Announcement PDF ReNerve Limited Appendix 4D Half-year report 1. Company details Name of entity: ABN: Reporting period: Previous period: ReNerve Limited 23 614 848 216 For the half-year ended 31 December 2024 For the half-year ended 31 December 2023 2. Results for announcement to the market $ Loss from ordinary activities after tax attributable to the owners of ReNerve Limited up 29.8% to (1,843,656) Loss for the half-year attributable to the owners of ReNerve Limited up 29.8% to (1,843,656) Total comprehensive loss for the half-year attributable to the owners of ReNerve Limited up 29.8% to (1,843,656) Dividends There were no dividends paid, recommended or declared during the current financial period. Comments The loss for the company after providing for income tax amounted to $1,843,656 (31 December 2023: $1,419,997). 3. Net tangible assets Reporting period Cents Net tangible assets per ordinary security 4. Control gained over entities Not applicable. 5. Loss of control over entities Not applicable. 6. Dividends Current period There were no dividends paid, recommended or declared during the current financial period. Previous period There were no dividends paid, recommended or declared during the previous financial period. 7. Dividend reinvestment plans Not applicable. 4.91 Previous period Cents (0.19) ReNerve Limited Appendix 4D Half-year report 8. Details of associates and joint venture entities Not applicable. 9. Foreign entities Details of origin of accounting standards used in compiling the report: Not applicable. 10. Audit qualification or review Details of audit/review dispute or qualification (if any): The financial statements were subject to a review by the auditors and the review report is attached as part of the Interim Report. 11. Attachments Details of attachments (if any): The Interim Report of ReNerve Limited for the half-year ended 31 December 2024 is attached. 12. Signed Signed ___________________________ Stephen Cooper Independent Chairman & Director Date: 28 February 2025 ReNerve Limited ABN 23 614 848 216 Interim Report - 31 December 2024 ReNerve Limited Directors' report 31 December 2024 The directors of ReNerve Limited (referred to hereafter as the 'company') present their report, together with the financial statements of the company for the half year ended 31 December 2024. Directors The following persons were directors of ReNerve Limited during the whole of the financial half-year and up to the date of this report, unless otherwise stated: Mr Stephen Cooper – Independent Chairman & Director Dr Michael Panaccio – Independent Non-Executive Director Dr Julian Chick – Director & Chief Executive Officer Dr David Rhodes – Executive Director & Chief Scientific Officer Principal activities ReNerve is a medical device company with FDA market clearance for its first product, the NervAlign® Nerve Cuff, which is currently on the market in the US and New Zealand. The company is developing a portfolio of complementary products for use in the repair and/or replacement of damaged peripheral nerves, with three further products at various stages of development: a) The NervAlign® Nerve Conduit b) The NervAlign® Nerve Guide Matrix c) The NervAlign® Bionic Replacement Nerve Dividends There were no dividends paid, recommended or declared during the current or previous financial half-year. Review of operations The loss for the company after providing for income tax amounted to $1,843,656 (31 December 2023: $1,419,997). During the half year the company has continued to build its US sales infrastructure through partnerships with sales agents and distributors, with a focus on developing channels that will not only be effective in selling the NervAlign® Nerve Cuff but will also support the sale of additional products in due course. ReNerve’s efforts to work more closely with sales agents and distributors resulted in much stronger sales for the half year compared to the corresponding period in the prior year: on a calendar year basis US sales for 2024 were up by around 100% compared to 2023. Throughout the period the company has continued to work with surgeons, with surgeon feedback confirming the unique characteristics of the NervAlign® Nerve Cuff in terms of surgical convenience, patient safety and efficacy. The NervAlign® Nerve Cuff is produced using a proprietary, non-toxic process and is designed to protect the repaired nerve, whilst facilitating remodelling and therefore nerve regeneration. The product is easily used and can be fixed in place through a number of methods. The Nerve Cuff is ultimately safely absorbed within six months into the surrounding fascial tissue post the healing of the repaired nerve. In addition, during the period ReNerve has furthered clinical programs to explore the utility and benefit of the NervAlign® Nerve Cuff. In conjunction with an Indianapolis based surgical team, ReNerve is undertaking a clinical study that compares the recovery of repaired nerves that have been protected with the NervAlign® Nerve Cuff with the recovery of nerves repaired using the current standard of care. ReNerve expects that the data for this study will be presented in late March 2025. ReNerve will continue to explore clinical studies to illustrate the functionality of its products, but also the clinical utility and benefits for surgeons and patients. During the period ReNerve continued to explore markets outside the US. The company signed two distribution partnerships during the period: one with Accession Medical Supplies based in Hong Kong, and the other with Mediscience B.S.C. based in Bahrain. The agreement with Mediscience B.S.C. covers six countries in the region. The partnerships in Hong Kong and the Middle East complement the existing partnerships in New Zealand and Taiwan and are part of a broader program by the company to open additional markets outside the US. These partnerships will also benefit from the clinical and patient data accumulated and presented in the US. During the first half of the 2024/25 financial year, ReNerve continued to work with its commercial development partners on the NervAlign® Nerve Conduit and NervAlign® Nerve Guide Matrix programs. 1 ReNerve Limited Directors' report 31 December 2024 During the period ReNerve successfully showed that its Nerve Guide Matrix was able to re-establish functioning nerves in an animal model that replicated the procedures common in patients, where an injured nerve is replaced with an autologous nerve, such as the sural nerve. The study was designed to investigate the performance of the NervAlign® Nerve Guide Matrix as an alternative to using an autologous nerve. The very positive results showed that animal gait was restored to normal, and an electrophysiological stimulus was detected through the length of the nerve, on a basis comparable to the performance of the autologous nerve graft. ReNerve is actively continuing the development of the NervAlign® Nerve Guide Matrix product with its partner Collagen Solutions (EvergenTM) based in the US. Significant changes in the state of affairs In July 2024, a total pool of 150,000 options were granted to several employees at an exercise price of $0.35 per option, for an estimated fair value of $20,667, which was determined using a Black-Scholes option valuation model. Further, in July 2024, the company issued shares in lieu of cash payment to four Scientific Advisory Board members, as part payment for their services and consultancy activities, in which 300,000 shares were issued. Per the sales agent and market development agreement with Emerging Surgical in March 2024, the company issued a second tranche of 272,725 shares on 1 July 2024. In August 2024, the company issued shares in lieu of cash payment to a new Scientific Advisory Board member, as part payment for their services and consultancy activities, in which 150,000 shares were issued. In September 2024, a total pool of 600,000 options were granted to several employees at an exercise price of $0.35 per option, for an estimated fair value of $82,297, which was determined using a Black-Scholes option valuation model. Further, in September 2024, ReNerve raised $755,000 before costs via the issue of convertible notes, to fund the progression of the Nerve Guide Matrix project, support the company’s marketing program for the NervAlign® Nerve Cuff and address working capital requirements. The terms of the convertible notes provided that the convertible notes would convert into shares on an IPO, of shares in ReNerve. Pursuant to the terms of the convertible notes, the conversion price was a 20% discount to the IPO Offer Price. During the period, ReNerve successfully completed an initial public offer (IPO) of new shares in the company, raising $7 million (before costs) through the issue of 35,000,000 shares. ReNerve shares were listed on the Australian Stock Exchange (ASX) on 26 November 2024. Upon the successful IPO, the company granted Lead Manager Options to Alpine Capital Pty Ltd, representing 2% of the fully diluted share capital post completion of the Offer. These options have an exercise price of $0.30 and a three year expiry from the date of issue. Based on the maximum subscription of $7 million, a total of 2,951,594 Lead Manager Options were granted. In conjunction with the IPO, the convertible notes were converted into 10,984,847 ordinary shares in the company. Taking into account the short timeframe since listing, the company confirms that it expects to utilise the funds raised under its prospectus in accordance with the use of funds statement and the key business objectives underlying the expected use of the funds remains intact. There were no other significant changes in the state of affairs of the company during the financial half-year. Matters subsequent to the end of the financial half-year No matter or circumstance has arisen since 31 December 2024 that has significantly affected, or may significantly affect the company's operations, the results of those operations, or the company's state of affairs in future financial years. Auditor's independence declaration A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors' report. 2 ReNerve Limited Directors' report 31 December 2024 This report is made in accordance with a resolution of directors, pursuant to section 306(3)(a) of the Corporations Act 2001. On behalf of the directors ___________________________ Stephen Cooper Independent Chairman & Director 28 February 2025 3 Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the directors of ReNerve Limited As lead auditor for the review of ReNerve Limited for the half-year ended 31 December 2024, I declare that, to the best of my knowledge and belief, there have been: — no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and — no contraventions of any applicable code of professional conduct in relation to the review. William Buck Audit (Vic) Pty Ltd ABN 59 116 151 136 Jeffrey Luckins Director Melbourne, 28 February 2025 Level 20, 181 William Street, Melbourne VIC 3000 +61 3 9824 8555 William Buck is an association of firms, each trading under the name of William Buck across Australia and New Zealand with affiliated offices worldwide. Liability limited by a scheme approved under Professional Standards Legislation. vic.info@williambuck.com williambuck.com.au ReNerve Limited Contents 31 December 2024 Statement of profit or loss and other comprehensive income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements Directors' declaration Independent auditor's review report to the members of ReNerve Limited 6 7 8 9 10 18 19 General information The financial statements cover ReNerve Limited as an individual entity. The financial statements are presented in Australian dollars, which is ReNerve Limited's functional and presentation currency. ReNerve Limited is a company limited by shares. Registered office Principal place of business DLK Advisory Pty Ltd, Level 10, 99 Queen Street Melbourne, 3000, Australia 15 Heidelberg Road Northcote VIC 3070, Australia A description of the nature of the company's operations and its principal activities are included in the directors' report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of directors, on 28 February 2025. 5 ReNerve Limited Statement of profit or loss and other comprehensive income For the half-year ended 31 December 2024 Note Revenue Sales Cost of sales 4 Gross profit Other income 5 Expenses Administration expenses Depreciation and amortisation expense Employee benefits expense Finance costs Marketing and selling costs Professional fees Research and development costs Share based payments 6 6 6 Loss before income tax expense 31 December 31 December 2024 2023 $ $ 102,215 (1,841) 38,318 - 100,374 38,318 419,281 263,210 (333,836) (35,592) (479,084) (249,456) (182,327) (400,397) (268,455) (414,164) (340,080) (74,914) (544,853) (20,244) (208,905) (56,023) (386,506) (90,000) (1,843,656) (1,419,997) - - (1,843,656) (1,419,997) - - (1,843,656) (1,419,997) Cents Cents Income tax expense Loss after income tax expense for the half-year attributable to the owners of ReNerve Limited Other comprehensive income for the half-year, net of tax Total comprehensive loss for the half-year attributable to the owners of ReNerve Limited Basic earnings per share Diluted earnings per share 13 13 (1.76) (1.76) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 6 (1.50) (1.50) ReNerve Limited Statement of financial position As at 31 December 2024 Note 31 December 2024 30 June 2024 $ $ Assets Current assets Cash and cash equivalents Trade and other receivables Inventories Prepayments Monies held in trust Total current assets 7 6,387,176 510,291 176,157 170,358 111,246 7,355,228 711,909 437,192 177,998 10,959 80,349 1,418,407 18,715 6,164 44,165 69,044 29,281 20,709 6,978 44,165 101,133 7,424,272 1,519,540 190,226 23,005 205,967 419,198 168,466 21,835 37,437 252,258 1,192,680 1,672,676 Non-current liabilities Employee benefits Total non-current liabilities 35,218 35,218 23,036 23,036 Total liabilities 454,416 1,695,712 6,969,856 (176,172) 16,796,993 472,322 (10,299,459) 8,076,928 202,703 (8,455,803) 6,969,856 (176,172) Non-current assets Plant and equipment Right-of-use assets Intangibles Other deposits Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Lease liabilities Accrued expenses Employee benefits Convertible notes Total current liabilities 8 Net assets/(liabilities) Equity Issued capital Reserves Accumulated losses 9 10 Total equity/(deficiency) The above statement of financial position should be read in conjunction with the accompanying notes 7 ReNerve Limited Statement of changes in equity For the half-year ended 31 December 2024 Issued capital $ Balance at 1 July 2023 Reserves Accumulated losses Total equity $ $ $ 7,842,383 294,034 (5,562,189) 2,574,228 Loss after income tax expense for the half-year Other comprehensive income for the half-year, net of tax - - (1,419,997) - (1,419,997) - Total comprehensive loss for the half-year - - (1,419,997) (1,419,997) Shares issued to consultants (see note 9) 120,000 - - 120,000 7,962,383 294,034 (6,982,186) 1,274,231 Balance at 31 December 2023 Issued capital $ Balance at 1 July 2024 Reserves Accumulated losses Total equity $ $ $ 8,076,928 202,703 (8,455,803) (176,172) Loss after income tax expense for the half-year Other comprehensive income for the half-year, net of tax - - (1,843,656) - (1,843,656) - Total comprehensive loss for the half-year - - (1,843,656) (1,843,656) Vesting of share based payments Shares issued to consultants (see note 9) Convertible notes, converted into equity (see note 8) Initial public offering (see note 9) Transaction costs (see note 9) 144,545 2,196,969 7,000,000 (621,449) 269,619 - - 269,619 144,545 2,196,969 7,000,000 (621,449) Balance at 31 December 2024 16,796,993 472,322 (10,299,459) 6,969,856 The above statement of changes in equity should be read in conjunction with the accompanying notes 8 ReNerve Limited Statement of cash flows For the half-year ended 31 December 2024 Note 31 December 31 December 2024 2023 $ $ Cash flows from operating activities Receipts from customers (inclusive of GST) Payments to suppliers and employees Interest received R&D tax credits received 111,595 (1,899,372) 10,900 377,068 30,462 (1,426,725) 14,124 339,985 Net cash used in operating activities (1,399,809) (1,042,154) Cash flows from investing activities Payments for property, plant and equipment Payments for prepaid assets (3,505) (18,000) (1,301) - Net cash used in investing activities (21,505) (1,301) Cash flows from financing activities Repayment of lease liabilities Proceeds from issues of equity securities (excluding convertible debt securities) Proceeds from convertible notes Proceeds from issue of share capital (14,475) 7,000,000 755,000 (642,779) (42,872) 655,000 - Net cash from financing activities 7,097,746 612,128 Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial half-year Effects of exchange rate changes on cash and cash equivalents 5,676,432 711,909 (1,165) (431,327) 1,679,480 - 6,387,176 1,248,153 Cash and cash equivalents at the end of the financial half-year 7 The above statement of cash flows should be read in conjunction with the accompanying notes 9 ReNerve Limited Notes to the financial statements 31 December 2024 Note 1. Material accounting policy information These general purpose financial statements for the interim half-year reporting period ended 31 December 2024 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'. These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2024. The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated. New or amended Accounting Standards and Interpretations adopted The company has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Revenue recognition The company recognises revenue as follows: Revenue from contracts with customers Revenue is recognised at an amount that reflects the consideration to which the company is expected to be entitled in exchange for transferring goods to a customer. For each contract with a customer, the company identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods promised. Sale of goods Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, which is generally at the time of delivery. The transaction price is determined based on the agreed consideration, adjusted for any variable consideration, such as discounts, rebates, or refunds, if applicable. Any estimates of such variable consideration are made using the expected value or most likely amount method and are constrained where necessary to prevent significant revenue reversals. Note 2. Critical accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below. Non-recognition of carry forward tax losses The balance of future income tax benefit arising from the current financial year tax losses and timing differences have not been recognised as an asset because it is not clear when the losses will be recovered. The cumulative future income tax benefit estimated has not been recognised as an asset, will only be obtained if: ● the company derives future assessable income of a nature and an amount sufficient to enable the benefit to be realised; ● the company continues to comply with the conditions for deductibility imposed by law; and ● no changes in tax legislation adversely affecting the company realising the benefit. 10 ReNerve Limited Notes to the financial statements 31 December 2024 Note 2. Critical accounting judgements, estimates and assumptions (continued) Lodgement of R&D claims Over the past 4 years, the entity has successfully claimed for and received cash from the Australian Taxation Office in respect of credits for its research and development program. Under this program, the ATO has the right, extending back 4 tax years to investigate, audit and potentially clawback these claims in the event that they fail to meet the necessary criteria as established under the research and development credit claim legislation and regulations. It is the directors’ view that there is no probable likelihood that any potential action may take place based upon the following reasons: ● ● ● Upon submission of the claim, the ATO and AusIndustry conduct an overall desktop review of the claim, including the eligibility of any overseas research and development activity undertaken (which requires an Advanced Overseas Finding before being eligible); The industry environment in which the entity deals is known for its research and development activities which have historically been supported through research and development claims; and The entity has a track record extending 4 years of never being challenged on its research and development claims by the ATO or AusIndustry. Note 3. Operating segments Management has determined the operating segments based on the reports reviewed by the Board of Directors. During the year, the company continued to operate in one segment, being Medical Devices for damaged peripheral nerves in the United States of America. Major customers During the reporting period, sales to two individual customers each exceeded 10% of total revenue, representing approximately 21% and 15%, respectively. Both customers are located in the United States. Geographical information Sales to external customers 31 December 31 December 2024 2023 $ $ New Zealand United States 738 101,477 379 37,939 102,215 38,318 Note 4. Revenue 31 December 31 December 2024 2023 $ $ Revenue from contracts with customers Sale of goods 102,215 38,318 Disaggregation of revenue The disaggregation of revenue from contracts with customers is as follows: 31 December 31 December 2024 2023 $ $ Timing of revenue recognition Goods transferred at a point in time 102,215 11 38,318 ReNerve Limited Notes to the financial statements 31 December 2024 Note 5. Other income 31 December 31 December 2024 2023 $ $ Interest received R&D credits 29,221 390,060 25,281 237,929 419,281 263,210 Note 6. Expenses During the period, the company incurred several non-recurring expenses that have impacted the statement of profit or loss. These costs primarily relate to the company’s initial public offering and other capital raising activities. The total one-off costs incurred amount to $853,112, comprising: Expense category Description $ Finance costs Professional fees Share-based payments Fair value adjustment of convertible notes Non-recurring IPO-related costs Lead manager advisor options issued in connection with the IPO 249,289 352,635 251,188 Note 7. Cash and cash equivalents 31 December 2024 30 June 2024 $ $ Cash management account Cheque account Savings account Statement account Term deposits 247,923 47,970 757,215 24,514 5,309,554 88,119 23,527 59,934 10,329 530,000 6,387,176 711,909 Term deposits The balance includes term deposits with maturity periods ranging from three to four months, bearing interest rates between 4% and 5%. These deposits were established following the entity’s initial public offering in November 2024. A total of $7 million was raised during the offering, of which $5,309,554 has been allocated to term deposits. As at 31 December 2024, the term deposits comprise: AUD term deposit: AUD $3,500,000 USD term deposit: AUD $1,809,554 (initial deposit of USD $1,125,000) 12 ReNerve Limited Notes to the financial statements 31 December 2024 Note 8. Convertible notes 31 December 2024 30 June 2024 $ $ Convertible notes - 1,192,680 1,192,680 755,000 48,431 200,858 (2,196,969) 905,000 49,144 238,536 - - 1,192,680 Reconciliation Reconciliation of the fair values at the beginning and end of the current and previous financial half-year are set out below: Opening balance Convertible notes issued Coupon interest accrued into the notes Changes in fair value of the notes Conversion of convertible notes to equity on IPO Closing balance In September 2024 and October 2024, the company completed a successful pre-IPO capital raise through the issue of convertible notes, to raise $755,000. The details of the convertible notes issued in the period were: ● ● ● ● ● ● Face value of $755,000; A coupon interest rate of 10% is included and accrued on the face value of the notes; Maturity date of 1 December 2024; The terms of the notes provided that, if an IPO conversion event occurred, the convertible notes would convert into ordinary shares at a price per share which represents a 20% discount to the price per share of shares issued in the IPO, capped at a maximum conversion price of $0.24 per share; If any other conversion event occurred, being a trade sale of all the business assets, a capital raise in excess of $500,000 prior to an IPO, or a change in control, the convertible notes would convert into ordinary shares at a price of $0.20 per share; and In the event that the company did not IPO and was not sold, post 12 months the convertible notes would convert into ordinary shares at an issue price equal to the issue price of the company's previous capital raise of $0.20. The interest accrued on all convertible notes in the period was $48,431, and the fair value adjustment for the period was $200,858. ReNerve listed on the ASX on 26 November 2024. In connection with the IPO, convertible notes totalling $1,660,000, along with total accrued interest of $97,575, were converted into 10,984,847 ordinary shares in the company. Convertible notes were held at fair value, with changes in fair value taken to profit or loss. In assessing the fair value under this Level 3 hierarchy valuation, the directors considered that there was a 100% likelihood that the convertible notes would be settled through the issue of ordinary share capital, which has occurred within the reporting period. There was no likelihood of a cash redemption, as this could only be triggered by an event of default under the note. Other inputs included the terms and conditions of the notes, as set out above. Accordingly, the convertible notes were valued on an 'as converted' basis, with the assumption that the equity instruments received would be liquid and marketable. In the directors’ view, there was no exposure to any non-market variable relating to the convertible note conversion that could reasonably or materially influence its fair value as expressed in these financial statements. 13 ReNerve Limited Notes to the financial statements 31 December 2024 Note 9. Issued capital 31 December 31 December 2024 30 June 2024 2024 30 June 2024 Shares Shares $ $ Ordinary shares - fully paid 141,837,806 95,130,234 16,796,993 8,076,928 Issue price $ Movements in ordinary share capital Details Date Shares Balance Share based payment Share based payment Initial public offering (IPO) Conversion of convertible notes into equity Costs of capital raising 1 July 2024 1 July 2024 29 August 2024 26 November 2024 26 November 2024 26 November 2024 95,130,234 572,725 150,000 35,000,000 10,984,847 - Balance 31 December 2024 141,837,806 $0.20 $0.20 $0.20 $0.20 $0.00 8,076,928 114,545 30,000 7,000,000 2,196,969 (621,449) 16,796,993 In July 2024, t