ADNEO LIMITED — Interim / Quarterly Report 2020

Apr 28, 2020

AD1 Holdings Limited ACN 123 129 162 Suite 102, 697 Burke Rd Hawthorn East, VIC 3132

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AD1 Business Update and Appendix 4C

Melbourne, Australia, 29 April 2020: AD1 Holdings Limited (ASX: AD1) ( AD1 or the Company ), the provider of customer branded recruitment technology platforms, utilities software billing services and management platforms and related services, today released its business update and the Appendix 4C for March 2020 quarter.

Key March 2020 Quarter Highlights & Business Update

• Cash receipts from customers for the March 2020 quarter were $854,000 with a further $254,000 collected in the first week of April 2020 relating to contract wins from the March 2020 quarter.

• Operating outflows reduced by $619,000 (down 32%) compared to the December 2019 quarter. As communicated in the previous quarterly update, the March 2020 quarter represents the full benefit of the cost optimisation program undertaken in 2019.

• Near operating break-even March 2020 quarter with net cash outflows of $76,000 as a result of consistent cash receipts, the significant benefit from the cost optimisation along with the R&D refund of approximately $400,000.

• Progress of contract wins previously announced:

• ✓ The managed services solution for iGeno Pty Ltd, an embedded networks operator went live in early April 2020 and is now revenue generating.

• ✓ Completed the functionality enhancements to our mobile app and the new integrations from NSW Health and Transport for NSW into the iworkforNSW platform.

• ✓ Completed the functionality enhancements to the mobile app under the MyPharmacyCareer solution for the Pharmacy Guild.

• New contract wins:

• AD1 is working closely with both the NSW and Victorian Governments assisting with their efforts to promote their jobs, and in particular additional jobs for NSW related to COVID19. This is resulting in a pipeline of works across both Governments that are expected to be delivered in the current quarter.

• The Company is also assisting its existing utilities-retailer customer base better support the end consumers through the COVID-19 outbreak. This is also resulting in a pipeline of works for the June 2020 quarter.

• New business opportunities relating to Company’s utilities software offering are experiencing some delay following the outbreak of COVID-19 and restrictions imposed by both Federal and State Governments. The timing of new business opportunities is expected to be offset somewhat with the pipeline of works from existing customers.

• Despite the challenges presented by the current environment, the Company maintains its outlook that the June 2020 quarter will be the Company’s first cashflow positive quarter. This expectation is based on the strength of our existing customer base, the current pipeline of works and the significantly reduced cost base.

Impact of COVID-19 and business outlook:

Following the outbreak of COVID-19 and restrictions imposed by Federal and State authorities, the Company and its management have diligently assessed the potential impact and proactively put in place the necessary arrangements to ensure the continuity of its business operations.

Seamless service delivery to our customers whist ensuring the health and safety of all our staff is our highest priority. In addition to complying with the guidelines recommended by the health authorities on hygiene and social distancing, the Company enabled all staff to work remotely in the early stages of the outbreak and has maintained its services without any disruptions. The benefit of cloud-hosting all of our solutions also enables our platforms to continue operating with no impact.

Accordingly, other than some delay in receiving payments, our existing customer base has not been materially impacted by the pandemic and continues to provide a steady revenue stream. However, the Company is experiencing some delay in both converting late-stage opportunities and progressing new prospects as a result of the slowdown from the COVID-19 related restrictions.

Notwithstanding the slowdown, the Company expects the June 2020 quarter to be its first cashflow positive quarter with FY2021 projected to be breakeven on a full year basis.

As at 31 March 2020, the Company had a closing cash balance of $240,000 and debtors balance of $432,000 – out of which $325,000 has been received prior to this release.

The Company acknowledges that the full impact of the COVID-19 pandemic on its business and the overall economy remains unknown at this stage. However, as previously communicated, the Board will consider available non-dilutive funding alternatives should there be a requirement to manage any short-term timing impacts to the cashflow. The Company continues to monitor the status of COVID-19 and its impact on our business and will inform the market accordingly.

END

This release has been authorised by the directors of the Company.

Andrew Henderson

Prashant Chandra

Chairman CEO AD1 Holdings Limited AD1 Holdings Limited 03 8199 0455 03 8199 0455

Rule 4.7B

Appendix 4C

Quarterly cash flow report for entities subject to Listing Rule 4.7B

Name of entity

AD1 Holdings Ltd

ABN 29 123 129 162

Quarter ended (“current quarter”) 31 March 2020

Consolidated statement of cash flows	Current quarter $A’000	Year to date (9 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) research and development (b) product manufacturing and operating costs (c) advertising and marketing (d) leased assets (e) staff costs (f) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives (less costs) 1.8 Other (provide details if material) 1.9 Net cash from / (used in) operating activities	854 - (285) (6) - (850) (192) - - - - 403 -	2,442 - (1,330) (109) - (3,022) (781) - - - - 403 -
	(76)	(2,397)
2. Cash flows from investing activities 2.1 Payments to acquire: (a) entities (b) businesses (c) property, plant and equipment (d) investments (e) intellectual property	- - (16) - -	- - (16) - -

ASX Listing Rules Appendix 4C (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Consolidated statement of cash flows	Current quarter $A’000	Year to date (9 months) $A’000
(f) other non-current assets 2.2 Proceeds from disposal of: (a) entities (b) businesses (c) property, plant and equipment (d) investments (e) intellectual property (f) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities		(17) - - - - - - - - -	(17) - - - - - - - - -
		(33)	(33)
3. Cash flows from financing activities 3.1 Proceeds from issues of equity securities (excluding convertible debt securities) 3.2 Proceeds from issue of convertible debt securities 3.3 Proceeds from exercise of options 3.4 Transaction costs related to issues of equity securities or convertible debt securities 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from / (used in) financing activities		- - - - - - - - -	1,833 - - - - - - - -
		-	1,833
4. 4.1 4.2 4.3	Net increase / (decrease) in cash and cash equivalents for the period Cash and cash equivalents at beginning of period Net cash from / (used in) operating activities (item 1.9 above) Net cash from / (used in) investing activities (item 2.6 above)	350 (76) (33)	839 (2,397) (33)

ASX Listing Rules Appendix 4C (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Consolidated statement of cash flows	Current quarter $A’000	Year to date (9 months) $A’000
4.4 4.5 4.6	Net cash from / (used in) financing activities (item 3.10 above) Effect of movement in exchange rates on cash held Cash and cash equivalents at end of period	- -	1,833 -
		240	240
5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts		Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)		240 - - -	350 - - -
		240	350
6. Payments to related parties of the entity and their associates Current quarter $A'000 6.1 Aggregate amount of payments to related parties and their associates included in item 1 103 6.2 Aggregate amount of payments to related parties and their associates included in item 2 - The amount at 6.1 includes payment of directors’ fees and payments to a director related entity Excluding GST, superannuation and reimbursement for administrative expenses and travel expenses.
			Current quarter $A'000
			103
			-

ASX Listing Rules Appendix 4C (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

	7. Financing facilities Note: the term “facility’ includes all forms of financing arrangements available to the entity. Add notes as necessary for an understanding of the sources of finance available to the entity. Total facility amount at quarter end $A’000 Amount drawn at quarter end $A’000 7.1 Loan facilities - - 7.2 Credit standby arrangements - - 7.3 Other (please specify) - - 7.4 Total financing facilities - 7.5 Unused financing facilities available at quarter end - 7.6 Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well.	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
		-	-
		-	-
		-	-
			-
			-
-

8.	Estimated cash available for future operating activities	$A’000
8.1 8.2 8.3 8.4 8.5	Net cash from / (used in) operating activities (Item 1.9) Cash and cash equivalents at quarter end (Item 4.6) Unused finance facilities available at quarter end (Item 7.5) Total available funding (Item 8.2 + Item 8.3) Estimated quarters of funding available (Item 8.4 divided by Item 8.1)	(76) 240 - 240
		3.2
8.6	If Item 8.5 is less than 2 quarters, please provide answers to the following questions: 1. Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?
	Answer: n/a
	2. Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?
	Answer: n/a
	3. Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis?
	Answer: n/a

Note : refer to the accompanying business update for further commentary on the Company’s business outlook.

ASX Listing Rules Appendix 4C (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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Appendix 4C Quarterly cash flow report for entities subject to Listing Rule 4.7B

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

Date:

29 April 2020

Authorised by: the Board of Directors

(Name of body or officer authorising release – see note 4)

Notes

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity’s activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.

2. If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. If this report has been authorised for release to the market by your board of directors, you can insert here: “By the board”. If it has been authorised for release to the market by a committee of your board of directors, you can insert here: “By the [ name of board committee – eg Audit and Risk Committee ]”. If it has been authorised for release to the market by a disclosure committee, you can insert here: “By the Disclosure Committee”.

5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations , the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

ASX Listing Rules Appendix 4C (01/12/19) + See chapter 19 of the ASX Listing Rules for defined terms.

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