h1 - MagForce AG for Drugs and Medical Devices) ... report on post-balance Sheet Date events ......

half-year report 2013

h1

H1 2013 HigHligHts

3

Magforce and the University of Bremen launch a project to develop magnetic iron oxide

particles with improved efficacy. the goal is to use these new particles to treat abdomi-

nal cancers such as prostate and pancreatic cancer more effectively. In addition to pro-

ducing a more efficient magnetic fluid, a pilot production facility will be constructed once

the project is complete. the two-year project will receive funding from the Central Inno-

vation program for SMes (ZIM — Zentrales Innovationsprogramm Mittelstand), an initia-

tive of the Bundeswirtschaftsministerium (BMWi — German federal Ministry of econom-

ics and technology).

launch of research project with the University of Bremen

JanUary

4

H1 2013 Highlights

Magforce successfully completed the previously announced capital increase with pre-

emptive rights against cash and noncash contributions in the total amount of approxi-

mately €33.5 million. the new shares were subscribed in return for cash payments and

noncash contributions, and shareholder loans of €15.9 million were converted into equity.

this left Magforce debt-free and with €17.5 million in cash, which will support it through

the next significant stages of its growth.

MarChCapital increase successfully completed

at the start of april, Magforce received approval from the Bundesinstitut für arzneimit-

tel und Medizinprodukte (BfarM—the federal Institute for Drugs and Medical Devices) to

start its new study on patients with recurrent glioblastoma. the randomized, controlled,

open-label study examines the efficacy and safety of nanotherm®, both as a monother-

apy and in combination with radiotherapy, compared with radiotherapy alone in up to

280 glioblastoma patients. It will be conducted at approximately 15 clinics in total across

Germany, starting with five leading German centers.

BfArM grants approval for new glioblastoma study

aprIl

5

H1 2013 Highlights

the european patent office awarded Magforce another patent for its nanotherm® ther-

apy. the patent covers a new generation of nanotherm® particles—nanoparticle-drug

conjugates suitable for use in drug delivery systems. an externally applied alternating

magnetic field heats the nanoparticle-drug conjugates in the tumor, triggering the tem-

perature-dependent release of the drug directly into the tumor tissue to produce high lo-

cal concentrations. this approach also exploits the known synergy effects of combining

chemotherapy and hyperthermia. the appeal period expired at the beginning of May.

Another patent for Nanotherm® therapy

the Supervisory Board of Magforce aG appointed Dr. Ben J. lipps, former Ceo of frese-

nius Medical Care, as Chairman of the Management Board and Chief executive officer

of the Company effective September 2013. alongside his appointment as Ceo of Mag-

force, Ben lipps will continue his consulting work for fresenius Medical Care. Manage-

ment Board members prof. hoda tawfik (CMo/Coo) and Christian von Volkmann (Cfo)

will remain in their respective positions.

Dr. Ben J. lipps appointed as CEO of MagForce Ag

May

JUne

lEttEr tO sHArEHOlDErs

7

Dear shareholders of MagForce Ag,

I officially joined Magforce as Ceo on September 1, 2013. after you first heard from me

in the July 2013 shareholders’ letter, I would like to take the opportunity of today’s pub-

lication of our half-yearly figures to provide you with a brief update.

the key event in the first half of 2013 was the successful capital increase in March of

this year, which enabled the new glioblastoma study to go ahead. this was approved by

the Bundesinstitut für arzneimittel und Medizinprodukte (BfarM — the federal Insti-

tute for Drugs and Medical Devices) in april. the improvement in our results reflects the

restructuring measures implemented and the strategic repositioning of the Company.

however, given our roll-out plan, we expect the net loss from operating activities to be

higher than in 2012, largely due to the start of the new clinical glioblastoma study and

8

Letter to Shareholders

to preparations for market entry in other countries. Based on current developments, we

are fully on track and are reiterating our outlook for full-year 2013 as published in the

2012 annual report.

We want to take nanotherm® therapy to the next level—our aim is for it to become a

recognized and valued treatment option in the fight against recurrent glioblastoma

multiforme (GBM) and prostate cancer. the new glioblastoma study will start at the

end of the year and is backed by a large number of opinion leaders. By the end of the

year, a total of three nanoactivators will have been installed and commissioned for the

new study. other centers will follow at the start of 2014.

our aim for the coming years is to translate these positive prospects into a significant

increase in stakeholder value for both patients and our shareholders.

Best regards,

Dr. Ben lippsCeo

9

Shares and Investor Relations

MagForce’s sharesMagforce’s shares (Mf6.De) closed at €2.96 on June 30, 2013, up 32.1% compared with

the closing price on January 2, 2013. the Company’s shares recorded a high of €3.75 and

a low of €1.75 in the first half of 2013. Its market capitalization rose considerably in the

reporting period, from €12 million to €71 million.

the liquidity of Magforce’s shares also continued to improve in the period under review.

the average daily trading volume in the first half of 2013 was 24,466, compared with

9,489 in full-year 2012.

investor relationsthe Company’s management sets great store on regular communication with share-

holders. the aim of its investor relations activities is to attract capital market partici-

pants as key partners in Magforce’s future development. the goal is to communicate

the Company’s strategic focus and development reliably and transparently to extend

confidence in the Company and achieve a realistic and fair valuation of our shares. this

is particularly important at a stage where the Company is not yet generating any reve-

nue and is only just starting to commercialize its technology. outside of annual general

meetings, the Management Board has held numerous discussions with institutional

investors at roadshows and conferences. these discussions mainly revolved around

the capital increase that was implemented, operational performance, and the Compa-

ny’s strategic focus. Since July 2013, shareholders have also been informed about cur-

rent developments via a quarterly letter from the new Ceo, Ben lipps.

shares and investor relations

10


share price performance from January 2, 2013, to June 30, 2013 (in %)

160 %

140 %

120 %

100 %

80 %

60 %

febJan 2 Mar apr May Jun 30

200 t

150 t

100 t

50 t

Volume

11


MagForce share data

number of shares outstanding at the beginning of the year 5,316,158

number of shares outstanding as of the reporting date 23,922,711

free float 31%–35%

Six-month high (Xetra) in € 3.75

Six-month low (Xetra) in € 1.75

Closing price at the beginning of the year (Xetra) in € 2.24

Closing price at the reporting date (Xetra) in € 2.96

Market capitalization at the beginning of the year

(in € thousand)

11,908

Market capitalization at the reporting date (in € thousand) 70,811

average daily trading volume 24,466

ISIn De000a0hGQf5

WKn a0hGQf

Stock exchange symbol Mf6

Designated sponsor KochBank

Business and environment ............................................................................ 13

Company overview .................................................................................. 13

Developments at the Company in the first half of 2013 ......................... 14

results of operations, net assets, and financial position ........................... 16

results of operations .............................................................................. 16

net assets ............................................................................................... 16

financial position .....................................................................................17

opportunities and risks ................................................................................ 18

report on expected Developments .............................................................. 18

report on post-balance Sheet Date events .................................................. 19

iNtEriM FiNANCiAl rEpOrt

13

Interim Financial Report

1.1 Company overviewMagforce aG, which is headquartered in Berlin, is a leader in the field of nanotech-

nology-based cancer treatment. the nanotherm® therapy developed by the Company

makes it possible to treat virtually all solid tumors locally using heat generated by ac-

tivating magnetic nanoparticles injected into the tumor. nanotherm®, nanoplan®, and

nanoactivator™, the medical products which together make up this therapy, are ap-

proved throughout the eU for the treatment of brain tumors. Magforce’s technology

could be used to treat a range of solid tumors. according to the data currently available,

it is well tolerated in patients.

today, over two million patients a year are diagnosed with brain, prostate, and head

and neck cancer worldwide. nanotherm® therapy is ideal as a complementary treat-

ment for these solid tumors. the Company aims to establish this innovative therapy as

an additional mainstay in the treatment of cancer alongside conventional approaches

such as surgery, radiotherapy, and chemotherapy. It can be used either in combination

with other therapies or as a monotherapy, contributing to a significant improvement

in treatment.

nanotherm® therapy is already approved in all 27 eU countries for the treatment of

all solid brain tumors. the Company’s management aims to take the therapy to a new

level through wider-scale commercialization and to grow Magforce into a global leader

in the field of cancer treatment, benefiting a large number of patients as well as share-

holders.

1 Business and Environment

14


1.2 Developments at the Company in the first half of 2013Capitalization measures successfulthe key event in the first six months of 2013 was the mixed noncash and cash capital in-

crease that was implemented in the spring. the objective of this measure was to elimi-

nate the accounting insolvency and to safeguard the Company’s long-term financing.

Cash inflows from the capital increases will be used for the further clinical develop-

ment and marketing of nanotherm® technology, as well as for expanding distribution

and corporate partnerships.

a total of 18,606,553 new no-par value bearer shares were subscribed, 9,750,846 of

them in return for cash payments and 8,855,707 in return for noncash contributions.

loans of €15.9 million were converted into equity. the new shares were offered to the

Company’s shareholders for subscription at a ratio of 2:7. the subscription price for the

new shares was €1.80 per share.

as a result of this, Magforce is debt-free and had a liquidity increase of €17.5 million.

Advances in clinical developmenton april 8, 2013, Magforce announced that the Company had received approval from

the Bundesinstitut für arzneimittel und Medizinprodukte (BfarM—German federal In-

stitute for Drugs and Medical Devices) to start the new clinical study on patients with

recurrent glioblastoma. the ethics Committee and the Bundesamt für Strahlenschutz

(BfS—German federal office for radiation protection) granted their approval at the

end of December 2012 and in mid-2013, respectively, meaning that the Company can

now press ahead with the installation of the required nanoactivators™ in the treat-

ment centers and with its preparations for the start of the clinical study.

15


the Company expects to have three activators in operation at the end of 2013/begin-

ning of 2014. further devices are to be installed in the course of 2014.

Expansion of the Management BoardMagforce aG appointed Ben J. lipps as Ceo of the Company effective September 1, 2013.

Ben lipps has over 30 years’ experience in top management positions in medical tech-

nology companies listed on the DaX and Dow Jones. Under his management, fresenius

Medical Care grew into an independent listed company with a market capitalization of

€16.5 billion. Ben lipps was Ceo of fresenius Medical Care from 1999 to 2012. prior to

that, he was Ceo of fresenius USa (from 1985) and Ceo of fresenius Medical Care USa

(from 1996). his excellent contacts and his many years of experience in growing and

managing medical technology companies will help Magforce to realize the full potential

of its nanotherm® therapy.

16


2 results of Operations, Net Assets, and Financial position

2.1 results of operationsthe Company generated a net loss of €2,277 thousand for the six-month period ended

June 30, 2013, €1,295 thousand or 36% less than in the prior-year period (net loss of

€3,572 thousand). this improvement is largely due to the restructuring measures im-

plemented and the strategic repositioning of the Company.

the decline in operating expenses was mainly attributable to a 48% reduction in other

operating expenses to €974 thousand (previous year: €1,783 thousand). the prior-year

figure was primarily due to writedowns of long-term financial assets. no further re-

ceivables from affiliated companies were written down in 2013. the decline in operat-

ing expenses also reflected the €313 thousand or 25% decrease in staff costs, which

fell to €959 thousand (previous year: €1,272 thousand). this decrease was mainly due

to staff restructuring measures.

2.2 Net assetstotal assets decreased by €3,374 thousand to €16,216 thousand during the period

under review (January 1, 2013, to June 30, 2013). equity rose by €31,145 thousand to

€14,586 thousand. this was largely attributable to the inflow of €33,491 thousand

in the course of the capital increase in March 2013, which exceeded net accumulated

losses by €14,586 thousand. as a result of this, Magforce is debt-free and had €13,505

thousand in cash as of the June 30, 2013 reporting date. In addition, fixed assets de-

clined by €42 thousand to €1,652 thousand due to depreciation and amortization. pre-

payments for nanoactivators™ saw other receivables rise by €384 thousand. on the li-

abilities side, trade payables declined by €271 thousand in the reporting period.

17


2.3 Financial positionthe successful capital increase at the beginning of the year eliminated the Company’s

deficit not covered by equity in the period under review. the additions to fixed assets

are due to the final acceptance of a new animal applicator, as well as other additions re-

lating to the nanoactivators for the new clinical glioblastoma study. the €17,988 thou-

sand decline in liabilities is almost entirely attributable to the conversion of liabilities

to equity by way of noncash contributions in the amount of €15,940 thousand, as well

as the repayment of all remaining loans to avalon and the shareholder loans.

18


3 Opportunities and risks

Detailed information about opportunities and risks, as well as a description of the

Company’s risk management system, can be found on pages 61ff. of the 2012 annual

report. the statements made there continue to apply without modification.

as forecast in its 2012 annual report, the Company expects the net loss from operat-

ing activities to be higher than in 2012 given the roll-out plan. this will largely be at-

tributable to the start of the new clinical glioblastoma study and to preparations for

market entry in other countries. the Company is forecasting a higher negative operat-

ing cash flow for full-year 2013 due, among other things, to the reduction of liabilities

and the financing of measures to establish its nanotherm® therapy. Despite the repay-

ment of all loan liabilities, cash flows from financing activities will be firmly in positive

territory due to the capital increase in March 2013.

4 report on Expected Developments

19


5 report on post-balance sheet Date Events

Dr. Ben J. lipps was appointed to the Management Board as of September 1, 2013,

where he assumed the position of Chairman of the Management Board. there were no

other significant post-balance sheet date events or developments with a material im-

pact on the net assets, results of operations, or financial position of the Company that

are required to be reported here or that would change the statements contained in the

interim financial statements.

Berlin, September 23, 2013

Dr. Ben J. lippsChief executive officer &

Chairman of the

Management Board

prof. Dr. Hoda tawfikChief Medical officer &

Chief operating officer for

therapy Development

Christian von VolkmannChief financial officer

Income statement ......................................................................................... 21

Balance Sheet ................................................................................................22

Statement of changes in fixed assets ...........................................................24

NotesBasis of presentation ....................................................................................26

accounting policies .......................................................................................27

Balance Sheet Disclosures .............................................................................29

Income statement disclosures ......................................................................35

Supplemental Disclosures .............................................................................36

HAlF-yEArly FiNANCiAl stAtEMENts

21

Half-yearly Financial Statements 2013

income statement June 30, 2013 June 30, 2012EUr EUr

1. sales 0.00 0.00

2. increase or decrease in finished goods inventories and work in progress 0.00 0.00

3. Other operating income 37,714.54 99,631.29

37,714.54 99,631.29

4. Cost of materials

a) Cost of raw materials, consumables, and supplies 4,538.76 33,476.97

b) Cost of purchased services 29,471.28 34,708.46

34,010.04 68,185.43

5. personnel expenses

a) Wages and salaries 861,854.26 1,122,332.89

b) Social security and post-employment benefit costs 97,373.65 149,995.89

2,151,505.51 3,054,628.09

6. Depreciation, amortization, and writedowns

amortization and writedowns of intangible fixed assets, and depreciation and writedowns of tangible fixed assets 72,442.71 123,143.82

7. Other operating expenses 974,943.61 1,783,953.42

2,040,624.27 3,247,611.45

8. Other interest and similar income 2,672.31 88,203.38

9. Writedowns of long-term financial assets 0.00 0.00

10. interest and similar expenses 276,631.20 511,583.59

-273,958.89 -423,380.21

11. result from ordinary activities -2,276,868.62 -3,571,360.37

12. Other taxes 295.00 392.01

13. Net loss for the fiscal year 2,277,163.62 3,571,752.38

14. Accumulated losses brought forward 37,543,259.69 31,825,285.84

15. Net accumulated losses 39,820,423.31 35,397,038.22

22


Balance sheet June 30, 2013 Dec. 31, 2012EUr EUr

A. Fixed assets

i. intangible fixed assets

purchased industrial and similar rights and assets, and licenses in such rights and assets 4,650.63 3,735.58

ii. tangible fixed assets

1. leasehold improvements 0.00 0.00

2. technical equipment and machinery 357,263.98 297,756.50

3. other equipment, operating and office equipment 308,526.59 326,416.82

4. prepayments and construction in progress 954,416.26 954,416.26

1,620,206.83 1,578,589.58

iii. long-term financial assets

Shares in affiliated companies 27,826.20 27,826.20

1,652,683.66 1,610,151.36

B. Current assets

i. Other current assets 1,023,750.41 639,329.79

ii. Cash-in-hand, bank balances 13,504,604.16 688,555.29

C. prepaid expenses 35,463.09 24,937.64

D. Deficit not covered by equity 0.00 16,628,132.33

16,216,501.32 19,591,106.41

23


June 30, 2013 Dec. 31, 2012EUr EUr

A. Equity

i. subscribed capital 23,922,711.00 5,316,158.00

ii. Capital reserves 30,484,211.76 15,598,969.36

iii. Net accumulated losses -39,820,423.31 -37,543,259.69

14,586,499.45 -16,628,132.33

of which: deficit not covered by equity 0.00 16,628,132.33

B. special reserve for investment grants and subsidies for fixed assets 183,304.36 198,491.74

C. provisions

Other provisions 561,007.54 519,121.45

D. liabilities

1. trade payables 811,143.13 1,082,243.23

2. liabilities to affiliated companies 0.00 502,243.06

3. other liabilities 74,546.84 17,289,006.93

885,689.97 18,873,493.22

16,216,501.32 19,591,106.41

24


statement of changes in fixed assets Cost

Jan. 1, 2013EUr Additions transfers Disposals

June 30, 2013EUr

i. intangible fixed assets

purchased industrial and similar rights 11,704.58 2,658.95 0.00 0.00 14,363.53

ii. tangible fixed assets

1. leasehold improvements 0.00 0,00 0.00 0.00 0.00

2. technical equipment and machinery 1,656,466.25 107,455.50 0.00 0.00 1,763,921.75

3. other equipment, operating and office equipment 539,818.40 8,904.56 0.00 0.00 548,722.96

4. prepayments 954,416.26 0,00 0.00 0.00 954,416.26

3,150,700.91 116,360.06 0.00 0.00 3,267,060.97

iii. long-term financial assets

1. Shares in affiliated companies 27,826.20 0,00 0.00 0.00 27,826.20

2. loans to affiliated companies 2,386,382.64 0,00 0.00 0.00 2,386,382.64

2,414,208.84 0.00 0.00 0.00 2,414,208.84

5,576,614.33 119,019.01 0.00 0.00 5,695,633.34

25


Cumulative depreciation, amortization, and writedowns Carrying amounts

Jan. 1, 2013EUr Additions Disposals

June 30, 2013EUr

June 30, 2013EUr

Dec. 31, 2012EUr

7,969.00 1,743.90 0.00 9,712.90 4,650.63 3,735.58

0.00 0,00 0.00 0.00 0.00 0.00

1,358,709.75 47,948.02 0.00 1,406,657.77 357,263.98 297,756.50

213,401.58 26,794.79 0.00 240,196.37 308,526.59 326,416.82

0.00 0,00 0.00 0.00 954,416.26 954,416.26

1,572,111.33 74,742.81 0.00 1,646,854.14 1,620,206.83 1,578,589.58

0.00 0.00 0.00 0.00 27,826.20 27,826.20

2,386,382.64 0.00 0.00 2,386,382.64 0.00 0.00

2,386,382.64 0.00 0.00 2,386,382.64 27,826.20 27,826.20

3,966,462.97 76,486.71 0.00 4,042,949.68 1,652,683.66 1,610,151.36

26


the Company is a small corporation within the meaning of section 267(1) of the

handelsgesetzbuch (hGB—German Commercial Code). the half-yearly financial state-

ments for the period January 1, 2013, to June 30, 2013, were prepared in accordance with

the provisions of the hGB for small corporations and the provisions of the aktienge-

setz (aktG—German Stock Corporation act).

the total cost (nature of expense) format in accordance with section 275(2) of the hGB

is used for the presentation of the income statement.

Basis of presentation

Notes to the Half-yearly Financial statements for the six-month period ended June 30, 2013

27


Accounting policies

as in the prior year, the following accounting policies were applied in preparing the an-

nual financial statements:

Fixed assetspurchased intangible fixed assets are recognized at cost and amortized over their use-

ful lives.

tangible fixed assets are recognized at cost and depreciated using the straight-line

method.

low-value assets costing up to €410.00 are written off in the year of acquisition.

pooled items were recognized in the financial statements for simplification reasons for

assets that were acquired before January 1, 2010, and whose cost was between €150.01

and €1,000.00. these annual pooled items, whose amount is insignificant in the ag-

gregate, are depreciated by 20 % each tax year in accordance with the tax regulations.

long-term financial assets are carried at cost or the lower fair value.

Current assetsreceivables and other current assets are recognized at their principal amounts.

special reservea special reserve was recognized for investment grants and subsidies. It will be re-

versed over the average remaining useful life of the assets in question.

28


provisionsother provisions reflect all risks and uncertain obligations that were identifiable by

the reporting date on the basis of prudent business judgment. they are recognized in

the amount necessary to settle the obligations (i.e., including future cost and price in-

creases).

liabilitiesliabilities are recognized at their settlement amounts.

Deferred taxesfor the calculation of deferred taxes attributable to temporary or quasi-permanent

differences between the carrying amounts of assets, liabilities, prepaid expenses, and

items of deferred income in the financial statements and their tax base, or to tax loss

carryforwards, the amounts of the resulting tax liabilities and benefits are measured

using the tax rate of the reporting entity that applies when the differences reverse and

are not discounted. Deferred tax assets and liabilities are offset. no deferred tax assets

are reported because the corresponding recognition option is exercised.

29


Balance sheet disclosures

Fixed assetsChanges in the items of fixed assets are presented in the statement of changes in

fixed assets, based on the total cost of the fixed assets.

Disclosures on shareholdingsthe Company holds all shares of Mt Medtech engineering Gmbh, Berlin. this subsid-

iary’s negative equity amounted to €3,473 thousand as of December 31, 2012. the net

loss for the fiscal year from January 1 to December 31, 2012, amounted to €796 thou-

sand.

Other assetsother assets in the amount of €139 thousand (prior year: €139 thousand) are due af-

ter one year.

all other receivables and other assets are due within one year, as in the prior year.

the other assets include amounts of €182 thousand (prior year: €212 thousand) that

only arise legally after the reporting date. these relate to investment grants that will

be applied for.

subscribed capitalthe share capital amounted to €5,316,158.00 as of January 1, 2013, and was composed

of 5,316,158 no-par value bearer shares (ordinary shares) with a notional interest in the

share capital of €1.00 per share.

By way of a resolution by the Management Board on March 20, 2013, and with the ap-

proval of the Supervisory Board on the same date, the Company’s share capital was in-

creased by €18,606,553.00, from €5,316,158.00 to €23,922,711.00, by issuing 8,855,707

30


new no-par value bearer shares against noncash contributions and 9,750,846 new no-

par value bearer shares against cash contribution.

the Company’s share capital recorded in the commercial register of Berlin Charlotten-

burg amounted to €23,922,711.00 as of June 30, 2013, and is composed of 23,922,711

no-par value bearer shares (ordinary shares) with a notional interest in the share capi-

tal of €1.00 per share.

Contingent CapitalContingent Capital 2007/i In accordance with the Company’s articles of association, its share capital was contin-

gently increased by up to €325,000 by issuing up to 325,000 no-par value bearer shares

(ordinary shares) (Contingent Capital 2007/I). the annual General Meeting on august 16,

2012, resolved to cancel €225,000 of the Contingent Capital 2007/I in accordance with ar-

ticle 6 (2) of the Company’s articles of association. It therefore now amounts to €100,000.

Contingent Capital 2007/I serves to settle rights to subscribe for shares under stock op-

tions. no new stock options were issued, so the number of outstanding options as of

June 30, 2013, was 75,872.

Contingent Capital 2012/i the annual General Meeting on august 16, 2012, authorized the Management

Board, with the consent of the Supervisory Board, to issue bearer and/or registered

bonds with warrants and/or convertible bonds with a total nominal value of up to

€100,000,000.00 and with a maximum maturity of 20 years on one or more occasions

in the period up to august 15, 2017, and to grant options to the holders of bonds with

warrants and conversion rights to the holders of convertible bonds for up to a total

of 1,981,224 no-par value bearer shares of the Company with an aggregate notional

31


interest in the share capital of up to €1,981,224.00, as specified in greater detail by

the terms and conditions of the bonds with warrants or convertible bonds. Contingent

Capital 2012/I was cancelled by way of a resolution by the General Meeting on Janu-

ary 25, 2013.

Contingent Capital 2012/ii By way of a resolution by the annual General Meeting on august 16, 2012, the Com-

pany’s share capital was contingently increased by up to €395,000.00 by issuing up

to 395,000 no-par value bearer shares (Contingent Capital 2012/II). Contingent Capi-

tal 2012/II exclusively serves to secure preemptive rights for shares that will be issued

as part of the 2012 Stock option plan to Management Board members and Company

employees as well as to managers and employees at affiliated companies in the period

up to and including august 15, 2017. the contingent capital increase will only be imple-

mented to the extent that preemptive rights are issued and their holders exercise their

preemptive rights for shares in the Company and the Company does not grant treasury

shares or make cash settlements when settling these preemptive rights.

In fiscal year 2012, a total of 150,000 stock options were issued as part of the 2012

Stock option plan, and none in the six-month period ended June 30, 2013.

Contingent Capital 2013/i the annual General Meeting on January 25, 2013, authorized the Management

Board, with the consent of the Supervisory Board, to issue bearer and/or registered

bonds with warrants and/or convertible bonds with a total nominal value of up to

€100,000,000.00 and with a maximum maturity of 20 years on one or more occasions

in the period up to January 25, 2018, and to grant options to the holders of bonds with

warrants and conversion rights to the holders of convertible bonds for up to a total of

2,163,079 no-par value bearer shares of the Company with an aggregate notional in-

32


terest in the share capital of up to €2,163,079.00, as specified in greater detail by the

terms and conditions of the bonds with warrants or convertible bonds.

Authorized CapitalAuthorized Capital 2012/ithe annual General Meeting on august 16, 2012, authorized the Management Board

to increase the Company’s share capital, with the consent of the Supervisory Board,

once or in multiple partial amounts in the period up to august 16, 2017, by up to a to-

tal of €2,476,224.00 against cash and/or noncash contributions (including mixed non-

cash contributions) by issuing up to 2,476,224 no-par value bearer shares (authorized

Capital 2012/I).

the Company has made use of the authorization to increase its share capital under ar-

ticle 6(4) of its articles of association (authorized Capital 2012/I) several times in the

past. the Company has implemented capital increases from authorized Capital 2012/I

with the consent of the Supervisory Board in the amount of €363,709.00. authorized

Capital 2012/I therefore now amounts to €2,112,515.00.

Authorized Capital 2013/ithe annual General Meeting on January 25, 2013, authorized the Management Board


once or in multiple partial amounts in the period up to January 25, 2018, by up to a to-

tal of €545,564.00 against cash and/or noncash contributions (including mixed non-

cash contributions) by issuing up to 545,564 no-par value bearer shares (authorized

Capital 2013/I).

Authorized Capital 2013/iithe annual General Meeting on January 25, 2013, authorized the Management Board


33


once or in multiple partial amounts in the period up to January 25, 2018, by up to a to-

tal of €2,800,000.00 against cash and/or noncash contributions (including mixed non-

cash contributions) by issuing up to 2,800,000 no-par value bearer shares (authorized

Capital 2013/II).

authorized Capital 2013/II was not filed for registration with the commercial regis-

ter, as the Company did not need to make use of the additional options resulting from

the creation of authorized Capital 2013/II due to the capital increase in the amount of

€18,606,553.00 implemented in March 2013 and the upcoming annual General Meet-

ing on august 6, 2013, to which a proposal will be made to resolve a new authorized

Capital 2013/III.

Capital reservesIn connection with the increase in subscribed capital in fiscal year 2013 from the is-

suance of 18,606,553 ordinary shares, contributions to capital reserves in accordance

with section 272(2) no. 1 of the hGB amounted to €14,885 thousand.

the capital reserves contain an amount of €29,984 thousand within the meaning of

section 272(2) no. 1 of the hGB and an amount of €500 thousand within the meaning

of section 272(2) no. 4 of the hGB.

34


Net accumulated lossesthe net accumulated losses contain accumulated losses brought forward of

€37,543 thousand. net accumulated losses changed as follows:

special reserve for investment grants and subsidies for fixed assetsthe investment subsidies were granted from funds made available under the “Joint

Scheme for Improving regional economic Structures.” the investment grants were

made in accordance with the Investitionszulagengesetz (German Investment Grants

act). In the six-month period ended June 30, 2013, €15 thousand (prior-year period:

€15 thousand) was reversed to income from the special reserve for investment grants

and subsidies.

Other provisionsother provisions mainly related to bonus payments, outstanding invoices, liabilities

whose amount is uncertain, personnel expenses, and financial statement preparation

and audit costs. they also include a provision for investment subsidies in the amount

of €183 thousand because partial repayment is expected.

liabilities as in the prior year, trade payables and other liabilities are due within one year.

other liabilities primarily contain payroll and church tax liabilities.

€ thousand

net accumulated losses as of December 31, 2012 37,543

net loss for the six-month period ended June 30, 2013 2,277

Net accumulated losses as of June 30, 2013 39,820

35


income statement disclosures

other interest and similar income amounting to €0 thousand (prior year: €88 thou-

sand) was attributable to affiliated companies.

Interest and similar expenses amounting to €263 thousand (prior year: €512 thousand)

was attributable to affiliated companies.

36


supplemental disclosures

the interim financial report of Magforce aG was neither audited nor reviewed by au-

ditors.

shareholder structure

avalon Capital one Gmbh 37.02 %

nanostart aG 9.78 %

free float 53.20 %

total 100.00 %

37


governing bodies of the Company

Management BoardDr. Ben J. lippsCeo (since September 1, 2013)

prof. Dr. Hoda tawfikCMo/Coo

Christian von VolkmannCfo

supervisory BoardNorbert Neef (Chairman)

lawyer in Berlin. Mr. neef is Chairman of the Supervisory Board of nanostart aG

and is a member of a number of advisory boards of privately held companies.

stephan Jakober Cfo, Mr. Jakober is a member of a number of supervisory boards of privately held

companies.

Bernd Förtschpublisher, Chairman of the Management Board of Börsenmedien aG, member of the

Supervisory Boards of livinglogic aG, Vitrade aG, and panthera Capital aG.

Dr. Jan zur Hausen (Deputy Chairman)

Corporate finance Consultant (until September 13, 2013)

38


Notifications in accordance with section 20 of the Aktg in conjunction with section 160 (1) no. 8 of the AktgIn a letter dated april 9, 2013, nanostart aG, frankfurt am Main, notified Magforce

that it no longer held a majority interest in Magforce aG in accordance with section

16(1) of the aktG and that it no longer held an interest of more than 25 %.

on the same date, Bf holding Gmbh, Kulmbach, notified Magforce that Bf holding

Gmbh’s indirect interest in Magforce aG was no longer a majority interest within the

meaning of section 16(1) of the aktG and that this no longer related to an interest of

more than 25 %.

avalon Capital one Gmbh, frankfurt am Main, notified Magforce in accordance with

section 20(1) of the aktG in a letter dated June 4, 2013, that it holds an interest of more

than 25 percent in Magforce aG

39


Consolidated financial statementsMagforce aG is not required to prepare consolidated financial statements.

Berlin, September 23, 2013

the Management Board

Dr. Ben J. lippsChief executive officer &

Chairman of the

Management Board

prof. Dr. Hoda tawfikChief Medical officer &

Chief operating officer for

therapy Development

Christian von VolkmannChief financial officer

40

imprint

publisher and copyright© 2013

Magforce aG

Editorial and conceptMC Services aG, München

layout and realisationinterstruct aG, Berlin

Date of publicationSeptember 30, 2013

CopyrightMagforce, nanotherm®, nanoplan® and nanoactivator™

are trademarks of Magforce aG in selected countries.

Imprint

www.magforce.com

Headquarters BerlinMagforce aG

Max-planck-Strasse 3

12489 Berlin

GerMany

Division MunichMagforce aG

Bunsenstrasse 7, haus 1

82152 Martinsried

GerMany

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