DATAWORKS GROUP LIMITED — Annual Report 2017

Nov 13, 2017

ABN 85 607 766 718

FINANCIAL REPORT

for the period from 20 August 2015 (date of incorporation) to 30 June 2016

CONTENTS

Directors' Report	1
Auditor's Independence Declaration	3
Consolidated Statement of Profit or Loss and Other Comprehensive Income	4
Consolidated Statement of Financial Position	5
Consolidated Statement of Changes in Equity	6
Consolidated Statement of Cash Flows	7
Notes to the Consolidated Financial Statements	8
Directors' Declaration	18
Independent Auditor's Report	19

DIRECTORS' REPORT

The directors present this report on IXUP Pty Ltd (the "Company") and its controlled entity (together the "IXUP Group", "Consolidated Entity" or "Group") for the period from 20 August 2015 (date of incorporation) to 30 June 2016.

Information on Directors

The names of each person who has been a director during the reporting period and to the date of this report are:

Dean Cameron Joscelyne

Rhona Mary Imrie Marks

Directors have been in office since the start of the reporting period to the date of this report unless otherwise stated.

Operating Results

The loss of the Consolidated Entity after providing for income tax amounted to \$4,461,184.

Principal Activities

The Company was incorporated on 20 August 2015 as a proprietary company limited by shares. Its principal activities during the reporting period were development and sale of software.

No significant changes in the nature of the IXUP Group's activity occurred during the reporting period.

Significant Changes in the State of Affairs

The following changes in the state of affairs of the IXUP Group occurred during the reporting period:

• On 7 September 2015, the Company issued 49,999,999 new shares to Joscelyne Investments Unit Trust for the tangible and intangible assets associated with the IXUP business;
• On 7 September 2015, the Company acquired 100% of the issued shares of IXUP IP Pty Ltd;
• On 7 September 2015, Joscelyne Investments Unit Trust assigned all trademarks to IXUP IP Pty Ltd; and
• In September 2015, IXUP Pty Ltd issued 14,750,000 new shares to raise \$2,950,000 in new capital from shareholders.

Options and Warrants

On 23 December 2015, the Company agreed to issue warrants to Asia Principal Capital Group Pte Ltd as part of an advisory mandate. The warrants entitled the holder to subscribe for the number of ordinary shares in the Company equal to 15% of the fully diluted outstanding capital of the Company in return for the provision of strategic assistance services. On 23 June 2016, the same parties entered into a formal warrant deed to issue the warrants and also agreed that these warrants would lapse and that new warrants or options would be issued to the holder by IXUP Holdings Pty Ltd, in the event of a qualifying corporate reorganisation occurring.

Events After the Reporting Date

On 19 October 2016, IXUP Holdings Pty Ltd acquired 100% of the issued share capital of the Company and as consideration issued shares in IXUP Holdings Pty Ltd to each former shareholder of the Company as part of a restructure of the IXUP Group.

On 31 May 2017, the director and shareholder, Dean Cameron Joscelyne, and related entities have forgiven an amount of \$1.1m, of which \$733,778 was payable by the IXUP Group as at 30 June 2016.

On 18 May 2017, a mandate letter (as varied from time to time) was signed on behalf of the IXUP Group in which an Initial Public Offering of the shares of IXUP Holdings Pty Ltd would be undertaken.

On 22 May 2017, 13 June 2017 and 28 August 2017, Cygnet raised \$2.5m in funding for the IXUP Group in the form of a Convertible Note.

On 18 August 2017, the Company issued \$165,000 worth of new shares.

On 23 August 2017, debts owed by the IXUP Group totaling \$826,000 to parties unrelated to the Company were converted into equity.

Environmental Issues

The IXUP Group's operations are not regulated by any significant environmental regulations under a law of the Commonwealth or of a state or territory of Australia.

Dividends paid or recommended

No dividends were paid or declared since the start of the reporting period. No recommendation for payment of dividends has been made.

Indemnification and Insurance of Officers

During the financial period, the IXUP Group paid premiums in respect of a contract insuring the directors and officers of the Company and of any related body corporate against a liability incurred as such a director or officer 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. The IXUP Group has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer of the Company or of any related body corporate against a liability incurred as such an officer.

Indemnification and Insurance of Auditors

No indemnities have been given or insurance premiums paid, during or since the end of the reporting period, for any person who is or has been an auditor of the Company.

Page 1

DIRECTORS' REPORT

Future Developments

Other than as referred to in this report, further information as to likely future developments in the operations of the IXUP Group and expected results of those operations would, in the opinion of the directors, be speculative only.

Proceedings on Behalf of the Company

No person has applied for leave of Court to bring proceedings on behalf of the Company or 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 any part of those proceedings.

Auditor's Independence Declaration

The auditor's independence declaration is included after this report.

Signed in accordance with a resolution of the directors made pursuant to S.298(2) of the Corporations Act 2001:

Director:
	Dean Cameron Joscelyne
Director:
	Rhona Mary Imrie Marks

Dated: 32 over 2027

AUDITOR'S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF IXUP PTY LTD

I declare that, to the best of my knowledge and belief during the period ended 30 June 2016 there have been:

• no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and
• no contraventions of any applicable code of professional conduct in relation to the audit.

William Buck

William Buck Audit (WA) Pty Ltd ABN 67 125 012 124

Conley Manifis Director Dated this 31^st day of August, 2017

CHARTERED ACCOUNTANTS & ADVISORS

Level 3, 15 Labouchere Road South Perth WA 6151 PO Box 748 South Perth WA 6951 Telephone: +61 8 6436 2888 williambuck.com

William Buck is an association of independent firms, each trading under the name of William Buck across Australia and New Zealand with affiliated offices worldwide. Liability limited by a scheme approved under
Professional Standards Legislation other than for acts or omissions of financial services licensees.

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME for the period ended 30 June 2016

		Period from
		20 August 2015
		to 30 June 2016
	Note	\$
Revenue	3	247,610
Cost of sales		(15,488)
Gross profit		232,122
Other income	4	293
Personnel costs	5	(1,910,334)
Equity-settled share-based payments	6	(1,839,662)
Administrative costs	7	(882,727)
Depreciation and amortisation	8	(268,417)
Occupancy costs	9	(214,486)
Finance costs	10	(1,924)
Foreign currency gains and losses	11	(1,831)
LOSS FROM ORDINARY ACTIVITIES BEFORE INCOME TAX		(4,886,965)
Income tax benefit	12	425,781
LOSS FROM ORDINARY ACTIVITIES AFTER INCOME TAX		(4,461,184)
Other comprehensive income, net of income tax		-
TOTAL COMPREHENSIVE LOSS FOR THE PERIOD		(4,461,184)

The accompanying notes are an integral part of the accounts.

To be read in conjunction with the Financial Report.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 30 June 2016

		2016
	Note	\$
ASSETS
CURRENT ASSETS
Cash and cash equivalents	18	39,110
Trade and other receivables	13	555,166
TOTAL CURRENT ASSETS		594,276
NON-CURRENT ASSETS
Intangibles	14	1,539,012
TOTAL NON-CURRENT ASSETS		1,539,012
TOTAL ASSETS		2,133,288
LIABILITIES
CURRENT LIABILITIES
Trade and other payables	16	547,514
Borrowings	17	731,888
Provisions		61,482
TOTAL CURRENT LIABILITIES		1,340,884
TOTAL LIABILITIES		1,340,884
NET ASSETS		792,404
EQUITY
Issued capital	20	3,413,926
Equity-settled reserve	21	1,839,662
Accumulated losses		(4,461,184)
TOTAL EQUITY		792,404

The accompanying notes are an integral part of the accounts.

To be read in conjunction with the Financial Report.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the period ended 30 June 2016

	Issued capital	Equity-settled reserve	Accumulated losses	Total equity
	\$	\$	\$	\$
Balance at 20 August 2015	1	-	-	1
Loss for the period	-	-	(4,461,184)	(4,461,184)
Other comprehensive income, net of income tax	-	-	-	-
Total comprehensive loss for the period	1	-	(4,461,184)	(4,461,183)
Transactions with shareholders in their capacity as owners:
Issue of shares	3,463,925	-	-	3,463,925
Share issue costs	(50,000)	-	-	(50,000)
Issue of warrants	-	1,839,662	-	1,839,662
Balance at 30 June 2016	3,413,926	1,839,662	(4,461,184)	792,404

The accompanying notes are an integral part of the accounts.

To be read in conjunction with the Financial Report.

CONSOLIDATED STATEMENT OF CASH FLOWS

for the period ended 30 June 2016

		Period from
		20 August 2015
		to 30 June 2016
	Note	\$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers		118,517
Payments to suppliers and employees		(2,417,793)
Net Cash used in Operating Activities	18	(2,299,276)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for intangible assets		(1,759,379)
Payments for property, plant and equipment		(48,050)
Net Cash used in Investing Activities		(1,807,429)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowings		731,888
Proceeds from issue of shares		3,463,926
Payment for share issue costs		(50,000)
Net Cash generated by Financing Activities		4,145,814
Net increase in cash and cash equivalents		39,110
Cash and cash equivalents at the beginning of the reporting period		-
CASH AND CASH EQUIVALENTS AT THE END OF THE REPORTING PERIOD	18	39,110

The accompanying notes are an integral part of the accounts. To be read in conjunction with the Financial Report.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the period ended 30 June 2016

NOTE 1: GENERAL INFORMATION

The consolidated financial report covers IXUP Pty Ltd (the "Company") and IXUP IP Pty Ltd (together the "IXUP Group", "Consolidated Entity" or "Group"). IXUP Pty Ltd and IXUP IP Pty Ltd are for profit companies which are incorporated and domiciled in Australia.

The registered office and principal place of business for the IXUP Group is Level 3, 5-11 Bridge Street, Sydney.

The functional and presentation currency of the Group is Australian dollars.

The financial report was authorised for issue by the Directors on 31 August 2017.

NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

IXUP Group is not a reporting entity because in the opinion of the directors there are unlikely to exist users of the financial report who are unable to command the preparation of reports tailored so as to satisfy specifically all of their information needs. Accordingly, these special purpose financial statements have been prepared to satisfy the directors' reporting requirements under the Corporations Act 2001.

The financial statements have been prepared in accordance with the Corporations Act 2001, the recognition and measurement requirements specified by all Australian Accounting Standards and Interpretations, and the disclosure requirements of Accounting Standards AASB 101 'Presentation of Financial Statements', AASB 107 'Statement of Cash Flows', AASB 108 'Accounting Policies, Changes in Accounting Estimates and Errors' and AASB 1054 'Australian Additional Disclosures'.

The financial statements have been prepared on an accruals basis and are based on historical cost.

The significant accounting policies adopted in the preparation of these financial statements are presented below.

Going Concern

The financial report has been prepared on a going concern basis which assumes the settlement of liabilities and the realisation of assets in the normal course of business.

The consolidated entity has incurred a loss of \$4,461,184 and experienced net cash outflows from operating and investing activities of \$4,106,705 during the period ended 30 June 2016. As at 30 June 2016, the consolidated entity had cash and cash equivalents of \$39,110.

These conditions indicate a material uncertainty that may cast significant doubt about the IXUP Group's ability to continue as a going concern.

Notwithstanding this, the directors believe that it is appropriate to prepare the financial report on a going concern basis after consideration of the following matters:

• The IXUP Group has secured new business partners subsequent to year end and is expecting future revenues.
• The IXUP Group has appointed Cygnet Capital Pty Ltd ("Cygnet") to assist with completing an Initial Public Offering ("IPO") and, as part of that IPO, new capital in the amount of at least \$10.0m will be raised. Cygnet is an Australian boutique corporate advisory and investment banking group focussed on leading fundraisings for emerging companies. On 22 May 2017 and 13 June 2017, Cygnet has raised \$2.25m in funding for the IXUP Group in the form of a Convertible Note.
• Since year end, the IXUP Group has converted debt totalling \$826,000 into equity and has obtained financial support in the form of new issued capital totalling \$165,000. A further \$250,000 has been raised by Cygnet for the IXUP Group in the form of an increase in the Convertible Notes already issued by the IXUP Group.
• A director and shareholder who has financial capacity has advised the Company that financial support will be provided to the Company should the IPO be unsuccessful.
• On 31 May 2017, the director and shareholder, Dean Cameron Joscelyne, and related entities have forgiven an amount of \$1.1m, of which \$733,778 was payable by the IXUP Group as at 30 June 2016.
• The directors are confident that the IXUP Group will obtain additional financial support from existing shareholders, should that support be required before the IPO is completed.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the period ended 30 June 2016

Should the consolidated entity be unable to achieve the matters set out above, there is material uncertainty regarding whether the consolidated entity will be able to continue as a going concern and therefore, whether the consolidated entity will be able to realise its assets and extinguish its liabilities in the normal course of business. The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts, or to the amounts and classification or liabilities that might be necessary should the consolidated entity not continue as a going concern.

Basis of Consolidation

The consolidated financial statements incorporate the financial statements of the entities controlled by the Company. Control is achieved when the Company:

• has power over the investee;
• is exposed, or has rights, to variable returns from its involvement with the investee; and
• has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the IXUP Group are eliminated in full on consolidation.

Property, Plant and Equipment

Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated accumulated depreciation and impairment losses. Plant and equipment are measured using the cost model.

Costs include purchase price, other directly attributable costs and the initial estimate of the costs of dismantling and restoring the asset, where applicable.

Depreciation

Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the period ended 30 June 2016

Financial Instruments

Financial instruments are recognised initially using trade date accounting, i.e. on the date the group becomes party to the contractual provisions of the instrument.

On initial recognition, all financial instruments are measured at fair value plus transaction costs (except for instruments measured at fair value through profit or loss where transaction costs are expensed as incurred).

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement. Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities.

Loans and Receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers but also incorporate other types of contractual monetary assets.

Trade receivables and other receivables, including distributions receivable, are recognised at the nominal transaction value without taking into account the time value of money. If required a provision for doubtful debt has been created.

The IXUP Group's trade and other receivables fall into this category of financial instruments.

Significant receivables are considered for impairment on an individual asset basis when they are past due at the reporting date or when objective evidence is received that a specific counterparty will default.

In some circumstances, the Company renegotiates repayment terms with customers which may lead to changes in the timing of the payments. In these cases, the Company does not necessarily consider the balance to be impaired, however assessment is made on a case-by-case basis.

Impairment of Non-Financial Assets

At the end of each reporting period the directors determine whether there is an evidence of an impairment indicator for non-financial assets.

Where this indicator exists and regardless for goodwill, indefinite life intangible assets and intangible assets not yet available for use, the recoverable amount of the asset is estimated.

Where assets do not operate independently of other assets, the recoverable amount of the relevant cashgenerating unit (CGU) is estimated.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the period ended 30 June 2016

The recoverable amount of an asset or CGU is the higher of the fair value less costs of disposal and the value in use. Value in use is the present value of the future cash flows expected to be derived from an asset or cash-generating unit.

Where the recoverable amount is less than the carrying amount, an impairment loss is recognised in profit or loss.

Reversal indicators are considered in subsequent periods for all assets which have suffered an impairment loss.

Cash and Cash Equivalents

Cash and cash equivalents comprises cash on hand, demand deposits and short-term investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

Revenue Recognition

Revenue is recognised when the amount of the revenue can be measured reliably, it is probable that economic benefits associated with the transaction will flow to the company and specific criteria relating to the type of revenue as noted below, has been satisfied.

All revenue is stated net of the amount of goods and services tax (GST).

Revenue is measured at the fair value of the consideration received or receivable and is presented net of returns, discounts and rebates.

Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the company and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.

Rendering of services

Revenue in relation to rendering of services is recognised depending on whether the outcome of the services can be measured reliably. If this is the case then the stage of completion of the services is used to determine the appropriate level of revenue to be recognised in the period. If the outcome cannot be reliably measured then revenue is recognised to the extent of expenses recognised that are recoverable.

Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO).

Receivables and payables are stated inclusive of GST. The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the statement of financial position.

Share-based payments arrangements

Equity-settled share-based payments to employees and others providing similar services are measured at the fair value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-settled share-based transactions are set out in the notes to the accounts.

The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest, with a corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the equitysettled employee benefits reserve.

Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or the counterparty renders the service.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the period ended 30 June 2016

Comparative Amounts

The Company was incorporated on 20 August 2015 and as such comparative figures are not applicable.

Financial Liabilities

Other financial liabilities, including borrowings and trade and other payables, are initially measured at fair value, net of transaction costs.

Trade and other payables represent the liabilities for goods and services received by the Group that remain unpaid at the end of the reporting period. Trade payables are recognised at their transaction price. They are subject to normal credit terms and do not bear interest.

Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

Foreign Currencies

In preparing the financial statements, transactions in currencies other than the Group's functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Provisions

Provisions are recognised when the group has a present (legal or constructive) obligation as a result of a past event, when it is probable the group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the reporting date, taking into account the risks and uncertainties surrounding the obligation. If the time value of money is material, provisions are discounted using a current pre-tax rate specific to the liability. The increase in the provision resulting from the passage of time is recognised as a finance cost.

Intangibles

Expenditure on research activities is recognised as an expense in the period in which it is incurred. Where no internallygenerated intangible can be recognised, development expenditure is recognised in profit or loss in the period in which it is incurred.

An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if, and only if, all of the following have been demonstrated:

• the technical feasibility of completing the intangible asset so that it will be available for use or sale:
• the intention to complete the intangible asset and use or sell it;
• the ability to use or sell the intangible asset; and
• how the intangible asset will generate probable future economic benefits.

Amortisation is recognised so as to write off the cost of internally-generated assets over their useful lives, using the straight-line method. The estimated useful lives and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. The following useful lives are used in the calculation of amortisation:

• Software	3.33 years
• Trademarks and other intangibles	8 years

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the period ended 30 June 2016

Current Tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the statement of profit or loss and other comprehensive income because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Group's current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period. Current tax liabilities are therefore measured at the amounts expected to be paid to / recovered from the relevant taxation authority.

Deferred Tax

Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences.

Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Critical Accounting Judgments and Key Sources of Estimation Uncertainty

In the application of the Group's accounting policies, which are described in Note 2, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period. Alternatively, if the revision affects both current and future periods, the revision to the accounting estimate is recognised in the period of the revision as well as in future periods.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the period ended 30 June 2016

	Period from 20 August 2015 to 30 June 2016
	\$
NOTE 3: REVENUE
Software Revenues	247,610
	247,610
NOTE 4: OTHER INCOME
Interest Income	293
	293
NOTE 5: PERSONNEL COSTS
Wages and salaries	1,617,316
Other personnel costs	293,018
	1,910,334
NOTE 6: SHARE-BASED PAYMENTS
Equity-settled share-based payments	1,839,662
	1,839,662
NOTE 7: ADMINISTRATIVE COSTS
Professional adviser costs	476,642
Advertising and promotion	153,019
Travel	149,497
Software Licences	35,430
Other	68,138 882,727
NOTE 8: DEPRECIATION AND AMORTISATION
Depreciation and amortisation	268,417 268,417
NOTE 9: OCCUPANCY COSTS
Rent Other occupancy costs	183,725 30,761
	214,486
NOTE 10: FINANCE COSTS
Interest costs	1,924
	1,924
NOTE 11: FOREIGN CURRENCY GAINS AND LOSSES
Foreign currency gains and losses	1,831
	1,831
NOTE 12: INCOME TAX
R&D tax offset	425,781
	425,781

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the period ended 30 June 2016

	2016 \$
NOTE 13: TRADE AND OTHER RECEIVABLES
Accounts Receivable	94,935
GST	26,890
R&D tax rebate receivable	425,781
Other receivables	7,560
	555,166
NOTE 14: INTANGIBLES
Software	1,731,909
Less accumulated amortisation	(218,024)
	1,513,885
Trademarks and other intangibles	27,470
Less accumulated amortisation	(2,343)
	25,127
	1,539,012
NOTE 15: PROPERTY, PLANT AND EQUIPMENT
Office equipment	27,183
Less accumulated depreciation	(27,183) -
Computer equipment	20,867
Less accumulated depreciation	(20,867)
	-
NOTE 16: TRADE AND OTHER PAYABLES
Accounts payable	328,199
Trade payables due to related parties	109,972
Accruals	49,139
Other payables	60,205
	547,514
NOTE 17: BORROWINGS
Loans from:
Related Parties (i)	703,288
Other Entities (ii)	28,600
	731,888

Summary of borrowing arrangements

(i) Unsecured amounts repayable to entities related to the IXUP Group. The weighted average effective interest rate on the loans is 2.7%. Loans are either at-call or have a repayment date of not later than 30 June 2017.

(ii) Unsecured interest-free at-call amounts repayable to other entities.

The related parties have confirmed that they will not call on the outstanding loan and payable balance owed by the IXUP Group for a period of at least 12 months from the date of the approval of these financial statements, until such time the IXUP Group has sufficient available resources. Furthermore, on 31 May 2017, Dean Cameron Joscelyne and his related entities forgave \$1.1m of debts owed by the IXUP Group.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the period ended 30 June 2016

2016
\$

NOTE 18: CASH AND CASH EQUIVALENTS

Reconciliation of cash

Cash at the end of financial period as shown in the Consolidated Statement of Cash Flows is reconciled to the related items in the Consolidated Statement of Financial Position as follows:

Cash at bank	38,990
Cash on hand	120
	39,110
Reconciliation of loss from ordinary activities to cash flows from operating activities
Loss from ordinary activities after tax	(4,461,184)
Income tax benefit recognised in profit or loss	(425,781)
Non-cash items:
Issue of warrants	1,839,662
Depreciation	268,417
(Increase)/decrease in assets:
Trade and other receivables	(129,387)
Increase/(decrease) in liabilities:
Trade and other payables	547,514
Provisions	61,483
Net cash used in operating activities	(2,299,276)

Non-cash transactions

On 7 September 2015, the Company acquired the tangible and intangible assets of Joscelyne Investments Unit Trust in return for the issue of 49,999,999 shares in IXUP Pty Ltd.

On 23 December 2015, the Company agreed to issue warrants to Asia Principal Capital Group Pte Ltd as part of an advisory mandate. The warrants entitled the holder to subscribe for the number of ordinary shares in the Company equal to 15% of the fully diluted outstanding capital of the Company in return for the provision of strategic assistance services. On 23 June 2016, the same parties entered into a formal warrant deed to issue the warrants and also agreed that these warrants would lapse and that new warrants or options would be issued to the holder by IXUP Holdings Pty Ltd, in the event of a qualifying corporate reorganisation occurring.

NOTE 19: SUBSIDIARIES

Details of the Group's material subsidiary at the end of the reporting period are as follows.

Name of Subsidiary	Principal activity	Place of incorporation and operation	Proportion of ownership interest and voting power held by the Group
			2016
IXUP IP Pty Ltd	Dormant	Australia	100%

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

for the period ended 30 June 2016

		2016 \$
NOTE 20: ISSUED CAPITAL		2016
	Number of shares	Issued Capital
On issue at formation	1	1
Issued for purchase of assets	49,999,999	513,925
New equity raised	14,750,000	2,950,000
Costs of raising new equity	-	(50,000)
	64,750,000	3,413,926

Changes to the then Corporations Law abolished the authorised capital and par value concepts in relation to share capital from 1 July 1998. Therefore, the company does not have a limited amount of authorised capital and issued shares do not have a par value.

NOTE: 21 EQUITY-SETTLED RESERVE	2016
Balance at beginning of period	-
Issue of 11,426,470 warrants	1,839,662
Balance at end of period	1,839,662

On 23 December 2015, the Company agreed to issue warrants to Asia Principal Capital Group Pte Ltd as part of an advisory mandate. The warrants entitled the holder to subscribe for the number of ordinary shares in the Company equal to 15% of the fully diluted outstanding capital of the Company in return for the provision of strategic assistance services. On 23 June 2016, the same parties entered into a formal warrant deed to issue the warrants and also agreed that these warrants would lapse and that new warrants or options would be issued to the holder by IXUP Holdings Pty Ltd, in the event of a qualifying corporate reorganisation occurring.

To determine the fair value of the warrants, the IXUP Group engaged the support of a professional adviser, who estimated the fair value of the warrants using a widely accepted valuation methodology and assumptions based on historical data for similar publicly-listed securities.

NOTE 22: SUBSEQUENT EVENTS

On 19 October 2016, IXUP Holdings Pty Ltd acquired 100% of the issued share capital of the Company and as consideration issued shares in IXUP Holdings Pty Ltd to each former shareholder of the Company as part of a restructure of the IXUP Group.

On 31 May 2017, the director and shareholder, Dean Cameron Joscelyne, and related entities have forgiven an amount of \$1.1m, of which \$733,778 was payable by the IXUP Group as at 30 June 2016.

On 18 May 2017, a mandate letter (as varied from time to time) was signed on behalf of the IXUP Group in which an Initial Public Offering of the shares of IXUP Holdings Pty Ltd would be undertaken.

On 22 May 2017, 13 June 2017 and 28 August 2017, Cygnet raised \$2.5m in funding for the IXUP Group in the form of a Convertible Note.

On 18 August 2017, the Company issued \$165,000 worth of new shares.

On 23 August 2017, debts owed by the IXUP Group totaling \$826,000 to parties unrelated to the Company were converted into equity.

NOTE 23: COMMITMENTS FOR EXPENDITURE

Operating lease arrangements

Operating leases relate to the office lease with lease terms of 3 years. Non-cancellable operating lease commitments are as follows:

	2016
	\$
Not later than 1 year	165,648
Later than 1 year and not later than 5 years	84,048
Later than 5 years	-
	249,696

On 18 August 2017, the Company exercised an option to renew its office leases for a further term of 3 years.

NOTE 24: REMUNERATION OF AUDITORS

Auditor of the company

Audit of the financial statements 11,000

The auditor of the IXUP Group is William Buck Audit (WA) Pty Ltd.

DIRECTORS' DECLARATION

As detailed in Note 2 to the financial statements, the Company is not a reporting entity because in the opinion of the directors there are unlikely to exist users of the financial report who are unable to command the preparation of reports tailored so as to satisfy specifically all of their information needs. Accordingly, this 'special purpose financial report' has been prepared to satisfy the directors' reporting requirements under the Corporations Act 2001.

The directors declare that:

(a) in the directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable; and

(b) in the directors' opinion, the attached financial statements and notes thereto are in accordance with the Corporations Act 2001, including compliance with accounting standards (to the extent noted in Note 2) and give a true and fair view of the financial position and performance of the consolidated entity.

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

On behalf of the Directors

Director:

Dean-Cameron Joscelyne

Director:

Rhona Mary Imrie Marks

Dated: 32 August 2014

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF IXUP PTY LTD AND CONTROLLED ENTITY

Report on the Financial Report

We have audited the accompanying financial report on pages 4 to 18, being a special purpose financial report of IXUP Pty Ltd (the company), which comprises the consolidated statement of financial position as at 30 June 2016, the consolidated statement of profit or loss and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the period then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the company and the consolidated entity comprising the company and the entity it controlled at the period's end or from time to time during the financial period.

Directors' Responsibility 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, and have determined that the basis of preparation described in Note 2 to the financial report is appropriate to meet the requirements of the Corporations Act 2001 and is appropriate to meet the needs of the members.

The directors' responsibility also includes such internal control as the directors determine is necessary to enable the preparation of a financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We have conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of the financial report that gives a true and fair view 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 entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

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

CHARTERED ACCOUNTANTS & ADVISORS

Level 3, 15 Labouchere Road South Perth WA 6151 PO Box 748 South Perth WA 6951 Telephone: +61 8 6436 2888 williambuck.com

E William Buck

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF IXUP PTY LTD AND CONTROLLED ENTITY (CONT)

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.

Auditor's Opinion

In our opinion the financial report of IXUP Pty Ltd on pages 4 to 18 is in accordance with the Corporations Act 2001, including:

• a) giving a true and fair view of the company and consolidated entity's financial position as at 30 June 2016 and of its performance for the period ended on that date; and
• b) complying with Australian Accounting Standards to the extent described in Note 2 and the Corporations Regulations 2001.

Material Uncertainty Related to Going Concern

We draw attention to Note 2 of the financial report which indicates that the consolidated entity incurred a loss of \$4,461,184 and experienced net cash outflows from operating and investing activities of \$4,106,705 during the period ended 30 June 2016. As stated in Note 2, these events or conditions, along with other matters as set forth in Note 2, indicate that a material uncertainty exists that may cast significant doubt on the consolidated entity's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Basis of Accounting

Without modifying our opinion, we draw attention to Note 2 to the financial report, which describes the basis of accounting. The financial report has been prepared for the purpose of fulfilling the directors' financial reporting responsibilities under the Corporations Act 2001. As a result, the financial report may not be suitable for another purpose.

William Suit

William Buck Audit (WA) Pty Ltd ABN 67 125 012 124

Conley Manifis Director Dated this 31^st day of August, 2017