NANOSONICS LIMITED — Annual Report 2007

May 14, 2007

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NANOSONICS PTY LIMITED

A.B.N. 11 095 076 896

FINANCIAL REPORT FOR THE YEAR ENDED 30TH JUNE 2005

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PRITCHARD ADAMS

CHARTERED ACCOUNTANTS

EMBILITY CINITED BY A SCHEME AFFROYED UNDER FROFEISIONAL STANDARDS ESCISLATION

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NANOSONICS PTY LIMITED

A.B.N. 11 095 076 896

CONTENTS

Statement of Financial Performance Balance Sheet Notes to the Financial Statements Directors' Declaration

Auditor's Report

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NANOSONICS PTY LTD

STATEMENT OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30TH JUNE 2005

	Note	2005	2004
OPERATING PROFIT (LOSS) BEFORE INCOME TAX	2	(442, 789)	(1, 648, 514)
Income tax expense attributable to operating profit		471
OPERATING PROFIT (LOSS) AFTER INCOME TAX		(443, 260)	(1,648,514)
Retained profits (Accumulated losses) at the beginning of the financial year		(2, 176, 093)	(527, 579)
TOTAL AVAILABLE FOR APPROPRIATION		(2,619,353)	(2, 176, 093)
RETAINED PROFITS (ACCUMULATED LOSSES) AT THE END OF THE FINANCIAL YEAR		(2,619,353)	(2, 176, 093)

The accompanying notes form part of these financial statements.

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NANOSONICS PTY LTD

STATEMENT OF FINANCIAL POSITION AS AT 30TH JUNE 2005

	Note	2005 s	2004 \$.
CURRENT ASSETS
Cash		1.532,569	2,261,920
Receivables	3	435,107	60,648
Other	4	6,770	1,020
TOTAL CURRENT ASSETS		1,974,446	2,323,588
NON-CURRENT ASSETS
Receivables	3	25,000	25,000
Investments	5	3	3
Property, plant and equipment	6	266,369	321,272
Intangibles	7	129,337	70,592
TOTAL NON-CURRENT ASSETS		420,709	416,867
TOTAL ASSETS		2,395,155	2,740,455
CURRENT LIABILITIES
Creditors and borrowings	8	87,560	66,405
Provisions	ġ	50,878	20,482
Other	10	65,445	19,036
TOTAL CURRENT LIABILITIES		203,883	105,923
NON-CURRENT LIABILITIES
Creditors and borrowings	8	2,809,715	2,809,715
TOTAL NON-CURRENT LIABILITIES		2,809,715	2,809,715
TOTAL LIABILITIES		3,013,598	2,915,638
NET ASSETS (LIABILITIES)		(618, 443)	(175, 183)
EQUITY
Issued Capital
10 Fully Paid Ordinary Shares of \$1.00		10	10
5,000 Fully Paid Ordinary Shares of \$200		1,000,000	1,000,000
99,990 Fully Paid Ordinary Shares of
\$0.01		1,000	1,000
4,545 Fully Paid Ordinary Shares of
\$220.00		999,900	999,900
		2,000,910	2,000,910
Accumulated losses		2,619,353	2,176,093
TOTAL EQUITY		(618, 443)	(175, 183)

The accompanying notes form part of these financial statements.

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NANOSONICS PTY LTD A.B.N. 11 095 076 896

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2005

1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

This financial report is a special purpose financial report prepared for use by directors and members of the company. The directors have determined that the company is not a reporting entity.

The financial report has been prepared in accordance with the requirements of the following Australian Accounting Standards:

• AAS 4: Depreciation of Non-Current Assets
• AAS 5: Materiality
• AAS 8: Events Occurring after Reporting Date

No other Australian Accounting Standards, Urgent Issues Group Consensus Views or other authoritative pronouncements of the Australian Accounting Standards Board have been applied.

The financial report is prepared on an accruals basis and is based on historic costs and does not take into account changing money values or, except where specifically stated, current valuations of non-current assets.

Notwithstanding the deficiency of net assets, the financial statements have been prepared on a going concern basis as the directors have received a guarantee of continued financial support and the directors believe that such financial support will continue to be made available.

The following specific accounting policies, which are consistent with the previous period unless otherwise stated, have been adopted in the preparation of this financial report:

Investments

Investments are brought to account at cost or directors' valuation. Dividends and interests are brought to account when received.

Property, Plant and Equipment

Property, plant and equipment are carried at cost, independent or director's valuation,

All assets, excluding freehold land and buildings are depreciated over their useful lives to the company.

Intangibles

Patents

Patents and trademarks are valued in the accounts at cost of acquisition and are amortised over their estimated useful life.

NANOSONICS PTY LTD A.B.N. 11 095 076 896

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2005

Employee Benefits

Provision is made for the liability for employee benefits arising from services rendered by employees to balance date. Employee benefits expected to be settled within one year together with benefits arising from wages and salaries, annual leave and sick leave which will be settled after one year, have been measured at their nominal amount. Other employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

Contributions are made to an employee superannuation fund and are charged as expenses when incurred.

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NANOSONICS PTY LTD A.B.N. 11 095 076 896

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2005

		2005 Ż.	2004 \$
$\overline{2}$	OPERATING PROFIT (LOSS) Abnormal Items:
	Expenses: Extraordinary Item		752,392
	Total abnormal items before income tax		(752, 392)
	Total abnormal Items after income tax		(752, 392)
3	RECEIVABLES
	CURRENT Sundry Debtors GST Receivable	424,600 10,507	44,141 16,507
		$-435,107$	60,648
	NON-CURRENT Loans	25,000	25,000
4	OTHER ASSETS
	CURRENT Security Deposit Prepayments	2,160 4,610	600 420
		6,770	1.020
5	INVESTMENTS
	NON-CURRENT Investment in Subsidiary Company	з	3

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NANOSONICS PTY LTD A.B.N. 11 095 076 896

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30TH JUNE 2005

	FOR THE TEAR ENDED SUITIVING AVVS	2005 s	2004 s
6	PROPERTY, PLANT & EQUIPMENT
	Laboratory Fitout Costs Less: Accumulated Depreciation	317,032 173,456	315,542 120,750
		143,576	194,792
	Laboratory Equipment Less: Accumulated Depreciation	100,653 47,618	91,036 27,869
		53,035	63,167
	Office Furniture & Equipment Less: Accumulated Depreciation	120,893 51,135	96,241 32,928
		69,758	63,313
	Total property, plant & equipment	266,369 The State of Assessment Concerning Company	321,272
7	INTANGIBLES Patent Costs Intellectual Property	104,337 25,000	70,592
		129,337	70,592
8	CREDITORS & BORROWINGS
	CURRENT Trade Creditors	87,560	66,405
	NON-CURRENT Loan-3M	2,809,715	2,809,715
9	PROVISIONS
	CURRENT Provision for Holiday Pay Provision for Long Service Leave	40,192 10,686	20,482
		50,878	20,482
10	OTHER LIABILITIES
	CURRENT Accrued Charges	65,445	19,036
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NANOSONICS PTY LIMITED A.B.N. 11 095 076 896

DIRECTORS' DECLARATION

The directors have determined that the company is not a reporting entity and that this special purpose financial report should be prepared in accordance with the accounting policies described in Note 1 to the financial statements.

The directors of the company declare that:

• $\mathbf{1}$ the financial statements and notes, presents fairly the company's financial position as at 30th June 2005 and of its performance for the year ended on that date in accordance with the accounting policies described in Note 1 to the financial statements;
• $2.$ in the directors' opinion 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 Board of Directors:

Director
	Bernard Stang
Director
	Maurie Stang

Dated this 2000 ....... day of DEGEMIBER $8005$ PRITCHARD ADAMS

CHARTERED ACCOUNTANTS

INDEPENDENT AUDIT REPORT

TO THE MEMBERS OF

NANOSONICS PTY LIMITED A.B.N. 11 095 076 896

Scope

The Financial Report and Directors' Responsibility.

The financial report comprises the statement of financial position, statement of financial performances, accompanying notes to the financial statements and the directors' declaration for Nanosonics Pty Ltd for the year ended 30th June 2005.

The directors of the company are responsible for the preparation and true and fair presentation of the financial report in accordance with the Company's Constitution. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Audit approach

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We conducted an independent audit in order to express an opinion to the members of the company. Our audit was conducted in accordance with Australian Auditing Standards, in order to provide reasonable assurance as to whether the financial report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore an audit cannot guarantee that all material misstatements have been detected.

We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Company's Constitution, including compliance with Accounting Standards and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the company's financial position, and of its performance as represented by the results of its operations and cash flows.

We formed our audit opinion on the basis of these procedures, which included:

examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report, and assessing the appropriateness of the accounting policies and disclosures used and the reasonableness of significant accounting estimates made by the directors.

PARTNERS: REX F X HO2BEN, RUSSELL J REID, MARK P PURTILL, RICHARD A HUGHES, ROBERT E MAYBERRY. CONSULTANT: PAUL A JOHNSTONE.

LEVEL 9. 10 BARRACK STREET, SYDNEY NSW 2000, AUSTRALIA. GPO Box 5456, SYDNEY NSW 2001. TEL: +61 2 8297 8777. FAX: +61 2 8297 8700. EMAIL:info@pritchardadxms.com WEBSITE: www.pritchardzdzms.com ABN 60 574 353 917

LIATILIET LINITEU RE A SCHSMB AFPROVED UNDER PROFESSIONAL ETANUARDS LECIFIATION

PRITCHARD ADAMS

INDEPENDENT AUDIT REPORT

TO THE MEMBERS OF

NANOSONICS PTY LIMITED A.B.N. 11 095 076 896

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

Independence

In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements.

Audit Opinion

In our opinion, the financial report presents fairly in accordance with applicable Accounting Standards and other mandatory professional reporting requirements in Australia the financial position of Nanosonics Pty Ltd as at 30th June 2005, and the results of its operations and cash flows for the year then ended.

Name of Firm: Pritchard Adams Chartered Accountants

Name of Partner: Robert Mayberry

Level 9, 10 Barrack Street, Sydney Address:

Dated this 7th day of DECEMBER, 2005