MTFB.L Regulatory News (MTFB)

9 June 2015

Motif Bio plc

Motif BioSciences, Inc.

Audited non-statutory financial statements for the

year ended 31 December 2014

Motif Bio plc (LSE: MTFB), the clinical stage biopharmaceutical company specialising in developing novel antibiotics, reports to the market today the non-statutory financial statements of its wholly-owned subsidiary, Motif BioSciences, Inc. for the year ended 31 December 2014 - a period prior to the completion of the Company's merger, acquisition, and admission to AIM.

Since the end of the period covered by these financial statements, Motif Bio plc has completed the Group re-organisation, a necessity of becoming the holding company of the Group. Motif has also converted and restructured its liabilities, acquired the iclaprim assets, and raised new funds of approximately US $4.3 million, before issue costs of approximately US $1.0 million, through a placing and subscription of new shares and seen its shares admitted to trading on AIM.

These financial statements have been published to enable Motif Bio plc to comply with its financial reporting obligations under the AIM Rules and are presented and prepared in a form consistent with the financial information, and on the basis of the accounting policies of Motif BioSciences, Inc. set out in Part IV of the AIM admission document published by Motif Bio plc on 27 March 2015.

POST BALANCE SHEET HIGHLIGHTS:

· A transformational period including completion of the Group's re-organisation, acquisition of iclaprim's assets, US $4.3 million raised in new funds and successful listing on AIM.

· On 15 April 2015, the U.S. Food and Drug Administration (FDA) agreed to the proposed Phase III clinical development programme for iclaprim.

· On 1 June 2015, Motif BioSciences, Inc. signed Letters of Intent and interim agreements with a leading global Clinical Research Organisation - one of the world's top five providers of Phase I-IV clinical trial management services and to date, has contributed to the development of all of the top 50 prescription medicines on the market.

· Motif Bio plc selected to present at the 2015 BIO Equity Conference and at the 2015 BIO International Convention, two leading global partnering and investor events for the Biotechnology sector.

· One of the few opportunities for AIM investors to gain exposure to a late stage clinical asset that already has a wealth of safety and efficacy data from previously completed Phase III trials.

Richard Morgan, Chairman of Motif Bio plc, commented:

"Motif Bio plc has made excellent progress in a short period of time towards the goal of completing the clinical development of iclaprim and bringing this novel antibiotic to market. It is unusual to have a late stage clinical asset that already has a wealth of safety and efficacy data from previously completed Phase III trials, and that now has agreement from the FDA to initiate a new Phase III programme. The scientists at Motif Bio plc have been able to identify a number of ways to improve this new Phase III programme, based on careful analysis of the existing data, the evolving knowledge of infectious diseases, and the improved regulatory environment.

"With new incentives from governments, including the GAIN Act in the US, broad recognition by politicians and regulators of the need to help speed the development of novel antibiotics, and the unique properties of iclaprim, Motif Bio plc is well placed to make an important contribution in response to the challenges of anti-microbial resistance and the need for novel antibiotics."

Enquiries:

Notes to Editors:

Motif is a clinical stage biopharmaceutical company, which specialises in developing novel antibiotics designed to be effective against serious and life-threatening infections caused by multi-drug resistant bacteria. The Company has a lead antibiotic candidate, iclaprim, in clinical development and MTF-001, a preclinical stage programme to design a best-in-class dihydrofolate reductase inhibitor (DHFRi).

Iclaprim is being developed for the treatment of the most common and serious bacterial infections such as acute bacterial skin and skin structure infections (ABSSSI) and hospital acquired bacterial pneumonia (HABP), including those caused by resistant strains such as MRSA (methicillin-resistant Staphylococcus aureus) and MDRSP (multi-drug resistant Streptococcus pneumoniae) that have become prevalent in patients in both the community and hospital settings.

Chairman's Statement

These financial statements are for Motif BioSciences, Inc. ("Motif" or the "Company"), and cover the year ended 31 December 2014, prior to the completion of the merger procedure with Motif Bio plc which, as a consequence, Motif BioSciences Inc. became a wholly owned subsidiary undertaking of Motif Bio plc, which was admitted to trading on the AIM market of the London Stock Exchange ("AIM") on 2 April 2015.

These financial statements have been published to enable Motif Bio plc to comply with its financial reporting obligations under the AIM Rules and are presented and prepared in a form consistent with the financial information, and on the basis of the accounting policies of, Motif BioSciences Inc. set out in Part IV of the AIM admission document published by Motif Bio plc on 27 March 2015. Motif is not required to hold an AGM for the year ended 31 December 2014.

Since the end of the period covered by these financial statements, Motif Bio plc has completed the Group re-organisation, a necessity of becoming the holding company of the Group, converted and restructured its liabilities, acquired the iclaprim assets, and raised new funds of approximately US$4.3 million, before issue costs of approximately US$1.0 million, through a placing and subscription of new shares and seen its shares admitted to trading on AIM.

Background and Activities since IPO

Motif Bio plc is a clinical stage biopharmaceutical company, which specialises in developing novel antibiotics designed to be effective against serious and life-threatening infections caused by multi-drug resistant bacteria.

Motif Bio plc has a lead antibiotic candidate, iclaprim, in clinical development and MTF-001, a preclinical stage programme, to design a best-in-class dihydrofolate reductase inihibitor (DHFRi). Discussions and negotiations with academic institutions and pharmaceutical companies are under way to build a portfolio of antibiotic candidates through licensing. The Group's main area of operation is in the US. Subject to funding being available, the Directors anticipate that iclaprim could be ready for commercialisation within approximately 36 months.

Motif Bio plc has built a team of scientists and experts with extensive drug development experience. Additional funding will be needed to carry out the two Phase III clinical trials on iclaprim and to progress the other drug development programmes.

On 15 April 2015, 13 days following the Company's commencement of trading on AIM, the Company announced that the U.S. Food and Drug Administration (FDA) had agreed to the proposed Phase III clinical development programme for iclaprim.

The Phase III programme is designed to obtain marketing approval for an intravenous formulation of iclaprim in the treatment of acute bacterial skin and skin structure infections (ABSSSI) and hospital acquired bacterial pneumonia (HABP) caused by Gram positive pathogens, including resistant strains such as MRSA (methicillin-resistant Staphylococcus aureus) and MDRSP (multi-drug resistant Streptococcus pneumoniae). The FDA confirmed that two ABSSSI trials or one ABSSSI trial plus one HABP trial meeting their pre-specified primary endpoints are required for approval of iclaprim. Motif is working to determine the costs and timeline of these options. Assuming that funds can be raised or a partnership can be entered into, the first Phase III trial for ABSSSI is expected to commence in the second half of 2015.

On 1 June 2015, Motif Bio plc announced that its wholly-owned subsidiary, Motif BioSciences Inc., had signed Letters of Intent (LOIs) and interim agreements with a leading global Clinical Research Organisation (CRO). Under the terms of the interim agreements, the CRO will undertake preparations for two Phase III, randomised, double-blind, multicenter clinical trials to evaluate the efficacy and safety of intravenous iclaprim versus vancomycin in the treatment of acute bacterial skin and skin structure infections ("ABSSSIs") suspected or confirmed to be due to Gram-positive pathogens. The selected CRO is one of the world's top five providers of Phase I-IV clinical trial management services and to date, has contributed to the development of all of the top 50 prescription medicines on the market. The CRO has unique insights into infectious disease clinical trials with over 17,000 patients in more than 150 studies.

Motif Bio plc was selected to present at the 2015 BIO Equity Conference and at the 2015 BIO International Convention, two leading global partnering and investor events for the Biotechnology sector.

Addressing a Global Crisis

Resistance to antibiotics is a major global health threat. So-called "superbugs" are developing resistance to currently available antibiotics faster than new, effective antibiotics are being developed. In June 2013, Dr Margaret Chan, Director-General of the World Health Organisation stated that, "a post-antibiotic era means, in effect, an end to modern medicine as we know it. Things as common as strep throat or a child's scratched knee could once again kill. Some sophisticated interventions, like hip replacements, organ transplants, cancer chemotherapy, and care of preterm infants, would become far more difficult or even too dangerous to undertake."

Iclaprim is being designed to be administered in hospitals as an intravenous infusion. The directors believe the most urgent need for novel antibiotics effective against multi-drug resistant bacteria is in the hospital setting where patients often succumb to serious, life-threatening infections that require immediate treatment with the best available antibiotic. In the case of HABP, mortality rates for infected patients are currently between 20 per cent. and 50 per cent. Extended hospital stays pose a burden to healthcare systems and can increase hospital costs by an average of approximately £26,000 per patient. In the directors' experience, commercialisation of hospital products can be done with fewer resources than commercialisation in the community because there are fewer hospital healthcare professionals to communicate with, compared to launching and educating the larger number of primary care and general practitioners in most countries.

Outlook

Motif Bio plc has made excellent progress in a short period of time towards the goal of completing the clinical development of iclaprim and bringing this novel antibiotic to market. It is unusual to have a late stage clinical asset that already has a wealth of safety and efficacy data from previously completed Phase III trials, and that now has agreement from the FDA to initiate a new Phase III programme. The scientists at Motif Bio plc have been able to identify a number of ways to improve this new Phase III programme, based on a careful analysis of the existing data, the evolving knowledge of infectious diseases and the improved regulatory environment.

Iclaprim works in a different way to most other antibiotics and has a very low propensity for resistance development. This is important because as bacteria continue to develop resistance, several different classes of antibiotic, with different mechanisms will be needed to help fight against the looming public health crisis. Assuming that the clinical programme can be completed successfully, iclaprim may become an essential addition to the range of effective, life-saving antibiotics used by hospital doctors.

With new incentives from governments, including the GAIN Act in the US, broad recognition by politicians and regulators of the need to help speed the development of novel antibiotics, and the unique properties of iclaprim, Motif Bio plc is well placed to make an important contribution in response to the challenges of anti-microbial resistance and the need for novel antibiotics.

Richard C.E. Morgan

Chairman

8 June 2015

Directors' report

Status of the audited non-statutory financial information

The directors of Motif BioSciences, Inc present audited non-statutory financial information for the Company for the year ended 31 December 2014 (the "financial information"). The financial information covers the period prior to the completion of the Company's merger procedure with Nuprim, Inc and consequent acquisition of the exclusive rights to Nuprim's iclaprim assets, the completion of the Company's merger procedure with Motif Bio plc as a consequence of which the company became a wholly owned subsidiary undertaking of Motif Bio plc and the admission of the share capital of Motif Bio plc to trading on AIM, all of which effectively completed on 2 April 2015.

The financial information has been presented and prepared in a form consistent with the financial information of Motif BioSciences, Inc, and on the basis of the accounting policies of Motif BioSciences, Inc, set out in Part IV of the AIM admission document published by Motif Bio plc on 27 March 2015, and in a form consistent with that which will be adopted in the next published financial statements of Motif Bio plc having regard to accounting standards and policies and legislation applicable to such annual financial statements.

The financial information has been published by the company to enable Motif Bio plc to comply with its financial reporting obligations under the AIM Rules and does not constitute statutory financial statements for either Motif BioSciences, Inc or Motif Bio plc. The financial information has been audited but does not constitute statutory financial statements of Motif BioSciences, Inc under company law applicable in either the UK or the USA.

Directors

The following served as directors of Motif BioSciences, Inc during the period:

Richard C.E. Morgan

Jonathan Gold

Zaki Hosny

Dr. Mary Lake Polan

Dr. John W. Stakes

Bruce A. Williams

Gerard Moufflet - resigned October 30, 2014

Dr. Graham Lumsden - appointed October 15, 2014

Charlotta Ginman-Jones - appointed December 30, 2014

Statement of directors' responsibilities in relation to the non-statutory financial information

The directors are responsible for preparing the annual report and the non-statutory financial statements. The directors are required to prepare non-statutory financial statements for the Company in accordance with International Financial Reporting Standards as adopted by the European Union.

International Accounting Standard 1 requires that non-statutory financial statements present fairly for each financial year the Company's financial position, financial performance, and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board's "Framework for the Preparation and Presentation of Financial Statements". In virtually all circumstances, a fair representation will be achieved by compliance with all IFRS. Directors are also required to:

§ select suitable accounting policies and then apply them consistently;

§ present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information, and

§ provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company's financial position and financial performance.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the Company. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

In the opinion of the directors, the non-statutory financial statements are drawn up so as to give a true and fair view of the state of affairs of the Company as at 31 December 2014, and of the results, the changes in equity and cash flows of the Company for the period then ended and at the date of this statement, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they fall due.

Dividends

The directors do not recommend payment of a dividend in respect of the year ended 31 December 2014.

Going Concern

The directors are required to report that the business is a going concern, with supporting assumptions or qualifications as necessary.

After making enquiries, the directors consider that the Company has adequate resources and committed borrowing facilities to continue in operational existence for the foreseeable future. Consequently, they have adopted the going concern basis in preparing the non-statutory financial statements.

Statement of disclosure to non-statutory auditor

The directors have confirmed that:

§ so far as each director is aware, there is no relevant audit information of which the Company's non-statutory auditor is unaware; and

§ each director has taken all the necessary steps he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the Company's non-statutory auditor is aware of that information.

By order of the Board

Richard C.E. Morgan

Chairman

8 June 2015

Independent auditors' report on the non-statutory financial information on Motif BioSciences, Inc

We have audited the non-statutory financial statements ("the non-statutory financial statements") of Motif BioSciences, Inc. for the year ended 31 December 2014, which comprise the Statements of Comprehensive Income, the Statements of Financial Position, the Statements of Cash Flow, the Statements of Changes in Equity and the related notes.

The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. This report is made solely to the Company's members, as a body. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective Responsibilities of directors and auditor

As explained more fully in the Statement of Directors' Responsibilities, the directors are responsible for the preparation of the non-statutory financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit the non-statutory financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's Ethical Standards for Auditors.

Scope of the audit of the non-statutory financial statements

An audit involves obtaining evidence about the amounts and disclosures in the non-statutory financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the non-statutory financial statements.

In addition, we read all the financial and non-financial information, which comprise the Chairman's Statement and the Directors' Report, to identify material inconsistencies with the audited non-statutory financial statements. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report.

Opinion on non-statutory financial statements

In our opinion the non-statutory financial statements:

§ give a true and fair view of the state of the Company's affairs as at 31 December 2014 and of its results for the period then ended; and

§ have been properly prepared in accordance with IFRSs as adopted by the European Union.

Crowe Clark Whitehill LLP

Chartered Accountants

London

8 June 2015

Statements of comprehensive income of Motif BioSciences, Inc

* In accordance with IAS33 "Earnings per share", where the entity has reported a loss for the period, the shares are not diluted

Statements of financial position of Motif BioSciences, Inc

Statements of changes in equity of Motif BioSciences, Inc

Common stock represents the aggregate par value of the Company's issued common stock.

Share premium represents the excess issue price over and above the par values of the Company's common stock.

Retained deficit represent the aggregate retained deficit of Motif.

Cash flow statements of Motif BioSciences, Inc

Notes to the non-statutory financial statements of Motif BioSciences, Inc

1. Summary of significant accounting policies

General information

Motif BioSciences, Inc. is a company incorporated and domiciled in the USA engaged in applying proprietary technology and expertise in medicinal chemistry, biology, and genomics to discover and develop best-in-class small molecule drugs and novel genetic targets that can be partnered out to the pharmaceutical industry for further development.

Basis of preparation

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in this financial information.

a. Basis of preparation

The financial statements have been prepared in accordance with the requirements of the AIM Rules for Companies and in accordance with this basis of preparation. This basis of preparation describes how the financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (IFRSs as adopted by the EU). The financial statements have been prepared under the historical cost convention. A summary of the more important company accounting policies is set out below.

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial information and the reported amounts of revenue and expenses during the period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.

b. Standards, amendments and interpretations to published standards not yet effective

Certain changes to IFRS will be applicable for the Company's financial information in future periods. To the extent that these have not been adopted early in the preparation of the financial information, they will not affect the Company's reported profit or equity but they may affect disclosures.

The directors have considered those standards and interpretations, which have not yet been applied in the financial information but are relevant to the Company's operations, that are in issue but not yet effective and do not consider that any will have a material impact on the future results of Motif.

Numerous other minor amendments to standards have been made as a result of the IASB's annual improvement project.

c. Segment reporting

The chief operating decision-maker is considered to be the Board of Directors of Motif BioSciences, Inc. The chief operating decision-maker allocates resources and assesses performance of the business and other activities at the operating segment level.

The chief operating decision maker has determined that Motif has one operating segment, the development and commercialisation of pharmaceutical formulations. All activities take place in the USA.

d. Internally generated intangible assets - research and development costs

Costs on research activities are recognised as an expense in the period in which they are incurred. An internally generated intangible asset arising from the development of pharmaceutical formulations is recognised only if all of the following conditions are met:

− It is probable that the asset will create future economic benefits;

− The development costs can be measured reliably;

− Technical feasibility of completing the intangible asset can be demonstrated;

− There is the intention to complete the asset and use or sell it;

− There is the ability to use or sell the asset; and

− Adequate technical, financial and other resources to complete the development and to use or sell the asset are available.

At this time Motif does not meet all conditions and development costs are recorded as expense in the period in which the cost is incurred.

e. Measurement convention

The financial information has been prepared on the historical cost basis. Non-current assets are stated at the lower of previous carrying amount and fair value less costs to sell.

f. Classification of financial instruments issued by the Company

Under IAS32, financial instruments issued by the Company are treated as equity only to the extent that they meet the following two conditions:

(a) they include no contractual obligations upon the Company to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavorable to the Company; and

(b) where the instrument will or may be settled in the Company's own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the Company's own equity instruments or is a derivative that will be settled by the Company exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.

To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the Company's own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares.

g. Cash and cash equivalents

Cash and cash equivalents comprise cash balances. Bank overdrafts that are repayable on demand, and form an integral part of the Company's cash management, are included as a component of cash and cash equivalents for the purpose only of the cash flow statement.

h. Trade and other payables

Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method.

i. Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of the assets. The estimated useful lives range from 3 to 5 years.

j. Interest-bearing borrowings

Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest basis.

k. Share-based payment transactions

The grant date fair value of options granted to employees, directors, and consultants is recognised as expense, with a corresponding increase in equity, over the period in which the option holders become unconditionally entitled to the options. The fair value of the options granted is measured using an option valuation model, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest except where forfeiture is due only to share prices not achieving the threshold for vesting.

l. Financial income and expenses

Financial income comprises interest receivable on funds invested. Financial expenses comprise interest payable.

Interest income and interest payable are recognised in the income statement as they accrue, using the effective interest method.

m. Taxation

Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively enacted at the balance sheet date and any adjustment to tax payable in respect of previous years.

Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized.

n.  Earnings per share

The Company presents basic and diluted earnings per share (EPS) data for its shares. Basic EPS is calculated by dividing the profit or loss attributable to shares of the Company by the weighted average number of shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to shareholders and the weighted average number of shares outstanding for the effects of all dilutive potential shares, which comprise share options and warrants granted to employees and non-employees. Where the Company makes a loss, diluted EPS equates to basic EPS.

o. Borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.

Debt issuance costs on loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.

p. Use of assumptions and estimates

In preparing the financial information, the directors have to make judgments on how to apply the Company's accounting policies and make estimates about the future. The critical judgments that have been made in arriving at the amounts recognised in the financial information and the key sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying value of assets and liabilities in the next financial year, are discussed below:

Capitalisation of intangible assets

The directors have to make judgments when deciding to capitalise an internally generated intangible fixed asset arising from the development of antibiotic drugs. This is done when all the conditions for capitalising research and development are met. At this time, the Company does not meet all conditions and development costs are recorded as expense in the period in which the cost is incurred. All other intangible assets are capitalised at cost when they are acquired which can be measured reliably.

Stock based payments

The directors have to make judgments when deciding on the variables to apply in arriving at an appropriate valuation of stock based compensation and similar awards including appropriate factors for volatility, risk free interest rate and applicable future performance conditions and exercise patterns.

2. Operating loss

Motif BioSciences, Inc is not subject to local statutory audit and no fees were therefore been paid to the Company's independent auditors for that purpose in the period ended 31 December 2014.

3. Employee numbers and costs

The average number of persons employed by Motif (including executive directors but excluding non-executive directors) and key management personnel during the period, analysed by category, was as follows:

The aggregate payroll costs of those persons were as follows:

4. Directors' remuneration

The directors' did not receive any salaries prior to 31 December 2014. Directors of the Company have, however, been awarded rights to subscribe for stock in the Company as set out below:

5. Interest expense

6. Income tax expense

Recognised in the income statement:

7. Loss per share

Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of common stock in issue during the period. In accordance with IAS 33, where the Company has reported a loss for the period, the shares are not diluted. The number of potentially dilutive instruments, share options and convertible promissory notes, are detailed in notes 11 and 12 respectively.

8. Prepaid expenses and other receivables

Included in other receivables is an amount of $210,583 in relation to the acquisition of the iclaprim assets. On 17 October 2014, Motif issued 2,105,832 shares of common stock to the shareholders of Nuprim, Inc. at the execution of an agreed upon term sheet. Under the term sheet, Motif would merge Nuprim, Inc. into Motif and acquire the exclusive rights to Nuprim's iclaprim assets, the issued shares of common stock in the Company to be held in escrow until the closing of the reorganisation. The directors consider the fair value of the shares of common stock in the Company at the date of issue was $0.10 per share.

The maximum exposure to credit risk at the end of each reporting period is the fair value of each class of receivables set out above. The Company held no collateral as security. The Directors estimate that the carrying value of receivables approximated their fair value.

9. Trade and other payables

Included in trade and other payables were amounts due to affiliates in respect of accrued interest on loan notes (see note 10) and other liabilities as follows:

10. Other interest bearing loans and borrowings

The convertible promissory notes were issued in July 2008 and matured in July 2011 but remain unpaid. The notes accrued interest at 5% per annum until maturity and accrue interest at 7% after maturity. In the event the Company receives aggregate gross proceeds that equal or exceed US $4,000,000 from the financing that includes the offering of the notes including conversion of the Company's existing debt, the principal amount of these notes and the accrued but unpaid interest shall automatically be converted into shares of the Company's Series D preferred stock, at a per share price equal to the lower of US $4.00 and the lowest sales price of the Company's preferred stock in relevant prior offerings. At any time prior to the occurrence of a mandatory conversion, the note holder may convert the principal and accrued but unpaid interest into shares of the Company's Series D preferred stock at a per share price equal to the lower of US $4.00 and the lowest sales price of the Company's preferred stock in relevant prior offerings.

The notes payable to affiliates are demand notes from a shareholder of the Company - Amphion Innovations plc and its subsidiary undertaking, Amphion Innovations US Inc. The notes accrue interest at 5% per annum. If the principal or accrued interest remains outstanding at such time as the Company concludes an equity financing that equals or exceeds one million US dollars, the note holder may convert all or part of the principal balance plus accrued but unpaid interest into the securities of the Company issued in the financing at a conversion rate equal to the price per security at which the securities are issued in the financing.

11. Stock based payments

Motif has issued options and warrants to employees, directors, consultants, and note holders. The life of the options and warrants range from 7 to 10 years.

The fair value of options and warrants has been valued using the Black Scholes option pricing model. Volatility has been estimated by reference to historical stock price data. The assumptions for each option grant were as follows:

The range of exercise prices of the options at 31 December 2014 were $0.10-$3.00 (31 December 2013, 2012, 2011 - $0.06 - $3.00). The weighted average remaining contractual life of the outstanding options is 8.3 years.

The total expense recognised for the periods arising from stock-based payments are as follows:

On 4 December 2014, the Company adopted a Stock Option Plan under which options can be granted to employees, consultants, and directors of Motif. Under the Plan, 12,950,000 options were issued in 2014.

12. Capital

The holders of common stock are entitled to one vote for each share of common stock held by them. Subject to the rights and preferences of the holders of any preferred stock, the holders of the common stock are entitled to receive dividends.

The holders of the preferred stock have the right to vote on an as-converted basis, with the common stock. Each preferred share is initially convertible into shares of common stock on a one-for-one basis, at the option of the holder at any time. Upon the date when the Company's common stock begins publicly trading, the shares will be automatically converted into shares of common stock. In the event of any liquidation, dissolution, or winding up of the Company, the holders of preferred stock will be entitled to receive, prior and in preference to any distribution of any of the assets of the Company to the holders of shares of any other stock, an amount per share of preferred stock equal to the preferred stock original issue price plus all declared and unpaid dividends. The holders of preferred stock are entitled to receive cash dividends on an as converted basis.

On 17 October 2014, Motif issued 2,105,832 shares of common stock to the shareholders of Numprim, Inc. at the execution of an agreed upon term sheet. Under the term sheet, Motif would merge Nuprim, Inc. into Motif and acquire the exclusive rights to Numprim's iclaprim assets, the issued shares of common stock in Motif to be held in escrow until the closing of the reorganisation (see notes 8, 15, and 16).

In October 2014, 200,000 shares of common stock were issued to two directors upon the exercise of their options at US $.06 per share. One of the directors issued a promissory note for US $6,000 in payment. The note accrues interest at 5% per annum and is to be repaid within 30 days of the completion of a financing in excess of US $5,000,000 but no later than 31 March, 2015.

In December 2014, 100,000 shares of common stock were issued to a director upon the exercise of his options at US $.06 per share. The director issued a promissory note for US $6,000 in payment. The note accrues interest at 5% per annum and is to be repaid within 30 days of the completion of a financing in excess of US $5,000,000 but no later than 31 March 2015.

In December 2014, options were exercised to purchase 250,000 shares of common stock at US $.06 per share for a total of US $15,000.

In December 2014, the Company established a Stock Option Plan. On 4 December 2014, 12,950,000 options were issued to employees and consultants of the Company. The options were issued with an exercise price of US $0.10 and will mature ten years from the date of grant. The options will vest over three years.

13. Financial instruments

Categories of financial instruments

Set out below is a comparison by category of the carrying values and fair values of all the Company's financial assets and financial liabilities.

Financial instruments of the Company at each period end are:

Foreign currency exchange risk

The Company does not generally undertake foreign currency hedging. The majority of the Company's transactions are denominated in US$ and it uses this as its reporting currency.

Liquidity risk

The directors regularly review the Company's major funding positions to ensure that it has adequate financial resources in meeting its financial obligations. The directors take liquidity risk into consideration when deciding on sources of funds.

Credit risk

The Company had receivables of $78 at 31 December 2014 (2013: $nil). The maximum exposure to credit risk at the end of each reporting period is the fair value of each class of receivables set out above. The Company held no collateral as security. The Directors estimate that the carrying value of receivables approximated their fair value.

Market risk

The Company has minimal exposure to the differing types of market risk. It has no foreign currency denominated monetary assets or liabilities and does not make sales or purchases from overseas countries. The Company is not exposed to changes in interest rates as the cash balances that it holds are de-minimis and its financing exposures are at fixed rates of interest.

Capital risk management

The directors define capital as the total equity of the Company. The directors' objectives when managing capital are to safeguard the Company's ability to continue as a going concern in order to provide returns for stockholders and benefits for other stakeholders and to maintain an optimal structure to reduce the cost of capital. In order to maintain an optimal capital structure, the directors may adjust the amount of dividends paid to stockholders, return capital to stockholders and issue new stock to reduce debt.

14. Related party transactions

Transactions with Amphion Innovations plc and Amphion Innovations US Inc

At 31 December 2014 Amphion Innovations plc owned 37.99% of the issued stock in Motif. In addition, Amphion Innovations plc and its wholly owned subsidiary undertaking, Amphion Innovations US Inc, (together the 'Amphion Group') have provided funding for the activities of Motif through the issue of convertible interest bearing loan notes. Richard Morgan was a director of both Motif and Amphion Innovations plc in the period. Transactions between Motif and the Amphion Group are disclosed below:

Transactions with key management personnel

The directors are responsible for planning, directing, and controlling the activities of the Company. Transactions between the Company and its key management personnel and are disclosed in notes 3 and 4 above.

15. Commitment - Nuprim merger procedure

On 31 December 2014 the Company entered into the Nuprim merger agreement with Nuprim Inc and the former Nuprim shareholders pursuant to which Nuprim Inc would merge with and into the Company, which would be the surviving corporation.

Under the terms of the Nuprim merger procedure the Company would obtain the exclusive worldwide rights to the assets owned by Nuprim, including the iclaprim assets, and the rights to acquire certain ancillary materials over a period ending 31 December 2017. The Company is responsible for costs and expenses related to or arising from the transfer prices of the iclaprim assets, including storage and delivery costs of the physical drug supply and inventory which may be payable after 17 October 2014 and must assume and accept the terms and obligations arising under the Acino-LSMG agreement, including payment obligations and is also responsible for any third-party legal or administrative costs incurred by Nuprim in connection with the transaction, up to a maximum of US $25,000 and any obligations arising under a sale and purchase agreement between F. Hoffmann-La Roche Ltd, Hoffmann-LaRoche Inc and Arpida Ltd., dated 1 June 2001.

On completion of the Nuprim merger procedure the 1,513,040 (post reverse stock split) shares of common stock in Motif BioSciences, Inc. were issued to the former Nuprim shareholders on 17 October 2014 when the term sheet was executed, such shares to be held in escrow pending closing of the merger. These shares of common stock in Motif BioSciences, Inc. are to be converted into Ordinary Shares in the Company on Admission. Further details of this share exchange can be found at paragraph 13.8 of Part VI of the AIM admission document published by Motif Bio plc on 27 March 2015. A further 9,805,400 Ordinary Shares are to be issued to the former Nuprim shareholders at Completion and 9,432,033 Nuprim warrants which, when exercised, will constitute 9,432,033 Ordinary Shares. In the event that Motif fails to advance the development of iclaprim by commencing clinical development by 15 February 2017, the former Nuprim shareholders have the right to acquire the iclaprim assets for a purchase price of US $10,000

16. Post balance sheet events

On 12 January 2015, the Company entered into four convertible promissory notes as part of a pre-Admission fundraising for a total of £470,298 to fund the costs of admission to AIM.

On 20 January 2015, the holders of the 5% convertible promissory notes converted $278,787 of principal and accrued interest into 1,768,960 shares of the Company.

On 13 March 2015, the Company's Certificate of Incorporation was amended to increase the authorized number of shares of Common Stock up to 150,000,000.

On 13 March 2015, there was a reverse stock split of the Company's issued and outstanding shares of common stock on a 1 for 0.7185 basis. The holders of the issued and outstanding convertible securities of the Company were converted into Common Stock.

On 27 March 2015, Motif Bio plc utilised the statutory merger procedure as set out in section 251 and section 252, respectively, of the Delaware General Corporation Law to effect a merger between a specially incorporated Merger Subsidiary and Motif BioSciences, Inc to acquire the entire issued common stock of Motif BioSciences, Inc. Under these arrangements, all equity interests in Motif BioSciences, Inc were exchanged for equivalent participation in the Motif Bio plc upon admission to AIM which took place on 2 April 2015.

On 1 April 2015, Amphion Innovations plc converted US $6 million of the outstanding debt into 24,538,058 shares of the Company.

On 2 April 2015, the Company and Nuprim, Inc concluded the purchase and sale of the Nuprim shares by way of a merger procedure, as set out in section 251 and section 252, respectively, of the Delaware General Corporation Law, between the Company and Nuprim Inc, with Motif as the surviving corporation. The merger completed unconditionally on admission of shares in Motif Bio plc to trading on AIM, which took place on the same date. As a result of the merger, the Company acquired the exclusive rights to Nuprim's iclaprim assets.

Under the terms of the Nuprim merger procedure the former Nuprim Inc shareholders were issued with a further 9,805,400 ordinary shares in Motif Bio plc and 9,432,033 non-assignable warrants over ordinary shares in Motif Bio plc with an expiration date 10 years from the closing date and an exercise price of 20 pence.

The directors of Motif Bio plc consider the merger between Motif and Nuprim Inc, with Motif as the surviving corporation, as a consequence of which the Motif Bio plc group acquired the exclusive worldwide rights to Nuprim's iclaprim assets, know-how, and certain ancillary materials, does not meet the definition of an acquisition of a business as set out in IFRS3 and will therefore be accounted for as the acquisition of an asset or a group of assets that does not constitute a business.

IFRS3 requires that in such cases the acquirer shall identify and recognise the individual identifiable assets acquired (including those assets that meet the definition of, and recognition criteria for, intangible assets in IAS 38 Intangible assets) and to allocate the cost of the individual identifiable assets and liabilities on the basis of their relative fair values at the date of purchase, so that no goodwill will arise on the acquisition.

At the time of authorising these financial statements for issuance, the directors of Motif Bio plc were still in the process of finalising the valuation of the assets acquired. Any changes to the amounts disclosed below, arising from finalisation of these valuations, will be reflected in the next set of financial statements of Motif Bio plc.

Details of the purchase consideration and provisional amounts attributed to net assets acquired are as follows:

17. Ultimate controlling party

During the period ended 31 December 2014 the directors of Motif BioSciences, Inc do not consider that the Company had any single ultimate controlling party. Since 2 April 2015, Motif BioSciences, Inc has been a wholly owned subsidiary undertaking of Motif Bio plc.