polarean Regulatory News (POLX)

18 May 2022

Polarean Imaging Plc

("Polarean" or the "Company")

Final results for the year ended 31 December 2021

Notice of Annual General Meeting

Polarean Imaging plc (AIM: POLX), the medical‑imaging technology company with an investigational drug‑device combination product using hyperpolarised 129xenon gas to enhance magnetic resonance imaging (MRI) in pulmonary medicine announces its audited final results for the year ended 31 December 2021.

In addition, Polarean confirms that the Annual Report and Accounts for the year ended 31 December 2021, the Notice of the Annual General Meeting ("AGM") and a Form of Proxy are now available on the Company's website (http://www.polarean-ir.com/content/investors/annual-reports.asp) and will be posted to shareholders shortly.

Polarean's AGM will be held at 2500 Meridian Parkway, Suite 175, Durham, NC 27713, USA at 2 p.m. BST / 9 a.m. EST on Wednesday 29 June 2022. 

Highlights

- Raised £27 million (US$37.1 million) gross proceeds in an oversubscribed financing in April 2021, including continued support of strategic investors, Bracco Imaging S.p.A and Nukem Isotopes GmbH as well as institutional investor Amati AIM VCT plc, joined by several new UK and US institutional investors

- Sale and installation of two new Polarean 9820 Xenon Polariser systems to each of the University of Texas MD Anderson Cancer Center and the University of British Columbia BC Children's Hospital

- Appointment of Charles ("Chuck") Osborne, Chief Financial Officer, to the Board

- Publication of first peer-reviewed COVID-19 research using hyperpolarised xenon MRI to observe longer-term lung damage after COVID-19 infection by Professor Fergus Gleeson at the University of Oxford

- Net cash of US$28.9 million as of 31 December 2021, which, based on strategic decisions, could finance the company into 2024

Post-period end

- Successful re-submission of New Drug Application (NDA) to the FDA following the Complete Response Letter (CRL) received in October 2021, with an established user fee goal date of 30 September 2022

- Further new research system orders from McMaster University in Ontario, Canada and Cincinnati Children's Medical Center

- Appointment of Frank Schulkes and Dan Brague to the Board as Non-Executive Directors

- Appointment of Ken West as Non-Executive Chairman, following the retirement of Jonathan Allis

- Research collaboration with Oxford University Hospitals NHS Trust for long-COVID

Richard Hullihen, CEO of Polarean, said: "In the first half of 2021 we completed our largest financing to date with an oversubscribed £27 million gross proceeds placing, subscription and open offer. We welcomed several significant new institutional investors and continued to receive excellent support from our existing strategic, institutional and retail investors.

"We spent much of the year gearing towards our anticipated FDA approval, although the FDA confirmed in October that they were unable to approve the NDA in its current form due to some technical or manufacturing-related issues centred around the xenon hyperpolariser system. We worked hard with consultants and collaborators to thoroughly address the items raised and successfully resubmitted our application post-period end, in March 2022. We now have an established user fee goal date of 30 September 2022 and will continue to focus our efforts on building our commercial organisation to support a successful launch upon FDA approval.

We continue to identify exciting opportunities in the areas of COVID-19, cardiology and pulmonary vascular disease and these prospects should expand the use of the Company's technology in the future. Although the delay in FDA approval is disappointing, we are using this time to continue to explore potential future applications for our technology. On behalf of the Board and the whole Polarean team, I would like to extend my thanks to our shareholders for all their support and we look forward to a very positive year ahead."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

Enquiries:

About Polarean (www.polarean.com)

The Company and its wholly owned subsidiary, Polarean, Inc. (together the "Group") are revenue-generating, investigational drug-device combination companies operating in the high-resolution medical imaging research space.

The Group develops equipment that enables existing MRI systems to achieve an improved level of pulmonary function imaging and specialises in the use of hyperpolarised xenon gas (129Xe) as an imaging agent to visualise ventilation. 129Xe gas is currently being studied for visualisation of gas exchange regionally in the smallest airways of the lungs, across the alveolar tissue membrane, and into the pulmonary bloodstream.

In October 2020, the Group submitted a New Drug Application ("NDA") to the FDA for hyperpolarised 129Xe used to evaluate pulmonary function and to visualise the lung using MRI. The Group received a complete response letter on 5 October 2021. On 30 March 2022, the Company filed the resubmission of its NDA with the US FDA and has received a PDUFA date of 30 September 2022.

The Group operates in an area of significant unmet medical need and the Group's technology provides a novel investigational diagnostic approach, offering a non-invasive and radiation-free functional imaging platform.

Chairman's Statement

I am pleased to report on a year of considerable progress for Polarean particularly in light of the ongoing global challenges. We have continued to build momentum in our strategy to advance our powerful Xenon MRI lung imaging technology towards commercialisation. The COVID pandemic, and the challenges that are growing with long COVID, have further accentuated the urgent global need for improved ways to diagnose and manage pulmonary disease. Polarean is poised to offer a solution to the gaps that exist with current diagnostic imaging to directly measure and visualise lung function.

Our efforts in 2021 focused on preparation for commercialisation, following the Company's October 2020 New Drug Application ("NDA") submission to the United States Food & Drug Administration ("FDA"). To fund these commercialisation efforts, in April 2021, the Company completed an oversubscribed £27 million placing, subscription and open offer. This financing round put the Company into a strong financial position and brought in several new top-tier investors into the Polarean shareholder base.

The market research and physician advisory boards that were conducted in 2021 thoroughly advanced our understanding of the unmet needs our technology seeks to address and highlighted the market opportunities that exist in several clinical applications at commercial launch. Through scientific engagement between our medical affairs team and pulmonary disease thought-leaders undertaken in 2021, it is clear that awareness, interest, and enthusiasm is building for the potential of hyperpolarised xenon MRI to improve the care of patients with pulmonary disease. The interest in Polarean's technology is also growing amongst several pharmaceutical companies that are seeking novel approaches to use quantitative, functional lung imaging in the development of their investigational drugs. Finally, Polarean has also been in close contact with reimbursement entities in the US market, developing pathways to ensure that reimbursement for the use of Polarean's products is established, and at a level that acceptable to insurers and providers

We were disappointed in early October 2021 to have received a Complete Response Letter ("CRL") from the FDA in response to Polarean's NDA submission. The Company worked diligently to comprehensively respond to the questions raised in the CRL, which were mostly technical and manufacturing related. The Company resubmitted the NDA to the FDA on 30 March 2022 and on 20 April 2022, the Company announced that the FDA had accepted the resubmission of the NDA and established a user fee goal date of 30 September 2022.

Our primary focus for the remainder of 2022 will be working with the FDA to obtain final approval for our drug-device combination product and continuing the planning and preparation for commercial launch. We are also looking forward to generating new clinical data evidence to support a strong value proposition and indication and geographical expansion in subsequent regulatory filings over the next several years.

On behalf of the Board, I thank the employees, stakeholders and shareholders for their support, without which none of this would have been possible.

Kenneth West

Non-Executive Chairman

17 May 2022

Chief Executive Officer's Statement

2021 - Year of Preparation and Response

We spent the first nine months of 2021 preparing for the launch of our drug-device combination product in anticipation of receiving FDA approval in the fourth quarter of 2021. On 5 October 2021, we were surprised to receive a CRL from the FDA, indicating that they were unable to approve the NDA in its current form. The CRL and subsequent Type A meeting with the FDA provided the Company with the list of issues that needed to be addressed to obtain approval. The issues were mostly technical or manufacturing-related in nature and centred around the xenon hyperpolariser system. The Company worked with its consultants and collaborators to address the items identified in the CRL. On 30 March 2022, the Company refiled the NDA with the FDA. The resubmission addressed the items identified in the CRL. On 20 April 2022, the Company announced that the FDA had accepted the resubmission of the NDA and established a user fee goal date of 30 September 2022, designating it Type 2.

The Opportunity

Pulmonary disease places a significant burden on the US and global healthcare systems. In addition, the COVID-19 pandemic has resulted in millions of additional patients who could potentially benefit from improvements in the quantitative assessment of pulmonary function via non-invasive imaging. The Company sees a tremendous opportunity to bring our technology's quantitative, reproducible, non- invasive method for diagnostic and therapeutic guidance to medicine. Researchers around the world are receiving grants to study long COVID patients using the Company's technologies. Promising preliminary results are already emerging and being published and we anticipate additional studies being published over the next 12 months. Researchers are currently conducting clinical trials and pharmaceutical company sponsored investigations in multiple areas of pulmonary disease using our technology. The Company continues to do market research and work with key opinion leaders through its advisory board process to refine and extend our understanding of current standards of care and refine the development of the healthcare economic analyses of our technology to support the adoption of hyperpolarised noble gas imaging by healthcare providers. The business plan continues to focus initially on addressing the high end of the US academic and teaching hospital market segment, which comprises approximately the top 1000 institutions nationally having coincident multiple Centres of Excellence in Pulmonary Medicine and Radiology. The combined addressable capital equipment market there for our products approaches US$500 million in equipment sales alone, with the consequent drug sales following, as laid out in recently published research. We also see a parallel opportunity supporting the pharmaceutical industry in improving the velocity and reducing the scale and cost of their pulmonary drug clinical trials by providing quantitative, reproducible image-based data.

Polarean continues to serve the medical imaging research market by providing xenon polarisers to enable functional MRI of the pulmonary system to institutions and researchers. This brings dynamic, reproducible, three-dimensional, high-resolution, regional, quantitative, image-based information to pulmonary physicians and researchers whose best alternative tool is spirometry, with its limitations in use for measurement of expired breath. We expanded our installed bases with two new polariser installations during 2021, including one at high profile academic research centre, MD Anderson.

Our Organisation

In anticipation of FDA approval, the Company has been involved in preparing the organisation for commercialisation of our products. The Company recently named Alexander Dusek as its Chief Commercial Officer. Mr. Dusek brings an extensive background in pharmaceutical industry commercialisation and is building our commercial organisation to support a successful launch upon FDA approval.

Our Operations

In 2021, the Company focused on working with its drug and system contract manufacturing partners to ensure that they are prepared for the launch of the Company's product. In addition, we made planned advances in our quality systems and engineering infrastructure as we move toward maturing in our new regulated environment.

During the year, we completed installations of two model 9820 xenon polariser systems at BC Children's Hospital, Vancouver BC, and at the University of Texas MD Anderson Cancer Center, to support their pulmonary research programmes.

R&D

We continued to invest in our intellectual property portfolio and future development of our technology. Intellectual property continues to be developed in the areas of gas exchange and pulmonary vascular disease. Our group has continued to push the design of the polariser systems forward. We have also made key advances in exciting new display and analysis software focused on providing an intuitive, colour encoded three-dimensional display for use across all stakeholders in the healthcare process focused on providing care to pulmonary patients.

Financials

Sales for 2021 were below our original expectations, as we did not receive FDA approval in the final quarter as anticipated in the plan. We were able to adjust our spending plans following receipt of the CRL from the FDA, which allowed us to finish 2021 with a higher than anticipated cash balance of US$28.9 million. We continued to sell our polariser systems into the research market and completed two installations during 2021. The financing we completed in the first half of 2021 has put the Company in a solid financial position with the ability to fund the Company well into 2023.

Advisers

The Company appointed Stifel as joint broker in December 2020 and followed that up by appointing them as the Company's nominated adviser and sole broker early in 2021. Stifel guided the Company through an oversubscribed round of financing, securing important new and larger funds participation in the first half of 2021 that allowed the Company to prepare for the anticipated US launch of its product.

2022 and Beyond

We spent the first quarter of 2022 finalising our NDA resubmission focusing on execution of near-term objectives. We announced on 20 April 2022 that the FDA had accepted the resubmission of the NDA as a complete response and has established a user fee goal date of 30 September 2022. In the meantime, we continue to sell our systems to the research market, including the recently announced order and installation from McMaster University in Canada, and an order for an additional system at Cincinnati Children's Hospital Medical Center.

We continue to identify exciting opportunities in the areas of long COVID, cardiology and pulmonary vascular disease and these prospects should expand the use of the Company's technology in the future. We recently announced a research collaboration in long COVID with Oxford University Hospitals NHS Trust, whereby we will evaluate the underlying causes of persistent breathlessness in patients with long COVID using our xenon polariser. We are utilising the delay in obtaining FDA approval to work on the commercialisation and launch programmes and explore initiation of follow-on trials for potential future applications of our technology. We have begun evaluation of geographic market exploration and expansion, and the pursuit of early engagement with respiratory drug developers as we develop scale sufficient to prove our value proposition with regard to reducing the costs of their drug development process.

Polarean has a dedicated team of employees, consultants and advisers working to bring our much- needed technology to the healthcare market.

Richard Hullihen

Chief Executive Officer

17 May 2022

Consolidated Statement of Comprehensive Income

The results reflected above relate to continuing activities.

There are no items of Other Comprehensive Income ("OCI") for the year other than the loss above and therefore no separate statement of other comprehensive income has been presented.

Consolidated Statement of Financial Position

These Financial Statements were approved and authorised for issue by the Board of Directors on 17 May 2022 and were signed on its behalf by:

Kenneth West Non-Executive Chairman

Company Statement of Financial Position

For the year under review, the amount due from subsidiary undertaking is regarded as net investment and is therefore reclassified from trade and other receivable to investment in subsidiary, and their respective comparatives were also restated.

As permitted by section 408 of the Companies Act 2006, no separate statement of Comprehensive Income is presented in respect of the parent Company. The loss for the financial year dealt with in the financial statements of the parent Company was US$2,128,845 (2020: US$908,895).

These financial statements were approved and authorised for issue by the Board of Directors on 17 May 2022 and were signed on its behalf by:

Kenneth West Non-Executive Chairman

Consolidated Statement of Changes in Equity

Company Statement of Changes in Equity

Consolidated Statement of Cash Flows

Company Statement of Cash Flows

Notes to the Financial Statements

The Company is incorporated in England and Wales under the Companies Act 2006. The registered number is 10442853 and its registered office is at 27-28 Eastcastle Street, London, W1W 8DH. The Company is listed on the AIM market of the London Stock Exchange.

The Company is the parent company of Polarean, Inc (the "Subsidiary", together the "Group"). The principal activity of the Group is developing next generation medical imaging technology. The Subsidiary is incorporated in the United States of America and has a registered office of 2500 Meridian Parkway #175, Durham, NC 27713, USA.

Standards and interpretations adopted during the year

Information on new standards, amendments and interpretations that are relevant to the Group's annual report and accounts is provided below:

· Interest Rate Benchmark Reform (IBOR) reform Phase 2 (Amendments to IFRS 9, IAS 39 and IFRS 7); and

· COVID-19-Related Rent Concessions beyond 30 June 2021 (Amendments to IFRS 16).

These standards have no material impact on the Group.

Standards, amendments and interpretations that are not yet effective

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the Company has decided not to adopt early. The most significant of these are as follows, which are all effective for the period beginning 1 January 2022:

· Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37);

· Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);

· Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and

· References to Conceptual Framework (Amendments to IFRS 3).

The following amendments are effective for the period beginning 1 January 2023:

· Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);

· Definition of Accounting Estimates (Amendments to IAS 8); and

· Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).

The Group is currently assessing the impact of these new accounting standards and amendments.

Basis of preparation

These financial statements have been prepared in accordance with UK adopted International Accounting Standards ("IFRS") and under the historical cost convention. The financial statements are presented in United States Dollars ("US$") except where otherwise indicated.

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

Going concern

The Directors consider the going concern basis of preparation to be appropriate in preparing the financial statements.

The Group is in its development stage and has not yet moved to full commercial exploitation of its IP. During the year ended 31 December 2021 the Group recorded a loss after tax of US$14,016,004 (2020: loss of US$6,534,523) and a net cash outflow from operating activities of US $12,250,467 (2020: US$5,794,698).

During the year, the Group raised approximately US$37.3 million from the placement of new shares. At the reporting the Group's cash balance was US$28.9 million (2020: US$6.3 million). In considering the appropriateness of this basis of preparation, the Directors have reviewed the Group's working capital forecasts for a minimum of 12 months from the date of the approval of this financial information. Based on their consideration the Directors have reasonable expectation that the Group has adequate resources to continue for the foreseeable future and that carrying values of intangible assets are supported. Thus, they continue to adopt the going concern basis of accounting in preparing this financial information.

Management has implemented logistical and organisational changes to underpin the Group's resilience to COVID-19, with the key focus being protecting all personnel, minimising the impact on critical work streams and ensuring business continuity. COVID-19 may impact the Group in varying ways, which could lead to a direct bearing on the Group's ability to generate future cash flows for working capital purposes. Management is closely monitoring commercial and technical aspects of the Group's operations to mitigate the impact from the COVID-19 pandemic. The inability to gauge the length of such disruption further adds to this uncertainty. For these reasons the generation of sufficient operating cash flows remain a risk. Management believes the Group will generate sufficient working capital and cash flows to continue in operational existence and will have the ongoing support of its shareholders, if required, for the foreseeable future.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in share premium as a deduction from the proceeds.

Government and other grants

Grants are not recognised until there is a reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received. Grants are treated as deferred income and released to the income statement on the achievement of the relevant performance criteria.

Inventory

Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the weighted average cost principle and includes expenditure incurred in inventories, adjusted for rebates, and other costs incurred in bringing them to their existing location.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less.

3. Significant accounting policies continued

Functional and presentation currency

Items included in the financial statements of the Group are measured using the currency of the primary economic environment in which the Group operates ("the functional currency"). The financial statements are presented in United States Dollars (US$) which is also the Group's functional currency.

Foreign currencies

Transactions in foreign currencies are initially recorded by the Group's entities at their respective functional currency spot rates at the date the transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date.

Differences arising on settlement or translation of monetary items are recognised in profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e., translation differences on items whose fair value gain or loss is recognised in OCI or profit or loss are also recognised in OCI or profit or loss, respectively).

Basis of consolidation

The consolidated financial statements are for the year ended 31 December 2021. The measurement bases and principal accounting policies of the Group are set out below.

On 30 May 2017 Polarean Merger-Sub, Inc., a Subsidiary of the Subsidiary, completed a merger process under which it acquired substantially all of the assets of m2m Imaging Corp ("m2m"), a portfolio company of Amphion Innovations plc engaged in the development of high-performance MRI RF coils for the global research market, primarily in micro-imaging. By 2016 m2m had been inactive for several years due to an inability to raise funds. At the date of the merger the assets of m2m were its technology and patents. The merger was affected by way of court sanction in the process of which the Subsidiary acquired, through a special purpose entity, Polarean Merger Sub, Inc. the assets of another special purpose entity, m2m Merger Sub, Inc., with m2m Merger Sub, Inc. being the surviving entity. After the reporting date, on 1 September 2017, m2m Merger Sub, Inc. was merged into the Subsidiary with the Subsidiary being the surviving entity, the effect being that m2m Merger Sub, Inc. was collapsed, and the Subsidiary had acquired the m2m assets.

As part of the arrangements for the merger 576,430 shares in the Subsidiary were issued to the former shareholders in m2m with the intention that all parties would exchange their stock in Polarean, Inc. for shares in the Group on a pro rata basis as soon as practicable.

The Directors consider the merger between the Subsidiary and m2m Acquisition, Inc. as a consequence of which the group acquired the exclusive worldwide rights to m2m's technology and patents does not meet the definition of an acquisition of a business as set out in IFRS3 and has therefore been accounted for as the acquisition of an asset or a group of assets that does not constitute a business.

IFRS 3 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. Such a transaction or event does not give rise to goodwill.

The fair value of the assets acquired under the merger arrangement of US$4,999,996 represents the aggregate estimated value of the financial obligations of the former m2m shareholders which were converted into equity in m2m prior to the merger agreement.

3. Significant accounting policies continued

The Directors consider the acquisition of the entire issued common stock of the Subsidiary by the Company in exchange for equivalent equity participation in the Company to be a group re-organisation and not a business combination and to fall outside the scope of IFRS 3. Having considered the requirements of IAS 8 and the relevant UK and US guidance, the transaction has been accounted for on a merger or pooling of interest basis as if both entities had always been combined, using book values, with no fair value adjustments made nor goodwill recognised.

Revenue recognition

Revenue comprises the fair value of the sale of goods and rendering of services to external customers, net of applicable sales tax, rebates, promotions and returns.

Contracts and obligation

The majority of customer contracts have three main elements that the Group provides to the customer:

- Sale of polarisers;

- Sale of parts and upgrades; and

- Provision of service.

The sale of polarisers is seen as a distinct performance obligation and revenue is recognised at a point in time. The customer can benefit from the use of the polarisers when supplied and is not reliant on the Group to provide the parts and upgrades or service, and therefore revenue from the sale of polarisers is recognised in full when the goods are delivered to the customer.

The second performance obligation is the sale of parts and upgrades. The customer can benefit from the use of the parts and upgrade when supplied and is not reliant on the Group to provide the service, and therefore revenue from the sale of parts and upgrades is recognised in full when the goods are delivered to the customer.

The third performance obligation is the provision of preventive maintenance service. Revenue from the provision of preventive maintenance service is recognised over the period when the services are rendered. A contract liability represents the obligation of the Group to render services to a customer for which consideration has been received (or the amount is due) from the customer. 

Determining the transaction price

The transaction price is determined as the fair value of the Group expects to receive over the course of the contract.

There are no incentives given to customers that would have a material effect on the financial statements.

Allocate the transaction price to the performance obligations in the contract

The allocation of the transaction price to the performance obligations in the contract is non-complex for the Group. There is a fixed unit price for each product or service sold. Therefore, there is limited judgement involved in allocating the contract price to each unit ordered.

Recognise revenue when or as the entity satisfies its performance obligations

The overarching terms are consistent in each contract.

The sale of polarisers is seen as a distinct performance obligation and revenue is recognised at a point in time, when title of the goods transferred to the customer, as the customer can benefit from the use of the polarisers when supplied.

The sale of parts and upgrades is seen as a distinct performance obligation and revenue is recognised at a point in time, when supplied to the customer, as the customer can benefit from the use of the parts and upgrade when supplied.

The provision of service is seen as a distinct performance obligation and revenue is recognised as the Group provides these services for the duration of the contract, i.e. over time. Any unexpired portion of a service contract or payment received in advance in respect of service contracts either partially completed or not started, are included in deferred income and released over their remaining term.

3. Significant accounting policies continued

Property, plant and equipment

Owned assets

Items of property, plant and equipment are stated at cost or deemed cost less accumulated depreciation and impairment losses. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended use. When parts of an item of property, plant and equipment have different useful lives, those components are accounted for as separate items of property, plant and equipment.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.

Depreciation

Depreciation is charged to profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows:

● Computer and IT equipment - 33% straight line

● Leasehold improvements - 20% straight line

● Laboratory equipment - 20% straight line

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, or if there is an indication of a significant change since the last reporting date.

Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised within administrative expenses in the statement of comprehensive income.

Intangible Assets

Patents and related rights which are acquired through a business combination, are assessed by reviewing their net present value of future cash flows. Patents are currently amortised over their useful life, not exceeding 10 years.

Internally generated intangible assets - research costs are costs incurred in research activities and are recognised as an expense in the period in which they are incurred. An internally generated intangible asset arising from the development of commercial technologies 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 the Directors consider that the Group does not meet all of those conditions and development costs are therefore recorded as expense in the period in which the cost is incurred.

Impairment of non-financial assets

Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are reviewed at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

3. Significant accounting policies continued

Provisions

A provision is recognised in the statement of financial position when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, when appropriate, the risks specific to the liability. The increase in the provision due to the passage of time is recognised in finance costs.

Financial assets

The Group classifies all of its financial assets at amortised cost. Financial assets do not comprise prepayments. Management determines the classification of its financial assets at initial recognition.

These assets arise principally from the provision of goods and services to customers (e.g. trade receivables), but also incorporate other types of financial assets where the objective is to hold their assets in order to collect contractual cash flows and the contractual cash flows are solely payments of the principal and interest. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

Amortised Cost

The Group's financial assets held at amortised cost comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position.

Impairment provisions for trade receivables are recognised based on the simplified approach within IFRS 9 using the lifetime expected credit losses. During this process the probability of the non-payment of the trade receivables is assessed. This probability is then multiplied by the amount of the expected loss arising from default to determine the lifetime expected credit loss for the trade receivables. For trade receivables, which are reported net; such provisions are recorded in a separate provision account with the loss being recognised within administrative expenses in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

Impairment provisions for other receivables are recognised based on the general impairment model within IFRS 9. In doing so, the Company follows the 3-stage approach to expected credit losses. Step 1 is to estimate the probability that the debtor will default over the next 12 months. Step 2 considers if the credit risk has increased significantly since initial recognition of the debtor. Finally, Step 3 considers if the debtor is credit impaired, following the criteria under IAS 39.

Financial liabilities

The Group classifies its financial liabilities in the category of financial liabilities at amortised cost. All financial liabilities are recognised in the statement of financial position when the Group becomes a party to the contractual provision of the instrument.

Financial liabilities measured at amortised cost comprise trade payables and other short-dated monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest rate method.

Unless otherwise indicated, the carrying values of the Group's financial liabilities measured at amortised cost represents a reasonable approximation of their fair values.

Employee benefits: pension obligations

The Group operates a defined contribution plan. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.

The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available.

3. Significant accounting policies continued

Net finance costs

Finance costs

Finance costs comprise direct issue costs and foreign exchange losses; and are expensed using the effective interest method in the period in which they are incurred.

Finance income

Finance income comprises interest receivable on funds invested, and foreign exchange gains.

Interest income is recognised in the income statement as it accrues using the effective interest method.

Leases

Definition of a lease

The Group assesses whether a contract is or contains a lease. A contract is or contains a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration.

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, and subsequently at cost less any accumulated amortisation and impairment losses and adjusted for certain measurements of the lease liability. Right-of-use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to be shorter than the lease term.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

The lease liability is subsequently increased by the interest cost on the lease liability and decreased by lease payments made. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, a change in estimate of the amount expected to be payable under a residual value guarantee, or as appropriate, changes in the assessment of whether a purchase or extension option is reasonably certain to be exercised or a termination option is reasonably certain not to be exercised.

The Group has applied judgement to determine the lease term for some lease contracts in which it is a lease that include renewal options. The assessment of whether the Group is reasonably certain to exercise such options impacts the lease term, which significantly affects the amount of lease liabilities ad right-of-use assets recognised.

Income tax

Income tax for the years presented comprises current and deferred tax. Income 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 year, using tax rates enacted or substantively enacted at the statement of financial position date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognised on temporary differences arsing between the tax bases of assets and liabilities and their carrying amounts.

The following temporary differences are not recognised if they arise from a) the initial recognition of goodwill, and b) for the initial recognition of other assets or liabilities in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred tax is determined using tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised, or the deferred income tax liability is settled.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

3. Significant accounting policies continued

Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.

Critical accounting estimates and judgements

The preparation of the Group's financial statements under IFRS requires the directors to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities. Estimates and judgements are continually evaluated and are based on historical experience and other factors including expectations of future events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.

The directors consider that the following judgements are likely to have the most significant effect on the amounts recognised in the financial statements.

Carrying value of intangible assets - Group

In determining whether there are indicators of impairment of the Group's intangible assets, the directors take into consideration various factors including the economic viability and expected future financial performance of the asset and when it relates to the intangible assets arising on a business combination, the expected future performance of the business acquired.

Carrying value of investments in and amounts receivable from subsidiaries - Company

In determining whether there are indicators of impairment of the Company's investments in, and amounts receivable from, its subsidiary undertakings, the directors take into consideration various factors including the economic viability and expected future financial performance of the business of the subsidiary undertakings.

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker (which takes the form of the Board of Directors) as defined in IFRS 8, in order to allocate resources to the segment and to assess its performance.

The chief operating decision maker has determined that the Group has one operating segment, the development and commercialisation of gas polariser devices and ancillary instruments. Revenues are reviewed based on the products and services provided: Polarisers, Parts and Upgrades, Service and Other revenue.

The Group operates in Canada, Germany, the United Kingdom and the United States of America. Revenue by origin of geographical segment for all entities in the Group is as follows:

Product and services revenue analysis

Management measures revenues by reference to the Group's core services and products and related services, which underpin such income.

Staff costs for the Group and the Company during the year:

Key management compensation:

The following table details the aggregate compensation paid to key management personnel.

Key management personnel include all directors who together have authority and responsibility for planning, directing, and controlling the activities of the Group and senior divisional managers.

The loss per share has been calculated using the loss for the year and the weighted average number of ordinary shares outstanding during the year, as follows:

For diluted loss per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potential dilutive warrants, options and convertible loans over ordinary shares. Potential ordinary shares resulting from the exercise of warrants, options and the conversion of convertible loans have an anti-dilutive effect due to the Group being in a loss position. As a result, diluted loss per share is disclosed as the same value as basic loss per share.

There were no charges to current corporate taxation due to the losses incurred by the Group in the period.

Income taxes computed at the statutory federal income tax of 21% (2020: 21%) and the state income tax of 2.50% (2020: 2.50%) UK corporation tax is calculated at 19% of the estimated assessable profits for the year.

The tax reform act of 1986 contains provisions which limit the ability to utilise the net operating loss carry forwards in the case of certain events including significant changes in ownership interests. If the Group's net operating loss carry forward, the Group would incur a federal income tax liability even though net operating loss carry forwards would be available in future years.

The Company has tax losses carried forward of US$33,391,842 (2020: $19,375,838). The unutilised tax losses have not been recognised as a deferred tax asset due to uncertainty over the timing of future profits and gains. In addition, there are approximately $531,000 (2020: $227,000) of unrecognised deferred tax assets in respect of the share-based payment.

The investment in subsidiary undertaking is stated at cost less provision for impairment. The amount due from subsidiary undertaking are regarded as net investment which is subject to the impairment assessment whenever events or changes in circumstance indicate that the carrying value of the investment and the amount due from subsidiary undertakings may not be recoverable. For the year under review, there is no such indicator for impairment.

The net carrying amounts noted above relates to the Subsidiary. The subsidiary undertaking during the year were as follows:

Analysis of trade receivables based on age of invoices

The Group applies the IFRS 9 simplified approach to measuring expected credit losses (ECL) which uses a lifetime expected loss allowance for all trade receivables. The ECL balance has been determined based on historical data available to management in addition to forward looking information utilising management knowledge. The Company applies a similar approach to measuring ECL for the amounts due from group undertakings.

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 30 days and therefore are all classified as current. The majority of trade and other receivables are non-interest bearing. Where the effect is material, trade and other receivables are discounted using discount rates which reflect the relevant costs of financing. The carrying amount of trade and other receivables approximates fair value.

The group trade receivables include governments grants which amounted to US$Nil (2020: US$42,735) in which there are no unfulfilled conditions or contingencies attached to these grants as of 31 December 2021.

During the year ended 31 December 2021, a total of $677,402 of inventories was included in the statement of comprehensive income as an expense (2020: $346,300).

The issued share capital of the Company was as follows:

On 2 March 2020, the Company issued 232,010 new ordinary shares upon the exercise of share warrants with an exercise price of £0.15 each.

On 1 April 2020, the Company issued 46,624,997 new ordinary shares at a price of £0.18 each.

On 1 June 2020, the Company issued 534,400 new ordinary shares upon the exercise of share warrants with an exercise price of £0.00003 each.

On 20 October 2020, the Company issued 64,128 new ordinary shares upon the exercise of share warrants with an exercise price of £0.15 each.

On 23 December 2020, the Company issued 1,318,800 new ordinary shares upon the exercise of share options with an exercise price of £0.15 each.

On 24 February 2021, the Company issued 61,563 new ordinary shares upon the exercise of share warrants with an exercise price of £0.15 each. 

On 25 March 2021, the Company issued 358,713 new ordinary shares upon the exercise of share warrants with an exercise price of £0.00037 each.

On 31 March 2021, 7 April 2021 and 8 April 2021 the Company issued a total of 44,932,142 new ordinary shares of £0.00037 each in the capital of the Company at the issue price of 60 pence per share in a Placing, Subscription and Open Offer for total proceeds of £27 million (before expenses).

On 16 April 2021, the Company issued 467,733 new ordinary shares upon the exercise of share warrants with an exercise price of £0.00037 each.

On 17 May 2021, the Company issued 40,080 new ordinary shares upon the exercise of share warrants with an exercise price of £0.00037 each.

On 23 November 2021, the Company issued 66,800 new ordinary shares upon the exercise of share options with an exercise price of £0.025358 each.

On 9 December 2021, the Company issued 110,000 new ordinary shares upon the exercise of share options with an exercise price of £0.15 each.

Share premium

Share premium represents the excess of subscription amounts for the issue of shares over nominal value of shares issued, less any attributable share issue costs.

Group re-organisation reserve

The group re-organisation reserve arose on the transaction under which the Group acquired the Subsidiary by way of a group re-organisation.

Share based payment reserve

Cumulative fair value of options charged to the consolidated income statement net of transfers to the profit or loss reserve on exercised and cancelled/lapsed options.

Accumulated losses

Includes all current and prior year retained profits and losses.

Merger reserve

The balance on the merger reserve represents the fair value of the consideration given in excess of the nominal value of the ordinary shares issued in an acquisition made by the issue of shares where the transaction qualifies for merger relief under the Companies Act 2006.

Share options

The Company grants share options at its discretion to Directors, management and employees. These are accounted for as equity settled transactions. Should the options remain unexercised after a period of ten years from the date of grant the options will expire unless an extension is agreed to by the board. Options are exercisable at a price equal to the Company's quoted market price on the date of grant or an exercise price to be determined by the board.

Details of share options granted, exercised, lapsed and outstanding at the year-end are as follows:

On 23 December 2020, 900,000 options were granted, with an exercise price of 73 pence per share. 25% of the options shall vest on the one year anniversary of the employee's date of hire with the remaining 75% vesting in equal portions over the 36 months following the one year anniversary of the employee's date of hire.  

On 27 April 2021, 1,000,000 options were granted, with an exercise price of 77 pence per share. 25% of the options shall vest on the one-year anniversary of the employee's date of hire with the remaining 75% vesting in equal portions over the 36 months following the one year anniversary of the employee's date of hire.

On 24 June 2021, 250,000 options were granted, with an exercise price of 95 pence per share. 25% of the options shall vest on the one-year anniversary of the employee's date of hire with the remaining 75% vesting in equal portions over the 36 months following the one year anniversary of the employee's date of hire.

19.  Share based payments continued

On 07 July 2021, 5,250,000 options were granted, with an exercise price of 93 pence per share . 25% of the options shall vest on the one-year anniversary of the employee's date of hire with the remaining 75% vesting in equal portions over the 36 months following the one year anniversary of the employee's date of hire.

On 26 August 2021, 1,300,000 options were granted, with an exercise price of 87 pence per share . 25% of the options shall vest on one-year anniversary of the employee's date of hire with the remaining 75% vesting in equal portions over the 36 months following the one year anniversary of the employee's date of hire.

On 08 September 2021, 430,000 options were granted, with an exercise price of 89 pence per share. 25% of the options shall vest on the one-year anniversary of the employee's date of hire with the remaining 75% vesting in equal portions over the 36 months following the one year anniversary of the employee's date of hire.

On 21 October 2021, 150,000 options were granted, with an exercise price of 63 pence per share . 25% of the options shall vest on the one-year anniversary of the employee's date of hire with the remaining 75% vesting in equal portions over the 36 months following the one year anniversary of the employee's date of hire.

On 14 December 2021, 200,000 options were granted, with an exercise price of 57 pence per share . 25% of the options shall vest on the one-year anniversary of the date of hire with the remaining 75% vesting in equal portions over the 36 months following the one year anniversary of the employee's date of hire... The options outstanding as at 31 December 2021 have an exercise price in the range of US$0.0041 to US$1.19 (2020: US$0.0041 to US$0.99).

The fair value of options granted during the year has been calculated using the Black Scholes model which has given rise to fair values per share of between US$0.43 and US$0.60. This is based on risk-free rates of between 0.60% and 1.20% and volatility of between 57% and 80%.

The Black Scholes calculations for the options resulted in a charge of US$1,814,882 (2020: US$474,716) which has been expensed in the year. The weighted average remaining contractual life of the share options is 6.85 years (2020: 6.47 years). The weighted average share price at the date of exercise for all share options exercised during the period was US$0.58 (2020: $0.73). All share options are equity settled on exercise.

Share warrants

The Company grants share warrants at its discretion to Directors, management, employees, advisors and lenders. These are accounted for as equity settled transactions. Terms of warrants vary from agreement to agreement.

Details for the warrants granted, exercised, lapsed and outstanding at the year-end are as follows:

The weighted average remaining contractual life of the share warrants is 2.55 years (2020: 2.81 years). The weighted average share price at the date of exercise for all share warrants exercised during the period was US$0.68 (2020: $0.31).

On 19 December 2011, the Subsidiary entered into an agreement with a third party to purchase various assets, including patents, trademarks, a license agreement and physical inventory. As consideration for this transaction, the Subsidiary agreed to pay 5 per cent. of gross revenue on clinical sales of products that are sold related to the patents purchased, for seven years from the date of the commercial sale. As of 31 December 2021, the fair value of this contingent consideration was US$316,000 (2020: US$316,000). This liability is valued based on a probability weighted expected return method using projected future cash flows. There were no significant events in the year ended 31 December 2021 necessitating revision of the probability weighted expected value of the contingent consideration.

There was therefore US$Nil profit or loss arising on revaluation of contingent consideration during the year ended 31 December 2021 (2020: US$Nil).

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs and are payable within 1 year.

The Directors consider the carrying value of all financial liabilities to be equivalent to their fair value.

Group

Nature of leasing activities

The group leases properties in the jurisdiction in which it operates with all lease payments fixed over the lease term.

The Group discounts the lease payments using its incremental borrowing rate at the commencement date of the lease. The weighted-average rate applied is 10%.

Right-of-use assets

24.  Leases continued

Lease Liabilities

Analysis of lease liabilities

Maturity of the lease liabilities is analysed as follows:

Royalty commitments

The Subsidiary has entered into three agreements requiring royalty payments. One agreement is conditional and requires a payment of 5 per cent. of gross revenue on clinical sales during the payment period beginning on the date a product is first commercially sold, contingent on receiving FDA approval, and ending seven years from that date. A separate agreement requires payments of 0.25 per cent of net sales of machines, and 20 per cent of any sublicensing income for a specific method of use of patent beginning in 2016. Additionally, beginning five years after the effective date of 1 February 2021, there are minimum yearly royalties of US$5,000. The third agreement requires a fixed payment of US$250,000 for use of patents.

The Group has exposure to the following key risks related to financial instruments:

i. Market risk

ii. Credit risk

iii. Liquidity risk

This note presents information about the Group's exposure to each of the above risks, the Group's objectives, policies and processes for measuring and managing risk, and the Group's management of capital. Further quantitative disclosures are included throughout these consolidated Financial Statements.

The Group uses financial instruments including cash, loans, as well as trade receivables and payables that arise directly from operations.

Due to the simple nature of these financial instruments, there is no material difference between book and fair values, discounting would not give a material difference to the results of the Group and the Directors believe that there are no material sensitivities that require additional disclosure.

(a) Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Subsidiary. In order to minimise the risk, the Subsidiary endeavours only to deal with companies which are demonstrably creditworthy and this, together with the aggregate financial exposure, is continuously monitored. The maximum exposure to credit risk is the value of the outstanding amount. The Group considers the banks and financial institutions have low credit risks. Therefore, the Group is of the view that the loss allowance is immaterial and hence no provision is required.

The Directors do not consider that there is any concentration of risk within either trade or other receivables. There are no impairments to trade or other receivables in each of the years presented.

Categories of financial instruments

Capital risk management

The Group manages its capital to ensure that it will be able to continue as a going concern while maximising returns to shareholders through the optimisation of capital structure. The Group is funded by equity. Equity comprises share capital, share premium, share-based payment reserves, group re-org reserves and accumulated losses and is presented in the statement of financial position. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders or issue new shares.

The Group manages the capital structure and makes adjustments to it in the light of changes to economic conditions and risks.

26.  Financial instruments continued

(b) Market risk

There is no interest risk exposure to the group or the company. The Company made unsecured interest-free loans to its subsidiary and are expected to be repaid in the future as the subsidiary is revenue generative.

(c) Liquidity risk

A maturity analysis of the Group's financial liabilities is shown below:

Derivatives

The Group and Company have no derivative financial instruments.

The Directors are not aware of any material contingent liabilities, except for the contingent consideration detailed in note 20.

Remuneration of the key management personnel has been disclosed in Note 5.

Between 1 January 2022 and 30 April 2022, the Company issued a total of 3,190,024 new ordinary shares of £0.00037 each in the capital of Company upon the exercise of share options.

Between 1 January 2022 and 4 May 2022, the Company granted options over a total of 1,070,000 ordinary shares of £0.00037 each in the capital of Company to a new employee and two new Directors. The options vest over a four-year period and have an exercise price equal to the closing price on the date of grant.

On 13 April 2022 and 4 May 2022, the Company appointed Frank Schulkes, Non-Executive Director and Daniel Brague, Non-Executive Director to the Board of Directors, respectively.

On 4 May 2022, Jonathan Allis resigned as Non-Executive Director from the Board of Directors.

On 4 May 2022, Kenneth West assumed the role of Non-Executive Chairman of the Board of Directors.

Notice of the Annual General Meeting 

POLAREAN IMAGING PLC

 (Incorporated in England and Wales under the Companies Act 2006 with company number 10442853)

NOTICE OF ANNUAL GENERAL MEETING

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to what action you should take, you are recommended to seek your own financial advice from your stockbroker or other independent adviser authorised under the Financial Services and Markets Act 2000.

If you have recently sold or transferred all of your shares in Polarean Imaging plc, please forward this document, together with the accompanying documents, as soon as possible either to the purchaser or transferee or to the person who arranged the sale or transfer so they can pass these documents to the person who now holds the shares.

It is intended that the Annual General Meeting (the "AGM") of Polarean Imaging plc (the "Company") will be held at the Company's office at 2500 Meridian Parkway, Suite 175, Durham, NC 27713 USA at 2:00 p.m. BST (9:00 a.m. EST) on 29 June 2022. However, it is possible that there may be government restrictions imposed as a result of the COVID-19 pandemic at that time and therefore the arrangements for the AGM may be subject to change, possibly at short notice.

In light of this, we strongly encourage you to vote on all resolutions by completing an online proxy form in advance of the meeting, appointing the Chair of the meeting as your proxy, whether or not you are ultimately able to attend in person. Details of how to do this are set out below. Please note that if you appoint a person other than the Chair of the meeting as your proxy, in the event that measures are put in place by the US government which prevent attendance at the meeting, your proxy may not be able to attend the AGM and, if this is the case, your votes will not be counted.

NOTICE IS HEREBY GIVEN that the annual general meeting of Polarean Imaging plc (the "Company") will be held at the Company's office at 2500 Meridian Parkway, Suite 175, Durham, NC 27713 USA at 2:00 p.m. BST (9:00 a.m. EST) on 29 June 2022 for the purpose of considering and, if thought fit, transacting the following business:

ORDINARY BUSINESS

To consider and, if thought fit, pass the following resolutions which will be proposed as ordinary resolutions:

1. To receive and consider the Company's audited accounts for the year ended 31 December 2021 and the Directors' of the Company (the "Director(s)") and auditors' reports thereon.

2. To consider and approve the remuneration report as detailed in the Company's annual report and accounts.

3. To re-appoint Crowe UK LLP as auditor of the Company (the "Auditor") to hold office until the conclusion of the next general meeting at which accounts are laid and to authorise the Directors to fix the Auditor's remuneration.

4. To re-elect Richard Hullihen as a Director, who retires in accordance with article 78 of the Articles, and who, being eligible, offers himself for re-election.

5. To re-elect Bastiaan Driehuys as a Director, who retires in accordance with article 78 of the Articles, and who, being eligible, offers himself for re-election.

6. To re-elect Frank Schulkes as a Director, who retires in accordance with article 83 of the Articles, and who, being eligible, offers himself for re-election.

7. To re-elect Daniel Brague as a Director, who retires in accordance with article 83 of the Articles, and who, being eligible, offers himself for re-election.

8. To generally and unconditionally authorise the Directors for the purpose of section 551 of the Companies Act 2006 (the "Act"), in substitution for all existing authorities to the extent unused, to exercise all the powers of the Company to allot or grant rights to subscribe for or to convert any security into shares in the Company up to an aggregate number of 31,865,998 ordinary shares of £0.00037  each ("Ordinary Shares") (being 15 per cent. of the total number of Ordinary Shares in issue as at the date of this notice) provided that this authority shall expire on the earlier of 15 months after the date of passing of this resolution or the conclusion of the annual general meeting of the Company next following the passing of this resolution, save that the Company may, before such expiry, make an offer or agreement which would or might require shares or equity securities, as the case may be, to be allotted or such rights granted after such expiry and the Directors may allot shares or equity securities or grant such rights, as the case may be, in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired.

SPECIAL BUSINESS

To consider and, if thought fit, pass the following resolution as a special resolution:

9. Subject to the passing of resolution 8 above, to empower the Directors, pursuant to the general authority conferred on them and section 570 of the Act, to allot equity securities (within the meaning of section 560 of the Act) for cash as if section 561 of the Act did not apply to any such allotment, provided that this power shall be limited to the allotment of equity securities:

9.1. made in connection with an offer of securities, open for acceptance for a fixed period, to holders of Ordinary Shares of the Company on the register on a fixed record date in proportion (as nearly as may be) to their then holdings of such Ordinary Shares (but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient to deal with any legal or practical problems under the laws or requirements of any recognised regulatory body or any stock exchange in any overseas territory or in connection with fractional entitlements); and/or

9.2. wholly for cash (otherwise than pursuant to paragraph 7.1 above) up to an aggregate number of 31,865,998 Ordinary Shares.

This authority shall expire on the earlier of 15 months after the date of passing of this resolution and the conclusion of the annual general meeting of the Company next following the passing of this resolution but the Company may, before such expiry, make an offer or agreement which would or might require shares or equity securities, as the case may be, to be allotted or such rights granted after such expiry and the Directors may allot shares or equity securities or grant such rights, as the case may be, in pursuance of such an offer or agreement notwithstanding that the power conferred by this resolution has expired.

NOTES

A shareholder entitled to attend and vote at the meeting convened by this notice is entitled to appoint one or more proxies to exercise all or any of their rights to attend, speak and vote on their behalf at the AGM. A proxy need not be a shareholder.

(1) Arrangements for the meeting - COVID-19 outbreak

The continuing coronavirus (COVID-19) pandemic has previously led to the imposition of severe restrictions on public gatherings. Although it appears as at the date of this Notice that these will not apply on the date of the AGM, this remains subject to change. In the event that the AGM venue is closed on the date of the AGM, physical attendance in person at the AGM will not be possible, in which case the meeting will take place with the minimum necessary quorum of two shareholders which will be facilitated by the Company in line with the Government's social distancing advice as at that time.

On this basis, to safeguard Shareholders' and employees' health and to make the meeting as safe and as efficient as possible, the Board:

· encourages Shareholders to submit their votes by proxy as early as possible, and Shareholders should appoint the Chairman of the meeting as their proxy. If a Shareholder appoints someone else as their proxy, that proxy may not be able to attend the AGM in person or cast the Shareholder's vote. All proxy appointments should be received by no later than 2:00 p.m. BST on 27 June 2022;

· strongly recommends CREST members to vote electronically through the CREST electronic proxy appointment service as your vote will automatically be counted. In addition, the Company has also decided that Forms of Proxy can also be submitted by Shareholders electronically (even outside CREST) by emailing a scanned copy of the signed personalised Form of Proxy to voting@shareregistrars.uk.com. Please contact Share Registrars Limited contact number on +44 (0) 1252 821390 for any further guidance. Dealing with paper proxies requires physical interaction such as post sorting and delivery, evaluation and manual input. Given the current situation, any task that requires a physical presence may be subject to disruption and sending a paper proxy is no guarantee of having your vote counted;

· proposes that voting at the meeting will be conducted by means of a poll on all resolutions, with each Shareholder having one vote for each share held, thereby allowing all those proxy votes submitted and received prior to the meeting to be counted;

· encourages you to submit any question that you would like to be answered at the meeting by sending it, together with your name as shown on the Company's register of members and the number of shares held, to the following email address: polarean@walbrookpr.com so that it is received by no later than 2:00 p.m. BST on 24 June 2022. Please insert "AGM - Shareholder Questions" in the subject header box of your email. The Company will endeavour to respond to all questions received from Shareholders at the AGM or within seven days following the AGM; and

· will continue to closely monitor the COVID-19 situation in the lead up to the meeting and make further updates about the meeting on the Company's website at https://www.polarean-ir.com/content/news/corporate-news as necessary. Please ensure that you regularly check this page for updates.

(2) To appoint a proxy, shareholders should use the form of proxy enclosed with this notice of AGM. Please carefully read the instructions on how to complete the form of proxy. For a proxy to be effective, the instrument appointing a proxy together with the power of attorney or such other authority (if any) under which it is signed or a notarised certified copy of the same must be deposited with the Company's registrars, Share Registrars Limited of 3 The Millennium Centre, Crosby Way, Farnham, Surrey, GU9 7XX, United Kingdom (the "Registrars") or by e-mail to voting@shareregistrars.uk.com, by 2:00 p.m. BST on 27 June 2022, or, if the AGM is adjourned, 48 hours before the time fixed for the adjourned meeting (excluding any part of a day that is not a business day). The completion and return of a form of proxy does not preclude a shareholder from subsequently attending and voting at the AGM in person if he or she so wishes. If a shareholder has appointed a proxy and attends the AGM in person, such proxy appointment will automatically be terminated.

(3) Pursuant to Regulation 41 of Uncertificated Securities Regulations 2001, the Company specifies that only those shareholders on the register of members at 2:00 p.m. BST on 27 June 2022 or, if the meeting is adjourned, 48 hours before the time of the adjourned meeting (excluding any part of a day that is not a business day), shall be entitled to attend or vote at the AGM in respect of the number of ordinary shares of £0.00037 each (the "Ordinary Shares") registered in their name at that time. Changes to the register of members after that time shall be disregarded in determining the rights of any person to attend or vote at the AGM.

(4) Any Shareholder may insert the full name of a proxy or the full names of two alternative proxies of the Shareholder's choice in the space provided with or without deleting 'the Chairman of the meeting.' A proxy need not be a Shareholder but must attend the meeting to represent the relevant Shareholder. The person whose name appears first on the Form of Proxy and has not been deleted will be entitled to act as proxy to the exclusion of those whose names follow. If this proxy form is signed and returned with no name inserted in the space provided for that purpose, the Chairman of the meeting will be deemed to be the appointed proxy. Where a Shareholder appoints as his/her proxy someone other than the Chairman, the relevant Shareholder is responsible for ensuring that the proxy attends the meeting and is aware of the Shareholder's voting intentions. Any alteration, deletion or correction made in the Form of Proxy must be initialled by the signatory/ies.

(5) A shareholder may appoint more than one proxy provided that each proxy is appointed to exercise the rights attached to a different Ordinary Share or Ordinary Shares held by that shareholder. A shareholder may not appoint more than one proxy to exercise rights attached to any one Ordinary Share. If a shareholder wishes to appoint more than one proxy, they should contact the Registrars on 01252 821390, +44 1252 821390 from overseas. Lines are open from 9.00 a.m. to 5.30 p.m. Monday to Friday, excluding public holidays. Alternatively, you may write to the Registrars at Share Registrars Limited, 3 The Millennium Centre, Crosby Way, Farnham, Surrey, GU9 7XX, United Kingdom for additional proxy forms and for assistance.

(6) Any corporation which is a shareholder can appoint one or more corporate representatives who may exercise on its behalf all of its powers as a shareholder provided that they do not do so in relation to the same Ordinary Share.

(7) As at the close of business on the date immediately preceding this notice, the Company's issued share capital comprised 212,439,990 Ordinary Shares. Each Ordinary Share carries the right to vote at the AGM and, therefore, the total number of voting rights in the Company as at close of business on the date immediately preceding this notice is 212,439,990.

(8) A shareholder's instructions to the proxy must be indicated in the appropriate space provided. To abstain from voting on a resolution, select the relevant 'Vote withheld' box. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote (or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the meeting.

(9) This form of proxy must be signed by the appointor, or his attorney duly authorised in writing. The power of attorney or other authority (if any) under which the form of proxy is signed, or a notarised certified copy of the power or authority, must be received by the Registrars with the form of proxy. If the appointor is a corporation, the form of proxy should be signed on its behalf by an attorney or duly authorised officer or executed as a deed or executed under common seal. In the case of joint holders, the signature of any one of them will suffice, but the names of all joint holders should be stated.

(10) CREST members who wish to appoint a proxy or proxies through the CREST Electronic Proxy Appointment Service may do so for the AGM to be held at 2:00 p.m. BST on 29 June 2022 and any adjournment(s) thereof by following the procedures described in the CREST manual. All messages relating to the appointment of a proxy or an instruction to a previously appointed proxy, which are to be transmitted through CREST, must be received by the Registrars (ID 7RA36) no later than 2:00 p.m. BST on 27 June 2022, or, if the AGM is adjourned, 48 hours before the time fixed for the adjourned meeting (excluding any part of a day that is not a business day).

(11) In order to revoke a proxy instruction, you will need to inform the Company by sending a signed hard copy notice clearly stating your intention to revoke your proxy appointment to the Registrars. In the case of a shareholder which is a company, the revocation notice must be executed in accordance with note 12 below. Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy of such power or authority) must be included with the revocation notice and must be received by the Registrars not less than 48 hours (excluding any part of a day that is not a business day) before the time fixed for the holding of the AGM or any adjourned meeting (or in the case of a poll before the time appointed for taking the poll) at which the proxy is to attend, speak and to vote. If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to the paragraph directly below, your proxy appointment will remain valid.

(12) A corporation's form of proxy must be executed under either its common seal, if any, or under the hand of a duly authorised officer or attorney, in each case as required under the laws of its relevant jurisdiction.