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1 ABN SIROCCO ENERGY LIMITED (formerly known as Agri Energy Limited) Consolidated Interim Financial Report

2 ABN Consolidated Interim Financial Report CONTENTS Page Corporate Directory 1 Directors Report 2 Auditors Independence Declaration 6 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 7 Condensed Consolidated Statement of Financial Position 8 Condensed Consolidated Statement of Changes in Equity 9 Condensed Consolidated Statement of Cash Flows 10 Notes to the Consolidated Interim Financial Statements 11 Directors Declaration 20 Independent Auditor s Review Report to the Members 21 This condensed consolidated interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual financial report for the year ended 30 June 2012 and any public announcements made by the Company during the period from 1 July 2012 to the date of this report in accordance with the continuous disclosure requirements of the Corporations Act 2001.

3 Corporate Directory Corporate Directory Directors Company Secretary Registered Office Share Register Auditor Stock Exchange Listing Website Michael Billing Non-Executive Chairman Nerida Schmidt Non-executive Director Michelle Afflick Non-executive Director Nerida Schmidt Level 2, Colin Street West Perth, Western Australia 6005 Telephone: +61 (0) Fax: +61 (0) Computershare Investor Services Pty Limited Level 11, 172 St Georges Terrace Perth Western Australia 6000 Telephone: Overseas: Facsimile: +61 (0) Stielow & Associates Suite 1 / 100 Hay Street Subiaco Western Australia 6008 shares are listed on the Australian Securities Exchange, home branch, Perth Code: SCY (currently suspended) 1

4 Directors Report DIRECTORS REPORT Your directors present their interim financial report on ( Sirocco or the Company ), previously named Agri Energy Limited, for the half-year ended 31 December Directors The names of each person who has been a director from 1 July 2012 and up to the date of this report are: Michael Billing appointed 23 December 2013; Nerida Schmidt appointed 31 May 2015; Michelle Afflick appointed 31 May 2015; Glenn Whiddon appointed 18 August 2011, resigned 27 November 2012; Gregory Channon appointed 1 December 2011, resigned 25 May 2015; Ray Ridge appointed 19 September 2014, resigned 25 May 2015; Dougal Ferguson appointed 1 December 2011, resigned 23 December 2013; Patrick Burke appointed 23 July 2009, resigned 23 December 2013; and Chris Whiteman appointed 23 December 2013, resigned 14 May Company Secretary The current company secretary, Ms Nerida Schmidt, was appointed on 25 May At the beginning of this half year Mr Dougal Ferguson was the company secretary. He resigned on 23 December 2013 and Mr James Church was appointed. Mr Church resigned 25 May 2015 with the appointment of Ms Schmidt. Principal Activities The principal activities of the Group and Company are in the energy and resources sector. The Group continues to consider new projects in the energy and resources sector by way of acquisition or investment with a primary focus on the oil and gas industry. Review of Operations and Significant Changes in the State of Affairs On 10 September 2012, the Company announced it had signed a Letter Agreement with Canadian listed Statesman Resources Limited ( Statesman ) to pursue oil and gas opportunities in Africa. Sirocco was to acquire 49.9% shareholding in Statesman Africa Limited ( SAL ) and fund its 49.9% share of the costs of the activities of SAL. The Company advanced Statesman US800,000 interest free interim funding which was refundable if Sirocco did not obtain shareholder approval and re-compliance with Chapters 1 & 2 of the ASX Listing Rules as part of the transaction. At the same time, the Company announced that it had appointed Taylor Collison as lead broker and advisor which included a placement of 60,000,000 shares raising 300,000 before costs, to assist with the funding of the transaction. On 30 November 2012, Sirocco lodged a prospectus with ASIC to raise up to 7,000,000 to fund the acquisition and forward expenditures of SAL. On 3 December 2012, the shares of the Company were consolidated on a 1:23 basis following shareholder approval of both the transaction and the share consolidation. 2

5 Directors Report Going Concern The shares of Sirocco have been suspended since 30 November 2012 and will remain suspended until the Company completes re-compliance processes or is otherwise re-admitted to trading by ASX. Please refer to Events After the Reporting Period. The Group s current cash flow forecast supports the Directors opinion that the Group s working capital position will remain positive for at least the next twelve months from the date of these financial statements based on certain assumptions, including: raising additional working capital from the issue of shares to both new and existing shareholders, as approved in a general meeting of shareholders 6 July 2015; and outstanding creditors are extinguished in accordance with agreements currently in place, including shares issued as approved by shareholders in a general meeting 6 July Upon identifying a suitable transaction, the Board intends to issue a prospectus in order to raise an appropriate amount of working capital to fund the business going forward. It is expected that a transaction of scale or which changes the nature of the business will require the Company to comply with Chapters 1 and 2 of the ASX Listing Rules. There is, however, an inherent uncertainty about the achievement of future funding on which the assessment of going concern is based. Despite this, the Directors have reviewed the operating outlook for the Group and are of the opinion that the use of the going concern basis of accounting is appropriate as they believe the Group will achieve the matters set out above. Operating Result The consolidated loss from continuing operations for the half-year after providing for income tax was 1,408,856 (2011:558,817). Additional information on the operations and financial position of the Group and its business strategies and prospects is set out in this directors report and the consolidated interim financial statements. Events after the Reporting Period On 28 February 2013, the Company formally closed the offer issued on 30 November 2012 undersubscribed which meant Sirocco could not satisfy the requirements of re-compliance with the ASX Listing Rules. As a result, the Company has been suspended from official quotation since 30 November 2012 and remains so to the date of this report. In March 2013, Sirocco called on the loan from Statesman, and an amount of US20,000 was repaid by Statesman on 21 May However no further repayments have been received to date. The Directors fully impaired the outstanding balance of US780,000 as at 30 June 2013 due to the inability of Statesman to repay its debt. As a result of the inability to close the prospectus capital raising, and the inability of Statesman to repay the loan, both executive directors of the Company resigned on 31 May 2013 in an effort to minimise costs and continued as non-executive Board members. Consequently and prior to the resignation of the executive directors, the Board and the executives agreed that a Special Circumstance Event had occurred with respect to the Employee Share Acquisition Plan and the shares held in trust for the executive directors were transferred back to the Company as treasury stock, in full and final satisfaction of the loan made by the Company. The end result was that all the shares acquired under the plan were now owned by the Company and held as treasury shares. On 19 December 2013 the Company announced a further capital raising of 66,360, which was a combination of the sale of the above mentioned treasury stock together with a placement of 4,896,861 shares at 0.01 per share. 3

6 Directors Report At the same time, the Company agreed with the majority of its creditors to settle outstanding liabilities either through the future issue of shares or a reduction in the amount payable to those parties. Following the capital raising on 23 December 2013, Mr Dougal Ferguson and Mr Patrick Burke resigned as non-executive directors and Mr Michael Billing and Mr Chris Whiteman were appointed as non-executive directors. Subsequently Mr Whiteman resigned on 14 May 2014 and Mr Ray Ridge was appointed as non-executive director. On 5 May 2015 the Company received a Court Summons from the Australian Securities and Investment Commission for failure to comply with the Corporations Acct 2001 by failing to: hold an Annual General Meeting for the 2013 financial year; lodge Half Year reports for the half years ended and 2013;and lodge Annual Reports for the financial years ended 30 June 2013 and The Company is working towards the rectification of these outstanding compliance requirements and settlement of the ASIC proceedings by the end of September On 25 May 2015 Mr Greg Channon and Mr Ray Ridge resigned as non-executive directors and Ms Nerida Schmidt and Mrs Michelle Afflick were appointed non-executive directors. A General Meeting of shareholders held on 6 July 2015 approved the following: the consolidation of shares on a 5:1 basis resulting in 7,508,520 shares being on issue; the issue of 24,000,000 shares (post consolidation) at an issue price of 0.005, together with one free attaching Option for every share subscribed to raise up to 120,000. These funds will be used to prepare and audit the outstanding financial statements of the Company for the 2013 and 2014 financial years, and to provide general working capital; the issue of 1,223,337 shares in settlement of major creditors of the Group at 30 June 2013; removal of KPMG and the appointment of Stielow & Associates as auditors of the Group; and the issue of 1,000,000 unlisted options each to Mr Michael Billing, Ms Nerida Schmidt and Mrs Michelle Afflick. The options were granted for nil cash consideration and are exercisable at 0.02 three years from the date of grant. All changes in equity approved at the General Meeting are to be completed after the date of this report. On 6 July 2015, the Company cancelled 434,784 options previously issued to former directors. The options had an exercise price of 0.69 and were to expire on 23 December The Company has been advised by the ASX that re-compliance with the Listing Rules, and therefore re-quotation, must be achieved prior to 31 January 2016 otherwise the Company will be officially de-listed. 4

7 Directors Report Auditor s Independence Declaration A copy of the auditors independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 6 of the interim financial report. Signed in accordance with a resolution of the Board of Directors. Michael Billing Chairman West Perth 8 July

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9 Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income For the half-year ended Note Half Year 2012 Half Year 2011 Operations Revenue 3-2,228 Expenses 4 (1,418,722) (598,567) Loss from continuing operations (1,418,722) (596,339) Finance income - Interest 3 9,866 37,522 Loss before tax from operations (1,408,856) (558,817) Income tax expense - - Loss after tax from operations (1,408,856) (558,817) Profit/(loss) and total comprehensive income/(loss) for the period attributable to the members of (1,408,856) (558,817) Loss per share Cents Cents Basic loss per share (4.40) (2.09) Diluted loss per share n/a n/a The above condensed consolidated statement of profit or loss and comprehensive income should be read in conjunction with the accompanying notes. 7

10 Condensed Consolidated Statement of Financial Position As at ASSETS Note 31 Dec Jun 2012 Current assets Cash and cash equivalents 18,593 1,220,745 Trade and other receivables 30,841 53,524 Total current assets 49,434 1,274,269 Non-current assets Financial assets employee loans 5 167, ,643 Plant and equipment 1,397 1,867 Loans to related party 6 19,774 - Total non-current assets 188, ,510 Total assets 237,993 1,428,779 LIABILITIES Current liabilities Trade and other payables 143, ,849 Total current liabilities 143, ,849 Total non-current liabilities - - Total liabilities 143, ,849 NET ASSETS 94,101 1,220,930 EQUITY Contributed equity 7 4,039,737 3,759,110 Share based payment reserve 7 181, ,571 Accumulated losses (4,127,607) (2,718,751) TOTAL EQUITY 94,101 1,220,930 The above condensed consolidated statement of financial position should be read in conjunction with the accompanying notes. 8

11 Condensed Consolidated Statement of Changes in Equity For the half-year ended 2012 Contributed Equity Share Based Payment Reserve Accumulated Losses Total Balance 1 July ,759, ,571 (2,718,751) 1,220,930 Net loss for the period - - (1,408,856) (1,408,856) Comprehensive income for the period Total comprehensive loss for the period - - (1,408,856) (1,408,856) Transactions with owners in their capacity as owners: Share issue placement 300, ,000 Share issue costs (19,373) (19,373) Options issued - 1,400-1,400 Balance 31 Dec ,039, ,971 (4,127,607) 94, Contributed Equity Share Based Payment Reserve Accumulated Losses Total Balance 1 July ,362,162 - (1,516,832) 1,845,330 Net loss for the period - - (558,817) (558,817) Comprehensive income for the period Total comprehensive loss for the period - - (558,817) (558,817) Transactions with owners in their capacity as owners: Share issue placement 200,000 40, ,000 Share issue employee acquisition plan 200, , ,873 Option issue employee acquisition plan Transaction costs (3,052) - - (3,052) Balance 31 Dec ,759, ,735 (2,075,649) 1,857,196 The above condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 9

12 Condensed Consolidated Statement of Cash Flows For the half-year ended Half Year Half Year Cash flows from operating activities Interest received 9,866 37,522 GST refund 18,450 27,529 Foreign exchange gain - 2,228 Payments to suppliers and employees (739,548) (367,794) Net cash outflow from operating activities (711,232) (300,515) Cash flows from financing activities Loans to related party (772,947) - Net cash inflow from financing activities (772,947) - Cash flows from financing activities Proceeds from the issue of shares and options 300, ,000 Costs associated with capital raising (17,973) - Loans to employees - (200,000) Net cash inflow from financing activities 282, ,000 Net decrease in cash and cash equivalents (1,202,152) (100,515) Cash and cash equivalents at 1 July 1,220,745 1,844,857 Cash and cash equivalents at 31 December 18,593 1,744,342 The above condensed consolidated statement of cash flows should be read in conjunction with the accompanying notes. 10

13 Notes to the Consolidated Interim Financial Statements 1 Summary of significant accounting policies is domiciled in Australia. The financial statements of the Company as at and for the half-year ended are available upon request at the Company s registered office Level 2, Colin Street, West Perth, 6005 or at The Company is involved in energy and resources exploration. (a) Basis of preparation These condensed consolidated interim financial statements have been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act They do not include all of the information required for full annual financial statements and should be read in conjunction with the financial statements as at and for the year ended 30 June The accounting policies applied by the Group in these consolidated interim financial statements are the same as those applied by the Company in its financial report as at and for the year ended 30 June (b) Critical Accounting Estimates, Judgments and Assumptions The preparation of financial statements in conformity with AASBs requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. (c) Going Concern Basis of Accounting The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business. The Group has recorded a net loss for the period of 1,408,856 (2011: Loss 558,817) with net cash outflows for the period of 1,202,152 (2011: 100,515), current liabilities exceeded current assets by 94,458 (current assets exceeded current liabilities in 2011: 1,066,420), and the Group has net assets of 94,101 (2011: 1,220,930). The Group s current cash flow forecast supports the Directors opinion that the Group s working capital position will remain positive for at least the next twelve months from the date of these financial statements based on certain assumptions, including: raising additional working capital from the issue of shares to both new and existing shareholders, as approved in a general meeting of shareholders 6 July 2015; and outstanding creditors are extinguished in accordance with agreements currently in place, including shares issued as approved by shareholders in a general meeting 6 July Upon identifying a suitable transaction, the Board intends to issue a prospectus in order to raise an appropriate amount of working capital to fund the business going forward. It is expected that a transaction of scale or which changes the nature of the business will require the Company to comply with Chapters 1 and 2 of the ASX Listing Rules. There is, however, an inherent uncertainty about the achievement of future funding on which the assessment of going concern is based. Despite this, the Directors have reviewed the operating outlook for the Group and are of the opinion that the use of the going concern basis of accounting is appropriate as they believe the Group will achieve the matters set out above. 11

14 Notes to the Consolidated Interim Financial Statements 2 Segment information The Company currently operates in one operating segment being the energy and resources sector. The Company is pursuing new projects in the energy and resources sector by way of acquisition or investment. The Company currently operates in one geographic segment that being Australia. The Directors are of the opinion that the current financial position and performance of the Company as set out in the statement of financial position and statement of comprehensive income is equivalent to the operating segment identified above and as such no further disclosure is being provided. 3 Income from operations Half-year 31 Dec 2012 Half-year 31 Dec 2011 Income Interest received 9,866 37,522 Foreign exchange gain - 2,228 9,866 39,750 4 Expenses from operations Expenses Corporate compliance costs 39,255 31,848 General legal fees Audit fees and disbursements 18,749 26,805 Occupancy costs 36,842 42,099 Administration costs 69,215 45,124 Depreciation Capital Raising Costs 112,191 - Corporate management costs 29, ,941 Salaries and superannuation 253,700 33,333 Discounting of loan (14,745) - Renewable energy projects - 6,000 Project generation costs 99,597 49,943 Acquisition costs - 37,397 Impairment expense 753,173 31,042 Share based payment expense - 173,735 Share loan plan administration costs 20,000-1,418, ,567 12

15 Notes to the Consolidated Interim Financial Statements 5 Financial assets Employee loans 31 Dec Jun 2012 Employee loan Greg Channon 83,694 76,321 Employee loan Dougal Ferguson 83, , ,643 Interest free, full recourse loan funds in the amount of 100,000 to each of Mr Channon and Mr Ferguson pursuant to the terms of the employee share acquisition plan and associated loan agreements which are revalued to reflect the fair value of the interest free loan. Refer Note 10 Events after the Reporting Period for further comment. 6 Loans to related party 31 Dec Jun 2012 Loan funds advanced during the period 772,947 - Less: Provision for impairment (753,173) - Closing balance 19,774 - On 5 July 2012, the Company signed a Letter Agreement with Canadian listed Statesman Resources Limited ( Statesman ) to pursue oil and gas opportunities in Africa. Sirocco was to acquire 49.9% shareholding in Statesman Africa Limited ( SAL ) and fund its 49.9% share of the costs of the activities of SAL. The Company advanced Statesman US800,000 interest free interim funding which was refundable if Sirocco did not obtain shareholder approval and recompliance with Chapters 1 & 2 of the ASX Listing Rules as part of the transaction. On 30 November 2012, Sirocco lodged a prospectus with ASIC to raise up to 7,000,000 to fund the acquisition and forward expenditures of SAL. On 28 February 2013, the Company formally closed the offer undersubscribed which meant Sirocco could not satisfy the requirements of re-compliance with the ASX Listing Rules. In March 2013, Sirocco called on the loan from Statesman, and an amount of US20,000 was repaid by Statesman on 21 May 2013, however no further repayments have been received to date. The Directors have fully impaired the outstanding balance of US780,000 as at 30 June 2013 due to the inability of Statesman to repay its debt. 13

16 Notes to the Consolidated Interim Financial Statements 7 Contributed equity (a) Share capital 31 Dec 2012 Shares 31 Dec Jun 2012 Shares 30 Jun 2012 Ordinary shares fully paid 32,645,741 4,039, ,842,973 3,759,110 (b) Movement in ordinary share capital Half Year 2012 Number of shares Amount Date Details 1/7/2012 Opening balance 690,842,973 3,759,110 21/09/2012 Share issue placement 60,000, ,000 21/09/2012 Share issue costs - (19,373) 03/12/2012 Consolidation (23:1) (718,197,232) - 31/12/2012 Balance 32,645,741 4,039,737 Half Year 2011 Number of shares Amount Date Details 1/7/2011 Opening balance 610,842,973 3,362,162 23/12/2011 Share issue placement 40,000, ,000 23/12/2011 Share issue ESAP 40,000, ,000 23/12/2011 Share issue costs - (3,052) 31/12/2011 Balance 690,842,973 3,759,110 Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote. 14

17 7 Contributed equity (continued) Notes to the Consolidated Interim Financial Statements (c) Other equity securities Options The Options are disclosed on a post-consolidation basis: Expiry Date Exercise Price Number under option Fair value Unlisted options 30/06/ ,957 1,400 86,957 1, June 2012 Expiry Date Exercise Price Number under option Fair value Unlisted options Class A 23/12/ , Unlisted options Class B 23/12/ , , ,957 options (post consolidation) were granted to Taylor Collison in relation to the capital raising during the current reporting period. A summary of the major terms and conditions of the unlisted options issued are as follows: i Each option entitles the holder to subscribe for one share upon exercise of each option. ii The exercise price, vesting date and specified expiry date of each option is referred to in the table following: Exercise Price Vesting Date Expiry Date September June 2014 The Company has used a Black Scholes option pricing model to value the options issued. Options that have not vested are written off over the vesting period. The following inputs were used in the calculation: Stock price Risk free interest rate 5 % Exercise price 0.46 Volatility 100% Dividend yield 0 Expiry date 30/06/2014 Options are considered to be potential ordinary shares. 15

18 7 Contributed equity (continued) Notes to the Consolidated Interim Financial Statements (d) Movement in other equity securities - Options Half Year 2012 Date Details Number of options Exercise Price 1/7/2012 Opening balance 20,000,000 31/10/2012 Option issue 2,000, /12/2012 Consolidation (23:1) (21,043,475) 31/12/2012 Balance 956,525 Half Year 2011 Date Details Number of options Exercise Price 1/7/2011 Opening balance - 23/12/2011 Option issue EOAP 10,000, /12/2011 Option issue EOAP 10,000, /12/2011 Balance 20,000,000 (e) Share based payment reserve Number of Amount shares Total 3,478, , June 2012 Number of Amount shares Total 80,000, ,571 (f) Movement in Share based payment reserve There was no movement in the Share based payment reserve in the current period other than the issue of options noted in note 7(c). Movement in the prior year is summarised as follows: 31 December 2011 Issue Date Discount Price Number of shares Amount Opening balance 1/7/ Share issue placement 23/12/ ,000,000 40,000 Share issue under ESAP 23/12/ ,000,000 40,000 Assessed benefit - ESAP - 92,873 Closing balance 31/12/ ,000, ,873 16

19 Notes to the Consolidated Interim Financial Statements 8 Related Party Transactions During the period the Company advanced Statesman Resources Limited US800,000 in accordance with the Letter Agreement to pursue oil and gas opportunities in Africa. Statesman is a director related party due to Greg Channon and Dougal Ferguson being directors of Sirocco and Statesman. The Directors have determined that an impairment provision of 753,173 should be raised against the recoverability of the loan to Statesman representing the net amount outstanding after the loan was called on in March The Company incurred rent, administration and general office expenses of 95,792 (2011: nil) to Hemisphere Corporate Services Pty Ltd, a company in which Mr. Glenn Whiddon (former director) has a shareholding. 55,546 remains payable at the end of the half year. An amount of 2,000 (2011: nil) has been accrued for corporate and financial services provided by Edge Corporate services, a director related entity of Nerida Schmidt and Michelle Afflick on commercial terms. The amount is payable upon the receipt of cash funds received from the issue of shares approved by a general meeting dated 6 July The above amounts exclude GST. All transactions were on normal commercial terms. 9 Contingent Liability There are no contingent liabilities as at the date of signing of this report other than the matter noted below: On the 5 May 2015 the Company received a Court Summons from the Australian Securities and Investment Commission for failure to comply with the Corporations Acct 2001 by failing to: hold and Annual General Meeting for the 2013 financial year; lodge Half Year reports for the half years ended and 2013; lodge Annual Reports for the financial years ended 30 June 2013 and The maximum penalty for such non-compliance is estimated to be 31,875. The Company is working towards the rectification of these outstanding compliance requirements and settlement of the ASIC proceedings by the end of September Events after the Reporting Period On 28 February 2013, the Company formally closed the offer undersubscribed which meant Sirocco could not satisfy the requirements of re-compliance with the ASX Listing Rules. The Company has been suspended from official quotation to the date of this report. In March 2013, Sirocco called on the loan from Statesman, and an amount of US20,000 was repaid by Statesman on 21 May However no further repayments have been received to date. The Directors fully impaired the outstanding balance of US780,000 as at 30 June 2013 due to the inability of Statesman to repay its debt. 17

20 10 Events after the Reporting Period (Continued) Notes to the Consolidated Interim Financial Statements As a result of the inability to close the prospectus capital raising, and the inability of Statesman to repay the loan, both executive directors of the Company resigned on 31 May 2013 in an effort to minimise costs and continued as non-executive Board members. Consequently and prior to the resignation of the executive directors, the Board and the executives agreed that a Special Circumstance Event had occurred with respect to the Employee Share Acquisition Plan and the shares held in trust for the executive directors were transferred back to the Company as treasury stock, in full and final satisfaction of the loan made by the Company. The end result was that the all the shares acquired under the plan were at that point now owned by the Company and held as treasury shares. On 19 December 2013 the Company announced a further capital raising of 66,360, which was a combination of the sale of the above mentioned treasury stock together with a placement of 4,896,861 shares at 0.01 per share. At the same time, the Company agreed with the majority of its creditors to settle outstanding liabilities either through the future issue of shares or a reduction in the amount payable to those parties. Following the capital raising on 23 December 2013, Mr Dougal Ferguson and Mr Patrick Burke resigned as non-executive directors and Mr Michael Billing and Mr Chris Whiteman were appointed as non-executive directors. Subsequently Mr Whiteman resigned on 14 May 2014 and Mr Ray Ridge was appointed as non-executive director. On 5 May 2015 the Company received a Court Summons from the Australian Securities and Investment Commission for failure to comply with the Corporations Acct 2001 by failing to: hold an Annual General Meeting for the 2013 financial year; lodge Half Year reports for the half years ended and 2013; and lodge Annual Reports for the financial years ended 30 June 2013 and The Company is working towards the rectification of these outstanding compliance requirements and settlement of the ASIC proceedings by the end of September On 25 May 2015 Mr Greg Channon and Mr Ray Ridge resigned as non-executive directors and Ms Nerida Schmidt and Mrs Michelle Afflick were appointed non-executive directors. A General Meeting of shareholders held on 6 July 2015 approved the following: the consolidation of shares on a 5:1 resulting in 7,508,520 shares being on issue; the issue of 24,000,000 shares (post consolidation) at an issue price of 0.005, together with one free attaching Option for every share subscribed to raise up to 120,000. These funds will be used to prepare and audit the outstanding financial statements of the Company for the 2013 and 2014 financial years, and to provide general working capital; the issue of 1,223,337 shares in settlement of major creditors of the Group at 30 June 2013; removal of KPMG and the appointment of Stielow & Associates as auditors of the Group; the issue of 1,000,000 unlisted options each to Mr Michael Billing, Ms Nerida Schmidt and Mrs Michelle Afflick. The options were granted for nil cash consideration and are exercisable at 0.02 three years from the date of grant. All changes in equity approved at the General Meeting are to be completed after the date of this report. 18

21 10 Events after the Reporting Period (continued) Notes to the Consolidated Interim Financial Statements On 6 July 2015, the Company cancelled 434,784 options previously issued to former directors. The options had an exercise price of 0.69 and were to expire on 23 December The Company has been advised by the ASX that re-compliance with the Listing Rules, and therefore re-quotation, must be achieved prior to 31 January 2016 otherwise the Company will be officially de-listed. 19

22 Directors Declaration The Directors of the Company declare that: 1 The consolidated interim financial statements and notes as set out on pages 6 to 15 are in accordance with the Corporations Act 2001, and (i) (ii) comply with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and give a true and fair view of the financial position of the Group as at 31 December 2012 and of its performance for the half-year ended on that date. 2 In the opinion of the directors 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. Michael Billing Director Perth 8 July

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