VGI Health Technology : Annual Report for the year ended 30 June 2022

VGI Health Technology Limited

ABN 35 111 082 485

Annual Report

for the year ended

30 June 2022

VGI HEALTH TECHNOLOGY LIMITED

CONTENTS
CORPORATE DIRECTORY....................................................................................................................................................................................................	3
PRINCIPAL ACTIVITIES .........................................................................................................................................................................................................	4
REVIEW OF OPERATIONS...................................................................................................................................................................................................	4
DIRECTORS' REPORT ............................................................................................................................................................................................................	6
CORPORATE GOVERNANCE STATEMENT .................................................................................................................................................................	14
AUDITOR'S INDEPENDENCE DECLARATION............................................................................................................................................................	22
STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME.............................................................................................	23
STATEMENT OF FINANCIAL POSITION ......................................................................................................................................................................	24
STATEMENT OF CASH FLOWS .......................................................................................................................................................................................	25
STATEMENT OF CHANGES IN EQUITY........................................................................................................................................................................	26
DIRECTORS' DECLARATION ............................................................................................................................................................................................	51
INDEPENDENT AUDIT REPORT ......................................................................................................................................................................................	52
SUPPLEMENTARY INFORMATION................................................................................................................................................................................	56

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VGI HEALTH TECHNOLOGY LIMITED

CORPORATE DIRECTORY

VGI HEALTH TECHNOLOGY LIMITED

ABN 35 111 082 485

Directors
Louis James Panaccio	Non-Executive Chairman
Glenn Tong	Managing Director
Steven Yu	Non - Executive Director
Company Secretary
Catriona Glover

Registered Office and Principal Place of Business

Level 45, Suite 03,

19-29 Martin Place,

Sydney, NSW, 2003

Ph: [phone]

Postal Address

VGI Health Technology Limited

Level 45, Suite 03,

19-29 Martin Place,

Sydney, NSW, 2003

Share Register

Link Market Services

Level 12, 680 George Street

SYDNEY, NSW, 2000

Ph: 1300 554 474

Auditors

Hall Chadwick

Level 40, 2 Park Street

SYDNEY, NSW, 2000

Securities Exchange Listing

National Stock Exchange of Australia

(Home Branch - Sydney)

NSX Code: VTL

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VGI HEALTH TECHNOLOGY LIMITED

PRINCIPAL ACTIVITIES

During the year ended 30 June 2022 the principal activity of VGI Health Technology Limited (NSX:VTL) is to research, develop, distribute and market a range of health and therapeutic products and technologies, including innovative drugs and wellbeing supplements.

REVIEW OF OPERATIONS

On 9 July 2021, following shareholder approval, the company advised that it's name had changed to VGI Health Technology Limited (formerly Azure Health Technology Limited). The effective date of change for the NSX was the commencement of trading on Wednesday 14 July 2021. The Company's ticker code on NSX remained as VTL.

On 7 September 2021 VGI Health Technology Limited announced that it agreed with FIFO Capital to renew a Receivable Finance Facility with respect to VTL's assessed tax cash benefit under the Federal Government's R&D Tax Incentive Program administered by AusIndustry and paid by the Australian Tax Office for the June 2022 period.

On 13 September the company announced it's operational subsidiary, Invictus Ops Pty Ltd., had approved a clinical study to be conducted by Altipure R&D in Ohio, USA on its patented nutraceutical product NE1-Elite®.NE1-Elite® has been shown in previous clinical studies to reduce Delayed Onset Muscle Soreness (DOMS), improve muscle recovery after exercise and allow maintenance of peak muscle power.

The company announced on 14 September 2021 that its wholly owned subsidiary, Invictus Ops Pty Ltd, had appointed Gallipoli Medical Research Foundation (GMRF) as a clinical study site for its multi-site Phase II Clinical Study in Non- alcoholic Fatty Liver Disease (NAFLD)/Non-Alcoholic Steatohepatitis (NASH).

On 5 October 2021 VTL announced that it had agreed revised terms with cornerstone investor Mr Aiden Jiang for the drawdown of $1,500,000 from a previously agreed convertible loan facility. The company would start drawing down on the facility from the week commencing 11 October 2021. The loan is convertible to shares in VTL at a Loan Conversion Price of $0.20 per share, subject to approval, by VTL shareholders at a general meeting. The interest rate applicable is 8% per annum (to be capitalised and repaid with the principle upon settlement of the loan), the period of the loan is for 12 months and VTL may repay the loan at its election prior to the expiry date or extend the repayment period by a further 12 months.

On 20 January 2022 VTL announced that both NE1-Elite® and NE1-Heart® were now available for sale on Amazon in the United States.

On 14 February 2022 VTL announced that it had executed a non-binding Term Sheet for the sale of its wholly owned subsidiary, the Invictus BioPharma Pty Ltd Group (Invictus Group) to Invictus BioPharma Holdings Ltd (IVBHL). The Invictus Group includes Invictus Biotechnology Pty Ltd. which owns the patent rights to the "Transmucosal Delivery of Tocotrienols" patent estates and also the licensed patent rights from Monash University for tocotrienol prodrugs. IVBHL is a company founded by VTL Director Dr Glenn Tong. The Term Sheet prescribes an Exclusivity Period which extends for three months after the date of execution of the Term Sheet or the execution of a Share Purchase Agreement (SPA), whichever is the earlier.

VTL announced on 25 February that Invictus Nutraceuticals Inc, a subsidiary of VTL, had signed a Sales Representation agreement with Continuum Sciences LLC. Continuum Sciences has a successful track record of placing innovative human consumer health products into major U.S. retailers.

On 4 April 2020 VTL announced that the United States Patents and trademarks office had approved the granting of a divisional patent to Invictus Biotechnology Pty Ltd for the "Transmucosal Delivery of Tocotrienols". The patent will provide commercial rights in the U.S. until November 2032.

VTL executed a binding agreement on 5 April 2022 for the sale of its wholly owned subsidiary Invictus BioPharma Pty Ltd (IBP). Under the agreement, VTL will have an exclusive licence to manufacture, market and sell nutraceutical products based on the IBP's intellectual property rights and an exclusive perpetual licence to manufacture, market and sell pharmaceutical products based on the IBP intellectual property rights in China.

The Key Terms that have been agreed in principle by VTL and IVBHL are as follows:

• A cash payment of $2,300,000 by IVBHL to VTL
• Issue of shares in the capital of IVBHL equating to no less than 20% of the total capital on issue in IVBHL (following any seed round capital raise dilution). These shares are to be issued to VTL on completion of the transaction.
• VTL is to be granted a first right of refusal / pre-emption in relation to any future capital raisings undertaken by IVBHL on a pro rata basis. As an illustrative example, if the VTL owns 20% of the IVBHL, and IVBHL conducts a capital raising for $2,000,000, the right of first refusal/pre-emption will apply to a $400,000 investment by VTL.

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VGI HEALTH TECHNOLOGY LIMITED

• VTL agrees to hand over the Invictus Group free of financial indebtedness on completion of this transaction.
• IVBHL will transfer the ownership of the US subsidiary, Invictus Nutraceuticals, Inc., to VTL for nil consideration.
• IVBHL is to grant VTL an exclusive perpetual global licence to manufacture, market and sell nutraceutical products based on the Invictus Group's intellectual property rights, with a royalty payable of 10% of net profit after tax.
• IVBHL is to grant VTL an exclusive perpetual licence to manufacture, market and sell pharmaceutical products based on the Invictus Group's intellectual property rights in the Peoples Republic of China with a royalty payable of 10% of net profit after tax.

On 2 May 2022 a notice of Extraordinary General Meeting was announced to the market. The meeting was to take place on 3 June 2022. The notice of meeting was to approve the resolution for disposal of Invictus BioPharma Limited, and also 3 resolutions to approve the provision of a financial benefit to Glenn Tong, Richard Estalella and David Kingston.

At the Extraordinary meeting held on 3 June 2022 it was resolved that the 4 resolutions be approved.

EVENTS SUBSEQUENT TO THE END OF THE REPORTING PERIOD

On 5 July 2022, the company announced that its wholly owned subsidiary, Invictus Ops Pty Ltd (Invictus), had commenced recruitment of patients for its Phase II clinical study in Non-Alcoholic Fatty Liver Disease (NAFLD)/Non-Alcoholic SteatoHepatitis (NASH). The study will enrol eighty patients across eight sites in Australia, with two sites The Gallipoli Medical Research Foundation (GMRF) in Queensland and The Royal Melbourne Hospital in Victoria had now commenced recruitment of patients. This study will be a randomised, double-blind,placebo-controlled Phase II clinical study on NAFLD/NASH to analyse the efficacy and safety of IVB001, a drug candidate based on the non-invasive and direct delivery of tocotrienols using Invictus' patented transmucosal delivery platform.

Other than the foregoing, no other matter or circumstance has arisen since 30 June 2022 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.

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