DIGITALX LIMITED — Annual Report 2020

Aug 27, 2020

APPENDIX 4E RESULTS FOR ANNOUNCEMENT TO THE MARKET

Authorised for release by the Board of DigitalX Ltd on 27 August 2020

A. Reporting Period

Financial period 30 June 2020.

B. Previous Corresponding Period (PCP)

The previous corresponding period for the Group is the period end 30 June 2019.

C. Results

	% change from
	30 June 2019	$USD
Revenue from ordinary activities	↓71%	290,424
Profit/(loss) from ordinary activities after tax attributable to members	↑87%	(4,707,851)
Profit/(loss) for the period attributable to members	↑87%	(4,707,851)

D. Net tangible asset per ordinary share

2020 ($USD per share) 0.014 2019 ($USD per share) 0.021

E.Dividends paid or recommended

No dividends have been paid or declared for payment during the financial year (Prior period: Nil).

F.Entities over which control has been lost during the period

Airpocket LLC – Deregistered in the ordinary course of business, the impact to the Group was immaterial.

G.Entities over which control has been gained during the period

DigitalX BTC Fund (Unit Trust) – During the period the Group announced that it had established its second asset management product, the DigitalX BTC Fund. The impact to the Group is disclosed in Note G1.

H.Associates and joint venture entities

During the period the Group announced that it had terminated the joint ventures with DX Americas LLC, Coincast and Futuredge Capital. The impact to the Group was immaterial.

I. Audit Status

This report is based on consolidated financial statements that have been audited. The Independent Audit Report will be included with the Annual Report and is not expected contain any modifications to the opinion.

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DIGITALX LIMITED PRELIMINARY FINAL REPORT FOR THE YEAR ENDED 30 JUNE 2020

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COMMENTARY ON RESULTS FOR THE PERIOD	2
CONSOLIDATED STATEMENT OF PROFIT OR LOSS & OTHER COMPREHENSIVE INCOME	4
CONSOLIDATED STATEMENT OF FINANCIAL POSITION	6
CONSOLIDATED STATEMENT OF CASHFLOWS	7
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	8
NOTES TO THE FINANCIAL STATEMENTS	10

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Directors

Toby Hicks Non-Executive Chairman

Leigh Travers Executive Director

Peter Rubinstein Non-Executive Director

Company Secretary

Shannon Coates

ABN

59 009 575 035

Registered Office and Principal Place of Business

Suite 1, Level 2 66 Kings Park Road West Perth WA 6005 Tel: +61 (8) 9322 1587

Website www.digitalx.com

Auditor

BDO (WA) Audit Pty Ltd 38 Station Street Subiaco WA 6008 PO Box 700 West Perth WA 6872

Tel: +61 (8) 6382 4600 Fax: +61 (8) 6382 4601 Stock Exchange Listing

DigitalX Limited shares are listed on the Australian Securities Exchange (ASX Code: DCC)

Share Registry

Computershare Investor Services Pty Limited Level 11, 172 St Georges Terrace Perth WA 6000

GPO Box D182 Perth WA 6840

Telephone: +61 (8) 9323 2000 Facsimile: +61 (8) 9323 2096 Email: perth.services@computershare.com.au

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Operating results

After recording a loss of USD$4.5m for the first half of the year, the result for the year ended 30 June 2020 was a consolidated loss attributable to members of the Group of $USD4,707,851 (2019: loss of $USD2,524,151

Overview

• Following a disappointing first half loss, DigitalX underwent a strategic review that led to significant cost reductions.

• Post the strategic review, DigitalX focused on advancing the digital assets funds management division and blockchain technology development.

• DigitalX is focused on these two business lines to provide shareholders with exposure to the fundamental impact of blockchain as both a technological and financial innovation.

• Operational expenditure was reduced in FY20 by 41% from $4.9m to $2.9m.

Blockchain Innovation and Development.

Throughout the year DigitalX delivered on its strategy to deepen engagement with enterprise organisations through a series of blockchain discovery workshops and project submissions. The purpose of the workshops was to collaborate with Senior Executives to assess problems and challenges within their organisations where blockchain solutions have the potential to provide high business value. Pleasingly, the Company was able to progress identified applications quickly to a prototype design stage, with an objective of demonstrating the potential impact of these new technologies for businesses and a roadmap for solution productisation for DigitalX.

DigitalX was engaged by a large global accounting firm to deploy a set of smart contracts supporting the development of a blockchain based accounting and audit system for large joint venture owned and operated oil and gas assets. DigitalX was able to complete development of the prototype for demonstration to global customers in the energy industry. DigitalX is now assessing further commercialisation opportunities for this product with project partners.

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The market for blockchain technology within the public sector continued to grow with a number of government programs established to assist with the advancement of the technology within Australia. DigitalX was engaged to provide a blockchain solution design project in the gaming industry, alongside a large international consulting firm, for a government agency and continued to submit tender applications during the period for other public sector entities.

DigitalX continued to closely monitor distributed ledger technology (DLT) opportunities around the transformational development of a large critical national financial market infrastructure replacement project. The Company formed an internal innovation working group to research, identify and validate potential product offerings for leveraging future data improvements and DLT benefits. The Group has prioritised the development of a regulatory technology (RegTech) business, which is currently being tested with potential customers responsible for corporate governance at Australian publicly listed companies.

DigitalX provided consulting and development services to the xbullion gold project during the year. xbullion offers digitally transferable ownership of physical gold bullion that is vaulted, audited and insured representing a fundamental transformation in the way gold bullion can be acquired. xbullion progressed to achieve several key milestones, including the successful audit and deployment of smart contracts developed by DigitalX for the minting, transfer and redemption of gold ownership recorded through the Ethereum blockchain.

Digital Asset Funds Management

DigitalX is the investment manager of digital asset investment products that provide qualified investors with a secure and accessible way to gain digital asset exposure. The Company operates two professionally managed wholesale funds, the DigitalX Bitcoin Fund and the Digital Asset Fund, a diversified basket of leading digital assets. The DigitalX digital asset investment products solve the technical and administrative challenges of making an investment into this emerging asset class.

During the first half of the financial year the Company explored the potential of expanding the digital asset division internationally, as well as expanding the potential investment horizon for the funds. Subsequently, the Board made the decision to refocus on the Australian marketplace and on the leading digital assets, including Bitcoin. The execution of this revised strategy saw significant operational savings as well as the establishment of the DigitalX Bitcoin Fund.

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The DigitalX Bitcoin Fund is available through a traditional unlisted fund structure to offer qualifying investors, including family offices and high net worth individuals, a low-cost and understood vehicle to gain exposure to this growing asset class. The DigitalX Bitcoin Fund was seeded with 215 Bitcoin from the Group’s existing holding and was announced to the market in November 2019.

The performance of the two digital asset investment funds over the second half of FY20 was encouraging. From inception the DigitalX Bitcoin Fund returned 58% and the Digital Asset Fund returned 60%, significantly better than gold 26%[1] and the ASX All Ords -15%[2] . The performance was attributable to the expansionary monetary and fiscal policies implemented by Governments and central banks, as well as institutional acceptance of the asset class. The COVID-19 effects on markets accelerated these trends, including the movement towards digital money.

During the period, significant efforts were made to broaden the market education and awareness of the investment funds and digital assets more generally. The Company’s Funds Management division delivers fortnightly digital asset education and research, in collaboration with Delphi Digital to qualified investors and financial advisors. The DigitalX Bitcoin Fund secured a product listing on Australia’s number 1 rated wealth management platform Netwealth (ASX:NWL). The challenges in acquiring Bitcoin from cryptocurrency exchanges, storing them securely and managing tax and audit complexities have been the biggest barriers to entry for potential Bitcoin investors. The DigitalX Bitcoin Fund was specifically built to solve these pain points for investors and its addition to the Netwealth platform further serves this purpose. The Company is optimistic that these changes will reap rewards over the coming financial year.

COVID-19

The Company made key financial decisions to manage its working capital during this uncertain time, including the deferral of all Director fees and the reduction in salaries for all senior executives. Each of the Company’s Non-Executive Directors agreed to defer their Director fees for up to 12 months and to convert those fees into shares in the Company, subject to the receipt of all shareholder approvals, expected to be put to shareholders at the Company’s AGM in November 2020. In addition, the Company’s Executive Director, Mr Leigh Travers agreed to defer an equivalent amount on the same terms as the Non-Executive Directors.

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Future Developments

With a strong digital asset market as well as a number of new commercial opportunities the DigitalX Group is pursuing, the outlook for DigitalX is positive. The Funds Management division has recently appointed a new fund manager, Mr Matthew Harry, to further capital raising efforts inside the division. As part of this appointment, the Company expects to secure additional distribution channels alongside Netwealth as well as improving the education around digital assets in the Australian investment market by securing CPD accreditation for digital asset investor presentations.

DigitalX has been actively investigating opportunities to build products to complement the major Distributed Ledger Technology (DLT) projects within Australia and the working group established to actively identify the highest priority opportunities has progressed. The Group has prioritised the development of a regulatory technology (RegTech) business, with activities now at an advanced stage the Company looks forward to updating the market on its product development efforts.

The xbullion project recently went live via a soft launch and absent any setbacks will be moving to a full launch over the quarter. The market for tokenised assets continues to increase, with the Ethereum ecosystem growing from $USD500m to over $USD6B of asset value in the last year[3] .

With the Company reducing its operations in the US, the Company has changed its reporting policy and from the 1 July 2020 the Company has commenced reporting in Australian Dollars.

1 https://www.perthmint.com/investment_invest_in_gold_precious_metal_prices.aspx

2 https://www.asx.com.au/about/historical-market-statistics.htm

3 https://defipulse.com/

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Note Revenue from operations C2 Net gain/(loss) on digital assets C2 Other Income C2 Professional and consultancy fees C3 Settlement costs C3 Brokerage costs Corporate expenses Advertising, media and investor relations Employee benefit expenses Share based payments – employee benefits Depreciation Intangible asset impairment Realised and unrealised foreign exchange losses Fair value movement of financial assets Impairment of investments and other assets Interest expense Finance costs Other expenses C3 Equity accounted share of profit/(loss) from joint venture D3 Profit/(Loss) before tax Income tax benefit/(expense) Profit/(Loss) for the period Profit/(Loss) attributable to: Members of the parent entity Non-controlling interests	Year ended 30 June 2020 $USD Year ended 30 June 2019 $USD
	290,424 1,013,096
	(2,332,415) 1,511,247
	91,095 30,696
	(445,985) (464,690)
	- (526,068)
	- (69,920)
	(42,839) (188,101)
	(62,573) (266,414)
	(1,238,643) (1,520,014)
	(148,916) (700,044)
	(170,698) (53,883)
	- (50,000)
	(139,695) (191,370)
	(115,079) 14,450
	- (69,944)
	- (70,074)
	(37,897) -
	(524,211) (838,128)
	(16,259) (38,442)
	(4,893,691) (2,477,603)
	- -
	(4,893,691) (2,477,603)
	(4,707,851) (2,524,151) (185,840) 46,548
	(4,893,691) (2,477,603)

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The accompanying notes form part of these financial statements.

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Note Profit/(Loss) for the period Other comprehensive income for the period Items that may be reclassified to profit or loss Exchange differences on translation of operations Other comprehensive income for the period, net of tax Total comprehensive income for the period Total comprehensive income/(loss) attributable to: Members of the parent entity Non-controlling interests Profit/(Loss) per share attributable to the ordinary equity holders of the parent: Basic earnings/(loss) per share C4 Earnings per share from continuing operations Total Diluted earnings/(loss) per share (cents) C4 Earnings per share from continuing operations Total	Year ended 30 June 2020 $USD Year ended 30 June 2019 $USD
	(4,893,691) (2,477,603)
	(803) 19,126
	(803) 19,126
	(4,894,494) (2,458,476)
	(4,708,520) (2,486,844)
	(185,974) 28,368
	(4,894,494) (2,458,476)
	(0.008) (0.005)
	(0.008) (0.005)
	(0.008) (0.005)
	(0.008) (0.005)

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The accompanying notes form part of these financial statements.

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CURRENT ASSETS Cash and cash equivalents Trade and other receivables Digital assets Other current assets Total Current Assets NON-CURRENT ASSETS Investments Investments – Equity accounted Property, plant and equipment Right of use asset Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Contract liabilities Lease liabilities Total Current Liabilities NON-CURRENT LIABILITIES Lease liabilities Total Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Retained earnings/(losses) Capital & reserves attributable to owners of DigitalX Non-controlling interests TOTAL EQUITY	Note	Year ended 30 June 2020 $USD	Year ended 30 June 2019 $USD
	D1 C2 D2 D3 D3 E1 E2 C3 E2 E2 F1 F2 F2
		2,736,872 135,578 4,723,946 71,962	5,160,689
			165,477
			7,115,373
			100,992
		7,668,358	12,542,531
		1,030,510 - 227,641 292,048
			518,313
			16,259
			297,490
			-
		1,550,199	832,062
		9,218,557	13,374,593
		332,381 15,437 91,841
			1,029,974
			188,128
			-
		439,659	1,218,102
		245,064
			-
		245,064	-
		684,723	1,218,102
		8,533,834	12,156,491
		34,756,917 1,533,107 (28,218,045)
			33,662,319
			1,384,860
			(23,483,498)
		8,071,979 461,855	11,563,681
			592,810
		8,533,834	12,156,491

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The accompanying notes form part of these financial statements.

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Cash flows from operating activities Receipts from customers Payments to suppliers and employees Other income Interest paid Net cash provided by/(used in) operating activities Cash flows from investing activities Acquisition of property plant and equipment Payment for investments Net payment for digital assets in funds Loan to related party Net cash used in investing activities Cash flows from financing activities Proceeds from issue of equity securities Net proceeds from issue of units in fund Payments for share issue costs Principal elements of lease payments Net cash (used in)/provided by financing activities Net increase/ (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Foreign exchange movement in cash Cash and cash equivalents at end of period	Note	Year ended 30 June 2020 $USD Year ended 30 June 2019 $USD
		202,640 1,271,834 (2,420,165) (3,512,924) 26,074 48,010 - (12,168)
		(2,191,451) (2,205,248)
		(10,908) (347,992) - (506,796) (84,447) (495,817) - (17,538)
		(95,355) (1,368,143)
		- 3,226,941 108,049 97,500 (4,927) (176,548) (108,478) -
		(5,356) 3,147,893
		(2,292,162) (425,498)
		5,160,689 5,772,287 (131,655) (186,100)
	D1	2,736,872 5,160,689

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The accompanying notes form part of these financial statements.

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	Contributed Equity	Reserves1 Retained Earnings/(Losses) Total	Non-controlling interest	Total
Consolidated Group	$USD	$USD $USD $USD	$USD	$USD
Balance at 30 June 2019	33,662,319	1,384,860 (23,483,498) 11,563,681	592,810	12,156,491
Change in accounting policy4	-	- (26,696) (26,696)	-	(26,696)
Balance at 1 July 2019	33,662,319	1,384,860 (23,510,194) 11,536,985	592,810	12,129,795
Profit/(Loss) for the year	-	(4,707,851) (4,707,851)	(185,840)	(4,893,691)
Other comprehensive income	-	(669) - (669)	(134)	(803)
Total comprehensive income for the period	-	(669) (4,707,851) (4,708,520)	(185,974)	(4,894,494)
Shares issued during the period3	1,101,624	- - 1,101,624		1,101,624
Units issued during the period2	-	- - -	55,019	55,019
Share issue costs	(7,026)	- - (7,026)	-	(7,026)
Share based payment expense	-	8 148,916 - 148,916	-	148,916
Balance at 30 June 2020	34,756,917	1,533,107 (28,218,045) 8,071,979	461,855	8,533,834

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1 Refer to Note F2 for reconciliation of reserve balances.

2 Balance is net of issues, redemptions and change of ownership.

3 Refer to Note F1 for details of shares issued during the period.

4 Refer to Note E2 for details of change in accounting policy.

The accompanying notes form part of these financial statements.

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	Contributed Equity	Reserves1 Retained Earnings/(Losses) Total	Non-controlling interest	Total
Consolidated Group	$USD	$USD $USD $USD	$USD	$USD
Balance at 1 July 2018	30,431,588	832,033 (20,959,346) 10,304,274	514,600	10,818,874
Profit/(Loss) for the year	-	- (2,524,151) (2,524,151)	46,548	(2,477,603)
Other comprehensive income	-	37,307 - 37,307	(18,181)	19,126
Total comprehensive income for the period	-	37,307 (2,524,151) (2,486,844)	28,368	(2,458,476)
Shares issued during the period	3,224,128	- - 3,224,128	-	3,224,128
Units issued during the period2	-	- - -	49,843	49,843
Share issue costs	(294,002)	116,081 - (177,921)	-	(177,921)
Share based payment expense	300,605	399,439 - 700,044	-	700,044
Share options issued	-	- - -	-	-
Share options and performance rights converted	-	9 - - -	-	-
Balance at 30 June 2019	33,662,319	1,384,860 (23,483,498) 11,563,681	592,810	12,156,491

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1 Refer to Note F2 for reconciliation of reserve balances.

2 Balance is net of issues, redemptions and change of ownership.

The accompanying notes form part of these financial statements.

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CORPORATE INFORMATION

DigitalX Limited (the Company or the parent) is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. The Company is a for-profit entity.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies adopted in the preparation of the financial report are set out below. These policies have been applied consistently to all periods presented in the financial report excepted as described in the notes or in the Group’s interim financial report. These accounting policies are consistent with Australian Accounting Standards and with International Financial Reporting Standards.

Basis of preparation

The Preliminary Final Report has been prepared in accordance with ASX Listing Rule 4.3A and the disclosure requirements of ASX Appendix 4E and does not include all the notes typically included in an annual report.

All amounts are presented in United States Dollars, unless otherwise noted.

Compliance with IFRS

The Preliminary Final Report of the Group also complies with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) where applicable for satisfying the requirements of ASX Listing Rule 4.3A and does not include all the disclosures typically included in an annual report.

• Revenue recognition (Note C2)

• Digital assets including (Note D2)

• Fair value of digital assets (Note D2)

• Functional currency

Key sources of estimation uncertainty

The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

• Multijurisdictional taxation of operations

• Valuation of share-based payments (Note F2)

Historical cost convention

The Preliminary Financial Report has been prepared under the historical cost convention, except for digital assets that are measured at fair value at the end of each reporting period, as explained in the accounting policies below. Cost is based on the fair value of the consideration given in exchange for assets.

Going concern

At the date of this report the consolidated entity has a strong working capital position and its cash flow forecast indicates that it expects to be able to meet its minimum commitments and working capital requirements for the twelve-month period from the date of the report.

Presentation and functional currency

Presentation currency

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The consolidated financial report is presented in United States Dollars.

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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, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in developing and applying accounting policies

The following are the critical judgements, apart from those involving estimations (see Notes below), that the Directors have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in the consolidated financial statements.

Functional currency

The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each group entity are expressed in United States dollars (‘$USD’), which is the functional currency of the Company and the presentation currency for the consolidated financial statements. Due to the nature of these activities for all entities in the Group the functional currency has been determined to be $USD with exception of DigitalX Asset Management Pty Ltd, DigitalX Funds Management Pty Ltd, DigitalX Fund and the DigitalX BTC Fund.

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In addition to the commentary set out in the Review of Operations, the financial position and performance of the Group was particularly affected by the following events and transactions during the period ended 30 June 2020.

Event	Description of impact	Impact
	Over the course of the year the price of Bitcoin fell by 16%
	from $10,817 to a closing pricing of $9,137 at 30 June 2020.
Change in digital asset market	Given the Group’s bitcoin treasury holdings and the consolidation of the DigitalX Fund the results for the period	Note C2 Note D2
	were materially impacted by the decline in fair value of
	$2,332,415.
	During the period, the Group adopted the new leasing
	standard, AASB 16 Lease, from 1 July 2019. As a result there
Adoption of Leasing standard	has been an increase to the assets of $292,048 and liabilities	Note E3
	of $336,905 at 30 June 2020. Further details on the change of
	policy are set out in Note E2.
	During the period, the Group issued 9,411,764 at $AUD0.085
	as the final tranche of the investment into Bullion Asset
Issue of shares to Bullion Asset	Management Pte Ltd (the management company of the	Note D3
Management (BAM)	xbullion project). As a result of the share issue the investment	Note F1
	in BAM increased by $544,680 with a corresponding increase
	in equity.

C1 SEGMENT INFORMATION

Segment reporting

AASB 8 requires operating segments to be identified based on internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker in order to allocate resources to the segment and to assess its performance.

Based on the information used for internal reporting purposes by the Chief Operating Decision Maker (CODM), being the Board, which makes strategic decisions, at 30 June 2020 the Group operated three segments, Blockchain consulting and development, Asset Management and Other. In the previous corresponding period (period ended 30 June 2019) the Group had three reportable segments: Advisory, Funds Under Management, and Technology.

In light of the company update announcement on the 5[th] of September, 2019, the segment names and descriptions have been updated to reflect the current operations. However, there has been no immaterial impact on the comparatives as a result of this.

Segment description

BLOCKCHAIN CONSULTING

The Group provides consulting, technical due diligence, solution design and development to businesses by utilising distributed ledger solutions and best of blockchain technologies.

ASSET MANAGEMENT

The asset management division was setup in 2018 to give high net worth and institutional investors access to a portfolio of digital assets. DigitalX operates two funds focussed on digital assets, the DigitalX Fund (www.digitalx.fund) and the DigitalX BTC Fund.

OTHER

Amounts disclosed in the segment primarily relates to Group-level functions including governance, finance, legal, risk management, company secretarial and management of the corporate entity.

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SEGMENT PERFORMANCE

Segment reporting ($USD)	BLOCKCHAIN	CONSULTING ASSET MANAGEMENT2	OTHER	TOTAL
	30 June 2020	30 June 2019 30 June 2020 30 June 2019	30 June 2020 30 June 2019	30 June 2020 30 June 2019
Results Segment revenue Intersegment revenue		914,557 28,279 26,049 - - -
	207,097		55,048 72,492	290,424 1,013,096
	-		- -	- -
Revenue from external customers	207,097	(185,351) 28,279 26,049	55,048 72,492	290,424 1,013,096
Revenue recognition timing – point in time Revenue recognition timing – over time	140,297	732,886 - - 181,671 28,279 26,049	- -	140,297 732,886
	66,800		55,048 72,492	150,127 280,210
Segment result	(216,078)	(185,351) (578,638) (737,676)	(3,874,120) (1,342,177)	(4,668,857) (2,265,204)
Income tax expense/(benefit)		- - -	- -	- -
Segment result after tax	(216,078)	(185,351) (578,638) (737,676)	(3,874,120) (1,342,177)	(4,668,857) (2,265,204)
Reconciliation to profit/loss after tax Equity accounted share of profit from joint venture Interest Depreciation Amortisation & impairment Taxation Profit/(loss) after income tax
				(4,668,857) (2,265,204)
				(16,259) (38,442)
				(37,897) (70,074)
				(170,698) (53,883)
				- (50,000)
				- -
				(4,893,691) (2,477,603)

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1Revenue earned from external customers by geography and major customer information is not able to be disclosed as the information is not available to the Group.

2 For the purpose of segment reporting the Asset Management segment does not include the operating results, segment assets or segment liabilities of the DigitalX Fund as CODM reviews the fund on a fair value basis of the Group’s interest in the fund.

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SEGMENT POSITION

	BLOCKCHAIN	CONSULTING	ASSET MANAGEMENT	ASSET MANAGEMENT	OTHER	OTHER	TOTAL	TOTAL
Segment reporting ($USD)	30 June 2020	30 June 2019	30 June 2020	30 June 2019	30 June 2020	30 June 2019	30 June 2020	30 June 2019
Assets
Segment assets	30,290	53,377	46,521	22,477	9,141,746	13,298,739	9,218,557	13,374,593
Total assets	30,290	53,377	46,521	22,477	9,141,746	13,298,739	9,218,557	13,374,593
Liabilities
Segment liabilities	5,301	580	16,735	1,183	662,688	1,216,339	684,723	1,218,102
Total liabilities	5,301	580	16,735	1,183	662,688	1,216,339	684,723	1,218,102

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C2 - REVENUE & RECEIVABLES

Revenue

Revenue
Advisory Consulting Asset Management Fees Licensing Total revenue Trade and other receivables	Year ended 30 June 2020 $USD	Year ended 30 June 2019 $USD
	- 206,278 31,562 52,584	773,314
		126,517
		18,293
		8,543
	290,424	926,667
	Year ended	Year ended 30 June 2019 $USD
	30 June 2020 $USD
Trade receivables (gross)1,2	46,196	57,012
Loss allowance	-	-
Trade receivables – Net	46,196	57,012
Other receivables
Statutory tax receivable	-	13,621
Loan to a related party	-	26,099
Deposits	56,896	68,745
Contract asset	32,486	-
Total trade and other receivables	135,578	165,477
Other Income Interest received Other income Total other income Net fair value gain on digital assets held
	Year ended 30 June 2020 $USD	Year ended 30 June 2019 $USD
	22,216 68,879	30,696
		-
	91,095	30,696
	(2,332,415)	1,639,848

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C3 - EXPENSES, PAYABLES & OTHER ASSETS

(A) Professional and Consultancy fees

(A) Professional and Consultancy fees
	Year ended 30 June 2020 $USD Year ended 30 June 2019 $USD
Legal fees	126,139 177,108
Consulting fees	225,344 209,280
Tax consulting fees	39,987 28,708
Audit fees	54,515 49,594
Total professional and consultancy fees	445,985 464,690

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(B) Settlement costs

Settlement costs Total other expenses	Year ended 30 June 2020 $USD Year ended 30 June 2019 $USD
	- 1526,068
	- 526,068

1 The balance relates solely to the finalisation of legal proceedings as announced to the market on 7 May 2019 which is expected to be a non-recurring amount. The Group also incurred $USD66,830 in legal fees for this matter included in the total legal fees disclosed above in (A) for the year ended 30 June 2019.

(C) Other expenses

Regulatory and compliance Occupancy Other expenses Total other expenses Current liabilities – trade & other payables	Year ended 30 June 2020 $USD Year ended 30 June 2019 $USD
	318,678 344,186
	94,501 11,193
	110,918 482,749
	524,097 838,128
	Year ended 30 June 2020 $USD Year ended 30 June 2019 $USD
Trade payables	225,647 242,723
Accrued expenses	89,293 397,554
PAYG withholding payable	17,441 16,086
Share applications	- 561,739
Total trade & other payables	332,381 1,218,102
C4 - EARNINGS PER SHARE (EPS) Basic earnings/(loss) per share From continuing operations Total Diluted earnings/(loss) per share From continuing operations Total The earnings/(loss) used in the calculation of basic and diluted loss per share From continued operations From discontinued operations Weighted average number of ordinary shares on issue during the period used in the calculation of basic EPS
	Year ended 30 June 2020 $USD Year ended 30 June 2019 $USD
	(0.008) (0.005)
	(0.008) (0.005)
	- -
	- -
	(4,707,851) (2,524,151)
	- -
	602,105,566 512,099,007

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Adjustments for calculation of diluted EPS Options Performance rights Convertible notes Weighted average number of ordinary shares on issue during the period used in the calculation of diluted EPS
	32,848,977 60,240,335
	28,500,000 9,000,000
	- -
	665,954,543 581,339,342

1 Potential ordinary shares in the form of share options and rights are not considered to be dilutive. As the Group made a loss for the prior period, diluted earnings per share is the same as basic earnings per share for that period.

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D1 CASH AND CASH EQUIVALENTS

	Year ended 30 June 2020 $USD Year ended 30 June 2019 $USD
Cash at bank	2,736,872 5,160,614
Cash deposits at call1	- 75
Total cash and cash equivalents	2,736,872 5,160,689

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1Cash deposits at call include cash balances on exchanges. The balance originates following a liquidation of digital assets.

D2 - DIGITAL ASSETS

At each reporting period the Group reviews its classification and measurement of Digital Assets, taking into account changes in the business, market best practice and up to date guidance from the various accounting and regulatory bodies.

At 30 June 2020, the Group made the determination that due to the nature of the Group’s holding and its reduced trading activity it was considered appropriate to classify its Bitcoin holding as an intangible asset under AASB138: Intangible Assets using fair value under the revaluation method. As the Group previously record its Bitcoin holding at fair value under AASB102: Inventory there was no gain or loss on reclassification.

	Year ended 30 June 2020 $USD Year ended 30 June 2019 $USD
Bitcoin1,2	4,065,591 4,661,772
Other listed digital assets1,3	522,807 1,121,074
Non-listed digital assets4	135,548 1,332,527
Total Digital Assets	4,723,946 7,115,373
	Year ended 30 June 2020 $USD Year ended 30 June 2019 $USD
Inventory method	- 4,661,772
Intangible asset method	4,638,138 1,683,601
Financial asset method	85,808 770,000
Total Digital Assets	4,723,946 7,115,373

1 Digital assets were measured at fair value using at 30 June 2020. Refer to Note H2 for prices at the date of this report.

2 The amount includes $USD2,021,713 held by the DigitalX BTC Fund.

3 Includes all tokens that are not bitcoin that are listed on an exchange. The amount includes $USD500,704 held by the DigitalX Fund.

4 Includes all tokens not listed on an exchange. The amount includes $USD79,846 held by the DigitalX Fund.

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D3 – INVESTMENTS

D3 – INVESTMENTS
	Year ended 30 June 2020 $USD Year ended 30 June 2019 $USD
Investment in Coincast - Equity accounted joint venture	- 16,259
Investment in Bullion Asset Management Pte Ltd	861,216 322,662
Convertible note receivable	169,294 195,651
	1,030,510 534,572

During the period the Group announced that it had terminated the joint ventures with DX Americas LLC, Coincast and Futuredge Capital. The impact to the Group was immaterial and the investments were written down to nil value.

Investment in DigitalX Funds

The Group has provided seed capital to the DigitalX Fund (a unit trust) and DigitalX BTC Fund (a unit trust) for the purpose of investing in and generating returns digital assets, however, as DigitalX also provides fund management services for the fund it is deemed that the Group meets the definition of control under AASB10: Consolidated Financial Statements and as a result, the fund has been included in the Group’s consolidated financial statements. The Group will continue to assess its position with respect to control of the fund at each reporting period and there has been no changes to the Group’s assessment for the year ended 30 June 2020.

The net asset value (NAV) of the Group’s units in the funds at 30 June 2020 were $AUD 0.50 (2019: $0.85) and $AUD1.35 respectively.

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E1 - PROPERTY, PLANT AND EQUIPMENT – COMPUTER EQUIPMENT

	Year ended 30 June 2020 $USD Year ended 30 June 2019 $USD
Cost	352,098 351,352
Accumulated depreciation	(124,457) (53,862)
Net Carrying amount	227,641 297,490
Reconciliation
Carrying amount at beginning of period	297,490 502
Additions	6,990 351,352
Disposals	(6,244) (481)
Depreciation charge for the period	(70,595) (53,883)
Net carrying amount at end of period	227,641 297,490

E2 - NON-CURRENT ASSETS – RIGHT TO USE

(A) Change of accounting policy

On 1 July 2019, the Group adopted the new leasing standard, AASB16: Lease, which replaced the existing standard, AASB117: Leases .

Under the new standard, leases are no longer classified as operating leases or finances leases as they had been previously under AASB 117.

In applying AASB16 from 1 July 2019 the Group has adopted the new standard retrospectively but has not restated comparatives for the 2018 or 2019 reporting comparatives, as permitted under the transitional provisions of the new standard.

The reclassifications and impact of the new standard are therefore recognised in the opening statement of financial position on 1 July 2019.

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(B) Adjustments recognised on adoption of AASB16

(C) Lease liability

At the time of the change, the Group only had one lease classified as an operating lease, being the lease for the Blockchain Centre entered in to in July 2018 for a term of 5 years, that was required to be recognised:

The lease liabilities were recognised at the present value of remaining lease payments, discounted using the Group’s incremental borrowing rate (8.8%) at the time of the adoption.

Operating lease commitments disclosed at 30 June 2019 Adjustment for contracts reassessed as service contracts Adjustment for discounting using the Group’s incremental borrowing rate Adjustment for finance liabilities Liability at 1 July 2019 Current Lease Liability Non-Current Lease Liability Liability at 1 July 2019 Interest expense Lease payments Foreign exchange effect Liability at 30 June 2020 Current Lease Liability Non-Current Lease Liability	$USD
	544,549
	(234,663)
	(166,972)
	273,218
	416,132
	86,576 329,556
	416,132
	31,278 (108,478) (2,027)
	336,905
	91,841 245,064

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(D) Right of use asset

The associated right of use asset for property leases were measured on a retrospective basis as if the new rules had always been applied. There were no onerous lease contracts that would have required adjustment

Opening balance at 30 June 2019 Adjustment for right of use asset Right of use asset at 1 July 2019 Depreciation of right of use asset Right of use asset at 30 June 2020	Property Leases $USD
	-
	389,397
	389,397
	(97,349)
	292,048

1 The net impact to retained earnings at 1 July 2019 was $26,696.

2 The Group does not currently recognise deferred tax assets, as a result no deferred tax impact has been recognised as a result of the change in the standard.

(C) Other transition disclosures

• The Group has applied several practical expedients under the new standard as permitted. The expedients include:

• a. Use of single discount rate;

• b. Reliance on previous assessment as to whether lease(s) are onerous; and

• c. Exclusion of indirect costs for the measurement of right of use assets and initial application.

• Lease payments for property leases includes fixed payments less any incentives, variable payments based on a rate and amounts expected to be payable under residual value guarantees.

• Right of use assets for property leases include the initial measurement of the lease liability plus initial direct & restoration costs

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F1 – CONTRIBUTED EQUITY

(a) Issued and paid up Capital

(a) Issued and paid up Capital
	Year ended 30 June 2020 $USD Year ended 30 June 2019 $USD
Fully paid ordinary shares– 605,628,549 (2019: 571,525,427)	34,759,917 33,662,319

(b) Movement in Ordinary Share Capital

Date Details1 Number of Shares	Issue Price A$	$USD2
30-Jun-19 Closing Balance 571,525,427		33,662,319
1-Jul-19 Issue of Shares on exercise of options 24,691,358	0.0324	556,934
2-Jul-19 Share issue costs		(3,472)
15-Nov-19 Issue of Shares under agreement with Bullion Asset Management 9,411,764	0.0850	544,690
18-Nov-19 Share issue costs		(3,555)
30-Jun-20 Closing Balance 605,628,549		34,756,916
Date Details1 Number of Shares	Issue Price A$	$USD2
30-Jun-18 Closing Balance 486,865,628		30,431,588
5-Jul-18 Vesting of Performance Rights 1,000,000	-	-
10-Jul-18 Share issue costs -	-	(1,426)
7-Aug-18 Issue of Shares on exercise of options 3,086,420	0.0324	73,757
8-Aug-18 Share issue costs -	-	(1,397)
18-Sep-18 Issue of shares on exercise of convertible notes 16,296,295	0.027	317,108
18-Sep-18 Issue of shares to employees 3,441,000	0.12	300,606
20-Sep-18 Share issue costs -	-	(3,571)
8-Oct-18 Issue of Shares on exercise of options 100,000	0.0324	2,341
10-Oct-18 Share issue costs -	-	(1,336)
13-May-19 Issue of Shares for settlement 1,895,453	0.0616	81,301
14-May-19 Share Issue costs		(1,368)
15-May-19 Issue of Shares under Share Purchase Plan 36,321,122	0.0677	1,701,610
16-May-19 Share Issue costs		(6,960)
17-May-19 Issue of Shares under top up placement 19,046,519	0.0677	887,500
17-May-19 Share Issue costs		(270,745)
21-May-19 Share Issue costs		(4,459)
27-May-19 Issue of Shares for settlement 1,576,568	0.0740	80,714
28-May-19 Share Issue costs		(1,368)
18-Jun-19 Issue of Shares for settlement 1,896,422	0.0615	79,796
24-Jun-19 Share Issue costs		(1,372)
30-Jun-19 Closing Balance 571,525,427		33,662,319

• 2 Based on AUD/USD as at the date of transaction.

• 3 Refer to Note H1 for any issues subsequent to the end of the reporting period.

1 Refer to the corresponding Appendix 3B for full details of each issue.

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F2 - RESERVES

Nature of reserves

Option premium and share-	Reserve is established to record balances pertaining to share options and performance rights
based payment reserve	granted for services provided to the company by employees and vendors.
Convertible note reserve	Reserve is established to record amounts required to be recognised in equity for convertible notes
	that meet the definition of compound instruments.
Foreign Exchange Reserve	Exchange differences arising on translation of the foreign controlled entity are recognised in other
	comprehensive income and accumulated in a separate reserve within equity. The cumulative
	amount is reclassified toprofit or loss when the net investment is disposed of.
Non-controlling interest	This reserve is used to record transactions with non-controlling interests that do not result in a loss
	of control.

	Note	Option premium and share-based payment reserve1 Convertible Note Reserve	Foreign Exchange Reserve	Non-Controlling Interest
30 June 2019		1,300,760 62,680	21,420	592,810
Share based payment expense		148,916 -	-	-
Conversion of foreign operations		- -	(669)	-
NCI share of profit or loss	P&L	- -	-	(185,840)
NCI net units issued in Unit Trust2		- -	-	55,019
NCI share in translation difference		- -	-	(134)
30 June 2020		1,449,676 62,680	20,751	461,855
	Note	Option premium and share-based payment reserve1 Convertible Note Reserve	Foreign Exchange Reserve	Non-Controlling Interest
30 June 2018		785,240 62,680	(15,887)	514,600
Share based payment expense		399,439 -	-	-
Share options issued2		116,081 -	-	-
Conversion of foreign operations		- -	37,307	-
NCI share of profit or loss	P&L	- -	-	46,548
NCI net units issued in Unit Trust3		- -	-	49,843
NCI share in translation difference		- -	-	(18,181)
30 June 2019		1,300,760 62,680	21,420	592,810

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1 Ordinary share issues treated as share-based payments that have no vesting conditions are recognised directly in equity.

2 Balance is the net amount inclusive of issues, redemptions and changes in interest in the DigitalX Fund & DigitalX BTC Fund.

Valuation of options and performance rights

The fair value of the share options and performance rights at grant date are determined using a binomial option pricing method that takes into account the exercise price, the term of the option, the probability of exercise, the share price at grant date and expected volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option.

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The following tables list the inputs to the model used for valuation of the options:

Options issued to Director

Volatility (%)		119.92%
Risk-free interest rate (%) – range		1.04%
Expected life of option (years)		5
Exercise price per terms & conditions		$AUD0.10
Underlying security spot price		$AUD0.04
Valuation date		10 July 2019
Expiry date		30 June 2024
Valuation per option		$AUD0.046

Valuation of performance rights

The fair value of performance rights with market-based conditions at grant date are determined using a Monte-Carlo simulation method that takes into account the market conditions, the term of the vesting period, the share price at grant date and expected volatility of the underlying share across a number of simulations.

	Tranche 1	Tranche 1
Market based condition – Share price target over 15 days	$AUD0.09	$AUD0.09
Volatility (%)	121.84%	117.18%
Expected vesting period	3	3
Underlying security spot price	$AUD0.04	$AUD0.03
Valuation date	10 July 2019	21 Nov 2019
Expiry date	9 July 2922	12 Dec 2022
Valuation per right	$AUD0.037	$AUD0.021

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G1 - CONTROLLED ENTITIES

Year ended 30 June 2020

There were no changes to the controlled entities during the year ended 30 June 2020 except for those noted below:

• DigitalX BTC Fund (Unit Trust); and

• Airpocket LLC.

All of the entities above were incorporated as part of the ongoing development and execution of the Group’s asset management strategy. The results for the entities above are immaterial for the period.

Year ended 30 June 2019

There were no changes to the controlled entities during the year ended 30 June 2019 except for those noted below:

• DigitalX Asset Management Pty Ltd;

• DigitalX (BVI) Limited;

• Digital Asset Administration; and

• DigitalX New Tech Fund Inc.

All of the entities above were incorporated as part of the ongoing development and execution of the Group’s asset management strategy. The results for the entities above are immaterial for the period.

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H1 - EVENTS AFTER THE REPORTING DATE

No other matter or circumstance has arisen since 30 June 2020 that has significantly affected the group’s operations, results or state of affairs, or may do so in future years other than those set out below. There were no other reportable subsequent events.

Date of event	Details of event	Details of event	Details of event	Details of event
	Due to the volatile nature and the materiality of the digital assets held, we disclose the impact of changes in the value of digital assets held by the Group, excluding the DigitalX Fund and DigitalX BTC Fund and unlisted digital assets, as at the close date of the 27 August. Coin Symbol $USD Spot Price at 30 June $USD Spot Price at 27 August $USD Impact BTC $9,137 $9,737.32 $507,906
	Coin Symbol	$USD Spot Price at 30 June	$USD Spot Price at 27 August	$USD Impact
	BTC	$9,137	$9,737.32	$507,906

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