Interim report
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Avecho Biotechnology Limited Appendix 4D Half-year report 1. Company details Name of entity: Avecho Biotechnology Limited ABN: 32 056 482 403 Reporting period: For the period ended 30 June 2026 Previous period: For the period ended 30 June 2025 2. Results for announcement to the market $ Revenues from ordinary activities down 89.4% to 59,602 Loss from ordinary activities after tax attributable to the owners of Avecho Biotechnology Limited down 28.1% to (1,923,629) Loss for the period attributable to the owners of Avecho Biotechnology Limited down 28.1% to (1,923,629) The loss for the Consolidated Entity after providing for income tax amounted to $1,923,629 (30 June 2025: loss of $2,675,960). Comments The reported losses are typical of companies in the biotech sector at the Company’s stage of development profile, reflecting the substantial upfront investment required. Further information on the results is detailed in the 'Review of operations' section of the Directors' report which is part of the Half-year Report. 3. Net tangible assets 30 June 2026 31 December 2025 Cents Cents Net tangible assets per ordinary security 0.05 0.04 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.
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Avecho Biotechnology Limited Appendix 4D Half-year report 8. Details of associates and joint venture entities Not applicable. 9. Foreign entities Not applicable. 10. Review status The financial statements were subject to a review by Grant Thornton Audit Pty Ltd and the review report is attached as part of the Half Year Report. 11. Attachments The Half Year Report of Avecho Biotechnology Limited for the period ended 30 June 2026 is attached. 12. Signed Signed ___________________________ Date: 25 August 2026 Dr Gregory Collier Chairman
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Avecho Biotechnology Limited ABN 32 056 482 403 Half Year Report - 30 June 2026
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Avecho Biotechnology Limited Contents 30 June 2026 1 Corporate directory 2 Directors' report 3 Auditor's independence declaration 6 Consolidated statement of profit or loss and other comprehensive income 7 Consolidated statement of financial position 8 Consolidated statement of changes in equity 9 Consolidated statement of cash flows 10 Notes to the consolidated financial statements 11 Directors' declaration 20 Independent auditor's review report to the members of Avecho Biotechnology Limited 21
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Avecho Biotechnology Limited Corporate directory 30 June 2026 2 Directors Dr Gregory Collier (Chairman) Dr Ross Murdoch (Non-Executive Director) Ms Kathy Connell (Non-Executive Director) Chief Executive Officer Dr Paul Gavin Company Secretary Ms Naomi Lawrie Registered office Unit A8, 2A Westall Road and Principal place of business Clayton VIC 3168 Australia Telephone: +61 3 9002 5000 Email: info@avecho.com.au Share register Computershare Investor Services Pty Limited Yarra Falls, 452 Johnston Street Abbotsford VIC 3067 Australia Telephone: +61 3 9415 5000 Fax: +61 3 9473 2500 Auditor Grant Thornton Audit Pty Ltd Collins Square Tower 5 727 Collins Street Melbourne VIC 3008 Stock exchange listing Avecho Biotechnology Limited securities are listed on the Australian Securities Exchange. (ASX code: AVE) Website www.avecho.com.au
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Avecho Biotechnology Limited Directors' report 30 June 2026 3 The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'Consolidated Entity') consisting of Avecho Biotechnology Limited (referred to hereafter as the 'Company' or 'parent entity' or 'Avecho') and the entities it controlled at the end of, or during, the half-year period ended 30 June 2026 (the 'period'). Directors The following persons were directors of Avecho Biotechnology Limited during the whole of the financial period and up to the date of this report, unless otherwise stated: Dr Greg Collier (Chairman) Dr Ross Murdoch (Non-Executive Director) Ms Kathy Connell (Non-Executive Director) Mr Matthew McNamara (Non-Executive Director - resigned on 25 May 2026) Company secretary Ms Naomi Lawrie On 1 May 2026, the Company announced the appointment of Ms. Naomi Lawrie as Company Secretary, effective 1 May 2026, to replace Ms. Melanie Leydin following team reassignments within Vistra (Australia) Pty Ltd, the Company's secretarial and corporate compliance services provider. Ms. Naomi Lawrie is a corporate lawyer and company secretary with more than 20 years of experience, particularly with health and technology companies. Principal activities and review of operations Avecho Biotechnology Limited develops and commercialises innovative Human and Animal Health products using its proprietary drug delivery system called TPM® (Tocopherol Phosphate Mixture). TPM® is derived from Vitamin E using unique, proprietary and patented processes and is proven to enhance the solubility and oral, dermal and transdermal absorption of drugs and nutrients. Avecho’s lead asset is a proprietary cannabidiol (CBD) TPM soft-gel capsule, which has been demonstrated to enhance CBD absorption. The capsule is currently undergoing Phase III clinical development for the treatment of insomnia. During the period, the final participant in the interim analysis cohort completed treatment. Following a review of the interim data, Avecho received a positive and unanimous recommendation from the independent Data Monitoring Board (DMB) to continue the pivotal Phase III insomnia trial through to the originally planned enrolment of 519 participants. Importantly, the DMB recommended that the trial continue with its originally planned sample size, with no increase in participant numbers required. This outcome is consistent with the treatment effect and data variability assumptions underpinning the study design and provides further support for the robustness of the trial's statistical framework. Avecho believes the product's favourable safety and tolerability profile is an important aspect of its potential commercial positioning, particularly when compared with existing prescription sleep medications that may be associated with next-day impairment and overdose risks. Following the positive recommendation, Avecho is progressing plans to recruit the remaining participants through its existing clinical site network, supplemented by additional sites identified to accelerate enrolment. The Company intends to activate these sites as quickly as possible and leverage the recruitment strategies, patient management processes and operational enhancements developed during the initial phase of the study. Once the additional sites are operational, Avecho expects recruitment of the remaining participants to be completed within approximately 12 months. Dividends There were no dividends paid, recommended or declared during the current or previous financial period. Review of financial results The loss for the Consolidated Entity for half-year period to 30 June 2026 amounted to $1,923,629 (30 June 2025: loss of $2,675,960).
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Avecho Biotechnology Limited Directors' report 30 June 2026 4 ● Total revenue decreased by 89% to $59,602 for the period (half- year ended 30 June 2025: $560,069), reflecting the intermittent and variable nature of product sales to Ashland & Themis. ● Research and development tax incentive and other income increased by 74% to $1,375,397 (30 June 2025: $792,575), primarily due to the R&D tax incentives of $1,369,052 (30 June 2025: $747,785). ● Expenses from operations decreased by 13% to $3,343,105 for the period (half-year ended 30 June 2025: $3,863,436). The reduction was primarily driven by lower research and development expenditure, which decreased by 13% to $1,819,144 (30 June 2025: $2,096,814). Research and development activities during the period remained focused on the Company's pivotal Phase III clinical trial evaluating its oral cannabidiol (CBD) capsule for the treatment of insomnia. Expenditure was lower than the prior corresponding period as the trial progressed through the interim analysis phase, culminating in the completion of treatment by the final participant in the interim cohort. The reduction in costs reflects the timing and nature of clinical trial activities undertaken during the period as the Company achieved this key development milestone. At 30 June 2026, the Consolidated Entity held $6,609,515 in cash and cash equivalents (31 December 2025: $4,663,491). The net assets(i) of the Consolidated Entity (excluding the upfront licensing fee received from Sandoz) increased by $347,597 to $6,740,009 as at 30 June 2026 (31 December 2025: $6,392,412). Working capital, being current assets less current liabilities, was a surplus of $6,643,605 as at 30 June 2026 (31 December 2025: $6,347,425). The net operating cash outflow for the half-year period was $49,468 (30 June 2025: inflow $4,643,806). (i) The reported net assets as per the statement of financial position at 30 June 2026 was $1,907,247, which was net of the upfro nt licensing fee of $4,832,762 received from Sandoz in a previous accounting period. The upfront licensing fee is non-refundable, and the Consolidated Entity will be recognising the amount as revenue in the statement of profit or loss and other comprehensive income when/as performance conditions are satisfied as per AASB 15 Revenue from Con tracts with Customers. Until such time, the upfront licensing fee is classified as a contract liability as per the requirements of AASB 15 Revenue from Contracts with Cus tomers. The upfront licensing fee received is not expected to result in transfer of an economic resources of the Consolidated Entit y and has therefore been added back in the analysis of the net assets above. Significant changes in the state of affairs On 29 April 2026, the Company advised that its listed options trading under ASX code AVEOA, exercisable at $0.012 each, would expire on 10 May 2026. A total of 2,167,130,063 AVEOA options were on issue on 29 April 2026. Of these, a total of: ● 156,984,578 AVEOA options were exercised, raising approximately $1.9 million in cash before costs; and ● The remaining 2,010,145,485 AVEOA options expired unexercised on 10 May 2026. On 1 May 2026, the Company announced the appointment of Ms. Naomi Lawrie as Company Secretary, effective 1 May 2026, to replace Ms. Melanie Leydin following team reassignments within Vistra (Australia) Pty Ltd, the Company’s secretarial and corporate compliance services provider. On 22 May 2026, the Consolidated Entity received $1.98 million under the Australian Government's Research and Development (R&D) Tax Incentive Scheme in respect of eligible R&D expenditure incurred during the year ended 31 December 2025. On 25 May 2026, the Company announced the resignation of Mr. Matthew McNamara as a Non-Executive Director. Following his cessation of office, 1,584,650 unlisted options lapsed in accordance with their terms and conditions. On 1 June 2026, the Company issued 7,923,243 unlisted options to an employee of the Company. The options have an exercise price of $0.0066 and expire on 27 November 2028. The options were issued pursuant to the terms of the Company's employee incentive arrangements. On 24 June 2026, the Company announced a positive outcome from the interim analysis of its Phase III clinical trial evaluating its TPM®-enhanced cannabidiol (CBD) capsule for insomnia. The independent Data Monitoring Board unanimously recommended that the trial continue to its planned enrolment of 519 participants, confirming that the pre-specified interim analysis criteria had been met. The outcome represents a significant milestone for the program, reducing development risk and supporting the Company's ongoing regulatory and commercialisation activities. During June 2026, the Company issued 33,277,616 fully paid ordinary shares following the exercise of employee and director options. There were no other significant changes in the state of affairs of the Consolidated Entity during the financial period.
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Avecho Biotechnology Limited Directors' report 30 June 2026 5 Matters subsequent to the end of the financial period No matter or circumstance has arisen since 30 June 2026 that has significantly affected, or may significantly affect the Consolidated Entity's operations, the results of those operations, or the Consolidated Entity's state of affairs in future financial years. Rounding of amounts Avecho Biotechnology Limited is a type of Company that is referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2026/183 and therefore the amounts contained in this report and in the financial statements have been rounded to the nearest dollar. 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. 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 ___________________________ Dr Gregory Collier Chairman 25 August 2026
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Grant Thornton Audit Pty Ltd Level 22 Tower 5 Collins Square 727 Collins Street Melbourne VIC 3008 GPO Box 4736 Melbourne VIC 3001 T +61 3 8320 2222 grantthornton.com.au ACN-130 913 594 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389. Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards Legislation. #21563185v1 Auditor’s Independence Declaration To the Directors of Avecho Biotechnology Limited In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of Avecho Biotechnology Limited for the half-year ended 30 June 2026. I declare that, to the best of my knowledge and belief, there have been: a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and b no contraventions of any applicable code of professional conduct in relation to the review. Grant Thornton Audit Pty Ltd Chartered Accountants J D Vasiliou Partner – Audit & Assurance Melbounre, 25 August 2026
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Avecho Biotechnology Limited Consolidated statement of profit or loss and other comprehensive income For the period ended 30 June 2026 Consolidated Note 30 June 2026 30 June 2025 $ $ The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 7 Revenue from contracts with customers 4 59,602 560,069 Cost of sales (15,523) (165,168) Gross profit 44,079 394,901 Research and development tax incentive and other income 5 1,375,397 792,575 Research and development expenses 6 (1,819,144) (2,096,814) Administration and corporate expenses 7 (1,474,789) (1,698,013) Finance costs (49,172) (68,609) Loss before income tax expense (1,923,629) (2,675,960) Income tax expense - - Loss after income tax expense for the period attributable to the owners of Avecho Biotechnology Limited (1,923,629) (2,675,960) Other comprehensive income for the period, net of tax - - Total comprehensive loss for the period attributable to the owners of Avecho Biotechnology Limited (1,923,629) (2,675,960) Cents Cents Basic loss per share 12 (0.05) (0.08) Diluted loss per share 12 (0.05) (0.08)
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Avecho Biotechnology Limited Consolidated statement of financial position As at 30 June 2026 Consolidated Note 30 June 2026 31 December 2025 $ $ The above consolidated statement of financial position should be read in conjunction with the accompanying notes 8 Assets Current assets Cash and cash equivalents 6,609,515 4,663,491 Trade and other receivables 1,459,037 2,204,549 Inventories 16,706 8,066 Other assets (prepaid assets) 74,580 180,522 Total current assets 8,159,838 7,056,628 Non-current assets Plant and equipment 8,975 20,746 Right-of-use assets 225,135 12,949 Other assets (term deposit) 15,730 15,730 Total non-current assets 249,840 49,425 Total assets 8,409,678 7,106,053 Liabilities Current liabilities Trade and other payables 931,688 198,289 Lease liabilities 80,279 14,473 Provisions 504,266 496,441 Total current liabilities 1,516,233 709,203 Non-current liabilities Contract liabilities 8 4,832,762 4,832,762 Lease liabilities 147,266 - Provisions 6,170 4,438 Total non-current liabilities 4,986,198 4,837,200 Total liabilities 6,502,431 5,546,403 Net assets 1,907,247 1,559,650 Equity Issued capital 9 249,171,740 246,901,334 Reserves 28,467,510 28,466,690 Accumulated losses (275,732,003) (273,808,374) Total equity 1,907,247 1,559,650
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Avecho Biotechnology Limited Consolidated statement of changes in equity For the period ended 30 June 2026 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes 9 Total equity Issued capital Reserves Accumulated losses Consolidated $ $ $ $ Balance at 1 January 2025 244,605,505 28,055,984 (269,391,751) 3,269,738 Loss after income tax expense for the period - - (2,675,960) (2,675,960) Other comprehensive income for the period, net of tax - - - - Total comprehensive loss for the period - - (2,675,960) (2,675,960) Transactions with owners in their capacity as owners: Share-based payments (note 13) - 231,382 - 231,382 Issue of share capital 25,000 (25,000) - - Balance at 30 June 2025 244,630,505 28,262,366 (272,067,711) 825,160 Total equity Issued capital Reserves Accumulated losses Consolidated $ $ $ $ Balance at 1 January 2026 246,901,334 28,466,690 (273,808,374) 1,559,650 Loss after income tax expense for the period - - (1,923,629) (1,923,629) Other comprehensive income for the period, net of tax - - - - Total comprehensive loss for the period - - (1,923,629) (1,923,629) Transactions with owners in their capacity as owners: Share-based payments (note 13) - 188,629 - 188,629 Exercise of options (note 9) 2,291,406 (187,809) - 2,103,597 Option exercise transaction costs (21,000) - - (21,000) Balance at 30 June 2026 249,171,740 28,467,510 (275,732,003) 1,907,247
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Avecho Biotechnology Limited Consolidated statement of cash flows For the period ended 30 June 2026 Consolidated Note 30 June 2026 30 June 2025 $ $ The above consolidated statement of cash flows should be read in conjunction with the accompanying notes 10 Cash flows from operating activities Receipts from customers (inclusive of GST) 207,392 1,295,073 Upfront licensing fee from Sandoz 8 - 4,832,762 Receipts from R&D tax incentive and Export Market Development Grants 1,979,976 1,695,102 Payments to suppliers and employees (inclusive of GST) (2,239,681) (3,182,826) Interest received 6,345 5,877 Finance costs paid (3,500) (2,182) Net cash (used in)/from operating activities (49,468) 4,643,806 Cash flows from investing activities Payments for property, plant and equipment (2,000) - Net cash used in investing activities (2,000) - Cash flows from financing activities Principal element of lease payments (40,210) (41,102) Proceeds from exercise of options 2,103,597 - Transaction costs related to exercise of options (21,000) - R&D incentive loan received 1,579,000 - R&D incentive loan repayment (including interest and fees) (1,623,895) (1,043,218) Net cash from/(used in) financing activities 1,997,492 (1,084,320) Net increase in cash and cash equivalents 1,946,024 3,559,486 Cash and cash equivalents at the beginning of the financial period 4,663,491 2,374,534 Cash and cash equivalents at the end of the financial period 6,609,515 5,934,020
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Avecho Biotechnology Limited Notes to the consolidated financial statements 30 June 2026 11 Note 1. General information The financial statements cover Avecho Biotechnology Limited as a consolidated entity consisting of Avecho Biotechnology Limited and the entities it controlled at the end of, or during, the half-year period to 30 June 2026 (the 'Consolidated Entity'). The financial statements are presented in Australian dollars, which is Avecho Biotechnology Limited's functional and presentation currency. Avecho Biotechnology Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Refer to the corporate directory for further information. A description of the nature of the Consolidated Entity'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 25 August 2026. Note 2. Material accounting policy information These general purpose financial statements for the interim half-year reporting period ended 30 June 2026 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 31 December 2025 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 accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated. Historical cost convention The financial statements have been prepared under the historical cost convention. Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Consolidated Entity's accounting policies. Going concern The financial statements have been prepared on the going concern basis, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. The Consolidated Entity made a net loss of $1,923,629 for the half-year ended 30 June 2026 (30 June 2025: $2,675,960 loss). The continuing viability of the Consolidated Entity and its ability to continue as a going concern is dependent upon the successful progression and completion of its Phase III clinical development program for its proprietary CBD TPM® soft-gel capsule for insomnia, together with the Consolidated Entity's ability to access additional sources of funding as required to meet its operational and development commitments within one year from the date of signing the financial statements. As a result of these matters there is a material uncertainty that may cast significant doubt upon the Consolidated Entity’s ability to continue as a going concern and therefore whether the Consolidated Entity will realise its assets and settle its liabilities in the ordinary course of business at the amounts recorded in the financial statements. Notwithstanding the above, the Directors determined that the use of the going concern basis of accounting is appropriate in preparing the financial statements. The assessment of the going concern assumption is based on the Consolidated Entity’s cash flow projections and application of a number of judgements and estimates. These includes the following features:
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Avecho Biotechnology Limited Notes to the consolidated financial statements 30 June 2026 Note 2. Material accounting policy information (continued) 12 ● The Consolidated Entity has prepared detailed cash flow forecasts and the Directors believe that they will have sufficient cash to fund the research and development and operations for the 12 months from signing the financial report; ● The Consolidated Entity had a working capital, being current assets less current liabilities, surplus as at 30 June 2026 of $6,643,605 (31 December 2025: $6,347,425), including cash and cash equivalents as at 30 June 2026 of $6,609,515 (31 December 2025: $4,663,491); ● The Consolidated Entity's cost base comprises a high proportion of discretionary expenditure. Accordingly, in the event of cash flow constraints, management has the ability to rapidly reduce costs to ensure the consolidated entity operates within its available funding; ● The Consolidated Entity has minimal contractual expenditure commitments, and the Board considers the present funds sufficient to maintain the working capital of the consolidated entity for a period of at least 12 months from the date of signing of this report; ● The Consolidated Entity has the ability to raise additional working capital through the issue of equity, as needed, and has a successful history in raising funds and has previously been well supported by its major shareholders; ● The Consolidated Entity have a successful history of: - Being eligible for Research and Development (R&D) tax incentives and various other government grants; - Licensing existing patented products; and - Selling TPM® and Vital ET® products to Ashland and Themis. The Directors will continue to monitor the ongoing funding requirements of the Consolidated Entity. As a consequence of the above, the directors believe that, notwithstanding the Consolidated Entity's operating results for the half-year, the Consolidated Entity will be able to continue as a going concern. Should the Consolidated Entity be unable to continue as a going concern, it may be required to realise its assets and extinguish its liabilities other than in the ordinary course of the business, and at amounts that differ from those stated in the consolidated financial statements. The consolidated financial statements does not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessarily incurred should the Consolidated Entity not continue as a going concern. New Accounting Standards and Interpretations adopted The Consolidated 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. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the Consolidated Entity. New Accounting Standards and Interpretations not yet mandatory or early adopted Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Group for the half-year reporting period ended 30 June 2026. The Group has not yet assessed the impact of these new or amended Accounting Standards and Interpretations. AASB18 Presentation and Disclosure in Financial Statements This standard is applicable to annual reporting periods beginning on or after 1 January 2027. The standard replaces AASB 101 Presentation of Financial Statements , with many of the original disclosure requirements retained and there will be no impact on the recognition and measurement of items in the financial statements. But the standard will affect presentation and disclosure in the financial statements, including introducing five categories in the statement of profit or loss and other comprehensive income: operating, investing, financing, income taxes and discontinued operations. The standard introduces two mandatory sub-totals in the statement: 'Operating profit' and 'Profit before financing and income taxes'. There are also new disclosure requirements for 'management-defined performance measures', such as earnings before interest, taxes, depreciation and amortisation ('EBITDA') or 'adjusted profit'. The standard provides enhanced guidance on grouping of information (aggregation and disaggregation), including whether to present this information in the primary financial statements or in the notes. The Group will adopt this standard from 1 January 2027. As at reporting date, the Group has not completed an assessment on the impact of the standard.
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Avecho Biotechnology Limited Notes to the consolidated financial statements 30 June 2026 Note 2. Material accounting policy information (continued) 13 AASB 2024-2 Amendments to Australian Accounting Standards - Classification and measurement of financial instruments Amends AASB 9 Financial instruments to introduce an option to derecognise financial liabilities settled through electronic transfer before the settlement date, clarifies how contractual cash flows should be assessed for financial assets with environmental, social and governance (ESG) and similar features, includes additional guidance in respect of non-recourse features and contractually linked instruments and amends specific disclosure requirements. The Group is currently evaluating the expected impact of these amendments on the consolidated financial statements. The amendments are applicable to annual reporting periods beginning on or after 1 January 2026. As at reporting date, the Group has not completed an assessment on the impact of the standard. Note 3. Operating segments Identification of reportable operating segments The Consolidated Entity is organised into two operating segments based on differences in products and services provided: Production Production segment manufactures and sells TPM® and Vital ET® for the use in drug delivery and cosmetic formulations. Human Health Human Health portfolio covers delivery of pharmaceutical products through gels, injectables and patches including conduct of research and development activities. Minimal activities are conducted under the Animal Health and Nutrition segments and therefore these not separately identified nor monitored. These operating segments are based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources. There is no aggregation of operating segments. The CODM reviews EBITDA (earnings before interest, tax, depreciation and amortisation). 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. Operating segment information Production Human Health Corporate Total Consolidated - 30 June 2026 $ $ $ $ Sales to external customers 59,602 - - 59,602 Cost of sales (15,523) - - (15,523) Research and development tax incentive and other income - 1,369,052 - 1,369,052 Research expenses - (1,494,448) - (1,494,448) Employee and directors benefits expenses (16,743) (324,696) (670,595) (1,012,034) Other operating expenses from continuing operations (82,246) - (699,510) (781,756) Interest income - - 6,345 6,345 Depreciation and amortisation - - (54,867) (54,867) Loss before income tax expense (54,910) (450,092) (1,418,627) (1,923,629) Income tax expense - Loss after income tax expense (1,923,629) Assets Segment assets 1,850,841 1,371,830 5,187,007 8,409,678 Total assets 8,409,678 Liabilities Segment liabilities 4,841,173 716,550 944,708 6,502,431 Total liabilities 6,502,431
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Avecho Biotechnology Limited Notes to the consolidated financial statements 30 June 2026 Note 3. Operating segments (continued) 14 Production Human Health Corporate Total Consolidated - 30 June 2025 $ $ $ $ Sales to external customers 560,069 - - 560,069 Cost of sales (165,168) - - (165,168) Research and development tax incentive and other income 38,913 747,785 - 786,698 Research expenses - (1,716,426) - (1,716,426) Employee and directors benefits expenses (284,071) (436,480) (384,718) (1,105,269) Other operating expenses from continuing operations (88,472) - (884,841) (973,313) Interest income - - 5,877 5,877 Depreciation and amortisation - - (68,428) (68,428) Profit/(loss) before income tax expense 61,271 (1,405,121) (1,332,110) (2,675,960) Income tax expense - Loss after income tax expense (2,675,960) Consolidated - 31 December 2025 Assets Segment assets 1,912,017 1,982,754 3,211,282 7,106,053 Total assets 7,106,053 Liabilities Segment liabilities (i) 57,502 4,964,201 524,700 5,546,403 Total liabilities 5,546,403 Understanding segment results Revenues from sales to external customers comprise the sale of TPM® and Vital ET® products on a wholesale basis, as well as royalties and licence income. Revenues of $59,602 were derived from two external customers (30 June 2025: $560,069). These revenues are attributed to the Production segment. (i) The reported liabilities include the upfront licensing fee of $4,832,762 received from Sandoz during the half-year ended 30 June 2025. The upfront licensing fee is non-refundable and will be recognised as revenue in the statement of profit or loss and other comprehensive income when, or as, the relevant performance obligations are satisfied in accordance with AASB 15 Revenue from Contracts with Customers. Until such time, the upfront licensing fee is classified as a contract liability as per the requirements of AASB 15 Revenue from Contracts with Customers The Consolidated Entity is domiciled in Australia. The amount of its revenue from external customers broken down by location of customers is shown below. Geographical information Sales, Licences and Royalties Geographical non-current assets 30 June 2026 30 June 2025 30 June 2026 31 December 2025 $ $ $ $ Australia - 117,807 249,840 49,425 Switzerland 16,602 442,262 - - Americas - - - - India 43,000 - - - France - - - - 59,602 560,069 249,840 49,425
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Avecho Biotechnology Limited Notes to the consolidated financial statements 30 June 2026 Note 3. Operating segments (continued) 15 The geographical non-current assets above are measured in the same way as the financial statements. These assets are allocated based on the operations of the segments and physical location of assets. Note 4. Revenue from contracts with customers Consolidated 30 June 2026 30 June 2025 $ $ Sale of goods and services transferred at a point in time 59,602 560,069 Note 5. Research and development tax incentive and other income Consolidated 30 June 2026 30 June 2025 $ $ Research and development tax incentive 1,369,052 747,785 Export Market Development Grants (EMDG) - 36,600 Other income - 2,313 Interest income 6,345 5,877 1,375,397 792,575 Note 6. Research and development expenses Consolidated 30 June 2026 30 June 2025 $ $ Consultancy and laboratory consumables 2,606 31,925 Clinical development expenses 1,491,842 1,684,501 Employment expenses associated with research and development 324,696 380,388 1,819,144 2,096,814 Note 7. Administration and corporate expenses Consolidated 30 June 2026 30 June 2025 $ $ Director fees 129,485 134,071 Share based payments expenses 188,629 231,382 Salaries and other employee expenses (non - R&D) 369,223 359,428 Insurance expenses 93,293 174,362 Shareholder and listing expenses 143,698 104,516 Patent portfolio expenses 33,670 65,776 Occupancy expenses 30,273 25,194 Professional and consultancy fees 164,131 158,705 Depreciation of right-of-use assets and plant and equipment 54,867 68,428 Other sundry expenses 47,989 50,568 Investor relations 71,511 24,234 Travel expenses 35,600 20,503 Foreign exchange loss 112,420 280,846 1,474,789 1,698,013
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Avecho Biotechnology Limited Notes to the consolidated financial statements 30 June 2026 16 Note 8. Contract liabilities Consolidated 30 June 2026 31 December 2025 $ $ Non-current liabilities Contract liabilities(i) 4,832,762 4,832,762 Reconciliation Reconciliation of the written down values at the beginning and end of the current and previous financial period are set out below: Opening balance 4,832,762 - Payments received in advance during the period - 4,832,762 Closing balance 4,832,762 4,832,762 (i) On 3 March 2025 Avecho announced it has signed an exclusive ten- year development and licensing agreement with Sandoz Group AG for the commercial rights to Avecho’s Phase III cannabidiol capsule for insomnia in Australia. Avecho retains the rights to commercialise the product in all other territories, with Sandoz granted a first right of refusal for these markets. In consideration of the rights granted, Sandoz paid an upfront licensing fee of US$3M (approx. A$4.8M), which has been recognised as contract liability in these financial statements. Avecho will recognise the revenue on satisfaction of the entity’s performance obligations under the development and licensing agreement. Unsatisfied performance obligations The aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied at the end of the reporting period was $4,832,762 as at 30 June 2026 ($4,832,762 as at 31 December 2025) and is expected to be recognised as revenue in future periods as follows: Consolidated 30 June 2026 31 December 2025 $ $ Within 1 year - - More than 1 year 4,832,762 4,832,762 4,832,762 4,832,762 Note 9. Issued capital Consolidated 30 June 2026 31 December 2025 30 June 2026 31 December 2025 Shares Shares $ $ Ordinary shares - fully paid 3,863,725,873 3,673,463,679 249,171,740 246,901,334
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Avecho Biotechnology Limited Notes to the consolidated financial statements 30 June 2026 Note 9. Issued capital (continued) 17 Movements in ordinary share capital Details Date Shares Issue price $ Opening balance 1 January 2026 3,673,463,679 246,901,334 Share issued on exercise of listed options 4 May 2026 1,807,146 $0.012 21,686 Share issued on exercise of listed options 6 May 2026 5,193,571 $0.012 62,323 Share issued on exercise of listed options 8 May 2026 3,316,013 $0.012 39,792 Share issued on exercise of listed options 12 May 2026 146,667,848 $0.012 1,760,164 Shares issued on exercise of employee options 24 June 2026 3,961,621 $0.006 26,147 Shares issued on exercise of employee & director options 26 June 2026 21,392,753 $0.006 141,192 Shares issued on exercise of employee options 29 June 2026 7,923,242 $0.006 52,293 Transfer from options reserve upon exercise of options 187,809 Option exercise transaction costs (21,000) Closing balance 30 June 2026 3,863,725,873 249,171,740 On 29 April 2026, the Company advised that its listed options trading under ASX code AVEOA, exercisable at $0.012 each, would expire on 10 May 2026. A total of 2,167,130,063 AVEOA options were on issue on 29 April 2026. Of these, a total of: ● 156,984,578 AVEOA options were exercised, raising approximately $1.9 million in cash before costs; and ● The remaining 2,010,145,485 AVEOA options expired unexercised on 10 May 2026 Note 10. Contingent asset and liabilities The Consolidated Entity provided a bank guarantee, secured by a NAB term deposit of $15,730 (31 December 2025: $15,730) as security for the corporate credit card facility and lease at its principal place of business. The Directors are not aware of any other material contingent assets or contingent liabilities as at 30 June 2026 (31 December 2025: Nil). Note 11. Events after the reporting period No matter or circumstance has arisen since 30 June 2026 that has significantly affected, or may significantly affect the Consolidated Entity's operations, the results of those operations, or the Consolidated Entity's state of affairs in future financial years. Note 12. Loss per share Consolidated 30 June 2026 30 June 2025 $ $ Loss after income tax attributable to the owners of Avecho Biotechnology Limited (1,923,629) (2,675,960) Number Number Weighted average number of ordinary shares used in calculating basic loss per share 3,717,986,625 3,171,069,573 Adjustments for calculation of diluted earnings per share: Weighted average number of ordinary shares used in calculating diluted loss per share 3,717,986,625 3,171,069,573
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Avecho Biotechnology Limited Notes to the consolidated financial statements 30 June 2026 Note 12. Loss per share (continued) 18 Cents Cents Basic loss per share (0.05) (0.08) Diluted loss per share (0.05) (0.08) There are share options, which are excluded from the calculation of diluted earnings per share. These equity instruments are considered to be anti-dilutive, as their inclusion would not decrease earnings per share nor increase the loss per share, from continuing operations. Note 13. Share-based payments The Consolidated Entity provides benefits to service providers in the form of share-based payments. Employees render services in exchange for rights over shares (equity-settled transactions). There is currently one scheme in place to provide these benefits to employees, being the Equity Incentive Plan (EIP). All options granted to key management personnel have been issued in accordance with the provisions of the Equity Incentive Plan (EIP). Options granted carry no dividend or voting rights and contain a service condition that the employee/director remain an employee/director at the prescribed vesting date. When a participant in the EIP ceases employment prior to the vesting of their options, the options are forfeited unless cessation of employment is due to retirement or death or otherwise provided by the Board of directors. Set out below are summaries of options granted under the plan: 30 June 2026 Grant date Expiry date Exercise price Balance at the start of the period Granted * Exercised Lapsed ** Balance at the end of the period 26/04/2024 26/10/2027 $0.006 3,993,644 - - - 3,993,644 27/05/2025 27/11/2028 $0.007 142,618,373 - (29,315,995) (1,584,650) 111,717,728 14/05/2026 27/11/2028 $0.007 - 7,923,243 (3,961,621) - 3,961,622 146,612,017 7,923,243 (33,277,616) (1,584,650) 119,672,994 Weighted average exercise price $0.007 $0.007 $0.007 $0.007 $0.007 31 December 2025 Grant date Expiry date Exercise price Balance at the start of the period Granted Exercised Expired/forfeit ed/other Balance at the end of the period 26/04/2024 26/10/2027 $0.006 3,993,644 - - - 3,993,644 27/05/2025 27/11/2028 $0.007 - 142,618,373 - - 142,618,373 3,993,644 142,618,373 - - 146,612,017 Weighted average exercise price $0.006 $0.007 $0.000 $0.000 $0.007 * On 1 June 2026, the Company issued 7,923,243 unlisted options to an employee of the Company. The options have an exercise price of $0.0066 and expire on 27 November 2028, subject to vesting conditions. ** On 25 May 2026, the Company announced that Mr. Matthew McNamara had resigned from his position as a Non-Executive Director. Following his cessation of office during the period, 1,584,650 unlisted options lapsed as the service conditions weren't met. The Consolidated Entity valued the options using a Black ‑Scholes option pricing model, with the following inputs used to determine the fair value for options granted during the current period:
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Avecho Biotechnology Limited Notes to the consolidated financial statements 30 June 2026 Note 13. Share-based payments (continued) 19 Grant date Expiry date Share price at grant date Exercise price Expected volatility Dividend yield Risk-free interest rate Fair value per option at grant date 14/05/2026 27/11/2028 $0.014 $0.007 142.67% - 4.678% $0.011 Reconciliation of share based payments expense recorded in the statement of profit and loss relating to each class of share based payment: Consolidated 30 June 2026 30 June 2025 $ $ Issue of shares as part of short-term incentive - 25,000 Unlisted options to Executives and employees 175,158 181,000 Unlisted options to Directors 13,471 25,382 188,629 231,382
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Avecho Biotechnology Limited Directors' declaration 30 June 2026 20 In the directors' opinion: ● the attached financial statements and notes comply with the Corporations Act 2001, Australian Accounting Standard AASB 134 'Interim Financial 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 Consolidated Entity's financial position as at 30 June 2026 and of its performance for the half-year financial period ended on that date; and ● there are reasonable grounds to believe that the Consolidated Entity 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 ___________________________ Dr Gregory Collier Chairman 25 August 2026
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Grant Thornton Audit Pty Ltd Level 22 Tower 5 Collins Square 727 Collins Street Melbourne VIC 3008 GPO Box 4736 Melbourne VIC 3001 T +61 3 8320 2222 grantthornton.com.au ACN-130 913 594 Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389. Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Limited is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 ACN 127 556 389 and its Australian subsidiaries and related entities. Liability limited by a scheme approved under Professional Standards Legislation. #21562987v1 Independent Auditor’s Review Report To the Members of Avecho Biotechnology Limited Report on the half-year financial report Material uncertainty related to going concern We draw attention to Note 2 in the financial report, which indicates that the Group incurred a net loss of $1,923,629 during the half-year ended 30 June 2026. As stated in Note 2, these events or conditions, along with other matters as set forth in Note 2, indicate that a material uncertainty exists that may cast significant doubt on the Group’s ability to continue as a going concern. Our conclusion is not modified in respect of this matter. Conclusion We have reviewed the accompanying half-year financial report of Avecho Biotechnology Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 30 June 2026, and the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, including material accounting policy information, other selected explanatory notes, and the directors’ declaration. Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the accompanying half-year financial report of Avecho Biotechnology Limited does not comply with the Corporations Act 2001 including: a giving a true and fair view of the Group’s financial position as at 30 June 2026 and of its performance for the half-year ended on that date; and b complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. Basis for Conclusion We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity. Our responsibilities are further described in the Auditor’s Responsibilities for the Review of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.
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Grant Thornton Audit Pty Ltd 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 gives a true and fair view and is free from material misstatement, whether due to fraud or error. Auditor’s responsibility for the review of the financial report 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 half year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 30 June 2026 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. 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. Grant Thornton Audit Pty Ltd Chartered Accountants J D Vasiliou Partner – Audit & Assurance Melbourne, 25 August 2026