PENTANET LIMITED — Interim / Quarterly Report 2021

Feb 17, 2021

PENTANET LTD ABN: 29 617 506 279

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Half-Year Report

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1. COMPANY DETAILS

Name of entity: PENTANET LTD ABN: 29 617 506 279 Reporting period: For the half-year ended 31 December 2020 Previous period: For the half-year ended 31 December 2019

2. RESULTS FOR ANNOUNCEMENT TO MARKET

2. RESULTS FOR ANNOUNCEMENT TO MARKET	2. RESULTS FOR ANNOUNCEMENT TO MARKET	2. RESULTS FOR ANNOUNCEMENT TO MARKET	2. RESULTS FOR ANNOUNCEMENT TO MARKET	2. RESULTS FOR ANNOUNCEMENT TO MARKET
$
Revenue from ordinary activities	up	164%	to	4,757,355
EBITDA1	down	154%	to	(6,564,644)
Loss from ordinary activities after tax attributable to the owners of Pentanet Limited	up	265%	to	(11,155,048)
Loss for the half-year attributable to the owners of Pentanet Limited	up	265%	to	(11,155,048)

Dividends

No dividends were paid during the half-year, and the directors have not recommended a dividend in respect of the 2021 financial period (2020: Nil.)

Review of Operations

The loss for the Consolidated Entity after providing for income tax and non-controlling interest amounted to $11,155,048 (31 December 2019: $3,056,451).

The half-year loss of $11.2m includes share-based payments of $4.5m, finance cost relating to the exercise of convertible note options of $3.8m and IPO related cost of $0.4m. The consolidated entity maintained a healthy growth trajectory in revenue and subscribers in the economic backdrop of the Coronavirus (COVID-19) pandemic. The key organisational focus remains to expand the fixed wireless network and increase the fixed wireless service offering. The wireless product offering yields a higher gross margin and improved customer experience in comparison to customers on the NBN.

The impact of the COVID-19 pandemic is ongoing. COVID-19 had a positive impact on the provision of internet and associated telecommunications products and services with the demand for Pentanet’s services increasing during the peak of the pandemic when COVID-19 restrictions were imposed. Telecommunication services remain an essential service, and we can continue to operate under and in accordance with restrictions imposed.

Existing credit management policies have been reviewed in light of the pandemic, and the consolidated entity continues to monitor recoverability of debtors closely. No single customer relationship is material to the consolidated entity. Pentanet will remain conservative in assessing current and forecast credit conditions when determining the default rates on debtors balances.

On 7 January 2021, the Consolidated Entity issued 89,940,000 fully paid ordinary shares at an issue price of $0.25 (25 cents) per share under an initial public offer (IPO).

Please refer to Pentanet Ltd’s prospectus published on 11 December 2020 outlining the historical audited financial performance of the Consolidated Entity in Section 6. Financial performance and the ongoing strategic and operational plans and performance objectives are outlined in section 2.9 Strategy, plans and objectives.

1EBITDA is a financial measure which is not prescribed by Australian Accounting Standard (‘AAS’) and represents the profit under AAS adjusted for depreciation, amortisation, interest and tax.

PENTANET LTD ABN: 29 617 506 279

3. NET TANGIBLE ASSETS

	Reporting Period Cents	Previous Period Cents
Net tangible assets per ordinary security	0.02	0.01

4. CONTROL GAINED OVER ENTITIES

Not applicable

5. LOSS OF CONTROL OVER ENTITIES

Not applicable

6. DETAILS OF ASSOCIATE AND JOINT VENTURE ENTITIES

Not applicable

7. AUDIT QUALIFICATION OR REVIEW

Details of audit/review dispute or qualification (if any):

The financial statements were subject to a review by the auditors, and the review report is attached as part of the Interim Report.

8. ATTACHMENTS

Details of attachments (if any):

The Interim Report of Pentanet Limited for the half-year ended 31 December 2020 is attached.

9. SIGNED

Signed _______

David Buckingham Non-Executive Chairman 17 February 2021 Perth

PENTANET LTD ABN: 29 617 506 279

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Half-Year Report

PENTANET LTD ABN: 29 617 506 279

INTERIM FINANCIAL REPORT - 31 DECEMBER 2020

This interim financial report does not include all of the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2020.

Corporate directory Director’s report Auditor’s independence declaration Statement of proft and loss and other comprehensive income Statement of fnancial position Statement of changes in equity Statement of cash fows Notes to the fnancial statements Directors’ declaration Independent Auditors review report to the members of Pentanet Limited	5 6 - 7 8 9 10 11 12 13 - 22 23 24 - 25

GENERAL INFORMATION

The financial statements cover Pentanet Limited as a consolidated entity consisting of Pentanet Limited and the entities it controlled at the end of, or during, the half-year. The financial statements are presented in Australian dollars, which is Pentanet Limited’s functional and presentation currency.

Pentanet Limited is a listed public company limited by shares, incorporated and domiciled in Australia.

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

The financial statements were authorised for issue, in accordance with a resolution of directors, on 17 February 2021.

PENTANET LTD ABN: 29 617 506 279

CORPORATE DIRECTORY 31 DECEMBER 2020

Directors

David Buckingham Stephen Cornish Timothy Cornish Dalton Gooding Craig Amos

Non-Executive Chairman Managing Director Executive Director Non-Executive Director Non-Executive Director

Company Secretary

Patrick Holywell

Registered Office

Unit 2 / 8 Corbusier Place, Balcatta 6021

Principal Place of Business

Unit 2 / 8 Corbusier Place, Balcatta 6021

Share Register

Automic Group Level 5, 126 Phillip Street, Sydney, New South Wales 2000

Auditors BDO Audit (WA) Pty Ltd Level 1, 38 Station Street, Subiaco WA 6008

Stock Exchange Listing Pentanet Limited shares are listed on the Australian Securities Exchange (ASX code: 5GG)

PENTANET LTD ABN: 29 617 506 279

DIRECTORS’ REPORT 31 DECEMBER 2020

The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the ‘Consolidated Entity’) consisting of Pentanet Limited (referred to hereafter as the ‘company’ or ‘parent entity’) and the entities it controlled at the end of, or during, the half-year ended 31 December 2020.

Directors

The following persons were directors of Pentanet Limited during the whole of the financial half-year and up to the date of this report, unless otherwise stated:

David Buckingham (appointed 11 September 2020 – Chairman)

Dalton Gooding (appointed 20 December 2018)

Stephen Cornish (appointed 22 February 2017)

Timothy Cornish (appointed 22 February 2017)

Craig Amos (appointed 13 November 2018)

Principal activities

During the financial period the principal continuing activities of the Consolidated Entity consisted of the provision of internet and associated telecommunications products and services.

Review of operations

The loss for the consolidated entity after providing for income tax and non-controlling interest amounted to $11,155,048 (31 December 2019: $3,056,451).

The half-year loss of $11.2m includes share-based payments of $4.5m, finance cost relating to the exercise of convertible note options of $3.8m and IPO related cost of $0.4m. The consolidated entity maintained a healthy growth trajectory in revenue and subscribers in the economic backdrop of the COVID-19 pandemic. The key organisational focus remains to expand the fixed wireless network and increase the fixed wireless service offering. The wireless product offering yields a higher gross margin and improved customer experience in comparison to customers on the NBN.

The impact of the COVID-19 pandemic is ongoing. COVID-19 had a positive impact on the provision of internet and associated telecommunications products and services with the demand for Pentanet’s services increasing during the peak of the pandemic when COVID-19 restrictions were imposed. Telecommunication services remains an essential service, and we can continue to operate under and in accordance with restrictions imposed.

Existing credit management policies have been reviewed in light of the pandemic, and the consolidated entity continues to monitor recoverability of debtors closely. No single customer relationship is material to the consolidated entity. Pentanet will remain conservative in assessing current and forecast credit conditions when determining the default rates on debtors balances.

On 7 January 2021, the Consolidated Entity issued 89,940,000 fully paid ordinary shares at an issue price of $0.25 (25 cents) per share under an initial public offer (IPO).

PENTANET LTD ABN: 29 617 506 279

Please refer to the Pentanet Ltd prospectus published on 11th of December 2020 outlining the historical audited financial performance of the Consolidated Entity in Section 6. Financial performance and the ongoing strategic and operational plans and performance objectives as outlined in section 2.9 Strategy, plans and objectives.

Significant changes in the state of affairs

On 27 November 2020, all convertible notes on issue (plus interest accrued) were converted into 20,646,154 shares at $0.13 per share and 2,741,342 shares at $0.10 per share. Further to this, there were attaching options which were exercised into 6,256,410 shares at $0.13 per share.

On 11 December 2020, Pentanet lodged its prospectus with ASIC.

On 7 January 2021, the Consolidated Entity issued 89,940,000 fully paid ordinary shares at an issue price of $0.25 (25 cents) per share under an initial public offer (IPO).

On 29 January 2021 Pentanet listed on the ASX.

The Company has entered into a binding commercial agreement with NVIDIA (NVIDIA Agreement), whereby NVIDIA and the Company will collaboratively work on delivering a commercialised “GeForce NOW” (GFN) based cloud gaming solution in the Oceania region with an initial deployment in Australia.

NVIDIA Corporation is a NASDAQ-listed multinational technology company and is one of the world’s largest manufacturers of graphics processing units for gaming and professional markets. GeForce NOW is the name of NVIDIA’s cloud gaming service, which is currently available in over 70 countries. GeForce NOW enables users to stream games from the cloud directly to a laptop, desktop or compatible Android device. It is a subscription-based service which instantly turns nearly any laptop, desktop, Mac, or Android device into a powerful gaming computer, providing users with on-demand access to their game libraries, hosted on nearby servers for the life of the subscription.

The Company issued 160,000 Shares and 29,610,000 Options (Employee Options) to staff, Directors and management of the Company (together, Employee Securities). The Employee Securities have been offered by way of a secondary offer under the prospectus.

There were no other significant changes in the state of affairs of the consolidated entity during the financial half-year.

Auditor’s independence declaration

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

This report is made in accordance with a resolution of directors, pursuant to section 306(3)(a) of the Corporations Act 2001.

Signed on behalf of the directors:

Signed _______

David Buckingham Non-Executive Chairman 17 February 2021 Perth

PENTANET LTD ABN: 29 617 506 279

AUDITOR’S INDEPENDENCE DECLARATION

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Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

DECLARATION OF INDEPENDENCE BY GLYN O'BRIEN TO THE DIRECTORS OF PENTANET LIMITED

As lead auditor for the review of Pentanet Limited for the half-year ended 31 December 2020, I declare that, to the best of my knowledge and belief, there have been:

1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

2. No contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of Pentanet Limited and the entities it controlled during the period.

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Glyn O'Brien Director

BDO Audit (WA) Pty Ltd Perth, 17 February 2021

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.

PENTANET LTD ABN: 29 617 506 279

Pentanet Ltd

Consolidated statement of profit or loss and other comprehensive income For the half-year ended 31 December 2020

			Consolidated	Consolidated
		Note	31 Dec 20	31 Dec 19
			$	$
Revenue		3	4,757,355	1,805,227
Other income		3	165,974	-
Expenses			-	-
Network, carrier and hardware expenses		4	(2,813,382)	(1,186,930)
Employee benefits expense			(2,771,842)	(1,129,403)
Share based payments		16	(4,459,854)	(995,498)
Other expenses		4	(1,442,895)	(1,076,488)
Earnings before finance costs, depreciation and amortisation expenses ings before finance costs, tax, deprec ation and amortisation expenses	(EBITDA)		(6,564,644)	(2,583,092)
Finance costs		4	(3,873,661)	(43,657)
Finance income			150	115
Depreciation, amortisation and impairment expense			(716,893)	(429,817)
**Loss before tax **			(11,155,048)	(3,056,451)
Income tax expense			-	-
Loss after income tax for the half-year attributable to the owners of
Pentanet Ltd			(11,155,048)	(3,056,451)
Other comprehensive income			-	-
Total comprehensive loss for the half-year attributable to the owners of
Pentanet Ltd			(11,155,048)	(3,056,451)
			Cents	Cents
Basic (loss) per share attributable to owners of Pentanet Group		15	(0.09)	(0.03)

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

PENTANET LTD ABN: 29 617 506 279

Pentanet Ltd Consolidated statement of financial position For the half-year ended 31 December 2020

		Consolidated	Consolidated
	Note	31 Dec 20	30 Jun 20
		$	$
Assets
Current assets
Cash and cash equivalents	5	6,282,503	1,273,033
Trade and other receivables		111,394	132,798
Inventories		63,656	78,329
Deposits and prepayments		207,335	255,483
Total current assets		6,664,888	1,739,643
Non-current assets
Right of use assets	6	1,448,916	1,668,014
Plant and equipment	7	4,063,795	3,828,944
Intangible assets	8	336,390	362,388
Total non-current assets		5,849,101	5,859,346
Total Assets		12,513,989	7,598,989
Liabilities
Current Liabilities
Trade and other payables		2,283,140	1,270,565
Contract liabilities		126,889	149,056
Employee benefits		154,209	102,330
Loans and borrowings	9	5,824,694	3,269,784
Total current liabilities		8,388,932	4,791,735
Loans and borrowings	9	896,561	1,264,068
Contract liabilities		30,183	27,118
Employee benefits		-	2,364
Total non-current liabilities		926,744	1,293,550
Total Liabilities		9,315,676	6,085,285
Net assets		3,198,313	1,513,704
Equity
Share capital	10	16,518,677	8,138,873
Reserves		5,567,756	1,107,903
Accumulated losses		(18,888,120)	(7,733,072)
Total Equity		3,198,313	1,513,704

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

PENTANET LTD ABN: 29 617 506 279

Pentanet Ltd Consolidated statement of changes in equity For the half-year ended 31 December 2020

				Accumulated
Consolidated	Note	Issued capital	Reserves	losses	Total
		$	$	$	$
Balance at 1 July 2019		5,181,957	-	(2,621,811)	2,560,146
Loss after income tax expense for the half-
year		-	-	(3,056,451)	(3,056,451)
Other comprehensive loss for the half-
year,net of tax		-	-	-	-
Total comprehensive loss for the half-year		-	-	(3,056,451)	(3,056,451)
Transactions with owners in their capacity
as owners:
Issue of shares	10	3,120,001	-	-	3,120,001
Share issue costs		(163,085)	-	-	(163,085)
Share-based payments		-	995,498	-	995,498
Balance at 31 December 2019		8,138,873	995,498	(5,678,262)	3,456,109

				Accumulated
Consolidated	Note	Issued capital	reserves	losses	Total
		$	$	$	$
Balance at 1 July 2020		8,138,873	1,107,903	(7,733,072)	1,513,704
Loss after income tax expense for the half-
year		-	-	(11,155,048)	(11,155,048)
Other comprehensive loss for the half-
year, net of tax		-	-	-	-
Total comprehensive loss for the half-year		-	-	(11,155,048)	(11,155,048)
Transactions with owners in their capacity
as owners:
Issue of shares	10	8,379,804	-	-	8,379,804
Share issue costs		-	-	-	-
Share-based payments		-	4,459,853	-	4,459,853
Balance at 31 December 2020		16,518,677	4,459,853	(18,888,120)	3,198,313

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

PENTANET LTD ABN: 29 617 506 279

Pentanet Ltd Statement of changes in equity For the half-year ended 31 December 2020

		Consolidated	Consolidated
		31 Dec 20	31 Dec 19
	Note	$	$
Cash flows from operating activities
Receipts from customers (inclusive of GST)		4,925,631	1,807,543
Payments to suppliers and employees (inclusive of GST)		(5,359,389)	(2,994,525)
Cash generated from operations		(433,758)	(1,186,982)
Interest received		150	115
Interest and other finance costs paid		(50,979)	(43,657)
Income taxespaid		-	-
Net cash from / (used in) operating activities	5	(484,587)	(1,230,524)
Cash flows from investing activities
Payments for plant and equipment		(623,201)	(904,092)
Payments for intangible assets		(60,772)	(154,555)
Net cash used in investing activities		(683,973)	(1,058,647)
Cash flow from financing activities
(Repayment) / Proceeds from borrowings		5,225,409	184,094
Payments of lease liabilities		(285,713)	(267,926)
Proceeds from issue of shares		1,238,334	3,120,001
Share issue transaction cost		-	(163,085)
Net cash from financing activities		6,178,030	2,873,084
Net increase in cash and cash equivalents		5,009,470	583,913
Cash and cash equivalents at beginning of the financial half-year		1,273,033	580,557
Cash and cash equivalents at end of the financial half-year	5	6,282,503	1,164,470

The above consolidated statement of cash flow should be read in conjunction with the accompanying notes.

PENTANET LTD ABN: 29 617 506 279

Pentanet Ltd Notes to the financial statements For the half-year ended 31 December 2020

Note 1. Significant accounting policies

These general purpose financial statements for the interim half-year reporting period ended 31 December 2020 have been prepared in accordance with Australian Accounting Standard AASB 134 'Interim Financial Reporting' and the Corporations Act 2001, as appropriate for for-profit oriented entities. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 'Interim Financial Reporting'.

These general purpose financial statements do not include all the notes of the type normally included in annual financial statements. Accordingly, these financial statements are to be read in conjunction with the annual report for the year ended 30 June 2020.

The principal accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated.

New or amended Accounting Standards and Interpretations adopted

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

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

Note 2. Operating segments

Operating segments are presented using the ‘management approach’, where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers (‘CODM’). The Group operates in two segments being the provision of internet and telecommunication services and gaming technology within Australia.

Note 3. Revenue

	Consolidated	Consolidated
	31 Dec 20	31 Dec 19
Revenue from contracts with customers	$	$
Rendering a service - telecommunication service	309,734	181,458
Rendering a service - recurring network revenues	4,123,812	1,467,923
Sale ofgoods	323,809	155,846
	4,757,355	1,805,227
Other Revenue
Australian Tax Office-COVID19 Grants	165,974	-
	165,974	-
Total revenue	4,923,479	1,805,342

Revenue from contracts with customers is recognised over time, excluding sale of goods.

PENTANET LTD ABN: 29 617 506 279

Pentanet Ltd Notes to the financial statements For the half-year ended 31 December 2020

Note 4. Expenses

	Consolidated	Consolidated
Loss before income tax includes the following specific expenses	31 Dec 20	31 Dec 19
	$	$
Network, carrier and hardware expenses	2,813,382	1,186,930
Depreciation
Leasehold improvements	19,133	3,392
Plant and equipment	57,054	39,924
Right of use assets	312,163	187,495
Network infrastructure	241,773	186,952
Amortisation	83,239	12,054
Impairment of intangible asset	3,531	-
Total Depreciation, amortisation and impairment	716,893	429,817
Bad debts	9,082	3,431
Bank and transaction cost	71,384	30,025
Legal and professional services	65,705	26,328
Insurance	75,189	35,727
IPO related costs	403,376	-
Repairs and maintenance	27,024	27,893
Software subscription	43,376	43,711
Operating expenses	565,993	757,129
Office and staff cost	181,766	152,244
Total other expenses	1,442,895	1,076,488
Superannuation expense	198,312	93,163
Share-based payments expense	4,459,854	995,498
Finance cost	3,873,661	43,657

PENTANET LTD ABN: 29 617 506 279

Pentanet Ltd Notes to the financial statements For the half-year ended 31 December 2020

Note 5. Cash and Cash Equivalent

	Consolidated	Consolidated
	31 Dec 20	30 Jun 20
	$	$
Cash at bank	6,282,503	1,272,514
Cash on hand	-	519
Total cash and cash equivalents	6,282,503	1,273,033
Reconciliation:
	Consolidated
	31 Dec 20	30 Jun 20
	$	$
Profit before tax	(11,155,048)	(3,056,451)
Adjusted for:
Depreciation	716,893	429,817
Interest income	(150)	(115)
Interest expense	3,873,661	43,657
Share-based payments	5,003,674	995,498
(Increase)/Decrease in trade and other receivables	21,404	(12,932)
(Increase)/Decrease in inventories	14,673	(27,396)
(Increase)/Decrease in deposits and prepayments	48,148	(154,237)
Increase/(Decrease) in trade and other payables	1,012,575	568,917
Increase/(Decrease) in employee benefits	49,515	11,012
Increase/(Decrease) in customer contract liability	(19,103)	15,248
Cash generated from operations	(433,758)	(1,186,982)
Interest paid	(50,829)	(43,542)
Income taxes paid	-	-
Net cash from / (used in) operating activities	(484,587)	(1,230,524)

PENTANET LTD ABN: 29 617 506 279

Pentanet Ltd Notes to the financial statements For the half-year ended 31 December 2020

Note 6. Non-current assets - right of use assets

		Consolidated	Consolidated
		31 Dec 20	30 Jun 20
		$	$
Network infrastructure - at cost		1,993,673	1,971,003
Less: Accumulated depreciation		(674,168)	(462,264)
		1,319,505	1,508,739
Office lease		278,731	278,731
Less: Accumulated depreciation		(149,320)	(119,456)
		129,411	159,275
Total right of use assets		1,448,916	1,668,014
Reconciliation:
	Network	Office
	Infrastructure	Lease	Total
	$	$	$
Balance at 1July 2020	1,508,739	159,275	1,668,014
Additions	22,675	-	22,675
Depreciation expense	(211,909)	(29,864)	(241,773)
Balance at 31 December 2020	1,319,505	129,411	1,448,916

Note 7. Non-current assets - plant and equipment

			Consolidated	Consolidated
			31 Dec 20	30 Jun 20
			$	$
Leasehold improvements - at cost			113,204	30,263
Less: Accumulated Depreciation			(19,133)	(6,400)
			94,071	23,863
Plant and equipment - at cost			801,929	783,970
Less: Accumulated depreciation			(234,284)	(158,097)
			567,645	625,873
Network infrastructure			4,331,612	3,838,077
Less: Accumulated depreciation			(929,533)	(658,869)
			3,402,079	3,179,208
			4,063,795	3,828,944
Reconciliation:	Leasehold	Plan and	Network
	improvement	equipment	infrastructure	Total
	$	$	$	$
Balance at 1 July 2020	23,863	625,873	3,179,208	3,828,944
Additions	89,341	-	648,949	738,290
Disposals	-	(1,174)	(113,915)	(115,089)
Depreciation expense	(19,133)	(57,054)	(312,163)	(388,350)
Balance at 31 December 2020	94,071	567,645	3,402,079	4,063,795

P 16 f 23

PENTANET LTD ABN: 29 617 506 279

Pentanet Ltd Notes to the financial statements For the half-year ended 31 December 2020

Note 8. Non-current assets - intangibles

Note 8. Non-current assets - intangibles
	Consolidated
	31 Dec 20	31 Dec 19
	$	$
Trademarks and design	40,822	21,453
Less: Impairment	-	-
	40,822	21,453
Software	182,818	154,148
Less: Accumulated amortisation	(135,731)	(68,168)
	47,087	85,980
Intellectual property	100,000	100,000
Less: Accumulated amortisation	-	-
	100,000	100,000
Other intangible assets	170,038	170,038
Less: Accumulated amortisation and impairment	(21,557)	(15,083)
	148,481	154,955
	336,390	362,388

Reconciliations

Reconciliations of the written down values at the beginning and end of the current financial half-year are set out below:

			Other
	Trademarks		intangible	Intellectual
	and design	Software	assets	property	Total
	$	$	$	$	$
Balance at 1 July 2020	21,453	85,980	154,955	100,000	362,388
Additions	19,369	28,670	-	-	48,039
Amortisation expense	-	(67,563)	(6,474)	-	(74,037)
Impairment	-	-	-	-	-
Balance at 31 December 2020	40,822	47,087	148,481	100,000	336,390

PENTANET LTD ABN: 29 617 506 279

Pentanet Ltd Notes to the financial statements For the half-year ended 31 December 2020

Note 9. Current and Non-current liabilities - borrowings

	Consolidated	Consolidated
	31 Dec 20	30 Jun 20
	$	$
Current
Right of use lease liability	448,257	412,601
Other loans	103,937	82,215
Convertible notes	-	2,774,968
Unissued share capital	5,272,500	-
	5,824,694	3,269,784
Non-current
Right of use lease liability	846,959	1,145,653
Other loans	49,602	118,415
Convertible notes	-	-
	896,561	1,264,068

Unissued share capital relates to cash received for shares to be issued on completion of the IPO. Upon completion of the IPO shares were issued.

On the 7th of January 2021 Pentanet Ltd received the remaining funds raised under the IPO of $17,187,500 and issued the shares.

Convertible notes held by various lenders were converted to shares prior to admission to the ASX. 23,387,509 Shares were issued upon the conversion of Convertible Notes (and accrued interest) and 6,256,427 Shares issued upon exercise of all Convertible Note Options.

Craig Amos (non-executive director) converted 551,283 options into ordinary shares. Dalton Gooding (non-executive director) converted 275,641 options into ordinary shares.

PENTANET LTD ABN: 29 617 506 279

Pentanet Ltd Notes to the financial statements For the half-year ended 31 December 2020

			Consolidated	Consolidated
			31 Dec 20	30 Jun 20
Note 10. Equity - Issued Capital			$	$
Issue of shares			16,857,859	8,478,055
Share issue costs			(339,182)	(339,182)
Total share capital			16,518,677	8,138,873
Movement in ordinary share capital			Share Price
Details	Date	Shares	$	$
Opening Balance 1 July 2020		131,750,999		8,138,873
Exercise of convertible note options	11 Dec 20	26,902,594	0.250	6,725,648
Exercise of options	11 Dec 20	1,500,000	0.150	225,000
Exercise of convertible note options	11 Dec 20	2,741,342	0.250	685,336
Exercise of options	11 Dec 20	2,000,000	0.100	200,000
Exercise of employee share options	11 Dec 20	5,215,000	0.028	146,020
Exercise of employee share options	11 Dec 20	3,060,000	0.130	397,800
Closing Balance as at 31 December 2020		173,169,935		16,518,677

Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital. On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Note 11. Contingent assets

There were no changes to contingent assets since 30 June 2020.

Note 12. Contingent liabilities

There were no changes to contingent liabilities since 30 June 2020.

Note 13. Related party transactions

Parent entity

Pentanet Ltd is the parent entity.

Key Management Personnel

Directors are listed in the Directors report.

Pentanet Ltd has entered into an non-executive director appointment contract with David Buckingham which govern the terms of his appointment as Non-Executive Director of the Company. David Buckingham will act as Chair of the Board.

PENTANET LTD ABN: 29 617 506 279

Pentanet Ltd Notes to the financial statements For the half-year ended 31 December 2020

Note 13. Related party transactions continued

Pentanet Ltd spent $15,976 with DFK Gooding Partners during the half-year, on commercial terms and market rates, which is a director related entity (Dalton Gooding), with no balance relating to this fee outstanding as at 31 December 2020.

Pentanet Ltd spent $37,389 with The Cornish Property Trust during the half-year, on commercial terms and market rates, which is a related party of a director related entity (Stephen Cornish and Timothy Cornish), with no balance relating to this fee outstanding as at 31 December 2020

On 27 November 2020, Pentanet L d issued the following options to directors:the 27[th] of November, Pentane t Ltd issued the following options to directors:

Director	Capacity	Tranche 1	Tranche 2	Tranche 3	Total options granted
David Buckingham	Non-Executive Chairman	1,000,000	1,000,000	1,000,000	3,000,000
Stephen Cornish	Managing Director	3,300,000	3,300,000	3,300,000	9,900,000
Timothy Cornish	Executive Director	2,200,000	2,200,000	2,200,000	6,600,000
Craig Amos	Non-Executive Director	600,000	600,000	600,000	1,800,000
Dalton Gooding	Non-Executive Director	800,000	800,000	800,000	2,400,000
		7,900,000	7,900,000	7,900,000	23,700,000

Each Option (unless otherwise specified) will have an exercise price as set out below (Exercise Price) and will expire at 5.00pm (AWST) on 30 June 2024 (Expiry Date). Any Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

Tranche 1 Options have an issue price of $0.25 and have an exercise price of $0.30 Tranche 2 Options have an issue price of $0.25 and have an exercise price of $0.37 Tranche 3 Options have an issue price of $0.25 and have an exercise price of $0.50

		Fair value at	Fair value at	Fair value at	Total value of
		grant date:	grant date:	grant date:	options
Director	Capacity	Tranche 1	Tranche 2	Tranche 3	granted
		$	$	$	$
David Buckingham	Non-Executive Chairman	157,486	148,040	134,024	439,550
Stephen Cornish	Managing Director	519,703	488,531	442,280	1,450,514
Timothy Cornish Craig Amos Dalton Gooding	Executive Director Non-Executive Director Non-ExecutiveDirector	346,469 94,491 125,989	325,688 88,824 118,432	294,853 80,414 107,219	967,010 263,729 351,640
		1,244,138	1,169,515	1,058,790	3,472,443

For the options granted during the interim half-year reporting period ending 31 December 2020, the valuation model inputs used to determine the fair value at grant date, are as follows:

		Share
		price at
		grant		Expected		Risk-free	Fair value at
Grant date	Expiry date	date	Exercise price	volatility	Dividend yield	interest rate	grant date
		$	$				$
27/11/2020	30/06/2024	0.250	0.300	100%	0	0.81%	0.1575
27/11/2020	30/06/2024	0.250	0.370	100%	0	0.81%	0.1480
27/11/2020	30/06/2024	0.250	0.500	100%	0	0.81%	0.1340

PENTANET LTD ABN: 29 617 506 279

Pentanet Ltd Notes to the financial statements For the half-year ended 31 December 2020

Note 14. Events after the reporting period

On the 77 January 2021 the Consolidated Entity issued 89,940,000 fully paid ord nary share[th] January 2021 the Consolidated Entity issued 89,940,000 fully pa i d ordinary s at an issue price of $0.25 (25hares at an issue price of $0.25 (25 cents) per share under an initial public offer (IPO).cents) per share under an initial public offer (IPO).

On the 29th of January 2020 Pentanet listed on the ASX.29 January 2020 Pentanet listed on the ASX.

No other matter or circumstance has arisen since 31 December 2020 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.

Note 15. Earnings per share

Note 15. Earnings per share
	Consolidated
	31 Dec 20	31 Dec 19
	$	$
Loss after income tax	(11,155,048)	(3,056,451)
Loss after income tax attributable to the owners of Pentanet Group Ltd	(11,155,048)	(3,056,451)
	Number	Number
Weighted average number of ordinary shares used in calculating basic earnings per share	118,108,205	115,838,671
Weighted average number of ordinary shares used in calculating diluted earnings per share	135,994,233	119,775,315
	Cents	Cents
Basic (loss) pershare attributable to owners of Pentanet Group	(0.09)	(0.03)

Note 16. Share-based payment

A share option plan has been established by the Consolidated Entity and approved by shareholders at a general meeting, whereby the Consolidated Entity may grant options over ordinary shares in the Group to certain personnel of the Consolidated Entity. Options granted carry no dividend or voting rights, nor do they carry any rights to participate in any issues of shares of the Group or any other entity.

All options were granted over unissued fully paid ordinary shares in the Group. Options vest based on the provision of service over the vesting period whereby the employee becomes beneficially entitled to the option on vesting date and non-performance vesting conditions. Options are exercisable by the holder from the vesting date.

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

PENTANET LTD ABN: 29 617 506 279

Pentanet Ltd Notes to the financial statements For the half-year ended 31 December 2020

2019

							Balance at the
		Exercise	Balance at the			Expired/	end of the
Grant date	Expiry date	price	start of theyear	Granted	Exercised	Forfeited/ other	period
		$
27/09/2019	5/04/2020	0.100	-	2,000,000	-	-	2,000,000
27/09/2019	31/12/2020	0.028	-	5,215,000	-	-	5,215,000
27/09/2019	30/06/2021	0.130	-	3,555,000	-	-	3,555,000
27/09/2019	30/06/2021	0.130	-	6,955,000	-	-	6,955,000
27/09/2019	30/06/2021	0.130	-	4,355,000	-	-	4,355,000

The weighted average options exercise price of all unexercised options on issue at the end of 30 June 2020 was $0.078 No options were exercised, expired or forfeited during the year ended 30 June 2020 . The weighted average remaining contractual life of options outstanding at the end of the financial year was 1 yearThe weighted average remaining contractual life of options outstanding at the end of the financial year was 1 year.

2020

							Balance at the
		Exercise	Balance at the			Expired/	end of the
Grant date	Expiry date	price	start of theyear	Granted	Exercised	Forfeited/ other	period
		$
27/09/2019	5/04/2020	0.100	2,000,000	-	(2,000,000)	-	-
27/09/2019	31/12/2020	0.028	5,215,000	-	(5,215,000)	-	-
27/09/2019	30/06/2021	0.130	3,555,000	-	(1,455,000)	-	2,100,000
27/09/2019	30/06/2021	0.130	6,955,000	-	-	(6,955,000)	-
27/09/2019	30/06/2021	0.130	4,355,000	-	(1,605,000)	-	2,750,000
27/11/2020	30/06/2024	0.300	-	9,870,000	-	-	9,870,000
27/11/2020	30/06/2024	0.370	-	9,870,000	-	-	9,870,000
27/11/2020	30/06/2024	0.500	-	9,870,000	-	-	9,870,000

The weighted average options exercise price of all unexercised options on issue at the end of 31 December 2020 was $0.050 During the interim half-year reporting period ending 31 December 2020, 10,275,000 options were exercised and 6,955,000 were cancelled.

For the options granted during the interim half-year reporting period ending 31 December 2020, the valuation model inputs used to determine the fair value at grant date, are as follows:

		Share
		price at
		grant		Expected		Risk-free	Fair value at
Grant date	Expiry date	date	Exercise price	volatility	Dividend yield	interest rate	grant date
		$	$				$
27/11/2020	30/06/2024	0.250	0.300	100%	0	0.81%	0.1575
27/11/2020	30/06/2024	0.250	0.370	100%	0	0.81%	0.1480
27/11/2020	30/06/2024	0.250	0.500	100%	0	0.81%	0.1340

Consolidated	Consolidated
31 Dec 20	31 Dec 19
$	$
Share based payment expense reconciliation
Issue of share options to directors and employees under incentive option scheme 4,459,854	995,498
4,459,854	995,498

PENTANET LTD ABN: 29 617 506 279

DIRECTOR’S DECLARATION 31 DECEMBER 2020

In the directors’ opinion:

the attached financial statements and notes comply with the Corporations Act 2001, Australian Accounting Standard AASB 134 ‘Interim Financial Reporting’, the Corporations Regulations 2001 and other mandatory professional reporting requirements;

• the attached financial statements and notes give a true and fair view of the consolidated entity’s financial position as at 31 December 2020 and of its performance for the financial half-year ended on that date; and

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

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

Signed on behalf of the directors:

Signed ______

David Buckingham Non-Executive Chairman 17 February 2021 Perth

PENTANET LTD ABN: 29 617 506 279

AUDITOR’S INDEPENDENCE DECLARATION

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Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

INDEPENDENT AUDITOR’S REVIEW REPORT

To the members of Pentanet Limited

Report on the Half-Year Financial Report

Conclusion

We have reviewed the half-year financial report of Pentanet Limited (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 December 2020, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the half-year ended on that date, a summary of statement of accounting policies and other explanatory information, and the directors’ declaration.

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the accompanying half-year financial report of the Group does not comply with the Corporations Act 2001 including:

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

• (ii) Complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

Basis for conclusion

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity . Our responsibilities are further described in the Auditor’s Responsibilities for the Review of the Financial Report section of our report. We are independent of the Company in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant to the audit of the annual financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

We confirm that the independence declaration required by the Corporations Act 2001 which has been given to the directors of the Company, would be the same terms if given to the directors as at the time of this auditor’s review report.

Responsibility of the directors for the financial report

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

BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO Australia Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation.

PENTANET LTD ABN: 29 617 506 279

AUDITOR’S INDEPENDENCE DECLARATION

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Auditor’s responsibility for the review of the financial report

Our responsibility is to express a conclusion on the half-year financial report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 31 December 2020 and its financial performance for the half-year ended on that date and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

BDO Audit (WA) Pty Ltd

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Glyn O'Brien

Director

Perth, 17 February 2021