CONNECTED MINERALS LIMITED — Annual Report 2021

Aug 31, 2021

Connected IO Limited ABN 99 009 076 233 Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

Results for announcement to market

Results for announcement to market
	2021	2020
Key Information	$	$	% Change
Revenue from ordinary activities	1,196,657	3,817,964	(68.66%)
Loss after tax from ordinary activities attributable to	(5,802,731)	(2,392,816)	142.51%
members
Loss attributable to members	(5,802,731)	(2,392,816)	142.51%

Commentary on Results for the Period

Operational Review

Connected IO (“CIO” or the “Company”) revenues from ordinary activities significantly reduced from $3.8m for FY2020 to $1.2m for FY2021, representing a 69% decrease which was primarily associated with the COVID-19 business interruptions and restrictions in the United States experienced throughout the FY21 financial year.

The net loss for the Company for the year ended 30 June 2021 was $5,802,731, after providing for share based payments totalling $1,251,272 (refer to Note 12) and impairment of goodwill on consolidation of $2,418,610 for the year (refer to Note 5).

The Company experienced a significant reduction in sales commencing in Q4 of FY2020 directly related to the COVID-19 restrictions that were in place in the United States. This sales trend continued throughout FY2021, and the Company has yet to return to sales levels that were being achieved prior to the pandemic. The Company has focused its efforts on keeping operating and administrative expenses at a minimum in the current environment.

Additional pressures on the supply chain have also had an effect on the Company as a result of the global chip shortage. This has meant that any sales orders of significance have been difficult to fill in a timely manner and the Company is now conducting a Strategic Review which is focussed on how best to manage the timeframes associated with manufacturing and the impact that is having on the business.

Corporate Review

During the year ended 30 June 2021, the Company has undergone a major re-structure to reduce debt and raise additional capital to grow the business.

On 2 December 2020, Mr. Yakov Temov resigned as Managing Director to focus on recovery of the United States business. Additional loan funds were secured later in December of 2020 in addition to some monies from stimulus packages available to the Company.

On 19 January 2021, the Company announced a placement and entitlement offer which together raised a total of approximately $570,000 (before costs). On 23 January 2021, Mr Dougal Ferguson (a non-executive director of the Company) was appointed Chief Executive Officer to oversee the re-structure and assist with the Strategic Review process. The Company then also initiated a Small Shareholding Sale Facility to allow shareholders who held less than a marketable parcel of shares (<$500 in value) to sell their shares in an efficient and cost-effective manner.

Following the closing of the Small Shareholding Sale Facility process, on 28 May 2021, the Company announced a further placement, entitlement offer and debt re-structure. Some elements of the re-structure was subject to shareholder approval which was received on 30 June 2021, with the re-structure being fully implemented in July 2021.

Following the implementation of the re-structure (including a 1:10 consolidation of shares), the Company has significantly reduced its debt, including full repayment of the convertible notes, and has approximately $3 million in cash and 317,919,465 shares on issue.

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Connected IO Limited ABN 99 009 076 233

Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

2021 2020 Key Information cents/share cents/share Net tangible assets per share (0.14) (0.59)

Dividends paid and proposed – NIL

Dougal Ferguson Director

Dated at Perth this 31[st] day of August 2021

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Connected IO Limited ABN 99 009 076 233

Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

Note Sales revenue Cost of goods sold Gross profit Interest received Other income Debts forgiven 10 Director fees, salary and wages expense Professional fees Depreciation and amortisation expense Administration expense Interest and facility fee expenses Impairment of goodwill 5 Share based payments 12 Loss before tax Income tax expense Loss for the year from continuing operations Other comprehensive income for the year, net of tax Items that may be reclassified to profit or loss Exchange differences on translation of foreign balances Items that will not be reclassified to profit or loss Recognition of translated foreign exchange balances on deconsolidation Total comprehensive loss for the year Earnings per share for loss attributable to the ordinary equity holders of the company Basic and diluted loss per share from continuing operations 13 Basic and diluted loss per share from continuing and discontinued operations 13	Consolidated 2021 $ Consolidated 2020 $ 1,196,657 3,817,964 (752,071) (2,331,466)
	444,586 1,486,498
	54 869 174 132,399 199,529 - (1,427,901) (1,826,867) (466,902) (227,240) (128,776) (119,554) (640,670) (777,869) (112,943) (318,524) (2,418,610) - (1,251,272) (742,528)
	(5,802,731) (2,392,816) - -
	(5,802,731) (2,392,816) (159,334) 38,219 - -
	(5,962,065) (2,354,597)
	Cents Cents
	(1.63) (1.12) (1.63) (1.12)

The above should be read in conjunction with the accompanying notes.

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Connected IO Limited ABN 99 009 076 233

Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2021

Note Current assets Cash and cash equivalents 1 Trade and other receivables 2 Inventory 3 Total current assets Non-current assets Plant and equipment Right-of-use asset 4 Goodwill 5 Other intangibles 6 Other assets Total non-current assets Total Assets Current liabilities Trade and other payables 7 Lease liabilities 4 Borrowings 8 Convertible notes 9 Other payables 10 Total current liabilities Non-current liabilities Lease liabilities 4 Other payables 10 Total non-current liabilities Total Liabilities Net assets/(liabilities) Equity Issued capital 11 Reserves Accumulated losses Total Equity	Consolidated 2021 $ Consolidated 2020 $ 1,550,376 713,079 59,804 286,770 271,949 615,050
	1,882,129 1,614,899
	11,094 18,878 86,043 136,147 - 2,418,610 43,041 138,198 10,143 10,079
	150,321 2,721,912
	2,032,450 4,336,811
	1,351,087 1,072,013 39,418 39,338 697,030 450,000 1,321,000 1,321,000 29,529 -
	3,438,064 2,882,351
	54,526 102,910 - 253,533
	54,526 356,443
	3,492,590 3,238,794
	(1,460,140) 1,098,017
	73,530,158 70,777,722 1,995,576 1,503,438 (76,985,874) (71,183,143)
	(1,460,140) 1,098,017

The above should be read in conjunction with the accompanying notes.

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Connected IO Limited ABN 99 009 076 233

Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

Consolidated Balance at 1 July 2019 Net loss for the year Other comprehensive income for the year Total comprehensive loss Shares issued Share issue costs Share-based payments Balance at 30 June 2020 Balance at 1 July 2020 Net loss for the year Other comprehensive income for the year Total comprehensive loss Shares issued Share issue costs Unissued capital Share-based payments Balance at 30 June 2021	Issued Capital Convertible Notes Share-Based Payments Reserve Foreign Currency Translation Reserve Accumulated Losses Total $ $ $ $ $ $
	68,827,796 96,456 1,081,349 144,886 (68,790,327) 1,360,160 - - - - (2,392,816) (2,392,816) - - - 38,219 - 38,219
	- - - 38,219 (2,392,816) (2,354,597)
	2,015,926 - - - - 2,015,926 (66,000) - - - - (66,000) - - 142,528 - - 142,528
	70,777,722 96,456 1,223,877 183,105 (71,183,143) 1,098,017
	70,777,722 96,456 1,223,877 183,105 (71,183,143) 1,098,017 - - - - (5,802,731) (5,802,731) - - - (159,334) - (159,334)
	- - - (159,334) (5,802,731) (5,962,065)
	1,786,652 - - - - 1,786,652 (34,216) - - - - (34,216) 1,000,000 - - - - 1,000,000 - - 651,472 - - 651,472
	73,530,158 96,456 1,875,349 23,771 (76,985,874) (1,460,140)

The above statement should be read in conjunction with the accompanying notes.

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Connected IO Limited ABN 99 009 076 233

Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2021

Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Finance costs Income tax paid Net cash used in operating activities 14(b) Cash flows from investing activities Payments for plant and equipment Payments for other intangibles Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Payments for share issue costs Proceeds from borrowings Repayment of borrowings Payments of lease liabilities US Federal funding assistance Net cash provided by financing activities Net change in cash and cash equivalents held Cash and cash equivalents at beginning of the financial year Effect of exchange rate fluctuation on cash held Cash and cash equivalents at end of financial year 14(a)	Consolidated 2021 $ Consolidated 2020 $ 1,308,926 3,514,172 (2,610,585) (4,701,391) 54 869 (34,100) (116,460) (34,215) (1,856)
	(1,369,920) (1,304,666)
	(1,080) (3,940) - (64,721)
	(1,080) (68,661)
	1,637,048 1,250,000 (34,216) - 701,619 820,000 (54,588) (656,705) (36,700) (25,415) (4,866) 253,533
	2,208,297 1,641,413
	837,297 268,086 713,079 435,524 - 9,469
	1,550,376 713,079

The above should be read in conjunction with the accompanying notes.

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Connected IO Limited ABN 99 009 076 233

Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2021

Status of Audit

The 30 June 2021 consolidated financial report and accompanying notes for Connected IO Limited and its controlled entities is in the process of being audited.

This preliminary final report has been prepared in accordance with the ASX Listing Rule 4.3A and the disclosure requirements of ASX Appendix 4E.

Going Concern

This report has been prepared on the going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and settlement of liabilities in the normal course of business.

For the year ended 30 June 2021 the Group recorded a loss of $5,802,731 (2020: $2,392,816) and had net cash outflows from operating and investing activities of $1,371,000 (2020: $1,373,327). At 30 June 2021, the Group had a working capital deficit of $1,555,935 (2020: deficit of $1,267,452).

During the 2021 financial year and immediately following the end of the 2021 financial year, the Company has been successful in re-structuring its balance sheet, cost base and debt levels. Although there is remaining uncertainty with respect to the ongoing operating environment, the ability of the Group to continue as a going concern in the short to medium terms is no longer dependent on the Company securing additional funding through debt or equity to continue to fund its operational activities.

These conditions indicate that there is no longer a material uncertainty that may cast a significant doubt about 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.

Therefore, the financial statements have been prepared on the basis that the Group is a going concern, which contemplates the continuity of normal business activity, realisation of assets and settlement of liabilities in the normal course of business.

Following completion of the re-structure, the Directors consider the going concern basis of preparation to be appropriate for this financial report. The financial statements do not include any adjustments relative to the recoverability and classification of recorded asset amounts or, to the amounts and classification of liabilities that might be necessary should the entity not continue as a going concern.

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Connected IO Limited ABN 99 009 076 233 Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2021

1. Cash and cash equivalents

1. Cash and cash equivalents
Cash at bank 2. Trade and other receivables Trade receivables Prepaid inventory Other receivables	2021 2020 $ $
	1,550,376 713,079
	1,550,376 713,079
	2021 2020 $ $
	1,805 115,112 3,848 141,058 54,151 30,600
	59,804 286,770

Trade receivables are non-interest bearing and are generally on 30 day terms. All amounts are short term. The carrying value of trade receivables is considered a reasonable approximation of fair value.

Expected credit losses

The Group applies the AASB 9 simplified model of recognising lifetime expected credit losses for all trade receivables as these items do not have a significant financing component.

In measuring the expected credit losses, the trade receivables have been assessed on a collective basis as they possess shared credit risk characteristics. They have been grouped based on the days past due.

The current expected loss rates are based on the payment profile for sales over the past 24 months before 30 June 2021 and 30 June 2020 respectively as well as the corresponding historical credit losses during that period. The historical rates are adjusted to reflect current and forwarding looking factors affecting the customer’s ability to settle the amount outstanding. The expected credit loss at 30 June 2021 and 2020 was nil.

Trade receivables are written off when there is no reasonable expectation of recovery. Failure to make payments and to engage with the Group on an alternative payment arrangement, amongst other matters, are considered indicators of no reasonable expectation of recovery.

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Connected IO Limited ABN 99 009 076 233

Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2021

3. Inventory

3. Inventory
Finished goods	2021 2020 $ $
	271,949 615,050
	271,949 615,050

4. Leases – Right-of-use Assets and Lease Liabilities

This note provides information for leases where the Group is a lease.

(i) Amounts recognised in the balance sheet

The balance sheet shows the following amounts relating to leases:

Right-of-use assets Premises Accumulated amortisation Lease liabilities Current Non-current Total lease liabilities	Consolidated 30 June 2021 Consolidated 30 June 2020 $ $
	162,527 178,039 (76,484) (41,892)
	86,043 136,147
	39,418 39,338 54,526 102,910
	93,944 142,248

Reconciliation or right-of-use assets:

Opening balance Initial adoption Foreign currency differences Acquisitions through business combinations Disposals Disposals – discontinued operation Disposals or classified as held for sale Impairment expense Depreciation expense Closing balance	Consolidated 30 June 2021 Consolidated 30 June 2020 $ $
	136,147 - - 174,405 (11,604) 4,566 - - - - - - - - - - (38,500) (42,824)
	86,043 136,147

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Connected IO Limited ABN 99 009 076 233

Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2021

4. Leases – Right-of-use Assets and Lease Liabilities (continued)

Recognition of lease liabilities:

ecognition of lease liabilities:
Opening balance Initial adoption Foreign currency differences Principal repayments Interest expense Disposals Disposals – discontinued operation Disposals or classified as held for sale Closing balance	Consolidated 30 June 2021 Consolidated 30 June 2020 $ $
	142,248 - - 174,405 (11,604) 4,566 (28,945) (25,415) (7,755) (11,308) - - - - - -
	93,944 142,248

5. Goodwill

5. Goodwill
Opening balance Impairment Closing balance	2021 2020 $ $
	2,418,610 2,418,610 (2,418,610) -
	- 2,418,610

Goodwill represents an acquisition via a business combination.

Based on the Company’s preliminary assessment of future cash flow forecasts at the cash-generating unit level, being Connected IO Inc., the Company has resolved to impair the entire carrying value of the goodwill.

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Connected IO Limited ABN 99 009 076 233

Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2021

6. Other intangibles

6. Other intangibles
Certifications Opening balance New certifications acquired Amortisation Foreign currency differences Closing balance Tooling costs Opening balance New tooling costs incurred Amortisation Foreign currency differences Closing balance Total other intangibles	2021 2020 $ $
	101,140 143,300 - 16,839 (68,412) (58,999) (9,018) -
	23,710 101,140
	37,058 - - 47,882 (14,596) (10,824) (3,131) -
	19,331 37,058
	43,041 138,198

Certifications represent costs incurred in obtaining certification that the Company's products conform to the regulations of the Federal Communications Commission (USA). Costs of obtaining a certification are amortised over the useful life of the certification, which Management has assessed as being 3 years.

Tooling costs represent costs incurred by the Company in relation to the mould that is installed within the manufacturers’ machines so as to produce routers that are to the Company’s specifications. Tooling costs are amortised over the useful life of 3 years based on Management’s assessment.

7. Trade and other payables

Current Payables Other payables Accruals Accrued interest Closing balance	2021 2020 $ $
	- 392,832 564,757 202,531 546,906 166,467 239,424 310,183
	1,351,087 1,072,013

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Connected IO Limited ABN 99 009 076 233

Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2021

8. Borrowings

Australia Loan – Tyche Investments Pty Ltd Loan – A.C.N. 627 852 797 Pty Ltd United States Loan – Unrelated Parties Closing Balance Opening Balance Advances Repayments – cash Repayments – issue of shares and options post year end Closing Balance	2021 2020 $ $
	400,000 450,000 - - 297,030 -
	697,030 450,000
	450,000 286,706 701,619 820,000 (54,589) (400,000) (656,706) -
	697,030 450,000

Tyche Investments Pty Ltd

During the year ended 30 June 2020, the Company secured a line of credit facility of $500,000 with Tyche Investments Pty Ltd to drive manufacturing acceleration. This facility was increased to an available limit of $700,000 on 21 November 2019. The facility is debt-only and does not dilute the existing shareholders. Interest is calculated at 5% p.a. from the date that funds are initially drawn down. Additional interest of 1% per month is payable on funds which remain outstanding in excess of 90 days from the date of initial drawdown. Any outstanding accrued interest on the facility will be required to be repaid in cash.

On 31 July 2020, the Company repaid $50,000 of the facility. On 30 June 2021, the Company obtained shareholder approval to convert accrued interest of approximately $107,573 into fully paid ordinary shares at $0.02 per share. Subsequent to year end, 5,378,630 fully paid ordinary shares were issued to Tyche Investments Pty Ltd in satisfaction of the accrued interest on the loan to 31 March 2021.

A.C.N. 627 852 797 Pty Ltd

On 3 December 2020, the Company entered into a loan agreement with A.C.N. 627 852 797 Pty Ltd (A.C.N.) for the provision of a loan facility to advance funds of up to $400,000 to be used for assisting in the payment of the Company’s inventory production.

The interest free loan was provided in three tranches with the final drawdown date on or around 28 February 2021.

On 28 May 2021, the Company issued a Notice of General Meeting seeking shareholder approval to repay the loan via the issue of 200,000,000 shares and 200,000,000 options. On 30 June 2021, the Company obtained shareholder approval and subsequent to year end, issued the shares and options to A.C.N. in satisfaction of repayment of the loan.

Although the administrative process of issuing the shares and options occurred subsequent to year end, as the Company had obtained shareholder approval and the Directors had agreed to issue the shares and options to A.C.N. prior to year end, the Company had a contractual obligation and therefore the Directors have resolved to recognise the transaction in the Company’s accounts for the year ended 30 June 2021. Refer to Note 12(b) for further details.

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Connected IO Limited ABN 99 009 076 233 Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2021

8. Borrowings (continued)

Unrelated Parties

During the year ended 30 June 2021, the Company’s wholly owned subsidiary, CIO Technology Inc., received an advance from an employee of CIO Technology Inc. for approximately USD $150,000 and a further amount of approximately USD $77,000 from an unrelated party. There are currently no commercial terms agreed for either advances received by the subsidiary and the advances are repayable by the subsidiary.

9. Convertible Notes

At the 2018 Annual General Meeting, shareholders approved the conversion of the Company’s $1.37m loan facility with Gorilla Pit Pty Ltd into convertible notes. On 28 February 2019 the Company issued convertible notes with a face value of $1,351,000. Each note entitles the holder to convert to ordinary shares at a cost of $0.003 per share.

During the year ended 30 June 2020, convertible notes with a face value of $30,000 plus accrued interest of $4,185 were converted into ordinary shares.

On 30 June 2021, all but three (3) convertible noteholders elected to waive their interest entitlements for the year ended 30 June 2021. As such, total interest expense recognised by the Company for the year ended 30 June 2021 was $10,560. During the year ended 30 June 2021, accrued interest of $149,604 was converted into 4,986,811 ordinary shares at a conversion price of $0.03 per share and accrued interest of $23,873 was paid in physical cash.

Conversion may occur at any time between the date of issue and maturity date at the election of the holder. Interest of 9% will accrue daily on the face value from the issue date until the maturity date and be paid six monthly on the anniversary of the Issue date. Holders may elect to convert their interest to shares at the same issue price ($0.003 per share).

Noteholders are entitled to secure the loan by the registration on the Personal Property Securities Register (PPSR).

The net proceeds received from the issue of the convertible notes have been split between the financial liability and an equity component, representing the residual attributable to the option to convert the financial liability into equity of the Company. The convertible notes had an original maturity date of 30 June 2019 which was extended to 30 June 2020. On or about 30 June 2020, the Company again successfully extended the maturity date of the convertible notes to 30 June 2021 under a letter of amendment. On 28 May 2021, the Company issued a Notice of General Meeting seeking shareholder approval to utilise funds raised under a share placement to repay the convertible notes on issue plus any accrued interest owing on the convertible notes. The repayment of the convertible notes and any accrued interest was subject to the Company raising the full amount prescribed by the share placement and the obtaining of shareholder approval which was granted on 30 June 2021. Subsequent to year end, the convertible notes and accrued interest was repaid in full.

The allocation between financial liability and equity has been undertaken by the Company in relation to both the issue of the convertible notes and their subsequent extensions as follows.

28 February 2019 issue of convertible notes Proceeds of issue Liability component at date of issue Unwinding – interest expense Liability component at repayment date of 30 June 2019	2021 2020 $ $
	1,351,000 1,351,000
	1,325,199 1,325,199 25,801 25,801
	1,351,000 1,351,000

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Connected IO Limited ABN 99 009 076 233 Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2021

9. Convertible Notes (continued)

Equity component at date of issue Extension of repayment date to 30 June 2020 Liability at date of extension Liability component at date of extension Equity component at date of extension Total equity component at balance date Extension of repayment date to 30 June 2021 Liability at date of extension Liability component at date of extension Equity component at date of extension	2021 2020 $ $
	25,801 25,801
	1,351,000 1,351,000
	1,280,345 1,280,345
	70,655 70,655
	96,456 96,456
	1,321,000 1,321,000
	1,321,000 1,321,000
	- -

As at 30 June 2021, the fair value of the outstanding convertible notes was the equivalent to its face value of $1,321,000. Therefore there were no adjustments to the equity component of $96,456 that was credited to equity during the year ended 30 June 2019. Total interest accrued on the convertible notes as at 30 June 2021 was $75,990.

10. Other Payables

10. Other Payables
Opening balance Advances Repayments Partial debt forgiveness Foreign currency differences	2021 2020 $ $
	253,533 - - 253,533 (4,866) - (199,529) - (19,609) -
	29,529 253,533

The other payables of USD $22,200 (AUD $29,529) at 30 June 2021 (2020: USD $174,000 (AUD $253,533)) represents funding assistance provided by the US Department of Treasury to CIO Technology, Inc. as a result of COVID-19 to assist with meeting employee wages, rent and general costs associated with the Company. The funding assistance provided to the Company is in the form of a promissory note (i.e. short term loan) of which there is an initial interest free period of 6 months before interest is charged at a fixed rate of 1% p.a. on any unpaid principal balance. The promissory note has a term of 2 years from the date that funding was provided before full repayment is required.

During the year ended 30 June 2021, the US Department of Treasury partially forgave USD $149,000 (AUD $199,529) of the promissory note and the Company repaid USD $2,800 (AUD $4,866).

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Connected IO Limited ABN 99 009 076 233 Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2021

11. Issued Capital

Issued and paid up capital Ordinary shares fully paid (a) Movements in issued and paid up capital (a) Ordinary fully paid shares Balance as at 1 July 2019 Conversion of convertible notes (20 Sep 2019, $0.003 per share) Director shares – in lieu of fees (20 Dec 2019, $0.004 per share) Director bonus – share reward compensation (20 Dec 2019, $0.04 per share) Placement (20 Dec 2019, $0.003 per share) Consolidation 1:10 basis (23 Apr 2020) Placement broker fee shares (5 May 2020, $0.03 per share) Costs directly attributable to issue of share capital Balance as at 30 June 2020 Balance as at 1 July 2020 Conversion of convertible notes accrued interest (31 Jul 2020, $0.003 per share) Placement (Stage 1) (25 Jan 2021, $0.002 per share) Rights Offer (Stage 1) (18 Feb 2021, $0.002 per share) Rights Offer – Shortfall Shares (Stage 1) (18 Feb 2021, $0.002 per share) Rights Offer – Shortfall Shares (Stage 1) (26 Feb 2021, $0.002 per share) Rights Offer (Stage 2) (28 Jun 2021, $0.002 per share) Rights Offer – Shortfall Shares (Stage 2) (29 Jun 2021, $0.002 per share) Costs directly attributable to issue of share capital Unissued capital Repayment of loan subject to shareholder approval1 Balance as at 30 June 2020	2020 2020 $ $
	73,530,158 70,777,722
	73,530,158 70,777,722
	Number Consolidated $
	1,813,085,059 68,827,796 11,394,998 34,185 16,435,333 65,741 150,000,000 600,000 416,666,667 1,250,000 (2,166,824,839) - 2,200,000 66,000 - (66,000)
	242,957,218 70,777,722
	242,957,218 70,777,722 4,986,811 149,604 37,191,604 75,000 128,597,018 257,194 31,423,381 62,847 87,923,630 175,847 355,366,115 710,732 177,713,547 355,428 - (34,216)
	1,066,159,324 72,530,158 200,000,000 1,000,000
	1,266,159,324 73,530,158

1 On 30 June 2021, at a General Meeting of the Company, shareholders approved the issue of 200,000,000 shares and 200,0000,000 options in satisfaction of repayment of the loan owing to A.C.N. 627 852 797 Pty Ltd which were issued subsequent to year end. Refer to Note 12(b) for further details.

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Connected IO Limited ABN 99 009 076 233 Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2021

11. Issued Capital (continued)

(c) Options

As at 30 June 2021, 7,500,000 unlisted options were on issue. The options are exercisable at $0.10 and expire on 20 December 2022.

On 30 June 2021, at a General Meeting of the Company, shareholders approved the issue of 200,000,000 shares and 200,0000,000 options in satisfaction of repayment of the loan owing to A.C.N. 627 852 797 Pty Ltd which were issued subsequent to year end. The options are exercisable at $0.003 and expire on 1 July 2024. Refer to Note 12(b) for further details.

(d) Performance Rights

Balance as at 1 July 2019 Additions during the year Consolidation on a 1:10 basis Balance as at 30 June 2020 Balance as at 1 July 2020 Additions during the year Reversal of expense previously recognised Balance as at 30 June 2021	Number Consolidated $
	- - 200,000,000 142,528 (180,000,000) -
	20,000,000 142,528
	20,000,000 142,528 - - - (142,528)
	20,000,000 -

As at 30 June 2021, 10,000,000 Class A Performance Rights and 10,000,000 Class B Performance Rights were on issue, which were granted to Mr Temov as an incentive to provide ongoing dedicated services to the Company. Refer to Note 12(a) for further details.

12. Share Based Payments

During the year ended 30 June 2021, the following transactions were recognised as share based payments by the Group:

Performance incentive (Note 12(a)) Loan repayment (Note 12(b))	Value $
	(142,528) 1,393,800
	1,251,272

• (a) In December 2019, following shareholder approval granted at the Company’s 2019 Annual General Meeting, 10,000,000 Class A Performance Rights and 10,000,000 Class B Performance Rights were granted to Mr Temov as an incentive to provide ongoing dedicated services to the Company.

The Performance Rights were granted at nil consideration, did not have an exercise price, expire on 31 December 2023, and were subject to the satisfaction of certain Performance Milestones, completion of a vesting period of 12 months and Mr Temov’s continued engagement as Managing Director.

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Connected IO Limited ABN 99 009 076 233 Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2021

12. Share Based Payments (continued)

The total fair value of the rights granted to Mr Temov was $800,000 based on the Company’s closing share price of $0.04 as at the date of the Company’s 2019 Annual General Meeting. Based on the vesting conditions of the rights, $142,528 was recognised as a share based payment for the period of 27 November 2019, being the date that the rights were granted, to 30 June 2020.

During the year ended 30 June 2021, Mr Temov resigned as Managing Director of the Company. As a result of his resignation, the conditions associated with the Performance Rights have not been satisfied and therefore the Performance Rights will not vest to Mr Temov. Therefore, an amount of $142,528 previously expensed in respect of these rights were reversed.

ese rights were reversed.
Number Issued Grant Date Expected Vesting Date Vesting Period (days) Value per Right Total Value of Rights Amount Expensed in Prior Year Amount Reversed in Current Year	Class A Performance Rights Class B Performance Rights Total
	10,000,000 10,000,000 27 November 2019 27 November 2019 31 December 2022 31 December 2023 1,130 1,495 $0.04 $0.04 $400,000 $400,000 $800,000 $81,173 $61,355 $142,528 ($81,173) ($61,355) ($142,528)

• (b) On 3 December 2020, the Company entered into a loan agreement with A.C.N. 627 852 797 Pty Ltd (A.C.N.) for the provision of a loan facility to advance funds of up to $400,000 to be used for assisting in the payment of the Company’s inventory production.

The interest free loan was provided in three tranches with the final drawdown date on or around 28 February 2021.

On 28 May 2021, the Company issued a Notice of General Meeting seeking shareholder approval to repay the loan via the issue of 200,000,000 shares and 200,000,000 options. On 30 June 2021, the Company obtained shareholder approval and subsequent to year end, issued the shares and options to A.C.N. in satisfaction of repayment of the loan.

Although the administrative process of issuing the shares and options occurred subsequent to year end, as the Company had obtained shareholder approval and the Directors had agreed to issue the shares and options to A.C.N. prior to year end, the Company had a contractual obligation and therefore the Directors have resolved to recognise the transaction in the Company’s accounts for the year ended 30 June 2021.

The total fair value of the shares and options granted to A.C.N. was $1,794,000 of which $1,000,000 and $794,000 represented the fair value of the shares and options granted respectively.

The fair value of the equity-settled shares granted is based on the Company’s closing share price of $0.005 as at the date of the Company’s General Meeting. The fair value of the equity-settled share options granted is estimated as at the date of grant using the Black-Scholes option valuation model taking into account the terms and conditions upon which the options were granted.

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Connected IO Limited ABN 99 009 076 233

Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2021

12. Share Based Payments (continued)

Weighted average exercise price $0.003 Weighted average life of the options 3.01 years Weighted average underlying share price $0.005 Expected share price volatility 127% Risk-free interest rate 0.20% Grant date 30 June 2021 Expiry date 1 July 2024 Value per option $0.00397

The following table summarises the equity-settled securities issued in lieu of repayment of the loan to A.C.N.:

Number Issued Grant Date Issue Date Value per Security Total Value of Securities Less: Carrying Value of Loan Less: Issue Price of Options Total Share Based Payment	Shares Options	Total
	200,000,000 200,000,000 30 June 2021 30 June 2021 26 July 2021 27 July 2021 $0.005 $0.00397 $1,000,000 $794,000	$1,794,000 ($400,000) ($200)
		$1,393,800

13. Earnings per Share

13. Earnings per Share
	2021	2020
	Cents	Cents
Basic and diluted loss per share from continuing from operations	(1.63)	(1.12)

The earnings and weighted average number of ordinary shares used in the calculation of basic and diluted earnings per share is as follows :

hare is as follows_:_
	2021	2020
	$	$
Net loss from continuing operations	(5,802,731)	(2,392,816)
	Number	Number
Weighted average number of ordinary shares used in the	355,845,864	213,445,049
calculation of basic EPS

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Connected IO Limited ABN 99 009 076 233 Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2021

14. Notes to the Cash Flow Statement

(a) Reconciliation of cash and cash equivalents

For the purpose of the cash flow statement, cash includes cash on hand and in banks and deposits at call, net of outstanding bank overdrafts. Cash at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the balance sheet as follows:

Cash at bank	2021 2020 $ $
	1,550,376 713,079
	1,550,376 713,079

(b) Reconciliation of loss for the year to net cash flows from operating activities

Loss after income tax Non-cash items: Depreciation and amortisation expense Share based payments Impairment of goodwill Debt forgiven Changes in assets and liabilities (Increase)/decrease in trade and other receivables (Increase)/decrease in inventory (Increase)/decrease in other assets (Decrease)/increase in trade and other payables	2021 2020 $ $
	(5,802,731) (2,392,816) 128,776 119,554 1,251,2721 874,269 2,418,6102 - (199,529)3 - 238,159 93,224 343,101 (349,757) (63) 13,045 252,485 337,815
	(1,369,920) (1,304,666)

1 Refer to Note 12(b) 2 Refer to Note 5 3 Refer to Note 10

15. Investments

The consolidated financial statements include financial statements of Connected IO Limited and the following subsidiaries:

	Country of	% Equity Interest	% Equity Interest
Name	Incorporation	2021	2020
CIO Technology, Inc	Texas, USA	100%	100%

Connected IO Limited is the ultimate Australian parent entity and ultimate parent of the Group. Balances between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and not disclosed in this note.

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Connected IO Limited ABN 99 009 076 233 Appendix 4E – Preliminary Final Report for the Year Ended 30 June 2021

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AS AT 30 JUNE 2021

16. Subsequent events

• (a) On 8 July 2021, following shareholder approval granted at the General Meeting held on 30 June 2021, the Company completed a consolidation of its issued capital on the basis that every ten (10) shares be consolidated into one (1) share. The total shares on issue post consolidation was 1,066,159,324.

• (b) On 26 and 27 July 2021, following shareholder approval granted at the General Meeting on 30 June 2021, the Company successfully completed the restructuring of its debts through the issue of the following securities, on a post consolidation basis:

• 20,000,000 shares at a deemed issue price of $0.02 per share and 20,000,000 options to A.C.N. 627 852 797 Pty Ltd in lieu of repayment of $400,000 advanced to the Company. The options are exercisable at $0.03 per share and expire on 1 July 2024. The financial effect of this transaction has been brought to account as at 30 June 2021 (refer to Note 12(b));

• 5,378,630 shares to Tyche Investments Pty Ltd at an issue price of $0.02 per share in lieu of repayment of accrued interest of approximately $107,573;

• 10,925,000 shares to Directors at an issue price of $0.02 per share in lieu of outstanding director and company secretarial fees accrued of approximately $218,500; and

• 9,000,000 options, exercisable at $0.03 per share and expiring 1 July 2024, in relation to services provided by each Director to the Company. The options are subject to a vesting period of 12 months.

• (c) In July and August 2021, the Company successfully completed a capital raising of approximately $3.5 million (before costs) through the issue of 175,000,000 shares, on a post consolidation basis, at an issue price of $0.02 per share to sophisticated and institutional investors. In addition, 42,000,000 options, exercisable at $0.03 per share and expiring 1 July 2024, were issued in relation to the underwriting of the rights issue and placement.

• (d) Subsequent to the Company’s successful capital raising, the Company repaid approximately $1.3 million of convertible notes that matured on 30 June 2021 plus any accrued interest.

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