MEMPHASYS LIMITED. — Interim / Quarterly Report 2021

Jul 25, 2021

26 July 2021 ASX: MEM

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JUNE 2021 QUARTERLY ACTIVITY REPORT AND APPENDIX 4C – MEMPHASYS LIMITED (ASX: MEM)

Memphasys Limited (‘ Memphasys ’ or the ‘ Company ’) is pleased to provide its Appendix 4C cash flow statement for the quarter ended 30 June 2021 (‘ Q4 ’), along with the following update.

Business activities in the Fourth Quarter (Q4)

Memphasys is focused on reproductive biotechnology and proprietary cell separation techniques. It is developing novel medical devices, diagnostics, and media with application to assisted reproduction technologies in humans and animals.

The Company is currently commercialising the Felix device, which separates high quality sperm for IVF processes. In addition, it has several research and development (R&D) projects being undertaken at the University of Newcastle, Australia.

There was no change in the activities of the Company during Q4. The Company continued spending on R&D projects, staff and consultants at the same pace as it did in the first three quarters of the financial year.

Other administration and corporate costs of $226k in Q4 included payment of $42k in director fees to directors Andrew Goodall, Shane Hartwig and Paul Wright, which is consistent with the previous three quarters of the financial year.

The salary amount of $87.5k was paid to the Executive Chairman, Alison Coutts, which is consistent with the previous three quarters of the financial year. This amount was included within the staff costs.

The lack of proportion between the net cash used in operating activities in Q4 of $1.13m and the net cash used in whole financial year of $2.95m is due to government grants not received in Q4.

Material Developments

On 29 April 2021, the Company announced the successful granting of two additional U.S. patents by the U.S. Patent and Trademark Office, bringing the total number of patents granted to 4.

As announced on 4 May 2021, the Felix device co-developer and head of Memphasys’ Scientific Advisory Committee, Professor John Aitken, won the globally prestigious 2021 distinguished andrology award. Professor Aitken also co-wrote a paper with Associate Professor Hassan Bakos that was published in the prestigious journal, “Human Reproduction”. Professor Aitken has agreed to join Memphasys and is employed as Research Director by Memphasys, effective 1 July 2021.

On 4 May 2021, the company issued an update on the development progress of the portfolio of precommercialisation/R&D reproductive biotechnology projects being undertaken by Professor John Aitken’s research group at the University of Newcastle and in particular the stallion dismount fertility diagnostic, that was moving to development of a prototype device.

Postal Address Contact Details E info@memphasys.com P.O. Box 2202 P +612 8415 7300 W memphasys.com Homebush West NSW 2140 F +612 8415 7399 ABN 33 120 047 556

Memphasys Limited 30-32 Richmond Road Homebush West NSW 2140

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On 26 May 2021, the company announced that two major shareholders had provided $3m in new funding in the form of a loan to be issued as convertible notes subject to shareholder approval. The funds will be applied to Felix commercialisation and to advance the range of new products being developed with Professor John Aitken’s research group at the University of Newcastle.

Verification activities on the upgraded Felix device were completed by 30 June 2021, and this was reported on 1 July 2021. It was also reported that validation activities were expected to be completed by 30 September 2021, and that potential commercial sales discussions with Key Opinion Leaders in early markets were expected to resume in the July-September quarter after they had successfully tested the upgraded device, but subject to prevailing COVID conditions in these early access markets.

This announcement was approved by the Board of Memphasys.

For further information, please contact: Memphasys Limited Alison Coutts Executive Chairman (02) 8415-7300

Rule 4.7B

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Name of entity

Memphasys Limited

ABN 33 120 047 556

Quarter ended (“current quarter”)

30 June 2021

Consolidated statement of cash flows	Current quarter $A’000	Year to date (12 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) research and development (b) product manufacturing and operating costs (c) advertising and marketing (d) leased assets (e) staff costs (f) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives 1.8 Other (provide details if material) 1.9 Net cash from / (used in) operating activities	- (411) (2) (2) (99) (396) (226) - - - - 9 -	- (1,607) (2) (12) (250) (1,506) (925) - 5 - - 1,352 -
	(1,127)	(2,945)
2. Cash flows from investing activities 2.1 Payments to acquire or for: (a) entities (b) businesses (c) property, plant and equipment (d) investments (e) intellectual property (f) other non-current assets	- - (56) - - -	- - (113) - - -

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Consolidated statement of cash flows	Current quarter $A’000	Year to date (12 months) $A’000
2.2 Proceeds from disposal of: (a) entities (b) businesses (c) property, plant and equipment (d) investments (e) intellectual property (f) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities		- - - - - - - - -	- - - - - - - - -
		(56)	(113)
3. Cash flows from financing activities 3.1 Proceeds from issues of equity securities (excluding convertible debt securities) 3.2 Proceeds from issue of convertible debt securities 3.3 Proceeds from exercise of options 3.4 Transaction costs related to issues of equity securities or convertible debt securities 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from / (used in) financing activities		- (3,000) - (93) - - - - -	- (3,000) 193 (99) - - - - -
		2,907	3,093
4. 4.1 4.2 4.3	Net increase / (decrease) in cash and cash equivalents for the period Cash and cash equivalents at beginning of period Net cash from / (used in) operating activities (item 1.9 above) Net cash from / (used in) investing activities (item 2.6 above)	279 (1,127) (56)	1,968 (2,945) (113)

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Consolidated statement of cash flows	Current quarter $A’000	Year to date (12 months) $A’000
4.4 4.5 4.6	Net cash from / (used in) financing activities (item 3.10 above) Effect of movement in exchange rates on cash held Cash and cash equivalents at end of period	2,907 -	3,093 -
		2,003	2,003
5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts		Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)		2,003 - - -	279 - - -
		2,003	279
6. Payments to related parties of the entity and their associates			Current quarter $A'000
6.1 Aggregate amount of payments to related parties and their associates included in item 1 129 6.2 Aggregate amount of payments to related parties and their associates included in item 2 - Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of, and an explanation for, such payments.			129
			-

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

7. 7.1 7.2 7.3 7.4 7.5 7.6	Financing facilities Note: the term “facility’ includes all forms of financing arrangements available to the entity. Add notes as necessary for an understanding of the sources of finance available to the entity. Total facility amount at quarter end $A’000 Amount drawn at quarter end $A’000 Loan facilities - - Credit standby arrangements - - Other (please specify) - - Total financing facilities - - Unused financing facilities available at quarter end - Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well.	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
		-	-
		-	-
		-	-
		-	-
8.	Estimated cash available for future operating activities		$A’000
8.1 8.2 8.3 8.4 8.5 8.6	Net cash from / (used in) operating activities (item 1.9) (1,127) Cash and cash equivalents at quarter end (item 4.6) 2,003 Unused finance facilities available at quarter end (item 7.5) - Total available funding (item 8.2 + item 8.3) 876 Estimated quarters of funding available (item 8.4 divided by item 8.1) 0.78 Note: if the entity has reported positive net operating cash flows in item 1.9, answer item 8.5 as “N/A”. Otherwise, a figure for the estimated quarters of funding available must be included in item 8.5. If item 8.5 is less than 2 quarters, please provide answers to the following questions: 8.6.1 Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?		(1,127) 2,003 -
			876
	Answer: Yes, the entity expects to continue to develop its portfolio of products at a similar rate of spending.
	8.6.2 Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?
	Answer: The Company anticipates raising $1.07m from the conversion of 32,404,457 options at $0.0332 due to expire at the end of September 2021. In September 2021, the Company also expects to receive approximately $1.36m from the R&D Tax Incentive Scheme. The current cash reserves plus these two sources of funding are considered sufficient to allow the Company to fund its operations to February 2022, based upon projected forecast expenditure. The Company, together with its longstanding corporate advisor Canaccord Genuity, will commence planning an appropriate equity funding package for the Company beyond February 2022.

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

8.6.3 Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis? Answer: Yes. The business expects to be able to continue its operations and meet its business objectives on the basis it has the necessary licences, agreements, technical and commercial personnel in place to ensure the Company continues to advance its portfolio of products under development, and in particular, the commercial development of the Felix Device.

Note: where item 8.5 is less than 2 quarters, all of questions 8.6.1, 8.6.2 and 8.6.3 above must be answered.

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Date: 26 July 2021

Authorised by: By the Board of Directors

(Name of body or officer authorising release – see note 4)

Notes

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2. If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the [ name of board committee – eg Audit and Risk Committee ]”. If it has been authorised for release to the market by a disclosure committee, you can insert here: “By the Disclosure Committee”.

5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations , the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

ASX Listing Rules Appendix 4C (17/07/20) + See chapter 19 of the ASX Listing Rules for defined terms.

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