SQID Technologies Limited — Management Reports 2024

Nov 14, 2024

DISCLAIMER FOR FORWARD-LOOKING INFORMATION

Certain statements in this Management Discussion and Analysis are forward‐looking statements or information (collectively “forward‐looking statements”). The Company is providing cautionary statements identifying important factors that could cause the Company’s actual results to differ materially from those projected in these forward‐looking statements. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, through the use of words or phrases such as “may”, “anticipates”, “is expected to”, “estimates”, “intends”, “plans”, “projection”, “could”, “vision”, “objective”, “goals” and “outlook”) are not historical facts and may be forward‐looking and may involve estimates, assumptions and uncertainties which could cause actual results or outcomes to differ materially from those expressed in the forward‐looking statements. In making these forward‐looking statements, the Company has assumed that the current market will continue and grow and that the risks listed below will not adversely impact the Company. These forward‐looking statements include, among other things, statements relating to the ability of the Company to generate revenue; use of funds; intentions to further develop, market and promote its operations by expansion of its merchant base and industries served in Australia; strategy for customer retention, growth, service development, market position and financial results; the success of marketing and sales efforts of the Company; the Company’s efforts to continuously update its software to meet business requirements; future sales plans and strategies; the economy and other future conditions; the timeline to further develop and market future enhancements; unanticipated cash needs and the possible need for additional financing and the adoption of governance policies, committees and practices.

By their nature, forward‐looking statements involve numerous assumptions, inherent risks and uncertainties, both general and specific, which contribute to the possibility that the predicted outcomes may not occur or may be delayed. The risks, uncertainties and other factors, many of which are beyond our control, that could influence actual results include, but are not limited to: a downturn in general economic conditions; the ability of the Company to continue to generate revenue adequate to fund its business plans and operations; the ability of the Company to expand its operations in Australia; competitive conditions in the industry which could prevent the Company from continuing to be profitable; competition from other payment process providers who are well established with the financial capacity to overwhelm the ability of the Company to operate in Australia, security risks; increasing costs of being a publicly traded company, the possibility that our services may become further regulated; the effectiveness and efficiency of advertising and promotional expenditures to generate market interest in the Company’s products and services; the inability to list on a public market; volatility of the Company’s share price following listing; liquidity and the inability to secure additional financing; the Company’s intention not to pay dividends in the near future; claims, lawsuits and other legal proceedings and challenges; conflict of interest with directors and management and other factors beyond the Company’s control.

These forward-looking statements reflect management’s current views and are based on certain assumptions and speak only as of the date of this report, and, except as required by applicable law, the Company undertakes no obligation to update any forward‐looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events. New factors emerge from time to time, and it is not possible for management to predict all such factors and to assess in advance the impact of each such factor on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward‐looking statement. See “ Risk Factors and Uncertainties ”.

1.1 – Date and Basis of Discussion & Analysis

This management discussion and analysis (“MD&A”) is dated 14 November 2024 and should be read in conjunction with the audited financial statements of SQID Technologies Limited for the fiscal twelve months ended 31 December 2023 (“the Financial Statements”). The Financial Statements are prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board ("IASB"). Unless expressly stated otherwise, all financial information is presented in Australian dollars.

1.2 – Overall Performance

Nature of Business

The continuing activities of the Group include:

• the provision of merchant services and transaction processing solutions to business merchants and ecommerce customers across both Business to Business (B2B) and Business to Consumer (B2C) segments through its leading partner platform; and

• management of investments.

There were no significant changes to the nature of business during the reporting period.

• 1.3 – Selected Annual Information – not applicable

1.4 – Results of Operations for the third quarter and ytd

Continuing operations compared to the previous corresponding period being September 2023(pcp)

Third quarter

Revenue from continuing operations was $49,498 (pcp: $76,232).

The loss from continuing operations was $7,009 (pcp: $48,437 profit).

Year to date

The net loss for the year to date was $28,791 (2023: $102,824) comprising a loss from continuing operations of $28,791 (2023: $14,796) and a loss from discontinued operations of $nil (2023: $88,028).

The loss from continuing operations includes:

• Revenue from contracts with customers $146,788 (2023: $185,555), and

• Total expenses $175,582 (2023: $200,354).

Lower reported revenue is attributed to on-going cost of living pressures affecting consumer discretionary spending levels.

As at 30 September 2024, the Group's cash and cash equivalents balance was $6,640 (31 December 2023: $65,368). The lower cash balance is largely attributed to the operating loss and cash applied to reducing trade and other payable balances.

1.5 – Summary of Quarterly Results

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1.5 – Summary of Quarterly Results (continued)

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1.6 – Liquidity and Capital Resources

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1.7 – Capital Resources – investments held

The Group holds 1,079,545 shares (3.37%) in Sienna Mining Limited which has acquired land positions in prospective uranium mining geology in Tanzania. The carrying value for the Sienna Mining Limited holding at $75,568 or $0.07 per share is in line with the most recent capital raise completed in May 2024.

The Group also holds:

• 4,260,000 fully paid ordinary shares at cost of $0.0470 per share and 1,065,000 options in Riva Technology and Entertainment Ltd (RTE - formerly MSM Corporation International Limited). RTE is a digital media entertainment company that specialises in global gaming and Esports. The investment cost base is $200,220, however after fair value losses booked in prior reporting periods the carrying value is $nil, and

• a cryptocurrency under development investment through tagSpace. The investment cost base is $100,000; however, this carrying value is $nil after impairments booked in prior reporting periods

The Group continues to monitor the holdings and engage with management of the investment entities.

1.8 – Off Balance Sheet Arrangements

As at 30 September 2024, there were no off-balance sheet arrangements.

1.9 – Transactions with Related Parties

The Company had the following balances and transactions with key management personnel (directors and executive officers), or companies controlled by these persons and other related parties for the three months ended 30 September 2024 and 30 September 2023 and outstanding payables as at 30 September 2024 and 31 December 2023:

Transactions	30 Sep 2024	30 Sep 2023
Executive remuneration
Nick Bobir – former CEO- Icon Esports Pty Ltd - (short term, post-employment and long term employee benefits)	-	31,609
Sqid Technologies Limited- non-executive director remuneration(1)
Andrew Sterling	5,000	6,000
Michael Clarke	5,000	6,000
Other key management personnel short term benefits(1)
Athan Lekkas–CEO & Chair	12,500	-
Mark Pryn (Baudin Consulting Pty Ltd)–CFO	9,250	5,250
Ben Dixon(3)	0	-
Other related party transactions
Shape Capital Pty Ltd
- Consultancy(2)	0	(10,000)
Balances – Accounts Payable	30 Sep 2024	31 Dec 2023
Athan Lekkas	3,750	5,000
Andrew Sterling	1,650	2,200
Michael Clarke	1,500	2,000
Mark Pryn(BaudinConsultingPtyLtd)	1,945	2,977

Ben Dixon - 2,000

(1) All key management personnel (executives and directors) invoice for their services monthly in arrears. The invoices are generally paid in full in the following month.

(2) Shape Capital Pty Ltd (“Shape”) is a related entity of Anoosh Manzoori, who on 4 May 2023 resigned as CEO / Chair of SQID’s largest shareholder, First Growth Funds Limited.

(3) With effect from 10 January 2024, Ben Dixon was no longer considered to be a related party. He resigned as a director of Icon Esports Pty Ltd (ICON) effective 10 August 2023 being the date SQID completed the sale of ICON.

1.10 Subsequent Events

No matter or circumstance has arisen since 31 December 2023 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.

1.11– Fourth Quarter (Q4) –not applicable

1.12 – Proposed Transactions

Nil

1.13(a) – Critical Accounting Estimates

Refer to Note 2 to the 2023 Annual Financial Report.

1.13(b) Changes in Accounting Policies – International Financial Reporting Standards (“IFRS”)

Refer to Note 2 2023 Annual Financial Report.

1.14 (a) Fair value measurement

Refer to Note 9 to the September 2024 Interim Financial Report.

1.14 (b) – Financial Instruments and Other Instruments

Refer to Note 8 to the September 2024 Interim Financial Report.

1.15 – Other MD&A Requirements

Share Capital

Refer to Note 7 to the September 2024 Interim Financial Report.

RISK FACTORS AND UNCERTAINTIES

The Group will continue to actively manage and seek revenue growth opportunities within the payment solutions sector. Further the Group will continue to manage and monitor its investments and its cryptocurrency exposures.

The Group is exposed to risk and uncertainties:

• Risk of no return on investment : There is no assurance that the Group's businesses and investments will be profitable in the future, or that the Group will be able to generate sufficient or any income to meet its obligations. There is no assurance that an investment in our securities will earn a specified rate of return or any return over the life of the Company.

• Economic dependency: The payment solutions revenue is highly concentrated with two key customers which increases the risk of economic dependency.

• Security price volatility: There can be no assurance that an active trading market in our securities will be established and sustained. Factors such as commodity prices, government regulation, interest rates, share price movements of our peer companies and competitors, as well as overall market movements, may have a significant impact on the market price of the securities of our Group. The stock market has from time-totime experienced extreme price and volume fluctuations, which have often been unrelated to the operating performance of particular companies.

• Global financial conditions : Global financial conditions over the last few years have been characterised by volatility and the bankruptcy of several financial institutions or the rescue thereof by governmental authorities. These factors may affect the ability of the Group to obtain equity or debt financing on suitable terms in the future. Additionally, these factors, as well as other related factors, may cause asset value impairments which may also adversely impact future cash flows, earnings and the pricing of our securities.

• • Uncertainty of additional financing: There is no assurance future working capital will be adequate to finance business growth objectives. The Group does not have any commitment to obtain additional financing and if required in future, there is no assurance that the Group will be available on commercially reasonable terms. The failure to obtain such financing on a timely basis could have a material adverse impact. Equity financing and the additional issuance of equity securities may result in the dilution of existing security holder interests.

• Acquisition risk: The Group 's business growth strategies may include pursuing acquisitions. The successful implementation of acquisitions will depend on a range of factors including due diligence, acquisition costs, funding arrangements, business cultural compatibility and operational integration. To the extent acquisitions are not successfully integrated with the Group’s existing business, the Group ’s financial performance could be materially adversely affected. Future acquisitions may involve the issue of Group securities which may dilute existing security holder interests.

• Unforeseen competition: There can be no assurance that significant competition will not enter the market and offer any number of similar services to those provided by the Group and/ or its investee organisations.

• • Technology risk: The Group ’s, assets and business operations, may be susceptible to rapid technological change and there is no assurance that adequate responses will be made in a timely manner.

• Access to insurance: The Group may also be subject to or affected by liability or sustain loss risks and hazards against which it cannot insure or which it may elect not to insure because of the cost. This absence of insurance coverage could have an adverse impact on the Group ’s future cash flows, earnings, results of operations and financial condition.

RISK FACTORS AND UNCERTAINTIES (continued)

• Reliance on directors, officers and other key personnel: The Group has a small management team and the unexpected loss of any of these individuals may have a serious impact on the business. Specifically, the Group is dependent upon the skills of the management team listed in items “Directors and Executive Officers” for the successful operation of its business interests. At present, there is no key-man insurance in place for any members of the management team. The loss of services of any of these personnel to develop the business and make appropriate decisions in respect of the management thereof could have a material adverse effect on the Group's business interests. The Group also relies on consultants to carry out certain business objectives and the unexpected loss of any of these consultants could have a serious impact on the business.

• Relationships with key third party suppliers and service providers: Any loss of a key third-party supplier or service provider, a material limitation of the services provided, a deterioration in the level of service provided, or a material alteration of the terms on which they are provided, could result in a disruption to its business and may negatively impact Group ’s ability to win and retain contracts, each of which could materially adversely affect Group ’s future business, operating and financial performance.

• Data security & cybersecurity risks: The Group is subject to Australian Privacy legislation which includes the requirement to report any serious security or privacy breaches. The Group 's payment solutions business relies on uninterrupted operation of its external payments processing platform provided by Merchant Warrior. Merchant Warrior’s (MW) core technologies and other systems could be exposed to damage or interruption from systems failures, computer viruses, cyber-attacks or other events. MW has detailed merchant vetting / KYC procedures used to detect or mitigate fraud. Merchant accounts all have transaction limits, in line with the industry they are in, and all transactions are monitored and assigned a risk score.

• Non-exhaustive list: The above list of risk factors should not be taken as exhaustive. The above factors and others not yet identified may materially affect future financial performance and the value of our securities.

APPROVAL

The Board of Directors of the Company approved the disclosure contained in this MD&A on14 November 2024.