BOD Australia Limited...Bod remains well positioned to further grow its revenue profile across the remainder of FY2019 via pending distribution agreements, international sales opportunities

BOD Australia Limited Appendix 4D Half Year-report

1. Company details Name of entity: BOD Australia Limited ABN: 89 601 225 441 Reporting period: For the half - year ended 31 December 2018 Previous period: For the half - year ended 30 December 2017

2. Results for announcement to the market The consolidated entity has adopted Accounting Standards AASB 9 'Financial Instruments' and AASB 15 'Revenue from Contracts with Customers' for the half-year ended 31 December 2018. The Accounting Standards have been applied retrospectively and comparatives have been restated, where applicable. As at 31 December 2018 there were no material impact of AASB 9 or AASB 15 for the period ended 31 December 2018 or the comparative period. $ Revenues from ordinary activities up 48.3% to 1,075,609 Loss from ordinary activities after tax attributable to the owners of BOD Australia Limited

up

108.9%

to

(2,786,152)

Loss for the half - year attributable to the owners of BOD Australia Limited

up

108.9%

to

(2,786,152)

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 $2,786,152 (31 December 2017: $1,333,641).

3. Net tangible assets

Reporting

period Previous

period Cents Cents Net tangible assets per ordinary security 9.20 4.64

4. Control gained over entities Not applicable.

5. Loss of control over entities Not applicable.

6. Dividends There were no dividends paid, recommended or declared during the current financial period (31 December 2017: Nil).

BOD Australia Limited Appendix 4D Half Year-report

7. Dividend reinvestment plans Not applicable.

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 have been reviewed by the Company’s auditors who issued an unqualified review opinion which is attached to the financial statements.

11. Attachments Details of attachments (if any): The Interim Report of BOD Australia Limited for the half-year ended 31 December 2018 is attached.

12. Signed Signed ___________________________ Date: 28 February 2019 Joanne Patterson Director and Chief Executive Officer

BOD Australia Limited Bod Australia Limited – Appendix 4D Commentary For the Half-Year end 31 December 2018

Bod Australia Limited – Appendix 4D Commentary Highlights: • Revenue of $1,075,609 achieved for the half-year ended 31 December 2018 – Represents 148.3% of revenue

reported in the previously corresponding period (PCP) ended 31 December 2017

• Revenue for the half included a net R&D tax rebate of $453,170, allowing Bod to recoup some costs from its

Phase I Clinical Medicinal Cannabis Trial

• Increase in sales was underpinned by product suite expansion, new distribution agreements with Priceline,

generally positive product uptake and expanding distribution through independents.

• During the period, Bod secured a distribution agreement for the MamaCare pregnancy supplement with Priceline

Pharmacy – product now stocked in a minimum of 300 doors in Priceline’s network

• Alignment with Chemist Warehouse established – Bod’s medicinal cannabis products to be dispensed with the

group

• Medicinal cannabis export licence for Bod’s unique, patented cannabis based sublingual wafer product secured

during the period – Bod actively progressing significant international expansion opportunities

• World first achieved in Phase I Clinical trial – first global instance that the pharmacokinetics of a full plant extract

have been evaluated in blinded conditions

• Inaugural medicinal cannabis prescription received via Cannabis Access Clinics collaboration agreement –

ongoing prescriptions being received across the remainder of FY2019

Positive Revenue Growth: Bod is pleased to advise that it has achieved positive revenue growth for the half-year of $1,075,609 comprising of sales of $588,825 for the period, representing 148% of revenue of $725,228 reported in the half-year ended 2017. Revenue generated includes an R&D grant of $453,170, which recoups costs associated with Bod’s Phase I Clinical trial of its proprietary sublingual cannabis wafer. Growth has been realised with the assistance of recently appointed Chairman, Mr. George Livery and Executive Director, Mr. Stephen Thompson, who both commenced roles during the half. Increased sales were also underpinned by distribution agreements with Priceline Pharmacy for Bod’s premium pregnancy supplement Mamacare. Further, Bod also witnessed considerable product uptake through its national network of independent and specialist retailers. Bod remains well positioned to further grow its revenue profile across the remainder of FY2019 via pending distribution agreements, international sales opportunities and a range of potential new products targeting sectors the Company does not already have exposure to. Medicinal cannabis export license obtained: Bod further solidified its position as a medicinal cannabis leader by successfully gaining an export listing on the Australian Register of Therapeutic Goods for its patented sublingual form of medicinal cannabis. The license provides Bod with the ability to export medicinal cannabis products manufactured in Australia, into international markets. The Company will focus on exporting its sublingual cannabis wafer product to European countries including Belgium, Switzerland and the United Kingdom. Bod continues to build a considerable presence throughout Europe and will leverage its relationships with key partners, such as Linnea SA (a subsidiary of Schwabe and Ipsen) to drive uptake. Bod aligns with Chemist Warehouse Group to dispense medicinal cannabis products: Bod achieved an important milestone in aligning with Australia’s largest pharmacy retailer, Chemist Warehouse Group to distribute MediCabilis™, Bod’s pharmaceutical grade cannabis extract (Ecs315), in oil form.

BOD Australia Limited Bod Australia Limited – Appendix 4D Commentary For the Half-Year end 31 December 2018

Chemist Warehouse Group is Australia’s largest pharmacy retailer, boasting over 450 stores throughout Australia with approximately 15,000 employees. As part of the initiative, Bod will undertake a comprehensive training program within the group to educate employees on all aspect of dispensing MediCabilis™ to eligible patients and aspects of the regulatory landscape. Bod is pleased to advise that it has received a number of prescriptions for the product to date, partly assisting in the Company’s revenue growth. First cannabis prescription secured via collaboration with Cannabis Access Clinics: Bod received its inaugural prescription and required Special Access Scheme approvals for its MediCabilis™ cannabis oil and also entered into a research collaboration agreement with Biologics Research Institute Australia (BRIA), the owners and operators of Cannabis Access Clinics (CAC). Under the agreement, Bod and CAC will study the effects of Bod’s proprietary MediCabilis™ product on a broad range of patient outcomes. CAC boasts the most extensive network of healthcare clinics in Australia and New Zealand that assist doctors and patients in navigating regulatory approvals for prescribing medicinal cannabis products. Sales adjustment: Bod advises that subsequent to the end of the reporting period, it accepted the return of Mamacare stock that was included in previously reported sales revenue for the quarter ended 31 December 2018, from a retailer in its network. While this is outside of the Company’s regular terms of trading, Bod accommodated the retailer in the interests of a longer-term relationship. The total value of the returned stock, which has been subtracted from reported sales, is $243,000. The returned stock has a substantial remaining shelf life, and the Company is confident that the stock will be sold on to another retailer in the near term. World first achieved in Phase I Clinical Trial: During the half, Bod achieved a major milestone in the Phase I Clinical Trial of its proprietary CBD extract ECs315 suspended in a sublingual wafer delivery method. This occurrence is the first time globally that the pharmacokinetics, or the interaction of a drug and its absorption, distribution, metabolism and excretion, of a full plant cannabis extract have been evaluated under ‘blinded’ clinical trial conditions. Blinded conditions refer to the patient and clinician not knowing if they are using an active drug or placebo. The next phase of the trial tests the absorption rate of Bod’s patented sublingual wafer compared to the ECs315 cannabis extract currently available in oil form. Bod is also testing the absorption rate against a competitor’s product, which is currently available on the Australian market. Bod’s Phase I Clinical trial is well progressed and the Company is confident it will be able to report results in the coming weeks. Corporate: Bod remains well capitalized with $6,861,652 cash at bank as at 31 December 2018. This follows the completion and settlement of the Company’s strategic placement (refer ASX release 28 September 2018). Bod advises that it also received $450,500 of additional funds from Directors following approval sought at the Annual General Meeting on 19 November 2018. Bod’s cash balance provides the financial flexibility to build capabilities in key international markets, as well as pursue growth opportunities throughout Australia and Asia.

BOD Australia Limited ABN 89 601 225 441

Interim Report – 31 December 2018

BOD Australia Limited Corporate directory 31 December 2018

1

Directors George Livery (Executive Chairman – appointed 1st September 2018) Joanne Patterson

Simon Taylor Simon O'Loughlin

Stephen Thompson (Executive Director – appointed 1st September 2018) Mickey Perret (Resigned 31st January 2019) Company secretary Stephen Kelly Registered office Suite 2, Level 10, 70 Phillip Street SYDNEY NSW 2000 Principal place of business Level 1, 377 New South Head Road Double Bay NSW 2028 Share register Link Market Services Limited Level 12, 680 George Street SYDNEY NSW 2000 Auditor Nexia Sydney Audit Pty Limited Level 16 1 Market Street Sydney NSW 2000 Stock exchange listing BOD Australia Limited shares are listed on the Australian Securities Exchange (ASX

code: BDA) Corporate Governance Statement Refer to Company website: https://bodaustralia.com

BOD Australia Limited Directors' report 31 December 2018

2

The directors present their report, together with the financial statements, on the company during the half year ended 31 December 2018.

Directors The following persons were directors of the company during the whole of the financial half year and up to the date of this report, unless otherwise stated: George Livery (Executive Chairman – appointed 1st September 2018) Joanne Patterson Simon O'Loughlin Simon Taylor Stephen Thompson (Executive Director – appointed 1st September 2018) Mickey Perret (Resigned 31st January 2019) Principal activities The principal activity of BOD Australia Limited during the half year was a vertically integrated developer, manufacturer, distributor and marketer of plant-based health supplements and beauty solutions. No significant changes in the nature of the Company's activity occurred during the half year. Dividends There were no dividends paid, recommended or declared during the current or previous financial half year. Result of operations The loss for the company after providing for income tax amounted to $2,786,152 (31 December 2017: $1,333,641).

Significant changes in the state of affairs There were no significant changes in the state of affairs of the company during the financial half year. Events after the reporting period No matter or circumstance has arisen since 31 December 2018 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. Auditor

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 ___________________________ Joanne Patterson Director and Chief Executive Officer 28 February 2019

To the Board of Directors of Bod Australia Limited

Auditor’s Independence Declaration under section 307C of the Corporations Act 2001

As lead audit director for the review of the interim financial statements of Bod Australia Limited for the

financial half year ended 31 December 2018, I declare that to the best of my knowledge and belief, there

have been no contraventions of:

(a) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

(b) any applicable code of professional conduct in relation to the review.

Yours sincerely

Nexia Sydney Audit Pty Ltd

Joseph Santangelo

Director

Date: 28 February 2019

BOD Australia Limited Contents 31 December 2018

4

Statement of profit or loss and other comprehensive income 5 Statement of financial position 6 Statement of changes in equity 7 Statement of cash flows 8 Notes to the financial statements 9 Directors' declaration 19 Independent auditor's review report to the members of BOD Australia Limited 20

General Information The financial statements cover BOD Australia Limited as an individual entity for the half-year ended 31 December 2018. The financial statements are presented in Australian dollars, which is BOD Australia Limited's functional and presentation currency. BOD Australia Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business are: Registered office Principal place of business Suite 2, Level 10 Level 1 70 Phillip Street 377 New South Head Road Sydney NSW 2000 Double Bay NSW 2028 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 2019. The directors have the power to amend and reissue the financial statements.

BOD Australia Limited Statement of profit or loss and other comprehensive income For the half - year ended 31 December 2018

Note 31 Dec 2018 31 Dec 2017 $ $

The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

5

Revenue 3 1,075,609 725,228 Expenses Other operating expenses 4 (2,728,065) (1,378,350) Employee benefits expense (964,624) (500,359) Depreciation and amortisation expense (18,645) (14,012) Share-based payment expenses (150,427) (165,935) Finance costs - (213) Loss before income tax expense (2,786,152) (1,333,641) Income tax expense - -

Loss after income tax expense for the half year attributable to the owners of BOD Australia Limited

13

(2,786,152)

(1,333,641)

Other comprehensive income for the half year, net of tax - -

Total comprehensive income for the half year attributable to the owners of BOD Australia Limited

(2,786,152)

(1,333,641)

Cents Cents Basic loss per share 18 (4.48) (2.88) Diluted loss per share 18 (4.48) (2.88)

BOD Australia Limited Statement of financial position As at 31 December 2018

Note 31 Dec 2018 30 Jun 2018 $ $

The above statement of financial position should be read in conjunction with the accompanying notes 6

Assets Current assets Cash and cash equivalents 5 6,861,652 3,115,414 Trade and other receivables 208,277 74,269 Inventories 6 1,141,886 465,133 Other assets 7 122,195 132,737

Total current assets 8,334,010 3,787,553

Non-current assets Plant and equipment 8 68,870 42,548 Intangible assets 54,830 -

Total non-current assets 123,700 42,548

Total assets 8,457,710 3,830,101

Liabilities Current liabilities Trade and other payables 9 2,010,158 1,150,425 Provisions 10 63,985 60,957 Total current liabilities 2,074,143 1,211,382

Total liabilities 2,074,143 1,211,382

Net assets 6,383,567 2,618,719

Equity Issued capital 11 14,665,696 9,001,814 Reserves 12 1,719,463 832,345 Accumulated losses 13 (10,001,592) (7,215,440)

Total equity 6,383,567 2,618,719

BOD Australia Limited Statement of changes in equity For the half - year ended 31 December 2018

The above statement of changes in equity should be read in conjunction with the accompanying notes 7

Issued Accumulated Total equity capital Reserves losses

$ $ $ $ Balance at 1 July 2017 5,955,180 589,008 (3,543,335) 3,000,853 Loss after income tax expense for the year - - (1,333,641) (1,333,641) Other comprehensive income for the half year, net of tax

-

-

-

-

Total comprehensive income for the year - - (1,333,641) (1,333,641) Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs 2,901,494 - - 2,901,494 Share-based payments - 241,055 - 241,055

Balance at 31 December 2017 8,856,674 830,063 (4,876,976) 4,809,761

Issued Accumulated Total equity capital Reserves losses

$ $ $ $ Balance at 1 July 2018 9,001,814 832,345 (7,215,440) 2,618,719 Loss after income tax expense for the year - - (2,786,152) (2,786,152) Other comprehensive income for the half year, net of tax

-

-

-

-

Total comprehensive income for the year - - (2,786,152) (2,786,152) Transactions with owners in their capacity as owners: Contributions of equity, net of transaction costs 5,663,882 - - 5,663,882 Share-based payments - 887,118 - 887,118

Balance at 31 December 2018 14,665,696 1,719,463 (10,001,592) 6,383,567

BOD Australia Limited Statement of cash flows For the half - year ended 31 December 2018

Note 31 Dec 2018 31 Dec 2017 $ $

The above statement of cash flows should be read in conjunction with the accompanying notes 8

Cash flows from operating activities Receipts from customers (inclusive of GST) 699,769 235,117 Payments to suppliers and employees (inclusive of GST) (3,739,961) (1,589,541) R&D Grant Received 453,170 276,098 Interest received 32,485 32,951

Net cash used in operating activities (2,554,537) (1,045,375)

Cash flows from investing activities Payments for plant and equipment 8 (44,968) (26,665) Payments for intangible assets (54,830) -

Net cash used in investing activities (99,798) (26,665)

Cash flows from financing activities Proceeds from issue of shares 11 6,810,500 3,200,000 Share issue transaction costs (409,927) (223,386)

Net cash from financing activities 6,400,573 2,976,614

Net increase in cash and cash equivalents 3,746,238 1,904,574 Cash and cash equivalents at the beginning of the financial year 3,115,414 3,034,209

Cash and cash equivalents at the end of the financial half-year 5 6,861,652 4,938,783

BOD Australia Limited Notes to the financial statements 31 December 2018

9

Note 1. Significant accounting policies These general purpose financial statements for the interim half-year reporting period ended 31 December 2018 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 2018 and any public announcements made by the company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001. The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for the policies stated below. New or amended Accounting Standards and Interpretations adopted The entity 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. The following Accounting Standards and Interpretations are most relevant to the entity: AASB 9 Financial Instruments The entity adopted AASB 9 from 1 July 2018. The standard introduced new classification and measurement models for financial assets. A financial asset shall be measured at amortised cost if it is held within a business model whose objective is to hold assets in order to collect contractual cash flows which arise on specified dates and that are solely principal and interest. A debt investment shall be measured at fair value through other comprehensive income if it is held within a business model whose objective is to both hold assets in order to collect contractual cash flows which arise on specified dates that are solely principal and interest as well as selling the asset on the basis of its fair value. All other financial assets are classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on initial recognition to present gains and losses on equity instruments (that are not held-for-trading or contingent consideration recognised in a business combination) in other comprehensive income ('OCI'). Despite these requirements, a financial asset may be irrevocably designated as measured at fair value through profit or loss to reduce the effect of, or eliminate, an accounting mismatch. For financial liabilities designated at fair value through profit or loss, the standard requires the portion of the change in fair value that relates to the entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge accounting requirements are intended to more closely align the accounting treatment with the risk management activities of the entity. New impairment requirements use an 'expected credit loss' ('ECL') model to recognise an allowance. Impairment is measured using a 12-month ECL method unless the credit risk on a financial instrument has increased significantly since initial recognition in which case the lifetime ECL method is adopted. For receivables, a simplified approach to measuring expected credit losses using a lifetime expected loss allowance is available. AASB 15 Revenue from Contracts with Customers The entity adopted AASB 15 from 1 July 2018. The standard provides a single comprehensive model for revenue recognition. The core principle of the standard is that an entity shall recognise revenue to depict the transfer of promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard introduced a new contract-based revenue recognition model with a measurement approach that is based on an allocation of the transaction price. This is described further in the accounting policies below. Credit r isk is presented separately as an expense rather than adjusted against revenue. Contracts with customers are presented in an entity's statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Customer acquisition costs and costs to fulfil a contract can, subject to certain criteria, be capitalised as an asset and amortised over the contract period. The impact on the change in Accounting Standards with respect to AASB 9 and AASB 15 for the half year ended 31 December 2018 and the comparative period is immaterial.


10

Note 1. Significant accounting policies (continued) Revenue recognition The entity recognises revenue as follows: Revenue from contracts with customers Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated entity: 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 or service 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 or services promised. Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are initially recognised as deferred revenue in the form of a separate refund liability. 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. Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Other revenue Other revenue is recognised when it is received or when the right to receive payment is established. Trade and other receivables Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. Right of return assets Right of return assets represents the right to recover inventory sold to customers and is based on an estimate of customers who may exercise their right to return the goods and claim a refund. Such rights are measured at the value at which the inventory was previously carried prior to sale, less expected recovery costs and any impairment. Investments and other financial assets Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless, an accounting mismatch is being avoided.


11

Note 1. Significant accounting policies (continued) Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the consolidated entity has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off. Financial assets at fair value through profit or loss Financial assets not measured at amortised cost or at fair value through other comprehensive income are classified as financial assets at fair value through profit or loss. Typically, such financial assets will be either: (i) held for trading, where they are acquired for the purpose of selling in the short-term with an intention of making a profit, or a derivative; or (ii) designated as such upon initial recognition where permitted. Fair value movements are recognised in profit or loss. Financial assets at fair value through other comprehensive income Financial assets at fair value through other comprehensive income include equity investments which the consolidated entity intends to hold for the foreseeable future and has irrevocably elected to classify them as such upon initial recognition. Impairment of financial assets The consolidated entity recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the consolidated entity's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain. Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate. For financial assets measured at fair value through other comprehensive income, the loss allowance is recognised within other comprehensive income. In all other cases, the loss allowance is recognised in profit or loss. Refund liabilities Refund liabilities are recognised where the consolidated entity receives consideration from a customer and expects to refund some, or all, of that consideration to the customer. A refund liability is measured at the amount of consideration received or receivable for which the consolidated entity does not expect to be entitled and is updated at the end of each reporting period for changes in circumstances. Historical data is used across product lines to estimate such returns at the time of sale based on an expected value methodology.

Note 2. Operating segments Identification of reportable operating segments The Company only currently has a single operating segment being the developer and distributor of natural, evidence-based skin care and health products. The Company's operations and assets are all located in Australia. The Chief Operating Decision Maker (CODM - identified as the Board of Directors) reviews the performance of the entity by reviewing the growth in sales revenue. The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements. The information reported to the CODM is on a monthly basis.


12

Note 3. Revenue

31 Dec 2018

31 Dec 2017 $ $ Sales revenue

Gross sale of goods 645,793 416,179

Trading terms (56,968) -

588,825 416,179

Other revenue

Freight and shipping revenue 1,129 -

Interest 32,485 32,951

Research and development incentive 453,170 276,098

486,784 309,049

Total Revenue 1,075,609 725,228

Note 4. Other operating expenses Loss before Income tax includes the following specific operating expenses: 31 Dec 2018 31 Dec 2017 $ $ Cost of sales 340,764 226,128 Accounting and professional fees 84,165 150,618 Bank charges 1,663 443 Auditing or reviewing the financial statements 26,234 36,612 Advertising 1,161,726 217,485 Rental expenses 93,435 38,532 Legal expenses 25,926 56,786 Research and development 721,690 129,833 Write off of inventories 5,044 132,000 Write off of financial assets - 68,033 Other expenses 267,418 321,880 2,728,065 1,378,350

Note 5. Current assets - cash and cash equivalents 31 Dec 2018 30 Jun 2018 $ $ Cash at bank and cash on hand 725,483 3,005,414 Cash on deposit 6,136,169 110,000 6,861,652 3,115,414


13

Note 6. Current assets - inventories 31 Dec 2018 30 Jun 2018 $ $ Finished goods - at cost 1,280,960 599,163 Less: Provision for impairment (139,074) (134,030)

1,141,886 465,133

Note 7. Current assets - other assets 31 Dec 2018 30 Jun 2018 $ $ Prepayments 50,944 22,823 Other receivables 55,312 93,975 Other deposits 15,939 15,939

122,195 132,737

Note 8. Non-current assets - plant and equipment 31 Dec 2018 30 Jun 2018 $ $ Plant and equipment - at cost 138,954 93,986 Less: Accumulated depreciation (70,084) (51,438)

68,870 42,548

Reconciliations Reconciliations of the written down values at the beginning and end of the current half and previous financial half year are set out below: Plant and

equipment

$

Balance at 1 July 2017 25,647

Additions 46,787

Depreciation expense (29,886)

Balance at 30 June 2018 42,548

Additions 44,968

Depreciation expense (18,646)

Balance at 31 December 2018 68,870


14

Note 9. Current liabilities - trade and other payables 31 Dec 2018 30 Jun 2018 $ $ Trade payables 1,461,421 1,007,735 Other payables and accruals 466,482 83,026 Superannuation Payable 38,180 27,468 PAYG Withholding Payable 44,075 32,196

2,010,158 1,150,425

Note 10. Current liabilities - provisions 31 Dec 2018 30 Jun 2018 $ $ Annual leave 63,985 60,957

Note 11. Equity - issued capital 31 Dec 2018 30 Jun 2018 31 Dec 2018 30 Jun 2018 Shares Shares $ $ Ordinary shares - fully paid 69,390,000 56,432,000 14,665,696 9,001,814

Movements in ordinary share capital Details Date Shares $ Balance 1 July 2017 46,032,000 5,955,180 Shares issued 10,000,000 $0.32 3,200,000 Option exercised 400,000 $0.28 110,000 Transfer from option reserve for option exercised - $0.00 32,040 Less share issue costs - $0.00 (295,406)

Balance 30 June 2018 56,432,000 9,001,814 Shares issued 12,958,000 $0.53 6,810,500 Less share issue costs - $0.00 (1,146,618)

Balance 31 December 2018 69,390,000 14,665,696

Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital. On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Options The options are separately accounted for in the share-based payment reserves if the issuance of the options relates to a delivery of goods or services. Share buy-back There is no current on-market share buy-back.


Note 11. Equity - issued capital (continued)

15

Capital risk management The company's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital. Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents. In order to maintain or adjust the capital structure, the company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

Note 12. Equity - reserves 31 Dec 2018 30 Jun 2018 $ $ Share-based payments reserve 1,719,463 832,345

Share-based payments reserve The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and other parties as part of their compensation for services. Refer Note 19 for details.

Note 13. Equity - accumulated losses 31 Dec 2018 31 Dec 2017 $ $ Accumulated losses at the beginning of the financial half year (7,215,440) (3,543,335) Loss after income tax expense for the year (2,786,152) (1,333,641)

Accumulated losses at the end of the financial half year (10,001,592) (4,876,976)

Note 14. Equity - dividends There were no dividends paid, recommended or declared during the current or previous financial half year.

Note 15. Commitments 31 Dec 2018 30 Jun 2018 $ $ Lease commitments - operating Committed at the reporting date but not recognised as liabilities, payable: Within one year 95,348 45,955

Other commitments - operating Committed at the reporting date but not recognised as liabilities, payable: Within one year - 142,880


16

Note 16. Contingencies The Company did not have any contingencies at 31 December 2018. (31 December 2017: None). Note 17. Events after the reporting period No matter or circumstance has arisen since 31 December 2018 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.

Note 18. Earnings per share 31 Dec 2018 31 Dec 2017 $ $ Loss after income tax attributable to the owners of BOD Australia Limited (2,786,152) (1,333,641)

Number Number Weighted average number of ordinary shares used in calculating basic earnings per share 62,153,587 46,249,391

Weighted average number of ordinary shares used in calculating diluted earnings per share 62,153,587 46,249,391

Cents Cents Basic loss per share (4.48) (2.88) Diluted loss per share (4.48) (2.88)


17

Note 19. Share-based payments The following share-based payment arrangements were outstanding during the half year: 31 December 2018 Balance at Expired/ Balance at Exercise the start of forfeited/ the end of Grant date Expiry date price the year Granted Exercised other the year 22/12/2016 22/12/2019 $0.30 750,000 - - - 750,000 22/12/2016 22/12/2019 $0.35 750,000 - - - 750,000 03/08/2016 03/08/2019 $0.20 1,500,000 - - - 1,500,000 03/08/2016 03/08/2019 $0.25 1,000,000 - - - 1,000,000 03/08/2016 03/08/2019 $0.30 1,000,000 - - - 1,000,000 03/08/2016 03/08/2019 $0.35 1,000,000 - - - 1,000,000 27/10/2016 27/10/2019 $0.20 2,651,600 - - - 2,651,600 27/10/2016 27/10/2019 $0.30 100,000 - - - 100,000 27/10/2016 27/10/2019 $0.35 100,000 - - - 100,000 17/11/2017 17/11/2020 $0.20 300,000 - - - 300,000 17/11/2017 17/11/2020 $0.25 500,000 - - - 500,000 17/11/2017 17/11/2020 $0.30 200,000 - - - 200,000 27/12/2017 27/12/2019 $0.40 750,000 - - - 750,000 27/12/2017 27/12/2019 $0.48 750,000 - - - 750,000 26/11/2018 26/11/2021 $0.50 - 2,300,000 - - 2,300,000 26/11/2018 01/07/2022 $0.50 - 550,000 - - 550,000 26/11/2018 01/07/2023 $0.50 - 750,000 - - 750,000 26/11/2018 01/07/2024 $0.50 - 1,000,000 - - 1,000,000 26/11/2018 - * $0.55 - 798,373 - - 798,373 26/11/2018 - * $0.65 - 798,373 - - 798,373 26/11/2018 - * $0.75 - 798,374 - - 798,374

11,351,600 6,995,120 - - 18,346,720

Weighted average exercise price $0.28 $0.55 $0.00 $0.00 $0.38 30 June 2018 Balance at Expired/ Balance at Exercise the start of forfeited/ the end of Grant date Expiry date price the year Granted Exercised other the year 22/12/2016 22/12/2019 $0.30 750,000 - - - 750,000 22/12/2016 22/12/2019 $0.35 750,000 - - - 750,000 03/08/2016 03/08/2019 $0.20 1,500,000 - - - 1,500,000 03/08/2016 03/08/2019 $0.25 1,000,000 - - - 1,000,000 03/08/2016 03/08/2019 $0.30 1,000,000 - - - 1,000,000 03/08/2016 03/08/2019 $0.35 1,000,000 - - - 1,000,000 27/10/2016 27/10/2019 $0.20 2,651,600 - - - 2,651,600 27/10/2016 27/10/2019 $0.30 100,000 - - - 100,000 27/10/2016 27/10/2019 $0.35 100,000 - - - 100,000 16/03/2017 16/03/2020 $0.25 200,000 - (200,000) - - 16/03/2017 16/03/2020 $0.30 200,000 - (200,000) - - 16/03/2017 16/03/2020 $0.35 200,000 - - (200,000) - 17/11/2017 17/11/2020 $0.20 - 300,000 - - 300,000 17/11/2017 17/11/2020 $0.25 - 500,000 - - 500,000 17/11/2017 17/11/2020 $0.30 - 200,000 - - 200,000 27/12/2017 27/12/2019 $0.40 - 750,000 - - 750,000 27/12/2017 27/12/2019 $0.48 - 750,000 - - 750,000

9,451,600 2,500,000 (400,000) (200,000) 11,351,600 Weighted average exercise price $0.26 $0.36 $0.28 $0.35 $0.28


Note 19. Share-based payments (continued)

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Set out below are the options exercisable at the end of the financial year: 31 Dec 2018 30 Jun 2018 Grant date Expiry date Number Number 03/08/2016 03/08/2019 4,500,000 3,500,000 27/10/2016 27/10/2019 2,851,600 2,851,600 22/12/2016 22/12/2019 1,500,000 1,500,000 27/12/2017 27/12/2019 1,500,000 - 17/11/2017 17/11/2020 1,000,000 300,000 26/11/2018 26/11/2021 2,300,000 - 26/11/2018 - * 2,395,120 - 26/11/2018 01/07/2022 550,000 - 26/11/2018 01/07/2023 750,000 - 26/11/2018 01/07/2024 1,000,000 -

18,346,720 8,151,600

The fair values of options granted were determined using a trinomial option pricing model that takes into account factors specific to the options issued including vesting period, exercise price, term to expiry. The volume weighted average price (VWAP) performance conditions were incorporated into the valuation, where relevant, by means of probabilistic modelling techniques such as monte carlo simulations. *These options do not have a fixed expiry date and will expire 3 years after vesting date which is determined by reference to the achievement of specified VWAP conditions. Note 20. Related party transactions Parent entity BOD Australia Limited is the parent entity. Transactions with related parties No transactions with related parties occurred.

Loans to/from related parties There were no loans to or from related parties at the current and previous reporting date. Terms and conditions

All transactions were made on normal commercial terms and conditions and at market rates.

BOD Australia Limited Directors' declaration 31 December 2018

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In the directors' opinion: ● the attached financial statements and notes comply with the Corporations Act 2001, the Australian Accounting

Standards AASB 134 ‘Interim Reporting’, the Corporations Regulations 2001 and other mandatory professional reporting requirements;

● the attached financial statements and notes give a true and fair view of the company's financial position as at 31

December 2018 and of its performance for the financial year ended on that date; and ● there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due

and payable. Signed in accordance with a resolution of directors made pursuant to section 303(5)(a) of the Corporations Act 2001. On behalf of the directors ___________________________ Joanne Patterson Director and Chief Executive Officer 28 February 2019

INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF BOD AUSTRALIA LIMITED

We have reviewed the accompanying half-year financial report of Bod Australia Limited (the ‘Company’), which

comprises the statement of financial position as at 31 December 2018, the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on

that date, notes comprising a summary of significant accounting policies and other explanatory information, and

the directors’ declaration of the Company.

Directors’ Responsibility for the Half-Year Financial Report

The directors of the Company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such

internal control as the directors determine is necessary to enable the preparation of the half-year financial report

that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the 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 2018 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 Bod

Australia 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.

Independence

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

We confirm that the independence declaration required by the Corporations Act 2001, has been given to the

directors of Bod Australia Limited.

INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF BOD AUSTRALIA LIMITED

(CONT’D)

Conclusion

Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the

half-year financial report of Bod Australia Limited is not in accordance with the Corporations Act 2001 including:

a) giving a true and fair view of the entity’s financial position as at 31 December 2018 and of its performance

for the half-year ended on that date; and

b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

Nexia Sydney Audit Pty Ltd

Joseph Santangelo

Director

Dated: 28 February 2019

Sydney

Documents

BOD Australia Limited...Bod remains well positioned to further grow its revenue profile across the remainder of FY2019 via pending distribution agreements, international sales opportunities