BEFOREPAY GROUP LIMITED - Annual Report 2020

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Beforepay Group Limited (Formerly known as Cheq Limited) ABN 63 633 925 505

Annual Report - 30 June 2020

Beforepay Group Limited
(Formerly known as Cheq Limited)
Contents
30 June 2020
Directors' report	2
Auditor's independence declaration	8
Statement of profit or loss and other comprehensive income	9
Statement of financial position	10
Statement of changes in equity	11
Statement of cash flows	12
Notes to the financial statements	13
Directors' declaration	38
Independent auditor's report to the members of Beforepay Group Limited	39

Beforepay Group Limited (Formerly known as Cheq Limited) Directors' report 30 June 2020

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The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'Group' or 'Beforepay') consisting of Beforepay Group Limited (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled at the end of, or during, the period from 5 June 2019 to 30 June 2019 and the year ended ended 30 June 2020.

Directors

The following persons were directors of Beforepay Group Limited during the whole of the financial period and up to the date of this report, unless otherwise stated:

Brian Hartzer - Chairman (appointed 5 July 2021) Danny Moss - Non-Executive Director Stefan Urosevic - Non-Executive Director Dean Mao - Executive Director (resigned 19 July 2021) Tarek Ayoub - Executive Director (resigned 19 July 2021) Patrick Tuttle - Non-Executive Director (appointed 16 November 2020) Natasha Davidson - Non-Executive Director (appointed 16 November 2020)

Principal activities

During the financial period the principal continuing activities of the Group consisted of providing finance to its customers by way of salary advances.

Dividends

There were no dividends paid, recommended or declared during the current or previous financial period.

Review of operations

The loss for the Group after providing for income tax amounted to $649,987 (30 June 2019: $17,162).

Significant changes in the state of affairs

In December 2019, the Cheq app (now 'Beforepay') was commercially launched in Australia.

There were no other significant changes in the state of affairs of the Group during the financial period.

Matters subsequent to the end of the financial period

In and around August 2020, the company raised $4,167,605 via the issue of ordinary shares in Beforepay Group Limited.

In or around November 2020, the company registered and commenced trading under the business name Beforepay.

In and around December 2020, the company raised $8,330,452 via the issue of convertible notes.

In or around April 2021, the company raised $12,125,000 via the issue of convertible notes.

On 14 May 2021, via a resolution of shareholders, the parent company, Cheq Limited changed its name to Beforepay Group Limited.

On 20 May 2021, the company appointed a new CEO, Mr Jamie Twiss. Jamie previously worked for Westpac Banking Corporation as Chief Strategy Officer and then Chief Data Officer. Before that, he was the Managing Director, Americas for First State Investments, the asset-management firm owned at the time by Commonwealth Bank of Australia. Prior to that, he held a strategy role with Commonwealth Bank, and before that he worked for McKinsey & Company in the United States and in Australia.

On 9 June 2021 a debt facility agreement was signed between Longreach Credit Investors Pty Ltd (as arranger) and Beforepay Finance Pty Ltd (as borrower), and Beforepay Ops Pty Ltd and Beforepay IP Pty Ltd (as guarantors). Further, Beforepay Group Limited has granted security over the shares it owns in each of the borrower and the guarantors, but is not a guarantor under the terms of the facility. The terms of the debt facility are as follows:

Beforepay Group Limited (Formerly known as Cheq Limited) Directors' report 30 June 2020

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The secured debt facility has a limit of A$45 million and expires on or about June 2023.
Interest is payable monthly in arrears based on a fixed rate of 9.50%.
The facility is subject to covenants that are in line with standard market practice given the nature of the financing facilities. The primary covenant for all facilities is a maximum LVR which varies based on negotiated terms. The LVR is measured as the value of the facility drawn over total eligible receivables funded plus restricted cash. These covenants are in line with standard market practice given the nature of the facility. Covenants have been complied with throughout the date of this report. Debt covenants have been assessed regularly to determine whether there were any breaches for which disclosure is required and considered in the forward forecast.

On or about 7 July 2021, Beforepay Group Limited entered into a domain transfer agreement with, amongst others, Grouse Limited and Chrisco Hampers Australia Limited, in relation to the purchase and transfer of domain names connected to the Beforepay name.

The purchase price payable for the above domain names was $187,500 (including GST) and comprised of $87,500 cash consideration and the issuance of 100,000 convertible notes with a face value of $1 each. The notes were issued to one of the sellers, Mr Geoffrey Michael Spong, and were on terms substantially similar to the notes issued in the most recent capital raise.

The consequences of the Coronavirus (COVID-19) pandemic are continuing to be felt around the world, and its impact on the Group, if any, has been reflected in its published results to date. Whilst it would appear that control measures and related government policies, including the roll out of the vaccine, have started to mitigate the risks caused by COVID-19, it is not possible at this time to state that the pandemic will not subsequently impact the Group's operations going forward. The Group now has experience in the swift implementation of business continuation processes should future lockdowns of the population occur, and these processes continue to evolve to minimise any operational disruption. Management continues to monitor the situation both locally and internationally.

The Group is currently pursuing a listing on the Australian Securities Exchange.

The Group is currently in the process of raising approximately $8,500,000 via the issue of convertible notes to be issued in August 2021.

No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.

Likely developments and expected results of operations

Information on likely developments in the operations of the Group and the expected results of operations have not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the Group.

Environmental regulation

The Group is not subject to any significant environmental regulation under Australian Commonwealth or State law.

Beforepay Group Limited (Formerly known as Cheq Limited) Directors' report 30 June 2020

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Information on directors

Name: Brian Hartzer Title: Non-Executive Director and Chairman Qualifications: Princeton University Graduate; Chartered Financial Analyst. Experience and expertise: Brian Hartzer is an experienced executive, leadership mentor and investor who served as CEO of the Westpac Banking Group from 2015 to 2019. Prior to his time as Westpac’s CEO, Brian spent 15 years in senior executive roles at major banks in Australia and the UK. These roles included CEO at Westpac and divisional chief executive roles at the Royal Bank of Scotland Group and ANZ Banking Group. Brian’s banking career has had a strong emphasis on the use of data: He set up the database marketing department at ANZ in the mid 1990s, headed ANZ’s credit card and consumer finance business, and through his various roles was a strong advocate for the application of data and data science in delivering personalised customer service, strong revenue growth, and effective risk management. Prior to joining ANZ, Brian spent ten years as a financial services strategy consultant at First Manhattan Consulting Group, which pioneered the use of customer profitability analysis and segmentation in banking. Brian currently works as a senior advisor to both Sayers, a Melbourne-based investment and advisory firm, and to Quantium, a Sydney-based data science company. He is also an angel investor in and advisor to several Fintech and technology start-ups. Brian serves as a Trustee of the Australian Museum and as Chairman of the Australian Museum Foundation Trust. Special responsibilities: None Name: Danny Moss Title: Non-Executive Director Qualifications: BBus, MAICD Experience and expertise: Danny is experienced in managing financial services businesses. He is a founding partner and the Managing Director of VFS Group, a firm specialising in wealth management. He has over 15 years’ experience in investment markets, specialising in equities, derivatives and portfolio construction. Danny is also an active seed stage investor managing multiple venture investments dealing in high growth, disruptive companies. He is an experienced Director having taken board seats on several portfolio companies. Special responsibilities: Member of the Remuneration Committee Name: Stefan Urosevic Title: Non-Executive Director Qualifications: CPA, MBA, F FIN, GradDipFP Experience and expertise: Stefan is currently an Executive Director and the Chief Financial Officer at VFS Group a holistic wealth management firm based in Sydney. Stefan has extensive experience in Wealth Management, Financial Planning, Corporate Advisory and Venture Capital Investing. Stefan served as a Non-Executive Director on the board of Grow Inc. and continues to serve as the Responsible Manager for the company. Further Stefan currently serves as a Non-Executive Director of CTSA Group & TogetherAI. Stefan holds an MBA from Deakin University, is a Fellow of the Financial Services Institute of Australasia (FINSIA), is a member of the Certified Practicing Accountants Australia and is a member of the Australian Institute of Company Directors. Special responsibilities: Chairman of the Audit and Risk Committee

Beforepay Group Limited (Formerly known as Cheq Limited) Directors' report 30 June 2020

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Name:	Patrick Tuttle
Title:	Non-Executive Director
Qualifications:	B Econ., Member of Chartered Accountants Australia and New Zealand
Experience and expertise:	Patrick previously acted as divisional finance director for a range of operating
	businesses within Macquarie Bank Limited, before becoming finance director of
	Pepper Group in 2001. Patrick became CEO of Pepper Group’s Australian mortgage
	lending and asset finance business in 2008, before also being appointed as Co-
	Group CEO of Pepper’s global business in 2012. Patrick is currently Non-Executive
	Chairman of Consolidated Operations Group (ASX: COG) and Openpay Group (ASX:
	OPY), and serves as a Non-Executive Director of GetCapital, Azora Finance, Azora
	Asset Finance, Divipay and Douugh Limited. He is also a Non-Executive Director of
	Australian Ireland Fund Limited (registered charity) and a former Deputy Chairman of
	the Australian Securitisation Forum, Inc.
Special responsibilities:	Member of the Audit and Risk Committee
Name:	Natasha Davidson
Title:	Non-Executive Director
Qualifications:	Master of Law; Honours in Law
Experience and expertise:	Natasha has been a practising attorney for over 25 years specialising in equity capital
	markets and mergers & acquisitions. She is the former President and Chair of the
	Australian Financial Markets Association, Capital Raising Committee. She has been a
	senior executive across both governance and commercial growth mandates in listed
	and non-listed SaaS technology companies and is a Fellow of the Governance
	Institute of Australia.
Special responsibilities:	Member of the Audit and Risk Committee and Chair of the Remuneration Committee

Company secretaries

David Hwang and Elizabeth Spooner, employees of Automic, a corporate secretarial provider, were appointed as company secretaries on 14 May 2021.

David Hwang is an experienced corporate lawyer who specialises in ASX listings, equity capital markets and providing advice on corporate governance and compliance issues. David has developed significant expertise across a wide range of industry sectors, including technology. He also serves as director and company secretary of various ASX listed entities. David holds a Bachelor of Laws from UNSW, and is also a notary public.

Elizabeth Spooner is an experienced governance and compliance professional who works closely with a number of boards of both listed and unlisted public companies in her role at Automic. She holds a double degree in Bachelor of Business Administration and Bachelor of Arts majoring in Human Resources, and a Graduate Diploma of Applied Corporate Governance from the Governance Institute. Elizabeth is in the final stages of completing her Juris Doctor degree from Australian National University. She is an Associate of the Governance Institute of Australia, a Member of the Australian Institute of Company Directors, a Member of the Australian HR Institute and a NSW Justice of the Peace.

Meetings of directors

The number of meetings of the company's Board of Directors ('the Board') and of each Board committee held during the period from 6 June 2019 to 30 June 2020, and the number of meetings attended by each director were:

	Full Board	Full Board		Audit and Risk	Committee	Remuneration Committee	Remuneration Committee
	Attended	Held		Attended	Held	Attended	Held
Danny Moss		1	1	-	-		-	-
Stefan Urosevic		1	1	-	-		-	-
Dean Mao		1	1	-	-		-	-
Tarek Ayoub		1	1	-	-		-	-

Held: represents the number of meetings held during the time the director held office.

Beforepay Group Limited (Formerly known as Cheq Limited) Directors' report 30 June 2020

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Shares under option

Unissued ordinary shares of Beforepay Group Limited under option at the date of this report are as follows:

Exercise Grant date Expiry date price 1 July 2019 30 June 2024 $37.55 12 August 2019 11 August 2024 $37.55 15 August 2020 15 August 2025 $43.52 19 August 2020 19 August 2025 $43.52 20 September 2020 30 June 2024 $130.00 30 September 2020 30 September 2025 $20.00 1 November 2020 1 November 2025 $20.00 16 November 2020 30 June 2024 $130.00 17 November 2020 17 November 2025 $20.00 4 January 2021 4 January 2026 $87.93 8 January 2021 8 January 2026 $20.00 27 January 2021 30 June 2024 $130.00 15 February 2021 15 February 2026 $87.93 22 February 2021 22 February 2026 $87.93 23 February 2021 23 February 2026 $87.93 3 March 2021 3 March 2026 $87.93 16 March 2021 16 March 2026 $20.00 1 April 2021 1 April 2026 $20.00 20 April 2021 20 April 2026 $20.00 30 April 2021 30 April 2026 $87.93 31 May 2021 31 May 2026 $87.93 1 July 2021 1 July 2031 $87.93 9 July 2021 9 July 2026 $87.93 21 July 2021 21 July 2026 $87.93	Number under option 2,130 1,065 115 581 15,998 66 55 1,070 2,352 99 2,154 3,582 59 143 59 475 416 44 1,187 63 106 2,422 9,590 203
	44,034

Exercise
Grant date
Expiry date
price
1 July 2019
30 June 2024
$37.55
12 August 2019
11 August 2024
$37.55
15 August 2020
15 August 2025
$43.52
19 August 2020
19 August 2025
$43.52
20 September 2020
30 June 2024
$130.00
30 September 2020
30 September 2025
$20.00
1 November 2020
1 November 2025
$20.00
16 November 2020
30 June 2024
$130.00
17 November 2020
17 November 2025
$20.00
4 January 2021
4 January 2026
$87.93
8 January 2021
8 January 2026
$20.00
27 January 2021
30 June 2024
$130.00
15 February 2021
15 February 2026
$87.93
22 February 2021
22 February 2026
$87.93
23 February 2021
23 February 2026
$87.93
3 March 2021
3 March 2026
$87.93
16 March 2021
16 March 2026
$20.00
1 April 2021
1 April 2026
$20.00
20 April 2021
20 April 2026
$20.00
30 April 2021
30 April 2026
$87.93
31 May 2021
31 May 2026
$87.93
1 July 2021
1 July 2031
$87.93
9 July 2021
9 July 2026
$87.93
21 July 2021
21 July 2026
$87.93

Number
under option
2,130
1,065
115
581
15,998
66
55
1,070
2,352
99
2,154
3,582
59
143
59
475
416
44
1,187
63
106
2,422
9,590
203

44,034

No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of the company or of any other body corporate.

Shares issued on the exercise of options

There were no ordinary shares of Beforepay Group Limited issued on the exercise of options during the period ended 30 June 2020 and up to the date of this report.

Indemnity and insurance of officers

The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith.

During the financial period, the company paid a premium in respect of a contract to insure the directors and executives of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

Indemnity and insurance of auditor

The company has not, during or since the end of the financial period, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor.

During the financial period, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity.

Proceedings on behalf of the company

No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of those proceedings.

Beforepay Group Limited (Formerly known as Cheq Limited) Directors' report 30 June 2020

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Auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this directors' report.

Auditor

Ernst & Young continues in office in accordance with section 327 of the Corporations Act 2001.

This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001.

On behalf of the directors

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_________Danny Moss Director

12 August 2021

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Ernst & Young Tel: +61 2 9248 5555 200 George Street Fax: +61 2 9248 5959 Sydney NSW 2000 Australia ey.com/au GPO Box 2646 Sydney NSW 2001

Auditor’s independence declaration to the directors of Beforepay Pty Ltd

As lead auditor for the audit of the financial report of Beforepay Pty Ltd for the financial years ended 30 June 2020 and 30 June 2019, I declare to the best of my knowledge and belief, there have been:

a. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b. No contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Beforepay Pty Ltd and the entities it controlled during the financial year.

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Ernst & Young

Simon Hannigan Partner 12 August 2021

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

Beforepay Group Limited (Formerly known as Cheq Limited) Statement of profit or loss and other comprehensive income For the period ended 30 June 2020

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Note Revenue Beforepay income 4 Other income 5 Expenses Employee benefits expense Depreciation and amortisation expense Expected credit losses expense Occupancy expenses Advertising and marketing expenses Professional and consultancy expenses Software licences Technical suppliers Other expenses Finance costs 6 Loss before income tax expense Income tax expense 7 Loss after income tax expense for the period attributable to the owners of Beforepay Group Limited Other comprehensive income for the period, net of tax Total comprehensive income for the period attributable to the owners of Beforepay Group Limited	Consolidated From 1 July 2019 to 30 June 2020 From 5 June 2019 to 30 June 2019 $ $ 44,784 - 398,675 - (262,196) (10,010) (78,826) - (48,348) - (45,496) - (68,841) - (226,106) (7,117) (56,772) - (160,942) - (80,618) (35) (53,781) - (638,467) (17,162) (11,520) - (649,987) (17,162) - - (649,987) (17,162)
	(638,467) (11,520)
	(649,987) -
	(649,987)

The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

Beforepay Group Limited (Formerly known as Cheq Limited) Statement of financial position As at 30 June 2020

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Note Assets Current assets Cash and cash equivalents 8 Trade and other receivables 9 Government grants receivable Total current assets Non-current assets Property, plant and equipment 10 Intangibles 11 Other 12 Total non-current assets Total assets Liabilities Current liabilities Trade and other payables 13 Borrowings 14 Employee benefits Other 15 Total current liabilities Total liabilities Net assets Equity Issued capital 16 Reserves 17 Accumulated losses Total equity	Consolidated 30 June 2020 30 June 2019 $ $ 825,793 100 148,083 400,000 312,175 - 1,286,051 400,100 13,302 - 335,710 - 1,414 - 350,426 - 1,636,477 400,100 160,607 17,162 350,000 - 28,463 - 447,495 - 986,565 17,162 986,565 17,162 649,912 382,938 1,316,715 400,100 346 - (667,149) (17,162) 649,912 382,938
	1,286,051
	13,302 335,710 1,414
	350,426
	1,636,477
	160,607 350,000 28,463 447,495
	986,565
	986,565
	649,912
	1,316,715 346 (667,149)
	649,912

The above statement of financial position should be read in conjunction with the accompanying notes

Beforepay Group Limited (Formerly known as Cheq Limited) Statement of changes in equity For the period ended 30 June 2020

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Issued capital $ - - -	Reserves $ - - -	Accumulated losses $ - (17,162) -	Total equity $ - (17,162) -
- 400,100	- -	(17,162) -	(17,162) 400,100
400,100	-	(17,162)	382,938
Issued capital $ 400,100 - -	Reserves $ - - -	Accumulated losses $ (17,162) (649,987) -	Total equity $ 382,938 (649,987) -
- 916,615 -	- - 346	(649,987) - -	(649,987) 916,615 346
1,316,715	346	(667,149)	649,912

The above statement of changes in equity should be read in conjunction with the accompanying notes

Beforepay Group Limited (Formerly known as Cheq Limited) Statement of cash flows For the period ended 30 June 2020

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Note Cash flows from operating activities Receipts from repayment of customers advances (inclusive of GST) Receipts of Beforepay income Payments to suppliers and employees (inclusive of GST) Advances from customers (inclusive of GST) Interest and other finance costs paid Government grants received Net cash used in operating activities 27 Cash flows from investing activities Payments for property, plant and equipment 10 Payments for intangibles 11 Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares 16 Proceeds from borrowings Share issue transaction costs Net cash from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the financial period Cash and cash equivalents at the end of the financial period 8	Consolidated From 1 July 2019 to 30 June 2020 From 5 June 2019 to 30 June 2019 $ $ 1,009,478 - 7,601 - (730,131) - (1,132,706) - (845,758) - (53,781) - 62,000 - (837,539) - (25,604) - (402,234) - (427,838) - 1,782,960 100 350,000 - (41,890) - 2,091,070 100 825,693 100 100 - 825,793 100
	(845,758) (53,781) 62,000
	(837,539)
	(25,604) (402,234)
	(427,838)
	1,782,960 350,000 (41,890)
	2,091,070
	825,693 100
	825,793

The above statement of cash flows should be read in conjunction with the accompanying notes

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 1. General information

The financial statements cover Beforepay Group Limited as a Group consisting of Beforepay Group Limited and the entities it controlled at the end of, or during, the period. The financial statements are presented in Australian dollars, which is Beforepay Group Limited's functional and presentation currency.

The company was incorporated on 5 June 2019 and therefore the results for the current year ended 30 June 2020 may not be directly comparable to the comparative period from 5 June 2019 to 30 June 2019.

Beforepay Group Limited is an unlisted public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Level 4 11-17 York Street Sydney NSW 2000

A description of the nature of the Group's operations and its principal activities are included in the directors' report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of directors, on 12 August 2021. The directors have the power to amend and reissue the financial statements.

Note 2. Significant accounting policies

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

New or amended Accounting Standards and Interpretations adopted

The Group has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

The following Accounting Standards and Interpretations are most relevant to the Group:

AASB 16 Leases

The Group has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and for lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases and leases of low-value assets, right-of-use assets and corresponding lease liabilities are recognised in the statement of financial position. Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results improve as the operating expense is now replaced by interest expense and depreciation in profit or loss. For classification within the statement of cash flows, the interest portion is disclosed in operating activities and the principal portion of the lease payments are separately disclosed in financing activities. For lessor accounting, the standard does not substantially change how a lessor accounts for leases.

Impact of adoption

There was no impact to the Group from the adoption of AASB 16. Other than the short term leases expensed in occupancy expenses, the Group had not entered into any other lease agreements on 1 July 2019.

Going concern

Overview

The Group’s business model is to make payments to customers in advance of those customers receiving regular income in the form of wages. As a result of the ongoing growth of the Group, the Group will seek additional capital, accessed in the form of both external debt and equity funding. Such capital will support growth in customer advances, development of the Group’s platform and the Group’s continued expansion.

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 2. Significant accounting policies (continued)

During the year ended 30 June 2020, the Group incurred a loss after tax $649,987 (2019: loss after tax of $17,162) and net operating cash outflows of $837,539 (30 June 2019: $nil) and net investing cash outflows of $427,838 (30 June 2019: $nil).

Historic capital raising activities

To support the growth in the customer advances book and in operations, the Group has demonstrated its ability to raise external debt and equity, including raising the following capital subsequent to 30 June 2020, and up to the date of this report:

Equity capital - $4,167,605 via the issue of ordinary shares in August and September 2020.
Debt financing - The Group utilised the following debt financing to fund the Group’s customer advances books: (a) Convertible notes, as issued in the following tranches:
$8,330,452, issued in December 2020; and
$12,125,000 issued in April 2021.
(b) A $45 million loan facility with Longreach Credit Investors, entered into in June 2021, expiring in June 2023. This facility is primarily fund expansion growth in customer advances.

In addition to the above, as at the date of signing of the 30 June 2020 financial report, the Group was engaged in the following capital raising activities:

A convertible note issuance of approximately $8.5 million, conducted between June and August 2021. The Group has received binding applications for this issuance, with settlement expected to occur in August 2021.
Equity capital – the Group is currently seeking to raise $40.0 million via an initial public offering in late calendar year 2021.

The Group has complied with the respective covenants of its convertible notes and loan facility at all times.

In the event that:

Existing debt facilities are not maintained in accordance with financial covenant requirements; or
the Group’s customer advances receivable growth exceeds current plans; or
the Group’s results materially underperform current expectations.

then additional funding, in either the form of debt (in excess of current facility limits) or equity (such as by way of an initial public offering of the Group) will be required to support the business.

As a result of these matters, there is a material uncertainty that may cast significant doubt on the Group's ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.

The Directors believe that the funds available from existing cash reserves and debt facilities, combined with those that would become available from the yet to be concluded convertible notes issuance and initial public offering, will provide the Group with sufficient working capital to carry out its stated objectives for at least the next 12 months from the date of signing these financial statements. The Directors have therefore prepared the financial statements on a going concern basis, which assumes the realisation of assets and settlement of liabilities in the normal course of business.

Basis of preparation

These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB').

Historical cost convention

The financial statements have been prepared under the historical cost convention.

Critical accounting estimates

The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3.

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 2. Significant accounting policies (continued)

Initial adoption of AASB 1 'First-time Adoption of Australian Accounting Standards'

These financial statements are the first set of general purpose financial statements of Beforepay Group Limited. In preparing these financial statements, the company has adopted AASB 1: First-time Adoption of International Financial Reporting Standards ('AASB 1') and applies the recognition, measurement and disclosure requirements in International Financial Reporting Standards ('IFRS') issued by the International Accounting Standards Board ('IASB') as endorsed by the Australian Accounting Standards Board ('AASB'), with interpretations issued by the IFRS Interpretations Committee ('IFRICs'), and with those parts of the Corporations Act 2001 applicable to companies reporting under IFRS.

Effect of adoption of AASB 1

AASB 1 requires a first-time adopter to retrospectively apply all Australian Accounting Standards effective as at the end of its first annual reporting period. AASB 1 also provides a first-time adopter certain optional exemptions and requires certain mandatory exceptions from full retrospective application. Most of these exemptions must be applied as at the date of transition. As these are the first set of general purpose financial statements prepared by the company, and the company is not transitioning from another accounting framework, most of these exceptions and exemptions have limited applicability.

The application of the mandatory exceptions did not impact amounts reported in the consolidated financial statements on the date of transition. The company did not apply any optional exemptions available under AASB 1.1.2.

Parent entity information

In accordance with the Corporations Act 2001, these financial statements present the results of the Group only. Supplementary information about the parent entity is disclosed in note 25.

Principles of consolidation

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Beforepay Group Limited ('company' or 'parent entity') as at 30 June 2020 and the results of all subsidiaries for the period then ended. Beforepay Group Limited and its subsidiaries together are referred to in these financial statements as the 'Group'.

Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and noncontrolling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

Revenue recognition

The Group recognises revenue as follows:

Beforepay income

Beforepay income is recognised over the period of which customer advances are made up until when they are repaid, applying the effective interest rate method. Beforepay income is calculated and charged based on a fixed percentage of the amount advanced.

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 2. Significant accounting policies (continued)

Other revenue

Other revenue consists of government grants, which are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with.

Income tax

The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:

When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or
When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

The carrying amount of recognised and unrecognised deferred tax assets are reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.

Current and non-current classification

Assets and liabilities are presented in the statement of financial position based on current and non-current classification.

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Trade receivables and customer advances receivable

Customer advances receivable

Customer advances receivable represent outstanding amounts on advances and associated BeforePay income receivable issued on the BeforePay platform. The Group’s business model is to hold the receivables with the objective to collect the contractual cash flows, including principal and interest due to BeforePay. Consumer receivables are measured at amortised cost using the Effective Interest Rate ('EIR') method. They are generally due within 14 – 56 days.

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 2. Significant accounting policies (continued)

Allowance for expected credit losses on customer advances receivable

The Group applies the general provision approach under AASB 9 Financial Instruments to account for ECLs on consumer receivables measured at amortised cost. ECLs are based on the difference between the contractual cash flows due in accordance with the BeforePay terms and all the cash flows that the Group expects to receive.

Due to the short-term nature of the customer receivables, the ECLs approximates the lifetime ECL. The Group uses ageing of customer advances receivable as the basis for ECL measurement given the short duration of consumer payment terms (maximum 62 days).

At each reporting date, the Group assesses impairment risk on initial recognition of the customer advances receivable and movements in the ageing of outstanding customer receivables to estimate the ECL.

Under this impairment approach, AASB 9 requires the Group Go classify Consumer receivables into three stages, which measure the ECL based on credit migration between the stages.

The Group has defined these stages as follows:

Age of customer advances
receivable	Basis of measurement of ECL
Current (not yet due)	ECL is determined based on the probability of an advance default occurring over the life of
	the customer advances receivable.
1-61 days past due	When a consumer has not paid by the due date, this is treated as an indication that risk of
	default has increased. Consequently, the loss allowance for customer advances receivable
	of this age is measured at a rate consistent with historical defaults for customer advances 1
	to 61 days past due. The rate of default for advances in this stage is generally higher than
	that for the Group’s entire advance book.
62+ days past due	Customer advances receivable aged greater than 61 days are considered objectively credit
	impaired. Such aging is considered to have an adverse impact on the potential future
	receipt of customer advances receivable aged 61 days or older and therefore a detrimental
	effect on the estimated cash inflows associated with advances at this stage.

Receivables are written off when the Group has no reasonable expectation of recovery. Any subsequent recoveries following write off are credited to receivables impairment expenses within the Consolidated Statement of profit or loss and other comprehensive income in the period in which they were recovered.

Investments and other financial assets

Investments and other financial assets are initially measured at fair value. Transaction costs are included as part of the initial measurement, except for financial assets at fair value through profit or loss. Such assets are subsequently measured at either amortised cost or fair value depending on their classification. Classification is determined based on both the business model within which such assets are held and the contractual cash flow characteristics of the financial asset unless an accounting mismatch is being avoided.

Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the Group has transferred substantially all the risks and rewards of ownership. When there is no reasonable expectation of recovering part or all of a financial asset, it's carrying value is written off.

Financial assets at amortised cost

A financial asset is measured at amortised cost only if both of the following conditions are met: (i) it is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and (ii) the contractual terms of the financial asset represent contractual cash flows that are solely payments of principal and interest.

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 2. Significant accounting policies (continued)

Impairment of financial assets

The Group recognises a loss allowance for expected credit losses on financial assets which are either measured at amortised cost or fair value through other comprehensive income. The measurement of the loss allowance depends upon the Group's assessment at the end of each reporting period as to whether the financial instrument's credit risk has increased significantly since initial recognition, based on reasonable and supportable information that is available, without undue cost or effort to obtain.

Where there has not been a significant increase in exposure to credit risk since initial recognition, a 12-month expected credit loss allowance is estimated. This represents a portion of the asset's lifetime expected credit losses that is attributable to a default event that is possible within the next 12 months. Where a financial asset has become credit impaired or where it is determined that credit risk has increased significantly, the loss allowance is based on the asset's lifetime expected credit losses. The amount of expected credit loss recognised is measured on the basis of the probability weighted present value of anticipated cash shortfalls over the life of the instrument discounted at the original effective interest rate.

For financial assets mandatorily measured at fair value through other comprehensive income, the loss allowance is recognised in other comprehensive income with a corresponding expense through profit or loss. In all other cases, the loss allowance reduces the asset's carrying value with a corresponding expense through profit or loss.

Property, plant and equipment

Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows:

Computer equipment

2-3 years

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

Intangible assets

Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.

Research and development

Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is probable that the project will be a success considering its commercial and technical feasibility; the Group is able to use or sell the asset; the Group has sufficient resources and intent to complete the development; and its costs can be measured reliably. Capitalised development costs are amortised on a straight-line basis over the period of their expected benefit, being their finite life of 3-4 years.

Patents and trademarks

Significant costs associated with patents and trademarks are re capitalised as an asset. These costs are not subsequently amortised.

Formation costs

Costs in relation to the formation of the Group are capitalised as an asset. These costs are amortised on a straight-line basis over the period of their expected benefit, being their finite life of 4 years.

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 2. Significant accounting policies (continued)

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.

Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

Leases

The Group has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss on a straight-line basis.

Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial period and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.

Borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest method.

Finance costs

Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred.

Employee benefits

Short-term employee benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.

Other long-term employee benefits

The liability for annual leave and long service leave not expected to be settled within 12 months of the reporting date are measured at the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at the reporting date on high quality corporate bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Defined contribution superannuation expense

Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred.

Share-based payments

Equity-settled share-based compensation benefits are provided to employees.

Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services.

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 2. Significant accounting policies (continued)

The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.

The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.

Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.

If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.

If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.

If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.

Fair value measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.

Issued capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 2. Significant accounting policies (continued)

Goods and Services Tax ('GST') and other similar taxes

Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.

New Accounting Standards and Interpretations not yet mandatory or early adopted

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2020. The Group's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out below.

Conceptual Framework for Financial Reporting (Conceptual Framework)

The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 July 2021 and early adoption is permitted. The Conceptual Framework contains new definition and recognition criteria as well as new guidance on measurement that affects several Accounting Standards. Where the Group has relied on the existing framework in determining its accounting policies for transactions, events or conditions that are not otherwise dealt with under the Australian Accounting Standards, the Group may need to review such policies under the revised framework. At this time, the application of the Conceptual Framework is not expected to have a material impact on the Group's financial statements.

Note 3. Critical accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.

Coronavirus (COVID-19) pandemic

Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the Group based on known information. This consideration extends to the nature of the products and services offered, customers, supply chain, staffing and geographic regions in which the Group operates. Other than as addressed in specific notes, there does not currently appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the Group unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic.

Allowance for expected credit losses

Judgement is applied in measuring the allowance for ECL's and determining whether the risk of default has increased materially since initial recognition of the customer advances.

The Group considers both quantitative and qualitative information, including historical loss experience based on customer demographic data and the proportion of defaults over time in determining the profitability of default. The Group also considers forward looking adjustments, such as macroeconomic forecasts and seasonality trends that are not captured within the base ECL calculations. This inclusion of forward-looking information increases the degree of judgement required to assess effects on the Group’s ECL.

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 3. Critical accounting judgements, estimates and assumptions (continued)

The impact of the COVID-19 pandemic remains uncertain and represents a material downside risk to the economy. While the methodologies applied to the ECL calculations remained unchanged from those applied in prior to the onset of COVID19, the Group has incorporated judgements, estimates and assumptions specific to the impact of COVID-19, where relevant, in the measurement of ECL.

The assumptions and methodologies applied in derivation of the allowance for ECL are reviewed regularly.

Estimation of useful lives of assets

The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

Note 4. Beforepay income

Beforepay income	Consolidated From 1 July 2019 to 30 June 2020 From 5 June 2019 to 30 June 2019 $ $ 44,784 -

Beforepay income consists of the advance transaction fees charged to customers on advances. Beforepay income is calculated and charged based on a fixed percentage of the amount advanced.

Note 5. Other income

Government grants Research and development tax incentive Other income	Consolidated From 1 July 2019 to 30 June 2020 From 5 June 2019 to 30 June 2019 $ $ 86,500 - 312,175 - 398,675 -
	398,675

Government grants (COVID-19) represents grants received from the Government comprising of:

(i) JobKeeper support payments from the Australian Government which are passed on to eligible employees. These have been recognised as government grants in the financial statements and recorded as other income over the periods in which the related employee benefits are recognised as an expense. The Group was eligible for the JobKeeper payment scheme for the fortnights from 30 March 2020 on the condition that employee benefits continue to be paid during that period.

(ii) Cash Boost support payments - during the year the Group received payments from the Australian Government as part of its ‘Boosting Cash Flow for Employers’ scheme in response to the Coronavirus (‘COVID-19’) pandemic. These nontax assessable amounts have been recognised as government grants and recognised as income once there is reasonable assurance that the Group will comply with any conditions attached.

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 6. Expenses

Loss before income tax includes the following specific expenses: Finance costs Interest and finance charges paid/payable on borrowings Leases Short-term lease payments Superannuation expense Defined contribution superannuation expense Share-based payments expense Share-based payments expense Note 7. Income tax Income tax expense Current tax benefit Deferred tax - origination and reversal of temporary differences Aggregate income tax expense Deferred tax included in income tax expense comprises: Increase in deferred tax assets Increase in deferred tax liabilities Deferred tax - origination and reversal of temporary differences Numerical reconciliation of income tax expense and tax at the statutory rate Loss before income tax expense Tax at the statutory tax rate of 27.5% Tax effect amounts which are not deductible/(taxable) in calculating taxable income: Share-based payments Non-assessable research and development incentive Non-deductible research and development expenses Other non-deductible expenses Deferred tax liability relating to capitalised research and development Tax losses not recognised as deferred tax assets Income tax expense	Consolidated From 1 July 2019 to 30 June 2020 From 5 June 2019 to 30 June 2019 $ $ 53,781 - 45,496 - 53,608 811 346 - Consolidated From 1 July 2019 to 30 June 2020 From 5 June 2019 to 30 June 2019 $ $ - - 11,520 - 11,520 - (84,146) - 95,666 - 11,520 - (638,467) (17,162) (175,578) (4,720) 95 - (103,036) - 89,021 - 18,838 - 90,275 - 91,905 4,720 11,520 -
	11,520
	(84,146) 95,666
	11,520
	(638,467)
	(175,578) 95 (103,036) 89,021 18,838 90,275 91,905
	11,520

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 7. Income tax (continued)

Amounts (credited)/charged directly to equity Deferred tax assets Tax losses not recognised Unused tax losses for which no deferred tax asset has been recognised Potential tax benefit @ 27.5%	Consolidated From 1 July 2019 to 30 June 2020 From 5 June 2019 to 30 June 2019 $ $ (11,520) -	Consolidated From 1 July 2019 to 30 June 2020 From 5 June 2019 to 30 June 2019 $ $ (11,520) -
	351,364	17,162
	96,625	4,720

The above potential tax benefit for tax losses has not been recognised in the statement of financial position. These tax losses can only be utilised in the future if the continuity of ownership test is passed, or failing that, the same business test is passed.

Deferred tax asset Deferred tax asset comprises temporary differences attributable to: Amounts recognised in profit or loss: Allowance for expected credit losses Accrued expenses Recognition of income tax losses Offset against deferred tax liabilities Amounts recognised in equity: Capital raising costs Offset against deferred tax liabilities Deferred tax asset Movements: Opening balance Credited to profit or loss Credited to equity Offset against deferred tax liabilities Closing balance	Consolidated 30 June 2020 30 June 2019 $ $ 13,295 - 36,615 - 34,236 - (84,146) -	Consolidated 30 June 2020 30 June 2019 $ $ 13,295 - 36,615 - 34,236 - (84,146) -
	-	-
	11,520 (11,520)	- -
	-	-
	-	-
	- 84,146 11,520 (95,666)	- - - -
	-	-

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 7. Income tax (continued)

Deferred tax liability Deferred tax liability comprises temporary differences attributable to: Amounts recognised in profit or loss: Intangible assets Offset by deferred tax assets Deferred tax liability Movements: Opening balance Charged to profit or loss Offset by deferred tax assets Closing balance Note 8. Current assets - cash and cash equivalents Cash at bank Note 9. Current assets - trade and other receivables Receivables - customer advances Less: Allowance for expected credit losses Subscriptions receivable Other receivables	Consolidated 30 June 2020 30 June 2019 $ $ 95,666 - (95,666) - - - - - 95,666 - (95,666) - - - Consolidated 30 June 2020 30 June 2019 $ $ 825,793 100 Consolidated 30 June 2020 30 June 2019 $ $ 148,246 - (48,348) - 99,898 - - 400,000 48,185 - 148,083 400,000
	99,898
	- 48,185
	148,083

Note 8. Current assets - cash and cash equivalents

Note 9. Current assets - trade and other receivables

Allowance for expected credit losses

The Group has recognised a loss of $48,348 (period ended 30 June 2019: $nil) in profit or loss in respect of the expected credit losses for the period ended 30 June 2020.

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 9. Current assets - trade and other receivables (continued)

The ageing of the receivables and allowance for expected credit losses provided for above are as follows:

Expected credit loss rate 30 June 2020 30 June 2019 Consolidated % % Not overdue 9.9% - 1-61 days overdue 25.4% - Greater than 61 days overdue 100.0% -	Carrying amount 30 June 2020 30 June 2019 $ $ 40,289 - 84,300 - 23,657 -	Carrying amount 30 June 2020 30 June 2019 $ $ 40,289 - 84,300 - 23,657 -	Allowance for expected credit losses 30 June 2020 30 June 2019 $ $ 3,248 - 21,443 - 23,657 -	Allowance for expected credit losses 30 June 2020 30 June 2019 $ $ 3,248 - 21,443 - 23,657 -
	148,246	-	48,348	-

Movements in the allowance for expected credit losses are as follows:

Opening balance Additional provisions recognised Receivables written off during the year as uncollectable Unused amounts reversed Closing balance	Consolidated 30 June 2020 30 June 2019 $ $ - - 48,348 - - - - -	Consolidated 30 June 2020 30 June 2019 $ $ - - 48,348 - - - - -
	48,348	-

Subscriptions receivable

Subscriptions receivable represents funds receivable from 50,000 ordinary shares that were issued on 28 June 2019 (refer to note 16). This amount was received subsequent to the financial year ended 30 June 2019.

Note 10. Non-current assets - property, plant and equipment

Computer equipment - at cost Less: Accumulated depreciation	Consolidated 30 June 2020 30 June 2019 $ $ 25,604 - (12,302) -	Consolidated 30 June 2020 30 June 2019 $ $ 25,604 - (12,302) -
	13,302	-

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial period are set out below:

Consolidated Balance at 5 June 2019 Balance at 30 June 2019 Additions Depreciation expense Balance at 30 June 2020	Computer equipment $ -
	- 25,604 (12,302)
	13,302

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 11. Non-current assets - intangibles

Development - at cost Less: Accumulated amortisation Patents and trademarks - at cost Formation costs Less: Accumulated amortisation	Consolidated 30 June 2020 30 June 2019 $ $ 393,929 - (65,655) - 328,274 - 3,960 - 4,345 - (869) - 3,476 - 335,710 -
	328,274
	3,960
	4,345 (869)
	3,476
	335,710

Reconciliations

Reconciliations of the written down values at the beginning and end of the current and previous financial period are set out below:

Development costs $ -	Patents and trademarks $ -	Formation costs $ -
- 393,929 (65,655)	- 3,960 -	- 4,345 (869)
328,274	3,960	3,476

		160,607

Refer to note 19 for further information on financial instruments.

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 14. Current liabilities - borrowings

Loans payable to shareholders	Consolidated 30 June 2020 30 June 2019 $ $ 350,000 -

Refer to note 19 for further information on financial instruments. Refer to note 18 for further information on financial instruments. Included in loans from shareholders is $250,000 from related party shareholders. Refer to note 24 for related party loan information.

Loans to shareholders are repayable 12 months from issuance, on 31 October 2020. Interest is payable, monthly in arrears, at a rate of 15% per annum.

These loans were repaid in full in June 2021.

Note 15. Current liabilities - other

Subscriptions received in advance	Consolidated 30 June 2020 30 June 2019 $ $ 447,495 -

Subscriptions received in advance

Subscriptions received in advance represents funds received for ordinary shares that were issue subsequent to the end of the financial year on 20 July 2020.

Note 16. Equity - issued capital

30 June 2020 Shares 172,329	Consolidated 30 June 2019 30 June 2020 Shares $ 150,000 1,316,715	30 June 2019 $ 400,100
Date 5 June 2019 5 June 2019 28 June 2019 30 June 2019 19 November 2019 26 November 2019 30 June 2020	Number of Shares - 100,000 50,000 150,000 852 21,477 - 172,329	$ - 100 400,000
		400,100 34,992 900,473 (18,850)
		1,316,715

Ordinary shares

Ordinary shares entitle the holder to participate in any dividends declared and any proceeds attributable to shareholders should the company be wound up in proportions that consider both the number of shares held and the extent to which those shares are paid up. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital.

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 16. Equity - issued capital (continued)

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Capital risk management

The Group's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.

Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents.

In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The Group is subject to certain financing arrangements covenants and meeting these is given priority in all capital risk management decisions. There have been no events of default on the financing arrangements during the financial period.

Note 17. Equity - reserves

Share-based payments reserve	Consolidated 30 June 2020 30 June 2019 $ $ 346 -

Share-based payments reserve

The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their remuneration, and other parties as part of their compensation for services.

Movements in reserves

Movements in each class of reserve during the current and previous financial period are set out below:

Consolidated Balance at 5 June 2019 Balance at 30 June 2019 Share-based payments Balance at 30 June 2020	Share-based payments $ -	Total $ -
	- 346	- 346
	346	346

Note 18. Equity - dividends

There were no dividends paid, recommended or declared during the current or previous financial period.

Note 19. Financial instruments

Financial risk management objectives

The Group’s principal financial liabilities comprise trade and other payables and bank loans. The main purpose of these financial liabilities is to finance the Group’s operations. The Group’s principal financial assets include cash and trade receivables that are derived directly from its operations.

In assessing the financial risk management objectives consideration is given to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk.

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 19. Financial instruments (continued)

The Group is primarily exposed to credit risk, interest rate risk and liquidity risk. The current activities of the Group do not expose it to any significant foreign currency risk or price risk. The Group's overall risk management strategy seeks to minimise potential adverse effects on the financial performance and financial position of the Group. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use cash deposits, capital raisings and through the issue of shares and lease contracts. The Group uses different methods to measure its liquidity risk including cash flow analysis. The Group uses the general model to manage and provide for expected future credit losses.

Risk management is carried out by senior executives under policies approved by the Board of Directors ('the Board'). These policies include identification and analysis of the risk exposure of the Group and appropriate procedures, controls and risk limits.

Market risk

Foreign currency risk

The Group operates exclusively within Australia and not have any transactions denominated in foreign currency. Therefore, the Group is not exposed to any significant foreign currency risk.

Price risk

The Group is not exposed to any significant price risk.

Interest rate risk

The Group's main interest rate risk arises from long-term borrowings. Borrowings obtained at variable rates expose the consolidated entity to interest rate risk. As at the reporting date, the Group's borrowings are issued at fixed interest rates therefore the Group has no significant exposure to interest rate risk.

As at the reporting date, the Group had the following fixed rate borrowings outstanding:

	30 June	2020	30 June	2019
	Weighted		Weighted
	average		average
	interest rate	Balance	interest rate	Balance
Consolidated	%	$	%	$
Bank loans	15.00%	350,000	-		-
Net exposure to cash flow interest rate risk		350,000			-

An analysis by remaining contractual maturities in shown in 'liquidity and interest rate risk management' below.

Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit limits. The Group obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The Group does not hold any collateral.

Generally, customer advances are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 62 days.

The Group does not have any significant credit risk exposure to any single customer. However, the entity is exposed to significant credit risk concentration with key banks through its cash balances. The carrying amount of financial assets recorded in the statement of financial position, net of any allowances for losses, represents the Group’s maximum exposure to credit risk.

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 19. Financial instruments (continued)

Liquidity risk

Vigilant liquidity risk management requires the Group to maintain sufficient liquid assets (mainly cash and cash equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.

The Group manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.

Remaining contractual maturities

The following tables detail the Group's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.

1 year or less $ 5,693 17,919 350,000	Between 1 and 2 years $ - - -	Between 2 and 5 years $ - - -	Over 5 years $ - - -	Remaining contractual maturities $ 5,693 17,919 350,000
373,612	-	-	-	373,612
1 year or less $ 6,151	Between 1 and 2 years $ -	Between 2 and 5 years $ -	Over 5 years $ -	Remaining contractual maturities $ 6,151
6,151	-	-	-	6,151

The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above.

Note 20. Fair value measurement

The carrying amounts of trade and other receivables and trade and other payables are assumed to approximate their fair values due to their short-term nature.

The fair value of financial liabilities is estimated by discounting the remaining contractual maturities at the current market interest rate that is available for similar financial liabilities.

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 21. Key management personnel disclosures

Compensation

The aggregate compensation made to directors and other members of key management personnel of the Group is set out below:

Short-term employee benefits Post-employment benefits Share-based payments	Consolidated From 1 July 2019 to 30 June 2020 From 5 June 2019 to 30 June 2019 $ $ 131,290 - 13,782 - - -	Consolidated From 1 July 2019 to 30 June 2020 From 5 June 2019 to 30 June 2019 $ $ 131,290 - 13,782 - - -
	145,072	-

Note 22. Remuneration of auditors

During the financial period the following fees were paid or payable for services provided by Ernst & Young, the auditor of the company:

Audit services - Ernst & Young Audit or review of the financial statements	Consolidated From 1 July 2019 to 30 June 2020 From 5 June 2019 to 30 June 2019 $ $ 60,000 -

Note 23. Contingent liabilities

As at 30 June 2020, the Group had no contingent liabilities (30 June 2019: None)

Note 24. Related party transactions

Parent entity

Beforepay Group Limited is the parent entity.

Subsidiaries

Interests in subsidiaries are set out in note 26.

Key management personnel

Disclosures relating to key management personnel are set out in note 21.

Transactions with related parties

The following transactions occurred with related parties:

Consolidated	Consolidated
From 1 July	From 5 June
2019 to 30	2019 to 30
June 2020	June 2019
$	$

Expenses to related parties: Interest expense - Director affiliated entities (note (a))

25,000 -

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 24. Related party transactions (continued)

Receivable from and payable to related parties

The following balances are outstanding at the reporting date in relation to transactions with related parties:

	Consolidated
	30 June 2020 30 June	2019
	$ $
Current payables:
Interest payable - Director affiliated entities (note a)	6,250	-
Loans to/from related parties
The following balances are outstanding at the reporting date in relation to	loans with related parties:
	Consolidated
	30 June 2020 30 June	2019
	$ $
Non-current borrowings:
Loans payable - Director affiliated entities (note a)	250,000	-

Loans to/from related parties

The following balances are outstanding at the reporting date in relation to loans with related parties:

Note (a):

At 30 June 2020, the Group had the following loans payable to director controlled entities:

Deejlink Pty Ltd, an entity controlled by Danny Moss. This loan, of $50,000, was issued on 1 November 2019. The loan is unsecured and has a one-year fixed term and interest payable at a rate of 15% p.a., quarterly in arrears. Interest expense associated with the loan for the year ended 30 June 2020 was $5,000, of which $3,750 was paid and $1,250 was payable by the Group at 30 June 2020.
Trinity Financial Markets Pty Ltd, an entity controlled by Stefan Urosevic. This loan, of $100,000, was issued on 1 November 2019. The loan is unsecured and has a one-year fixed term and interest payable at a rate of 15% p.a., quarterly in arrears. Interest expense associated with the loan for the year ended 30 June 2020 was $10,000, of which $7,500 was paid and $2,500 was payable by the Group at 30 June 2020.
Lavalhars Pty Ltd, an entity controlled by Stephen Moss. This loan of $100,000 was issued on 1 November 2019. The loan is unsecured and has a one-year fixed term and interest payable at a rate of 15% p.a., quarterly in arrears. Interest expense associated with the loan for the year ended 30 June 2020 was $10,000, of which $7,500 was paid and $2,500 payable by the Group at 30 June 2020.

Terms and conditions

All transactions were made on normal commercial terms and conditions and at market rates.

Note 25. Parent entity information

Set out below is the supplementary information about the parent entity.

Statement of profit or loss and other comprehensive income

Profit after income tax Total comprehensive income	Parent From 1 July 2019 to 30 June 2020 From 5 June 2019 to 30 June 2019 $ $ 10,814 -	Parent From 1 July 2019 to 30 June 2020 From 5 June 2019 to 30 June 2019 $ $ 10,814 -
	10,814	-

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 25. Parent entity information (continued)

Statement of financial position

Total current assets Total assets Total current liabilities Total liabilities Equity Issued capital Share-based payments reserve Retained profits Total equity	Parent 30 June 2020 30 June 2019 $ $ 2,121,594 400,100	Parent 30 June 2020 30 June 2019 $ $ 2,121,594 400,100
	2,125,370	400,100
	797,495	-
	797,495	-
	1,316,715 346 10,814	400,100 - -
	1,327,875	400,100

Guarantees entered into by the parent entity in relation to the debts of its subsidiaries

The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2020 and 30 June 2019.

Contingent liabilities

The parent entity had no contingent liabilities as at 30 June 2020 and 30 June 2019.

Capital commitments - Property, plant and equipment

The parent entity had no capital commitments for property, plant and equipment as at 30 June 2020 and 30 June 2019.

Significant accounting policies

The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 2, except for the following:

Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impairment of the investment.

Note 26. Interests in subsidiaries

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in note 2:

		Ownership	interest
	Principal place of business /	30 June 2020 30 June 2019
Name	Country of incorporation	%	%
Beforepay Finance Pty Ltd (formerly Cheq Finance Pty
Limited)	Australia	100.00%	100.00%
Beforepay Ops Pty Limited	Australia	100.00%	100.00%
Beforepay IP Pty Ltd	Australia	100.00%	100.00%

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 27. Cash flow information

Reconciliation of loss after income tax to net cash used in operating activities

Loss after income tax expense for the period Adjustments for: Depreciation and amortisation Share-based payments Change in operating assets and liabilities: Increase in trade and other receivables Decrease in deferred tax assets Increase in government grants receivable Increase in trade and other payables Increase in employee benefits Net cash used in operating activities	Consolidated From 1 July 2019 to 30 June 2020 From 5 June 2019 to 30 June 2019 $ $ (649,987) (17,162) 78,826 - 346 - (149,497) - 11,520 - (312,175) - 154,965 17,162 28,463 -	Consolidated From 1 July 2019 to 30 June 2020 From 5 June 2019 to 30 June 2019 $ $ (649,987) (17,162) 78,826 - 346 - (149,497) - 11,520 - (312,175) - 154,965 17,162 28,463 -
	(837,539)	-

Changes in liabilities arising from financing activities

Consolidated Balance at 5 June 2019 Net cash from financing activities Balance at 30 June 2019 Net cash from financing activities Balance at 30 June 2020	Loans payable to shareholders $ - -
	- 350,000
	350,000

Note 28. Share-based payments

During the financial year ended 30 June 2020, an Employee Option Plan has been established by the Group whereby share options have been issued to certain employees. The options are issued for nil consideration and are granted in accordance with performance guidelines established by the Board. These options allow each option holder to convert each option to one share following vesting.

The options vest as follows:

25% of the options granted will vest one year from grant date; and
from the start of the second year, the remaining 75% of the options granted will vest on a quarterly basis over a 3 year period.

Vesting conditions and other vesting events may be varied at the discretion of the Board. The options may only be exercised for shares in the Company.

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 28. Share-based payments (continued)

Set out below are summaries of options granted under the plan:

30 June 2020 Exercise Grant date Expiry date price 01/07/2019 01/01/2025 $37.55 24/07/2019 01/01/2025 $37.55 Weighted average exercise price	Balance at the start of the period - -	Granted 2,130 1,065	Exercised - -	Expired/ forfeited/ other - -	Balance at the end of the period 2,130 1,065
	-	3,195	-	-	3,195
	$0.00	$37.55	$0.00	$0.00	$37.55

No options are exercisable at the end of the financial reporting period.

The weighted average remaining contractual life of options outstanding at the end of the financial period was 4.5 years.

For the options granted during the current financial period, the valuation model inputs used to determine the fair value at the grant date, are as follows:

		Share price	Exercise	Expected	Dividend	Risk-free	Fair value
Grant date	Expiry date	at grant date	price	volatility	yield	interest rate	at grant date
01/07/2019	01/01/2025	$8.00	$37.55	50.00%	-	0.72%	$0.44
24/07/2019	01/01/2025	$8.00	$37.55	50.00%	-	0.72%	$0.44

Note 29. Events after the reporting period

In and around August 2020, the company raised $4,167,605 via the issue of ordinary shares in Beforepay Group Limited.

In or around November 2020, the company registered and commenced trading under the business name Beforepay.

In and around December 2020, the company raised $8,330,452 via the issue of convertible notes.

In or around April 2021, the company raised $12,125,000 via the issue of convertible notes.

On 14 May 2021, via a resolution of shareholders, the parent company, Cheq Limited changed its name to Beforepay Group Limited.

Beforepay Group Limited (Formerly known as Cheq Limited) Notes to the financial statements 30 June 2020

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Note 29. Events after the reporting period (continued)

The secured debt facility has a limit of A$45 million and expires on or about June 2023.
Interest is payable monthly in arrears based on a fixed rate of 9.50%.
The facility is subject to covenants that are in line with standard market practice given the nature of the financing facilities. The primary covenant for all facilities is a maximum LVR which varies based on negotiated terms. The LVR is measured as the value of the facility drawn over total eligible receivables funded plus restricted cash. These covenants are in line with standard market practice given the nature of the facility. Covenants have been complied with throughout the date of this report. Debt covenants have been assessed regularly to determine whether there were any breaches for which disclosure is required and considered in the forward forecast.

The Group is currently pursuing a listing on the Australian Securities Exchange.

The Group is currently in the process of raising approximately $8,500,000 via the issue of convertible notes to be issued in August 2021.

Beforepay Group Limited (Formerly known as Cheq Limited) Directors' declaration 30 June 2020

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In the directors' opinion:

the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the Group's financial position as at 30 June 2020 and of its performance for the financial period ended on that date; and
there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.

On behalf of the directors

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_________Danny Moss Director

12 August 2021

Ernst & Young 200 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001

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Tel: +61 2 9248 5555 Fax: +61 2 9248 5959 ey.com/au

Independent auditor’s report to the members of Beforepay Group Limited

Opinion

We have audited the financial report of Beforepay Group Limited (the Company) and its subsidiaries (collectively the Group), which comprises the consolidated statement of financial position as at 30 June 2020 and 30 June 2019, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001 , including:

a. Giving a true and fair view of the consolidated financial position of the Group as at 30 June 2020 and 30 June 2019 and of its consolidated financial performance for the year ended on that date; and
b. Complying with Australian Accounting Standards and the Corporations Regulations 2001 .

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report. We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of Matter – Material Uncertainty Regarding Continuation as a Going Concern

Without qualifying our conclusion, we draw attention to Note 2 in the financial report which indicates that the Group’s ability to continue as a going concern is dependent on future conditions including the Group’s ability to successfully raise debt or equity capital.

These factors cast doubt over whether the Group will realise its assets and liabilities in the normal course of business and at the amounts stated in the financial report. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that might be necessary should the Group not continue as a going concern.

Information other than the financial report and auditor’s report thereon

The directors are responsible for the other information. The other information is the directors’ report accompanying the financial report.

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

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Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Responsibilities of the directors for the financial report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

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concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

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Ernst & Young

Simon Hannigan Partner Sydney 12 August 2021

A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

AI assistant

BEFOREPAY GROUP LIMITED — Annual Report 2020

64491_rns_2022-01-12_2908eb0a-2235-48f3-83c5-b42cdd4eb174.pdf

Directors

Principal activities

Dividends

Review of operations

Significant changes in the state of affairs

Matters subsequent to the end of the financial period

Likely developments and expected results of operations

Environmental regulation

Information on directors

Company secretaries

Meetings of directors

Shares under option

Shares issued on the exercise of options

Indemnity and insurance of officers

Indemnity and insurance of auditor

Proceedings on behalf of the company

Auditor's independence declaration

Auditor

Auditor’s independence declaration to the directors of Beforepay Pty Ltd

Note 1. General information

Note 2. Significant accounting policies

New or amended Accounting Standards and Interpretations adopted

AASB 16 Leases

Impact of adoption

Going concern

Overview

Note 2. Significant accounting policies (continued)

Historic capital raising activities

In the event that:

Basis of preparation

Historical cost convention

Critical accounting estimates

Note 2. Significant accounting policies (continued)

Initial adoption of AASB 1 'First-time Adoption of Australian Accounting Standards'

Effect of adoption of AASB 1

Parent entity information

Principles of consolidation

Revenue recognition

Beforepay income

Note 2. Significant accounting policies (continued)

Other revenue

Income tax

Current and non-current classification

Cash and cash equivalents

Trade receivables and customer advances receivable

Customer advances receivable

Note 2. Significant accounting policies (continued)

Allowance for expected credit losses on customer advances receivable

Investments and other financial assets

Financial assets at amortised cost

Note 2. Significant accounting policies (continued)

Impairment of financial assets

Property, plant and equipment

Computer equipment

2-3 years

Intangible assets

Research and development

Patents and trademarks

Formation costs

Note 2. Significant accounting policies (continued)

Impairment of non-financial assets

Leases

Trade and other payables

Borrowings

Finance costs

Employee benefits

Short-term employee benefits

Other long-term employee benefits

Defined contribution superannuation expense

Share-based payments

Note 2. Significant accounting policies (continued)

Fair value measurement

Issued capital

Note 2. Significant accounting policies (continued)

Goods and Services Tax ('GST') and other similar taxes

New Accounting Standards and Interpretations not yet mandatory or early adopted

Conceptual Framework for Financial Reporting (Conceptual Framework)

BEFOREPAY GROUP LIMITED Annual Report 2020