DIGITALX LIMITED — Interim / Quarterly Report 2021

Feb 24, 2021

[2

==> picture [95 x 32] intentionally omitted <==

APPENDIX 4D

RESULTS FOR ANNOUNCEMENT TO THE MARKET

Authorised for release by the Board of DigitalX Ltd on 25 February 2021

A. Reporting Period Financial period 31 December 2020.

B. Previous Corresponding Period (PCP)

The previous corresponding period for the Group is the period end 31 December 2019.

C. Results

% change from financial period ending 31 Dec 2019	$AUD
Revenue from ordinary activities ↓0.4% Profit/(loss) from ordinary activities after tax attributable to members ↓84.5% Profit/(loss) for the period attributable to members ↓84.5%	281,875 ($1,014,650) ($1,014,650)
D. Net tangible asset per ordinary share
2020 $AUD/share 2019 $AUD/share 0.037 0.019

E. Dividends paid or recommended

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

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

Not applicable.

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

Not applicable.

• H. Associates and joint venture entities

• DigitalX Fund Unit Trust

• DigitalX BTC Fund Unit Trust

The impact of associates and joint ventures is disclosed in Note D3.

[2

==> picture [94 x 32] intentionally omitted <==

==> picture [339 x 110] intentionally omitted <==

----- Start of picture text -----

INTERIM FINANCIAL REPORT
FOR THE PERIOD ENDED
31 DECEMBER 2020
----- End of picture text -----

==> picture [76 x 26] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[1] DIGITALX LTD - INTERIM FINANCIAL REPORT
----- End of picture text -----

==> picture [80 x 12] intentionally omitted <==

DIRECTORS’ REPORT	2
AUDITOR’S INDEPENDENCE DECLARATION	7
AUDITOR’S REPORT	8
CONSOLIDATED STATEMENT OF PROFIT OR LOSS & OTHER COMPREHENSIVE INCOME	10
CONSOLIDATED STATEMENT OF FINANCIAL POSITION	12
CONSOLIDATED STATEMENT OF CASHFLOWS	13
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	14
NOTES TO THE FINANCIAL STATEMENTS	16
BASIS FOR PREPARATION	17
KEY OPERATING & FINANCIAL RESULTS	17
CAPITAL & RISK MANAGEMENT	25
FINANCIAL POSITION	25
EQUITY	30
GROUP STRUCTURE	33
OTHER DISCLOSURES	34
CORPORATE DIRECTORY	34

==> picture [77 x 27] intentionally omitted <==

[2] DIGITALX LTD - INTERIM FINANCIAL REPORT

==> picture [11 x 9] intentionally omitted <==

==> picture [107 x 11] intentionally omitted <==

Your Directors present their report together with the financial report on the consolidated entity (referred to hereafter as the Group or Consolidated entity ) consisting of DigitalX Limited ( DigitalX or the Company ) and the entities it controlled at the end of, or during, the half-year ended 31 December 2020. Information contained within this report and the financial report is presented in Australian dollars ($AUD) .

Directors & Company Secretary

The following persons were Directors of DigitalX Limited during the period and up to the date of this report:

• Toby Hicks, Non-Executive Chair;

• Leigh Travers, Executive Director;

• Peter Rubinstein, Non-Executive Director; and

• Shannon Coates, Company Secretary.

==> picture [276 x 11] intentionally omitted <==

==> picture [7 x 10] intentionally omitted <==

Operating results

For the period ended 31 December 2020, the consolidated loss attributable to members of the Group after providing for income tax amounted to AUD$1,014,650 (2019: loss of AUD$6,548,662) and total comprehensive income of AUD$9,637,036[1] (2019: loss of AUD$6,536,948). The Group also had net assets of AUD$22,320,281 (30 June 2020: net assets of AUD$11,725,680). Operating cash out flows for the period decreased by AUD$1,330,874 from AUD$2,078,156 to AUD$747,282 representing a decrease in operating cash outflows of 64% against the prior corresponding period. This is consistent with the previously announced strategy and focus on managing its finances and costs appropriately.

DigitalX continued to progress on its dual business strategy of growing its funds management division as well as developing applications utilising Distributed Ledger Technology ( DLT ), giving it a presence in both the financial and technology aspects of the Bitcoin and Blockchain industries. The Company has a unique skill set and experience within the industry and seeks to provide investors with exposure to both high-growth markets.

BLOCKCHAIN CONSULTING AND DEVELOPMENT

FinTech and RegTech Businesses - Drawbridge

==> picture [130 x 26] intentionally omitted <==

During the half-year, the Company announced the launch of Drawbridge (www.opendrawbridge.io). Drawbridge is a new RegTech business executing on the Company’s strategy of creating DLT products with near term revenue potential and first-mover advantages for leveraging emerging, high-growth technologies in the financial markets sector.

Drawbridge’s first product provides a digital solution to manual and error-prone processes for publicly-listed companies in managing and implementing their securities trading policies. A securities dealing policy is required by all ASX listed companies under ASX Listing Rule 12.9 - 12.12. Similar requirements exist in most major financial jurisdictions.

The first version of the Drawbridge securities dealing software application was built through a six-week design and development programme using an agile approach with a small, specialised team. The application has a back-end database built using DAML, the same technology language being used for the CHESS replacement system. Drawbridge has been designed with future integration in mind with global exchanges set to adopt DAML, which may enable enhanced features and broader services to be offered to customers.

Since release of the product, work has been focused on planning and implementing strategies for the ongoing commercialisation and scaling of the Drawbridge business. The Company is taking an evidence-based approach using customer feedback through the Early Adopter Programme ( EAP ), in order to prove out the business’s revenue model, pricing structure, customer acquisition channels, onboarding process, and feature roadmap. Drawbridge secured its first customer during the quarter along with small first cash receipts for use of the product during the EAP. These cash receipts are still at this stage immaterial. The Company continues to sign up ASX listed companies to its EAP.

==> picture [76 x 27] intentionally omitted <==

1 Primarily attributable to fair value movement in digital assets. Refer to Note C1 for details.

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[3] DIGITALX LTD - INTERIM FINANCIAL REPORT
----- End of picture text -----

Foundation Consulting Partner of Digital Asset Holdings

==> picture [126 x 26] intentionally omitted <==

The Company has also strengthened its network of key industry relationships by becoming a Foundation Consulting Partner of Digital Asset Holdings, who are the developers of DAML and work directly with leading global securities exchanges such as the ASX, HKEX, and SGX.

Drawbridge product demonstrations have been presented to senior Digital Asset staff members and have resulted in meaningful earlystage conversations on cross-marketing opportunities for DAML and Drawbridge.

Digital Finance Cooperative Research Centre (CRC)

During the period, DigitalX made a partnership declaration to support a bid to create a Digital Finance Cooperative Research Centre (DFCRC) along with other partners including major retail and central banks, technology companies, and universities. CRCs are an Australian government initiative that provides funding for collaborative projects between industry and research organisations to promote national competitiveness and productivity. If successful, funding would be used to progress projects in digital finance, regulatory technology, and asset digitisation fields[2] . The Digital Finance CRC application has been successfully progressed to round two with a final outcome due in March 2021 for funding to commence in October 2021.

DIGITALX ASSET MANAGEMENT

DigitalX offers a dedicated digital asset funds management business to provide qualified investors with secure and low-cost exposure to Bitcoin and the digital asset market. The asset class has been shown to provide strong historical returns and low-correlation to traditional asset classes.[3] While the benefits of the asset class to a diversified portfolio are highlighted in the current macroeconomic environment, Australian investors have been underserved with traditional fund structures and are often constrained from ownership due to technical and administrative hurdles. The DigitalX Asset Management business is designed to solve this problem in the marketplace.

DigitalX continues to be a first mover in the digital asset funds management industry and while initial growth has been lower than targeted, funds under management are approaching $20 million and continuing to grow. Returns for both funds have been pleasing and in line with the asset class highlighting the ability of the products to provide qualified investors with a safe, secure and accessible way to gain exposure to the sector.

The DigitalX funds management team continues to run fortnightly webinars to groups of investors and financial advisors as well as personalised individual presentations. The team delivers high quality digital asset specific research to an audience of over 5,000 qualified investors and is frequently sought after for market commentary from traditional investment media platforms. In improving the education and awareness around the sector as well as the business, DigitalX is one of the only organisations that delivers a digital asset presentation that has been accredited for continuing professional development.

The DigitalX Bitcoin Fund is listed on wealth management platforms Powerwrap and Netwealth and has made progress in due diligence with an additional two other major wealth management platforms. The DigitalX Bitcoin Fund has been available for qualified Australian investors but has recently been in discussions with the fund administrator to open the fund to all Commonwealth countries which serves to broaden the potential investor base.

Subsequent to the end of the period the Company provided shareholders with an update on the funds management business noting that the funds management business had experienced record funds management inflows in February.

OTHER

BAM and xbullion

Bullion Asset Management Pte Ltd ( BAM ), a Singapore based bullion technology business is a key client for the Company and recently launched xbullion with the technical support of DigitalX. xbullion allows investors to acquire digitally transferable ownership of physical gold bullion that is vaulted, audited and insured for a fraction of the cost of traditional measures. xbullion gold is BAM’s first product and is supported by technical infrastructure, supply agreements, partnerships and an online customer portal.

2 http://www.dfcrc.com.au/research-programs.html 3 https://www.etftrends.com/cryptocurrencies-have-a-place-in-a-diversified-investment-portfolio/

==> picture [77 x 27] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[4] DIGITALX LTD - INTERIM FINANCIAL REPORT
----- End of picture text -----

DigitalX was responsible for building the core technical infrastructure of xbullion which enabled the product to go live to the market on one platform in late September 2020. Initial progress has been positive, with xbullion seeing 50% month-on-month growth in sales. The DigitalX team created the additional infrastructure required to enable the product to be launched on larger international platforms as well as providing real-time market analysis through the development of trading and monitoring dashboards.

Following the success of this first product, BAM has developed a roadmap of additional products and platforms and DigitalX expects to continue to support the business through the provision of technical services through 2021.

Subsequent to the end of the period DigitalX announced a follow-on investment of US$250,000 as part of a capital raising of US$1.3 million as well as ongoing consulting services to support BAM’s product roadmap.

Corporate

Bitcoin Corporate Treasury

Over the half-year the Group noted the trend in public companies to acquire Bitcoin as part of their corporate treasury strategy has been led by technology businesses Square and Microstrategy prompting other companies to follow a similar strategy. Twitter has announced that it is currently considering the move and the potential impact on the market for Bitcoin is significant, particularly with $1.9 trillion in cash and cash equivalents for S&P500 companies.

During the half-year the Group continued to hold bitcoin[4] as a core treasury asset and has done so since 2017.

Change of currency

As foreshadowed in the Company’s June quarterly report, effective from 1 July 2020 the Company changed its functional currency from US dollars to Australian dollars.

Consistent with this change, the presentation currency also changed to Australian Dollars, which means that financial information in this interim financial report (including comparatives) are presented in Australian dollars.

This decision was made as a result of the focus on Australian markets through the Company’s digital asset funds, consulting activities and the new product development combined with a reduction in staff in the United States. Furthermore, the Company notes that the sourcing of reliable pricing in Australian dollars for its cornerstone asset, Bitcoin, has also improved.

Future Developments

The Group continues to focus on the growth in its business, including the ongoing promotion of its Australian digital asset investment funds and the ongoing growth and promotion of its new RegTech products for publicly traded companies.

Subsequent events

No other matter or circumstance has arisen since 31 December 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.

The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has not had a material impact on the business up to 31 December 2020, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is continually evolving and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.

Date of event	Details of event
18 January 2021	The Company announced a follow-on investment of $USD250,000 and ongoing consulting services to
	bullion technology business, Bullion Asset Management Services Pte Ltd (BAM).
19 February 2021	The Company announced that the performance milestone for 19,500,000 performance rights held by
	nominees of the Directors had been satisfied and are now capable of being converted into shares.

==> picture [77 x 27] intentionally omitted <==

4 The Group holds 215.95 bitcoin directly.

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[5] DIGITALX LTD - INTERIM FINANCIAL REPORT
----- End of picture text -----

28 February 2021	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 25 February. Coin Symbol $AUD Spot Price at 31 December $AUD Spot Price at 25 February $AUD Impact BTC $37,488 $62,389 $10,732,331	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 25 February. Coin Symbol $AUD Spot Price at 31 December $AUD Spot Price at 25 February $AUD Impact BTC $37,488 $62,389 $10,732,331	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 25 February. Coin Symbol $AUD Spot Price at 31 December $AUD Spot Price at 25 February $AUD Impact BTC $37,488 $62,389 $10,732,331	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 25 February. Coin Symbol $AUD Spot Price at 31 December $AUD Spot Price at 25 February $AUD Impact BTC $37,488 $62,389 $10,732,331
	Coin Symbol	$AUD Spot Price at 31 December	$AUD Spot Price at 25 February	$AUD Impact
	BTC	$37,488	$62,389	$10,732,331

Auditor’s independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 7.

The Directors’ Report is signed in accordance with a resolution of the Directors made pursuant to Section 306(3) of the Corporations Act 2001.

On behalf of the Board of Directors.

==> picture [156 x 39] intentionally omitted <==

Leigh Travers Executive Director Perth, 25 February 2021

==> picture [77 x 27] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[6] DIGITALX LTD - INTERIM FINANCIAL REPORT
----- End of picture text -----

==> picture [136 x 11] intentionally omitted <==

==> picture [18 x 11] intentionally omitted <==

In the opinion of the Directors of DigitalX Limited (the ‘Company’):

• (a) The financial statements, notes and the additional disclosures of the consolidated entity set out on pages 10 to 34 are in accordance with the Corporations Act 2001 including:

• (i) Giving a true and fair view of the consolidated entity’s financial position as at 31 December 2020 and of its performance for the half-year then ended; and

• (ii) Complying with Australian Accounting Standards and the Corporations Regulations 2001.

• (b) There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration has been made after receiving the declarations required to be made to the Directors in accordance with Section 295A of the Corporations Act 2001 for the half-year ended 31 December 2020.

Signed in accordance with a resolution of the Directors made pursuant to Section 303(5) of the Corporations Act 2001.

On behalf of the Directors

==> picture [157 x 39] intentionally omitted <==

Leigh Travers Executive Director Perth, 25 February 2021

==> picture [77 x 27] intentionally omitted <==

[7] DIGITALX LTD - INTERIM FINANCIAL REPORT

==> picture [504 x 699] intentionally omitted <==

==> picture [77 x 27] intentionally omitted <==

[8] DIGITALX LTD - INTERIM FINANCIAL REPORT

==> picture [504 x 696] intentionally omitted <==

==> picture [77 x 27] intentionally omitted <==

[9] DIGITALX LTD - INTERIM FINANCIAL REPORT

==> picture [504 x 698] intentionally omitted <==

==> picture [77 x 27] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[10] DIGITALX LTD - INTERIM FINANCIAL REPORT
----- End of picture text -----

==> picture [296 x 11] intentionally omitted <==

==> picture [197 x 10] intentionally omitted <==

Note Revenue from operations Net gain/(loss) on digital assets C3 Other Income C3 Professional and consultancy fees 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 Finance costs Other expenses Equity accounted share of profit/(loss) from joint venture (Increase)/decrease in net assets attributable to unit holders D4 Profit/(Loss) before tax Income tax benefit/(expense) Profit/(Loss) for the period attributable to members of DigitalX	Half-year ended 31 December 2020 $AUD	(Restated) Half-year ended 31 December 2019 $AUD
	281,875	280,782
	-	(5,008,257)
	199,824	13,688
	(87,092)	(348,651)
	(38,773)	(23,662)
	(108,112)	(58,801)
	(681,458)	(1,084,403)
	(481,609)	(102,883)
	(173,329)	(124,179)
	-	-
	5,218	(16,878)
	370,668	(8,892)
	(20,404)	(29,105)
	(331,532)	(462,211)
	-	(23,620)
	50,074	448,410
	(1,014,650)	(6,548,662)
	-	-
	(1,014,650)	(6,548,662)

==> picture [77 x 27] intentionally omitted <==

The accompanying notes form part of these financial statements.

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[11] DIGITALX LTD - INTERIM FINANCIAL REPORT
----- End of picture text -----

==> picture [296 x 11] intentionally omitted <==

==> picture [241 x 13] intentionally omitted <==

==> picture [38 x 13] intentionally omitted <==

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 Fair value increase/(decrease) in digital assets Other comprehensive income/(loss) for the period, net of tax Total comprehensive income/(loss) for the period Total comprehensive income/(loss) attributable to: Members of the parent entity 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 C4 Earnings per share from continuing operations Total	Half-year ended 31 December 2020 $AUD	(Restated) Half-year ended 31 December 2019 $AUD
	(1,014,650)	(6,548,662)
	(91,648)	11,714
	10,743,334	-
	10,651,686	11,714
	9,637,036	(6,536,948)
	9,637,036	(6,536,948)
	9,637,036	(6,536,948)
	(0.002)	(0.011)
	(0.002)	(0.011)
	(0.002)	(0.011)
	(0.002)	(0.011)

==> picture [77 x 27] intentionally omitted <==

The accompanying notes form part of these financial statements.

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[12] DIGITALX LTD - INTERIM FINANCIAL REPORT
----- End of picture text -----

==> picture [310 x 11] intentionally omitted <==

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 Intangible assets Total Non-Current Assets TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Contract liabilities Lease liabilities Net assets attributable to unit holders Total Current Liabilities NON-CURRENT LIABILITIES Lease liabilities Total Non-Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Retained earnings/(losses) TOTAL EQUITY	Note	31 December 2020 $AUD	(Restated) 30 June 2020 $AUD	(Restated) 1 July 2019 $AUD
	D1 C3 D2 D3 E1 E2 E3 C3 E2 D4 E2 F1 F2
		3,823,155 256,401 21,700,023 68,729	3,975,690	7,496,623
			196,946	240,379
			6,862,193	10,336,075
			104,535	146,705
		25,848,308	11,139,364	18,219,782
		1,865,812 - 230,938 348,739 80,707
			1,496,960	752,922
			-	23,618
			330,680	432,146
			424,241	-
			-	-
		2,526,196	2,251,881	1,208,686
		28,374,504	13,391,245	19,428,468
		938,106 15,000 139,533 4,684,344
			482,830	1,496,050
			22,424	273,413
			133,412	-
			670,909	861,140
		5,776,983	1,309,575	2,630,603
		277,240
			355,990	-
		277,240	355,990	-
		6,054,223	1,665,565	2,630,603
		22,320,281	11,725,680	16,797,865
		50,965,244 13,360,348 (42,005,311)
			50,489,288	48,899,231
			2,227,053	2,011,703
			(40,990,661)	(34,113,069)
		22,320,281	11,725,680	16,797,865

The accompanying notes form part of these financial statements.

==> picture [77 x 27] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[13] DIGITALX LTD - INTERIM FINANCIAL REPORT
----- End of picture text -----

==> picture [264 x 11] intentionally omitted <==

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 Payment for intellectual property Acquisition of property plant and equipment Payment for investments Net payment for digital assets in funds Payment for deposits 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	Half-year ended 31 December 2020 $AUD	(Restated) Half-year ended 31 December 2019 $AUD
		256,385 (1,151,284) 147,617 -	76,987 (2,179,399) 24,256 -
		(747,282)	(2,078,156)
		(85,199) (2,889) - (1,491,817) - -	- (8,507) - (6,284) - (5,837)
		(1,579,905)	(20,628)
		337,400 1,920,575 (7,068) (83,489)	- - (2,411) (80,186)
		2,167,418	(82,597)
		(159,769)	(2,181,381)
		3,975,690 7,234	7,496,623 (56,485)
	D2	3,823,155	5,258,757

Non-cash investing and financing activities

In addition to the above, the Group also had the following non-cash investing and financing activities that impacted on the Statement of Profit or Loss and Other Comprehensive Income and the Statement of Financial Position.

Current period

• Shares issued on conversion of options – Note F1.

• Movement in prices of investments – Note D3.

• Movement in prices of digital assets – Note D2.

• Movement in unit holder liability – Note D4.

Comparative period

• Shares issued to Bullion Asset Management

• Shares issued on conversion of options

• Movement in prices of digital assets

• Seeding of the bitcoin fund

• Adoption of accounting standard (AASB 16)

==> picture [77 x 27] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[14] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

==> picture [204 x 10] intentionally omitted <==

==> picture [104 x 12] intentionally omitted <==

Contributed Equity	**Reserves1 **	Retained Earnings/(Losses) Total
Consolidated Group $AUD	$AUD	$AUD $AUD
Balance at 30 June 2020 (Restated)3 50,489,288	2,227,053	(40,990,661) 11,725,680
Profit/(Loss) for the half-year -		(1,014,650) (1,014,650)
Other comprehensive income -	10,651,686	- 10,651,686
Total comprehensive income for the period -	10,651,686	(1,014,650) 9,637,036
Shares issued during the period2 484,848	-	- 484,848
Share issue costs (8,892)	-	- (8,892)
Share-based payment expense -	481,609	- 481,609
Balance at 31 December 2020 50,965,244	13,360,348	(42,005,311) 22,320,281

1 Refer to Note F2 for reconciliation of reserve balances.

2 Refer to Note F1 for details of shares issued during the year.

3 Refer to Note B2 for details of change in accounting policy.

==> picture [76 x 27] intentionally omitted <==

The accompanying notes form part of these financial statements.

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[15] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

==> picture [390 x 14] intentionally omitted <==

(Restated) Contributed Equity	(Restated) **Reserves1 **	(Restated) Retained Earnings/(Losses) (Restated) Total
Consolidated Group $AUD	$AUD	$AUD $AUD
Balance at 30 June 2019 (Restated) 48,899,231	2,011,703	(34,113,069) 16,797,866
Change in accounting policy -	-	(38,780) (38,780)
Restated balance at 1 July 2019 48,899,231	2,011,703	(34,151,848) 16,759,086
Profit/(Loss) for the half-year -	-	(6,548,662) (6,548,662)
Other comprehensive income -	11,714	- 11,714
Total comprehensive income for the half-year -	11,714	(6,548,662) (6,536,948)
Shares issued during the half-year2 1,600,263	-	- 1,600,263
Share issue costs (10,208)	-	- (10,208)
Share-based payment expense -	102,880	- 102,880
Balance at 31 December 2019 (Restated) 50,489,286	2,126,297	(40,700,510) 11,915,072

1 Refer to Note F2 for reconciliation of reserve balances. 2

Refer to Note F1 for details of shares issued during the financial year.

==> picture [76 x 27] intentionally omitted <==

The accompanying notes form part of these financial statements.

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[16] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

==> picture [355 x 10] intentionally omitted <==

==> picture [75 x 10] intentionally omitted <==

==> picture [7 x 10] intentionally omitted <==

==> picture [22 x 10] intentionally omitted <==

The notes to the financial statements have been set out under the following main headings:

A. Legend B. Basis for preparation (B1 to B2) C. Key operating & financial results (C1 to C4) D. Capital & risk management (D1 to D4) E. Financial position (E1 to E3) F. Equity (F1 to F2) G. Group structure (G1) H. Other disclosures (H1 to H3)

==> picture [13 x 13] intentionally omitted <==

==> picture [50 x 13] intentionally omitted <==

CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS

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.

• Revenue recognition

• Note D2 – Digital assets

• Note D2 – Fair value of digital assets

• Note D3 – Consolidation of DigitalX Funds

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.

• Note F2 – Valuation of share-based payments

• Note D2 – Valuation of unlisted and low volume trading digital assets

ADDITIONAL COMMENTARY

Additional management commentary on the item has been provided above what is required under legislation or accounting standards for stakeholders to understand the financial report.

==> picture [76 x 26] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[17] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

==> picture [7 x 10] intentionally omitted <==

==> picture [147 x 10] intentionally omitted <==

The section below includes information regarding how the overall financial statements are prepared including the key accounting policies and accounting standard frameworks applied.

B1 - SIGNIFICANT ACCOUNTING POLICIES

Statement of compliance

The half year financial report is a general-purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134: Interim Financial Reporting. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 Interim Financial Reporting. The half year report does not include notes of the type normally included in an annual financial report and shall be read in conjunction with the most recent financial report which can be located here.

Basis of preparation

The condensed consolidated financial statements have been prepared on the basis of historical cost except for the revaluation of certain assets and financial instruments. Cost is based on the fair values of the consideration given in exchange for assets. The half year financial report is presented in Australian dollars unless stated otherwise.

The accounting policies and methods of computation adopted in the preparation of the half year financial report are consistent with those disclosed in the Group’s Annual Report for the Financial Year Ended 30 June 2020 other than those disclosed below.

Going concern

At the date of this report the Consolidated Entity’s 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 signing the financial report except as noted below.

B2 – CHANGES TO ACCOUNTING POLICIES

As previously disclosed, the Group identified a number of factors which indicated a review of its functional and reporting currency was appropriate, these included:

• Significant reduction in expenditure incurred in US dollars following a reduction in the staffing levels in the United States and associated activities.

• Maturity of the Australian digital asset market and the ability to source reliable pricing for the Company’s cornerstone asset, Bitcoin, in Australian dollars.

As a result of this review, the Group has changed its functional[5] and reporting[6] currency from US dollars to Australian dollars in the current year effective from 1 July 2020.

All other accounting policies are consistent with those adopted in the annual financial report for the year ended 30 June 2020.

5 In accordance with AASB 121: The Effects of Changes in Foreign Exchange Rates, the change in functional currency to Australian Dollars has been applied prospectively from 1 July 2020, being the effective date of the change.

6 Under AASB 121: The Effects of Changes in Foreign Exchange Rates, a change in reporting currency is considered a voluntary change and applied retrospectively. The Group have considered this position and have determined that the change in reporting currency has not been a voluntary change and is necessitated by a change in the Group’s functional currency in order to provide useful and relevant information to the users of the financial statements. As a result, the translation of prior period balances, as disclosed above, was completed using the same principles of a change in functional currency being the closing rate prior to the date of the change. This treatment is consistent with guidance publish by a major international accounting firm. The effect of the difference between the exchange rates used compared to the actual prevailing rates would not have had a material impact on comparative financial information if the change were applied retrospectively as the difference in the rates is less than 1%.

==> picture [76 x 26] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[18] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

The financial information included in the interim financial report for the year ended 30 June 2020 (including comparatives at 1 July 2019) and half-year ended 31 December 2019, previously reported in US dollars, has been restated to Australian dollars using the procedures outlined below:

1. Statement of Profit or Loss and Other Comprehensive Income, Statement of Cash Flows and Statement of Financial Position have been translated into Australian Dollars using the conversion rate of $1.45264[7] representing the closing rate at the end of the period 30 June 2020.

2. Earnings per share and Net Tangible Asset disclosures have also been restated to Australian dollars to reflect the change in reporting currency.

==> picture [9 x 12] intentionally omitted <==

==> picture [258 x 12] intentionally omitted <==

The section below includes information regarding how the Group performed during the financial year including segment analysis and detailed breakdowns of items in the Statement of Profit or Loss and Other Comprehensive Income.

This section includes the following disclosures:

C1 Significant changes in the current reporting period (Page 19) C2 Segment Information (Page 20) C3 Profit and Loss information (Page 23) C4 Earnings Per Share (Page 24)

==> picture [76 x 26] intentionally omitted <==

7 Rate per xe.com

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[19] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

C1 SIGNIFICANT CHANGES DURING THE REPORTING PERIOD

In addition to the commentary set out in the Directors’ Report, the financial position and performance of the Group was particularly affected by the following events and transactions during the half-year ended 31 December 2020.

Event	Description of impact	Impact
Change in functional and presentational currency	As noted above, the Group has changed is functional and presentation currency from US dollars to Australian dollars. As a result all balances, including comparative, in the financial report are in Australian dollars unless otherwise stated.	Note B2
	Over the half-year the price of bitcoin rose by 161% from AUD$14,329 to a closing pricing of AUD$37,488 at 31
Change in digital asset market	December 2020. Given the Group’s bitcoin treasury holdings and the consolidation of the DigitalX and DigitalX BTC Funds the results for the period were materially impacted by the increase in fair value with a movement of $10,734,334	Note D2
	recognised in other comprehensive income.

==> picture [76 x 27] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[20] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

C2 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 31 December 2020 the Group operated three segments, Blockchain consulting and development, Asset Management and Other.

Segment description

BLOCKCHAIN DEVELOPMENT & CONSULTING (BDC)

The Group develops its own blockchain & RegTech products as well as providing consulting, technical due diligence, solution design and development to businesses by utilising distributed ledger solutions and best of blockchain technologies.

ASSET MANAGEMENT (AM)

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.

==> picture [76 x 26] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[21] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

SEGMENT PERFORMANCE

Segment reporting ($AUD)	BLOCKCHAIN DEVELOPMENT & CONSULTING ASSET MANAGEMENT2 Half-year ended 31 Dec 2020 (Restated) Half-year ended 31 Dec 2019 Half-year ended 31 Dec 2020 (Restated) Half-year ended 31 Dec 2019	OTHER	OTHER	TOTAL
		Half-year ended 31 Dec 2020	(Restated) Half-year ended 31 Dec 2019	Half-year ended 31 Dec 2020 (Restated) Half-year ended 31 Dec 2019
Results Segment revenue Intersegment revenue	75,700 242,540 108,073 14,066 - - - -
		98,102	24,176	281,875 280,782
		-	-	- -
Revenue from external customers	75,700 242,540 108,073 14,066	98,102	24,176	281,875 280,782
Revenue recognition timing – point in time Revenue recognition timing – over time	- 203,971 - - 75,700 38,569 108,073 14,066	-	-	- 203,971
		98,102	24,176	281,575 77,321
Segment result	(243,832) 109,644 (167,500) (447,612)	(459,659)	(6,482,201)	(870,991) (6,820,169)
Income tax expense/(benefit)	- - - -	-	-	- -
Segment result after tax	(243,832) 109,644 (167,500) (447,612)	(459,659)	(6,482,201)	(870,991) (6,820,169)
Reconciliation to profit/loss after tax				(870,991) (6,820,169)
Equity accounted share of profit from joint venture				- (23,620)
Interest				(20,404) (29,105)
Depreciation				(173,329) (124,179)
Amortisation & impairment				- -
Taxation				- -
(Increase)/decrease in net assets attributable to unit holders				50,074 448,410
Profit/(loss) after income tax				(1,014,650) (6,548,663)

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 Funds Under Management segment does not include the operating results, segment assets or segment liabilities of the DigitalX Fund & DigitalX BTC Fund as CODM reviews the fund on a fair value basis of the Group’s interest in the fund.

==> picture [77 x 27] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[22] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

SEGMENT POSITION

	BLOCKCHAIN DEVELOPMENT & CONSULTING	BLOCKCHAIN DEVELOPMENT & CONSULTING	ASSET MANAGEMENT	ASSET MANAGEMENT	OTHER	OTHER	TOTAL	TOTAL
Segment reporting ($AUD)	31 December 2020	(Restated) 30 June 2020	31 December 2020	(Restated) 30 June 2020	31 December 2020	(Restated) 30 June 2020	31 December 2020	(Restated) 30 June 2020
Assets
Segment assets	129,885	44,001	175,012	67,578	28,069,607	13,279,666	28,375,504	13,391,245
Total assets	129,885	44,001	175,012	67,578	28,069,607	13,279,666	28,375,504	13,391,245
Liabilities
Segment liabilities	22,318	7,700	19,088	24,310	6,012,817	1,633,556	6,054,223	1,665,565
Total liabilities	22,318	7,700	19,088	24,310	6,012,817	1,633,556	6,054,223	1,665,565

==> picture [77 x 27] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[23] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

C3 – PROFIT & LOSS INFORMATION

(A) Significant Items

Profit/(loss) for the year for the year includes the following items that are unusual because of their size, nature of incidence:

COVID-19 related relief Net fair value gain/(loss) on digital assets held1	Half-year ended 31 December 2020 $AUD (Restated) Half-year ended 31 December 2019 $AUD
	102,500 - - (5,008,257)

1 For the prior corresponding period movements in the fair value of digital assets as a result of revaluation were treated in accordance with AASB102 and recognised in the profit or loss. For the current period movements in the fair value of digital assets, unless impaired, are recognised in the asset revaluation reserve in accordance with AASB138.

(B) Receivables and Payables

Trade and other receivables

Trade and other receivables
		(Restated) 30 June 2020 $AUD
	31 December 2020 $AUD
Trade receivables (gross)1	153,509	67,106
Loss allowance	-	-
Trade receivables – Net	153,509	67,106
Other receivables
Deposits	85,392	82,540
Other	17,500	47,299
Total trade and other receivables	256,401	196,946
Trade and otherpayables
		(Restated) 30 June 2020 $AUD
	31 December 2020 $AUD
Trade payables	354,656	305,360
Accrued expenses and other payables	223,450	177,470
Unit applications1	360,000	-
Total trade and other payables	938,106	482,830

1 Relates to monies received by the fund for units that have not yet been issued.

==> picture [76 x 26] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[24] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

C4 - EARNINGS PER SHARE (EPS)

Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing the profit/(loss) after tax attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the period, adjusted for bonus elements in ordinary shares issued or cancelled during the period.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

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 are as follows: From continued operations Weighted average number of ordinary shares on issue during the period used in the calculation of basic EPS Adjustments for calculation of diluted EPS Options Performance rights Weighted average number of ordinary shares on issue during the period used in the calculation of diluted EPS	Half-year ended 31 December 2020 $AUD	(Restated) Half-year ended 31 December 2019 $AUD
	(0.002)	(0.011)
	(0.002)	(0.011)
	(0.002)	(0.011)
	(0.002)	(0.011)
	(1,014,650)	(6,536,948)
	612,809,983	598,620,877
	46,348,977	35,348,977
	28,500,000	28,500,000
	687,658,960	662,469,854

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.

==> picture [77 x 26] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[25] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

==> picture [8 x 10] intentionally omitted <==

==> picture [49 x 10] intentionally omitted <==

The section below includes information regarding how the Group manages it capital assets including the positions at year end.

The section includes the following disclosures:

D1 Cash and cash equivalents (Page 25) D2 Digital assets (Page 25) D3 Investments (Page 27) D4 Net assets attributable to unit holders (Page 28)

D1 CASH AND CASH EQUIVALENTS

Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, cash held with digital asset exchanges, other short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Cash and cash equivalents do not include the Group’s holdings of digital assets which are classified as intangible assets (refer to Note D2).

	31 December 2020 $AUD	(Restated) 30 June 2020 $AUD
Cash at bank	3,823,155	3,975,690
Cash deposits at call1	-	-
Total cash and cash equivalents	3,823,155	3,975,690

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

D2 - DIGITAL ASSETS

Digital Assets – Accounted for using inventory methodology

For digital assets that meet the criteria of AASB102: Inventory, the Group measures digital assets at its fair value less costs to sell, with any change in fair value less costs to sell being recognised in profit or loss in the period of the change. Amounts are derecognised when the Group has transferred substantially all the risks and rewards of ownership. As a result of the various blockchain protocols, costs to sell are immaterial in the current period and no allowance is made for such costs.

Digital assets are derecognised when the Group disposes of the inventory through its trading activities or when the Group otherwise loses control and, therefore, access to the economic benefits associated with ownership of the digital asset.

Digital Assets – Accounted for using intangible asset methodology

The Group consider that any digital asset that does not fall under the inventory or financial asset methodology and meet the recognition criteria (identifiable, controllable and capable of generation future economic benefits) are considered to intangible assets.

For digital assets that meet the criteria of AASB138: Intangible Assets, the Group measures digital assets at its fair value less costs to sell in accordance with the revaluation model (provided there is an active market), with increase in fair value being recognised in OCI and credited to a revaluation reserve, unless it reverses a revaluation deficit of the same asset previously recognised in profit or loss. A revaluation deficit is recognised in profit or loss, except to the extent that it offsets an existing surplus on the same asset recognised in the revaluation reserve. Digital assets classified as intangible assets are considered to be indefinite life intangible assets given their nature.

Digital assets are derecognised when the Group disposes of the asset or when the Group otherwise loses control and, therefore, access to the economic benefits associated with ownership of the digital asset.

==> picture [77 x 26] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[26] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

Estimates & Judgements

(a) Treatment of Digital assets

Management note that the topic of digital assets and the accounting for digital assets continues to be considered by the International Accounting Standards Board (IASB) and continues to monitors new comments and interpretations released by the Board and other standard setters from around the world. There has been no change in treatment for the half-year ended 31 December 2020.

In line with this, the Group has considered its position for the half-year ending 31 December 2020 and has determined that the Group’s digital assets fall into 3 categories:

• Inventory method (historical method used by the Group)

• Intangible asset method (the method noted by the IASB in its most recent deliberations)

• Financial asset method (used where the digital asset meets the criteria of a financial asset)

Management notes that under the 3 methods noted above, the treatment continues to be to measure digital assets at fair value (unless otherwise disclosed and provided certain conditions are met) under the respective accounting standards.

(b) Fair value of Digital Assets

Digital assets (including bitcoin inventory) is measured at fair value using the quoted price in United States dollars on from a number of different sources with the primary being Coin Market Cap (www.coinmarketcap.com) and the Bitcoin Liquid Index (BLX) at closing Coordinated Universal Time. Management considers this fair value to be a Level 1 input under the AASB 13 Fair Value Measurement fair value hierarchy as the price on the quoted price (unadjusted) in an active market for identical assets.

Management uses a number of exchanges including Binance, Bitgo, Independent Reserve and others in order to provide the Group with appropriate size and liquidity to provide reliable evidence of fair value for the size and volume of transactions that are reasonably contemplated by the Group.

Unlisted digital assets are fair valued using a combination of Level 2 and Level 3 techniques. Refer to the table below for the breakdown of fair value levels.

(A) Reconciliation of Digital Assets

	31 December 2020 $AUD	(Restated) 30 June 2020 $AUD
Bitcoin1,2	19,543,779	5,905,840
Other listed digital assets1,3	2,075,330	759,450
Non-listed digital assets4	80,914	196,903
Total Digital Assets	21,700,023	6,862,193

1 Digital assets were measured at fair value using as at 31 December 2020. Refer to Note H3 for prices at the date of this report. 2 The amount includes $11,045,391 held by the DigitalX BTC Fund.

3 Includes all tokens that are not bitcoin that are listed on an exchange. The amount includes $2,058,515 held by the DigitalX Fund.

4 Includes all tokens not listed on an exchange.

(B) Reconciliation by Class

(B) Reconciliation by Class
	31 December 2020 $AUD	(Restated) 30 June 2020 $AUD
Inventory method	-	-
Intangible asset method	21,691,364	6,853,534
Financial asset method	8,659	8,659
Total Digital Assets	21,700,023	6,862,193

(C) Movements by Class

==> picture [77 x 26] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[27] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

	Intangible Asset Financial Asset Total
Opening Balance 1 July 2020	6,853,334 8,659 6,862,193
Net trading activity1	1,491,817 - 1,491,817
Revaluation	13,346,213 - 13,346,213
Impairment	- - -
Closing Balance at 31 December 2020	21,691,364 8,659 21,700,023

1 Net trading activity is the net purchase and sale of digital assets and includes monthly rebalance for the DigitalX Fund and DigitalX BTC Fund.

D3 – INVESTMENTS

D3 – INVESTMENTS
	31 December 2020 $AUD	(Restated) 30 June 2020 $AUD
Investment in Bullion Asset Management Pte LtdA	1,621,706	1,251,036
Convertible note receivableB	244,106	245,924
	1,865,812	1,496,960

A. Investment in Bullion Asset Management Pte Ltd

	31 December 2020 $AUD	(Restated) 30 June 2020 $AUD
Opening balance	1,251,036	468,711
Additional investment	-	782,325
Increase/(decrease)in fair value	370,670	-
	1,621,706	1,251,036

• B. Convertible note receivable

• The Group holds a convertible note with YPB Systems Ltd (ASX:YPB) based on the terms and conditions in the announcement.

• 3-year fixed term, repayable only at maturity, non-redeemable;

• Conversion at any time to ordinary equity at the lower of A$0.018 or a 50% discount to the price at which YPB shares were subscribed for pursuant to the most recent capital raising of YPB preceding the date of conversion (not including the present equity placement), provided that the deemed price is no lower than $0.009

• Free attaching unlisted option with an exercise price of $0.025. Option expiry 18 months from the date of conversion of the convertible note to shares

At period end the Group valued the note at fair value using the fair value of holding the note to maturity. The key inputs were:

• Coupon rate – 10%

• Market interest rate – 11.8%

C. 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 on digital assets. As noted in Note C2 the Board reviews the performance of the funds at fair value based on the reported fund net asset value (NAV) each period. 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 financial position and performance of the DigitalX funds have been included in the Group’s consolidated financial statements.

==> picture [77 x 26] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[28] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

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 half-year ended 31 December 2020.

The net asset value (NAV) of the Group’s units in the funds at 31 December 2020 were $AUD1.157 (2020: $0.5015) and $AUD4.1797 (2020: $AUD1.2899) respectively.

D4 - NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS

In accordance with AASB: 132 Financial Instruments, certain instruments are classified as equity in the separate financial statements of a subsidiary or other entity controlled by the Group which represent non-controlling interests in the consolidated financial statements are classified as liabilities in the consolidated financial statements of the Group to the extent which the non-controlling interest has a preferential claim to the net assets of the subsidiary over shareholders of the parent. Changes in the net assets are recognised in the profit or loss except for distributions to unit holders and subscription of units.

	31 December 2020 $AUD	(Restated) 30 June 2020 $AUD
Opening Balance	670,910	861,139
Profit/(Loss) for the period attributable to non-controlling interests	(50,074)	269,958
Other comprehensive income attributable to non-controlling interests	2,505,536	(195)
Gain/(loss) on change in ownership	(2,603)	-
Net change in units on issue	1,560,575	79,925
Closing Balance	4,684,344	670,910

==> picture [7 x 11] intentionally omitted <==

==> picture [138 x 12] intentionally omitted <==

The section below includes information regarding the financial position of the Group (excluding non-operating assets & liabilities covered under Section C and Working Capital covered under Section D).

The section includes the following disclosures:

E1 Property, plant and equipment (Page 28) E2 Non-current assets – Right of use asset (Page 29) E2 Non-current assets - Intangible assets (Page 29)

E1 - PROPERTY, PLANT AND EQUIPMENT

Property Plant & Equipment

Property Plant & Equipment
	31 December 2020 $AUD	(Restated) 30 June 2020 $AUD
Cost	352,098	511,472
Accumulated depreciation	(124,457)	(180,791)
Net Carrying amount	227,641	330,680

==> picture [536 x 81] intentionally omitted <==

==> picture [77 x 26] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[29] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

Reconciliation
Carrying amount at beginning of period	330,680	432,146
Additions	3,839	10,154
Disposals	-	(9,070)
Depreciation charge for the period	(103,581)	(102,549)
Net carrying amount at end of period	230,938	330,680
E2 - NON-CURRENT ASSETS – RIGHT OF USE
	31 December 2020 $AUD	(Restated) 30 June 2020 $AUD
Right of use asset	697,477	697,477
Accumulated amortisation	(348,738)	(273,236)
Net Carrying amount	348,739	424,241
Reconciliation
Carrying amount at beginning of period	424,241	-
Initial recognition of right of use asset under AASB16	-	697,477
Depreciation charge for the period	(75,502)	(273,236)
Net carrying amount at end of period	348,739	424,241
	31 December 2020 $AUD	(Restated) 30 June 2020 $AUD
Carrying amount at beginning of period	489,402	-
Initial recognition of lease liability	-	604,489
Interest expense	10,860	45,435
Lease payments	(83,489)	(157,579)
Foreign exchange effect	-	(2,943)
Net carrying amount at end of period	416,773	489,402
Current	139,533	133,412
Non-Current	277,240	355,990
	416,773	489,202

E3 - NON-CURRENT ASSETS - INTANGIBLE ASSETS

	31 December 2020 $AUD	(Restated) 30 June 2020 $AUD
Intellectual property
Cost	3,009,502	2,928,795
Accumulated amortisation	-	-
Provision for Impairment1	(2,928,795)	(2,928,795)
Net Carrying amount	80,707	-

==> picture [531 x 32] intentionally omitted <==

==> picture [77 x 26] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[30] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

Reconciliation
Carrying amount at beginning of period	-	-
Additions2	85,151	-
Impact of movement in foreign exchange		-
Provision of impairment of Intangible Assets	(4,444)	-
**Net carrying amount at end of period1 **	80,707	-

1 Net of accumulated amortisation and provision for impairment.

2 Primarily relates to development costs for the Drawbridge product, as announced during the half-year. For accounting purposes it is not yet considered ready for amortisation.

==> picture [7 x 11] intentionally omitted <==

==> picture [50 x 13] intentionally omitted <==

The section below includes information regarding the Group’s equity structure including movements in contributed equity from share transactions and movements in reserves.

The section includes the following disclosures:

F1 Contributed Equity (Page 30) F2 Reserves & Non-Controlling Interest (Page 31)

F1 – CONTRIBUTED EQUITY

(a) Issued and paid up Capital

(a) Issued and paid up Capital
	31 December 2020 $AUD	(Restated) 30 June 2020 $AUD
Fully paid ordinary shares– 619,208,677 (2020: 605,628,549)	50,965,244	50,489,287

(b) Movement in Ordinary Share Capital

Date Details1	Number of Shares	Issue Price $AUD
30-Jun-20 Closing Balance	605,628,549	50,489,287
1-Sep-20 Issue of shares on exercise of options	5,251,852	0.0324 170,160
1-Sep-20 Issue of shares to employees	1,136,634	0.044 50,012
3-Sep-20 Share issue costs		(2,582)
10-Sep-20 Issue of shares on exercise of options	2,561,728	0.0324 83,000
11-Sep-20 Share issue costs		(1,922)
21-Sep-20 Issue of shares on exercise of options	2,600,000	0.0324 84,240
22-Sep-20 Share issue costs		(1,922)
4-Dec-20 Issue of shares in lieu of Directors’ fees	2,029,914	0.048 97,436
7-Dec-20 Share issue costs		(2,465)
31-Dec-20 Closing Balance	619,208,677	50,965,244

==> picture [77 x 26] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[31] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

Date Details1	Number of Shares	Issue Price (Restated) $AUD
1-Jul-19 Closing Balance	571,525,427	48,899,231
1-Jul-19 Issue of Shares on exercise of options	24,691,358	0.0324 809,024
2-Jul-19 Share issue costs		(5,043)
15-Nov-19 Issue of Shares under agreement with Bullion Asset Management	9,411,764	0.0850 791,238
18-Nov-19 Share issue costs		(5,164)
31-Dec-19 Closing Balance	605,628,549	50,489,287

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

2 Refer to Note H3 for any issues subsequent to the end of the reporting period.

Rights Attaching to Shares

The rights attaching to fully paid ordinary shares arise from a combination of the Company’s constitution, statute and general law. Fully paid ordinary shares carry one vote per share and carry a right to dividend.

Dividends

There are no dividends paid or declared during the period.

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.
Asset revaluation reserve	Reserve is established to record amounts required to be recognised in equity for movements in the
	fair value of assets to revalued through profit or loss. For the Group this primarily relates to the
	revaluation of digital assets.
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.

Option premium and share-based payment reserve1 Asset revaluation reserve	Convertible Note Reserve	Foreign Exchange Reserve Total
30 June 2020 (Restated) 2,105,857 -	91,052	30,144 2,227,053
Share based payment expense 481,609 -	-	- 481,609
Conversion of foreign operations - -	-	(91,648) (91,648)
Fair value movement of digital assets2 10,743,334	-	- 10,743,334
31 December 2020 2,587,466 10,743,334	91,052	(61,504) 13,360,348

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

2 Refer to Note C1 for commentary on movement in digital assets.

Share based payments

Employees and consultants of the Group receive remuneration in the form of share-based payments, whereby employees render services as consideration for equity instruments (equity-settled transactions).

==> picture [77 x 26] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[32] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

Equity-settled transactions

The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an appropriate valuation model. That cost is recognised, together with a corresponding increase in other capital reserves in equity, over the period in which the performance and/or service conditions are fulfilled in employee benefits expense.

The cumulative expense recognised for equity-settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The statement of profit or loss expense or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period and is recognised in employee benefits expense. No expense is recognised for awards that do not ultimately vest, except for equity-settled transactions, for which vesting is conditional upon a market or non-vesting condition.

These are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

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.

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

Options issued to Corporate Advisor

Volatility (%)		116.95%
Risk-free interest rate (%) – range		0.35%
Expected life of option (years)		4
Exercise price per terms & conditions		$AUD0.12
Underlying security spot price		$AUD0.09
Valuation date		7 Dec 2020
Expiry date		7 Dec 2024
Valuation per option		$AUD0.073
Number of options issued		1,000,000

Options issued to Employees

Item		Tranche 1
Volatility (%)		109%
Risk-free interest rate (%) – range		0.25%
Expected life of option (years)		3
Exercise price per terms & conditions		$AUD0.05
Underlying security spot price		$AUD0.04
Valuation date		1 Sep 2020
Expiry date		9 Sep 2023
Valuation per option		$0.02
Number of options issued		10,000,000

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.

There were no performance rights issued during the half-year.

==> picture [77 x 26] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[33] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

==> picture [9 x 10] intentionally omitted <==

==> picture [115 x 10] intentionally omitted <==

The section below includes information regarding the Group organisational structure and information related to the parent entity as required by the Corporations Act 2001.

G1 - CONTROLLED ENTITIES

The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with the accounting policy described in Note G1. All controlled entities are included in the consolidated annual final report. The parent entity does not guarantee to pay the deficiency of its controlled entities in the event a winding up of any controlled entity. The period end of the controlled entities is the same as that of the parent entity, except for the US companies listed below which use 31 December year end.

year end.
Name of Controlled Entity Place of Incorporation	% of Shares Held 31 Dec 2020	% of Shares Held 30 June 2020
Digital CC Management Pty Ltd Australia	100%	100%
Digital CC Trading Pty Ltd Australia	100%	100%
Digital CC IP Pty Ltd Australia	100%	100%
Digital CC Limited Hong Kong	100%	100%
Digital CC IP Limited Hong Kong	100%	100%
Digital CC Holdings USA Inc United States	100%	100%
Digital CC USA LLC United States	100%	100%
Digital CC USA Services LLC United States	100%	100%
Digital CC Ventures Pty Ltd Australia	100%	100%
Pass Petroleum Pty Ltd Australia	100%	100%
Airpocket International Pty Ltd Australia	100%	100%
DigitalX Funds Management Pty Ltd Australia	73%	73%
DigitalX Fund Unit Trust Australia	46%	46%
DigitalX Bitcoin Fund Unit Trust Australia	93%	93%
DigitalX Asset Management Pty Ltd Australia	100%	100%
DigitalX (BVI) Limited British Virgin Isles	100%	100%
Digital Asset Administration Cayman Limited British Virgin Isles	100%	100%

Half-year ended 31 December 2020

There were no changes to the controlled entities during the half-year ended 31 December 2020 except for those noted below:

• DigitalX New Tech Fund Inc. which was a dormant subsidiary, the impact of winding up the entity was immaterial.

==> picture [77 x 26] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[34] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

==> picture [8 x 10] intentionally omitted <==

==> picture [122 x 10] intentionally omitted <==

The section below includes information regarding other disclosures relevant to users of the financial statement in understanding other transactions and the impact of future standards or events that may impact the Group.

The section includes the following disclosures:

H1 Related Party Transactions (Page 34) H2 Commitments and contingents (Page 34) H3 Post balance date events (Page 34)

H1 - RELATED PARTY TRANSACTIONS

Half-year ended 31 December 2020

There were no changes to the nature of related party transactions disclosed in the Annual Report for the half-year ended 31 December 2020.

H2 – COMMITMENTS AND CONTINGENCIES

Commitments of the Group

During the 2018 financial year entered into a 5-year lease for premises at 66 Kings Park Road, West Perth, WA (“The Blockchain Centre”). At 31 December the amount due within 12 months was $139,533 and the committed between 12 months and 5 years was $277,240. There were no commitments greater than 5 years.

Guarantees entered into by the Group

There were no guarantees entered into by the Group as at 31 December 2020 other than for the lease noted above (2020: Nil).

Contingent Liabilities of the Group

The Group did not have any contingent liabilities as at 31 December 2020 (2020: Nil).

H3 - EVENTS AFTER THE REPORTING DATE

No other matter or circumstance has arisen since 31 December 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.

The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has not had a material impact on the business up to 31 December 2020, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is continually evolving and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided.

Date of event	Details of event
18 January 2021	The Company announced a follow-on investment of $USD250,000 and ongoing consulting services to
	bullion technology business, Bullion Asset Management Services Pte Ltd (BAM).
19 February 2021	The Company announced that the performance milestone for 19,500,000 performance rights held by
	nominees of the Directors had been satisfied and are now capable of being converted into shares.

==> picture [77 x 26] intentionally omitted <==

==> picture [329 x 39] intentionally omitted <==

----- Start of picture text -----

[35] DIGITALX LTD – INTERIM FINANCIAL REPORT
----- End of picture text -----

28 February 2021	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 25 February. Coin Symbol $AUD Spot Price at 31 December $AUD Spot Price at 25 February $AUD Impact BTC $37,488 $62,389 $10,732,331	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 25 February. Coin Symbol $AUD Spot Price at 31 December $AUD Spot Price at 25 February $AUD Impact BTC $37,488 $62,389 $10,732,331	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 25 February. Coin Symbol $AUD Spot Price at 31 December $AUD Spot Price at 25 February $AUD Impact BTC $37,488 $62,389 $10,732,331	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 25 February. Coin Symbol $AUD Spot Price at 31 December $AUD Spot Price at 25 February $AUD Impact BTC $37,488 $62,389 $10,732,331
	Coin Symbol	$AUD Spot Price at 31 December	$AUD Spot Price at 25 February	$AUD Impact
	BTC	$37,488	$62,389	$10,732,331

==> picture [142 x 10] intentionally omitted <==

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

Auditor

BDO Audit (WA) Pty Ltd 38 Station Street SUBIACO WA 6008 Tel: +61 (8) 6382 4600 www.bdo.com.au

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

www.digitalx.com | www.digitalx.fund |www.opendrawbridge.io

==> picture [77 x 26] intentionally omitted <==

[36] DIGITALX LTD – INTERIM FINANCIAL REPORT

DIGITALX LIMITED ABN 59 009 575 035 PERTH | MELBOURNE WWW.DIGITALX.COM INFO@DIGITALX.COM

==> picture [77 x 26] intentionally omitted <==

==> picture [120 x 41] intentionally omitted <==