999	6,707,403

Note 7. Customer contract assets

Contract assets - current Contract assets - non-current	Consolidated 31 December 2023 30 June 2023 $ $ 3,247,580 3,897,609 4,290,674 5,005,951	Consolidated 31 December 2023 30 June 2023 $ $ 3,247,580 3,897,609 4,290,674 5,005,951
	7,538,254	8,903,560

Customer contract assets (or accrued revenue) represents fees which have been recognised as revenue which are yet to be invoiced to the customer. The customer is invoiced when certain contract milestones have been met. This can fluctuate from period to period, as these balances are impacted by the timing of when contracted sales occur, performance obligations are met and the payment milestones that are specified within each contract. The carrying values are assumed to approximate the fair values for these balances.

Under the accounting standards, contracts in which payment by the customer and performance by the Company occur at significantly different times will need to be assessed to determine whether the contract contains a significant financing component. For the reporting period ended 31 December 2022, the Company identified that its customer contract with Akumin contains a significant financing component due to the performance obligation in relation to the delivery of the capital licence being completed in December 2022 but payment for the capital software licence occurring over a 10-year period. In determining the promised amount of consideration adjusted for the significant financing component, the Company used a discount rate that would be reflected in a separate financing transaction between the Company and Akumin at contract inception which takes into account the credit characteristics of Akumin. The difference between the contract value and the capital software licence revenue recognised at contract inception will unwind over the 10 year contract term as interest income in the statement of profit or loss and other comprehensive income. The contract asset recognised in relation to the Akumin contract is split between current and non-current based on the invoicing schedule in the contract.

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Mach7 Technologies Limited Notes to the financial statements 31 December 2023

Note 8. Intangibles

Goodwill - at cost Patents and trademarks - at cost Less: Accumulated amortisation Customer contracts - at cost Less: Accumulated amortisation Software - at cost Less: Accumulated amortisation Brand Names - at cost Less: Accumulated amortisation	Consolidated 31 December 2023 30 June 2023 $ $ 4,237,798 4,354,315	Consolidated 31 December 2023 30 June 2023 $ $ 4,237,798 4,354,315
	397,249 (321,767)	402,650 (322,290)
	75,482	80,360
	11,580,921 (10,734,810)	11,656,701 (10,504,132)
	846,111	1,152,569
	57,757,722 (36,216,443)	58,930,559 (33,666,329)
	21,541,279	25,264,230
	6,049,113 (1,557,974)	6,172,596 (1,557,974)
	4,491,139	4,614,622
	31,191,809	35,466,096

Reconciliations

Reconciliations of the written down values at the beginning and end of the current financial half-year are set out below:

Consolidated Balance at 1 July 2023 Exchange differences Amortisation expense Balance at 31 December 2023	Patents $ 80,360 (2,109) (2,769)	Customer Contracts $ 1,152,569 (25,761) (280,697)	Brand Names $ 4,614,622 (123,483) -	Software $ 25,264,230 (619,877) (3,103,074)	Goodwill $ 4,354,315 (116,517) -	Total $ 35,466,096 (887,747) (3,386,540)
	75,482	846,111	4,491,139	21,541,279	4,237,798	31,191,809

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Mach7 Technologies Limited Notes to the financial statements 31 December 2023

Note 9. Customer contract liabilities

Support and Maintenance Revenue received in advance Professional Service Revenue received in advance Subscription Revenue received in advance Software License Revenue received in advance	Consolidated 31 December 2023 30 June 2023 $ $ 4,913,067 6,316,755 2,674,192 2,664,481 2,228,408 2,113,846 110,182 128,452	Consolidated 31 December 2023 30 June 2023 $ $ 4,913,067 6,316,755 2,674,192 2,664,481 2,228,408 2,113,846 110,182 128,452
	9,925,849	11,223,534

Customer contract liabilities (or deferred revenue) represents cash amounts that have been collected from customers that will be recognised as revenue in a future period. Revenue is recognised:

• at a point in time when Capital Software Licenses are delivered.

• over a period of time when Professional Service milestones are achieved.

• over a period of time when Support and Maintenance services are performed.

• for Subscription over the subscription period upon the customer achieving First Productive Use.

The carrying values are assumed to approximate the fair values for these balances. Support and Maintenance revenue and Subscription revenue received in advance are expected to grow year on year as the Group signs new customer contracts, i.e. every new Support and Maintenance contract and Subscription contract signed going forward will add to this balance. Professional Service Revenue received in advance are expected to fluctuate from year to year, as timing of sales orders, cash payment milestones and Professional Service milestones will impact this balance.

Note 10. Issued capital

Ordinary shares - fully paid Movements in ordinary share capital Details Balance Options exercised during the period Shares issued as remuneration Balance	31 December 2023 Shares 241,191,047	Consolidated 30 June 2023 31 December 2023 Shares $ 240,009,381 116,223,871	Consolidated 30 June 2023 31 December 2023 Shares $ 240,009,381 116,223,871	30 June 2023 $ 115,697,098
	Date 1 July 2023 31 December 2023		Shares 240,009,381 856,666 325,000 241,191,047	$ 115,697,098 292,773 234,000 116,223,871

Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital.

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Share buy-back

There is no current on-market share buy-back.

16

Mach7 Technologies Limited Notes to the financial statements 31 December 2023

Note 11. Dividends

There were no dividends paid, recommended or declared during the current or previous financial half-year.

Note 12. Related party transactions

Parent entity

Mach7 Technologies Limited is the parent entity.

Transactions with related parties

There were no transactions with related parties during the current and previous financial half-year.

Receivable from and payable to related parties

There were no trade receivables from or trade payables to related parties at the current and previous reporting date.

Loans to/from related parties

There were no loans to or from related parties at the current and previous reporting date.

Note 13. Events after the reporting period

No matter or circumstance has arisen since 31 December 2023 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.

Note 14. Contingent liabilities

Mach7 Technologies, Inc., a wholly-owned subsidiary of Mach7 Technologies Limited, received a patent infringement claim from AI Visualize. This case was dismissed by the Federal Court and subsequently AI Visualize filed an appeal. The appeal was heard on 5 October 2023 and a summary judgement is still pending. The Company will continue to strongly defend the matter.

17

Mach7 Technologies Limited Notes to the financial statements 31 December 2023

Note 15 Share-based payments

Share-based payments expense during the period is $544,171 (31 December 2022:($262,828)) which relates to options/performance rights/shares issued to Directors, KMP and other employees of the company.

Summary of options granted and lapsed during the half-year ended 31 December 2023 are as below:

Unlisted Options

Set out below are summaries of options granted under the plan:

31 December 2023

Exercise Grant date Expiry date price 17/10/2018 17/10/2023 $0.185 12/11/2018 12/11/2023 $0.244 02/05/2019 02/05/2024 $0.265 11/10/2019 11/10/2024 $0.680 11/10/2019 01/10/2024 $0.680 18/11/2019 18/11/2024 $0.820 18/11/2019 18/11/2024 $0.800 18/11/2019 18/11/2024 $0.950 18/11/2019 18/11/2024 $1.100 01/12/2020 30/11/2025 $1.400 03/02/2021 30/06/2025 $1.480 10/09/2021 31/08/2026 $0.980 11/11/2021 11/11/2026 $0.910 11/11/2021 31/12/2025 $1.380 20/01/2022 20/01/2027 $0.782 24/02/2022 24/02/2027 $0.731 12/12/2022 12/12/2027 $0.610 01/01/2023 01/01/2028 $0.570 01/05/2023 01/05/2028 $0.636 01/07/2023 01/07/2028 $0.582 14/08/2023 14/08/2028 $0.800 01/09/2023 01/09/2028 $0.760 16/11/2023 16/11/2028 $0.710 01/12/2023 01/12/2028 $0.695 18/12/2023 18/12/2028 $0.730 Weighted average exercise price	Balance at the start of the half-year 646,666 225,000 50,000 793,333 166,667 285,000 250,000 250,000 250,000 85,000 1,550,000 2,510,000 110,000 225,000 200,000 250,000 110,000 200,000 200,000 - - - - - -	Granted - - - - - - - - - - - - - - - - - - - 400,000 50,000 30,000 225,000 50,000 2,435,000	Exercised (626,666) (225,000) - (5,000) - - - - - - - - - - - - - - - - - - - - -	Expired/ forfeited/ other (20,000) - - - - - - - - (11,666) - (120,000) (20,001) (75,000) - - (60,000) - - - - - - - -	Balance at the end of the half-year - - 50,000 788,333 166,667 285,000 250,000 250,000 250,000 73,334 1,550,000 2,390,000 89,999 150,000 200,000 250,000 50,000 200,000 200,000 400,000 50,000 30,000 225,000 50,000 2,435,000
	8,356,666	3,190,000	(856,666)	(306,667)	10,383,333
	$0.924	$0.711	$0.203	$0.965	$0.916

For the options granted during the current financial half-year, the valuation model inputs used to determine the fair value at the grant date, are as follows:

		Share price	Exercise	Expected	Dividend	Risk-free	Fair value
Grant date	Expiry date	at grant date	price	volatility	yield	interest rate	at grant date
01/07/2023	01/07/2028	$0.620	$0.582	63.00%	-	3.78%	$0.358
14/08/2023	14/08/2028	$0.800	$0.800	62.00%	-	3.93%	$0.449
01/09/2023	01/09/2028	$0.780	$0.760	63.00%	-	3.76%	$0.442
16/11/2023	16/11/2028	$0.780	$0.710	62.00%	-	4.23%	$0.457
01/12/2023	01/12/2028	$0.725	$0.695	62.00%	-	4.14%	$0.416
18/12/2023	18/12/2028	$0.775	$0.730	67.00%	-	3.37%	$0.461

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Mach7 Technologies Limited Notes to the financial statements 31 December 2023

Note 15. Share-based payments (continued)

Performance rights

The Company has on issue 1,825,185 (June 2023: 1,503,299) performance rights of which 402,185 expires on 30 September 2024, 723,000 expires on 30 September 2025 and 700,000 expires on 30 September 2026.

Summaries of performances rights is as below:

Outstanding at the beginning of the financial year Granted Exercised Expired/Forfeited	31 December 2023 1,503,299 700,000 - (378,114)	30 June 2023 1,180,299 723,000 (200,000) (200,000)
	1,825,185	1,503,299

During the period, the consolidated entity issued 700,000 performance rights to Mr Michael Lampron with various vesting conditions relating to service period and performance hurdles. The fair value of the performance rights was determined using the Black Scholes option pricing model using the following inputs:

Number of performance rights granted	560,000	140,000
Grant date	16 November 2023	16 November 2023
Expiry date	30 September 2026	30 September 2026
Weighted average share price at date of grant ($)	$0.72	$0.72
Weighted average exercise price ($)	-	-
Weighted average volatility %	54.34%	54.34%
Weighted average risk-free rate %	4.177%	4.177%
Vesting conditions with 30 June 2026 target date	Note 1	Note 2
Fair value per performance right $	$0.6468	$0.5096
Fair value of performance right $	$362,208	$71,338
Note 1:
Vesting condition	No. of Performance Rights
Company performance vesting condition linked to Revenue Compound		105,000
Annual Growth Rate
Company performance vesting condition linked to EBITDA Margin		350,000
Company performance vesting condition linked to Net Profit After Tax		105,000

Note 2:
Vesting condition	No. of Performance Rights
Market-based vesting condition linked to Total Shareholder Return	140,000

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Mach7 Technologies Limited Directors' declaration 31 December 2023

In the directors' opinion:

• the attached financial statements and notes comply with the Corporations Act 2001 (Cth), Australian Accounting Standard AASB 134 'Interim Financial Reporting', the Corporations Regulations 2001 and other mandatory professional reporting requirements;

• the attached financial statements and notes give a true and fair view of the Company's financial position as at 31 December 2023 and of its performance for the financial half-year ended on that date; and

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

Signed in accordance with a resolution of directors made pursuant to section 303(5)(a) of the Corporations Act 2001 (Cth).

On behalf of the Directors

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_________ Robert Bazzani Chairman

29 February 2024

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RSM Australia Partners

Level 27, 120 Collins Street Melbourne VIC 3000 PO Box 248 Collins Street West VIC 8007 T +61 (0) 3 9286 8000 F +61 (0) 3 9286 8199

www.rsm.com.au

INDEPENDENT AUDITOR’S REVIEW REPORT To the Members of Mach7 Technologies Limited

Conclusion

We have reviewed the accompanying half-year financial report of Mach7 Technologies Limited (“Company”) and its controlled entities (“Group”) which comprises the consolidated statement of financial position as at 31 December 2023, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the Group at the half-year end.

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 Mach7 Technologies Limited is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the Group’s financial position as at 31 December 2023 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 .

Basis for Conclusion

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity. Our responsibilities are further described in the Auditor’s Responsibilities for the Review of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of 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 (including Independence Standards) (the Code) that are relevant to our audit of the annual 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 Mach7 Technologies Limited, would be in the same terms if given to the directors as at the time of this auditor’s review report.

Directors' Responsibility for the Half-Year Financial Report

The directors of the Mach7 Technologies Limited are responsible for the preparation of the half-year 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 half-year financial report that is free from material misstatement, whether due to fraud or error.

THE POWER OF BEING UNDERSTOOD

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RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction. RSM Australia Partners ABN 36 965 185 036

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Liability limited by a scheme approved under Professional Standards Legislation

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Auditor’s Responsibility for the Review of the Financial Report

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 half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group’s financial position as at 31 December 2023 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 .

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.

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RSM AUSTRALIA PARTNERS

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M PARAMESWARAN Partner

Dated: 29 February 2024 Melbourne, Victoria

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