Final Results

23 March 2016

CloudTag Inc.

('CloudTag', 'the Company' or 'the Group')

Final Results for the year ended 30 September 2015

CloudTag Inc (AIM:CTAG.L), the company which develops personal performance monitoring for the consumer health, wellbeing and fitness markets, announces its final results for the year ended 30 September 2015.

Financial and Operational Highlights

· Surpassed CEO Amit Ben Haim's enhanced strategy for commercialisation and growth

· Completed integrated product design, comprising all hardware, software, smart device apps, testing and tooling with manufacturers, ahead of schedule

· Core development and operational skills brought in-house and multiple patent applications filed to enhance the IP estate

· Appointed John Wakely as Group Finance Director contributing experience in financial structuring and tax planning

· Appointed Alon Moss as Group Chief Technology Officer (non Board appointment)

· Investment in product development increased to £698,000 (2014: £629,000)

· Prudent management of costs during the period

· Other administrative expenses maintained at £846,000 (2014: £830,000) despite increased recruitment, business development activities and preparation for the launch of the product at the Consumer Electronics Show 2016 in Las Vegas

· Loss before tax of £1,989,000 (2014: £1,290,000)

Post Period End

· Launched first product set to schedule, CloudTag Track™ and the beatSMART™ Clip, at the Consumer Electronics show, Las Vegas, USA

· Signed significant distribution agreement with Second Chance Limited potentially worth at least $5.2 million

· Appointed Dr Gerald Bereika as Non-Executive Director, adding expertise to the Board in healthcare services and the psychology of behavioural change

· Appointed Jessie Pavelka, a well-known global fitness and weight loss expert as Global Brand Ambassador

· Successful fundraisings of £938,400 in equity and £1.25 million debt facility

Amit Ben-Haim, CEO of CloudTag, said: "I am extremely proud of the progress we have made throughout the financial year 2015 and recognise the immense effort it has taken from our dedicated employees across the Group in achieving so much in a comparatively short time.

"CloudTag has developed ahead of my planned strategy, and recently launched what we believe will be a leading product in our market, with capabilities which simply cannot be found anywhere else. It is now up to us to ensure that this product is adopted on as wide a scale as possible, to grow revenues and generate value for our loyal shareholders."

CHAIRMAN'S STATEMENT

The year to 30 September 2015 has been an exciting and transformational period in CloudTag's history. The Group has made significant progress by adhering to the enhanced strategy as set out by our Chief Executive, Amit Ben-Haim, since his appointment as Chief Executive of CloudTag in February 2015. Amit not only has a proven background as a successful and inventive entrepreneur, but also has crucial knowledge and experience in science, clinical cardiology and engineering. This has allowed him not only to devise an ambitious business strategy, but also to challenge and drive CloudTag's technical teams across the Group to deliver his vision for the product set.

Amit's impact and the implementation of his approach has yielded a number of key achievements during the period and beyond, culminating in CloudTag launching its first commercial product to market, the CloudTag Track™, at the Consumer Electronics Show (CES), Las Vegas, in January 2016. We believe that CloudTag is now in a strong position to build on these foundations as we work to capitalise on the opportunities afforded to us by our unique and potentially disruptive technology. CloudTag has come a very long way and the Group is now almost unrecognisable from where we were 12-18 months ago.

When I reported to shareholders a year ago, I anticipated that Amit would oversee the finalisation of our wearable technology, prepare our hardware for mass production and secure strategic technological and commercial partnerships in our target markets. I am very pleased to report that Amit, supported by the dedicated and talented employees across the Group, has surpassed against these ambitious goals in a period of just nine months, and set CloudTag on a path to sustainable future success in the growing health, wellbeing and fitness B2B2C and B2B markets.

As the wearables market becomes flooded with broadly similar products attempting to appeal to all consumers, success will depend on product differentiation and customer satisfaction. CloudTag is the first wearable device to focus its offering clearly on the weight-loss market, arguably the largest niche market within wearables. It is also the first time consumers have been offered access to a wearable which allows them to set a weight loss goal and target date with the whole system then building a personalised plan to achieve their goals, during which the "machine learning" aspects built into the system finds out more about the user and makes constant adjustments to help keep them on track.

The heart of our product

Our technology's heritage in medical-grade design gives our product range levels of accuracy which the Directors believe will be the highest in the wearable devices market, a major competitive advantage in a sector in which the accuracy, and consequently, efficacy of some of our competitors' offerings have recently been called into question.

CloudTag's offering is demonstrably different from our competitors: the capabilities of our hardware, coupled with our intuitive and effective software packages, allows us to provide convenient, tailored fitness programmes for our end customers, with the added comfort that their bio-telemetry is being measured and reported to the highest possible standards and stored securely in the Company's Cloud platform.

For the last 12 months the Company has focused on bringing the development of its proprietary intellectual property in-house by building an experienced and well qualified team of engineers and technical staff. This proprietary IP is protected by three patents pending, along with design patent (USA) and design registration (EU), which incorporate the unique contactless sensors and the innovative design of the product's chest attachment.

A new focus

Our technology platform is transferrable and has a great many different potential applications, but Amit's business model is now focused on delivery of a world-class product with clearly defined, achievable routes to market. We will, of course, continue to examine further applications and markets for our proprietary technologies, however any pursuit of these additional opportunities will utilise separate resources and structures so as not to divert our attention from the key Group objectives.

Our core focus on consumer markets is via a distributor model initially in the UK, Germany and the rest of Europe (with other EU territories to follow), but establishing a presence in the massive United States market will also be a key focus for us in the near future. Meanwhile, our sales to B2B markets are initially focused on health insurers, mobile telecommunications and corporate wellness programmes. Additional B2B sales methodologies for generating large volume orders are also being investigated by the business development team.

Financial performance

In the year to 30 September 2015, the Group recorded a loss before tax of £1,989,000 (30 September 2014: £1,290,000), and a loss after tax of £1,864,000 (30 September 2014: £1,035,000). This includes non-recurring costs associated with product development. Share based payments (a non-cash item) amounted to a charge of £430,000, compared with a gain of £169,000 in the previous year. The gain in the year to 30 September 2014 of £169,000 related to the reversal of the charge made in the previous year in respect of certain options where it was concluded that it was unlikely that the options would vest.

An important feature of this reporting period has been that development costs increased from £629,000 to £698,000, reflecting our commitment to launching our first product into the market post the period end. Administrative expenses marginally increased, up from £830,000 to £846,000 which included the increased costs of recruitment, business development activities and preparation for the launch of the product at CES 2016. This movement in development costs is indicative of the ongoing strategy and focus which Amit has put in place.

The Company has also benefitted from Amit's fundraising activities during the period and post period end. Together with our convertible debt facility the Board is now confident that it has sufficient funding in place to achieve our immediate commercialisation goals, however we will continue to examine options for future funding where it will aid in and accelerate our development.

Dividend

The Directors do not recommend the payment of a dividend at this stage in the Group's development but will review this position as we continue to grow. At this point in the Company's development, the Board will look to invest capital in areas designed to achieve our plan for growth, although clearly this matter is kept under review. It is the Board's intention to operate a progressive dividend policy as and when it is appropriate and sensible for the Group to do so.

Outlook

We believe CloudTag is now well advanced in developing a market leading proprietary technology together with a complete, well-considered product offering and management expertise to bring our innovative and unique products to market. We believe we have made excellent progress in the period under review and I would like to take this opportunity to thank Amit and our dedicated team across the Group for their tireless work in delivering these achievements.

 The business now has solid financial foundations and we have been successful to date in raising the funding needed allowing us to execute our strategy for growth. More funding may be required before breakeven but we hope that the achievement of our key milestones should facilitate this.

All our employees are aligned and committed to continuing this momentum in future reporting periods and we look forward to delivering further value for our shareholders and customers with enthusiasm and confidence.

Anthony Reeves

Chairman

22 March 2016

Chief Executive's Review

Introduction

When I was appointed as Chief Executive of CloudTag in February 2015, I was initially very impressed to find a highly accurate sensing technology platform with undoubted potential to make a large impact in a number of different markets. I quickly set about identifying the markets and applications most likely to bring successful commercialisation and sustainable revenues for the Group and I was tasked with developing a viable strategy to exploit these opportunities.

In order to prepare our technology for market, the hardware needed to be packaged with the correct software to design a complete and viable system. I then set clear objectives for the product's design. It had to be the most accurate device, include associated smart device apps and Cloud storage elements for the user and be embedded with cutting-edge technologies that capitalise on the power of 'machine learning'. Our product also had to be elegantly designed, simple to use and available at a competitive price point, making it as attractive as possible to a mass market. During the period excellent progress was made in assembling all of these component factors. As an important part of the process, the Company has also significantly bolstered its intellectual property and brought all core skillsets in-house.

In April 2015, I set for the Company a very ambitious goal of creating our first commercial product by 6 January 2016, in time for launch at the Consumer Electronics Show ("CES") in Las Vegas. Our teams rose to my challenge and worked tirelessly throughout the year to make sure that this target was met. The feedback we received from the show was extraordinarily encouraging - a great reward for the significant effort and dedication we showed during the development phase and a strong validation of the refined strategy for the Company's first product.

Quickly following CES on the 25th January 2016, I secured the first commercial contract for the Company with an EMEA distribution deal which will potentially generate sales of $5.2 million. The distributor, Second Chance Limited, has a network of over 7,500 stores with a focus on the UK and the core European countries of Germany, France, Spain and Italy.

The contract demonstrates an immediate appetite for our unique and well-positioned product and we continue to enjoy further, growing interest. This was a significant milestone for the Company and one which further strengthens our position as we come to produce the product in significant volumes later this year.

These achievements are however, just the beginning and everyone at CloudTag knows that we must maintain this level of commitment, to drive our business forward and get our technology into the hands of the consumers and businesses that need it.

I am pleased to report that following all our hard work, we are well on our way to executing this refined strategy and can now go into that strategy in more depth and operational detail.

Strategic overview

Product Development and Manufacturing

The Company has completed the development of the product achieving design finalisations for the device, the unique attachment accessories and the electronics. In parallel with the hardware development, the software, including the new smart device app, cloud infrastructure and the algorithms to power the unique dynamically changing exercise programmes were completed to schedule. Working devices with the embedded algorithms measuring the full electrocardiogram (ECG), calculating energy expenditure and automatically identifying the various activity types, have all been integrated with the mobile/tablet application and the Cloud architecture. We are now looking to optimise further the firmware to extend battery life (currently seven days on one charge). All first level production tooling is in place and all production files are with our manufacturer in the Far East. CloudTag and its manufacturing partners are therefore primed to meet increasing demand. It is the Company's stated goal to achieve the best quality possible for its products whilst having a clear view on keeping the bill of materials (unit cost) as low as possible and ensuring the security of our algorithms and software.

Product Testing and Validation

Accuracy is the key differentiator for CloudTag and we are very pleased with the results generated from the proprietary algorithms. We have been working with Essex University's Sport and Performance Unit to conduct third party independent validation tests of the wearable device and algorithms against the industry gold standard ECG and calorimetry equipment. These independent user tests have shown extremely positive results with energy expenditure (calorie burn) tracking between 91% and 99% from the gold standard at rest, running and walking activities (using CPX measured indirect calorimetry) and Heart Rate is tracking between 98% and 99% for 60 second intervals against a clinical ECG machine during rest, running and walking activities. Further user tests are being conducted with Essex University to test the full system architecture and the end user experience.

Intellectual property and our design partners

The Company is proceeding with patent applications which were submitted toward the end of the last calendar year, specifically concerning the unique, in-house-designed sensors and signal processing algorithm for both the hardware and software of the sensors as well as the innovative sensor's design and mechanical body attachment. Further registered design patent applications were submitted in January 2016. This is in addition to the exclusive worldwide license to CloudTag's algorithms developed by our design shareholder, Imec and the IP around source code to the mobile application, Cloud analytics and user dynamic feedback loop.

The IP portfolio and exclusive agreements with shareholders that we have in place are not the only barriers to entry for the competition. CloudTag also possesses a wealth of engineering know-how developed within the Company over the last nine months.

A further barrier to entry is CloudTag's development of a complete system based on psychology and sociology, which empowers the user to reach their fitness goals. We refer to this approach as 'the user journey' and it uniquely motivates each user, but in an unobtrusive and minimally invasive manner.

Due to these factors, the Directors are satisfied that CloudTag's unique position in the market can be maintained as we grow.

One product set, multiple markets - CloudTag Track™ and the beatSMART™ Clip

After nine months of preparation, we introduced our first complete commercial product to the ambitious schedule I set out in April 2015. The CloudTag Track™ and its associated smart device app range, provide innovative, personalised, weight-loss and fitness programmes based on the latest clinical-grade, wearable fitness monitoring technology. This is the first wearable that allows the user to select a weight loss goal and target date and builds a personalised plan to reach the objective. Its continual assessment, together with personalised nutrition and fitness progress updates with motivation and guidance via the app, empowers users to stay on track to achieve their individual chosen goals.

Our device has the unique selling points:

· Accuracy - CloudTag Track™ uses state-of-the-art sensing and signal processing technology to generate clinical-grade electrocardiograms (ECGs) which provides a significantly more accurate assessment than any other fitness monitoring technologies currently available in the world.

· Personalisation & Goal Driven - Our system uses intelligent machine learning techniques to personalise the algorithms to the user. The system then dynamically adjusts the user journey delivered through the app to deliver results by a set target date and chosen measurement (weight in kg or lbs) by the user.

· Heritage - CloudTag's algorithms are founded on ten years of medical research and have been through rigorous assurance processes. The Directors believe that this medical heritage gives CloudTag the position as the most accurate device on the market, delivering 'close-to-clinical' data as standard.

· Dual Mode - The CloudTag Track™ is usually worn on the wrist, but is moved closer to the user's heart in the beatSMART™ Clip during exercise to boost sensitivity and accuracy.

· Smart Charging - The beatSMART™ Clip is a SMART charger so the CloudTag Track™ charges when placed in the clip during exercise.

Data Science and Privacy

In the development of our Cloud platform I have implemented a clear strategy to ensure that user data security and privacy is of paramount importance and in addition to this, any insights generated from the data science activities must only be used to deliver further value to our end users. We are also actively seeking strategic partnerships to integrate with our Cloud offering to allow the exchange of data (only once we have received the user's expressed permission) where we see value being added to the end user, be it in quality of life or financial incentives derived from their data - to give just one example, the sharing of private consumer data with their medical insurance provider, could help reduce their premiums.

Market opportunity

The current wearable fitness tracker market is substantial and continues to grow:

· 2014 saw sales of 25.3 million wearable devices, while in 2015 these increased to 72.5 million*

· Industry analysts project this to continue, reaching 228.3 million devices sold in the year 2020*

· Fitness trackers still have the lion's share of the wearables market, accounting for 51 million (approximately 70 percent) of 2015's device sales*

· 71 percent of US adults said they would use a health tracking device if it was clinically accurate, according to a survey of 1,011 US adults between December 10 and 13th last year**

· There was a 118% rise in sales of wearable tech (3 million devices in UK) during 2015

· By 2019 the global wearables market is expected to be worth $25 billion***

· Market landscape shows a reduction in sales for the top two brands, still their year on year growth for the last five years was 77%; whereas newcomers managed to grow their business by as much as 124% year on year.

* Source: Research and Markets Ltd. - Global Wearable Electronics Market Analysis - Forecast (2014-2020)

** Source: Mobile Health News - Survey (2nd February 2016)

***Source: CSS Insight - Global Forecast for Wearable Devices 2016

Target markets

Our focus is now firmly on two main target markets where we believe our products can reach wide-scale adoption most quickly.

Our strategy and distributor model is focused on the following target demographics:

· Consumer impulse purchase price bracket - targeted RRP of $90-$100

· Initial product targeted to body mass weight loss which is by far the largest market segment within the health and wellness segment.

Routes to market

In order to minimise the capital expenditure requirement to CloudTag and associated risk to the Group, we have chosen to partner with established distribution organisations and retailers in key geographies.

Our 'perfect-fit' distribution deal is exemplified in the agreement signed in January 2016 with Second Chance Ltd, one of Europe's leading sporting goods retailers, with 25 years' experience in the market and a network of retailers comprising some 7,500 stores. A further notable feature of this agreement was that it contained a minimum

requirement in terms of the number of units Second Chance is to purchase from CloudTag during the calendar year 2016, amounting to $5.2 million if the contract is fully satisfied. We will continue to explore further beneficial distribution relationships of this kind both within the EU and our key market, the US.

B2B

We have identified the following three key markets within our B2B segment. Below is a matrix outlining these and the benefits we believe we can bring to each market in more detail:

Whilst we are pleased to report early traction has been achieved in European markets, we believe the United States will form the largest and most important market to CloudTag going forward.

In the coming months we will seek to establish a growing presence in the US and identify and sign agreements with the most reputable distribution partners across this important geography.

Review of the period

Operational

The focus of this financial year was on assembling the correct component factors involved in the development and subsequent launch of our first product, identifying clearly defined markets to target and addressing viable routes to penetrate each market. Many of the period's developmental achievements have already been discussed earlier in this report, but there were also some additional noteworthy achievements during the year.

Strategic partnership with Adience

In June 2015, we signed a license with Adience, a mobile analytics and commerce ecosystem with a user base of more than 80 million mobile consumers and growing rapidly month on month. Under the revenue share license, CloudTag has access to the Adience technology, leveraging modern machine learning and deep learning algorithms, which, through analysing users on more than 1,000 different data points, are able to create rich and precise user profiles to identify high value and engaged user demographics. CloudTag has access to Adience's 80 million user base for direct user acquisition of these high value demographics. This technology has been integrated into CloudTag's mobile/tablet apps, currently available on both iOS and Android platforms.

Board and senior management

Key appointments were made during the period to complement the experience and expertise already within CloudTag and each new member of our team is already delivering material improvements in their respective areas of the business.

Appointed Group Finance Director

In July 2015 Mr John Wakely was appointed to the Board as Finance Director, bringing with him a wealth of experience in financial structuring and tax planning with large international companies. John served from January 2002 to December 2013 as Executive Vice President of Stolt-Nielsen Limited (NO:SNI), a world leading integrated transportation, storage and distribution service provider for chemicals and other bulk liquid products with a market capitalisation of US$1.1 billion. John was responsible for tax planning, internal audit and legal structure. Previously John was employed by BP International in various accounting roles and is a member of the Chartered Institute of Management Accountants.

Appointed Group Chief Technology Officer (non Board appointment)

In April 2015 we welcomed Alon Moss to the Group as Chief Technology Officer (CTO). Alon is an accomplished and visionary CTO with extensive global experience. He has led business development, product development and day-to-day operations at several electronics and software providers, specialising in communications, large-scale sensor networks, Internet of things (IoT) and special-purpose sensors and technology for defence, transport and the oil & gas industries. Alon is an expert software and electronics engineer with over 20 years of combined hands-on and management experience. He is a specialist in the introduction of innovative products from concept to market and products under his leadership have generated revenues of more than US$200 million. Alon has built global partnerships and global distribution networks, leading international multi-site teams of up to 100 people. He has created successful new products for globally leading companies such as Comverse, Inc. (NASDAQ:CNSI), Mer Group (TASE: CMER) and Orpak Systems Limited. His academic qualifications include a BSc in Computer Engineering - a combined degree in Computer Science and Electronics Engineering.

Enhanced In-House Technical Expertise 

The Company has also grown its technical capabilities by opening a new CloudTag office in the greater London area in Q2 2015. We have subsequently built a team of more than 12 full time engineers, five contractors as well as more than 30 directly involved team members of 3rd party shareholder partners. The in-house skill sets now include: embedded systems architecture, sensor development, embedded software, mobile and cloud software, electrode, mechanical engineering, mechatronics, sensor systems integration, garment mechanical engineering and synthetic and bio-inspired adhesion engineers.

We are pleased to report that all core skills needed for the success of our product are now in-house.

Going concern

At 30 September 2015 the Group held cash balances of £16,000. Since the year end the Group has signed a draw down facility for convertible loan notes for £1,250,000, (including £300,000 which relates to the conversion of the loan repayable on demand outstanding at 30 September 2015), and raised £983,400 from the issue of shares.

The Directors have prepared a detailed cash flow forecast for the period ending 31 March 2017. The forecasts include only device sales committed under the distribution agreement with Second Chance Limited announced on 25th January and a conservative level of app sales and other income. The forecast shows that the Company will have sufficient facilities to enable it to trade in this scenario.

The Directors are confident that they will achieve these conservative sales targets, but as they are not guaranteed, have also prepared a further forecast showing reduced revenue and a reduction in costs, and a forecast with no revenue which identifies unavoidable third party running costs of the Group only.

All of the forecasts demonstrate that the Group will have sufficient cash resources (with the new facilities referred to above) available to allow it to continue in business for a period of at least twelve months from the date of approval of these financial statements. Accordingly, the accounts have been prepared on a going concern basis.

Post Period End

We were pleased to see the momentum generated during the reporting period continue beyond the financial year end, as we announced further significant progress:

Exclusive agreement with Imec

In October 2015, we were pleased to announce that we had entered into a licencing agreement with our shareholder Imec International in which Imec granted the Company an exclusive worldwide commercial licence to the unique algorithms developed for CloudTag and used in the Company's hardware devices. This was strategically very important in safeguarding the uniqueness of our technology as we look toward growing sales globally.

Strengthened Relationship with Preciousbluedot

Preciousbluedot our shareholder is the developer of CloudTag's unique user interfaces and mobiles apps and have been a long-standing strategic partner for CloudTag. The relationship was further strengthened as Preciousbluedot have agreed to settle historical fees through the acceptance of Warrants in the company.

Appointment of Non-Executive Director

In December 2015, CloudTag appointed Dr Gerald Bereika to the Board as a non-executive director. Dr Bereika has more than 35 years' experience in the planning, delivery and senior management of social and health care services in both the USA and the UK. In the USA, he served as Vice president for The Mentor Group, a leading national health and social care company. Dr Bereika holds a Ph.D. in Clinical Psychology and prior to his appointment to the board, has been instrumental in the development and integration of the user journey with CloudTag's development team.

Dr Bereika's clinical experience of behavioural change - and the psychology behind change - has been hugely beneficial in creating a personalised user journey that supports transformation and long-term success.

Appointment of Global Brand Ambassador

Also in December 2015, we were pleased to announce that Jessie Pavelka (www.jessiepavelka.com) was appointed as the global brand ambassador for CloudTag. Jessie is one of the most well-known faces in training and weight loss in both the USA and UK. He was a featured trainer on one of the most watched weight loss and fitness TV programmes in the USA: 'The Biggest Loser', with viewing figures ranging from 5.5 to 10.5 million while in the UK he presented the Sky TV documentaries 'Obese: A Year to Save my Life' and 'Fat: The Fight of my Life' and led the ITV Good Morning Britain campaign 'Sugar Free GMB'. He has built a Facebook following of more than 500,000 and Twitter following of more than 90,000 as his global profile continues to grow. Jessie is also an ambassador for Cancer Research's 2015 Race for Life, a new UK National Schools programme 'The Sports Challenge' and he also acts as Patron for obesity charity HOOP (UK). Jessie was present throughout the CloudTag Track™ product launch at CES in January 2016 and the Company also plans to release a CloudTag app featuring his specific programmes. In keeping with our strategy to align all partners with CloudTag, the agreement is focussed heavily on remuneration through sales delivered by Jessie and a modest monthly payment.

First Product Launch

On 6 January 2016, as planned, the Company was proud to launch its first product at the Consumer Electronics Show (CES) in Las Vegas. The product was exceptionally well-received at the CES, many discussions are ongoing with potential partners and customers and our first significant distribution deal was subsequently signed.

During and post launch the Company enjoyed very favourable press coverage, which clearly differentiated our product from the crowd.

In the second part of January 2016 CloudTag took part in the ISPO Exhibition in Munich, the world's largest trade fair for sporting goods and sportswear. We displayed our product and it was very well received, generating four days of back-to-back meetings with some of the best-known and largest department stores, retail chains and online retailers across Europe, all of whom are interested in stocking CloudTag's products during 2016.

Distribution agreement signed

Following the great reception we enjoyed at the CES, in January this year we were delighted to announce that CloudTag had signed a distribution agreement with Second Chance Limited for a minimum of US$5.2 million of device sales for the CloudTag Track™ and beatSmart Clip. Under the terms of the agreement, Second Chance has agreed to purchase a minimum number of units of the Company's product at a fixed price by 31 December 2016, equivalent to US$5.2 million revenue in 2016. These units will be distributed to Second Chance's network of retailers who have over 7,500 stores, with an emphasis on UK and further sales in mainland Europe. Second Chance has obligations to place minimum orders during each quarter in 2016. CloudTag has agreed to grant exclusivity to Second Chance over certain retailers and territories in the EMEA region, subject to Second Chance meeting these required minimum orders.

Second Chance is one of Europe's leading sporting goods distributors with over 25 years' experience, specialising in the distribution of sports related technology and accessories to the Europe, the Middle East and Africa (EMEA) in addition to providing sales acceleration, brand management, marketing and PR to support new products and drive product awareness.

We were delighted to see such interest and traction for our product so quickly after launch and we believe this demonstrates the quality and marketability of our offering.

Summary 

I am extremely proud of the progress we have made throughout the financial year 2015 and recognise the immense effort it has taken from our dedicated employees across the Group in achieving so much in a comparatively short time.

We have only just begun to seize the opportunities which lie ahead for our unique technology and we are wholly committed to maintaining this energy and momentum as we continue to grow.

CloudTag has developed soundly, and recently launched what we believe will be the leading product in our market, with capabilities which simply cannot be found anywhere else. It is now up to us to ensure that this product is adopted on as wide a scale as possible, to grow revenues and generate value for our loyal shareholders.

Target markets have been clearly defined and focused upon, ambitious but achievable strategies are in place to vigorously pursue those target markets and the Company has the financial foundations in place to achieve its goals. Our enhanced strategy is already beginning to bear fruit.

All of the hard work undertaken during this transformative period has given us an excellent platform for growth and put the Group in pole position to meet its full potential.

We therefore look forward to a bright future with renewed confidence.

Amit Ben-Haim

Chief Executive Officer

22 March 2016

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 September 2015

Consolidated statement of CHANGES IN EQUITY

For the year ended 30 September 2015

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 30 September 2015

The consolidated financial statements were approved by the Board on 22 March 2016.

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 30 September 2015

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 30 September 2015

1. BASIS OF PREPARATION

The Company was incorporated in the Cayman Islands which does not prescribe the adoption of any particular accounting framework. The Board has therefore adopted and complied with International Financial Reporting Standards as adopted by the European Union (IFRS).

The Group's shares are listed on AIM, a market operated by the London Stock Exchange plc.

The principal accounting policies applied by the Group are set out in the financial statements. These policies have been consistently applied to all the periods presented, unless otherwise stated.

The financial information set out in this preliminary announcement does not constitute statutory accounts. The consolidated statement of financial position at 30 September 2015, the consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows and associated notes for the year then ended have been extracted from the Group's 2015 financial statements upon which the auditor's opinion is unqualified.

2. SEGMENTAL INFORMATION

An operating segment is a distinguishable component of the Group that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Group's chief operating decision maker to make decisions about the allocation of resources and an assessment of performance and about which discrete financial information is available.

The chief operating decision maker has defined that the Group's only operating segment during the period is the development of physiological technology. All of the corporate headquarter costs are allocated to this segment.

The Group has not generated any revenues from external customers during the period.

In respect of the non-current assets all (2014: all) arise in the UK.

3. LOSS PER SHARE

There are 5,700,000 share options and 42,683,334 warrants in issue. Their effect is anti-dilutive, but are potentially dilutive against future profits. Additionally there is an amount of £7,496 accrued in respect of J Wakely fees which is due to be paid in shares at the share price at the time of issue. The number of shares this equates to is therefore variable but had these shares been issued on 30 September 2015, this would have equated to 352,753 shares at 2.125p each.

Since the year end a further 55,776,515 shares have been issued whose impact is potentially dilutive.

4. post balance sheet events

On 30 October 2015 the Company announced that it has issued 1,906,556 ordinary shares of 0.1p to Imec International in payment of €60,000 licence fee.

On 31 December 2015 the Company announced that it has issued 1,188,117 ordinary shares of 0.1p at 2.38p each in payment of fees and 2,282,353 ordinary shares of 0.1p at 2.125p in settlement of fees.

On 15 January 2016, the Company announced that it had signed a £1.25m unsecured draw down facility with some parts being convertible loan facility with Hector Limited ("Lender"), a private equity company specialising in hi-tech SME's (the "Facility"). Funds drawn down from the Facility will be used for purchase order funding with manufacturers and B2B partnerships in 2016 and for general working capital purposes. £300,000 advanced by the Lender at 30 September 2015 and included in liabilities at that date has been incorporated within this facility.

The Lender may elect at its discretion to convert any tranche of drawn funds into new ordinary shares in the Company at a price of 2.25 pence per share, conditional on the Company having sufficient authority from shareholders to issue such number of new ordinary shares.

On 15 January 2016, the company announced that it had issued 2,500,000 ordinary shares at 0.1p at a price of 2.125p in settlement of fees.

On 21 January 2016, the company announced that it had raised £250,000 pursuant to a subscription by new investors for 11,764,706 new ordinary shares of 0.1p at a price of 2.125 pence per share.

On 29 February 2016, the company announced that it had raised £215,000 pursuant to a subscription by Spreadex Limited for 11,684,783 new ordinary shares of 0.1p at a price of 1.84 pence per share.

Also on 29 February 2016, the company announced that it had issued 7,250,000 new ordinary shares of 0.1p at a price of 1.675 pence per share in settlement of fees due to a third party consultant ("Fee Shares") for business development activities in the UK and Europe.

On 7 March 2016, the Company announced that it had issued 2,600,000 new ordinary shares of 0.1p at a price of 2.5p raising £65,000.

On 16 March 2016, the Company announced that it had issued 7,600,000 new ordinary shares of 0.1p at a price of 3p raising £228,000.

On 21 March 2016, the Company announced that it had issued 7,000,000 new ordinary shares of 0.1p at a price of 3.22p raising £225,400.

5. PUBLICATION OF ANNUAL REPORT AND NOTICE OF AGM

The accounts for the year ended 30 September 2015 will be posted to shareholders shortly and laid before the Company at the Annual General Meeting which will be held on 26 April 2016 at 2.30 p.m. at the offices of Collas Crill, 40 Don Street, St Helier, Jersey, JE1 4XD. Copies will also be available on the Company's website (www.cloudtag.com) in accordance with AIM Rule 26.