Half-year Report

Lifeline Scientific, Inc.

("LSI" and or the "Company")

Half-year Report

Lifeline Scientific (AIM: LSIC), the transplantation technology company, announces its half yearly results for the six months ended 30 June 2016. The Company is pleased to report solid progress in H1, achieving top line growth whilst advancing planned new product and territory expansion initiatives.

Financial highlights

• Transplantation products and services revenues up by 21.1% to US$18.2m (H1 2015: US$15.0m)

§ North America revenues up 20.4% to US$15.0m (H1 2015: US$12.4m)

§ Revenue outside of North America of US$3.2m up 24.4% (H1 2015: US$2.6m) representing 17.7% of total revenue (H1 2015: 17.2%)

§ LifePort® proprietary consumables up 24.7% to US$10.6m (H1 2015: US$8.5m)

• Gross profit increased 27.9% to US$11.4m (H1 2015: US$8.9m)

• Income from operations increased US$1.9m to US$2.0m (2015: US$0.1m)

• Net income increased US$1.8m to US$1.9m (H1 2015: US$0.1m)

• Net cash generated from operations of US$1.6m (H1 2015: US$1.0m)

• Cash of US$7.5m as of 30 June 2016 (as of 31 December 2015: US$6.9m)

Operational highlights

• Installed base of LifePort Kidney Transporters grew to 219 transplant programmes in 32 countries worldwide (H1 2015: 204 programmes in 28 countries)

• Established six new LifePort sites in Europe and Middle East 

• US FDA review progressing for LifePort Liver Transporter

• Several new patents issued supporting LifePort and related products

David Kravitz, Chief Executive Officer of Lifeline, said:

"Achievements during the first half of 2016 have helped grow our diverse commercial base from which we will continue to expand the Company's support of clinical transplant markets worldwide. Whilst the first half of 2016 has been materially better than the same period last year, the overall performance for the full year is presently expected to be broadly in line with 2015 due to exceptional demand in H1 2016 normalising in the second half. Our focus remains on the development and commercialisation of products and services designed to improve patient outcomes in transplantation."

For further information, please contact:

About Lifeline Scientific Inc.

Lifeline Scientific, Inc. is a Chicago-based global medical technology company with regional offices in Brussels and São Paulo. The Company's focus is the development of innovative products that improve transplant outcomes and lower the overall costs of transplantation. Its lead product, LifePort Kidney Transporter, is the global market-leading medical device for hypothermic machine preservation (HMP) of donor kidneys. LifePorts and novel solutions designed for preservation of other organs are in development, with LifePort Liver Transporter next in line for commercial launch. For more information, please visit www.lifeline-scientific.com

About LifePort Kidney Transporter

Created with the challenges of organ recovery and transport in mind, LifePort Kidney Transporter is a proprietary medical device designed to help improve kidney preservation, evaluation and transport prior to transplantation. It has been widely studied in clinical trials throughout the world and is the standard of care for machine preservation of donor kidneys. Employed by surgeons in over 219 leading transplant programmes in 32 countries, LifePorts have successfully preserved more than 75,000 kidneys indicated for clinical transplant. For more information, please visit www.organ-recovery.com

About LifePort Liver Transporter

LifePort Liver Transporter (LLT) is modelled upon the clinically proven technology platform of LifePort Kidney Transporter and the Company's early LLT prototype successfully used in clinical transplant studies by surgeons at New York-Presbyterian Hospital/Columbia University Medical Center. LifePort Liver Transporter and the Company's proprietary machine preservation solution, Vasosol®, are in the process of US and international regulatory registrations. The system is designed to help improve outcomes in liver transplantation by enabling the clinical use of hypothermic machine perfusion, and has been developed in consultation with clinical and research teams specialising in liver transplantation at Columbia University Medical Center and the University of Chicago. The system employs a rugged, streamlined ergonomic design for ease of use and transportability from donor bedside to recipient operating room. For more information, please visit: http://www.organ-recovery.com/pipeline.php

Chairman's Statement

Revenues from transplantation products and services were up 21.1% to US$18.2m (H1 2015: US$15.0m), representing overall growth of 21.1% compared to the same period last year.

We continue to be successful in executing our strategic initiatives of increasing revenues in core US and EU markets and expanding our footprint in China and South America. North America remains our largest market with revenues up 20.4% to US$15.0m (H1 2015: US$12.4m). Revenues outside North America were up by 24.4% to US$3.2m (H1 2015: US$2.6m) and represent 17.7% of the total revenue for the period (H1 2015: 17.2%). Our China based distributor placed their initial major stocking order in December, 2015 following China's FDA (CFDA) approval of our full product line. Revenues for China were slightly down to US$135k (H1 2015: US$194k).

In France, adoption of the full suite of LifePort Kidney Transporter products continues to increase with 38 Transplant and Procurement centres in France and its territories deploying 133 LifePort Kidney Transporters. France remains one of the three largest national markets for kidney transplant procedures in Europe. Revenues for Europe were up 10.2% to US$2.6m (H1 2015: US$2.3m).

LifePort proprietary consumable revenue is up 24.7% at US$10.6m (H1 2015: US$8.5m) and sales of our solutions products increased by 22.4% to US$6.8m (H1 2015: US$5.6m. LifePort Kidney Transporter unit sales were down slightly to US$0.4m year-on-year (H1 2015: US$0.5m).

Gross profit increased 27.9% to US$11.4m (H1 2015: US$8.9m), due primarily to growth in trading during H1 and an increase in the proportion of higher margin proprietary consumables sold.

Net cash generated from operations for the period increased significantly to US$1.6m (H1 2015: US$1.0m). The cash position of the Company remains strong, with cash balances as of 30 June 2016 of US$7.5m (31 December 2015: US$6.9m). The Company remains debt free having paid off its revolver balance of US$2.2m at year-end 2015.

The opportunities represented by Lifeline's existing business, combined with CFDA approvals of our products and regulatory process advancement for our LifePort Liver Transporter, keep Lifeline's prospects strong for the balance of 2016 and beyond.

Post period-end, the Company provided an update on the status of its Strategic Review process which commenced following the 21 September 2015 announcement that LSI would undertake a comprehensive review of strategic and financial alternatives to enhance shareholder value. On 2 September 2016, we announced that we had entered into a definitive merger agreement with Shanghai Genext Medical Technology Co., Ltd ("SGM") in which SGM would acquire LSI for approximately US$87.8m in cash (the "Acquisition"), equating to an offer price of approximately 312 pence per share based on the US Dollar to British Pound Sterling exchange rate at the time of announcement (being 1.310) 1, which represents a 51.3% premium to the mid-market closing price on 18 September 20152. If approved by LSI shareholders, upon Closing, this all cash offer will provide full liquidity for LSI shareholders of record as of the Closing date and will also create one of the largest and fastest growing international medical technology companies serving the clinical transplant sector.

1the exact amount per share to be paid in British Pounds Sterling will be determined at the closing of the Acquisition, based on the US Dollar to British Pound Sterling exchange rate reported by the Financial Times at such time

2being the last dealing day prior to the date that Lifeline first announced the Company would launch a comprehensive review of strategic and financial alternatives to enhance shareholder value

John Garcia

Chairman

26 September 2016

Chief Executive Officer's review

During the first six months of the year, we have been encouraged by continued strong growth in key geographic markets. This is a result of our on-going focus on growth in our North American based business combined with continued geographic expansion in Europe, South America and China. For the first six months of 2016, revenues outside of North America have grown to US$3.2m, representing 17.7% of total turnover.

Geographic Expansion

North America

Growth in our North America base continues, with sales significantly ahead of the same period last year. The increase is due in part to contributions from a number of significant new accounts acquired in 2015.

Strategic Europe

We have established an additional six new LifePort sites in Europe and the Middle East. As the experience of using the LifePort to improve transplantation services increases, we are confident that more transplant centres across Europe will adopt LifePort in the near future.

Rest of World

Underpinning our strategy for growth in South America, Brazil continues to represent the largest and highest potential market for our products in South America, and our largest country customer to-date, with sales of more than US$500k for the period. Based upon reported significant improvement in transplant outcomes with LifePort vs standard of care, we remain confident that South America and, in particular Brazil, will contribute significantly to the growth of non-US sales in the coming years.

China

Since CFDA approval of LifePort Kidney Transporter in 4Q15, LSI has been working closely with its China based distributor to support their phased commercial launch to the nation's reported 169 renal transplant centres. Initial stocking orders were placed by our distributor during 4Q15 and we are anticipating additional stocking orders throughout the balance of 2016 in support of their product roll-out.

New Product Innovations

The Company's focus on new product innovations for the remainder of 2016 will be on preparations for commercial launch of our LifePort Liver Transporter System which is currently progressing through regulatory review.

Outlook

Achievements during the first half of 2016 have given us a strong and increasingly diverse commercial base from which to expand the Company's future efforts in support of transplant markets worldwide. Whilst the first half of 2016 has been materially better than the same period last year, the overall performance for the full year is presently expected to be broadly in line with 2015, due to exceptional demand in H1 2016 normalising in the second half.

David Kravitz

Chief Executive Officer

26 September 2016

LIFELINE SCIENTIFIC, INC.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

30 June 2016 and 2015

CONSOLIDATED BALANCE SHEETS

30 June 2016 and 2015 (In US Dollars unless otherwise noted) UNAUDITED

CONSOLIDATED STATEMENTS OF OPERATIONS

six months to 30 June 2016 and 2015 (In US Dollars unless otherwise noted) UNAUDITED

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

six months to 30 June 2016 and 2015 (In US Dollars unless otherwise noted) UNAUDITED

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS's EQUITY

six months to 30 June 2016 and 2015 (In US Dollars unless otherwise noted) UNAUDITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

six months to 30 June 2016 and 2015 (In US Dollars unless otherwise noted) UNAUDITED

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

General: The accompanying condensed consolidated financial statements of Lifeline Scientific, Inc. (the "Company") are unaudited and do not include all of the footnotes required by accounting principles generally accepted in the United States of America ("US GAAP"). In the opinion of management of the Company, these condensed consolidated financial statements contain all adjustments necessary for a fair presentation of the results for the interim periods presented. These statements should be read in conjunction with the Company's annual report as of and for the year ended 31 December 2015.

Principles of Consolidation: The Company was incorporated in the state of Delaware as Organ Recovery Systems, Inc. on 1 October 1998. On 20 December 2007, the Company changed its name to Lifeline Scientific, Inc. The Company is consolidated with the following wholly-owned subsidiaries:

ORS Europe, NV

Cell and Tissue Systems, Inc.

Organ Recovery Systems, Inc.

ORS Representacoes do Brasil LTDA

Intercompany balances and transactions have been eliminated in consolidation.

On 19 December 2014, the Company jointly formed Tissue Testing Technologies LLC ("T3") with another party. T3 was formed to meet regulatory requirements in order to obtain research grants from various government sources. Under the terms of the operating agreement, the Company owns 49% of T3 and the other party owns 51%. The Company has not made an investment in T3 as of 30 June 2016 and 2015. There are two receivables in other current assets at 30 June 2016 totalling US$22,234 for start-up loans made by the Company to T3. T3 made monthly payments of US$2,265 on these loans during the six months ended 30 June 2016 and 2015. The loans are expected to be paid off by 30 June 2017.

Cash and Cash Equivalents: The Company considers all money market accounts and short-term investments with an original maturity of three months or less and US Treasury money markets to be cash equivalents. The majority of cash and cash equivalents as of 30 June 2016 and 30 June 2015 were held through a single financial institution, and the balances held at times may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents.

Receivables: Receivables are carried at original invoice or closing statement amount less estimates made for doubtful receivables. Management determines the allowance for doubtful accounts by reviewing and identifying troubled accounts on a monthly basis and by using historical experience applied to an aging of accounts. A receivable is considered to be past due if any portion of the receivable balance is outstanding for more than 90 days. The Company does not charge interest on past due receivables. Receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received.

Inventories: Inventories are valued at the lower of cost (first-in, first-out) or market.

Depreciation and Amortisation: The Company's policy is to depreciate or amortise the cost of property and equipment over the estimated useful lives of the assets using the straight-line method. The cost of leasehold improvements is amortised over the estimated useful lives, or the applicable lease term, if shorter.

Long-Lived Assets: Long-lived assets to be held are reviewed for events or changes in circumstances that indicate that their carrying value may not be recoverable. The Company periodically reviews the carrying value of long-lived assets to determine whether or not an impairment to such value has occurred. Management of the Company believes that no impairment of long-lived assets exists as of 30 June 2016 and 2015.

Intangibles: The cost of intangible assets is being amortised over the remaining lives of the assets acquired as follows:

Professional and regulatory fees associated with obtaining the licenses that enable the Company to sell its products (i.e. certification marks) are capitalised and amortised over the shorter of the useful life of the related licenses or 20 years. Legal fees associated with filings for patents that are pending are capitalised if management believes that it is probable that such patent applications will be successful. Patent costs are not amortised until the patent is obtained. During the year ended 31 December 2010, the Company signed an agreement that allows for the licensing of technology to support the Company's product development efforts. The agreement is being amortised over the remaining estimated life of the licensed technology, or 10 years.

Goodwill: Goodwill results from business acquisitions and represents the excess of the purchase price over the fair value of acquired tangible assets and liabilities and identifiable intangible assets. In accordance with accounting for goodwill under US GAAP, goodwill is not amortised, but instead tested for impairment on an annual basis. The Company has applied Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2011-08, "Testing Goodwill for Impairment", in connection with the performance of the annual goodwill impairment test. Under FASB ASU 2011-08, entities are provided with the option of first performing a qualitative assessment on none, some, or all of its reporting units to determine whether further quantitative impairment testing is necessary. An entity may also bypass the qualitative assessment for any reporting unit in any period and proceed directly to the quantitative impairment test.

Goodwill must be tested on an annual basis or if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying amount. During the six months ended 31 December 2015, the Company was not required to record any impairments to the carrying value of goodwill or indefinite-lived intangible assets. During the six months ended 30 June 2016 and 2015, the Company identified no events or circumstances that would trigger an interim assessment of goodwill.

Deferred Rent: Minimum rent expense is recognised over the term of the lease. The Company recognises minimum rent starting when possession of the property is taken from the landlord. When a lease contains a predetermined fixed escalation of the minimum rent, rent expense is recognised on a straight-line basis. Any difference between the recognised rent expense and the amounts payable under the lease is reported as deferred rent in the consolidated balance sheets. The Company records include a tenant allowance on its facility lease in Itasca, Illinois, which is recorded as a component of deferred rent and amortised as a reduction to rent expense over the term of the lease. Future payments for common area maintenance, insurance, real estate taxes, and other occupancy costs to which the Company is obligated are excluded from future minimum lease payments.

Fair Value of Financial Instruments: US GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. US GAAP describes three approaches to measuring the fair value of assets and liabilities: the market approach, the income approach, and the cost approach. Each approach includes multiple valuation techniques. US GAAP does not prescribe which valuation technique should be used when measuring fair value, but does establish a fair value hierarchy that prioritises the inputs used in applying the various techniques. Inputs broadly refer to the assumptions that market participants use to make pricing decisions, including assumptions about risk. Level 1 inputs are given the highest priority in the hierarchy while Level 3 inputs are given the lowest priority. Assets and liabilities carried at fair value are classified in one of the following three categories based on the nature of the inputs to the valuation technique used:

The carrying values of cash and cash equivalents, accounts receivable, and accounts payable approximate their fair values because of the short-term nature of these instruments. The carrying values of long-term debt and the revolving line of credit approximate their fair values as the stated interest rates approximate current market interest rates of long-term debt and revolving lines of credit with similar terms.

Product Warranty: Estimated future costs applicable to products sold under warranty are charged to expense in the year of sale and the related liability is classified as current. The accrued warranty liability as of 30 June 2016 and 2015 was $181,555 and $168,047, respectively.

Revenue Recognition: Product sales revenue is recognised upon shipment of product to the client. Service fee revenue is recognised when services are performed. Deferred and unbilled revenue is recognised in the consolidated balance sheets.

The Company sells extended warranties on its LifePort product for a specific period of months. This revenue is deferred and recognised over the term of the warranties on a straight-line basis.

Income Taxes: Income taxes are provided for the tax effects of transactions reported in the condensed consolidated financial statements and consist of taxes currently due plus deferred taxes related primarily to differences between the basis of property and equipment, bad debts, intangibles, and accrued expenses for financial and income tax reporting. The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. The carrying value of the Company's deferred tax assets is dependent upon its ability to generate sufficient taxable income in the future. The Company has established a valuation allowance against its net deferred tax assets to reflect the uncertainty of realising the deferred tax benefits, given historical losses and limited history of current earnings. A valuation allowance is required when it is more likely than not that all or a portion of a deferred tax asset will not be realised. During the six months ended 31 December 2015, $6,800,000 of the valuation allowance was reversed to reflect the likelihood of future taxable income, which will most likely result in the utilisation of a portion of the Company's net operating losses. During the six months ended 30 June 2016, the Company determined no change to this estimate was required.

The Company is subject to US federal, state, and local taxes as well as foreign taxes in Belgium and Brazil. The Company's tax years extending back to the year ended 31 December 2011 remain open to examination for both federal and state jurisdictions; for foreign jurisdictions the Company's tax years extending back to December 31, 2012 remain open for examination. The Company's policy is to recognise interest and penalties related to uncertain tax positions as a component of income tax expense. During the six months ended 30 June 2016 and 2015, the Company did not recognise expense for interest and penalties. As of 30 June 2016 and 2015, the Company had $150,000 and $137,000, respectively, accrued for the payment of interest and penalties. The Company does not expect the total amount of unrecognised tax benefits to significantly change during the next 12 months.

The Company's condensed consolidated financial statements provide for any related US tax liabilities on earnings of foreign subsidiaries that may be repatriated, aside from qualifying undistributed earnings of certain foreign subsidiaries that are intended to be indefinitely reinvested in operations outside of the US.

The Company accounts for unrecognised tax benefits in accordance with US GAAP, which prescribes a more likely than not threshold for condensed consolidated financial statement presentation and measurement of a tax position taken or expected to be taken in a tax return. A tax position is recognised as a benefit only if it is "more likely than not" that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The amount recognised is the largest amount of tax benefit that is greater than 50% likely of being realised on examination. For tax positions not meeting the "more likely than not" test, no tax benefit is recorded.

Stock Options: In accordance with US GAAP, the Company accounts for the cost of employee services received in exchange for an award of equity instruments utilising the grant date fair value of the award. Stock-based awards that do not require future service (i.e., vested awards) are expensed immediately. The expense associated with stock-based employee awards that require future service are amortised over the relevant service period.

Management Estimates: The preparation of condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The estimates included by the Company in these condensed consolidated financial statements relate to warranty reserves, allowance for doubtful accounts, the allowance for excess and obsolete inventories, the useful lives of patents and the license agreement, the useful lives of depreciable property and equipment, and the valuation allowance for deferred tax assets.

Research and Development: Expenditures relating to the development of new products and procedures are expensed as incurred.

Foreign Currency Translation: The financial position and results of operations of the Company's foreign subsidiaries are measured using the subsidiary's local currency as the functional currency. Assets and liabilities of the foreign subsidiaries are translated to US dollars using exchange rates in effect as of the consolidated balance sheet dates. Income and expense items are translated at monthly average rates of exchange. The resultant translation gains or losses are included as part of the components of stockholders' equity designated as other comprehensive loss.

Contingencies: From time to time, the Company may experience litigation arising in the ordinary course of business. These claims are evaluated for possible exposure by management of the Company and their legal counsel. The company believes that the ultimate resolution of any such matters will not have a material adverse effect on its condensed consolidated financial position.

NOTE 2 - INVENTORIES

Inventories consist of the following as of 30 June 2016 and 2015:

NOTE 3 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following as of 30 June 2016 and 2015:

During the six months ended 30 June 2016 and 30 June 2015, the Company recognised property and equipment depreciation and amortisation expense of $538,004 and $471,590 respectively.

NOTE 4 - INTANGIBLES

Intangible assets consist of the following as of 30 June 2016 and 2015:

During the six months ended 30 June 2016 and 30 June 2015, the Company recognised intangible amortisation expense of $115,247 and $112,219, respectively. During the six months ended 30 June 2016 and 30 June 2015, the Company abandoned patents issued and patents pending with an original cost of $0 and $35,539, respectively.

NOTE 5 - LINE OF CREDIT AGREEMENT

On 18 September 2014, the Company entered into a loan and security agreement with The PrivateBank and Trust Company ("PB"). The loan and security agreement provides for a revolving line of credit, not to exceed an aggregate principal amount of $6,000,000 but limited to qualifying receivables and inventories, as defined. The outstanding principal under the loan and security agreement accrues interest at PB's prime rate, as defined. The loan and security agreement contains financial covenants which require the Company to maintain a minimum tangible net worth, as defined, and a minimum fixed charge coverage ratio, as defined. The Company was in compliance with its financial covenants as of 30 June 2016 and 2015. As of 30 June 2016 and 2015, there was US$0 and US$2,171,147, respectively, outstanding on the revolving line of credit. The loan and security agreement is secured by substantially all assets of the Company, and expires 31 August 2016. PB has formal credit approval to increase the line of credit to $10,000,000 and extend maturity through 31 August 2017 with the remaining open items of legal documentation currently in process.

NOTE 6 - INCOME TAXES

At the end of its interim six month periods, the Company makes its best estimate of the annual expected effective income tax rate and applies that rate to its ordinary earnings or loss for each six month interim period. The income tax provision or benefit related to significant, unusual, or extraordinary items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognised in the six month interim period in which those items occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realisability of a beginning of the year tax asset in future years or income tax contingencies is recognised in the six month interim period in which the change occurs.

The computation of the annual expected effective income tax rate at each six month interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax loss for the year, projections of the proportion of loss taxed in foreign jurisdictions, permanent and temporary differences, and the likelihood of the realisability of deferred tax assets generated in the current year. The accounting estimates used to compute the provision or benefit for income taxes may change as new events occur, more experience is acquired, additional information is obtained, or the Company's tax environment changes.

Income tax expense consists of the following components for the six months ended 30 June 2016 and 2015:

The net deferred tax assets (liabilities) in the accompanying condensed consolidated balance sheets include the following components as of 30 June 2016 and 2015:

The income tax benefit differs from the federal statutory tax rate generally as a result of changes in each jurisdiction's valuation allowance and permanent differences, such as meals and entertainment expenses. A valuation allowance has been provided to reduce the deferred tax assets to the amount that is more likely than not to be realised.

As of 30 June 2016, the Company has federal and state net operating loss carryforwards totalling $56,238,000, which may be used to offset future taxable income. If not used, the carryforwards will expire as follows:

As a result of changes in ownership at the IPO date, the Company estimates there will be future limitations on the utilisation of operating loss carryforwards pursuant to Internal Revenue Code Section 382. Any unused annual loss limitation carries forward to a future year. The annual limitation on loss carryforwards that could be utilised is approximately $2,600,000 after the six months ending 30 June 2016 and 30 June 2015. Additionally, the cumulative unused loss limitation, which carried into the year ended 31 December 2015, was approximately $18,267,000.

NOTE 7 - STOCK OPTIONS

A summary of option activity under the Second Amended and Restated Stock Option and Restricted Stock Plan (the "2007 Plan") as of 30 June 2016 and 2015, and the changes during the six months ended 30 June 2016 and 2015 is as follows:

The Company recognised compensation expense of $30,109 and $113,608 for the six months ended 30 June 2016 and 2015, respectively. As of 30 June 2016, there was approximately $47,743 of total unrecognised compensation cost related to nonvested share-based compensation arrangements granted under the 2007 Plan. That cost is expected to be recognised over a weighted-average period of 0.6 years.

NOTE 8 - EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share include the dilutive effect of stock options and warrants, using the treasury stock method. The following table sets forth the computation of basic and diluted earnings per share for the six months ended 30 June 2016 and 2015:

NOTE 9 - RELATED PARTY TRANSACTIONS

During the year ended 31 December 2010, the Company entered into a consulting agreement with a company in which Steven Mayer, a former member of the Company's Board of Directors, is a director. Mr. Mayer performed the consulting services. Fees for services rendered under the consulting agreement were $7,500 for the six months ended 30 June 2015. Mr. Mayer ceased to be a Director of the Company on 25 June 2015.

Additionally, during the six months ended June 2016 and 2015, the Company did business with a company in which David Kravitz and Steven Mayer are directors and have an ownership interest. Fees for research and development related products and services rendered were $0 and $65,000 for the six months ended 30 June 2016 and 2015, respectively. These payments represented expensed products and services of $0 and $15,000 for the six months ended 30 June 2016 and 2015, respectively, and asset purchases of $0 and $50,000, respectively.