ONE CLICK GROUP LIMITED — Interim / Quarterly Report 2017

Jul 27, 2017

UUV Aquabotix Limited ACN 616 062 072

APPENDIX 4D HALF-YEAR REPORT

1. Reporting Period

The financial information contained in the attached financial report is for the half-year ended 30 June 2017. The previous corresponding period was for the half-year ended 30 June 2016.

Results for announcement to the market Revenuefrom continuing activities Lossfrom continuing activities after tax attributable to members Net lossattributable to members Dividends:No dividends are being proposed or have been paid	Half-year 30 June 2017 Half-year 30 June 2016 **% change **
	287,920 364,459 (21.0)
	(2,325,733) (46,043) (4,951.2)
	(2,325,733) (46,043) (4,951.2)

2. Commentary related to the above results

Revenue reduced marginally in the period as the Company transitions from small-scale to commercial operations, with significant investment of staff time and funds utilised to bring the new contract manufacturer online. The net loss incorporates expenses associated with the Initial Public Offering (“IPO”), establishment of the Australian office, hiring new key staff and business development costs.

3. Net Tangible Asset (NTA) backing per share

3. Net Tangible Asset (NTA) backing per share
Net Tangible Asset (NTA) backing per share	As at 30 June 2017 As at 30 June 2016 **% change **
	4.34 (0.68) 739.5

4. Details of entities over which control has been gained or lost during the period

On 28 April 2017, UUV Aquabotix Limited completed through an IPO the remaining condition precedent for the complete acquisition of Aquabotix Technology Corporation. Note 1(c) to the financial report contains details of how this transaction has been accounted for.

The consolidated financial statements represent the continuation of the financial statements of Aquabotix Technology Corporation from the date of the transaction.

5. There were no payments of dividends during the period.

6. There is no dividend reinvestment plan in operation.

7. There are no associates or joint venture entities.

8. This report is based on accounts that have been reviewed and are not subject to dispute or qualification.

The attached financial report is all the half-year information provided to the Australian Securities Exchange under Listing rule 4.2A.3. This report also satisfied the half-year reporting requirements of the Corporations Act 2001.

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Durval Tavares CEO and Executive Director

28 July 2017

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UUV Aquabotix Limited ACN 616 062 072

CORPORATE INFORMATION

Directors and Management

Peter James (Non-Executive Chairman) Jay Cohen (Non-Executive Director) Durval Tavares (Chief Executive Officer and Executive Director) Brendan Martin (Chief Financial Officer and Executive Director) Anand Sundaraj (Company Secretary)

Registered Office

Level 29, 201 Elizabeth Street Sydney, 2000 NSW Australia Telephone: + 61 2 8072 1400 E-mail: info@aquabotix.com Website: www.aquabotix.com

Auditors

RSM Australia Partners Level 13, 60 Castlereagh Street Sydney, NSW 2000

Bankers

Commonwealth Bank of Australia Silicon Valley Bank, Level 21, 201 Sussex Street 3003 Tasman Drive, Santa Clara, Sydney NSW 2000, Australia CA 95054, USA

Solicitors

Steinepreis Paganin K&L Gates LLP Moses & Singer LLP 16 Milligan Street 70 West Madison Street, Suite 300 The Chrysler Building Perth WA 6000 Chicago, IL 60602 405 Lexington Avenue Australia USA New York NY 10174, USA

Share Registry

Link Market Services Limited Level 4, 152 St Georges Terrace Perth, WA 6000 Australia Telephone: +61 1300 554 474

Stock Exchange Listing

UUV Aquabotix Limited shares (ASX code UUV) and options (ASX code UUVO) are quoted on the Australian Stock Exchange.

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UUV Aquabotix Limited ACN 616 062 072

TABLE OF CONTENTS

DIRECTORS’ REPORT ............................................................................................................................ 4 AUDITOR’S INDEPENDENCE DECLARATION ...................................................................................... 7 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 30 JUNE 2017 ....................................................................................... 8 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017 .............................. 9 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 30 JUNE 2017 ......................................................................................................................................... 10 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 30 JUNE 2017 . 11 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 30 JUNE 2017 ............ 12 DIRECTORS’ DECLARATION ............................................................................................................... 24 INDEPENDENT AUDITOR’S REVIEW REPORT .................................................................................. 25

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UUV Aquabotix Limited ACN 616 062 072

DIRECTORS’ REPORT

Your directors submit the financial report for UUV Aquabotix Ltd (the “Company”) and its controlled entities, together the “consolidated entity” or the “Group” for the half-year ended 30 June 2017.

Directors

The names of directors who held office during the half year and until the date of this report are set out below. Directors were in office for this entire period unless otherwise stated:

Peter James (Non-Executive Chairman) Appointed 9 March 2017 Jay Cohen (Non-Executive Director) Appointed 9 March 2017 Brendan Martin (Executive Director) Appointed 22 November 2016 Durval Tavares (Managing Director) Appointed 9 March 2017 Robert Clisdell (Non-Executive Director) Appointed 22 November 2016 Resigned 9 March 2017 Peter Wall (Non-Executive Director) Appointed 22 November 2016 Resigned 9 March 2017

Review of Operations

Review of Operations
Key Information Revenue from ordinary activities Loss after tax from ordinary activities attributable to shareholders Net loss attributable to shareholders	Half-year Ended 30 June 2017 $ Half-year Ended 30 June 2016 $ % Change 287,920 364,459 (21.0)
	(2,325,733) (46,043) (4,951.2)
	(2,325,733) (46,043) (4,951.2)

Business Overview

The Company is based in Sydney and Fall River, Massachusetts, and is a unique and established underwater robotics company. It manufactures commercial/industrial-grade underwater drones (also known as unmanned underwater vehicles or UUVs) and commercial/industrial-grade networked underwater cameras for commercial, high-end consumer and military applications in a wide range of industries, including defence, marine construction, research and aquaculture among others.

The Company is a technology leader being one of very few companies worldwide offering commercially-available hybrid underwater drones, which are capable of both autonomous and remote human operation. This is important to note as the other hybrid vehicles can cost as much as ten times the price of the Aquabotix Hybrid.

The Company owns the intellectual property in a range of unmanned underwater vehicles and underwater camera products and is an early-mover in a nascent industry. With key design and system elements protected by patents the Company continues to build off its flexible and fully digital platform which has resulted in the largest list of integrated accessories available in its category.

Aquabotix’s systems are among the few commercially available and affordable solutions to the underwater requirements of the industries which purchase them. This has led users as diverse as defence agencies, marine construction companies and scientific organisations to have purchased Aquabotix’s products, which generally range between US$1,500 and US$150,000 per unit in price.

A number of key sales were made during the period, most notably to the United States Navy and the Virginia Institute of Marine Science (VIMS). These sales were significant for their size, which were both in excess of A$100,000 for a single unit, and also for their high degree of accessorisation and customisation. Each of these was won via competitive tender processes providing proof of the Company’s ability to deliver a technology leading product to large-scale clients.

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UUV Aquabotix Limited ACN 616 062 072

DIRECTORS’ REPORT

The Company is led by an experienced Board of Directors. Managing Director and founder of the Company is Mr. Durval Tavares, who has logged over 20 years in the undersea technology sector Naval Undersea Warfare Centre and MIKEL Undersea Warfare Systems. Mr. Tavares also worked at Fidelity Investments for 10 years prior to founding the Company in 2011. The Board of Directors includes Non-Executive Chairman Mr. Peter James, with over 30 years’ experience working with technology companies, both private and public. Notably Mr. James was a long-term director of iiNet Ltd, prior it being acquired by TPG Telecom for A$1.56 billion, and is the current Chairman of nearmap, Macquarie Telecom, Dreamscape Networks and DroneShield. Admiral Jay Cohen (Ret), a former Chief Technology Officer of the US Navy serves as a Non-Executive Director. Since leaving government in 2006, Admiral Cohen serves on corporate boards and is an independent consultant for science and technology in support of U.S. and international defence, homeland security and energy issues and solutions. Mr. Brendan Martin, a Chartered Accountant with over 15 years’ experience in the financial and industrials sectors, serves as an Executive Director and Chief Financial Officer.

Successful Completion of Initial Public Offering

The Company successfully listed its securities on the Australian Securities Exchange on 28 April 2017 in an oversubscribed IPO, under which the Company raised $7 million through the issuance of 35,000,000 shares at an issue price of $0.20 per share.

Listing on the ASX represented a significant step forward for the Company, with the proceeds to be used to:

• build out a distributor network in the United States, Australia and elsewhere internationally;

• expand its direct sales force, with an increased emphasis on sales outside of the United States;

• expand its direct sales force, with a particular emphasis on specific industry verticals (e.g. defence, marine construction, aquaculture and others) in which the Company believes its products are particularly relevant globally;

• expand the executive, sales, operations, research and development and support teams;

• expand its research and development in order to, among other things:

• maintain the Group’s products’ competitiveness and “edge”,

• develop new versions of its existing products as demand evolves,

• develop new products to meet market demand,

o add product extensions to its existing products, such as sensor add-ons and software subscription products.

• make an additional investment in intellectual property protection; and

• establish a multi-faceted publicly-traded underwater robotics company with sufficient resources for quick development and response to market requirements.

Each of these areas is critical to the Company’s ability to execute its strategy.

Sales

• Under the applicable accounting standard, the Company is required to recognize its revenue when it ships its products to its customers. Many of the Company’s customers, particularly its governmental customers, pay for its products following shipment, typically on a net 60 to 90-day basis.

• The Company undertook minimal shipments of its products to its customers during the first calendar quarter of 2017, while it finalised its manufacturing processes with its new contract manufacturer. Once the Company finalised these processes, the Company then commenced shipments of commercial quantities of its products later in the half year that is the subject of this report.

• Consequently, the Company achieved revenues of $287,920 and cash receipts from customers of $274,197 in 1H2017. Half on half, this compares to revenues of $364,459 and cash receipts from customers of $294,573 in the prior comparative period (1H2016)

• Given this 60 to 90-day lag in cash receipts following shipments and the recognition of accounting revenues, the Company expects to receive most of the cash receipts corresponding to this 1H2017 revenue during 2H2017.

• The Company notes that whilst the half-on-half revenue is down, its revenue run rate coming out of Q2 2017, being the second half of the period addressed in this report, has doubled relative to Q2 2016 and sits at $280,637. This is a positive development following the Company’s investment in manufacturing processes earlier in the period, as noted above.

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UUV Aquabotix Limited ACN 616 062 072

DIRECTORS’ REPORT

• The Company has increased the average revenue per product unit from approximately $5,000 to approximately $15,000.

• The Company continued to grow its sales pipeline through both outbound and inbound channels and is firmly focused on sales growth now that the IPO is complete and appropriate structures are in place.

Principal Activities

The principal activities of the consolidated entity were the development, manufacturing and selling of underwater unmanned vehicles.

Significant Changes in the State of Affairs and Events after the Balance Sheet

Other than discussed in the Review of Operations above, there have been no significant changes in the state of affairs of the consolidated group during the half year ended 30 June 2017 and there have been no significant events after the Balance Sheet date.

Auditor’s Independence Declaration

The lead auditor’s independence declaration under s 307C of the Corporations Act 2001 is set out on page 7 for the half-year ended 30 June 2017.

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Peter James Director Dated this 28[th] day of July 2017

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RSM Australia Partners

Level 12, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001

T +61 (0) 2 8226 4500 F +61 (0) 2 8226 4501

www.rsm.com.au

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the review of the financial report of UUV Aquabotix Limited for the half year ended 30 June 2017, 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

G N Sherwood

Partner Sydney, NSW Dated: 28 July 2017

THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING

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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

Liability limited by a scheme approved under Professional Standards Legislation

UUV Aquabotix Limited ACN 616 062 072

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF-YEAR ENDED 30 JUNE 2017

Note Revenue Other income Cost of sales General and administrative expense Selling and marketing expense Research and development expense Depreciation expense Share option expense Costs associated with Initial Public Offering 2 Foreign exchange losses Interest expense Loss before income tax Income tax expense Loss for the period Other comprehensive income Items that may be reclassified subsequently to profit or loss: – Adjustments on translation of foreign controlled entity Total comprehensive loss for the period Basic and diluted loss per share 10	Half-year Ended 30 June 2017 Half-year Ended 30 June 2016 $ $ 287,920 364,459 14,229 - (334,480) (123,914) (812,550) (205,952) (184,570) (23,191) (88,272) (37,589) (13,663) (6,121) (96,667) - (1,073,769) - (17,307) - (6,604) (13,735)
	(2,325,733) (46,043) - -
	(2,325,733) (46,043)
	(86,238) 1,496
	(2,411,971) (44,547)
	Cents Cents (1.94) (0.11)

The accompanying notes form part of these financial statements.

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UUV Aquabotix Limited ACN 616 062 072

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017

Note ASSETS CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Other assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Plant and equipment 4 TOTAL NON-CURRENT ASSETS TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade payables Accrued expenses and other Customer deposits Deferred revenue Borrowings 5 TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Borrowings 5 TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS / (LIABILITIES) EQUITY Contributed equity 6 Shares issue costs 6 Reserves Accumulated losses TOTAL EQUITY	Consolidated As at 30 June 2017 As at 31 December 2016 $ $ 5,683,660 347,527 156,573 166,060 128,750 206,866 85,135 39,920
	6,054,118 760,373
	53,462 52,210
	53,462 52,210
	6,107,580 812,583
	83,593 96,084 121,503 13,258 40,244 61,025 - 2,429 - 38,549
	245,340 211,345
	- 663,661
	- 663,661
	245,340 875,006
	5,862,240 (62,423)
	9,790,540 1,150,904 (848,830) - 460,650 1,060 (3,549,120) (1,214,387)
	5,862,240 (62,423)

The accompanying notes form part of these financial statements.

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ACN 616 062 072

UUV Aquabotix Limited

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF-YEAR ENDED 30 JUNE 2017

Consolidated Balance at 1 January 2016 Comprehensive income Loss for the period Other comprehensive income Total comprehensive income for the period Balance at 30 June 2016 Balance at 1 January 2017 Comprehensive income Loss for the period Other comprehensive income Total comprehensive income for the period Shares issued during the period Shares issued on conversion of options and warrants Shares issued on IPO Share issue costs Options issued in the period Balance at 30 June 2017	Contributed Equity Accumulated Losses Options Reserve Foreign exchange Reserve Total $ $ $ $ $ 1,085,134 (1,335,335) - (619) (250,820)
	- (46,043) - - (46,043) - - - 1,496 1,496
	- (46,043) - 1,496 (44,547)
	1,085,134 (1,381,378) - 877 (295,367)
	1,150,904 (1,214,387) - 1,060 (62,423)
	- (2,325,733) - - (2,325,733) - - - (86,238) (86,238)
	- (2,325,733) - (85,178) (2,411,971) 73,099 - - - 73,099 1,566,537 - - - 1,566,537 7,000,000 - - - 7,000,000 (848,830) - - - (848,830) - - 545,828 - 545,828
	8,941,710 (3,540,120) 545,828 (85,178) 5,862,240

The accompanying notes form part of these financial statements.

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UUV Aquabotix Limited ACN 616 062 072

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 30 JUNE 2017

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Finance costs Income tax paid Net cash used in operating activities CASH FLOWS FROM INVESTING ACTIVITIES Cash flows from loans to other entities Purchase of non-current assets Acquisition of subsidiary, net of cash acquired Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from issue of shares Proceeds from convertible notes and warrants Repayment of borrowings Dividends paid Net cash provided by/(used in) financing activities Net increase/(decrease) in cash held Foreign currency transactions Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period	Consolidated Half-year Ended 30 June 2017 Half-year Ended 30 June 2016 $ $ 274,197 294,573 (1,275,998) (357,961) 14,229 - (6,604) (13,735) - -
	(993,175) (77,123)
	(327,054) - (17,749) - 44,456 -
	(300,347) -
	6,175,026 - 508,195 - - (19,682) - -
	6,683,221 (19,682)
	5,389,717 (96,805) (53,583) (5,681) 347,527 166,316
	5,683,660 63,830

The accompanying notes form part of these financial statements.

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UUV Aquabotix Limited

ACN 616 062 072

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 30 JUNE 2017

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

These general-purpose interim financial statements for half-year reporting period ended 30 June 2017 have been prepared in accordance with requirements of the Corporations Act 2001 and Australian Accounting Standard AASB 134: Interim Financial Reporting . The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards.

This interim financial report is intended to provide users with an update on the latest annual financial statements of UUV Aquabotix Limited and its controlled entity, Aquabotix Technology Corporation, together the “company”, “consolidated group” or “group”.

This interim financial report does not include all the notes typical of inclusion within an annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance and financial position of the consolidated entity as a full financial report. It is recommended that this interim financial report be considered in conjunction with any other public announcements made by UUV Aquabotix Limited during the following half-year in accordance with the continuous disclosure requirements of the ASX Listing Rules.

These interim financial statements were authorised for issue on 28 July 2017.

Accounting Policies

The Group has considered the implications of new or amended Accounting Standards, but determined that their application to the financial statements is either not relevant or not material.

a) Going Concern

The directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Thus, the going concern basis of accounting in preparing the financial statements continues to be adopted.

b) Asset Principles of Consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of the group and the results of all subsidiaries for each applicable period then ended.

The subsidiaries are all entities over which the Company has the power to govern the financial and operating policies of those subsidiaries. Subsidiaries are fully consolidated from the date on which control is transferred to the Company.

Inter-company transactions, balances and unrealized gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred.

c) Reverse Acquisition Accounting

On 24 February 2017, UUV Aquabotix Limited entered into an Exchange Agreement with the shareholders of Aquabotix Technology Corporation, effective 20 April 2017, acquired 100% of Aquabotix Technology Corporation and subsequently listed on the Australian Stock Exchange on 28 April 2017.

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UUV Aquabotix Limited

ACN 616 062 072

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 30 JUNE 2017

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Under the accounting standard applicable to business acquisitions, AASB 3: Business Combinations , the acquisition does not meet the definition of a business combination as the net assets of UUV Aquabotix Limited did not represent a business at the date of acquisition. The transaction has therefore been accounted for as a reverse acquisition of UUV Aquabotix Limited by Aquabotix Technology Corporation. The transaction has been accounted for by reference to AAASB 2: Share based payments . Aquabotix Technology Corporation has been identified as the acquirer and UUV Aquabotix Limited the subsidiary.

Included within expenses in the statement of profit or loss and other comprehensive income are acquisition and initial public offering related costs totalling $1,073,769, including the options issued to the Joint Lead Managers to the value of $449,160, which is a non-cash item. The costs include advisory, legal, accounting and other professional fees.

The impact of the reverse acquisition on each of the primary statements is as follows:

Consolidated Statement of Financial Position: the 30 June 2017 statement of financial position represents both UUV Aquabotix Limited and Aquabotix Technology Corporation

Consolidated Statement of Profit or Loss and Other Comprehensive Income : the 30 June 2017 statement of profit or loss and other comprehensive income comprises 6 months of activities Aquabotix Technology Corporation and the activity from the effective acquisition date of 20 April 2017 for UUV Aquabotix Limited. The 30 June 2016 statement of profit or loss and other comprehensive income comprises 6 months of activities of Aquabotix Technology Corporation.

Consolidated Statement of Changes in Equity : The 30 June 2017 statement of changes in equity comprises the changes in equity and transactions with equity holders for the 6-month period for Aquabotix Technology Corporation and from the effective acquisition date of 20 April 2017 for UUV Aquabotix Limited. The 30 June 2016 statement of changes in equity comprises the changes in equity and transactions with equity holders for the 6-month period for Aquabotix Technology Corporation.

Consolidated Statement of Cash Flows : The 30 June 2017 statement of cash flows comprises the cash transactions for the 6-month period of Aquabotix Technology Corporation and from the effective acquisition date of 20 April 2017 for UUV Aquabotix Limited. The 30 June 2016 statement of cash flows comprises the cash transactions for the 6-month period of Aquabotix Technology Corporation.

d) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts.

e) Accounts receivable

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for impairment. This provision includes amounts that are not considered to be recoverable from debtors. Trade receivables are generally due for settlement no more than 30 days from the date of recognition.

Collectability of trade receivables is reviewed on an ongoing basis. A provision for impairment of trade receivables is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of the receivables.

f) Trade and other payables

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UUV Aquabotix Limited

ACN 616 062 072

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 30 JUNE 2017

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Trade payables and other payables represent the liabilities for goods and services received by the group that remain unpaid at the end of the reporting period. The balance is recognised as a current liability.

g) Revenue recognition

Revenue comprises the fair value for the sale of goods and services, excluding, rebates and discounts. Revenue is recognised as follows:

Sales of goods

Sales of goods are recognised when the entity has delivered a product to the customer, which is defined as upon shipment. The recorded revenue is the gross amount of sale, including any fees payable for the transaction. Such fees are included in cost of goods sold.

Sales of services

Sales of services are recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction assessed on the basis of the actual service provided as a proportion of the total services to be provided.

h) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost includes all expenses directly attributable to the manufacturing process as well as suitable portions of related production overheads, based on normal operating capacity. Costs of ordinarily interchangeable items are assigned using the average cost method. Net realisable value is the estimated selling price in the ordinary course of business less any applicable selling expenses.

i) Leases

Leases where the lessor retains substantially all of the risks and rewards of ownership of the net asset are classified as operating leases. Payments made under operating leases are recognised as an expense on a straight-line basis over the period of the lease. Associated costs, such as maintenance and insurance, are expensed as incurred.

j) Employee benefits

• i. Wages, salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months of the end of the reporting period are recognised in other payables in respect of employees’ services rendered up to the end of the reporting period and are measured at amounts expected to be paid when the liabilities are settled.

ii. Retirement benefits

The group does not maintain a superannuation plan. The group makes fixed percentage contributions for all Australian resident employees to complying third party superannuation funds. The group has a qualified deferred compensation 401(K) plan for US resident employees, under which eligible employees may defer a portion of their salaries subject to the limitations set by the Inland Revenue Services. The group’s legal or constructive obligation is limited to these contributions.

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UUV Aquabotix Limited ACN 616 062 072

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 30 JUNE 2017

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Contributions to these superannuation funds and compensation plans are recognised as an expense as they become payable.

k) Earnings per share

Basic earnings per share are calculated by dividing net earnings by the weighted average number of ordinary shares outstanding during each period. Preferred shares are considered to be anti-dilutive for the earnings per share calculation.

Diluted earnings per share are calculated by adjusting the weighted average number of ordinary shares on the assumption of conversion of all potentially dilutive ordinary shares. Potential ordinary shares are treated as dilutive when, and only when, their conversion to ordinary shares would decrease earnings per share or increase loss per share from continuing operations.

l) Research and development

Research and development costs are expensed as they are incurred.

m) Share-based payments

Equity settled share based compensation benefits are provided to employees through an employee options plan. Further information in relation to this is set out in Note 9.

Equity settled transactions are awards of shares or options over shares that are provided to employees in exchange for the rendering of services. Cash settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price.

The cost of equity settled transactions are measured at fair value on grant date. Fair value is independently determined using the Black-Scholes options pricing model that takes into account the exercise price, the vesting period and the underlying volatility of the equity.

n) Segment reporting

Operating segments are presented using the “management approach”, where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers (“CODM”). The CODM is responsible for the allocation of resources to operating segments and assessing their performance. The group only has one operating segment, being the development and subsequent sale of unmanned underwater vehicles.

o) Plant and equipment

Plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Cost is the fair value of consideration required to acquire and develop the asset and includes the purchase price, and any costs directly attributable to bring the asset to its location and condition necessary for it to be capable of operating in the manner intended by management.

Depreciation is recognised on a straight-line basis over the useful lives of the manufacturing tools and equipment. The following useful lives have been applied:

Furniture and equipment 3–5 years Manufacturing tools 5–7 years Molds 7 years

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UUV Aquabotix Limited ACN 616 062 072

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 30 JUNE 2017

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Residual value estimates and estimates of useful lives are reviewed and updated as required.

Gains and losses arising on the disposal of manufacturing tools and equipment are determined as the difference between the disposal proceeds and the carrying value of the assets and are recognised in profit or loss as incurred.

p) Foreign currency conversion

The consolidated financial statements are presented in Australian dollars (AUD), which is also the functional currency of the parent company. Aquabotix Technology Corporation’s functional currency is US dollars due to the current operations being located in the United States of America.

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions (spot exchange rates). Foreign exchange gains and losses resulting from the settlement of such transactions and from the re-measurement of monetary items at year end exchange rates are recognised in the profit or loss for the period.

On consolidation, assets and liabilities have been translated at the closing rate on the reporting date. Income and expenses have been translated into AUD at the average rate over the reporting period. Any exchange differences are charged or credited to other comprehensive income and recognised in the foreign currency translation reserve.

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UUV Aquabotix Limited

ACN 616 062 072

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 30 JUNE 2017

NOTE 2: LOSS FOR THE PERIOD

	Consolidated	Consolidated
	Half-year	Half-year
	Ended	Ended
	30 June 2017	30 June 2016
	$	$
The following revenue and expense items are relevant in explaining the
financial performance for the interim period:
Costs associated with Initial Public Offering	1,073,769	-

Included within the costs associated with the Initial Public Offering are the expenses associated with the options issued to the Joint Lead Managers of $449,160, which is a non-cash item. The remaining costs relate to legal, advisory and other expenses for services received in association with the Initial Public Offering.

NOTE 3: OPERATING SEGMENTS

The Group has one operating segment, being the development and sales of underwater unmanned vehicles. This operating segment is monitored by the Group’s chief operating decision maker and strategic decisions are made on the basis of reviewing the segment results. The Chief Operating Decision Maker of the group is the Chief Executive Officer.

The following table presents certain information regarding the geographical segments for the 6 months ended 30 June 2017. For the comparative period, there was only one geographical segment, being USA.

		30 June 2017	30 June 2017
Segment Performance	USA	Australia	Elimination	Total
	$	$	$	$
External Sales	287,920			287,920
Total Segment Revenue	287,920	-	-	287,920
Interest Income	4,396	9,833		14,229
Depreciation	(13,329)	(334)		(13,663)
Finance Costs	(6,604)	-		(6,604)
Income tax expense				-
Loss after income tax expense	(1,259,759)	(1,072,641)	6,667	(2,325,733)
Assets and liabilities
Segment Assets	753,279	5,754,330	(400,029)	6,107,580
Segment liabilities	(601,106)	(29,049)	384,815	(245,340)

Page 17

UUV Aquabotix Limited ACN 616 062 072

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 30 JUNE 2017

NOTE 4: PLANT AND EQUIPMENT

			Furniture
			and
	Molds	Tools	Equipment	Total
	$	$	$	$
Balance at 1 January 2017	38,551	7,558	6,101	52,210
Additions	-	10,581	7,168	17,749
Disposals	-	-	-	-
Depreciation	(10,176)	(1,786)	(1,701)	(13,663)
Exchange Differences	(1,970)	(526)	(338)	(2,834)
Balance at 30 June 2017	26,405	15,827	11,230	53,462

NOTE 5: BORROWINGS

NOTE 5: BORROWINGS
	Consolidated
	As at	As at
	30 June 2017	31 December2016
	$	$
Borrowings – less than 1 year	-	38,549
Borrowings – greater than 1 year	-	663,661

Amounts due to Related Parties

On 27 June 2014, Aquabotix Technology Corporation entered into a promissory note agreement with one of its shareholders for USD$350,000. The unsecured note paid interest of 5% per annum and was repayable upon the written demand of the lender at any time or after the maturity date or earlier upon the occurrence of an event or default. As at 31 December, 2016, USD$293,232 was outstanding due to related parties. Interest paid on this note for the 12 months ended 31 December 2016 was USD$15,324. The amounts outstanding, including interest were repaid in February 2017.

On 14 November 2016, Aquabotix entered into an agreement for two 24-month interest-free senior secured promissory notes (for US$250,000 and US$300,000 respectively), convertible into common shares of Aquabotix Technology Corporation, with one of its shareholders, and granted a warrant to that shareholder exercisable for common shares in Aquabotix.

In April 2017, both of the convertible notes and the warrant were converted into Aquabotix Technology Corporation’s equity.

Line of Credit

On 22 September 2014, Aquabotix Technology Corporation entered into an agreement with Santander Bank for a line of credit promissory note for USD$60,000 (AUD$80,797 at 30 June 2016). Interest accrues on all amounts outstanding at a variable rate per annum equal to the sum of the prime rate plus 3.75%. During the 6 months to 30 June 2016, USD$nil was repaid. This line of credit was repaid in full by December 2016.

Page 18

UUV Aquabotix Limited

ACN 616 062 072

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 30 JUNE 2017

NOTE 6: CONTRIBUTED EQUITY

		Number of	30 June
	Notes	shares	2017
			$
Balance at 1 January 2017 (US$840,811 converted at 1.36986		352,504	1,150,904
Equity contributed on issue of shares, conversion of warrants and convertible notes	(a) and (b)	454,444	1,639,636
Share Capital of Aquabotix Technology
Corporation prior to the execution of the		806,948	2,790,540
Exchange Agreement
Shares converted upon execution of the Exchange Agreement	(c)	(806,948)	(2,790,540)
Shares issued upon execution of the Exchange Agreement	(c) and (d)	100,000,001	2,790,541
Shares issued during period	(e)	35,000,000	7,000,000
Transaction costs in relation to share issue	(f)	-	(848,830)
Balance at 30 June 2017		135,000,001	8,941,711

• Note (a) In January 2017, 19,176 shares in Aquabotix Technology Corporation were issued to certain employees of the Company.

• Note (b) In February 2017, 435,268 shares in Aquabotix Technology Corporation were issued on conversion of warrants and convertible notes.

• Note (c) As part of the acquisition of Aquabotix Technology Corporation by UUV Aquabotix Limited, the previous owners of Aquabotix Technology Corporation exchanged their 806,948 shares in Aquabotix Technology Corporation in for 100,000,000 shares in UUV Aquabotix Limited. These parties may also be issued with up to 45,000,000 Performance Shares in UUV upon the achievement of certain milestones. Further information on these can be found in Note 8.

• Note (d) Included is the 1 share in the Company issued upon incorporation in November 2016 for $1.

• Note (e) In April 2017, the Company issued 35,000,000 shares under an initial public offering to raise AUD$7,000,000. Attached to each share was one listed option.

• Note (f) Included in transaction costs are the broker fees paid to the Joint Lead Managers. The value of the options issued to the Joint Lead Managers of AUD$449,160 has been expensed in the income statement.

Page 19

UUV Aquabotix Limited

ACN 616 062 072

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 30 JUNE 2017

NOTE 7: CHANGES IN COMPOSITION OF ENTITY

On 28 April 2017, the Company’s securities were listed on the ASX following the completion of its initial public offering under which it raised $7,000,000 through the issuance of 35,000,000 shares together with 35,000,000 listed options at $0.20 per share. The listed options have an exercise price of $0.22 per option.

100,000,000 shares were issued to the members of Aquabotix Technology Corporation upon the effective completion of the Exchange Agreement between the Company and Aquabotix Technology Corporation on 20 April 2017 in consideration for their interests in that business and Aquabotix Technology Corporation became a wholly owned subsidiary of the Company.

A summary of the capital structure of the Company at 30 June 2017 is set out below:

Shareholders	Shares Unlisted Options Listed UUVO Options Performance Shares
Existing shareholders of ATC IPO shareholders Options issued to Directors, Management and Advisory Board Options issued to Joint Leader Managers Total	100,000,001 - - 45,000,000 35,000,000 - 35,000,000 - - 12,000,000 - - - 10,000,000 - -
	135,000,001 22,000,000 35,000,000 45,000,000

Unlisted Options:

• 11,100,000 Unlisted Options issued to Directors and Management are exercisable at 30 cents, each with various expiry dates ranging between 20 April 2018 and 20 April 2020. These Options are subject to various time and market vesting conditions. See Note 9 for further details.

• 200,000 Unlisted Options issued to Directors and Management are exercisable at 40 cents, with expiry dates of 20 April 2020. These options are subject to various time and market vesting conditions. See Note 9 for further details.

• 700,000 Unlisted Options issued to the Company’s Advisory Committee are exercisable at 30 cents each on or before 20 June 2020. These Options have fully vested.

• 10,000,000 Unlisted Options issued to the Joint Lead Managers of the IPO are exercisable at 22 cents each on or before 20 April 2020. These options have fully vested.

Listed Options:

• These are exercisable at 22 cents on or before 20 April 2019.

Page 20

UUV Aquabotix Limited ACN 616 062 072

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 30 JUNE 2017

NOTE 8: PERFORMANCE SHARES

Existing shareholders of Aquabotix Technology Corporation were granted 45,000,000 Performance Shares, each convertible into one Ordinary Share in UUV Aquabotix Limited upon achievement of various performance milestones, as follows:

		Number
Shareholders	Milestones	in Issue
Class A	each share is convertible into one fully paid ordinary share upon the	15,000,000
Performance	Shares achieving a 30-day volume weighted average price exceeding
Shares	$0.30 and the Company securing no less than 20 paying customers
	of remotely operated underwater vehicles within 24 months of the date
	the Companyis admitted to the Official List.
Class B	each share will convert into one fully paid ordinary share upon the Company	15,000,000
Performance	achieving, in relation to the Company’s technology $7,000,000 of cumulative
Shares	revenue or $2,500,000 of annual revenue in any given twelve-month period,
	within36months ofthe date the Companyis admitted to the Official List.
Class C	each share is convertible into one fully paid ordinary share upon the Company	15,000,000
Performance	achieving, in relation to the Company’s technology, $3,000,000 of cumulative
Shares	earnings before interest and taxes (EBIT) or $1,000,000 of annual EBIT in any
	given financial year, within 36 months of the date the Company is admitted to
	the Official List.

None of the milestones were met in the period ended 30 June 2017 and no Performance Shares were converted to Ordinary Shares in the period.

Page 21

UUV Aquabotix Limited ACN 616 062 072

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 30 JUNE 2017

NOTE 9: OPTIONS ISSUED

During the period, a number of options were issued to directors, management and other employees of the entity as well as to the Company’s corporate advisors and investors who subscribed to shares under the Company’s initial public offering. Using the Black Scholes Model, the fair value of each option is set out below and based on the following criteria and assumptions.

	Class A	Class B	Class C	Class D	Class E	Class F	Class G	Class H	Class I	Class J
No. of Options	35,000,000	10,000,000	700,000	700,000	5,000,000	4,000,000	1,000,000	200,000	200,000	200,000
Issue Date	20-Apr-17	20-Apr-17	20-Apr-17	20-Apr-17	20-Apr-17	20-Apr-17	20-Apr-17	23-May-17	23-May-17	23-May-17
Expiry (years)	2	3	3	3	3	3	3	3	3	3
Exercise
price ($)	0.22	0.22	0.30	0.30	0.30	0.30	0.30	0.30	0.30	0.40
Vesting period	Immediately	Immediately	Immediately	20-Apr-18	20-Apr-18	20-Apr-19	20-Apr-20	20-Apr-18	20-Apr-19	20-Apr-20
Underlying
Volatility	60.0%	60.0%	60.0%	60.0%	60.0%	60.0%	60.0%	60.0%	60.0%	60.0%
Risk free
interest rate	1.57%	1.66%	1.66%	1.66%	1.66%	1.90%	1.90%	1.66%	1.90%	1.90%
Calculated fair
value of each
option ($)	0.0261	0.0378	0.0256	0.0352	0.0352	0.0442	0.0519	0.0352	0.0442	0.0419
Expense
recorded for the
period ended 30
June 2017 ($)	-	449,160	22,904	5,846	41,757	20,364	3,914	963	562	358
TOTAL
EXPENSE										545,828

Class A options were issued to all shareholders who subscribed for shares under the initial public offering for $nil consideration. No expense will be recognised until these options are exercised. Class B options were issued to the brokers as part of the fees for their services relating to the IPO and have been expensed immediately. Class C, D, E, F and G options were issued to Directors and Management and will be expensed over their vesting period. Class H, I and J options were issued to Management and will be expensed over their vesting period.

Page 22

ACN 616 062 072

UUV Aquabotix Limited

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 30 JUNE 2017

NOTE 10. EARNINGS PER SHARE

NOTE 10. EARNINGS PER SHARE
Earnings per share for loss Loss after income tax attributable to the owners of UUV Aquabotix Limited Basic and diluted loss per share Weighted average number of ordinary shares Weighted average number of ordinary shares used in calculating basic earnings per share Adjustments for calculation of diluted earnings per share: Options over ordinary shares Performance shares Weighted average number of ordinary shares used in calculating diluted earnings per share		Consolidated 30 June 2017 30 June 2016 $ $ (2,325,733) (46,043)
		Cents (1.94) Number 119,705,892		Cents (0.11) Number 43,497,722 - - 43,497,722
		- - 119,705,892

For the period ended 30 June 2017, the weighted average number of shares reflects Aquabotix Technology Corporation’s weighted average ordinary shares before the Exchange Agreement became effective on 20 April 2017 multiplied by the exchange ratio established in the acquisition, and the weighted average total actual shares of UUV Aquabotix Limited in issue after the date of acquisition.

For the period ended 30 June 2016, the weighted average number of shares reflects Aquabortix Technology Corporation's weighted average number of shares multiplied by exchange ratio established at acquisition.

All performance shares and share options are considered anti-dilutive for the period ended 30 June 2017 and the period ended 30 June 2016.

NOTE 11: CONTINGENT LIABILITIES

The directors believe the group has no contingent liabilities.

NOTE 12: EVENTS AFTER THE END OF THE INTERIM PERIOD

The directors are not aware of any significant events since the end of the interim period.

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UUV Aquabotix Limited ACN 616 062 072

DIRECTORS’ DECLARATION

In accordance with a resolution of the directors of UUV Aquabotix Limited, the directors of the company declare that: The financial statements and notes, as set out on pages 8 to 23, are in accordance with the Corporations Act 2001 , including:

• a. complying with Accounting Standard AASB 134: Interim Financial Reporting ; and

• b. giving a true and fair view of the consolidated entity’s financial position as at 30 June 2017 and of its performance for the half-year ended on that date.

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.

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Peter James Director Dated this 28[th] day of July 2017

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RSM Australia Partners

Level 12, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001 T +61 (0) 2 8226 4500 F +61 (0) 2 8226 4501

www.rsm.com.au

INDEPENDENT AUDITOR’S REVIEW REPORT

TO THE MEMBERS OF

UUV AQUABOTIX LIMITED

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of UUV Aquabotix Limited which comprises the statement of financial position as at 30 June 2017, the statement of comprehensive income, statement of changes in equity and 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.

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 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 half-year 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 30 June 207 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 UUV Aquabotix 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.

THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING

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Page 25

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

Liability limited by a scheme approved under Professional Standards Legislation

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Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations act 2001 , which has been given to the directors of UUV Aquabotix Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.

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 UUV Aquabotix Limited is not in accordance with the Corporations Act 2001 including:

• (a) giving a true and fair view of the company’s financial position as at 30 June 2017 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 .

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RSM AUSTRALIA PARTNERS

Sydney, NSW Dated: 28 July 2017

G N Sherwood Partner

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