USCOM LIMITED — Interim / Quarterly Report 2010

Feb 8, 2010

Uscom Limited ABN 35 091 028 090

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Level 7, 10 Loftus Street Sydney NSW 2000 Australia T +612 9247 4144 F +612 9247 8157 www.uscom.com.au

Uscom Limited and its controlled entity ABN 35 091 028 090

ASX Appendix 4D Half yearly report – 31 December 2009

Contents

Results for announcement to the market	1
Dividends per share	1
Net Tangible Assets per ordinary share	1
Status of review	1
Commentary	1
Financial highlights	1
Half yearly report	5-14

Uscom 2010 Half yearly report

ABN 35 091 028 090

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Uscom Limited

Level 7, 10 Loftus Street Sydney NSW 2000 Australia T +612 9247 4144 F +612 9247 8157 www.uscom.com.au

Reporting period ended 31 December 2009 Previous corresponding reporting period: 31 December 2008 Results for announcement to the market

Revenues from ordinary activities	up	13.33%	to	$635,337
Lossfrom ordinary activities after tax attributable to members	down	16.55%	to	$830,894
Net Lossfor the period attributable to members	down	16.55%	to	$830,894

Dividends per Share

It is not proposed to pay a dividend.

Net Tangible Asset per Ordinary Share

	31	December	2009	31	December	2008
NTA backing			6.8c			6.6c

Status of audit

The accounts have been reviewed.

Commentary Refer Chief Executive Officer review of operations in page 3-4.

Financial highlights
Revenues from ordinary activities	$635,337
Loss from ordinary activities	($830,894)
Sales Revenue	$621,458
Net operating cash consumption	($908,034)
Net increase in cash held	$154,691
Cash held at end of the year	$2,063,412

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Uscom 2010 Half yearly report

Appendix 4D Half yearly report

Interim Financial Report

DIRECTORS’ REPORT

Your directors present the financial report of Uscom Ltd for the half-year ended 31 December 2009.

Directors

The names of directors who held office during or since the end of the half-year:

Mr Rob Phillips Mr Roman Zwolenski Mr Bruce Rathie Mr Paul Butler (Resigned on 31 December 2009)

Shareholdings of directors as at 31 December 2009

Name of directors	Balance 31 December 2009
Mr Rob Phillips	16,979,9681
Mr Roman Zwolenski	248,8092
Mr Bruce Rathie	68,809
Mr Paul Butler	316,2123
Total	17,515,562

1 366,159 of these ordinary shares are held by NCS Pty Ltd as Trustee for Phillips Family Superannuation. 2

All these ordinary shares are held by Z-Link Pty Ltd Super Fund. Mr Zwolenski is a trustee of this fund. 3

41,212 of these ordinary shares are held by family associate.

Review of operations

The six months to 31 December 2009 saw good results for Uscom given the economic climate. We have worked closely with Spacelabs Healthcare and Pacific Medical Systems to increase sales of the USCOM 1A. Revenue from the sale of goods has more than doubled compared to the corresponding period last year ( from $285k in 2008 to $621k in 2009, refer Note 2 in page 10) as we start to see the initial sales in the USA through the Spacelabs channel.

Whilst expectations for USA sales were greater, many opportunities have been delayed due to the delay of funds available for capital purchases by customers due to economic circumstances. Despite the economy, there were still some significant sales including two major US children’s hospitals taking the first of what should be many Uscom units. Identified sales opportunities have grown throughout the year and we expect these to start converting. Uscom has worked closely with Spacelabs Healthcare in developing market opportunities with all Spacelabs sales representatives having spent time with Uscom personnel in the field. Spacelabs also launched the USCOM 1A in the UK in October and have already had some successes.

Pacific Medical Systems has continued to develop the Chinese market and we are seeing sales into the region build. Pacific Medical Systems are also expanding the market through Asia with new distributors in Thailand, Singapore and Indonesia.

Uscom had supported the channels providing clinical support and education, improving marketing collaterals and importantly, supporting clinicians to travel to the regions to provide user feedback to potential customers. We have continued to attend all the major global conferences along with our distribution partners and continue to develop the body of scientific evidence that supports the use of Uscom.

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Interim Financial Report

Uscom was included as a distinct technology at the recent Heamodynamic Round Table meeting in Rome and was very well received by the leading clinicians in this area. This followed a users group meeting that was held in London which included Uscom users from the UK, Europe, Africa and Australia. The meeting was convened by Dr. David Bennett who has since joined the Uscom Medical Advisory Board.

Throughout this activity Uscom is aware of the need to control expenditure until revenues are there to support it. There was a high level of marketing activity throughout this period and we were still able to reduce total expenses by more than 10%. Recognising the need to ensure adequate reserves Uscom initiated a Share Purchase Plan. This was very successful raising the company over $1.1M and we thank our shareholders for their support. These funds will go towards additional marketing efforts in the USA and Asia, and developing technology for new markets and applications such as hypertension and electrophysiology.

Our Technology team has kept the product up to date and developed an interface to communicate with the next generation Spacelabs Healthcare product. We are also working on a new hardware platform that will enable us to take the Uscom technology into new identified markets. We have submitted our application for regulatory approval in Canada having successfully completed the necessary audit.

Outlook for the rest of financial year 2010 is positive as we continue to build our partnerships with Spacelabs Healthcare and Pacific Medical Systems. The US healthcare market appears to be recovering and we have opportunities to enter new markets.

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Rob Phillips Director, Acting CEO

Sydney, 8 February 2010

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Uscom 2010 Half yearly report

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Interim Financial Report

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Auditor's Independence Declaration

As lead auditor for the review of Uscom Limited for the half year ended 31 December 2009, I declare that to the best of my knowledge and belief there have been:

• (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• (b) no contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Uscom Limited and the entities it controlled during the half year.

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PKF

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John Bresolin Partner Sydney

Dated this 8[th] day of February 2010.

Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.au PKF | ABN 83 236 985 726

Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | Australia DX 10173 | Sydney Stock Exchange | New South Wales

PKF East Coast Practice is a member of PKF Australia Limited a national association of independent chartered accounting and consulting firms each trading as PKF. The East Coast Practice has offices in NSW, Victoria and Brisbane. PKF Australia Limited is a member of PKF International, an association of legally independent chartered accounting and consulting firms.

Liability limited by a scheme approved under Professional Standards Legislation

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Uscom 2010 Half yearly report

Appendix 4D Half yearly report

Interim Financial Report

Uscom Limited and its controlled entities

Consolidated income statement

for the half year ended 31 December 2009

Continuing operations Note		31 Dec 2009 31 Dec 2008 $ $
Revenues from ordinary activities 2 Raw materials and consumables used Expenses from ordinaryactivities,excludingfinance costs 3		635,337 560,628 (151,485) (54,276) (1,464,746) (1,602,002)
Loss before income tax credit Income tax credit		(980,894) (1,095,650) 150,000 100,000
Loss after income tax credit		(830,894) (995,650)
Earning per share (EPS) Basic earnings per share (cents per share) Diluted earnings per share (cents per share) Consolidated statement of comprehensive income for the half year ended 31 December 2009		(2.0) (2.6) (2.0) (2.6) 31 Dec 2009 31 Dec 2008 $ $
Loss for the period Other comprehensive income Foreign currencytranslation differences for foreign operations		(830,894) (995,650) (6,692) 44,905
Other comprehensive income for the period		(6,692) 44,905
Total comprehensive income for the period		(837,586) (950,745)
Attributable to: Owners of the Company Minorityinterest		(837,586) (950,745) - -
Total comprehensive income for the period		(837,586) (950,745)

This Income statement and Statement of comprehensive income are to be read in conjunction with the annual financial report for the year ended 30 June 2009 and the attached notes.

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Interim Financial Report

Uscom Limited

Consolidated statement of financial position as at 31 December 2009

Note	31 Dec 2009 30 Jun 2009 $ $
Current assets Cash and cash equivalents Trade and other receivables Inventories Tax assets Other assets	2,063,412 1,908,721 180,972 296,912 241,501 219,038 537,217 387,217 80,565 87,120
Total current assets	3,103,667 2,899,008
Non-current assets Plant and equipment Intangible assets	72,740 87,338 561,262 539,178
Total non-current assets	634,002 626,516
Total assets	3,737,669 3,525,524
Current liabilities Trade and other payables Short termprovisions	120,062 224,198 142,441 143,470
Total current liabilities	262,503 367,668
Non-current liabilities Longtermprovisions	116,811 101,639
Total non-current liabilities	116,811 101,639
Total liabilities	379,314 469,307
Net assets	3,358,355 3,056,217
Equity Issued capital 4 Options reserve 5 Accumulated losses Foreign currencytranslation reserve	18,344,447 17,223,367 1,025,813 1,007,169 (16,073,511) (15,242,617) 61,606 68,298
Total equity	3,358,355 3,056,217

This Statement of financial position is to be read in conjunction with the annual financial report for the year ended 30 June 2009 and the attached notes.

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Interim Financial Report

Uscom Limited

Consolidated statement of changes in equity for the half year ended 31 December 2009

	Ordinary Options Accumulated Foreign currency Total share capital reserve losses translation reserve $ $ $ $ $
Balance at 1 July 2008 Loss from continuing operations Other comprehensive income Foreign currency translation differences Total comprehensive income for the period Transactions with owners, recorded directly in equity Issued Capital Options reserve Total transactions with owners Balance at 31 December 2008	16,644,265 864,765 (14,142,728) 39,224 3,405,526
	- - (995,650) - (995,650) - - - 44,905 44,905
	- - (995,650) 44,905 (950,745)
	539,102 - - - 539,102 - 72,427 - - 72,427
	539,102 72,427 - - 611,529
	17,183,367 937,192 (15,138,378) 84,129 3,066,310
Balance at 1 July 2009 Loss from continuing operations Other comprehensive income Foreign currency translation differences Total comprehensive income for the period Transactions with owners, recorded directly in equity Issued Capital Options reserve Total transactions with owners Balance at 31 December 2009	17,223,367 1,007,169 (15,242,617) 68,298 3,056,217
	- - (830,894) - (830,894) - - - (6,692) (6,692)
	- - (830,894) (6,692) (837,586)
	1,121,080 - - - 1,121,080 - 18,644 - - 18,644
	1,121,080 18,644 - - 1,139,724
	18,344,447 1,025,813 (16,073,511) 61,606 3,358,355

This Statement of Changes in Equity is to be read in conjunction with the annual financial report for the year ended 30 June 2009 and the attached notes.

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Interim Financial Report

Uscom Limited

Consolidated statement of cash flows

for the half year ended 31 December 2009

	31 Dec 2009	31 Dec 2008
	$	$
Cash flows from operating activities
Receipts from customers	734,344	451,134
Grants received	785	1,690
Payments to suppliers and employees	(1,656,257)	(1,318,802)
Interest received	13,094	55,156
Net cash used in operatingactivities	(908,034)	(810,822)
Cash flows from investing activities
Purchase of plant and equipment	(814)	(1,995)
Purchase ofpatents and trademarks	(57,541)	(58,947)
Net cashprovided by/ used investingactivities	(58,355)	(60,942)
Cash flows from financing activities
Proceeds from issue of shares and options	1,134,342	600,001
Share issue costs	(13,262)	(20,898)
Net cashprovided byfinancingactivities	1,121,080	579,103
Net increase (decrease) in cash and cash equivalents	154,691	(292,661)
Net cash and cash equivalents at the beginning of the period	1,903,804	2,547,159
Exchange rate adjustments to cash and cash equivalents at the beginning ofthe period	4,917	(38,515)
Net cash and cash equivalents at the end of the period	2,063,412	2,215,983

This Cash Flow Statement is to be read in conjunction with the annual financial report for the year ended 30 June 2009 and the attached notes.

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Notes to the Interim Financial Report

Uscom Limited

Selected Explanatory Notes to the Financial Statements for the half year ended 31 December 2009

Note 1 – Statement of significant accounting policies

The half-year consolidated financial report was approved by the Board of Directors on 8 February 2010. This half-year consolidated financial report has been prepared in accordance with Accounting Standard AASB 134 and is to be read in conjunction with the annual financial report for the financial year ended 30 June 2009. This is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards, including Australian Accounting Interpretations and the Corporations Act 2001.

The half-year report does not include full disclosures of the type normally included in an annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.

Accordingly, it is recommended that this financial report be read in conjunction with the annual financial report for the year ended 30 June 2009 and any public announcements made by Uscom Limited during the half-year in accordance with continuous disclosure requirements arising under the Corporations Act 2001.

The same accounting policies have been followed as those applied and discussed in the financial report for the financial year ended 30 June 2009, except as set out below;

Changes in accounting policy

Uscom Limited had to change on of its accounting policies as the result of new or revised accounting standards which became operative for the annual reporting period commencing on 1 July 2009.

The affected policy and standard is Segments – new AASB 8: Operating Segments.

Segment Reporting

Uscom has applied AASB 8 – Operating Segments from 1 July 2009. AASB 8 requires a ‘Management approach’ under which segment information is presented on the same basis as that used for internal reporting purposes.

This has resulted in no change to the reportable segments as operating segments continue to be reported in a manner consistent with the internal reporting provided to the chief operating decision maker, which is the Board of Directors.

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Notes to the Interim Financial Report

		31 Dec 2009 31 Dec 2008 $ $
	Note 2 – Revenue Sale of goods Other income Interest received Grants received Exchange gains Total other income Total revenue Note 3 – Expenses from ordinary activities Depreciation and amortisation expenses Employee expenses Research and development expenses Advertising and marketing expenses Occupancy expenses Regulatory expenses Bad debt expenses Administrative expenses Exchange losses Total expenses from ordinary activities Note 4 – Issued capital Ordinary shares Fully paid ordinary shares Total contributed equity Movement in issued capital Shares on issue at 1 July 2009 Share Purchase Plan in September 2009 Share issue cost Ordinary shares at 31 December 2009 Ordinary shares Ordinary shares issued during Share Purchase plan Total fully paid ordinary shares at 31 December 2009 Note 5 – Options reserve Options reserve balance at the beginning of the period Expenses arising from share-based payment OSI – right to participate in options Options reserve balance at the end of the period	621,458 285,619 13,094 59,178 785 1,690 - 214,141
		13,879 275,009
		635,337 560,628
		49,699 54,192 564,977 671,503 267,730 262,447 149,947 276,110 68,678 66,670 41,562 29,295 - 41,229 188,092 200,556 134,061 -
		1,464,746 1,602,002
		31 Dec 2009 30 June 2009 $ $ 18,344,447 17,223,367
		18,344,447 17,223,367
		17,223,367 17,223,367 1,134,342 - (13,262) -
		18,344,447 17,223,367
		Number Number 40,000,000 40,000,000 1,800,547 -
		41,800,547 40,000,000
		31 Dec 2009 30 June 2009 $ $ 1,007,169 864,765 18,644 142,403 - 1
		1,025,813 1,007,169

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Notes to the Interim Financial Report

		31 Dec 2009 30 Jun 2009 Number Number
	Note 5 – Options reserve (continued) Movement in option number Options at the beginning of the period Granted during the period Lapsed during the period Exercised during the period Options at the end of the period	3,835,000 690,000 - 3,400,000 - (255,000) - -
		3,835,000 3,835,000

Note 6 – Operating segments

Segment information

The Consolidated Entity operates in the global health and medical products industry. Globally the company has 4 geographic sales and distribution segments as shown below. For each segment, the CEO and CFO review internal management reports on at least a monthly basis.

The largest customer group which operates in USA, Europe, Australia and Asia accounts for 63 % of the total sales revenue.

	Australia Asia USA Europe Unallocated Total $ $ $ $ $ $
31 Dec 2009 Sales to external customers Other revenues Total segment revenue Segment expenses Segment result before income tax 31 Dec 2008 Sales to external customers Other revenues Total segment revenue Segment expense Segment result before income tax	22,710 171,250 399,457 28,041 - 621,458 13,094 - - 785 - 13,879
	35,804 171,250 399,457 28,826 - 635,337 4,633 48,093 228,438 120,748 1,214,319 1,616,231
	31,171 123,157 171,019 (91,922) (1,214,319) (980,894)
	15,225 127,249 107,836 35,309 - 285,619 59,178 - - - 215,831 275,009
	74,403 127,249 107,836 35,309 215,831 560,628 111,189 34,017 220,592 156,522 1,133,959 1,656,279
	(36,786) 93,232 (112,756) (121,213) (918,128) (1,095,651)

Note 7 – Contingent assets

There were no contingent assets as at 31 December 2009.

Note 8 – Contingent liabilities

There were no contingencies as at 31 December 2009.

Note 9 – Events after Balance Sheet date

There were no events subsequent to 31 December 2009 that are required to be reported in this note.

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Interim Financial Report

DIRECTORS’ DECLARATION

The directors of Uscom Ltd declare that:

• 1 the half-year financial statements and notes of Uscom Ltd are in accordance with the Corporations Act 2001, including:

• (a) giving a true and fair view of the company’s financial position as at 31 December 2009 and of its performance as represented by the results of its operations, changes in equity and cash flows for the half year ended on that date; and

• (b) complying with Accounting Standard AASB 134 “Interim Financial Reporting” and the Corporations Regulations 2001 and other mandatory professional reporting requirements.

• 2 In the directors’ opinion there are reasonable grounds to believe that the company will be able to pay it debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the board of directors.

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Rob Phillips Director, Acting CEO

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Roman Zwolenski

Director

Sydney, 8 February 2010

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Interim Financial Report

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INDEPENDENT AUDITOR’S REVIEW REPORT

To the members of Uscom Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Uscom Limited, which comprises the balance sheet as at 31 December 2009, and the income statement, statement of changes in equity and cash flow statement for the half-year ended on that date, other selected explanatory notes and the directors’ declaration of the consolidated entity comprising the company and the entities it controlled at 31 December 2009 or from time to time during the half year ended on that date.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the company are responsible for the preparation and fair presentation of the halfyear financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 . This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

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 an Interim Financial Report Performed by the Independent Auditor of the Entity , in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the company’s financial position as at 31 December 2009 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 Uscom 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.

Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.au PKF | ABN 83 236 985 726

Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | Australia DX 10173 | Sydney Stock Exchange | New South Wales

PKF East Coast Practice is a member of PKF Australia Limited a national association of independent chartered accounting and consulting firms each trading as PKF. The East Coast Practice has offices in NSW, Victoria and Brisbane. PKF Australia Limited is a member of PKF International, an association of legally independent chartered accounting and consulting firms.

Liability limited by a scheme approved under Professional Standards Legislation

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Interim Financial Report

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Independence

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

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

• (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December 2009 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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PKF

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John Bresolin Partner Sydney

Dated 8[th] February 2010.

Tel: 61 2 9251 4100 | Fax: 61 2 9240 9821 | www.pkf.com.au PKF | ABN 83 236 985 726 Level 10, 1 Margaret Street | Sydney | New South Wales 2000 | Australia DX 10173 | Sydney Stock Exchange | New South Wales

PKF East Coast Practice is a member of PKF Australia Limited a national association of independent chartered accounting and consulting firms each trading as PKF. The East Coast Practice has offices in NSW, Victoria and Brisbane. PKF Australia Limited is a member of PKF International, an association of legally independent chartered accounting and consulting firms.

Liability limited by a scheme approved under Professional Standards Legislation

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Uscom 2010 Half yearly report