ZipTel Limited ABN 41 108 042 593

Notice of Extraordinary General Meeting and Explanatory Memorandum

Date of Meeting: 17 August 2020

Time of Meeting: 10.00am AWST (Perth time)

Place of Meeting: Suite 1, 437 Roberts Road, Subiaco WA 6008 and due to the ongoing COVID-19 pandemic, the meeting will also be held via an audio conferencing facility. If you are a shareholder who wishes to attend and participate in the virtual meeting, please contact the Company by email to [email protected] or by phone to +61 8 6380 2555. Shareholders are strongly encouraged to lodge their completed proxy forms in accordance with the instructions in this Notice of General Meeting.

Independent Expert's Report: Shareholders of the Company should carefully consider the Independent Expert's report prepared for the purpose of the Shareholder approval under Section 611 item 7 of the Corporations Act (refer to Resolution 4) transactions the subject of this Resolution. The Independent Expert has determined the Acquisition is fair and reasonable to the non-associated Shareholders.

This is an important document. Please read it carefully. If Shareholders are in doubt as to how to vote in respect of any or all of the resolutions contained within this document, they are advised to seek advice from their accountant, solicitor, or other relevant professional adviser prior to voting.

Shareholders are encouraged to please complete the Proxy Form enclosed and return it in accordance with the instructions set out in the Proxy Form.

Notice of Extraordinary General Meeting

Notice is given that an Extraordinary General Meeting of shareholders of ZipTel Limited ABN 41 108 042 593 (Company) will be held virtually and at Suite 1, 437 Roberts Road, Subiaco WA 6008, on 17 August 2020 at 10.00am AWST (Perth time).

Impacts of COVID-19 on the Meeting

The health and safety of all members and personnel, and other stakeholders, is the Company's highest priority and the Company is acutely aware of the current circumstances resulting from COVID-19. While the COVID-19 situation remains volatile and uncertain, based on the best information available to the Board at the time of the Notice, the Company intends to conduct a poll on the resolutions of the Notice using the proxies filed prior to the Meeting and for shareholders to be able to attend and participate in the Meeting (including by voting on a show of hands) virtually via Zoom.

Shareholders are strongly encouraged to submit their proxies as early as possible and in any event, prior to the cut off for proxy voting as set out in the Notice. To lodge your proxy, please follow the directions on your personalised proxy form which will be enclosed with a copy of the Notice, delivered to you by email or post (depending on your communication preferences).

If you wish to attend the virtual Meeting, please contact the Company by email to the Company Secretary at [email protected] or by phone on 61 8 6380 2555 to receive registration details for the virtual Meeting.

In addition to questions asked at the virtual Meeting, the Company is happy to accept and answer questions submitted prior to the Meeting by email to the Company Secretary at [email protected]. Where a written question is raised in respect of the key management personnel of the Company or the resolutions to be considered at the Meeting, the Company will address the relevant question during the course of the Meeting by written response after the Meeting (subject to the discretion of the Company not to respond to unreasonable and/or offensive questions).

If the situation in relation to COVID-19 changes in a way that affects the position above, the Company will provide a further update ahead of the Meeting by releasing an announcement to ASX.

The Directors have determined pursuant to regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the General Meeting are those who are registered as Shareholders at 5pm (WST) on 15 August 2020.

If Shareholders are in any doubt as to how they should vote they should seek advice from their accountant, solicitor or other professional advisor.

Important: The Transaction requires Shareholder approvals under the ASX Listing Rules, the Constitution and Corporations Act. If the Acquisition Resolutions are not passed then the Transaction will not proceed. Each of the Acquisition Resolutions are subject to, and conditional on, each of the other Acquisition Resolutions being passed. The Acquisition Resolutions should be considered by Shareholders collectively as well as individually.

The Acquisition Resolutions are not conditional on the other Resolutions set out in this Notice however the Resolutions other than the Acquisition Resolutions are conditional on the Acquisition Resolutions being passed.

Capitalised terms and abbreviations used in this Notice of Meeting and the Explanatory Statement are defined in Section 16 of the Explanatory Statement.

Agenda

1. Resolution 1: Approval of Change to Nature and Scale of Activities

To consider and, if thought fit, pass the following Ordinary Resolution, with or without amendment:

"That, subject to and conditional upon the passing all of the Acquisition Resolutions, for the purposes of ASX Listing Rule 11.1.2 and for all other purposes, approval is given for the Company to make a significant change to the nature and scale of its activities resulting from the acquisition of the businesses of Douugh as described in the Explanatory Statement."

Short Explanation: The Company has entered into agreements with Douugh Limited ABN 89 620 721 342 (Douugh) pursuant to which the Company has agreed to acquire all the issued capital of Douugh (Acquisition). The Acquisition, if successful, will result in the Company changing the nature and scale of its activities. ASX Listing Rule 11.1.2 requires the Company to seek Shareholder approval where it proposes to make a significant change to the nature and scale of its activities. Please refer to the Explanatory Statement for details.

If this Resolution 1 is not passed and the Acquisition is not completed, the Company will continue to use its current funds to advance its current business activities.

Voting exclusion statement

The Company will disregard any votes cast in favour of this Resolution 1 by or on behalf of:

(a) a counterparty to the transaction that, of itself or together with one or more other transactions, will result in a significant change to the nature or scale of the entity's activities and any other person who will obtain a material benefit as a result of the transaction (except a benefit solely by reason of being a holder of ordinary securities in the entity); or
(b) an associate of that person (or those persons).

However, this does not apply to a vote cast in favour of a resolution by:

(a) a person as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with directions given to the proxy or attorney to vote on the Resolution in that way; or
(b) the chair of the meeting as proxy or attorney for a person who is entitled to vote of the Resolution, in accordance with a direction given to the chair to vote on the resolution as the chair decides; or
(c) a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
(1) the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the Resolution; and
(2) the holder votes on the Resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

2. Resolution 2: Consolidation of Capital

To consider and, if thought fit, pass the following Ordinary Resolution, with or without amendment:

"That, subject to and conditional upon the passing of the Acquisition Resolutions, for the purposes of clause 10.2 of the Company's Constitution, section 254H of the Corporations Act, ASX Listing Rule 7.20 and for all other purposes, the issued capital of the Company be consolidated on the following basis:

• for every two (2) ordinary Shares, a consolidation to one point one (1.1) Shares; and
• where this consolidation results in a fraction of a Share being held by a Shareholder, the Directors be authorised to round that fraction down to the nearest whole Share,

and otherwise on the terms and conditions set out in the Explanatory Statement."

3. Special Resolution 3: Approval for issue of new class of securities

To consider, and if though fit, pass the following Special Resolution, with or without amendment:

"That, subject to and conditional upon the passing of the Acquisition Resolutions, for the purposes of sections 246B(1) and 246C(5) of the Corporations Act and clause 2.4 of the Constitution of the Company and for all other purposes, the Company be authorised to issue the Consideration Performance Shares being Shares in a new class, the terms of which are set out in the Explanatory Statement."

4. Resolution 4: Approval of Issue of Consideration Shares, Consideration Options and Consideration Performance Shares

To consider and, if thought fit, pass the following Ordinary Resolution, with or without amendment:

"That, subject to and conditional upon the passing of the Acquisition Resolutions, for the purposes of section 611 (item 7) of the Corporations Act, and for all other purposes, the Company approves the issue of the Consideration Shares, Consideration Options and the allotment and issue of the Consideration Performance Shares to the Vendors and, as a result, an increase in the voting power of the Vendors to a maximum of 60.3% on a fully diluted basis at Minimum Subscription as consideration for the acquisition of the entire issued capital of Douugh Limited, on the terms and conditions set out in the Explanatory Statement."

Expert's Report: Shareholders should consider carefully the Independent Expert's Report prepared by RSM and attached at Schedule 1 to this Notice for the purposes of member approvals required under section 611 (item 7) of the Corporations Act. The Independent Expert's Report opines on the fairness and reasonableness of the Acquisition.

The Independent Expert has determined that the Acquisition is fair and reasonable to the nonassociated Shareholders.

Voting Exclusion

In accordance with section 611 item 7 of the Corporations Act, the Company will disregard votes cast in favour of this resolution by or on behalf of:

(a) Douugh, the Vendors and any person who will obtain a material benefit as a result of the acquisition of Douugh or the proposed issue of the Consideration Shares, Consideration Options and Consideration Performance Shares (except a benefit solely by reason of being a holder of ordinary securities in the Company); or
(b) an associate of that person (or those persons).

However the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the direction on the Proxy Form, or it is cast by the person chairing the General Meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

5. Resolution 5: Approval of Public Offer

To consider and, if thought fit, pass the following Ordinary Resolution, with or without amendment:

"That, subject to and conditional upon the passing of the Acquisition Resolutions, for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Company to allot and issue a minimum of 133,333,333 Shares and a maximum of 200,000,000 Shares (on a post-Consolidation basis) at an issue price of AU\$0.03 per Share to raise a minimum of AU\$4 million and a maximum of AU\$6 million, and otherwise on the terms and conditions set out in the Explanatory Statement."

Voting exclusion statement

The Company will disregard any votes cast in favour of this Resolution 5 by or on behalf of:

(a) any person who is expected to participate in the proposed issue;
(b) any person who will obtain a material benefit as a result of proposed issue (except a benefit solely by reason of being a holder of ordinary securities in the Company or Douugh); or
(c) an associate of that person (or those persons).

However, this does not apply to a vote cast in favour of a resolution by:

(a) a person as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with directions given to the proxy or attorney to vote on the Resolution in that way; or
(b) the chair of the meeting as proxy or attorney for a person who is entitled to vote of the Resolution, in accordance with a direction given to the chair to vote on the resolution as the chair decides; or
(c) a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
(1) the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the Resolution; and
(2) the holder votes on the Resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

6. Resolution 6: Approval for Issue of Shares to a Related Party – Mr Joshua Hunt

To consider and, if thought fit, pass the following Ordinary Resolution, with or without amendment:

"That, subject to and conditional upon the passing of the Acquisition Resolutions, for the purposes of ASX Listing Rule 10.11 and for all other purposes, approval is given for the Company to allot and issue 3,850,000 Shares (on a post-Consolidation basis) to Joshua Hunt (or his nominee) on the terms and conditions set out in the Explanatory Statement."

	Voting exclusion statement
		For the purposes of Listing Rule 14.11.1, the Company will disregard any votes cast in favour of this Resolution 6 by or on behalf of:
(a)		Joshua Hunt (or his nominee);
(b)		any other person who will obtain a material benefit as a result of the issue of the securities (except a benefit solely by reason of being a holder of ordinary securities in the Company); or
(c)		an associate of that person (or those persons).
		However, this does not apply to a vote cast in favour of this Resolution by:
(a)	a person as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with directions given to the proxy or attorney to vote on the Resolution in that way; or
(b)		the chair of the meeting as proxy or attorney for a person who is entitled to vote of the Resolution, in accordance with a direction given to the chair to vote on the resolution as the chair decides; or
(c)		a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
	(1)	the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the Resolution; and
	(2)	the holder votes on the Resolution in accordance with directions given by the beneficiary to the holder to vote in that way.
		Proxy Appointment Restriction
Resolution.		In accordance with section 250BD of the Corporations Act, a person appointed as a proxy must not vote, on the basis of that appointment, on this Resolution if the proxy is either a member of the Key Management Personnel of the Company or a Closely Related Party of such a member and the appointment does not specify the way the proxy is to vote on this
		However, the above prohibition does not apply if the proxy is the Chair and the

appointment expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with remuneration of a member of the Key Management Personnel.

7. Resolution 7: Approval for Issue of Shares to a Related Party – Mr Umberto (Bert) Mondello

To consider and, if thought fit, pass the following Ordinary Resolution, with or without amendment:

"That, subject to and conditional upon the passing of the Acquisition Resolutions, for the purposes of ASX Listing Rule 10.11 and for all other purposes, approval is given for the Company to allot and issue 3,850,000 Shares (on a post-Consolidation basis) to Umberto (Bert) Mondello (or his nominee) on the terms and conditions set out in the Explanatory Statement."

Voting exclusion statement

For the purposes of Listing Rule 14.11.1, the Company will disregard any votes cast in favour of this Resolution 7 by or on behalf of: (a) Umberto (Bert) Mondello (or his nominee); (b) any other person who will obtain a material benefit as a result of the issue of the securities (except a benefit solely by reason of being a holder of ordinary securities in the Company); or (c) an associate of that person (or those persons). However, this does not apply to a vote cast in favour of a resolution by: (a) a person as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with directions given to the proxy or attorney to vote on the Resolution in that way; or (b) the chair of the meeting as proxy or attorney for a person who is entitled to vote of the Resolution, in accordance with a direction given to the chair to vote on the resolution as the chair decides; or (c) a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met: (1) the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the Resolution; and (2) the holder votes on the Resolution in accordance with directions given by the beneficiary to the holder to vote in that way. Proxy Appointment Restriction In accordance with section 250BD of the Corporations Act, a person appointed as a proxy must not vote, on the basis of that appointment, on this Resolution if the proxy is either a member of the Key Management Personnel of the Company or a Closely Related Party of such a member and the appointment does not specify the way the proxy is to vote on this Resolution.

However the above prohibition does not apply if the proxy is the Chair and the appointment expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with remuneration of a member of the Key Management Personnel.

8. Resolution 8: Approval for Issue of Shares to a Related Party – Mr Salvatore Vallelonga

To consider and, if thought fit, pass the following Ordinary Resolution, with or without amendment:

"That, subject to and conditional upon the passing of the Acquisition Resolutions, for the purposes of ASX Listing Rule 10.11 and for all other purposes, approval is given for the Company to allot and issue 3,850,000 Shares (on a post-Consolidation basis) Shares to Salvatore Vallelonga (or his nominee) on the terms and conditions set out in the Explanatory Statement."

Voting exclusion statement

For the purposes of Listing Rule 14.11.1, the Company will disregard any votes cast in favour of this Resolution 8 by or on behalf of: (a) Salvatore Vallelonga (or his nominee); (b) any other person who will obtain a material benefit as a result of the issue of the securities (except a benefit solely by reason of being a holder of ordinary securities in the Company); or (c) an associate of that person (or those persons). However, this does not apply to a vote cast in favour of a resolution by: (a) a person as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with directions given to the proxy or attorney to vote on the Resolution in that way; or (b) the chair of the meeting as proxy or attorney for a person who is entitled to vote of the Resolution, in accordance with a direction given to the chair to vote on the resolution as the chair decides; or (c) holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met: (1) the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the Resolution; and (2) the holder votes on the Resolution in accordance with directions given by the beneficiary to the holder to vote in that way. Proxy Appointment Restriction

In accordance with section 250BD of the Corporations Act, the Company will In accordance with section 250BD of the Corporations Act, a person appointed as a proxy must not vote, on the basis of that appointment, on this Resolution if the proxy is either a member of the Key Management Personnel of the Company or a Closely Related Party of such a member and the appointment does not specify the way the proxy is to vote on this Resolution.

9. Resolution 9: Approval of issue of Shares – Mr Derek Hall

To consider and, if thought fit, pass the following Ordinary Resolution, with or without amendment:

"That, subject to and conditional upon the passing of the Acquisition Resolutions, for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Company to allot and issue 825,000 Shares (on a post-Consolidation basis) to Derek Hall (or his nominee) on the terms and conditions set out in the Explanatory Statement."

Voting exclusion statement

The Company will disregard any votes cast in favour of this Resolution 9 by or on behalf of:

(a)	a person who is expected to participate in, or who will obtain a material benefit as a result of, the proposed issue (except a benefit solely by reason of being a holder of ordinary securities in the Company); or
(b)	an associate of that person (or those persons).
	However, this does not apply to a vote cast in favour of a resolution by:
(a)	a person as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with directions given to the proxy or attorney to vote on the Resolution in that way; or
(b)	the chair of the meeting as proxy or attorney for a person who is entitled to vote of the Resolution, in accordance with a direction given to the chair to vote on the resolution as the chair decides; or
(c)	a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
	(1) the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the Resolution; and
	(2) the holder votes on the Resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

10. Resolution 10: Approval of Issue of Options to Canaccord Genuity Pty Ltd

To consider and, if thought fit, pass the following Ordinary Resolution, with or without amendment:

"That, subject to and conditional upon the passing of the Acquisition Resolutions for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Company to issue a maximum of 30 million unlisted options (on a post-Consolidation basis) to Canaccord Genuity Pty Ltd on the terms set out in the Explanatory Memorandum."

Voting exclusion statement

The Company will disregard any votes cast in favour of this Resolution 10 by or on behalf of:

(a) a person who is expected to participate in, or who will obtain a material benefit as a result of, the proposed issue (except a benefit solely by reason of being a holder of ordinary securities in the Company); or
(b) an associate of that person (or those persons).

However, this does not apply to a vote cast in favour of a resolution by:

(a) a person as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with directions given to the proxy or attorney to vote on the Resolution in that way; or
(b) the chair of the meeting as proxy or attorney for a person who is entitled to vote of the Resolution, in accordance with a direction given to the chair to vote on the resolution as the chair decides; or
(c) a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:

(1)	the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the Resolution; and
(2)	the holder votes on the Resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

11. Resolution 11: Approval of Issue of Shares to Advisors

To consider and, if thought fit, pass the following Ordinary Resolution, with or without amendment:

"That, subject to and conditional upon the passing of the Acquisition Resolutions for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Company to issue up to 1,375,000 Shares (on a post-Consolidation basis) to Company Advisors on the terms set out in the Explanatory Memorandum."

Voting exclusion statement

The Company will disregard any votes cast in favour of this Resolution 11 by or on behalf of:

(a) a person who is expected to participate in, or who will obtain a material benefit as a result of, the proposed issue (except a benefit solely by reason of being a holder of ordinary securities in the Company); or
(b) an associate of that person (or those persons).

However, this does not apply to a vote cast in favour of this Resolution by:

(a) a person as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with directions given to the proxy or attorney to vote on the Resolution in that way; or
(b) the chair of the meeting as proxy or attorney for a person who is entitled to vote of the Resolution, in accordance with a direction given to the chair to vote on the resolution as the chair decides; or
(c) a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
(1) the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the Resolution; and
(2) the holder votes on the Resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

12. Resolution 12: Approval of Issue of Shares – Douugh Convertible Notes

To consider, and if thought fit, pass the following Ordinary Resolution, with or without amendment:

"That, subject to and conditional upon the passing of the Acquisition Resolutions, for the purposes of ASX Listing Rule 7.1, approval is given for the Company to issue 8,333,333 Shares upon the conversion of 8,333,333 convertible notes by Douugh Limited to the Convertible Note Holders, on the terms and conditions set out in the Explanatory Memorandum."

13. Resolution 13: Employee Share Option Plan

To consider and, if thought fit, pass the following Ordinary Resolution, with or without amendment:

"That, for the purposes of ASX Listing Rule 7.2 Exception 13 and for all other purposes, approval is given for the Company to grant options and issue shares to employees in accordance with the Employee Share Option Plan, the terms and conditions of which are set out in the Explanatory Memorandum."

Voting exclusion statement

The Company will disregard any votes cast in favour this Resolution 13 by or on behalf of:

(a) a person who is eligible to participate in the Employee Share Option Plan; and
(b) any associates of those persons listed above.

However, this does not apply to a vote cast in favour of a resolution by:

(a) a person as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with directions given to the proxy or attorney to vote on the Resolution in that way; or
(b) the chair of the meeting as proxy or attorney for a person who is entitled to vote of the Resolution, in accordance with a direction given to the chair to vote on the resolution as the chair decides; or

(c)		a holder acting solely in a nominee, trustee, custodial or other fiduciary
		capacity on behalf of a beneficiary provided the following conditions are met:
	(1)	the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the Resolution; and
	(2)	the holder votes on the Resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

14. Resolution 14: Re-election of Mr Umberto (Bert) Mondello as a Director

To consider and, if thought fit, pass the following resolution, as an Ordinary Resolution of the Company with or without modification:

"That for the purposes of clause 13.3 of the Company Constitution, ASX Listing Rule 14.4, and for all other purposes, Mr Umberto (Bert) Mondello, a Director, being eligible, offers himself for re-election, be re-elected as a Director."

15. Resolution 15: Election of Mr Andy Taylor as a Director

To consider and, if thought fit, pass the following Ordinary Resolution, with or without amendment:

"That, subject to and conditional upon the passing of the Acquisition Resolutions, for the purposes of clause 13.3 of the Company Constitution and for all other purposes, Mr. Andy Taylor, being eligible and having consented to act, be elected as a Director of the Company, effective on Completion of the Acquisition."

16. Resolution 16: Election of Mr Steven Bellotti as a Director

To consider and, if thought fit, pass the following Ordinary Resolution, with or without amendment:

"That, subject to and conditional upon the passing of the Acquisition Resolutions, for the purposes of clause 13.3 of the Company Constitution and for all other purposes, Mr .Steven Bellotti , being eligible and having consented to act, be elected as a Director of the Company, effective on Completion of the Acquisition."

17. Resolution 17: Election of Mr Patrick Tuttle as a Director

To consider and, if thought fit, pass the following Ordinary Resolution, with or without amendment:

"That, subject to and conditional upon the passing of the Acquisition Resolutions, for the purposes of clause 13.3 of the Company Constitution and for all other purposes, Mr. Patrick Tuttle, being eligible and having consented to act, be elected as a Director of the Company, effective on Completion of the Acquisition."

18. Resolution 18: Approval to Set Directors' Fees

To consider and, if thought fit, pass the following Ordinary Resolution, with or without amendment:

"That, for the purpose of clause 13.7 of the Company Constitution, Listing Rule 10.17 and for all other purposes, Shareholders approve the maximum total aggregate fixed sum per annum to be paid to Directors be set at AU\$300,000 per annum to be paid in accordance with the terms and conditions set out in the Explanatory Memorandum."

Chairman's Voting Intention: The Chairman intends to vote undirected proxies in favour of this Resolution.

Voting exclusion statement

The Company will disregard any votes cast in favour of this Resolution 18 by or on behalf of any Director of the Company, or an associate of those persons.

However, this does not apply to a vote cast in favour of a resolution by:

(a) a person as proxy or attorney for a person who is entitled to vote on the Resolution, in accordance with directions given to the proxy or attorney to vote on the Resolution in that way; or
(b) the chair of the meeting as proxy or attorney for a person who is entitled to vote of the Resolution, in accordance with a direction given to the chair to vote on the resolution as the chair decides; or
(c) a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
(1) the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the Resolution; and
(2) the holder votes on the Resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

19. Special Resolution 19: Change of Name to Douugh Limited

To consider and, if thought fit, pass the following Special Resolution, with or without amendment:

"That, subject to and conditional upon the passing of the Acquisition Resolutions, for the purposes of section 157(1)(a) of the Corporations Act and for all other purposes, Shareholders approve, as a special resolution, a change of name of the Company from "ZipTel Limited" to "Douugh Limited"."

General business

To consider any other business as may be lawfully put forward in accordance with the Constitution of the Company.

By order of the board

Mr Derek Hall Company Secretary

Dated: 17 August 2020

Introduction

This Explanatory Memorandum is provided to shareholders of ZipTel Limited ABN 41 108 042 593 (Company, ZIP, ZipTel) to explain the resolutions to be put to Shareholders at the Extraordinary General Meeting to be held virtually and at Suite 1, 437 Roberts Road, Subiaco WA 6008 on 17 August 2020 at 10.00am AWST (Perth time). Neither ASX nor any of its respective officers take any responsibility for the contents of this Explanatory Memorandum.

Scope of Disclosure

The law requires that this Explanatory Statement sets out all information that is reasonably required by Shareholders in order to decide whether or not it is in the Company's interests to pass the Resolutions. The Company is not aware of any relevant information that is material to the decision on how to vote on the Resolutions other than is disclosed in this Explanatory Statement, or previously disclosed to Shareholders by the Company on the ASX.

Voting in person

To vote in person, please contact the Company by email to the Company Secretary on [email protected] or by phone on +61 8 6380 2555 to receive registration details for the virtual Meeting or attend Suite 1, 437 Roberts Road, Subiaco WA 6008 on 17 August 2020 at 10.00am AWST (Perth time).

Voting by Proxy

If you are a Shareholder entitled to vote, you may appoint an individual or a body corporate as a proxy to vote on your behalf by signing and returning the Proxy Form (attached to the Notice) to the Company in accordance with the instructions on the Proxy Form.

In accordance with section 249L of the Corporations Act, Shareholders are advised that:

(a) each Shareholder has the right to appoint a proxy;
(b) the proxy need not be a Shareholder of the Company; and
(c) a Shareholder who is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise.

The Company encourages Shareholders completing a Proxy Form to direct the proxy how to vote on the Resolution.

The Proxy Form must be received no later than 48 hours before the commencement of the Meeting, i.e. by no later than 10.00am (AWST) on 15 August 2020. Any Proxy Form received after that time will not be valid for the Meeting.

A Proxy Form may be lodged in the following ways:

By mail	Automic, GPO Box 5193, Sydney NSW 2001
By hand	Automic, Level 5, 126 Phillip Street, Sydney NSW 2000
By email	[email protected]
Online	https://investor.automic.com.au/#/loginsah

To be valid, the Proxy Form must be received by the Company in the manner stipulated above. The Company reserves the right to declare invalid any proxy not received in this manner.

IMPORTANT: If you appoint the Chair of the Meeting as your proxy, or the Chair becomes your proxy by default, and you do not direct your proxy how to vote on the Resolution then by submitting the Proxy Form you will be expressly authorising the Chair to exercise your proxy.

Power of Attorney

If a Proxy Form is signed under a power of attorney, the original power of attorney (or a certified copy of that power of attorney or other authority) must be received by the Company no later than 10.00am AWST on 15 August 2020, being 48 hours before the General Meeting.

Corporate representatives

Shareholders who are body corporates may appoint a person to act as their corporate representative at the Meeting by providing that person with a certificate or letter executed in accordance with the Corporations Act authorising him or her to act as the body corporate's representative. The authority is be sent to the Company and/or registry in advance of the Meeting when registering as a corporate representative.

An appointment of corporate representative form is available from the website of the Company's share registry, Automic, found at https://www.automicgroup.com.au.

Eligibility to vote

For the purposes of regulation 7.11.37 of the Corporations Regulations 2001 (Cth), the Directors have determined that, for the purposes of voting at the Meeting, Shareholders are those persons who are the registered holders of Shares at 5.00pm (AWST) on 15 August 2020.

Enclosures

Enclosed are the following documents:

A Proxy Form to be completed to be represented at the Meeting by proxy. Shareholders are encouraged to use the online voting facility that can be accessed on the Automic website at https://www.automicgroup.com.au to ensure the timely and cost effective receipt of your voting instructions and proxy appointment.

Summary

The key business to be conducted at the General Meeting relates to the Company's proposed acquisition of Douugh Limited ACN 620 721 342 (Douugh) (Acquisition) and associated change to the nature and scale of the activities of the Company. The Acquisition will be implemented in accordance with the Share Purchase Agreement executed between the Company, Douugh and the shareholders of Douugh (Vendors) pursuant to which the Company has agreed to acquire all of the issued capital of Douugh in consideration for the issue for a total of 275,000,000 Consideration Shares, 75,000,000 Consideration Options and 75,000,000 Consideration Performance Shares (all on a post-Consolidation basis) (Acquisition Securities).

The Transaction requires security holder approval under the Listing Rules and therefore may not proceed if that approval is not forthcoming. Additionally, the Company is required to re-comply with ASX's requirements for admission and quotation, and therefore the Transaction may not proceed if those requirements are not met. ASX has an absolute discretion in deciding whether or not to re-admit the entity to the Official List and to quote its securities and therefore the Transaction may not proceed if ASX exercises that discretion. Investors should take account of these uncertainties in deciding whether or not to buy or sell the entity's securities.

The key dates regarding the General Meeting and the Acquisition are as follows:

Indicative Timetable

1.	Dispatch of the Notice to Shareholders	17 July 2020
2.	Lodge Prospectus for Public Offer	28 July 2020
3.	Opening of Public Offer	4 August 2020
4.	Latest time for receipt of Proxy Forms	10.00am AWST, 15 August 2020
5.	Snapshot date for eligibility to vote at the General Meeting	5.00pm AWST, 15 August 2020
6.	General Meeting to consider and vote upon the Resolutions	17 August 2020
7.	Closing of Public Offer	17 August 2020
8.	Shares issued under the Public Offer and Acquisition	19 August 2020
9.	New holding statements and certificates dispatched to Shareholders following completion of Public Offer	20 August 2020
10.	Normal trading of Shares resumes (subject to satisfaction of Chapters 1 and 2 of the ASX Listing Rules)	Around 27 August 2020

*The above dates are indicative only and are subject to change without notice. The actual timetable will depend upon the timing of ASX approval and also the time at which the conditions precedent to the Acquisition are satisfied or, if applicable, waived. Further details of the conditions precedent are set out in Section 2.4 of this Explanatory Statement. The Company has the right to vary any or all of these dates and times, subject to the approval of such variation by ASX where required. Any variation to the timetable set out above will be announced to ASX.

The Notice of Meeting sets out the details of 17 Ordinary Resolutions and 2 Special Resolutions to be put to Shareholders.

1. Background to the Acquisition

1.1 Background

ZipTel is an Australian owned and operated telecommunications business focused on providing international roaming and calling solutions to consumers and businesses, using state of the art technologies developed and wholly owned by ZipTel.

ZipTel is a specialist in the development and marketing of social mobile applications, particularly focussed on emerging markets. ZipTel's Zipt mobile calling and messaging application achieved 10 million downloads globally with significant take-up in the Indian subcontinent, the Middle East and South East Asia.

ZipTel retains a software development capability offering delivering software development solutions. In June 2019, the Company entered into a collaboration agreement with Perth based software development company Lateral Pty Ltd.

Under the collaboration agreement, ZipTel and Lateral Pty Ltd work together to deliver bespoke software development solutions for third parties. The agreement leverages the ZipTel's strong app, software development and telephony experience.

The Directors of the Company have entered into a binding, conditional agreement to acquire 100% of the issued share capital in Douugh. None of the business of ZipTel is proposed to be disposed of as part of the Acquisition.

not to re-admit the entity to the Official List and to quote its securities and therefore the Transaction may not proceed if ASX exercises that discretion. Investors should take account of these uncertainties in deciding whether or not to buy or sell the entity's securities.

Share Purchase Agreement

The key terms are as follows:

(a) As outlined under Resolution 2, ZIP will acquire all of the legal and beneficial interest in the entire issued share capital of Douugh via the issue of the following (all issued on a post-Consolidation basis):
(1) 275,000,000 fully paid ordinary shares in ZIP at a deemed issue price of \$0.03 per Share to the Vendors (Consideration Shares);
(2) 75,000,000 unlisted options in ZIP (Consideration Options) exercisable at \$0.04 and with an expiry date that is four (4) years from the date of issue; and
(3) 75,000,000 performance shares in ZIP (Consideration Performance Shares) which will convert into a Share on a one-for-one basis on achievement of the following milestones (and subject to such other terms and conditions required by ASX or the ASX Listing Rules);

The Consideration Performance Shares will be issued in three equal tranches, with each Consideration Performance Share converting into one Shares subject to the achievement of the following milestones set out below:

(1) Class A Performance Share

25,000,000 Class A Performance Shares will convert to Shares on a one-for one basis on:

(A) the acquisition of 10,000 Customer Accounts; or;
(B) the achievement of AUD\$100,000 in Monthly Recurring Revenue for three (3) consecutive calendar months.

whichever occurs first, within 3 years of the date on which the Company is reinstated to the Official List of ASX following completion of the Acquisition (Listing).

(2) Class B Performance Share

25,000,000 Class B Performance Shares will convert to Shares on a one-for-one basis on:

(A) the acquisition of 12,500 Customer Accounts; or
(B) the achievement of AUD\$125,000 in Monthly Recurring Revenue for three (3) consecutive calendar months,

whichever occurs first, within 3 years of Listing.

(3) Class C Performance Share

25,000,000 Class C Performance Shares will convert to Shares on a one-for-one basis on:

(A) the acquisition of 25,000 Customer Accounts; or

(B) the achievement of AUD\$250,000 in Monthly Recurring Revenue for three (3) consecutive calendar months,

whichever occurs first, within 3 years of Listing.

(b) ZIP will seek to raise a minimum of AU\$4.0 million through the issue of 133,333,333 Shares (Minimum Subscription) and a maximum of AU\$6.0 million through the issue of 200,000,000 Shares (Maximum Subscription) at a price of \$0.03 per Share under a prospectus (Public Offer) and seek re-admission to the Official List of the ASX.

On completion of the Transaction, ZIP will change its name to "Douugh Limited". Additionally, the current Board of ZIP will resign and be replaced by new Board members as set out in Section 1.8 of this Explanatory Memorandum, with the exception of Bert Mondello who will stay on as Non-Executive Director following completion of the Transaction.

Conditions Precedent

Completion of the Acquisition is subject to satisfaction (or waiver) of the following conditions precedent:

(a) due diligence investigations by the Company in respect of Douugh, its shareholders and its projects including legal, financial and technical due diligence, and the results of the Company's due diligence being entirely to the Company's satisfaction;
(b) due diligence investigations by Douugh in respect of the Company including legal and financial due diligence, and the results of Douugh's due diligence being entirely to Douugh's satisfaction;
(c) ZIP Shareholders approving the resolutions as per this Notice of General Meeting;
(d) the completion of the Public Offer;
(e) approval, in principle, from the ASX for relisting and re-admission of its securities to the Official List;
(f) evidence to the satisfaction of the Company that Douugh and its shareholders have executed and delivered all relevant documentation (including share certificates, share transfer forms or otherwise) to enable the transfer of 100% of the issued share capital of Douugh to the Company;
(g) the parties obtaining all relevant approvals, including shareholder approval, board approval and any third-party consents necessary to implement the Acquisition, including:
(1) the issue of the Acquisition Securities;
(2) the Consolidation of the Company's issued capital;
(3) Shareholder approval of a change in nature and scale of the Company; and
(4) the issue of the Shares under the Public Offer.

The Acquisition is subject to shareholder approval being received in respect of Resolutions 1 to 5 of this Notice of Meeting (Acquisition Resolutions). The Acquisition Resolutions are conditional on each other. That is, should any of the Acquisition Resolutions not be approved by Shareholders, the Acquisition will not proceed.

As at the date of this Notice, none of the conditions precedent to the Share Purchase Agreement have been satisfied.

ZIP has undertaken appropriate enquiries into the assets and liabilities, financial position and performance, profits and losses, and prospects of Douugh. The current board of ZIP is satisfied that the Transaction is in the interests of ZIP and its security holders.

Lead Manager Mandate

The Company has engaged Canaccord Genuity Pty Ltd (Canaccord) to act as lead manager to the Transaction pursuant to a lead manager mandate (Mandate). The material terms of the Mandate are summarised below at Schedule 9.

Under the Mandate, Canaccord will be paid:

(a) a management fee of 2.0% of the total amount raised under the Offer to be paid only on the issue or transfer of any Shares under the Prospectus lodged with ASIC;
(b) a capital raising fee of 4.0% of the Offer proceeds to be paid only on the issue or transfer of any Shares under the Prospectus lodged with ASIC; and
(c) at the time of settlement of the Offer, between 20,000,000 (at Minimum Subscription) to 30,000,000 (at Maximum Subscription) options. The terms of the options are provided at Schedule 6 .

1.2 Overview of Douugh Limited

Douugh is a purpose-based fintech company with operations in the US and Australia, taking a proprietary artificial intelligence first approach to disrupting the business model of banking, helping customers live financially healthier. Douugh operates a subscription based financial wellness platform - autonomously helping customers spend wisely, pay off debt, save more and build wealth via a smart bank account and debit card.

Douugh is taking an AI-first approach to building a fully autonomous financial assistant that helps people live financially healthier. Douugh's technology strives to enable users to make the best financial decisions and help them reach their goals. Being purpose driven, technologically capable and innovation led for this new emerging millennial cohort is fundamental to building trust and credibility.

Douugh allows tier 2 banks and financial services organisations with high growth appetite, the ability to extend their assets and capabilities outside of their typical reach. These organisations that hold national banking licenses, however have traditionally been regional or state focused through a physical - branch based network.

Douugh's key products currently comprise of:

(a) Douugh Bank Account

The Douugh everyday bank account offers full banking functionality, with no fees, with the U.S federal government guarantee on deposits up to \$250,000.

(b) Douugh Mastercard Debit Card

Douugh has formed a strategic innovation partnership with Mastercard International (Mastercard), to launch new banking and payment technology and issue and promote a co-branded debit card into key markets.

(c) Douugh App and Platform

The Douugh App consists of integrated, AI-powered personal financial management tools to assist customers with budgeting & saving.

The Company is continually developing the Douugh App to act as a financial coach, mentor and assistant. The Douugh App analyses the banking data of a consumer and

provides feedback based on an individual's particular financial goals. It provides ongoing summaries of spending behaviours to the consumer.

Douugh has launched the Douugh App in the U.S to iOS users on its waitlist. The Douugh App can link to Douugh's contactless Mastercard Debit Card which provides greater insights, budgeting and savings functionality.

Douugh is currently operating a waitlist program (Waitlist) whereby customers need to sign up to the Waitlist to use the Douugh App. The Douugh App's availability will continue to be limited to U.S residents until Completion of the Transaction.

Having now integrated and deployed its proprietary technology stack with its U.S. banking partner Choice Bank, Douugh has launched its smart bank and Mastercard debit card offering in the U.S. iOS App Store, directly to consumers. Once established in the US, Douugh plans to expand its activities in Australia.

With its focus now on scaling its U.S customer base and growing Monthly Recurring Revenue. Douugh has also secured a further banking agreement with Regional Australia Bank and a strategic investment from Monex Group, a Tokyo listed financial services company (TYO:8698) to launch Douugh into Japan to circa 3 million of their existing customers.

Douugh was recently recognised and nominated for the 2019 Emerging Fintech of the Year Award by Fintech Australia. The business has a healthy pipeline of potential partners across Asia and Europe, which will establish Douugh as a fintech brand and SaaS platform over time. Douugh has a global partnership agreement with Mastercard for product issuing and marketing support.

Business Strategy

Douugh brings a mobile challenger brand customer offering and ability to profitably acquire, onboard and service emerging affluent millennial consumers 100% digitally at low cost. Douugh's model is to operate the Douugh App whilst leveraging the licencing and infrastructure of existing banks and the debit payment rails provided by Mastercard.

This approach will yield many benefits to Douugh's underlying metrics. The integration of new product verticals into the Douugh App will allow monitoring of in-app engagement and RPU (Revenue Per User) increase, as well as customer lifetime value.

Douugh's ability to attract and deepen relationships with this audience is attractive to banking partners, who themselves may not have the brand, internal capabilities or product offering to do so. The banking partner leverages their banking licence, balance sheet, underwriting and core banking system in the partnership. Unlike the typical neobank model, the Douugh SaaS solution is capital lite - no capital holding requirements or restrictions on deposit or lending volumes.

In the short-term, Douugh is working on launching a variety of features including enhanced AIautomation, wealth management, cash rewards and instalment loans.

In the long-term, Douugh plans to become a financial identity and payments platform for its users, fostering a vast ecosystem of best of breed partners who can harness the power of Douugh and offer complementary services connected into Douugh's smart bank account. Some of these will be integrated within the Douugh application itself, others through an API product, which will facilitate secure data exchange and payments (next gen open banking). This will enhance Douugh's ability to coach, manage and execute in a more cohesive and intuitive way for the benefit of customers.

Shareholders should refer to the Independent Experts Report included at Schedule 1 for further details on the operations of Douugh, including comparative analysis and description of its competitors.

Revenue Generation

Douugh has started to generate revenue from active users. The initial revenue is being earned from interchange revenue and deposits held by Choice Bank and Mastercard (calculated as revenue per active customer).

Revenue from existing and new customers will be earned from the following revenue lines:

(a) Fund Accounts Douugh will introduce a 'Fund Account' option in partnership with Stripe that will allow customers to fund their Douugh bank account using a debit/credit card. Douugh will earn approximately 3.0% on each top-up dollar value.
(b) Premium Subscriptions Douugh will incorporate a 'Premium Subscription' and earn fixed monthly fee from our customers. This subscription model includes:
(1) a Wealth Management solution, where Douugh will earn a % AUM fee on funds invested;
(2) a Cashback Rewards program, where Douugh will earn advertising revenue, paid for by retailers; and
(3) access to Douugh Marketplace partnerships, where customers will be able to access additional services and Douugh will be paid a revenue share by the partner.

Douugh Subsidiaries

Douugh's business model is currently centered on its subsidiaries, which comprise the following:

(a) Douugh Labs Pty Ltd ACN 609 270 475

Formerly named Douugh Pty Ltd, Douugh Labs was incorporated on 12 November 2015 and is the main company developing the technology.

(b) Douugh (Australia) Pty Ltd

This is the Australian operating business that contracts with our partner bank, Regional Australia Bank and Mastercard Australia.

(c) Douugh USA LLC

Douugh USA is the American operating business that contracts with our partner bank, Choice Bank and Mastercard International.

(d) Douugh Wealth LLC

Douugh Wealth is the American operating business for the sooner to launch Douugh Wealth offering that contracts with our broker and custodian partner, DriveWealth.

Material Agreements relevant to Operations of Douugh

(a) Master Program Agreement with Choice Bank

On 24 January 2018, Douugh USA entered into an exclusive agreement with Choice Financial Group (Choice). Choice Bank is the FDIC insured U.S Sponsor Bank partner that provides the banking infrastructure, licencing, BIN sponsorship and services to support the operation of the Douugh banking platform. Under the agreement, Choice engages Douugh to manage, service and market a program to offer to customers demand deposit accounts with linked debit cards through certain digital channels which Douugh operates (Services).

Other key terms of the agreement include that:

(1) Choice agrees to provide the Services and Douugh agrees to manage, service and market the program in accordance with the terms of the agreement;
(2) Choice, through its application interfaces (API's) and other technology services will provide an information technology connection for Douugh to connect to the services provided by Choice; and
(3) Choice shall be the exclusive provider of the applicable service and or Program with Douugh in the United States of America. Douugh is to offer Choice first right of refusal for any other programs.

The agreement is for an initial term of five (5) years commencing on 24 January 2018, with automatic renewal for successive one-year periods unless one party provides at least 90 days' notice of non-renewal, unless the agreement is terminated. Standard termination clauses for material breach apply.

In consideration for the services produced by Douugh under the agreement, Choice will pay Douugh:

(1) all customer fees generated by the programs' customer accounts in the prior month if they are in the hands of Choice;
(2) 90% of net interchange fees (fees paid to an issuer of a Card by an acquiring financial institution for a transaction) received by Choice in conjunction with the program; and
(3) a fee equal to the average daily balances across all program customer accounts for the prior month equal to 50% of the U.S. federal funds rate. The applicable federal funds rate is to be adjusted semi-annually on 1 January and 1 July and shall be the federal funds rate in effect the Business Day immediately prior to the date the change will take effect.

Douugh is required to pay Choice certain transactional fees in accordance with the following tiers:

(1) \$0.07 per transaction for the first 150,000 transactions;
(2) \$0.06 per transaction for 150,001 to 500,000 transactions; and
(3) \$0.05 per transaction for 500,001 and more transactions,

(Transactional Fees).

The Transactional Fees to be paid will be assessed on the past day of each month. For months 1- 3 from agreement's effective date, the Transactional Fees are waived. For months 4, 5 and 6 from the agreement's effective date, Douugh will pay Choice the greater of \$5,000 or the total of all Transactional Fees incurred. For each of months 7 to 12, Douugh will pay Choice the greater of \$7,000 or the total of all Transactional Fees. For each month after month 12, greater of \$10,000 or the total of all Transactional Fees.

Other fees are also payable by Douugh to Choice, including network fee costs, annual network ISO renewal costs and PIN network fee assessment costs.

(b) Carrying Agreement with Drivewealth LLC

On 21 May 2019, Douugh Wealth LLC (a fully owned subsidiary of Douugh incorporated in Delaware, U.S.) entered into a brokerage (carrying) agreement with DriveWealth LLC (DriveWealth), a broker-dealer registered with the U.S. Securities and Exchange Commission. Douugh has partnered with DriveWealth to provide it with a modern suite of API's to enable it to offer customers access to U.S securities via it's brokerage services in each market it operates. DriveWealth's fractional share, dollar-based investing technology allows any investor to own shares in the world's most recognized U.S. equities, regardless of stock price or deposit size.

In accordance with the terms of the agreement, Douugh will provide investment advisory services to certain customers who establish accounts at DriveWealth (Customers), and conduct transactions for the purchase and sale of securities though DriveWealth on behalf of those Customers. DriveWealth will provide all non-introducing brokerage services for accounts and customers.

The agreement will continue for a term of three (3) years from the date the agreement is executed with an automatic renewal for a further one (1) year, unless a party provides notice.

In consideration for the services produced by DriveWealth under the agreement, Douugh is required to pay DriveWealth certain fees, including but not limited to:

(1) monthly fee, being a minimum of \$2,500 per month, or an assets under management charge based on the total assets under management held across all accounts; and
(1) account maintenance fee of \$0.20 per funded account per month.

(c) Service Agreement with Blockscore

On 1 August 2019, Douugh USA entered into a non-exclusive license agreement with BlockScore, Inc (BlockScore). BlockScore operates an online information verification and authentication system (BlockScore Services) which allows its customers to verify and authenticate consumer information.

Under the agreement, Douugh USA has licensed from BlockScore the right to use the BlockScore Services. Douugh USA may use the BlockScore Services in the normal course of business to verify the accuracy of information submitted by consumers and for explicitly permitted uses as provided by USA legislation.

The agreement will continue for a term of three (3) years' with an automatic renewal for successive one (1) year periods following the one (1) year from the effective date of the agreement unless a party provides notice.

In consideration for the services produced by BlockScore under the agreement, the Douugh USA is required to pay the minimum monthly commitment or the fees of the actual usage of BlockScore, whichever is the greater, for the period of the agreement. Transactions Fees based on a tier of units or "hits" are also payable, together with an Integration Fee.

(d) Services Agreement with Galileo Processing, Inc.

On 12 March 2018, Douugh USA entered into an exclusive service agreement with Galileo Processing, Inc. (now named Galileo Financial Technologies Inc.) (Galileo). Galileo is a certified U.S based payments processor and is responsible for providing the necessary API's to operate a bank account and debit card construct with our issuing partner bank, Choice Bank and Mastercard in the U.S. Galileo is a certified third party processor with facilities which support card programs, including debit cards, prepaid cards and ATM cards.

The agreement between Galileo and Douugh USA governs the delivery of transaction services by Galileo including:

(1) processing of all authorisation and settlement transactions,
(2) processing of all payments and adjustments;
(3) maintaining and updating Cardholder information;
(4) providing interface to Customer's vendors for servicing including card embossing, letter generation and statement generation;
(5) providing web services;
(6) providing Customer reporting of all card sales, settlement and portfolio monetary transactions;
(7) providing training to Customer; and
(8) providing identification verification.

The agreement has an initial term of five (5) years. The agreement automatically renews for consecutive periods of one (1) processing year, unless either party provides to the other party written notice of its intent not to renew at least six (6) months prior.

In consideration for the services produced by Galileo, Douugh USA is required to pay the minimum monthly commitment fees (outlined in a tiered structure), processing fees and, where applicable, special fees for ancillary services provided.

(e) Co-Brand Agreement with Mastercard USA

On 11 July 2018, Douugh USA and Mastercard International Incorporated (Mastercard USA) entered into an exclusive incentive agreement to issue co-branded cards and to develop and actively participate in initiatives to increase the usage of co-branded cards and other Mastercard branded cards.

Pursuant to the terms of the agreement, Mastercard USA agrees to provide Douugh with various incentive payments (quoted in US dollars) each being subject to various performance hurdles:

(1) Volume Support of between \$60,000 and \$400,000 based on qualified volume tiers. Qualified Volume means the volume of US dollar amount of transaction for the purchase of goods and services attributable to a co-branded card account during the period of calculation that undergoes the process of authorisation, clearing and settlement by Mastercard;
(2) Joint Development Fund for each of year 2 through to year 5 of the Agreement, Mastercard is to provide Douugh with support for marketing programs and initiatives based on a percentage of Qualified Volume;
(3) co-brand marketing support of up to \$100,000 in Year 1; and
(4) launch support of up to \$200,000.

In consideration for the incentives Douugh must ensure that Mastercard co-branded cards will be the sole and exclusive debit card that bears a Douugh mark and not to permit any co-branded cards to bear or be associated with a competing brand.

(f) Douugh and Mastercard Australia Incentive Agreement

On 22 February 2019, Douugh (Australia) Pty Limited entered into an exclusive incentive agreement (Incentive Agreement) with Mastercard Asia/Pacific Pte Ltd (Mastercard) applying to Douugh's Mastercard branded consumer and commercial debit, credit and prepaid card programs (Card Programs).

The Incentive Agreement between Douugh and Mastercard has an incentive period of ten years from the first day of the calendar quarter immediately following the calendar quarter in which the first Card Program is launched (Incentive Period).

Under the terms of the agreement, Mastercard agrees to provide Douugh with various incentive payments (quoted in Australian dollars) each being subject to various performance hurdles as against gross dollar volume (GDV) targets including:

(1) Exclusivity Bonus to be paid by Mastercard to Douugh of \$125,000 for each relevant year upon achievement of a minimum of 60% of the projected GDV Target in each of Years 2, 3,4 and 5;
(2) Growth and Marketing Support– Launch Year 1 to be paid by Mastercard of up to \$200,000 in Year 1 to support marketing for the Launch of the First Card Product on the condition that Douugh attain a minimum of 60% of the total GDV Target in Year 1;
(3) Growth and Marketing Support Years 2 -10 to be paid by Mastercard will pay to Douugh up to \$75,000 between Year 2 and 10 as a reimbursement on the condition that Douugh must have attained a minimum of 60% of the projected GDV Targeting the previous year;
(4) Domestic and International Volume Support (Reinvestment Fund) to be to be paid by Mastercard as a percentage of Domestic and International GDV achieved in each Year based on the threshold percentage of the Domestic and International GDV target (set out in a tiered table within the agreement) achieved which is to be invested into Mastercard advisors, services and solution;.
(5) Domestic and International Volume Support (Cash Fund) to be paid by Mastercard as a percentage of Domestic and International GDV achieved in each Year based on the threshold percentage of the Domestic and International GDV Target (set out in a tiered table within the agreement;
(6) Best Practice Support Mastercard will provide to Douugh up to \$53,000 each in Year 2 and Year 5 for best practice study trips to further the objectives of the parties in connection with the agreement;
(7) New Product Launch -Mastercard will pay Douugh up to \$333,000 to support the launch of a new Card Program (e.g. Prepaid or Credit Product) other than the First Card Program in Year 3 of the Incentive Period; and
(8) Innovation Fund Mastercard will provide \$400,000 in years 1,4 and 6 to pay for innovation services through Mastercard Labs as a Service (LaaS) on the condition that Douugh attains a minimum of 60% of total GDV targets set out in a tiered table in the agreement.

As consideration for the incentives, Douugh must ensure that Mastercard is the exclusive brand for all Card Programs launched by Customer during the Incentive Period and that all types of new products jointly developed by Customer and Mastercard shall not be issued under any brands of any payments system organisation other than the Mastercard Family of Brands.

(g) Agreement with Stripe

Douugh USA entered into an agreement with Stripe, Inc. (Stripe), a certified U.S based payment provider on 9 January 2020 to engage Stripe's gateway technology to enable Douugh customers to connect their existing credit and debit cards to the Douugh platform as well as use Apple and Google Pay, to instantly fund their Douugh bank accounts.

The agreement has an initial term of twelve (12) months following the expiration of which, the fee schedule will automatically renew for subsequent twelve (12) month periods unless either party provides thirty (30) days' notice of their intention not to renew.

Either party may terminate for convenience at any time however, payment obligations remain in force until expiry of term.

Under the agreement's terms, Douugh key obligations include that:

(1) Stripe is Douugh's sole provider of payment processing services;
(2) all information about negotiated rates that Douugh has in place with a payment method provider that Douugh provides to Stripe is correct;
(3) it is responsible for its relationship with its customers and disclosure of transaction fees to customers; and
(4) it complies with all applicable rules and regulations for services such as MasterCard, Visa, American Express, Wells Fargo Bank N.A (payment method acquirer).

As consideration for the services provided by Stripe, Douugh is subject to a tiered fee structure (calculated in US dollars) based on monthly card volume for the processing of transactions.

(h) Partnership Agreement with Regional Bank Australia

Regional Australia Bank Ltd (Regional Australia Bank) is the Australian Sponsor Bank that provides the banking infrastructure, licencing, BIN sponsorship and services (Services) to support the operation of the Douugh banking platform in Australia. Douugh entered into a partnership agreement with Regional Australia Bank under which Regional Australia Bank will provide certain services, including onboarding services, account services and transaction services, and products for use by Douugh. The agreement has a term of five (5) years unless otherwise terminated.

Each party grants to the other a non-exclusive, royalty free license to access and use the other party's infrastructure and Douugh agrees not to sell or dispose of any IP without the express consent of Regional Australia Bank.

Regional Australia Bank may terminate the agreement with immediate effect by giving notice to Douugh if there is a change of control of Douugh, in circumstances where, in Regional Australia Bank's opinion, termination is necessary to ensure Regional Australia Bank can meet or ensure compliance with law, in circumstances where Regional Australia Bank has reasonable grounds for suspecting services it provides to Douugh are being used in contravention, when changes occur in circumstances which impact the viability of Regional Australia Bank to conduct business relating to the supply of services or the security or when the integrity of the services offered by Regional Australia Bank are at risk.

As consideration for the Services, Douugh must pay Regional Australia Bank various fees in accordance with transaction type and frequency. On the last business day of each calendar month, Regional Australia Bank will issue to Douugh an invoice for the fees payable for that calendar month.

(i) Master Services Agreement with Plaid Technologies, Inc.

Douugh USA entered into an agreement with open banking aggregator Plaid Technologies, Inc. (Plaid) on 5 April 2017 to allow it to access transactional banking data from a large selection of banks in the U.S. These banks include Chase, Wells Fargo, CitiBank, and Bank of America. The level of data access authorised by customers is considered by Douugh to be a fundamental component of enabling training of data models for its proprietary AI engine.

The term of the agreement is 12 months from 5 April 2017 after which the agreement will automatically renew for one (1) year periods unless either party provides the other party with sixty (60) days' notice. The agreement is currently active and has been renewed in accordance with its terms.

(j) Agreement with Salesforce

On 19 August 2019, Douugh Labs Pty Ltd (Douugh Labs) entered into a master services agreement and purchase order with SFDC Australia Pty Ltd (Salesforce). Salesforce is a cloud- based software providing a customer relationship management service.

The agreement includes services for mobile messaging and email using a product called ExactTarget for 150,000,000 super messages per annum, for 500,000 contacts and up to 100 users and 5 business units.

The term of the agreement is from 15 September 2019 until 14 September 2022.

The amount payable by Douugh Labs to Salesforce for the services provided is AUD\$443,855.95. Douugh Labs agrees that Salesforce will invoice Douugh Labs as follows:

(1) quarterly invoicing for months 1 through to 12;
(2) semi-annual invoicing for months 13-24; and
(3) annual invoicing for months 25 though to 36.

(k) Joint Marketing Agreement with Empyr

On 30 June 2018, Douugh USA and Empyr, Inc. a Delaware corporation (Empyr) entered into a joint marketing agreement to enable Douugh to use the service developed by Empyr that provides card linked offers (Services).

The initial term under the agreement continues for three (3) years from its effective date and thereafter automatically renews for additional period of one (1) year unless either party provides the other party with written notice at least 120 days prior to the expiration of the then current term.

Under the terms of agreement, Empyr grants to Douugh a non-transferrable license to use the URL and the API access key to enable Douugh's internet- based access to the Services.

The fees payable by Douugh as consideration for the Services include marketing fees, credit card tracking fees, user reward payments, integration Fees and monthly licensing fees.

Material Business Risks

Douugh is exposed to the following risks in the course of its business operations:

(a) Competitive risk The fintech sector is highly competitive with many new entrants seeking to develop and commercialise their products. There is the possibility that Douugh's anticipated market share may be adversely affected by competitor's products.
(b) Hiring risk The labour market in the technology sector is fiercely competitive. Douugh's ability to attract and retain the best talent to help the company grow aggressively will be a key determinant in its success.
(c) Regulatory risks Douugh may be exposed to the evolving regulations governing banks and the financial services sector. In addition, Douugh will have to navigate any differences in regulatory regimes that will occur from operating in multiple jurisdictions.
(d) Execution risk Notwithstanding the number of existing partnerships held by Douugh, there may be a risk in the future that Douugh is unable to find local banks to partner with in new jurisdictions, or that they will need to agree to onerous contractual terms, or that an established banking relationship may be lost.
(e) Financing risk In addition to the funds raised through the Public Offer, Douugh will require additional capital to implement its strategic objectives and growth plans. Should capital not be available, the growth of Douugh may suffer.
(f) Reliance on key personnel Douugh's performance is substantially dependent on the performance of its board of directors and management, especially Mr Andy Taylor. The loss of the services of any of these individuals could have a material adverse effect on the performance of Douugh. Douugh will seek to rapidly develop a strong management team that will be able to step up if and when required.

1.3 Offers and Consolidation

The Company will undertake the Public Offer to raise capital for the purposes of achieving its business objectives and satisfying the requirements of the ASX Listing Rules in relation to the relisting of its securities.

In addition to the Public Offer, the Company will conduct a consolidation of its existing capital on the basis that every 2 Shares be consolidated into 1.1 of its existing securities (Consolidation) and, by way of a prospectus, offer (on a post-Consolidation basis):

(a) up to 30,000,000 Options to Canaccord Genuity Pty Ltd as Lead Manager (Lead Manager Offer);
(b) 13,750,000 Shares to Advisors and Current Directors (Director Offer);
(c) 275,000,000 Consideration Shares, 75,000,000 Consideration Performance Shares and 75,000,000 Consideration Options to the Vendors in consideration for the acquisition of all of the issued capital of Douugh Limited (Acquisition Offer);
(d) 8,333,333 Douugh Convertible Note Shares to Douugh (Convertible Loan Offer); and
(e) a priority offer of Shares to existing Shareholders of Ziptel Limited (Priority Offer),

(together, the Additional Offers).

Further information about the effect of the Consolidation is provided at Section 3.4 of this Explanatory Memorandum.

The Offers are not underwritten.

1.4 Regulatory Information

As noted above, Shareholder approval of the Acquisition Resolutions is a condition precedent to Completion of the Acquisition under the Agreement.

(a) Item 7 Section 611 of the Corporations Act

Section 606 of the Corporations Act prohibits a person acquiring a relevant interest in issued voting shares in a company if, as a result of the acquisition, that person's or someone else's voting power in the company increases from less than 20% to more than 20%, or from a starting point that is above 20% and below 90%.

The voting power of a person in a body corporate is determined under Section 610 of the Corporations Act. The calculation of a person's voting power in a company involves determining the voting shares in the company in which the person and the person's associates have a relevant interest.

For the purposes of determining voting power under the Corporations Act, a person (Second Person) is an "associate" of the other person (First Person) if:

(a) pursuant to section 12(2) of the Corporations Act) the First Person is a body corporate and the Second Person is:
(1) a body corporate that the First Person controls;
(2) a body corporate that controls the First Person; and
(3) a body corporate that is controlled by an entity that controls the person;
(b) the Second Person has entered or proposes to enter into a relevant agreement with the First Person for the purpose of controlling or influencing the composition of the Company's Board or the conduct of the Company's affairs; or
(c) the Second Person is a person with whom the first person is acting or proposes to act, in concert in relation to the Company's affairs.

Section 608(1) of the Corporations Act provides that a person has a "relevant interest" if they:

(a) are the holder of the securities;
(b) have the power to exercise, or control the exercise of, a right to vote attached to the securities; or
(c) have power to dispose of or control the exercise of a power to dispose of, the securities.

It does not matter how remote the relevant interest is or how it arises. If two or more people can jointly exercise one of these powers, each of them is taken to have that power.

Item 7 of Section 611 provides an exception to the prohibition in section 606, in circumstances where the shareholders of the Company approve an acquisition of shares by virtue of an allotment or acquisition at a meeting at which no votes are cast by parties involved in the proposed acquisition, including their associates.

Section 611 approval is required for the Transaction as the Company seeks to issue 275,000,000 Shares, 75,000,000 Consideration Options and 75,000,000 Consideration Performance Shares (on a post-Consolidation basis) to the Vendors which will comprise between 54.4% to 60.3% of the issue capital of the Company on a fully diluted basis, and the Vendors will be in a position to control the Company.

In particular, the Digital Bakery Limited, an entity associated with Proposed Director Andy Taylor, currently holds 69.34% of the issued share capital in Douugh. Immediately following the proposed Transaction, Digital Bakery Limited will have a relevant interest in the Company of approximately 35.7% at Minimum Subscription and 31.7% at Maximum Subscription, and up to 41.8% at Minimum Subscription or 37.7% at Maximum Subscription on an fully diluted basis, and will have the ability to block special resolutions proposed by the Company.

The Company confirms that it is in compliance with its continuous disclosure obligations under Listing Rule 3.1.

Shareholders should consider the Independent Expert's Report and the balance of this Explanatory Memorandum for further details on the effect of the Acquisition, including certain prescribed information.

1.5 Capital Structure and Ownership

Should the Acquisition Resolutions be approved by Shareholders and following satisfaction of all other conditions to the Acquisition, including the Consolidation, the Company will issue 275,000,000 Shares, 75,000,000 Consideration Options and 75,000,000 Consideration Performance Shares (on a post-Consolidation basis) to the Vendors. A detailed as summary of Vendor Shareholdings in the Company is outlined at Schedule 2 of this Explanatory Memorandum. The Vendors are unrelated to one another, except for being shareholders of Douugh.

The Company will also conduct the Consolidation on its existing capital, such that every 2 Shares be consolidated into 1.1 of its existing securities.

Current issued share capital (pre Consolidation)	Issued share capital (post Consolidation)	Shares to be issued pursuant to the Acquisition Offer, Convertible Loan Offer and Director Offer (post Consolidation)	Performance Option issued pursuant to the Acquisition (post Consolidation	Performance Shares issued pursuant to the Acquisition (post Consolidation)	Public Offer (Minimum)	Pro-forma total issued share capital based on minimum raise
189,133,899	104,023,644	297,083,333	75,000,000	75,000,000	133,333,333	534,440,310

The effect of the Consolidation, the Public Offer and the issue of the Douugh Acquisition Securities is set out in the table below:

*This assumes that AU\$4,000,000 is raised through the Public Offer through the issue of 133,333,333 Shares at AU\$0.03 per Share (post-Consolidation). Following the Acquisition and Public Offer, the Vendors will in aggregate own 60.3% of the Company's issued Share capital on a fully diluted basis based on the Minimum Subscription.

Current issued share capital (pre Consolidation)	Issued share capital (post Consolidation)	Shares to be issued pursuant to the Acquisition Offer, Convertible Loan Offer and Director Offer (post Consolidation)	Performance Shares issued pursuant to the Acquisition (post Consolidation)	Vendor Consideration Options	Public Offer (Maximum)	Pro-forma total issued share capital based on maximum raise
189,133,899	104,023,644	297,083,333	75,000,000	75,000,000	250,000,000	601,106,977

*This assumes that AU\$6,000,000 is raised through the Public Offer through the issue of 200,000,000 Shares at AU\$0.03 per Share (post-Consolidation). Following the Acquisition and Public Offer, the Vendors will in aggregate own 54.4% of the Company's issued Share capital on a fully diluted basis based on the Maximum Subscription.

Current listed (pre Consolidation)	Listed Options (post Consolidation)	Funds raised under Public Offer (Minimum)	Lead Manager Options issued pursuant to the Lead Manager Offer (post Consolidation based on minimum capital raise)	Vendor Consideration Options	Pro-forma total unlisted options capital based on minimum raise
nil	nil	\$4,000,000	20,000,000	75,000,000	95,000,000

Current listed (pre Consolidation)	Listed Options (post Consolidation)	Funds raised under Public Offer (Maximum)	Lead Manager Options issued pursuant to the Lead Manager Offer (post Consolidation based on maximum capital raise)	Vendor Consideration Options	Pro-forma total unlisted options capital based on maximum raise
nil	nil	\$6,000,000	30,000,000	75,000,000	105,000,000

1.6 ZIP Share Capital Post Transaction

The capital structure of the Company prior to the Transaction taking place and post Transaction (should all Resolutions be passed) is as follows:

	Min. Raise		Max Raise
Holder	Shares/Options	%	Shares/Options	%
ZIP Shareholders	189,133,899	100	189,133,899	100
Current Options on issue	nil	nil	nil	nil
	Post consolidation 1.1:2
ZIP Shareholders	104,023,644	19.45	104,023,644	17.3
IPO Raise	133,333,333	24.9	200,000,000	33.3
Vendor Consideration Shares	275,000,000	51.5	275,000,000	45.7
Issue upon conversion of Douugh Convertible Note	8,333,333	1.6	8,333,333	1.4
Advisory and Directors	13,750,000	2.6	13,750,000	2.3
Total Shares Post Consolidation	534,440,310	100.00	601,106,977	100.00
Options and Performance Shares
Pre-Consolidation Options on issue	-	-	-	-
Post -Consolidation Options on issue	-	-	-	-
Vendor Consideration Performance Shares	75,000,000	44.1	75,000,000	41.7
Vendor Consideration Options	75,000,000	41.1	75,000,000	41.7
Lead Manager Options	20,000,000	11.8	30,000,000	16.6

Total Options and Performance Shares (Post-Consolidation)	170,000,000	100.00	180,000,000	100.00
-----------------------------------------------------------------	-------------	--------	-------------	--------

Based on the Minimum Subscription of \$4,000,000, the effect of the proposed Transaction on current shareholders of ZIP is to reduce their percentage shareholding in the Company from 100% to 19.464% post Transaction. If the maximum amount of \$6,000,000 was raised, this percentage shareholder would be further reduced to 17.305%.

	Fully Diluted Position
Prior to proposed Transaction		Post proposed Transaction Minimum Subscription		Post proposed Transaction Maximum Subscription
Existing Share/Option holders	121,594,373	100%	104,023,644	14.8%	104,023,644	13.3%
Vendor Share/Performance /Option Holders	0	0%	425,000,000	60.3%	425,000,000	54.4%
Other new Share/Option Holders	0	0%	175,416,666	24.9%	252,083,333	32.3%
Total Diluted Shares on Issue (Post - Consolidation)	121,594,373	100%	704,440,310	100%	781,106,977	100%

On 29 November 2019, ZIP issued 4 million shares at a deemed issue price of 1.3 cents in lieu of directors fees. These shares were approved by shareholders at ZIP's 2019 annual general meeting. Aside from this, ZIP has not issued any securities in the preceding 6 months.

1.7 Corporate Structure

The corporate structure of the Company after the completion of the Acquisition Resolutions is as follows:

1.8 Board and Management Structure

On Completion of the Acquisition, the current Board of the Company, with the exception Bert Mondello, will resign and be replaced by new Board members nominated by Douugh being Mr Andy Taylor, Mr Steve Bellotti and Mr Patrick Tuttle. Accordingly, on Completion of the Acquisition, the Board will comprise Mr Andy Taylor, Mr Steve Bellotti, Mr Patrick Tuttle and Mr Bert Mondello.

Profiles of the Proposed Directors are provided below.

(a) Proposed Board

Andy Taylor (Founder & Chief Executive Officer)

Co-founder of SocietyOne - Australia's leading P2P Lending platform now valued at over \$300m, having originated over \$800m in loans to date. A veteran in consumer marketing and technology, having previously also founded and exited a leading Australasian digital marketing agency.

Steve Bellotti (Non-Executive Chairman)

Highly experienced international banker, investor and blockchain expert. Previously MD of Global Markets and Loans at ANZ, MD of Capital Markets at Dresdner Kleinwort Wasserstein and MD of Capital Markets at Merrill Lynch.

Patrick Tuttle (Non-Executive Director)

Ex-Managing Director and Co-Group CEO of ASX-listed Pepper Group Limited, from early 2008 until March 2017 when he left the business. Since leaving Pepper Group Limited, Patrick has taken on a range of corporate advisory and Board roles with a number of emerging financial services businesses in both Australia and the United States.

Bert Mondello (Non-Executive Director)

Experienced Public Company Director and Corporate Advisor with 20 years' experience across both the private and public sectors. He is currently the Chairman for Vection Technologies Ltd (ASX: VR1), Emerge Gaming Ltd (ASX: EM1), SineTech Ltd (ASX: STC) and a Non-Executive Director of WestStar Industrial Ltd (ASX: WSI) and ZipTel Ltd. He holds a Bachelor of Laws from the University of Notre Dame, Australia.

(b) Interests of Directors

As at the date of this Explanatory Statement, the Directors and the Proposed Directors and their associates have interests in the following securities in the Company:

Director	Shares (pre consolidation)	Listed Options (pre consolidation)l**
Joshua Hunt	1,486,516	267,472
Umberto Mondello	20,629,167	2,575,833
Sal Vallelonga	1,360,437	272,069
Proposed Director	Shares	Listed Options
Andy Taylor	Nil	Nil
Steve Bellotti	Nil	Nil
Patrick Tuttle	Nil	Nil

There are no options currently on issue..

The Directors and the Proposed Directors and their associates will have interests in the following securities in the Company post the passing of the Acquisition Resolutions:

Director	Shares (post consolidation)
Joshua Hunt	817,584
Umberto Mondello	11,346,042
Sal Vallelonga	748,240
Proposed Director	Shares	Consideration Options
Andy Taylor	190,722,615	52,015,259
Steve Bellotti	4,063,736	1,108,291
Patrick Tuttle	3,311,700	903,191

Director	Consideration Performance Shares (Post Consolidation)
Proposed Director	Shares
Andy Taylor	52,015,259
Steve Bellotti	1,108,291
Patrick Tuttle	903,191

1.9 Financial Information of Company

This section contains historical and pro forma financial information for the Company.

Set out below in this Section is the pro-forma Consolidated Statement of Financial Position of both ZIP and Douugh (proforma consolidated) as at 31 December 2019 adjusted to reflect the Acquisition, the Public Offer and the issue of shares in ZIP as a result of the passing of all resolutions.

The financial accounts of Douugh and its controlled entities are set out in Schedule 3.

The historical and pro-forma financial information has been prepared on the basis of the significant accounting policies adopted by the Company set out in Schedule 3 and should be read in conjunction with the accompanying notes at Section 1.10.

Pro-forma Balance	31/12/20
Sheet	19	31/12/2019	Minimum Subscription			Maximum Subscription
	ZIP	Douugh	Pro forma adjustmen ts	Pro forma post capital raise	Pro forma adjustmen ts	Pro forma post capital raise
Current assets
Cash and cash equivalents	1,457,171	369,846	3,870,000	5,697,017	5,790,000	7,617,017
Other Receivables	19,502	538,998		558,500		558,500
Total current assets	1,476,673	908,844	3,870,000	6,255,517	5,790,000	8,175,517
Total assets	1,476,673	908,844	3,870,000	6,255,517	5,790,000	8,175,517
Current liabilities
Loans payable		846,378		846,378		846,378
Payables	124,845	560,061		684,906		684,906
Provisions	0	18,662		18,662		18,662
Total current liabilities	124,845	1,425,101	0	1,549,946	0	1,549,946
Total liabilities	124,845	1,425,101	0	1,549,946	0	1,549,946
Net assets (liabilities)	1,351,828	-516,257	3,870,000	4,705,571	5,790,000	6,625,571
Equity
Share capital	14,423,876	2,922,934	-7,430,667	9,916,143	-5,715,667	11,631,143
Reserves	8,000	23,992	1,951,000	1,982,992	2,156,000	2,187,992
Accumulated losses	-13,080,048	-3,463,183	9,349,667	-7,193,564	9,349,667	-7,193,564
Total equity	1,351,828	-516,257	3,870,000	4,705,571	5,790,000	6,625,571

Pro forma adjustments include:

Offer shares to the value of \$4,000,000 and maximum \$6,000,000
Share issue and transaction costs of \$380,000 \$460,000
Convertible note issue of \$250,000
Advisory and director issue
The issue of the 275,000,000 shares to the Vendors of Douugh
The recognition of a Listing expense with respect to the acquisition of Douugh
The issue of options to advisors

Included at Schedule 3 of this Notice are:

(a) the historical Consolidated Statement of Financial Position of ZIP as at 31 December 2019 (audited); and
(b) the historical Consolidated Statement of Financial Position of Douugh as at 31 December 2019 (audit reviewed).

1.10 Summary of Significant Accounting Policies

The historical financial information of the Company has been prepared in accordance with Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The financial information complies with International Financial Reporting Standards (IFRSs) and interpretations adopted by the International Accounting Standards Board. Douugh financial information and proforma financial information have been prepared in accordance with IFRSs and IFRIC interpretations issued by the IFRS Interpretations Committee.

The financial information is presented in Australian dollars. The functional currency of each entity within the pro-forma consolidated group is measured using the currency of the primary economic environment in which that entity operates. The pro-forma financial information is presented in Australian dollars (AUD\$) which is the functional currency of the operating entity.

The financial information has been prepared on an accruals basis using historical costs and does not take into account changing money values or, except where stated, current valuations of noncurrent assets. Cost is based on the fair values of the consideration given in exchange for assets. The accounting policies adopted have been consistently applied.

The significant accounting policies set out in Schedule 3 to this Explanatory Statement have been applied in the preparation and presentation of the financial information presented in this Section.

It is highly recommended that the financial information be read in conjunction with the Company's published Financial Statements and any public announcements made by the Company in accordance with its continuous disclosure requirements arising under the ASX Listing Rules.

1.11 Risk Factors

Shareholders should be aware that if the change in nature and scale of the Company's activities and Transaction proceeds, the Company will become a financial identity and payments platform for its users and offer complementary services into a smart bank account. Based on the information available, a non-exhaustive list of risk factors are as follows:

(a) General

Shareholders should be aware that if the Acquisition proceeds, the Company will be changing the scale and nature of its activities to that of a financial software and services business which is subject to various risk factors including the risk that investors may lose some or all of their investment. Based on the information available, a non-exhaustive list of risk factors are as follows:

(1) Re-quotation of Shares on ASX

Shareholders should be aware that the re-admission of the Company to the ASX is at the discretion of ASX and there can be no guarantee that the ASX will approve the re-admission on conditions that are able to be satisfied by the Company, or at all.

Should this occur the Shares will not be able to be traded on the ASX until such time as those conditions can be met, if at all. Shareholders may be prevented from trading Shares should the Company be suspended until such time as it does re-comply with the ASX Listing Rules.

(2) Public Offer does not reach \$4 million

A minimum of \$AUD 4 million is intended to be raised by the Company under the Public Offer. If the Company does not raise \$4 million under its Prospectus the Acquisition will not proceed. In the event the Company does not raise \$AUD 4 million any application money will be returned to applicants in accordance with the provisions of the Corporations Act.

(3) General economic conditions

Changes in the general economic climate in which the Company operates may adversely affect the financial performance of the Company. Factors such as inflation, currency fluctuations, interest rates, supply and demand of capital and industrial disruption have an impact on business costs, commodity process and stock market prices. The Company's operating costs, possible future revenues and future profitability can be affected by these factors, which are beyond the control of the Company.

(4) Legislative Change

Changes in government regulations and policies may adversely affect the financial performance or the current and proposed operations generally of the Company. The Company is not aware of any current or proposed material changes in relevant regulations or policy.

(5) Unforeseen Expenses

While the Company is not aware of any expenses that may need to be incurred that have not been taken into account, if such expenses were subsequently incurred, the expenditure proposals of the Company may be adversely affected.

(6) Share Market Conditions

Share market conditions may affect the value of the Company's quoted securities regardless of the Company's operating performance. Share market conditions are affected by many factors such as, general economic outlook, interest rates and inflation rates, currency fluctuations, changes in investor sentiment toward particular market sectors, the demand for, and supply of, capital and terrorism or other hostilities.

(7) Reliance on Key Personnel

The responsibility of overseeing the day-to-day operations and the strategic management of the Company depends substantially on its senior management and its key personnel. There can be no assurance given that there will be no detrimental impact on the Company if one or more of these employees cease their employment.

(8) Share Liquidity risk

The Company currently has 189,133,899 Shares on issue (on a pre-Consolidation basis). If the Resolutions are approved at the General Meeting, the Company's Shares will be consolidated on a one point one (1.1) for two (2) basis into approximately 104, 023,644 Shares (subject to rounding of fractional entitlements). On Completion, the Company will issue a further minimum 133,333,333 to maximum 200,000,000 Shares.

A portion of the shares on issue will be subject to escrow restrictions in accordance with Chapter 9 of the ASX. This could be considered an increased liquidity risk as a large portion of issued capital may not be able to be tradable freely for a period of time. Conversely, if the Company is successful in achieving

some or all of its objectives, this relative lack of liquidity may lead to volatility in the price of the Company's securities.

(9) Future Capital Needs

Further funding will be required by the Company to support its ongoing activities and operations. There can be no assurance that funding will be available on satisfactory terms or at all. Any inability to obtain finance will adversely affect the business and financial condition of the Company and its performance. If additional funds are raised through the issuance of new equity or equity-linked securities of the Company other than on a pro rata basis to existing shareholders, the percentage ownership of shareholders may be reduced. Shareholders may experience subsequent dilution. There can be no guarantee that any capital raisings will be successful.

It is the view of the Proposed Directors that completion of these activities may lead to the practical commercialisation of the projects of the Company.

Further funding may be required by the Company in the event costs exceed the Company's estimates or revenues do not meet estimates, to support its ongoing activities and operations, and to take advantage of opportunities for acquisitions, joint ventures or other business and technology opportunities, and to meet any unanticipated liabilities or expenses which the Company may incur.

(10) Speculative Investment

The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the Company's securities.

(b) Acquisition Specific Risks

As disclosed above, the Transaction will result in dilution to existing shareholders. While the directors are of the view that the Transaction will be beneficial, financial software and services businesses carry with them inherent risks, including:

(1) COVID-19 Pandemic

The occurrence of the COVID-19 pandemic has resulted in significant market uncertainty in global equity, currency, finance, trade and commodity markets. The effects of this pandemic are far-reaching and uncertain outcomes may impact the timing and viability of further investment in the Company and the Company's operations generally. Global financial markets have been severely impacted by this pandemic and such impacts may affect the ability of the Company to raise equity and debt.

To date, COVID-19 has not had any material impact on the Company's operations, however, any infections at the Company or Douugh's headquarters or to any of the Company or Douugh's personnel could result in operations being suspended or otherwise disrupted for an unknown period of time which may have an adverse impact and adverse implications on future cash flows, profitability and financial condition.

The general level of economic uncertainty caused by the COVID-19 pandemic may also adversely impact the company's operations, financial position and Prospectus.

The Company has implemented appropriate controls and will continue to review this response based on the latest guidance from health professionals and the government as the situation develops.

(2) Rate of Customer adoption

Douugh is currently in the early stages of establishing its presence in the US and Australia, and its ability to profitably scale its business is heavily reliant on adoption and usage rates customer base to increase revenues from debit card interchange fees and achieve profitable operations.

Failure to expand in this way may materially and adversely impact Douugh's ability to achieve economies of scale and to optimise its systems, and may therefore adversely impact the Company's ability to achieve future profitability.

Douugh's growth strategy also includes the introduction of new services and technologies, such as a wealth management program and cashback rewards. There is a risk that expansion initiatives may result in additional costs and risks, or may not deliver the outcomes intended. Douugh's strategy depends on increasingly expanding its customer base.

Specifically, Douugh's future revenue prospects are heavily contingent upon both:

(A) consumer adoption rates for Douugh Products; and
(B) the use of Douugh Products by users.

Douugh currently earns revenue predominantly from debit card interchange transaction fees and acquisition of brokered deposits sourced from partner banks. An increase in revenue generation requires greater use of Douugh Products by customers and for Douugh to continue to increase the number of registered users.

Douugh's success, growth and expansion could be impacted by a number of factors including but not limited to:

(A) failure to increase adoption and usage of the Douugh App and Douugh Products;
(B) Douugh's ability to meet users' demands for new products in a timely manner;
(C) cost-effectiveness and pricing of Douugh's product offering;
(D) the availability of competing products in the market (including new market entrants);
(E) software/product capabilities and performance;
(F) the ability to anticipate and quickly respond to changing technology, opportunities, regulatory requirements, industry standards or consumer requirements in the industry (i.e. first mover advantage); and
(G) the Douugh's reputation.

Douugh cannot guarantee that it will continue to increase its revenue from existing or new users. There is also the risk that the marginal cost to acquire a new user may increase or be higher than anticipated.

If Douugh fails in the execution of its marketing campaign and user adoption strategies, and consequently cannot attract additional users to the Douugh App, this may have an adverse impact upon the financial position of the Company.

(3) Loss of Customers

In addition to attracting new users through marketing and adoption strategies, the revenue of Douugh is dependent upon existing foundational users and their continued use of the Douugh App. Part of Douugh's expansion strategy is also dependent upon new users being attracted to Douugh Products via existing foundational users. Accordingly, Douugh must support its existing and future user base to ensure that they continue to support and use Douugh Products, and then support any future product offerings by Douugh. If Douugh fails to retain its existing users, this is likely to affect the financial performance of the Company.

(4) Cost of direct marketing

The growth of new direct users of Douugh Products depends in part on the effectiveness of the direct marketing efforts of Douugh. There is a risk that Douugh's direct advertising and direct marketing channels may become less effective or more expensive as a result of:

(A) increased competition or costs associated with bidding for search engine key words;
(B) increased competition or cost for online and social media advertisements;
(C) changes to the algorithms or terms of services for search engines, such as Google, which may cause the Company to be ranked lower or excluded from search results; and
(D) reduced effectiveness of mass marketing.

Additionally, Douugh's user acquisition strategy is substantially based on the support provided by loyal brand advocates who may not be effective in referring new members or acquisition of new customers.

If the costs of direct advertising materially increase, Douugh's brand advocates are ineffective, or the effectiveness of Douugh's direct marketing strategies decreases, Douugh may be unable to continue to grow at the expected rate or profitably, which would have a material adverse effect on the Company's business, financial condition, operating and financial performance, and/or growth.

(5) Demand Risk

Douugh's business has the potential to grow rapidly. If that occurs and Douugh fails to properly manage that growth, then that failure could harm its business. Any failure to properly meet customer demand could adversely affect the Company, including demand for the Company's products and services, revenue collection, customer satisfaction and public perception.

(6) Financing Risk

At the date of this Notice Douugh is not cash flow positive, meaning it is reliant on raising funds from investors in order to continue its operations. Although the Directors consider that the Company will, on completion of the Offer, have enough working capital to carry out some of its stated objectives, there can be no assurance that such objectives can be met without further funding.

The Company has limited financial resources and will likely need to raise additional funds from time to time to finance and further the development and commercialisation of its products and services and meet its other longer term objectives. The Company may never achieve profitability and its ability to raise additional funds will be subject to, among other things, factors beyond the control of the Company and its Directors, including cyclical factors affecting the economy

and the share markets generally. The Directors can give no assurance that future funds can be raised by the Company on favourable terms, if at all.

(7) Contractual risks

The operations of Douugh are underpinned by various material agreements. The success of Douugh is largely reliant upon counterparties continuing to fulfil their obligations under these contracts and a failure by those parties to perform such obligations under these contracts, or the termination of these contracts, could adversely affect the Company. Further, there can be no assurance that Douugh would be successful in attempting to enforce any of its rights through legal action.

Key infrastructure required by Douugh to facilitate the conduct of transactions via the Douugh App is provided by third parties who deliver the requisite expertise and regulatory approvals to undertake the processing and banking transactions performed by the Douugh Platform and App.

Douugh's business is still at a relatively early stage and contractual partnerships are not as diversified as they might be for a more mature business. The loss of Douugh's key partners may materially and adversely impact the Company's operations, revenue and profitability, and increase expenses to sign up new partners to replace those lost.

(8) Banking Performance

Douugh's core proposition revolves around fostering financial wellness through a proprietary AI money assistant and delivering business model innovation via a SaaS offering, as opposed to offering traditional banking products.

Douugh relies on its partnership arrangements with Choice Bank, Regional Australia Bank and Mastercard to provide banking operations such as its debit card and bank account. Any failures or disruptions to these partners in the provision of their banking services may impact the financial performance of the Company.

(9) Protection of Intellectual Property

Douugh's business depends in part on its ability to commercially exploit its technology and intellectual property, and it relies on laws relating to patents, trade secrets, copyright and trademarks to assist in protecting its proprietary rights. However, there is a risk that unauthorised use or copying of Douugh's patents, software, data, specialised technology or platforms will occur.

Douugh's competitors or other third parties may have intellectual property rights and interests which could potentially come into conflict with its own. A patent does not grant the holder of the patent the right to freely or commercially practice the patent. There may also be patents currently registered either in Australia or in any other jurisdiction (e.g. the United States of America) which would restrict Douugh from operating with the invention as disclosed in the Douugh's patent applications. If any trademark or patent infringement or other intellectual property claims against Douugh are successful, Douugh may not have a legal right to continue to develop, produce, use or sell products that are adjudicated to have infringed third parties' intellectual property rights. Douugh may be legally required to expend significant resources to redesign its products so that they do not infringe third parties' intellectual property rights, or it may be required to obtain relevant licenses to avoid further infringements. Intellectual property litigation against Douugh could significantly disrupt its business, divert its management's attention, or consume much of its financial resources.

In addition, Douugh cannot give any assurance that counterfeiting or imitation of its products will not occur in the future or, if it does occur, that it will be able to

detect or address the problem effectively. Any occurrence of counterfeiting or imitation of its products or other breaches of the Douugh's intellectual property rights could negatively affect its reputation and brand name, lead to loss of consumer confidence in its brands, and, as a consequence, adversely affect its operations. Any litigation to prosecute infringements upon the Douugh's rights and products is likely to be expensive and may divert the management's attention, as well as other resources, away from its business. If the intellectual property of Douugh is compromised, this may have an adverse impact upon the financial position of the Company

However, the Company is not reliant on its protection of its intellectual property in order to operate the Douugh App.

(10) Improving Technology

Douugh's business is predominantly based upon the success of the Douugh App and Platform. As with all new technology, there is the risk that the technology underlying the Douugh App will be superseded by other rapidly developing technologies which have an advantage over the functionality and usability of the Douugh App. If the Douugh App is superseded by other more efficient and customer friendly applications, this may have an adverse impact upon the financial position of the Company.

(11) New Technologies/Services

New products and services planned by Douugh may be delayed in development, may not be capable of cost-effective commercialisation, or may not be supported or adopted by new or existing Customers. Accordingly, products in development by Douugh may not be released to the market, or released in time, and there is no guarantee that these new developments will be successful at driving increases in Customers or revenue.

Furthermore, expenditure on research and development technologies is often uncertain or unproven and may yield no results or results different to what is expected. Investments in new technologies, products and processes may not yield the required return on those products for the Company to generate a return above cost.

(12) Competitor Risk

On completion of the Transaction, the Company will operate as a financial software and services business. The fintech sector is highly competitive with many new entrants seeking to develop and commercialise their products. Though the market is still in early stages of development, there are already several key actors offering products and services in the same sector as Douugh.

There also is a risk of new entrants in the market or that an existing organisation may disrupt the Company's business operations and market share. Existing competitors as well as new competitors may engage in aggressive customer acquisition campaigns, develop superior technology offerings or consolidate with other entities to deliver enhanced scale benefits. Such competitive pressures may materially erode the Company's market share and revenue and may materially and adversely impact the Company's revenue and profitability.

If the Company is unable to compete effectively with new entrants into the market, or attract new customers or expand into new jurisdictions, its financial performance may be materially impacted and reduce the value of an investment in the Shares. A general increase in competition may also require the Company to increase marketing expenditure or offer lower fees to its partners, which would decrease profitability even if the Company's market share does not decrease.

The emergence of mobile digital wallet products by established technology companies pose a risk to the Douugh App, in circumstances where those products are bank and card agnostic, allowing customers to utilise different payment sources and methods, which may compete directly with the Company and redirect users away from the Douugh App. The Douugh App also competes with banking mobile applications to the extent that consumers use those applications to pay their bills and accordingly increased funding to the technology sector of the banks and any improved functionality and product offering to those applications may adversely affect the Douugh App.

(13) Fraud Risk

Although the Company may not be directly exposed to risks imposed by fraudulent conduct, an increase in fraudulent activities on the Douugh App may result in a materially adverse impact to the Company's reputation, which would result in the Company bearing costs to rectify and safeguard its business operations, and to protect the Douugh App against further fraudulent activity.

(14) Disruption Risk

Douugh depends on the constant real-time performance, reliability and availability of its technology platforms, communications systems, servers and the internet in order to provide its services. As Douugh relies on third party services for some aspects of its products, many potential operational issues are outside Douugh's control. There is a risk that these systems may be adversely affected by disruption, failure, service outages or corruption of Douugh's IT network and information systems that may occur as a result of bugs, viruses and other destructive or disruptive software as well as natural disasters, power outages, terrorist attacks and similar events. Any disruption or failure of Douugh's technology systems, including those provided by third party providers may adversely affect the Company's business and financial position.

There is a risk that repeated failures to keep the Douugh App and technology available may result in a decline in customers. This may also materially and adversely impact the Company's financial performance, including a reduction in revenue from completed transactions and an increase in the costs associated with servicing customers through the disruption, as well as negatively impacting the Company's reputation.

In addition, the Company will depend on the ability of its partners and users to access the internet. Should access to the internet be disrupted or restricted, usage of the Douugh App may be adversely impacted.

(15) Security and Data Breaches

Through the ordinary course of business, Douugh collects a wide range of confidential information. Cyber-attacks may compromise or breach the technology platform used by Douugh to protect confidential information.

There is a risk that the measures taken by Douugh may not be sufficient to detect or prevent unauthorised access to, or disclosure of, such confidential information. Any data security breaches or the Douugh's failure to protect confidential information could result in the loss of information integrity, or breaches of the Douugh's obligations under applicable laws or agreements, each of which may materially adversely impact the Company's financial performance and reputation.

(16) General Change of Law and Regulation Risk

Douugh and its business are subject to a broad range of laws, regulations and industry compliance requirements

There is a risk that Douugh may fail to comply in all material respects with all the laws, regulations and industry rules relating to the markets and industry in which it operates. If Douugh does not meet regulatory requirements it may be exposed to fines or other penalties, it may be forced to pay compensation or it may even be suspended or have its authorisations cancelled, in which case it may not be able to continue to provide some or all of the services it currently provides. In such circumstances, the Company's financial position and business may be adversely impacted.

(17) Reputation risks

Maintaining the strength of Douugh's reputation is important to retaining and increasing its end customer base, maintaining its relationships with its current customers and partners and other service providers and successfully implementing Douugh's business strategy. There is a risk that unforeseen issues or events may adversely impact Douugh's reputation. This may adversely impact the future growth and profitability of the Company.

Douugh's reputation is also closely linked to the timely and accurate provision of services to users. There is a risk that Douugh's actions and the actions of Douugh's suppliers may adversely impact Douugh's reputation. Any factors that diminish Douugh's reputation could result in customers, customers or other parties ceasing to do business with the Company, impede its ability to successfully operate the Douugh App, negatively affect its future business strategy and materially and adversely impact the Company's financial position and performance.

(18) Domain name risks

Douugh's business depends to some extent on customers being attracted to its various products including the Company Website. The Company has registered its domain name, www.douugh.com. However, should the Company not renew or otherwise lose control of its domain name, it would lose all traffic directed to the Company Website and its various web applications, which would adversely affect the Company's revenue.

(19) Operational risk

The Company will be exposed to operational risks present in the current business including risks arising from system failure, failure of security and physical protection systems, customer services, staff skills and performance, and product development and maintenance. Operational risk has the potential to have a material adverse effect on the Company's financial performance and position as well as reputation. The Company will endeavour to take appropriate action or obtain appropriate insurance to mitigate these risks, however, certain residual risk will remain with the Company.

(20) Insurance arrangements

The Company intends to ensure that insurance is maintained within ranges of coverage that the Company believes to be consistent with industry practice and having regard to the nature of activities being conducted. No assurance, however, can be given that the Company will be able to obtain such insurance coverage at reasonable rates or that any coverage it arranges will be adequate and available to cover any such claims.

(21) Government policy and regulatory risk

Changes in relevant taxation, interest rates, other legal, legislative and administrative regimes, and Government policies in Australia or the US, may have an adverse effect on the assets, operations and ultimately the financial

performance of Douugh. These factors may ultimately affect the financial performance of the Company and the market price of its securities.

Douugh may be exposed to the evolving regulations governing banks and the financial services sector. In addition, Douugh will have to navigate any differences in regulatory regimes that will occur from operating in multiple jurisdictions

In addition to the normal level of income tax imposed on all industries, the Company may be required to pay government royalties, indirect taxes, GST and other imposts which generally relate to revenue or cash flows. Industry profitability can be affected by changes in government taxation policies.

(22) The Company may be subject to additional legal or regulatory requirements in the future

The legal and regulatory regime applicable to Douugh, and the industry rules under which Douugh operates, is subject to change. Changes in laws, regulations, government policy and industry rules may positively or negatively affect Douugh and the attractiveness of an investment in the Company. The Company cannot predict what changes to laws, regulations and industry rules may be made in the future or the impact that these changes may have on its business. In addition, if the amount and/or complexity of new laws, regulations and industry rules increase, the cost of compliance and the risk of non-compliance to the Company may also increase. This may have an adverse impact on the financial performance and prospects of the Company.

In addition, there is potential that the Company may become subject to additional legal or regulatory requirements if its business, operations, strategy or geographic reach expand in the future. This may potentially include financial services licensing, or other licencing or regulatory requirements or similar limitations of the conduct of its business.

(23) Reliance on Key Personnel

The emergence and development of the Company's business has been largely due to the talent, effort, experience and leadership of its board of directors, key employees and Management personnel, especially Mr Andy Taylor. The Company is substantially dependent on the continued service of experienced managerial and highly qualified technical staff to develop and operate its technology and to direct operational staff to manage the operational, sales, compliance and other functions of its business.

There is no assurance that the Company will be able to retain the services of such persons or that there will be no detrimental impact on the performance of the Company or its growth potential if one or more of the key management personnel cease their engagement with the Company and suitable replacements are not identified or engaged in a timely manner.

There is also a risk that the Company may not be able to recruit suitably qualified and talented staff in a timeframe that meets the growth objectives of Douugh. This may result in delays in the integration of new systems, development of technology and general business expansion, which may adversely impact the Company's revenue and profitability.

(24) Hiring Risk

The labour market in the technology sector is competitive. Douugh's ability to attract and retain the best talent to help the Company grow will be a determinative factors in its success. Accordingly, any loss of talent may adversely impact the Company's revenue and profitability.

(25) Limited Trading History

Although the Company believes that its proposed operations and business model will be successful on the basis of its success to date, the Company is a start-up company with limited trading history and any number of factors could adversely affect the operations and business model of the Company.

Given the Company's limited trading history, there is no guarantee that the proposed marketing and customer adoption strategies of the Company will be successful to achieve a sizeable adoption rate by Customers of its products and/or market share.

(26) Financing Risk

In addition to the funds raised through the IPO, Douugh will require additional capital to implement its strategic objectives and growth plans. Should capital not be available, the growth of the Company may suffer.

(27) Privacy and Protection Risk

One area of particular concern is that of data privacy and protection. The Douugh App may be impacted by informational privacy laws. Such laws differ from jurisdiction to jurisdiction.

In Australia, the collection, use, storage and disclosure of "personal information" is principally regulated by the Privacy Act. The Privacy Act does not prohibit the Douugh App; but it could in certain circumstances impose additional compliance obligations on the Company. The compliance obligations under the Privacy Act only extend to "personal information".

In the event that Douugh collects personal information, the Company will be required to comply with the compliance regime under the Privacy Act will apply to the Company in respect of the collection, use, storage and disclosure of that "personal information". Any failure of the Company to comply with the requirements of personal information storage and collection of personal information, or associated data breach in the security of such personal information, may negatively impact the Company.

(28) Hacker risk; Technology / disruption / corruption / systems failure

Security concerns and the possibility of data corruption and data manipulation are particular concerns with the ongoing confidence in applications in general and the adoption of short-range wireless technology. Where consumers perceive that the Douugh App is insecure and open to being hacked, then the utilisation of the Douugh App may be impacted. This may ultimately impact on the success of the Company.

Similarly the threat of the hacking of communications over the Internet between devices may similarly impact of the uptake of the Douugh App.

The perception of risk associated with the theft of devices on which consumers are running the Douugh App may also have a significant impact on the uptake of the Douugh App.

Whilst Douugh have sought as part of the design of the Douugh App to incorporate security aspects, no assurance can be given that the Douugh App will be immune from the usual range of application issues.

To mitigate any risks associated with security, Douugh will be integrating changes continuously to keep the Douugh App secure.

(29) Execution Risk

Notwithstanding the number of existing partnerships held by Douugh, there may be a risk in the future that Douugh is unable to find local banks to partner with in new jurisdictions, or they will need to agree on onerous contractual terms, or that an established banking relationship may be lost. This may adversely impact the Company's revenue and profitability.

1.12 Advantages and Disadvantages of the Acquisition

(a) Advantages

The Acquisition and the change in nature and scale of the Company's activities are consistent with the expansion and recapitalisation objectives of the Company. If Shareholders do not pass the Acquisition Resolutions, completion of the Acquisition will not occur and the Company will be restricted to its present level of activity.

The Directors are of the view that the following non-exhaustive list of advantages may be relevant to a Shareholder's decision on how to vote on the Acquisition Resolutions:

(1) the Directors have been actively seeking opportunities to improve Shareholder value. The Directors believe the Acquisition is such an opportunity;
(2) the Directors are of the view that the change in nature of the Company to a financial will deliver value to existing and new Shareholders;
(3) the Directors believe that the Acquisition represents an opportunity for the long– term growth of the Company;
(4) the Independent Expert has concluded that the Acquisition is fair and reasonable to the non-associated Shareholders;
(5) the Acquisition and associated capital raising will allow the Company to maintain its ASX Listing and provide a liquid market for the existing Shareholders;
(6) the Acquisition and the passing of the Acquisition Resolutions will increase the cash position of the Company substantially; and
(7) the Acquisition and the passing of the Acquisition Resolutions will restructure the Company's issued capital and net asset base, providing working capital, a new board and business direction. The Directors are of the view that the change in nature to a financial software and services business will deliver value to existing and new Shareholders.

(b) Disadvantages

The Directors consider that the key disadvantages of the Acquisition are as follows:

(1) the Company will be changing the nature of its activities which may not be consistent with the objectives of all Shareholders;
(2) there are many risk factors associated with this change in nature of the Company's activities. Some of these risk factors are set out in Section 1.11 of this Explanatory Memorandum;
(3) the issue of the Acquisition Securities to the Vendors and the Public Offer will dilute the shareholding of current Shareholders. Accordingly, the voting power of each current Shareholder and any corresponding control over the affairs of the Company that those Shareholders may have, will be reduced on completion of the Acquisition;
(4) following the completion of the Acquisition the Vendors will have a voting power of 60.3% (on an fully diluted basis based on Minimum Subscription), which may deter a takeover offer for the Company as these Vendors will be able to block a compulsory acquisition of the Shares for as long as it holds more than 10% of the number of Shares on issue; and
(5) the Acquisition and the passing of the Acquisition Resolutions will result in the Company undertaking a significant new business and as such may expose the Company to larger expenditure than currently being experienced by the Company or risks that the Company otherwise might not be subject to.

Shareholders should have regard to the Independent Expert's Report included with this Notice which contains further details of the Acquisition and its effect upon the Company.

2. Resolution 1 – Approval of change to Nature and Scale of Activities

2.1 General

The Company has entered into the Share Purchase Agreement with Douugh pursuant to which the Company has agreed to acquire all the issued capital of Douugh. The Acquisition, if successful, will result in the Company changing the nature and scale of its activities. Details of the Acquisition, the operations of Douugh, proposed changes to the structure and operations of the Company, and the impact on the capital of the Company are set out at Section 1 of the Explanatory Statement.

Resolution 1 seeks approval from Shareholders for a change in activities of the Company from a telecommunications software company to a financial software and services business.

2.2 Listing Rule 11.1

Listing Rule 11.1 provides that where an entity proposes to make a significant change, either directly or indirectly, to the nature and scale of its activities, it must provide full details to ASX as soon as practicable and comply with the following:

(a) provide to ASX information regarding the change and its effect on future potential earnings, and any information that ASX asks for;
(b) if ASX requires, obtain the approval of holders of its shares and any requirements of ASX in relation to the notice of meeting; and
(c) if ASX requires, meet the requirements of Chapters 1 and 2 of the ASX Listing Rules as if the company were applying for admission to the official list of ASX.

In the event that the Acquisition completes, there will be a significant change:

(a) to the nature of the Company's main undertaking from a telecommunications software company to a financial software and services business; and
(b) to the scale of the Company's activities, both operationally and financially.

Given the Company's focus was previously on providing international roaming and calling solutions to consumers and businesses, the effect of the completion of the Acquisition is that there will be a significant change to the nature and scale of the Company's activities.

2.3 Re-compliance with Chapters 1 and 2 of the ASX Listing Rules

ASX has indicated that as part of the Acquisition, the Company must obtain the approval of its Shareholders for the proposed change of activities and comply with the admission requirements of Chapters 1 and 2 of the ASX Listing Rules which prescribe the conditions for official quotation. Some of the key requirements of Chapters 1 and 2 of the ASX Listing Rules are as follows:

(a) a prospectus must be issued and lodged with ASIC;
(b) the Company must satisfy the shareholder spread requirements relating to the minimum number of Shareholders in the Company and the minimum value of the shareholdings of those Shareholders; and
(c) the Company must satisfy the "assets test" as set out in the ASX Listing Rules.

For this reason, the Company is seeking Shareholder approval under this Resolution 1 for the Company to change the nature and scale of its activities under Listing Rule 11.1.2.

As part of the re-compliance, the Company will seek to carry out the Public Offer through the issue of a Prospectus. Following completion of the Public Offer, the Company will have sufficient funds to carry out its proposed fintech activities.

If this Resolution 1 is not passed and the Acquisition is not completed, the Company will continue to use its current funds to advance its current business activities.

2.4 Use of Funds

Pursuant to the Offer, the Company will issue 133,333,333 Shares at \$0.03 cents each to raise a minimum of \$4,000,000, with provision for a maximum raise of a further 66,666,667 Shares to raise to a maximum total of \$6,000,000 (before costs) (post-Consolidation). The intended use of funds raised from the Public Offer is as follows:

Use of proceeds	Minimum Raise		Maximum Raise
	%	\$(AU)	%	\$ (AU)
Working capital and administrative expenses1	22.5%	\$900,000	21.5%	\$1,290,000
Research and development2	16%	\$640,000	18.3%	\$1,100,000
Marketing/growth hacking3	45.5%	\$1,820,000	45%	\$2,700,000
Public offer (6%)	6%	\$240,000	6%	\$360,000
Transaction expenses4	10%	\$400,000	9.2%	\$550,000
Total	100%	\$4,000,000	100%	\$6,000,000

The use of funds table above is based on the Company's current intentions as at the date of this Notice of Meeting and is subject to change.

Notes:

1. Comprises server costs, rental costs, employee costs (excluding marketing and development staff), directors' fees, legal costs, accounting and tax costs, insurance, ongoing listing costs and other administrative costs.
1. Includes internal labour costs for the ongoing development of the Douugh Platform and Douugh App.
1. Marketing costs associated with the Company's user acquisition strategy including creative production, awareness, promotion, public relations, agency costs, incentives and internal labour costs
1. Includes adviser and legal fees and capital raising costs, printing and distribution costs for the Prospectus and company secretarial costs.

The above table is a statement of current intentions as at the date of this Notice of Meeting. Investors should note that, as with any budget, the allocation of funds set out in the above table may change depending on a number of factors, including the outcome of sales success, operational and development activities, regulatory developments, and market and general economic conditions. In light of this, the Board reserves its right to alter the way the funds are applied.

Shareholders should note that the Company holds around \$1.16m in cash and cash equivalents as per its most recently released Appendix 4C Quarterly announced on ASX on 29 April 2020. It is currently envisaged that these funds will be allocated to ongoing administrative and employee costs and general working capital.

2.5 Regulatory Approvals and Waivers

ASX has confirmed that the Company will need to seek a 2 cent waiver to the '20 cent rule' in order to satisfy Listing Rule 2.1 Condition 2 and will also seek approval from ASX for the terms of the Consideration Options and Consideration Performance Shares (Listing Rules 1.1 Condition 12 and 6.1 respectively).

On 22 June 2020, the Company received confirmation from the ASX of the decision to grant the above waivers on the following conditions:

(a) Waiver Decision ASX Listing Rule 2.1 Condition 2

The ASX has granted ZipTel a waiver from Listing Rule condition 2 to the extent necessary to permit the issue of between 133,333,333 to 200,000,000 fully paid ordinary shares pursuant to the capital raising by way of the Public Offer (Public Offer Shares) at an issue price of less than \$0.20 per share, subject to the following conditions:

(a) the issue price of the Public Offer Shares is not less than \$0.02;
(b) the terms of the waiver are disclosed to the market and, along with the terms and conditions of the Public Offer Shares, are clearly disclosed in the notice of meeting pursuant to which the Company will seek the approval required under Listing Rule 11.1.2 for the Acquisition and in the prospectus to be issued in respect of the capital raising;
(c) the Company's shareholders approve the issue price of the Public Offer Shares in conjunction with the approval obtained under Listing Rule 11.1.2 in respect of the Acquisition; and
(d) the Company completes a consolidation of its capital structure in conjunction with the Acquisition such that its securities are consolidated at a ratio that will be sufficient, based on the lowest price at which the Company's securities traded over the 20 trading days preceding the date of the suspension of the Company's securities from official quotation, to achieve market value for its securities of not less than two (2) cents each.

The ASX has also stipulated that Resolution 1 only applies to 19 November 2020 and is subject to any amendments to the Listing Rules or changes in the interpretation or administration of the Listing Rules and policies of the ASX.

The ASX has considered Listing Rule 2.1 condition 2 only and makes no statement as to the Company's compliance with other Listing Rules.

(b) Waiver Decision ASX Listing Rule 1.1 Condition 12

The ASX has granted the Company in connection with the Acquisition and Public Offer a waiver from Listing Rule 1.1 condition 12 to the extent necessary to permit the Company to issue the Canaccord Options and the Consideration Options each with an exercise price of less than \$0.20 subject to the following conditions:

(a) the exercise price of the Canaccord Options and the Consideration Options is not less than \$0.02 each;
(b) the terms of the waiver are disclosed to the market and, along with terms and conditions of the Canaccord Options and the Consideration Options, are clearly disclosed in the notice of meeting pursuant to which the Company will seek approval under Listing Rule 11.1.2 for the Acquisition and in the prospectus to be issued in respect of the capital raising under the Public Offer;
(c) the Company's shareholders approve the exercise price of the Canaccord Options and the Consideration Options in conjunction with the approval obtained under Listing Rule 11.1.2 for the Acquisition.

The ASX has considered Listing Rule 2.1 condition 12 only and makes no statement as to the Company's compliance with other Listing Rules.

(c) Confirmation Decision ASX Listing Rule 6.1

The ASX has confirmed that the terms of the Consideration Performance Shares are appropriate and equitable pursuant to Listing Rule 6.1, on the following conditions:

(a) the Company obtains shareholder approval for the issue of the Consideration Performance Shares and the notice of meeting seeking shareholder approval includes the full terms and conditions of the Consideration Performance Shares;
(b) the Consideration Performance Shares are not quoted;
(c) the Considerations Performance Shares are not transferrable;
(d) the Consideration Performance Shares do not convey any right to vote, except as otherwise required by law;
(e) the Consideration Performance Shares do not permit the holder to participate in new issues of capital such as bonus issues and entitlement issues;
(f) the Consideration Performance Shares do not permit the holder to participate in a return of capital, whether in a winding up, upon a reduction of capital or otherwise;
(g) the Consideration Performance Shares do not carry an entitlement to a dividend;
(h) the Consideration Performance Shares do not permit the holder to participate in a return of capital, whether in a winding up, upon a reduction of capital or otherwise;
(i) the Consideration Performance Shares do not carry an entitlement to participate in the surplus profit or asset of the Company upon winding up of the Company;
(j) each Consideration Performance Share is converted into one fully paid ordinary share on achievement of the relevant milestone;
(k) if a Consideration Performance Share is not converted into a share by the relevant expiry date, each of the Consideration Performance Share will lapse;
(l) the Company makes an announcement immediately upon the satisfaction of any milestones, the conversion of any of the Consideration Performance Shares and the expiry of any of the Consideration Performance Shares;
(m) the terms and conditions of the Consideration Performance Shares, including without limitation the relevant milestones that have to be satisfied before each Consideration Performance Share is converted into an ordinary share, are not be changed without the prior approval of the ASX and the Company's shareholders;
(n) upon conversion of the Consideration Performance Shares into ordinary shares, the Company will apply to the ASX for quotation of the shares within the requisite time period;
(o) the Company discloses the following in each annual report, annual financial accounts, half-yearly report and quarterly cashflow report issued by the Company in respect of any period during which any of the Consideration Performance Shares remain on issue or were converted or cancelled:
(1) the number of Consideration Performance Shares on issue during the relevant period;
(2) a summary of the terms and conditions of the Consideration Performance Shares, including without limitation the number of ordinary shares into which they are convertible and the relevant milestones;
(3) whether any of the Consideration Performance Shares were converted or cancelled during that period; and
(4) whether any milestones were met during the period;
(p) the Company discloses the following in Part 5 of each Appendix 2A lodged by the Company while any of the Consideration Performance Shares remain on issue:
(1) the number of Consideration Performance Shares on issue at the time of lodgement of the Appendix 2A; and
(2) the conversion ratio of the Consideration Performance Shares into ordinary shares upon the achievement of a vesting condition.

The ASX has also stipulated that this waiver only applies to 19 November 2020 and is subject to any amendments to the Listing Rules or changes in the interpretation or administration of the Listing Rules and policies of the ASX.

The ASX has considered Listing Rule 6.1 only and makes no statement as to the Company's compliance with other Listing Rules.

3. Resolution 2 – Consolidation of Capital

3.1 General

Resolution 2 seeks Shareholder approval to consolidate the Company's issued capital by consolidating every two (2) existing Shares into one point one (1.1) new Shares (Consolidation). This will result in the number of securities on issue reducing from 189,133,899 to 104,023,644 (subject to rounding and not including those Shares to be issued under the other Resolutions in this Notice of Meeting).

The purpose of the Consolidation is to implement a more appropriate capital structure for the Company going forward and enable the Company to satisfy Chapters 1 and 2 of the ASX Listing Rules and obtain re-quotation of the Shares on ASX.

The Consolidation will take effect prior to the implementation of the Acquisition but will only occur if shareholder approval of the Acquisition Resolutions is obtained and all other conditions are satisfied. An indicative timetable for the Consolidation is set out in Section 3.4 below.

Pursuant to section 254H(1) of the Corporations Act, the Company may convert all or any of its shares into a larger or smaller number of shares by resolution passed at a general meeting. Pursuant to clause 10.2 of the Company's Constitution, the Company may, by Ordinary Resolution, consolidate its share capital by the number of new Shares that such relevant Ordinary Resolution specifies.

Accordingly, Resolution 2 seeks Shareholder approval under the Corporations Act and the Company's Constitution to consolidate the Company's authorised share capital.

As the Consolidation applies equally to all Shareholders, all Shareholders will hold the same proportion of the Company's share capital and net assets before and after the Consolidation. The current rights and obligations attaching to the Shares will not be affected by the Consolidation.

Fractions of a security resulting from the Consolidation will be rounded down to the nearest whole security. Each member's proportional interest in the Company's issued capital will, however, remain unchanged as a result of the Consolidation (other than minor variations resulting from rounding).

As from the effective date of the Consolidation, all holding statements for Shares will cease to have any effect except as evidence of entitlement to a certain number of post-Consolidation Shares.

After the Consolidation becomes effective, the Company will despatch a notice to Shareholders advising them of the number of Shares held both before and after the Consolidation. The Company will also arrange for new holding statements to be issued to Shareholders.

3.2 Taxation

It is not expected that any taxation consequences will exist for Shareholders as a result of the Consolidation. However, Shareholders are advised to seek their own tax advice as neither the Company nor the Directors accept any responsibility for any taxation implications arising as a result of the Consolidation.

3.3 Indicative timetable

Set out below, and subject to compliance with all regulatory requirements, is the expected timetable for completion of the Consolidation. These dates are indicative only and may be varied without notice. Shareholders should note that given the Shares are currently suspended there is no trading of Shares and the timetable below reflects this.

Event	Date
Date of General Meeting	17 August 2020
Consolidation Date	17 August 2020
Issue and allotment of Shares of a post consolidation basis	18 August 2020
Dispatch date for post-Consolidation holding statements (depending upon satisfaction of ASX Listing requirements)	20 August 2020

3.4 Effect on Capital Structure

The Company's indicative capital structure at minimum and maximum capital raise, taking the consolidation into account, and after the completion of the Transaction are detailed below:

			ZIP Capital Structure Pre -Consolidation
ZIP Shares on Issue					189,133,899
ZIP Options1					0
			Zip Shares Post Consolidation
	Min. Raise			Max. Raise
Holder	Shares	%	\$A Value1	Shares	%	\$A Value1
ZIP Shareholders	104,023,644	19.45	3,120,709	104,023,644	17.3	3,120,709
IPO Raise1	133,333,333	24.9	4,000,000	200,000,000	33.3	6,000,000
Vendor Consideration Shares	275,000,000	51.5	8,250,000	275,000,000	45.7	8,250,000
DOU Convertible Note conversion2	8,333,333	1.6	250,000	8,333,333	1.4	250,000
ZIP Advisors	1, 375,000	0.3	41, 250	13,750,000	0.2	41,250
ZIP Directors and Company Secretary	12,375,000	2.3	371,250	12,375,000	2.1	371,250
Total Shares on issue at Post Consolidation and IPO Raise	534,440,310	100.00	16,033,209	601,106,977	100.00	18,033,209
				Performance Shares and Options Post Consolidation
Vendor Performance Shares	75,000,000	14.03		75,000,000	12.4
Post Consolidation Options on Issue	0	0		0	0
Vendor Consideration Options (unlisted)3	75,000,000			75,000,000
Lead Manager Options (unlisted)4	20,000,000			30,000,000
Total Options on Issue Post Consolidation and Maximum IPO Raise – 105,000,000

1 at \$0.03 per share.

2 \$250,000 note convertible into ZIP Shares at capital raising price \$0.03 per share.

3 Unquoted options exercisable at 4 cents each and on the terms and conditions set out in Schedule 4.

4 Unquoted options exercisable at 4 cents each on or before 31 July 2024 and on the terms and conditions set out in Schedule 6.

4. Special Resolution 3 – Approval for issue of new class of securities

4.1 General

Resolution 3 is a Special Resolution which means a resolution of a General Meeting passed by at least 75% of votes cast by Shareholders who (being entitled to do so) vote in person or by proxy at that General Meeting.

4.2 Regulatory Requirements

The Company proposes to issue 75,000,000 (post-Consolidation) Consideration Performance Shares (the terms of which are set out in Schedule 5) to the Vendors or their nominee(s).

The Company currently has one class of shares on issue, which are ordinary shares (Ordinary Shares).

On 22 June 2020, ASX confirmed with the Company that the terms of the Consideration Performance Shares are appropriate and equitable for the purposes of Listing Rule 6.1. The conditions of the confirmation are set out above at section 2.5(c).

Company Constitution and Part 2F.2

Section 246C(5) of the Corporations Act provides that if a company with one class of shares issues new shares, the issue is taken to vary the rights attached to shares already issued if:

(a) the rights attaching to the new shares are not the same as the rights attached to shares already issued; and
(b) those rights are not provided for in:
(1) the company's constitution (if any); or
(2) a notice, document or resolution that is lodged with ASIC.

The Consideration Performance Shares would fall within the scope of Part 2F.2 section 246C(5) of the Corporations Act because the rights attaching to the Performance Shares are not the same as the rights attaching to the Ordinary Shares and those rights are not provided for in the Constitution or a document that is lodged with ASIC.

Accordingly, the issue is taken to vary the rights attached to the existing Shares.

Under section 246B(1) of the Corporations Act, if a company has a constitution which sets out the procedure for varying or cancelling (in the case of a company with share capital) rights attached to shares in a class of shares, those rights may be varied or cancelled only in accordance with the procedure.

In accordance with clause 2.4 of the Constitution, if at any time the share capital of the Company is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may be varied, whether or not the Company is being wound up:

(a) with the consent in writing of the holders of three quarters of the issued shares of that class; or
(b) authorised by a Special Resolution passed at a separate meeting of the holders of the shares of the class.

Accordingly, the Company seeks the approval of Shareholders of Ordinary Shares for the issue of the Consideration Performance Shares as a new class of shares on the terms set out in Schedule 5 of this Explanatory Statement in accordance with section 246B(1) of the Corporations Act and clause 2.3 of the Constitution as the issue of the Consideration Performance Shares would be taken to vary the rights attaching to the Ordinary Shares pursuant to Section 246C(5) of the Corporations Act.

Each Consideration Performance Share, if certain milestones are achieved, will convert into one fully paid ordinary share in the Company. Full terms and conditions of the Consideration Performance Shares are set out in Schedule 5 of this Explanatory Memorandum.

This Resolution is conditional on each of the Acquisition Resolutions being approved.

5. Resolution 4 – Approval of Issue of Consideration Shares, Consideration Options and Consideration Performance Shares.

5.1 General

The Acquisition is proposed to be completed via the issue of 275,000,000 (post-Consolidation) Consideration Shares, 75,000,000 Consideration Options (post-Consolidation) and 75,000,000 Consideration Performance Shares (post-Consolidation) to the current shareholders of Douugh. If this issue is not approved, then the Acquisition will not proceed and no Consideration Shares or Consideration Performance Shares will be issued.

The Directors anticipate that the Prospectus will be lodged prior to the General Meeting convened under this Notice.

5.2 Regulatory Information

As noted above, Shareholder approval of the Acquisition Resolutions is a condition precedent to Completion of the Acquisition under the Share Purchase Agreement. No Listing Rule approval is sought in addition to the approval sought for the purposes of item 7 of section 611 of the Corporations Act. This is because Listing Rule 7.2 Exception 8 provides that shareholder approval pursuant to Listing Rule 7.1 is not required where approval is being obtained pursuant to item 7 of section 611 of the Corporations Act. Accordingly, if this Resolution is passed, the issue of the Consideration Shares, Consideration Options and Consideration Performance Shares will be made without using the Company's 15% annual capacity in Listing Rule 7.1 and any additional 10% annual placement capacity in Listing Rule 7.1A.

(a) Item 7 Section 611 of the Corporations Act

For the purposes of determining voting power under the Corporations Act, a person (Second Person) is an "associate" of the other person (First Person) if:

(a) (pursuant to section 12(2) of the Corporations Act) the First Person is a body corporate and the Second Person is:
(1) a body corporate that the First Person controls;
(2) a body corporate that controls the First Person; and
(3) a body corporate that is controlled by an entity that controls the person;
(b) the Second Person has entered or proposes to enter into a relevant agreement with the First Person for the purpose of controlling or influencing the composition of the Company's Board or the conduct of the Company's affairs; or
(c) the Second Person is a person with whom the first person is acting or proposes to act, in concert in relation to the Company's affairs.

Section 608(1) of the Corporations Act provides that a person has a "relevant interest" if they:

(a) are the holder of the securities;
(b) have the power to exercise, or control the exercise of, a right to vote attached to the securities; or
(c) have power to dispose of or control the exercise of a power to dispose of, the securities.

It does not matter how remote the relevant interest is or how it arises. If two or more people can jointly exercise one of these powers, each of them is taken to have that power.

(b) Information Requirements under Section 611 (item 7) of the Corporations Act

The following information is required to be provided to members under the Corporations Act and ASIC Regulatory Guide 74 in respect of obtaining approval under section 611 item 7 of the Corporations Act. Members are also referred to the Independent Expert's Report prepared by RSM attached to this Notice at Schedule 1.

(a) Identity of Vendors and Associates: the identity of the Vendors is set out under Schedule 2 of this Notice.
(b) Relevant Interests and Voting Power: the relevant interests of the Vendors are set out under Section 1.4 and Schedule 2 of this Notice.
(c) Reason for the Proposed Issue of Securities: as detailed in Section 1.1 of this Notice, the Acquisition Shares will be issued in consideration for the Company's acquisition of all of the shares in Douugh.
(d) Material Terms of Proposed Issue of Securities: refer Section 1.1 of this Notice.
(e) Date of Proposed Issue of Securities: the Acquisition Shares and Public Offer shares will be issued upon completion of the Acquisition, which is set out in the timetable in this Notice and in any event within three months of the date that the Resolutions are approved at the General Meeting (or such later period approved by ASX).
(f) Interests of Directors: the interests of Directors and Proposed Directors are set out in Section 1.8. No Director has an interest in Douugh.
(g) Intentions of the Vendors and their associates: except as set out in this Explanatory Statement and as a result of the Acquisition, the Vendors have advised that they have no intention of:
(1) requesting the Company to change its strategic direction or operational priorities;
(2) injecting further capital into the Company;
(3) seeking to change the Company's or Douugh's current employment arrangements; or
(4) seeking to transfer the Company's assets to Vendors or their associates or otherwise redeploy the assets of the Company.
(h) Changes to the Board: as set out in Section 1.8, pursuant to the Acquisition it is proposed that Mr Andy Taylor, Mr Steve Bellotti and Mr Patrick Tuttle will join the Board of the Company on completion of the Transaction. Details of the Proposed Directors' qualifications and experience are set out in Section 1.8. Current directors Mr Joshua Hunt and Mr Salvatore Vallelonga will resign from the Board while Mr Umberto (Bert) Mondello will remain.
(i) Interests and recommendations of Directors: the Directors, except for Mr Mondello who is also a Proposed Director, do not have any material personal interests in the outcome of Resolution 4. Mr Hunt and Mr Vallelonga recommend that Shareholders vote in favour of Resolution 4. The Directors are not aware of any other information other than as set out in this Notice of Meeting that would be reasonably required by Shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolution 4.
(j) Capital Structure: a table showing the Company's current capital structure and the proforma capital structure on completion of the Transaction is set out in Section 1.5 and 1.6.

The Company has entered into the Share Purchase Agreement to acquire all the issued capital in Douugh from the Vendors in consideration for the issue of the Acquisition Shares. Terms of the Acquisition are summarised above at Section 1.1 of this Explanatory Memorandum.

Advantages and disadvantages of the acquisition are summarised at Section 1.12 of this Explanatory Memorandum.

Section 611 approval is required in this case as the Company in effect will have issued 275,000,000 Shares, 75,000,000 Consideration Options and 75,000,000 Consideration Performance Shares to the Vendors of the total 532,440,310 (post-Consolidation and based on Minimum Subscription) issued shares of the Company to the Vendors, and therefore collectively the Vendors will be in a position to control the Company. However it is noted that the Vendors are unrelated to each other, except for being shareholders of Douugh.

The Vendors will acquire more than a 20% relevant interest in the Company, appoint three board members and will have up to a 60.3% relevant interest (post-Transaction on an fully diluted basis based on the Minimum Subscription or 54.4%on a fully diluted basis based on the Maximum Subscription). On an undiluted basis without conversion of Consideration Performance Shares or exercise of Consideration Options and Canaccord Options) the Vendors will hold an interest of 51.5% in the Company immediately after the proposed Transaction on the Minimum Subscription is raised and 45.7% if the Maximum Subscription is raised.

Digital Bakery, an entity associated with Proposed Director Andy Taylor, the founder of Douugh, currently holds 69.34% of the issued share capital in Douugh. Immediately following the proposed Transaction, Digital Bakery will have a relevant interest in the Company of approximately 35.7% at Minimum Subscription and 31.7% at Maximum Subscription and up to 41.8% (Minimum Subscription) or 37.7% (Maximum Subscription) on an fully diluted basis.

The Acquisition Securities issued to Digital Bakery will be escrowed for 24 months.

Accordingly, Shareholder approval is being sought pursuant to item 7 section 611 of the Corporations Act for the issue of the Acquisition Securities to the Vendors.

5.3 Issue of Securities prior to the Transaction

ZIP issued 4 million shares at a deemed issue price of 1.3 cents in lieu of directors fees on 29 November 2019. These shares were approved by shareholders at ZIP's 2019 annual general meeting. Aside from this, ZIP has not issued any securities in the preceding 6 months.

Douugh has issued securities in the preceding 6 months and has raised AU\$1,000,000 in pre-ASX listing funding. Shares were issued via a placement to institutional and sophisticated investors. The issue was not underwritten. Funds raised were used to continue to build out and mature Douugh's underlying product and technology and update its brand and marketing material.

Other than the above, neither ZIP or Douugh intend to issue any securities prior to the completion of the Transaction and the Company's proposed re-admission to the ASX official list.

5.4 Independent Expert's Report

Under the ASIC regulatory guidance, the Company is required to engage an independent expert to review the acquisition as per RG 74.31 (and other association regulatory guidance provisions and Corporations Act) and to provide the shareholders with an opinion as to whether or not the Acquisition is "fair and reasonable" to members for the purposes of approval under section 611 (item 7) of the Corporations Act.

The Independent Expert's Report also contains assessments of the advantages and disadvantages of the Acquisition and is intended to assist all members of the Company in deciding how to vote on the resolutions set out in this Notice.

The Company has engaged RSM to prepare the Independent Expert's Report which is attached at Schedule 1 to this Notice. RSM has opined that this transaction is fair and reasonable to the non-associated Shareholders of the Company.

Shareholders are urged to carefully read the Independent Expert's Report in relation to the Acquisition to understand the scope of the report, the methodology of the assessment, the sources of information and any assumptions made.

6. Resolution 5 – Approval of Public Offer

6.1 Public Offer and Admission to the Official List

Conditional upon approval of the Transaction by shareholders, the Company will issue a prospectus to raise a minimum of AU\$4,000,000 and a maximum of AU\$6,000,000 and apply for re-admission to the Official List of ASX.

If Resolution 5 is approved by Shareholders, the securities will remain suspended until such time as the Company meets the requirements of Chapters 1 and 2 of the ASX Listing Rules and is readmitted to the ASX. If Resolution 5 is not approved by Shareholders, the Acquisition and Transaction will not proceed.

Effect of the Acquisition, assuming it is approved by shareholders and fully implemented, is detailed at Section 1.6.

This section contains a summary of the Company assuming the Acquisition is approved by Shareholders and fully implemented.

6.2 Proposed Use of Funds

	Minimum Raise			Maximum Raise
Use of proceeds	%	\$(AU)	%	\$ (AU)
Working capital and administrative expenses1	22.5%	\$900,000	21.5%	\$1,290,000
Research and development2	16%	\$640,000	18.3%	\$1,100,000
Marketing/growth hacking3	45.5%	\$1,820,000	45%	\$2,700,000
Public offer (6%)	6%	\$240,000	6%	\$360,000
Transaction expenses4	10%	\$400,000	9.2%	\$550,000
Total	100%	\$4,000,000	100%	\$6,000,000

The use of funds table above is based on the Company's current intentions as at the date of this Notice of Meeting and is subject to change.

Notes:

1. Comprises server costs, rental costs, employee costs (excluding marketing and development staff), directors' fees, legal costs, accounting and tax costs, insurance, ongoing listing costs and other administrative costs.
1. Includes internal labour costs for the ongoing development of the Douugh Platform and Douugh App.
1. Marketing costs associated with the Company's user acquisition strategy including creative production, awareness, promotion, public relations, agency costs, incentives and internal labour costs
1. Includes adviser and legal fees and capital raising costs, printing and distribution costs for the Prospectus and company secretarial costs.

6.3 Technical Information Required by Listing Rule 7.3

Pursuant to and in accordance with Listing Rule 7.3, the following information is provided in relation to Resolution 5:

(a) the Shares will be issued to subscribers under the Public Offer. The Directors will determine to whom the Shares will be issued, on a basis to ensure the Company's recompliance requirements are met;
(b) under the Public Offer, the Company will issue a minimum of 133,333,333 Shares to a maximum of 200,000,000 Shares (on a post-Consolidation basis);
(c) Shares will rank equally in all respects with existing Shares on issue;
(d) the Shares will be issued no later than 3 months after the date of the General Meeting;
(e) the Shares will be issued at a price of \$0.03 per Share; and

(f) the Company intends to use the funds raised from the Public Offer as set out in Section 6.2 of this Explanatory Memorandum.

Details with regards to the Transaction are set out above at Section 1 of this Explanatory Memorandum.

7. Resolutions 6 - 8 – Approval of Issue of Shares to Directors

7.1 General

Resolutions 6 – 8 seek Shareholder approval in accordance with Listing Rule 10.11 and Chapter 2E of the Corporations Act for the issue of Shares to Directors.

The Director Share Issue is proposed as remuneration to Directors over and above their Director fees in acknowledgement of the time and effort devoted to the Company by the Directors over the 5 years that they have been Directors. Over the past 12 months, the Company has not been overseen by management or other executive staff. The Directors have taken on these management responsibilities, in addition to their existing non-executive director responsibilities and have not received remuneration in respect of these executive duties.

Further information with regard to this is provided below at section 7.6.

7.2 Listing Rule 10.11

Mr Joshua Hunt, Mr Umberto (Bert) Mondello and Mr Salvatore Vallelonga, being Directors, are to be issued (on a post-Consolidation basis) 3,850,000 Shares each. Further details in relation to the issue of Shares to Directors is are set out in Section 7.4 below.

Listing Rule 10.11 provides that unless one of the exceptions in Listing Rule 10.12 applies, a listed company must not issue or agree to issue equity securities to, inter alia, a related party of the Company, unless it obtains the approval of its shareholders. Mr Hunt, Mr Mondello and Mr Vallelonga are related parties of the Company as they are directors of the Company and, accordingly, approval under Listing Rule 10.11 is required in order to issue Shares to them.

If Resolutions 6 to 8 are passed, the Company will be able to proceed with the Director Share Issue, and the Shares issued pursuant to Resolution 6 to 8 will not be included in the calculation of the Company's 15% annual placement capacity pursuant to Listing Rule 7.1.

If Resolutions 6 to 8 are not passed, the Company will not be able to proceed with the Director Share Issue and the Shares will not be issued to Mr Hunt, Mr Mondello and Mr Vallelonga.

7.3 Chapter 2E of the Corporations Act

Chapter 2E of the Corporations Act prohibits a public company from giving a financial benefit to a Related Party of the public company unless providing the benefit falls within a prescribed exception to the general prohibition. Relevantly, there is an exception if the company first obtains the approval of its shareholders in a general meeting in circumstances where certain requirements specified in Chapter 2E in relation to the convening of that meeting have been met (Shareholder Approval Exception).

A Related Party is defined widely in section 228 of the Corporations Act and includes, relevantly, a director (or proposed director) of a public company, any entity that controls (or is reasonably likely to control) a public company, and any entity that is controlled by a person or entity which is otherwise a Related Party, or there are reasonable grounds to believe that a person/entity is likely to become a Related Party of the public company.

A financial benefit for the purposes of the Corporations Act has a very wide meaning. It includes the public company paying money or issuing securities to the Related Party. In determining whether or not a financial benefit is being given, it is necessary to look to the economic and commercial substance and effect of what the public company is doing (rather than just the legal form). Any consideration which is given for the financial benefit is to be disregarded, even if it is full or adequate.

The Company is seeking separate Shareholder approval under Chapter 2E of the Corporations Act for each of the Directors' being issued Shares.

Chapter 2E of the Corporations Act prohibits the Company from giving a financial benefit to related parties of the Company unless either:

(a) the giving of the financial benefit falls within one of the nominated exceptions to the relevant provisions of the Corporations Act; or
(b) prior shareholder approval has been obtained for the giving of the financial benefit.

Any Shares issued to a Director will constitute a financial benefit for the purposes of Chapter 2E of the Corporations Act. The Director Shares will be issued at the same price as the other Director Shares. The Board believes that the issue of these Shares constitutes reasonable remuneration. However, in the interests of good governance the Board believes it is appropriate to give Shareholders the right to vote on these Resolutions and as such has decided to seek Shareholder approval under Chapter 2E of the Corporations Act.

For a public company, or an entity that the public company controls, to give a financial benefit to a related company of the public company, the public company or entity must:

(a) obtain the approval of the public company's members in the manner set out in section 217 to 227 of the Corporations Act; and
(b) give the benefit within 15 months following such approval,

unless the giving of the financial benefit falls within an exception set out in sections 210 to 216 of the Corporations Act.

The issue of the Shares constitutes giving of a financial benefit and Mr Joshua Hunt, Mr Bert Mondello and Mr Salvatore Vallelonga are related parties by virtue of being directors of the Company.

It is the view of the Company that the exceptions set out in section 210 to 216 of the Corporations Act may not apply in the current circumstances. Resolutions 6-8 therefore require the approval of the Company's Shareholders under section 208 of the Corporations Act. In any event the Directors have determined that Shareholders should have the opportunity to vote on the giving of the financial benefit under each of Resolutions 6-8 and that the Acquisition is not dependent upon the passing of Resolutions 6-8.

7.4 Technical information required by Chapter 2E, section 219 of the Corporations Act and Listing Rule 10.13

Pursuant to and in accordance with section 219 of the Corporations Act and Listing Rule 10.13, the following information is provided in relation to the Director Share Issue:

(a) the Shares will be issued to Mr Joshua Hunt, Mr Umberto (Bert) Mondello, Mr Salvatore Vallelonga (or their respective nominees);
(b) each of Mr Hunt, Mr Mondello and Mr Vallelonga are related parties of the Company due to their directorship pursuant to Listing Rule 10.11.1;
(c) the Shares will be issued for nil consideration and no funds will be raised from the issue;
(d) the maximum number of Shares to be issued pursuant to Resolutions 6 to 8 on a post consolidation basis is 11,550,000 comprising:
(1) 3,850,000 Shares to Mr Joshua Hunt;
(2) 3,850,000 Shares to Mr Umberto (Bert) Mondello; and
(3) 3,850,000 Shares to Mr Salvatore Vallelonga;
(e) each of the directors has a material personal interest in Resolutions 6 to 8;
(f) the Shares will be issued on the same terms as, and will rank equally with, all fully paid ordinary shares in the Company on issue;
(g) the Shares are anticipated to be issued on completion of the Acquisition and, in any event, no later than 1 month after the date of the Meeting;
(h) the as the Director Share Issue is being proposed in lieu of remuneration, no funds are to be raised from the issue of these Shares, and the Shares will be issued at a deemed issue price of \$0.03 per Share;
(i) a voting exclusion statement is included in the Notice of Meeting; and
(j) for the full financial year ended 30 June 2020 total amounts paid or are payable to the Directors as follows:
(1) Mr Joshua Hunt \$60,000 (directors fees payable to HopgoodGanim Lawyers, an entity of which Mr Hunt is a Partner);
(2) Mr Salvatore Vallelonga \$60,000; and
(3) Mr Umberto (Bert) Mondello \$149,000 (comprised of \$60,000 in director fees and \$89,000 in executive and management services, of which \$40,000 was converted to Shares and approved by Shareholders at the previous Annual General Meeting on 29 November 2019.

Between July and October 2019 inclusive, a short-term additional fee increase of \$6,000 per month was authorised for Mr Bert Mondello to provide additional services, including, but not limited to, managing and promoting the software development efforts of the Company. This entire amount, being \$40,000 was converted to Shares in the Company following Shareholder approval.

Further, in recognition of the extra time and effort committed by Mr Mondello to the operations of the Company, including detailed work in relation to the proposed Acquisition, from 1 December 2019 until 30 June 2020 a short-term additional fee increase of a total of \$11,000 per month was approved by the Board for Mr Bert Mondello.

7.5 Effect on Director Shareholdings

On the basis that the Shares are issued to the Directors, their shareholding will be increased as follows:

Director	Present Company Shareholding and \$value post Consolidation	Shares Issued and \$value (post consolidation)	Total Company Shareholding and (\$value)	Percentage increase
Joshua Hunt	817,583	3,850,000	4,667,583	470.9%
	(\$24,527.49)	(\$115,500)	(\$140,027)
Umberto	11,346,041	3,850,000	15,196,041	33.9%
Mondello	(\$340,381)	(\$115,500)	(\$455,881)
Sal Vallelonga	748,240	3,850,000	4,598,240	514.5%
	(\$22,447)	(\$115,500)	(\$137,947)

7.6 Additional Information and effect on Shareholders

The Director Share Issue is proposed as remuneration to Directors over and above their Director fees in acknowledgement of the time and effort devoted to the Company by the Directors over the 5 years that they have been Directors. The Company has been highly focussed on cutting and keeping costs to a minimum. In particular, over the past 12 months, the Company has not been overseen by management or other executive staff. The Directors have taken on these management responsibilities, in addition to their existing non-executive director responsibilities and have not received remuneration in respect of these duties.

The Directors believe the Shareholders should have the right to approve or not approve the Director Share Issue for one or all of the Directors and as such these Resolutions are not interdependent nor are they a condition of the Acquisition.

If any of the Resolutions 6-8 are not approved, then the Acquisition will still proceed.

Shareholders should be aware that the Directors have taken fees of \$4,000 per month in the financial half year ended 31 December 2019 and should have regard to this in the context of the remuneration that will be received under Resolutions 6-8.

Shareholders should further have regard to the fact that upon completion of the Acquisition Mr Hunt and Vallelonga will resign as Directors while Mr Mondello will remain as a Director.

The effect of the Director Share Issue on the capital structure of the Company both before and after the completion of the Acquisition are shown below:

	Min. Raise		Max Raise
Holder	Shares/Options	%	Shares/Options	%

	Post Consolidation
Director issue	11,550,000	2.16%	11,550,000	1.92%
Total Shares on issue at post Consolidation and Public Offer (Min/Max)	534,440,310	100.00%	601,106,977	100.00%

7.7 Directors recommendations

Joshua Hunt, Umberto Mondello and Sal Vallelonga each decline to make a recommendation to Shareholders in relation to Resolutions 6-8 due to their material personal interests in the outcome of the Resolutions.

8. Resolution 9 – Approval for Issue of Shares to Mr Derek Hall

8.1 General

Resolution 9 is an ordinary resolution and seeks Shareholder approval for the issue of 825,000 Shares to Mr Derek Hall, being the company secretary of the Company (Company Secretary Shares).

8.2 Listing Rule 7.1

Resolution 9 seeks shareholder approval to the issue of the Company Secretary Shares for the purposes of Listing Rule 7.1, so that the issue of those shares does not count towards the Company's 15% Capacity.

If Resolution 9 is passed, the Company Secretary Shares will be excluded from the calculation of the number of equity securities that the Company can issue without shareholder approval under Listing Rule 7.1.

If Resolution 9 is not passed, the Company will not proceed with the issue of the Company Secretary Shares and will need to examine alternative payment options to the Company Secretary.

8.3 Technical information required by Listing Rule 7.3

Pursuant to and in accordance with Listing Rule 7.3, the following information is provided in relation to the issue of the Company Secretary Shares:

(a) the number of Company Secretary Shares to be issued is 825,000;
(b) the Company Secretary Shares will be issued to Mr Derek Hall, company secretary of the Company;
(c) no funds will be raised from the issue of the Company Secretary Shares;
(d) the Company Secretary Shares will rank equally in all respects with existing Shares on issue;
(e) the Company Secretary Shares are anticipated to be issued on completion of the Acquisition and, in any event, no later than 3 months after the date of the General Meeting;
(f) the Company Secretary Shares are being issued in lieu of remuneration for company secretarial and general administrative services performed by Mr Hall for nil consideration, and no funds will be raised; and
(g) a voting exclusion statement is included in the Notice of Meeting.

8.4 Directors' Recommendation

The Directors recommend that Shareholders vote in favour of Resolution 9. Any undirected proxies held by the Chairman will be voted in favour of Resolution 9.

9. Resolution 10 – Approval for Issue of Options to Canaccord Genuity Pty Ltd

9.1 Options

The Company has appointed Canaccord Genuity (Australia) Limited (Canaccord) as Lead Manager of the Transaction.

Resolution 10 is an Ordinary Resolution and seeks Shareholder approval for the issue of a maximum of 30 million unlisted options exercisable at 4 cents each with an expiry date of 4 years from the date of issue (Canaccord Options). The maximum total number of unlisted options the Company will issue to Canaccord is 30,000,000 for the purposes of ASX Listing Rule 7.1.

9.2 Listing Rule 7.1

Broadly speaking, and subject to a number of exceptions, Listing Rule 7.1 limits the amount of equity securities that a listed company can issue without the approval of its shareholders over any 12 month period to 15% of the fully paid ordinary shares it had on issue at the start of that period (15% Capacity).

Resolution 10 seeks shareholder approval to the issue of the Canaccord Options for the purposes of Listing Rule 7.1, so that the issue of those options does not count towards the Company's 15% Capacity.

If Resolution 10 is passed, the Canaccord Options will be excluded from the calculation of the number of equity securities that the Company can issue without shareholder approval under Listing Rule 7.1.

If Resolution 10 is not passed, the Company will not proceed with the issue of the Canaccord Options and will need to examine alternative payment options to the Lead Manager.

9.3 Technical information required by Listing Rule 7.3

Pursuant to and in accordance with Listing Rule 7.3, the following information is provided in relation to the issue of Canaccord Options:

(a) the Canaccord Options will be issued in satisfaction of the provision of services by Canaccord as Lead Manager of the Transaction;
(b) between 20,000,000 to 30,000,000 Canaccord Options will be issued under this resolution;
(c) the material terms of the Canaccord Options are summarised in Schedule 6 of this Explanatory Memorandum;
(d) the Canaccord Options are anticipated to be issued on completion of the Acquisition and, in any event, no later than 3 months after the date of the General Meeting;
(e) the Canaccord Options will be issued for nil consideration but will have an exercise price of \$0.04 each;
(f) the Canaccord Options are being issued pursuant to a lead manager mandate between the Company and Canaccord, the material terms of which are summarised at Schedule 9; and
(g) a voting exclusion statement is included in the Notice of Meeting.

The terms and conditions of the Canaccord Options are set out in Schedule 6 attached to this Notice of Meeting.

Under the terms of the lead manager mandate, Canaccord will also receive 6% of the funds raised as a Lead Manager fee. Terms of the lead manager mandate are summarised at Schedule 9.

9.4 Directors' Recommendation

The Directors recommend that Shareholders vote in favour of Resolution 10. Any undirected proxies held by the Chairman will be voted in favour of Resolution 10. Any undirected proxies held by the Chairman will be voted in favour of Resolution 10.

10. Resolution 11 – Approval of Issue of Shares to Company Advisors

Resolution 11 is an Ordinary Resolution and seeks Shareholder approval for the issue of 1,375,000 shares on a post consolidation basis to Company Advisors (Advisor Shares) for the purposes of ASX Listing Rule 7.1.

10.1 Listing Rule 7.1

Resolution 11 seeks shareholder approval to the issue of the Advisor Shares for the purposes of Listing Rule 7.1, so that the issue of those options does not count towards the Company's 15% Capacity.

If Resolution 11 is passed, the Advisor Shares will be excluded from the calculation of the number of equity securities that the Company can issue without shareholder approval under Listing Rule 7.1.

If Resolution 11 is not passed, the Company will not proceed with the issue of the Advisor Shares and will need to examine alternative payment options to the Company Advisors.

10.2 Technical information required by Listing Rule 7.3

Pursuant to and in accordance with Listing Rule 7.3, the following information is provided in relation to the issue of the Advisor Shares:

(a) the Advisor Shares will be issued to Company Advisors Indian Ocean Corporate Pty Ltd;
(b) the maximum number of Advisor Shares to be issued on a post-Consolidation basis is 1,375,000;
(c) the Advisor Shares will rank equally in all respects with existing Shares on issue;
(d) the Advisor Shares are anticipated to be issued on completion of the Acquisition and, in any event, no later than 3 months after the date of the General Meeting;
(e) the Advisor Shares will be issued for nil consideration; no funds will be raised from the issue of the Advisor Shares;
(f) the deemed issue price of the Advisor Shares is \$0.03;
(g) the Advisor Shares are being issued to the Company Advisors for services provided to Douugh throughout the operating life cycle of Douugh and in satisfaction of past services provided to Douugh by the Company Advisors; and
(h) a voting exclusion statement is included in the Notice of Meeting.

10.3 Directors' Recommendation

The Directors recommend that Shareholders vote in favour of Resolution 11. Any undirected proxies held by the Chairman will be voted in favour of Resolution 11.

11. Resolution 12 – Approval of Shares – Douugh Convertible Notes

11.1 General

Douugh and the Company have entered into 8 separate convertible loan agreements (Convertible Loan Agreements) with third parties (Lenders) with an aggregate value of \$12,500,000 (Convertible Notes). All noteholders are unrelated parties of the Company. Material terms of the Convertible Loan Agreements and the identities of the Lenders are provided in Schedule 8.

Under the terms of the Convertible Loan Agreements, each noteholder agrees to lend Douugh a loan amount which will convert into ZIP Shares at the Public Offer price of \$0.03 per Share on completion of the Acquisition. In the event the Acquisition does not complete, each Loan will convert into Douugh shares. The Convertible Notes are currently held by Douugh.

Each Lender may be paid interest on the Loan. In the event the Loan is converted into ZIP Shares on completion of the Acquisition, interest is payable on the Loan to the Lender at a rate of 30% per annum (Interest Rate) on completion of the Acquisition. In the event the Acquisition does not complete and each Loan is converted into Douugh shares, interest will be payable on the Loan at the Interest Rate by the issue of Douugh shares.

Resolution 12 seeks Shareholder Approval for the issue of 8,333,333 Shares on the conversion of the Convertible Notes and for the purposes of Listing Rule 7.1.

11.2 Listing Rule 7.1

Broadly speaking, and subject to a number of exceptions (none of which apply in respect of this issue), Listing Rule 7.1 limits the amount of equity securities that a listed company can issue without the approval of its shareholders over any 12 month period to 15% of the fully paid ordinary shares it had on issue at the start of that period (15% Capacity).

Resolution 12 seeks shareholder approval to the issue of Shares on conversion of the Douugh Convertible Notes (Douugh Convertible Note Shares) the purposes of Listing Rule 7.1, so that the Douugh Convertible Note Shares do not count towards the Company's 15% Capacity.

If Resolution 12 and the Acquisition Resolutions are passed, the Shares issued will be excluded from the calculation of the number of equity securities that the Company can issue without shareholder approval under Listing Rule 7.1.

If Resolution 12 is not passed, the Lenders will be repaid the value of their Loan by Douugh in Douugh shares and no Convertible Note Shares will be issued pursuant to the Convertible Note Agreements.

11.3 Technical information required by Listing Rule 7.3

Pursuant to and in accordance with Listing Rule 7.3, the following information is provided in relation to the issue of the Douugh Convertible Note Shares:

(a) on conversion of the Convertible Notes at completion of the Acquisition, the Lenders will receive Shares in the Company;
(b) the maximum number of Douugh Convertible Note Shares to be issued on conversion of the Convertible Notes is 8,333,333 Shares;
(c) once converted, the Douugh Convertible Note Shares will be issued on the same terms and will rank equally with all fully paid ordinary shares in the Company on issue:
(d) the Douugh Convertible Note Shares are anticipated to be issued upon completion of the Acquisition and, in any event, no later than 3 months after the date of the General Meeting;
(e) the Convertible Notes will convert into Douugh Convertible Note Shares at a price of \$0.03 per Share;
(f) the Douugh Convertible Note Shares are being issued in satisfaction of Convertible Loan Agreements which have been entered into by the Company, Douugh and the Lenders to provide \$250,000 general working capital to Douugh;
(g) the terms and conditions of the Douugh Convertible Notes are set out in Schedule 8 attached to this Notice of Meeting; and
(h) a voting exclusion statement is included in the Notice of Meeting.

11.4 Directors' Recommendation

The Directors recommend that Shareholders vote in favour of Resolution 12. Any undirected proxies held by the Chairman will be voted in favour of Resolution 12.

12. Resolution 13 – Approval of Employee Share Option Plan

12.1 Employee Share Option Plan

Background

Subject to shareholder approval of this Resolution 13, the Company will adopt an Employee Share Option Plan to:

(a) establish a method by which directors or employees of the Company (Eligible Persons) can participate in the future growth and profitability of the Company;
(b) provide an incentive and reward for Eligible Persons for their contributions to the Company; and
(c) attract and retain a high standard of managerial and technical personnel for the benefit of the Company.

Shareholder approval of the Employee Share Option Plan is being sought to enable the Company to issue Awards to the Eligible Persons of the Company and to issue Shares to those Eligible Persons if they choose to exercise the Awards, without being required to include the Awards within the Company's 15% limit for the purpose of Listing Rule 7.1.

Key material terms of the Employee Share Option Plan are outlined in Schedule 7.

Purpose

The Board is of the opinion that the engagement and retention of highly-skilled and qualified executives and employees will be a crucial factor in the Company's ongoing commercial success. Given that the Company will, subject to shareholder approval of the Acquisition Resolutions, begin to undertake commercial activities in the mineral sands industry, the Board considers that for the purposes of achieving strategic objectives, acting as a reputable and competitive player in the market, and maximizing shareholder value, it is important to be able to offer balanced and proportionate remuneration to the Company's human capital assets.

In light of this reasoning, the Board considers that the Company can either:

(a) offer higher cash remuneration; or
(b) offer Awards to such Eligible Persons under a plan such as the proposed Employee Share Option Plan.

Amongst the benefits of the second option, the Board notes the benefits the Company will experience from paying out less in executive/employee pay as well as the extensive academic research which demonstrates that executives/employees who are incentivized under an employee incentive plan have greater aligned interests with the members of the Company.

ASX Listing Rules

ASX Listing Rule 7.1 (subject to some exemptions) provides that a publicly listed entity must not issue or agree to issue additional equity securities during a twelve (12) month time period which

represents 15% of the number of fully paid ordinary securities on issue at the commencement of that 12 (twelve) month period without shareholder approval.

An exemption to Listing Rule 7.1 is contained within Listing Rule 7.2 Exception 13(b) which provides that Listing Rule 7.1 does not apply to issues of securities under an employee incentive scheme if within three (3) years before the issue date of such securities holders of ordinary securities have approved the issue of securities under the scheme as an exception to the rule under Listing Rule 7.1.

With the passing of Resolution 13, the Company will have the ability to issue securities under the Employee Share Option Plan to Eligible Persons during the period up to three years from the date of approval without impacting on the Company's 15% capacity (i.e. not requiring shareholder approval) under Listing Rule 7.1. If Resolution 13 is not passed, any issue of securities by the Company pursuant to the Employee Share Option Plan will count towards the Company's 15% capacity.

For the purposes of Listing Rule 7.2, Exception 13(b) the following further information is provided:

(a) a summary of the terms of the Employee Share Option Plan is set out in Schedule 7 to these Explanatory Notes;
(b) no securities have been issued to, or for the benefit of Eligible Persons under the Employee Share Options Plan to date. The Employee Share Option Plan will become effective and in operation after members have approved the issue of securities under the Employee Share Option Plan in accordance with Resolution 13;
(c) following receipt of shareholder approval, the maximum number of securities proposed to be issued under the Employee Share Option Plan within the three year period from the date of the passing of Resolution 13 is 24,222,015 securities, representing 5% of the undiluted Shares in the Company at Minimum Subscription under the Public Offer following completion of the Acquisition. The maximum number is not intended to be a prediction of the actual number of securities to be issued under the Employee Share Option Plan, simply a ceiling for the purposes of Listing Rule 7.2 (Exception 13(b)); and
(d) a voting exclusion statement is required for this resolution under applicable law and regulation and has been set out with the resolution in this Notice of Meeting.

The Board recommends that the shareholders vote in favour of Resolution 13.

13. Resolutions 14 –17: Election and Re-Election of Directors

13.1 New directors and management

As part of the terms of the Acquisition, it is proposed that Mr Steve Bellotti will be nominated as the Chairman of the Board and Mr Andy Taylor as Chief Executive Officer of the Company. Patrick Tuttle is to be elected as Non-Executive Directors of the Company. Mr Umberto (Bert) Mondello will be nominated for re-election as a Non-Executive Director of the Company. If approved, their appointments will commence immediately on Completion of the Acquisition.

Shareholder approval for the election of the Proposed Directors are being sought under Resolutions 14 to 17 of this Notice of Meeting for the purposes of clause 13.3 of the Company's Constitution. Shareholder approval of Resolutions 14 to 17 are subject to receipt of approval for each of the other Acquisition Resolutions.

Under the Share Purchase Agreement, the current Board of the Company will resign, with the exception of Mr Umberto (Bert) Mondello, and the Company will appoint three persons to the board of directors of the Company on Completion of the Acquisition, being , Andy Taylor, Steve Bellotti, and Patrick Truffle (Proposed Directors). Shareholder approval for the appointment of the Proposed Directors is sought pursuant to Resolutions 14 to 17. Profiles of the Proposed Directors are provided in Section1.8 of the Explanatory Memorandum.

The Company will undertake the appropriate background checks on the proposed directors and other individuals prior to their appointment as directors in accordance with the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations.

The Directors, with the exception of Mr Bert Mondello, who makes no recommendation, recommend that Shareholders vote in favour of Resolutions 14 to17.

14. Resolution 18 – Approval to Set Directors' Fees

Directors' Fees

Resolution 18 seeks Shareholder approval for the purposes of clauses 13.7 of the Company's Constitution and Listing Rule 10.17 to set the Directors' aggregate maximum fee pool from AUD\$250,000 per annum to AUD\$300,000 per annum. This is the first time the Company has sought to increase this fixed amount since its establishment in March 2004.

ASX Listing Rule 10.17 provides that an entity must not increase the total aggregate amount of directors' fees payable to all of its non-executive directors without the approval of the holders of its ordinary securities.

Approval for the increase set out in Resolution 18 is sought in accordance with clause 13.8 of the Company's Constitution and Listing Rule 10.17.

For the purposes of Listing Rule 10.17, the following information is provided:

(a) the amount of the increase of the maximum fee pool is AUD\$50,000;
(b) the maximum aggregate amount of directors' fees that may be paid to all of the Company's non-executive directors is AUD\$300,000 per annum;
(c) there has been one issue of securities to non-executive directors under Listing Rule 10.11 within the preceding three (3) years, being the issue of 4,000,000 Shares to non-executive director Bert Mondello, which was approved by Shareholders at the Company's 2019 annual general meeting; and
(d) a voting exclusion statement has been set out with resolution 18 in this Notice of Meeting.

15. Resolution 19 – Change of Name to Douugh Limited

General

Resolution 19 is a Special Resolution which means a resolution of a General Meeting passed by at least 75% of votes cast by Shareholders who (being entitled to do so) vote in person or by proxy at that General Meeting.

The Company seeks Shareholder approval by special resolution to change the Company's name from "ZipTel Limited" to "Douugh Limited". The Company also proposes to change its ASX ticker code from "ZIP" to "DOU" to reflect this change, subject to confirmation by ASX.

Pursuant to section 157(1)(a) of the Corporations Act, the Company may change its name by passing a special resolution to that effect. The Special Resolution must be lodged with ASIC within 14 days after it is passed.

This change in name will not in itself, affect the legal status of the Company or any of its assets or liabilities.

The Directors believe that the new name more accurately reflects the proposed commercial undertaking of the Company (mineral sands exploration and production).

Shareholder approval of Resolution 19 is subject to receipt of Shareholder approval for each of the other Acquisition Resolutions.

The Directors unanimously recommend that Shareholders vote in favour of Resolution 19.

16. Interpretation

In this Explanatory Statement and the Notice of Meeting:

Acquisition means the acquisition by ZIP of all of the issued capital in Douugh.

Acquisition Resolutions means Resolutions 1 to 5 (inclusive), as set out in this Notice of Meeting.

Acquisition Securities means the Consideration Shares, Consideration Options and the Consideration Performance Shares (post-Consolidation) to be issued to the Vendors pursuant to the terms of the Douugh Acquisition.

Active Customer means a directly registered, active customer with a live account on the Douugh Platform who has undertaken one of the following activities within a 90-day period:

(a) activated their Douugh debit card and used their Douugh debit card to make a purchase; and/or
(b) funded their Douugh bank account (via a deposit by the customer or receipt of a cash transfer from a third party).

An Active Customer cannot be procured via the acquisition of another business.

Advisor Shares means 1,375,000 Shares to be issued on a post-Consolidation basis to Company Advisors pursuant to Resolution 11.

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited ACN 008 624 691 or the Australian Securities Exchange operated by ASX Limited, as the context requires.

ASX Listing means the listing of a company on the ASX.

Automic means the Company share registry, being Automic Pty Ltd ACN 152 260 814.

AWST means Australian Western Standard Time

Board means the board of Directors of the Company.

Business Day means Monday to Friday inclusive, except New Year's Day, Good Friday, Easter Monday, Christmas Day, Boxing Day, and any other day that ASX declares is not a business day.

CAPEX means capital expenditure.

Canaccord means Canaccord Genuity (Australia) Limited.

Canaccord Options means the issue of unlisted options in the Company the subject of Resolution 10 and on the terms and conditions as set out in Schedule 6 of the Explanatory Statement.

CHESS means the Clearing House Electronic Subregistry System operated by ASX Settlement Pty Limited.

Closely Related Parties has the meaning given to it in Corporations Act.

Company, Ziptel or ZIP means ZipTel Limited, ABN 41 108 042 593, being a company incorporated in Australia and having registered address at Suite 3, 138 Main Street, Osbourne Park 6017.

Company Advisors means Indian Ocean Corporate Pty Ltd.

Company Secretary Shares means 825,000 Shares to be issued to the Company Secretary, Mr Derek Hall, pursuant to Resolution 9.

Completion means completion of the Acquisition in accordance with its terms.

Consideration Shares means 275,000,000 Shares (post-Consolidation), the subject of Resolution 4.

Consideration Options means 75,000,000 Options, the subject of Resolution 4 and on the terms and conditions set out in Schedule 4.

Consideration Performance Shares means 75,000,000 (post-Consolidation) performance shares in the Company, the subject of Resolution 4 and on the terms and conditions set out in Schedule 5 of this Notice.

Consolidation means the 1.1:2 consolidation of the capital of the Company.

Consolidation Date means the date on which the Shares of the Company are consolidated pursuant to the Consolidation which the Company anticipates to be on or about 18 August 2020.

Constitution means the constitution of the Company.

Convertible Note Holders means:

(a) Mr Stuart Green;
(b) Richard Coombe Pty Ltd ACN 154 645 664;
(c) Seed Space Pty Ltd ACN 624 772 961;
(d) RS and DE Butcher Pty Ltd ACN 001 319 740;
(e) Hardham Pension Fund Pty Ltd ACN 006 520 627;
(f) 1123 Capital Pty Ltd ACN 134 498 043;
(g) Arthur Lo Pty Ltd ACN 116 848 821; and
(h) Waitoa Peaks Pty Ltd ACN 605 717 333.

Corporations Act means the Corporations Act 2001 (Cth).

Customer Accounts means total Active Customer accounts live on the Douugh Platform.

Digital Bakery means The Digital Bakery Limited, an entity associated with proposed director Andy Taylor.

Director means a current director of the Company (and where applicable includes the Proposed Directors).

Director Share Issue means the issue of Shares to Directors as set out in this Notice.

Douugh means Douugh Limited ABN 89 620 721 343, a company incorporated in Australia and having a registered address at Level 4, 17-19 Bridge Street, Sydney NSW 2000.

Douugh App means Douugh's software application which consists of integrated, AI-powered personal financial management tools to assist customers with budgeting and saving.

Douugh Platform means the online banking platform hosted by Douugh.

Douugh Products means Douugh's key products, including the Douugh bank account, debit card, Douugh App and Platform.

Douugh Convertible Notes means convertible notes which will convert into Shares at the Public Offer price of \$0.03 per Share.

Douugh Convertible Note Shares means Shares issued on conversion of Douugh Convertible Notes.

Douugh USA means Douugh USA LLC, a fully owned subsidiary of Douugh incorporated in Delaware, U.S.

Eligible Persons means directors or employees of ZIP eligible to receive benefits under the Company's Employee Share Option Plan.

Employee Share Option Plan or ESOP means the employee share option plan the subject of Resolution 13 and described more fully in Schedule 7.

Explanatory Statement means the Explanatory Statement to the Notice of Meeting.

General Meeting or Meeting means the extraordinary general meeting of the Company the subject of the Notice of Meeting.

Independent Expert or RSM means RSM Australia Pty Ltd.

Independent Expert's Report means the report prepared by RSM Australia Pty Ltd on the Acquisition as attached at Schedule 1 to this Explanatory Statement.

Key Management Personnel is defined in the Corporations Act.

Lead Manager or Canaccord means Canaccord Genuity (Australia) Limited ABN 19 075 071 466.

Listing Rules means the listing rules of the ASX from time to time.

Minimum Subscription means the issue of 133,333.333 Shares at \$0.03 to raise \$4,000,000.

Maximum Subscription means the issue of 200,000,000 Shares at \$0.03 to raise \$6,000,000.

Monthly Recurring Revenue means the reported revenue that Douugh Limited actually receives during a calendar month from the use of its online banking services, calculated by using an AUD/USD exchange rate published on the last day of the month by the Reserve Bank of Australia on its website at www.rba.gov.au.

Notice of Meeting or Notice means this notice of meeting.

Official List means the official list of ASX.

Option means an option to subscribe for Shares.

Ordinary resolution means a resolution of a General Meeting passed by a simple majority of Shareholders who (being entitled to do so) vote in person or by proxy at that meeting.

Privacy Act means the Privacy Act 1998 (Cth).

Proposed Directors means Mr Andy Taylor, Mr Steve Bellotti, Mr Patrick Tuttle (and includes Mr Umberto (Bert) Mondello as the continuing Director as relevant).

Prospectus means the prospectus issued by the Company as part of its re-compliance with Chapters 1 and 2 of the ASX Listing Rules.

Public Offer means the offer of a minimum of 175,000,000 Shares and a maximum of 200,000,000 Shares at an issue price of AUD\$0.03 per Share (post-Consolidation) to raise a minimum of AUD\$4,000,000 and a maximum of AUD\$6,000,000.

Resolution means a resolution contained in this Notice of Meeting.

SaaS means software-as-a-service.

Section means a section of this Explanatory Memorandum.

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means a holder of legal title to Shares (collectively).

Share Purchase Agreement means the agreement between the Company and the Vendors whereby the Company has agreed to purchase all of the issued capital of Douugh.

Special resolution means a resolution of a General Meeting passed by at least 75% of votes cast by Shareholders who (being entitled to do so) vote in person or by proxy at that General Meeting.

Transaction means the Acquisition, Consolidation, Public Offer and those matters dealt with in the Acquisition Resolutions.

Vendors means the shareholders of Douugh as set out in Schedule 2.

Voting Power has the meaning given in the Corporations Act.

AUD\$ means Australian Dollar as the currency of the Commonwealth of Australia.

Any inquiries in relation to the Resolutions or the Explanatory Memorandum should be directed to Derek Hall (Company Secretary):

Suite 3, 138 Main Street Osborne Park WA 6017 Telephone Phone: +61 8 6380 2555 Email: [email protected]

Schedule 1 – Independent Expert's Report

Schedule 1 – Independent Expert's Report

ZIPTEL LIMITED

Financial Services Guide and Independent Expert's Report

June 2020

We have concluded that the Proposed Transaction is Fair and Reasonable

FINANCIAL SERVICES GUIDE

RSM Corporate Australia Pty Ltd ABN 82 050 508 024 ("RSM Corporate Australia Pty Ltd" or "we" or "us" or "ours" as appropriate) has been engaged to issue general financial product advice in the form of a report to be provided to you.

In the above circumstances we are required to issue to you, as a retail client, a Financial Services Guide ("FSG"). This FSG is designed to help retail clients make a decision as to their use of the general financial product advice and to ensure that we comply with our obligations as financial services licensees.

This FSG includes information about:

who we are and how we can be contacted;
the financial services that we will be providing you under our Australian Financial Services Licence, Licence No 255847;
remuneration that we and/or our staff and any associates receive in connection with the financial services that we will be providing to you;
any relevant associations or relationships we have; and
our complaints handling procedures and how you may access them.

Financial services we will provide

For the purposes of our report and this FSG, the financial service we will be providing to you is the provision of general financial product advice in relation to securities.

We provide financial product advice by virtue of an engagement to issue a report in connection with a financial product of another person. Our report will include a description of the circumstances of our engagement and identify the person who has engaged us. You will not have engaged us directly but will be provided with a copy of the report as a retail client because of your connection to the matters in respect of which we have been engaged to report.

Any report we provide is provided on our own behalf as a financial services licensee authorised to provide the financial product advice contained in the report.

General Financial Product Advice

In our report we provide general financial product advice, not personal financial product advice, because it has been prepared without taking into account your personal objectives, financial situation or needs.

You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice. Where the advice relates to the acquisition or possible acquisition of a financial product, you should also obtain a product disclosure statement relating to the product and consider that statement before making any decision about whether to acquire the product.

Benefits that we may receive

We charge various fees for providing different financial services. However, in respect of the financial service being provided to you by us, fees will be agreed, and paid by, the person who engages us to provide the report and such fees will be agreed on either a fixed fee or time cost basis. You will not pay to us any fees for our services; the Company will pay our fees. These fees are disclosed in the Report.

Except for the fees referred to above, neither RSM Corporate Australia Pty Ltd, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the report.

Remuneration or other benefits received by our employees

All our employees receive a salary.

Referrals

We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we are licensed to provide.

Associations and relationships

RSM Corporate Australia Pty Ltd is beneficially owned by the partners of RSM Australia, a large national firm of chartered accountants and business advisers. Our directors are partners of RSM Australia Partners.

From time to time, RSM Corporate Australia Pty Ltd, RSM Australia Partners, RSM Australia and / or RSM Australia related entities may provide professional services, including audit, tax and financial advisory services, to financial product issuers in the ordinary course of its business.

Complaints resolution

Internal complaints resolution process

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints should be directed to The Complaints Officer, RSM Corporate Australia Pty Ltd, P O Box R1253, Perth, WA, 6844.

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaint within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination. If a complaint is received in advance of a shareholder meeting or other key date where shareholders or investors may be making decisions which are influenced by our report, we will make all reasonable efforts to respond to complaints prior to that date.

Referral to External Dispute Resolution Scheme

A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Australian Financial Complaints Authority ("AFCA"). AFCA is an independent dispute resolution scheme that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial services industry.

Further details about AFCA are available at the AFCA website www.afca.org.au. You may contact AFCA directly by email, telephone or in writing at the address set out below.

Australian Financial Complaints Authority GPO Box 3 Melbourne VIC 3001 Toll Free: 1800 931 678 Email: [email protected]

Time limits may apply to make a complaint to AFCA, so you should act promptly or consult the AFCA website to determine if or when the time limit relevant to your circumstances expires.

Contact details

You may contact us using the details set out at the top of our letterhead on page 5 of this report.

1.	Introduction 5
2.	Summary and Conclusion 7
3.	Summary of Transaction 10
4.	Scope of the Report 13
5.	Profile of Ziptel Limited 16
6.	Profile of Douugh Pty Ltd 21
7.	Valuation Approach 16
8.	Valuation of ZIP Prior to the Proposed Transaction 30
9.	Valuation of ZIP Following to the Proposed Transaction 34
10.	Is the Proposed Transaction Fair to ZIP Shareholders? 41
11.	Is the Proposed Transaction Reasonable? 42

A.	Declarations and Disclaimers 45
B.	Sources of Information 46
C.	Glossary of Terms 47
D.	Industry Overview 49

RSM Corporate Australia Pty Ltd

Level 32, Exchange Tower, 2 The Esplanade Perth WA 6000 GPO Box R 1253 Perth WA 6844 T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9199

www.rsm.com.au

23 June 2020

The Directors Ziptel Limited Suite 3, 138 Main Street Osborne Park WA 6017

Dear Directors

INDEPENDENT EXPERT'S REPORT ("REPORT")

1. Introduction

1.1 This Independent Expert's Report (the "Report" or "IER") has been prepared to accompany the Notice of General Meeting and Explanatory Statement ("Notice") to be provided to shareholders for a General Meeting of Ziptel Limited ("ZIP" or "the Company") to be held on or around 11 August 2020, at which shareholder approval will be sought for (among other things) the acquisition of 100% of the issued capital of Douugh Pty Ltd ("Douugh") and the change to nature and scale of activities of the Company.
1.2 On 20 March 2020, ZIP announced that it had signed a binding agreement to acquire all the issued capital of Douugh ("the "Proposed Transaction").
1.3 The Proposed Transaction will result in ZIP acquiring the business and developed technology of Douugh, and if successful will result in the Company changing the nature and scales of its activities. ASX Listing Rule 11.1.2 requires the Company to seek Shareholder approval where it proposes to make a significant change to the nature and scale of its activities.
1.4 In conjunction with the Proposed Transaction, the Company is proposing to undertake a share consolidation on the basis of 1.1 for every 2 shares held ("Consolidation"). ZIP will also seek to raise a minimum of \$4.0 million through the issue of 133,333,333 ZIP post-consolidation shares (maximum 200,000,000 postconsolidation shares for a \$6.0 million raising) and seek re-admission to the Official List of the ASX. On completion of the transaction ZIP will change its name to Douugh Limited.
1.5 In consideration for the acquisition of Douugh, ZIP will issue 275,000,000 ZIP shares, 75,000,000 ZIP performance shares convertible into ordinary shares on achievement of certain timed performance milestones and 75,000,000 unlisted options exercisable at \$0.04 to the vendors ("Vendors"), all on a post-consolidation basis.

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1.6 The Company is seeking shareholder approval for the purposes of item 7 of Section 611 of the Act on the basis that following the Proposed Transaction, the shareholders of Douugh could hold up to 60.3% of the issued share capital of ZIP (on a fully diluted basis). Specifically, The Digital Bakery Ltd, an entity controlled by Andy Taylor (the founder and CEO of Douugh) will acquire voting power of up to 35.7% in ZIP on completion of the Proposed Transaction, excluding performance shares and options.
1.7 The Directors of the Company have requested that RSM Corporate Australia Pty Ltd ("RSM"), being independent and qualified for the purpose, express an opinion as to whether the Proposed Transaction is fair and reasonable to shareholders not associated with the Proposed Transaction ("Non-Associated Shareholders").
1.8 The resolutions for the above transactions are set out in the Notice of Meeting as follows:

Resolution 1 – Approval of change to nature and scale of activities

Resolution 2 – Consolidation of capital

Resolution 3 – Approval for issue of new class of securities

Resolution 4 – Approval of issue of consideration shares, consideration options and consideration performance shares

Resolution 5 – Approval of Public Offer

(together "the Acquisition Resolutions")

1.9 The Acquisition Resolutions are conditional on each other. Therefore, should any of the Acquisition Resolutions not be approved by Shareholders, the Proposed Transaction will not proceed.
1.10 Accordingly, we have considered all conditions and terms relating to the Acquisition Resolutions as part of the Proposed Transaction because, without them, the Proposed Transaction cannot complete.
1.11 We note that there are several other resolutions contained in the Notice of Meeting, including the conversion of \$250,000 of Convertible Notes issued by Douugh which will convert into 8,333,333 post-consolidation ZIP shares, along with the issue of shares and options to Directors and advisors. All of these resolutions are conditional on the Acquisition Resolutions being passed.
1.12 The ultimate decision whether to approve the Proposed Transaction should be based on each Shareholder's assessment of their circumstances, including their risk profile, liquidity preference, tax position and expectations as to value and future market conditions. If in doubt as to the action they should take with regard to the Proposed Transaction, or matters dealt with in this Report, Shareholders should seek independent professional advice.

2. Summary and conclusion

Opinion

2.1 In our opinion, and for the reasons set out in Sections 10 and 11 of this Report, the Proposed Transaction is fair and reasonable to the Non-Associated Shareholders of ZIP.

Approach

2.2 In assessing whether the Proposed Transaction is fair and reasonable to the Non-Associated Shareholders, we have considered Australian Securities and Investment Commission ("ASIC") Regulatory Guide 111 – Content of Expert Reports ("RG 111"), which provides specific guidance as to how an expert is to appraise transactions.
2.3 Where an issue of shares by a company otherwise prohibited under section 606 of the Act is approved under item 7 of section 611, and the effect on the company shareholding is comparable to a takeover bid, such as the Proposed Transaction, RG 111 states that the transaction should be analysed as if it was a takeover bid.
2.4 Therefore, we have considered whether or not the Proposed Transaction is "fair" to the Non-Associated Shareholders by assessing and comparing:
The Fair Market Value of a Share in ZIP on a control basis prior to the Proposed Transaction; with
The Fair Market Value of a Share in ZIP on a non-control basis immediately post completion of the Proposed Transaction,

and, considered whether the Proposed Transaction is "reasonable" to the Non-Associated Shareholders by undertaking an analysis of the other factors relating to the Proposed Transaction which are likely to be relevant to the Non-Associated Shareholders in their decision of whether or not to approve the Proposed Transaction.

2.5 Further information of the approach we have employed in assessing whether the Proposed Transaction is "fair" and "reasonable" is set out at Section 4 of this Report.

Fairness

2.6 Our assessed values of a ZIP Share prior to and immediately after the Proposed Transaction are summarised in the table and figure below.

Table 1 Assessed values of a ZIP Share pre and post the Proposed Transaction

		Value per Share
Assessment of fairness	Low	High	Mid-point
	\$	\$	\$

Fair value of a ZIP Share pre Proposed Transaction – Control basis	0.028	0.036	0.032
Fair value of a ZIP Share post Proposed Transaction – Minority basis	0.034	0.041	0.038

Source: RSM analysis

Figure 1 ZIP Share valuation graphical representation

Source: RSM Analysis

2.7 The chart above indicates that the range of values of a ZIP Share post the Proposed Transaction is greater than the range of values of a ZIP Share prior to the Proposed Transaction. In our assessment of fairness, we have also had regard to the mid-point of the assessed value ranges.
2.8 In accordance with the guidance set out in ASIC RG 111, and in the absence of any other relevant information, for the purposes of complying with s611 of the Act, we consider the Proposed Transaction to be fair to the Non-Associated Shareholders of ZIP.

Reasonableness

2.9 RG 111 establishes that an offer is reasonable if it is fair. It might also be reasonable if, despite not being fair, there are sufficient reasons for security holders to accept the offer in the absence of any higher bid before the offer closes. As such, we have also considered the following factors in relation to the reasonableness aspects of the Proposed Transaction:
The future prospects of the Company if the Proposed Transaction does not proceed; and
Any other commercial advantages and disadvantages to the Non-Associated Shareholders as a consequence of the Proposed Transaction proceeding.
2.10 If the Proposed Transaction does not proceed the Board will continue to seek alternative opportunities to add value to shareholders whilst continuing with the existing business activities of ZIP.
2.11 The key advantages of the Proposed Transaction are:

Advantage	Details
The Proposed Transaction is fair	The Proposed Transaction is fair to the Non-Associated Shareholders
Opportunity to benefit from emerging sector and consumer product	The Directors have been actively seeking opportunities to improve Shareholder value. The acquisition of Douugh will provide shareholders with the opportunity to benefit from an emerging sector and consumer product, which is disruptive to the existing bank offering.
Ability to maintain ASX Listing	The Proposed Transaction and associated capital raising will provide the Company with the ability to seek approval from the ASX for re-admission, thereby providing a market for existing Shareholders. ZIP shares have been suspended from trading since January 2020 leaving shareholders no opportunity to realise their investment.
Improvement in cash position from Public Offer	If the Proposed Transaction is approved, it will increase the cash position of the Company through the Capital Raising, although it is noted that these funds will primarily be used to launch the Douugh platform.

2.12 The key disadvantages of the Proposed Transaction are:

Disadvantage	Details
Change in nature of activities and investment profile	If the Proposed Transaction is approved, the Company will be changing the nature of its activities to operate as a financial software and services company, which may not be consistent with the investment objectives of all Shareholders.
Dilution of Shareholders' interests	If the Proposed Transaction is approved, the issue of the Acquisition Shares to the Vendors and the Public Offer will potentially dilute the shareholding of existing Shareholders from 100% to 13.3% on a fully diluted basis (assuming all Performance Shares vest, all Options are exercised and maximum subscription to the Capital Raising).
Vendor of Douugh will have a significant shareholding in ZIP	If the Proposed Transaction is approved, Douugh shareholders will collectively hold a voting power of up to 60.3% in ZIP. The Digital Bakery will hold an interest of up to 35.7% immediately following the Proposed Transaction and up to 41.8% on a fully diluted basis (assuming all Performance Shares vest, all Options are exercised and minimum subscription to the Capital Raising). A significant shareholding of greater than 25% allows a shareholder to block compulsory acquisitions and special resolutions of the Company, and may also deter potential takeover bids.
Investment in development and marketing costs required to launch Douugh platform, together with exposure to different operational risks	If the Proposed Transaction is approved, it will result in the Company undertaking a significant new business which requires investment in development and marketing costs to launch its product. These costs intend to be funded from the Capital Raise but will significantly increase the ongoing operational cost base of the Company. The Company may be required to raise additional equity funding to fund the business activities of Douugh, which would be dilutive to existing shareholders.
	In addition, the new business will expose the Company to new risks including commercial and execution risk associated with the successful commercialisation of a technology platform. Consequently, improved financial performance is not guaranteed and the ability of Douugh to achieve forecast levels of growth is uncertain.

2.13 We are not aware of any alternative proposals which may provide a greater benefit to the Non-Associated Shareholders of ZIP at this time.
2.14 RG 111 states that if an offer is fair, then it is reasonable. In our opinion, the position of the Non-Associated Shareholders of ZIP if the Proposed Transaction is approved is more advantageous than if the Proposed Transaction is not approved. Therefore, in the absence of any other relevant information and/or a superior offer, we consider that the Proposed Transaction is reasonable for the Non-Associated Shareholders of ZIP.
2.15 Non-Associated Shareholders should have particular regard to the potential advantages and disadvantages set out above in the context of their own risk profile and investment strategy.

3. Summary of Proposed Transaction

Overview

3.1 On 20 March 2020, ZIP announced that it had entered into a binding, conditional agreement ("Agreement") to acquire 100% of the issued capital of Douugh, a fintech company which has developed an online banking and financial wellness platform. The successful completion of the Proposed Transaction will result in the Company changing the nature and scale of its activities from a telecommunications software company to a financial software and services business.
3.2 As consideration for the Proposed Transaction:
ZIP will issue the Vendors 275,000,000 fully paid ordinary ZIP shares (on a post-consolidation basis) at a deemed issue price of \$0.03 per Share ("Consideration Shares");
ZIP will issue the Vendors 75,000,000 unlisted options in ZIP ((on a post-consolidation basis) exercisable at \$0.04 with an expiry date of four years from issue ("Consideration Options").
ZIP will issue the Vendors 75,000,000 performance shares in ZIP (on a post-consolidation basis) ("Performance Shares") which will convert into fully paid ordinary shares on a one-for-one basis on the achievement of the following milestones (and subject to such other terms and conditions required by the ASX or ASX Listing Rules):
- a) 25,000,000 Performance Shares (post-consolidation) on the acquisition of 10,000 customers or the achievement of AU\$100,000 in monthly recurring revenue for 3 consecutive months, whichever event occurs first within 3 years of listing;
- b) 25,000,000 Performance Shares (post-consolidation) on the acquisition of 12,500 customers or the achievement of AU\$125,000 in monthly recurring revenue for 3 consecutive months, whichever event occurs first within 3 years of listing; and
- c) 25,000,000 Performance Shares (post-consolidation) on the acquisition of 25,000 customers or the achievement of AU\$250,000 in monthly recurring revenue for 3 consecutive months, whichever event occurs first within 3 years of listing.

(together the "Acquisition Securities").

3.3 Other key terms of the Agreement are:
a) ZIP will consolidate the Company's issued capital by consolidating every two (2) existing Shares into one point one (1.1) new shares ("Consolidation") prior to implementation of the Proposed Transaction. This will result in the number of ZIP Shares currently on issue reducing from 189,133,899 to 104,023,644. There are currently 31,946,780 ZIP listed options on issue with an expiry date of 6 July 2020; these will have expired prior to the Consolidation taking place.
b) ZIP will offer 200,000,000 ordinary Shares (on a post-consolidation basis) at an issue price of \$0.03 per share to raise up to \$6.0 million, with a minimum subscription of 133,333,333 Shares (post-consolidation), to raise at least AU\$4.0 million under a prospectus ("Capital Raising") and seek re-admission to the Official List of the ASX.
c) On completion of the Proposed Transaction, ZIP will change its name to "Douugh Limited".
d) The current Board of ZIP will resign and be replaced by new Board members ("Proposed Board"), with the exception of Mr Bert Mondello who will remain as Non-Executive Director following completion of the Proposed Transaction.

The Proposed Board will comprise of:

Andy Taylor (Founder and CEO of Douugh);
Mr Steve Bellotti (Non-Executive Chairman);
Mr Patrick Tuttle (Non-Executive Director); and
Mr Bert Mondello (Non-Executive Director).
3.4 In addition to the Acquisition Securities, the Notice of Meeting contains resolutions for the approval of the following shares and options in ZIP:
3.4.1 Issue of 12,375,000 post-consolidation ZIP Shares to the Directors and Company Secretary of ZIP for nil consideration (3,850,000 to each of Joshua Hunt, Bert Mondello and Salvatore Vallelonga, and 825,000 Shares to Derek Hall) – Resolutions 6 to 9;
3.4.2 Maximum of 30 million unlisted ZIP options (on a post-consolidation basis) exercisable at \$0.04 each with an expiry date of 4 years from date of issue to Canaccord Genuity Pty Ltd as Lead Manager. We understand that the terms of their agreement provide for 5 million options to be issued for every \$1 million of funds raised under the Public Offer – Resolution 10;
3.4.3 Issue of 1,375,000 post-consolidation ZIP Shares to advisor Indian Ocean for nil consideration Resolution 11; and
3.4.4 Issue of 8,333,333 post-consolidation ZIP Shares to holders of \$250,000 of existing Douugh Convertible Notes ("DOU Convertible Notes"). The conversion will occur on completion of the Proposed Transaction and post the Consolidation of ZIP share capital, at a conversion price of \$0.03 per share – Resolution 12.
3.5 We have reflected the above resolutions in our assessment of the Proposed Transaction as they all relate to the proposed acquisition of Douugh and associated capital raising.

Key conditions of the Proposed Transaction

3.6 Completion of the Proposed Transaction is subject to and conditional upon a number of conditions precedent, including:
Due diligence investigations by the Company in respect of Douugh, its shareholders and its projects including legal, financial and technical due diligence, and the results of the Company's due diligence being entirely due to the Company's satisfaction;
Due diligence investigations by Douugh in respect of the Company including legal and financial due diligence, and the results of Douugh's due diligence being entirely to Douugh's satisfaction;
ZIP Shareholders approving the Acquisition Resolutions as per the Notice of Meeting dispatched to the Shareholders of ZIP;
The close of the Public Offer;
Approval in principle, from the ASX for relisting and re-admission of its securities to the Official List of the ASX;
evidence to the satisfaction of the Company that Douugh and its shareholders have executed and delivered all relevant documentation (including share certificates, share transfer forms or otherwise) to enable the transfer of 100% of the issued share capital of Douugh to the Company; and

the parties obtaining all relevant approvals, including shareholder approval, board approval and any third party consents necessary to implement the Proposed Transaction, including:
(a) the issue of the Acquisition Securities;
(b) the Consolidation of the Company's issued capital;
(c) Shareholder approval of a change in nature and scale of the Company; and
(d) The issue of shares under the Public Offer.

Rationale for the Proposed Transaction

3.7 The Directors of ZIP have been actively seeking opportunities to improve shareholder value and believe that the Proposed Transaction will provide an opportunity for long term growth of the Company with a focus in the financial software and services industry.
3.8 The Proposed Transaction requires the Company to complete a capital raising to raise not less than \$4,000,000, which will provide the Company with sufficient funds to implement the proposed research, development, commercialisation and marketing strategy for the Douugh platform. It is noted that the consideration for the Proposed Transaction is primarily Shares and Performance Shares and Options, thereby allowing more funds raised from the Capital Raising to be used directly on launching the Douugh platform.
3.9 The Directors consider that the potential increase in market capitalisation of the Company following completion of the Proposed Transaction and the associated Capital Raising may lead to increased coverage from investment analysts, access to improved equity capital market opportunities and increased liquidity for Shareholders which are not currently present.

Impact of Proposed Transaction on ZIP's Capital Structure

3.10 The table below sets out a summary of the capital structure of ZIP prior to and post the Proposed Transaction.
3.11 On a fully diluted basis the vendors of Douugh could hold an interest of up to 60.3% in ZIP if the minimum subscription is raised, or 54.4% if the maximum subscription is raised under the Public Offer. This assumes that all performance milestones are achieved and therefore all 75 million of Performance Shares are converted into ordinary shares of ZIP.
3.12 On an undiluted basis (without conversion of Performance Shares or exercise of Options), the vendors of Douugh will hold an interest of 51.5% in ZIP immediately after the Proposed Transaction if the minimum subscription is raised under the Public Offer, or 45.7% if the maximum subscription is raised.
3.13 Digital Bakery is an entity controlled by Andy Taylor, the founder of Douugh, which currently holds 69.34% of the issued share capital of Douugh. As a result, Digital Bakery will hold an interest of 35.7% in ZIP immediately following the Proposed Transaction assuming the minimum subscription (31.7% at maximum subscription), and up to 41.8% assuming the Performance Shares vest and on a fully diluted basis (37.7% at maximum subscription). The Acquisition Securities issued to Digital Bakery will be escrowed for 24 months.

Table 2 Share structure of ZIP pre and post the Proposed Transaction

	Prior to Proposed Transaction		Post Proposed Transaction - Minimum Subscription		Post Proposed Transaction – Maximum Subscription
Shares on issue
Pre-Consolidation ZIP Shareholders	189,133,899		189,133,899		189,133,899
Post-Consolidation ZIP Shareholders (1.1 for 2)	104,023,644	100%	104,023,644	19.5%	104,023,644	17.3%
Vendor - Consideration Shares	-	0%	275,000,000	51.5%	275,000,000	45.7%
ZIP Directors	-	0%	12,375,000	2.3%	12,375,000	2.1%
ZIP Advisors	-	0%	1,375,000	0.3%	1,375,000	0.2%
DOU Convertible Noteholders	-	0%	8,333,333	1.6%	8,333,333	1.4%
Capital Raise	-	0%	133,333,333	24.9%	200,000,000	33.3%
Total undiluted shares on Issue (Post-consolidation)	104,023,644	100%	534,440,310	100.0%	601,106,977	100.0%
Options and Performance Shares
Pre-Consolidation Options on issue	31,946,780		-		-
Post-Consolidation Options on issue (1.1 for 2) – expiring 6 July 2020 1	17,570,729	100%	-	0.0%	-	0.0%
Vendor – Performance Shares	-	0%	75,000,000	44.1%	75,000,000	41.7%
Vendor – Consideration Options	-	0%	75,000,000	44.1%	75,000,000	41.7%
Lead Manager Options	-	0%	20,000,000	11.8%	30,000,000	16.7%
Total Options and Performance Shares (Post-consolidation)	17,570,729	100%	170,000,000	100.0%	180,000,000	100.0%
Fully Diluted Position:
Existing Share / option holders	121,594,373	100%	104,023,644	14.8%	104,023,644	13.3%
Vendor Share / option holders	-	0%	425,000,000	60.3%	425,000,000	54.4%
Other new Share / option holders	-	0%	175,416,666	24.9%	252,083,333	32.3%
Total diluted Shares on issue (Post-consolidation)	121,594,373	100%	704,440,310	100.00%	781,106,977	100.0%

Source: Company estimates

Listed options exercisable at \$0.05 on or before 6 July 2020 – these options will have expired prior to the General Meeting and Consolidation taking place.

4. Scope of the Report

Corporations Act

4.1 Section 606 of the Act prohibits a person from acquiring a relevant interest in the issued voting shares of a public company if the acquisition results in that person's voting interest in the company increasing from a starting point that is below 20% to an interest that is above 20%. Completion of the Proposed Transaction will result in the shareholders of Douugh increasing their interest in ZIP from nil to a maximum of 60.3%. More specifically, the Digital Bakery, an entity associated with Proposed Director Andy Taylor, will have a relevant interest in the Company of up to 41.8% at Minimum Subscription (fully diluted) and up to 37.7% at Maximum Subscription (fully diluted).
4.2 Under Item 7 of Section 611 of the Act, the prohibition contained in Section 606 does not apply if the acquisition has been approved by the Non-Associated Shareholders of the company.
4.3 Accordingly, the Company is seeking approval from the Non-Associated Shareholders for the Proposed Transaction under Item 7 of Section 611 of the Act.
4.4 Section 611(7) of the Act states that shareholders must be given all information that is material to the decision on how to vote at the meeting. ASIC Regulatory Guide 111 ("RG 111") advises the requirement to commission an Independent Expert's Report in such circumstances and provides guidance on the content.

Basis of evaluation

4.5 In determining whether providing the Proposed Transaction is "fair" and "reasonable" we have given regard to the views expressed by the ASIC in RG 111.
4.6 RG 111 provides ASIC's views on how an expert can help security holders make informed decisions about transactions. Specifically, it gives guidance to experts on how to evaluate whether or not a proposed transaction is fair and reasonable.
4.7 RG 111 states that the expert's report should focus on:
The issues facing the security holders for whom the report is being prepared: and
The substance of the transaction rather than the legal mechanism used to achieve it.
4.8 Where an issue of shares by a company otherwise prohibited under section 606 is approved under item 7 of section 611 and the effect on the company's shareholding is comparable to a takeover bid, RG 111 states that the transaction should be analysed as if it was a takeover bid.
4.9 RG 111 applies the fair and reasonable test as two distinct criteria in the circumstance of a takeover offer, stating:
A takeover offer is considered "fair" if the value of the offer price or consideration is equal to or greater than the value of the securities that are the subject of the offer; and
A takeover is considered "reasonable" if it is fair, or where the offer is "not fair" it may still be reasonable if the expert believes that there are sufficient reasons for security holders to accept the offer.
4.10 Consistent with the guidelines in RG 111, in determining whether the Proposed Transaction is fair and reasonable to the Non-Associated Shareholders, the analysis we have undertaken is as follows:
A comparison of the fair value of an ordinary Share in ZIP prior to (on a control basis) and immediately following (on a non-control basis) the Proposed Transaction – fairness; and

A review of other significant factors which Non-Associated Shareholders might consider prior to approving the Proposed Transaction – reasonableness.
4.11 The other significant factors to be considered include:
Other prospects of the Company if the Proposed Transaction does not proceed; and
any other commercial advantages and disadvantages to the Non-Associated Shareholders as a consequence of the Proposed Transaction proceeding.
4.12 Our assessment of the Proposed Transaction is based on economic, market and other conditions prevailing at the date of this Report.

5. Profile of Ziptel Limited

Background

5.1 Ziptel Limited is an Australian public company listed on the ASX that was founded in 2004 and is based in Perth. As at the date of this Report, ZIP had a market capitalisation of approximately \$3.2 million.
5.2 ZIP was historically focused on providing international roaming and calling solutions to the consumer. More recently, the Company has offered software development services to third parties and announced collaboration agreements with various parties.
5.3 ZIP has been suspended from quotation on ASX since 28 January 2020. On 20 March 2020, ZIP announced that it had entered into a binding agreement to acquire all of the issued share capital of Douugh.
5.4 The Company's group structure prior to the proposed transaction is shown in the figure below:

Figure 2 ZIP group structure prior to the proposed transaction

Source: Company

5.5 The directors of ZIP are summarised in the table below.

Table 3 ZIP Directors

Name	Title	Experience
Mr Josh Hunt	Non- Executive Chairman	Mr Josh Hunt is a lawyer and Partner of law firm Hopgood Ganim, with experience in providing advice to listed public and private companies and in all aspects of project acquisitions and disposals. Mr Hunt has practised corporate and commercial law for over 12 years and has been intimately involved in the formation, acquisition and development of numerous successful companies over this time.
Mr Umberto Mondello	Non-Executive Director	Mr Bert Mondello first entered the telecommunications industry in 1997, and managed key retail distribution channels for Optus and Vodafone until 2002. During this period, the telecommunications industry evolved significantly, shifting from the basic analogue network to digital and 3G. In 2002, Bert was invited to assist in building the business model and blueprint of Vodafone's outsourced pilot distribution model called Vodafone Alliance. As an equity partner and General Manager of Vodafone Alliance, his responsibility was to build and manage a national business to business sales team.
Mr Salvatore Vallelonga	Non-Executive Director	Mr Salvatore Vallelonga is a Chartered Accountant and a director of Plexus Global Consultants Pty Ltd, a Chartered Accounting and business advisory business specialising in the provision of tailored tax and consultative solutions to its SME clients and emerging growth clients. Salvatore is also a director of Plexus Wealth Pty Ltd, which provides financial planning and wealth solutions to clients. Salvatore is a director of numerous private companies and is also on a number of boards and committees of non-profit organisations.

Financial information of ZIP

5.6 The information in the following section has been extracted for the following sources:
Years ended 30 June 2019 and 30 June 2018 extracted from the audited financial statements of the Company, and for the half year ended 31 December 2019 from the reviewed financial statements of the Company.
5.7 The auditor of ZIP, Criterion Audit Pty Ltd, has issued an unmodified review opinion on the financial statements for the half year ended 31 December 2019.

Financial performance

5.8 The following table sets out a summary of the financial performance of ZIP for the years ended 30 June 2019 and 30 June 2018, and the half year ended 31 December 2019.

Table 4 ZIP historical financial performance

		Half year ended	Year ended	Year ended
		31-Dec-19	30-Jun-19	30-Jun-18
\$	Ref	Reviewed	Audited	Audited
Sale of goods and services	5.10	44,974	7,341	26,154
Other income	5.11	9,525	96,009	453,128
Cost of sales		-	(1,146)	(29,991)
Administration	5.12	(129,884)	(114,980)	(152,349)
Research and development	5.13	-	-	(108,293)
Employee benefits	5.12	(138,413)	(179,628)	(209,285)
Consulting	5.12	-	(146,869)	(165,400)
Depreciation and amortisation		-	-	(6,962)
Write off of software licences	5.14	-	-	(61,062)
Write off of inventories	5.14	-	-	(23,783)
Finance costs		(70)	(218)	(5,300)
Exchange gains		64	1,076	861
Loss before income tax expense		(213,804)	(338,415)	(282,282)
Income tax expense		-	-	-
Loss before income tax expense	5.9	(213,804)	(338,415)	(282,282)

Source: Company Financials

5.9 ZIP recorded a net loss of \$0.28 million in the year ended 30 June 2018 and \$0.34 million in the year ended 30 June 2019 due to lower income from government grants and R&D tax credits in FY19.
5.10 ZIP has minimal revenue-generating activities, therefore the Company has been historically loss-making. The revenue recorded is predominantly from software development services for third parties.
5.11 The Company recorded R&D tax credits in other income of \$0.07 million in the year ended 30 June 2019 and \$0.43 million in the year ended 30 June 2018. No R&D tax credits were recorded in the half year ended 31 December 2019.

5.12 Significant overheads for all the above periods primarily relate to administration expenses, employee benefits and consulting expenses. Included in these accounts are share-based payment expenses of \$0.03 million in the year ended 30 June 2019 and \$0.04 million in the half year ended 31 December 2019.
5.13 The Company recognised research and development expenditure of \$0.11 million in the year ended 30 June 2018.
5.14 ZIP recorded a total impairment expense of \$0.08 million in the year ended 30 June 2018 in relation to the write off of software licences and inventories.

Financial position

5.15 The table below sets out a summary of the financial position of ZIP as at 31 December 2019 and 30 June 2019.

Table 5 ZIP historical financial position

		31-Dec-19	30-Jun-19
\$	Ref	Reviewed	Audited
ASSETS
Cash and cash equivalents	5.17	1,457,171	1,603,329
Trade and other receivables		12,310	11,873
Prepayments		7,192	17,778
Total Current assets		1,476,673	1,632,980
Total Assets		1,476,673	1,632,980

LIABILITIES
Trade and other payables		124,845	107,347
Total current liabilities		124,845	107,347
Total liabilities		124,845	107,347

Net Assets	5.16	1,351,828	1,525,633

EQUITY
Issued capital		14,423,876	14,383,876
Reserves	5.18	8,000	8,000
Accumulated losses		(13,080,048)	(12,866,243)

Total Equity		1,351,828	1,525,633

Source: Company

5.16 As at 30 June 2019, ZIP had net assets of \$1.53 million, primarily comprising cash and cash equivalents. The reviewed financial statements as at 31 December 2019 show net assets of \$1.35 million.
5.17 The Company held \$1.60 million of cash as at 30 June 2019 and \$1.46 million as at 31 December 2019.
5.18 ZIP issued listed options to contractors in return for services rendered during the year ended 30 June 2019. The options were valued at \$8,000 and were recognised at grant date by the Company.

Cash Flow

5.19 ZIP released its quarterly review for Q3 FY20 on 29 April 2020 showing a cash balance of \$1.16 million at 31 March 2020. The net cash outflow of \$301,000 for the quarter primarily related to staff costs and administration expenses/corporate costs, offset by \$22,000 of receipts from customers.

Capital structure

5.20 ZIP has 189,133,899 ordinary shares on issue. The top 20 shareholders of ZIP as at 15 April 2020 are set out below.

Table 6 ZIP Top 20 shareholders

INDOMAIN ENTERPRISES PTY LTD 1 11,351,667 6.00% UPSKY EQUITY PTY LTD 2 9,000,000 4.76% 3 UCM HOLDINGS LIMITED 8,307,500 4.39% KIORAKU PTY LTD 4 7,950,000 4.20% 4 LIGURIAN HOLDINGS PTY LTD 7,950,000 4.20% 5 MR THOMAS LUKE ANUSIC 6,554,283 3.47% 6 RIMOYNE PTY LTD 5,145,866 2.72% TRADITIONAL SECURITIES GROUP PTY LTD 7 5,000,000 2.64% GAILFORCE MARKETING & PR PTY LTD 8 4,131,818 2.18% SUNSET CAPITAL MANAGEMENT PTY LTD 9 4,000,000 2.11% 10 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 3,804,591 2.01% ALTOR CAPITAL MANAGEMENT PTY LTD 11 3,250,000 1.72% 12 MR PHILIP UMBERTO RE 3,001,529 1.59% MR MARK PETER O'BRIEN & 13 2,312,000 1.22% MRS LOUISE MARGARET MARTHA O'BRIEN 14 MRS RUTH SAHAY 2,000,000 1.06% 14 MR JON PAUL RE 2,000,000 1.06% 15 KEYSQUARED PTY LTD 1,900,000 1.00% MR ADAM STUART DAVEY 16 1,685,500 0.89% SACCO DEVELOPMENTS AUSTRALIA PTY LIMITED 17 1,645,363 0.87% 18 MR ANDREAS BIERI 1,559,659 0.82% MR ROMANO NEGRI 19 1,500,000 0.79% NYG PTY LTD 20 1,337,360 0.71% Total Top 20 Shareholding 95,387,136 50.43% Total Issued Capital 189,133,899 100.00%	Rank	Name	Total Units	% Issued Share Capital

Share price performance

5.21 The market capitalisation of ZIP at the date of this report is \$3.2 million.
5.22 The figure below sets out a summary of ZIP closing share prices and traded volumes for the 12 months to 22 January 2020, as the Company was put into a trading halt on the ASX on 22 January 2020 pending the announcement of a material acquisition transaction.

Figure 3 ZIP daily closing share price and traded volumes

Source: S&P Capital IQ/ ASX

5.23 In the twelve-month period prior to the Company's trading halt on 22 January 2020, ZIP Shares were traded between \$0.010 and \$0.018 per share. The most significant trading day during this period was on 17 January 2020 when approximately 6.87% of ZIP's total volume of shares were traded.
5.24 The most significant trading days that have been summarised in the chart above are described as follows:

No.	Date	Comment
1	31-Jan-19	ZIP released its Appendix 4C quarterly review ending 31 December 2018 which provided an update on the Ziptel Convo Agreement and Launch Strategy
2	26-Feb-19	ZIP released its half yearly report and accounts which reported that the Company posted a net loss after tax of \$198,964 during the half year ended 31 December 2018
3	16-Apr-19	ZIP announced that it had received firm commitments for the placement of 33.4 million fully paid ordinary shares to sophisticated and professional investors to raise \$334,000 before costs. The proceeds of the placement were to be used to extend the Company's software development capabilities
4	24-Jun-19	ZIP announced that it had entered into a collaboration agreement with Perth based software development company Lateral Pty Ltd to deliver bespoke software development solutions for third parties
5	30-Aug-19	ZIP released its Annual Report to shareholders which reported that the Company posted a net loss of \$338,415 for the financial year ended 30 June 2019.
6	31-Oct-19	ZIP released its Appendix 4C review for the quarter ending 30 September 2019 which provided an update on the Company's software development capabilities

6. Profile of Douugh Pty Ltd

Background

6.1 Douugh is a purpose-based fintech company, incorporated in Australia as a proprietary limited company, which is taking a proprietary artificial intelligence ("AI") approach to disrupting the business model of banking.
6.2 Douugh is developing a subscription-based financial wellness platform which will assist customers in spending wisely, save more, pay off debt and build wealth via a smart bank account and debit card. Douugh's core proposition revolves around fostering financial wellness through a proprietary AI money assistant, as opposed to offering traditional banking products.
6.3 Douugh's key products offering currently encompasses:
A Douugh Bank Account;
A Douugh Debit Card; and
A Douugh Application ("App") and Platform.

Current Activities

6.4 Douugh differentiates itself from other neobanks by adopting a model of partnering with traditional banks, which negates the requirement for Douugh to hold a full banking licence in each jurisdiction and the associated high capital recruitments. Douugh has an agreement with Choice Bank in the USA which has allowed the launch of Douugh's products in this marketplace.
6.5 There is currently a waitlist in the USA of 10,000 individuals, of which approximately 1,000 are trialling the Douugh App, bank account and debit card (which is offered through a global agreement with Mastercard) in beta testing stage; the company has the ability to upscale its testing to beyond 1,000 users.
6.6 Douugh is currently focused on scaling its US customer base and growing its monthly recurring revenue before expanding its offerings to the wider international market on the successful completion of the Proposed Transaction. Douugh already has an agreement with Regional Australia Bank and a strategic investment from Monex Group, a Japanese financial services company.
6.7 The strategic intention of Douugh is to develop a software-as-a-service offering through a subscription-based financial wellness platform and AI assistant. Douugh will also look to expand its service offering wealth management, cashback rewards and instalment loans.
6.8 The current group structure of Douugh is shown below:

Figure 4 Douugh group structure prior to the proposed transaction

Agreements

6.9 Agreements entered into by Douugh which are material to its operations are as follows:

Agreement	Other Party	Key Terms
Partnership Agreement with Regional Australia Bank	Regional Australia Bank	Regional Australia Bank is the Australian Sponsor Bank to support the operation of the Douugh platform. The agreement provides for Regional Australia Bank to provide certain services, including onboarding services, account services and transaction services, for a fee payable by Douugh, with a term of five years.
Master Program Agreement with Choice Bank	Choice Financial Group	Under the agreement, Choice engages Douugh to manage, service and market a program to offer to customers demand deposit accounts with linked debit cards through certain digital channels which Douugh operates.
Carrying Agreement with DriveWealth LLC	DriveWealth LLC	Under the agreement, Douugh will provide investment advisory services to certain customers who establish accounts at DriveWealth, and conduct transactions for the purchase and sale of securities though DriveWealth on behalf of those customers. DriveWealth will provide all non-introducing brokerage services for accounts and customers.
Service Agreement with BlockScore	BlockScore	Under the agreement, Douugh has licensed from BlockScore the right to use the BlockScore Service. Douugh may use the BlockScore Services in the normal course of business to verify the accuracy of information submitted by consumers and for explicitly permitted uses as provided by USA legislation.
Services Agreement with Galileo Processing Inc	Galileo Processing Inc	Under the agreement, Galileo will deliver transaction services for Douugh including processing payments and transactions, maintaining and updating Cardholder information, providing customer reporting, providing training to customers, and providing identification verification.
Co-Brand Agreement with Mastercard USA	Mastercard International Inc	Douugh USA and Mastercard International entered into an exclusive incentive agreement to issue co-branded cards and to develop and actively participate in initiatives to increase the usage of co-branded cards and other Mastercard branded cards.
Douugh and Mastercard Australia Incentive Agreement	Mastercard Asia/Pacific Pte Ltd	Douugh Australia and Mastercard Asia/Pacific entered into an exclusive incentive agreement applying to Douugh's Mastercard branded Consumer and Commercial Debit, Credit and Prepaid Card Programs.
Agreement with Salesforce	SFDC Australia Pty Ltd	Under the agreement, Salesforce will provide services including mobile messaging and email using a product called ExactTarget for 150,000,000 super messages per annum, for 500,000 contacts and up to 100 users and 5 business units.
Joint Marketing Agreement with Empyr	Empyr Inc	Douugh and Empyr entered into a joint marketing agreement to enable Douugh to use the service developed by Empyr that provides card linked offers. Under the agreement, Empyr grants to Douugh a non-transferrable license to use the URL and the API access key to enable Douugh's internet- based access to the services.

Directors and management

6.10 The directors of Douugh are summarised below:
6.10.1 Mr Andy Taylor; and
6.10.2 Mr Mark Taylor.

Capital Structure

6.11 Douugh has 129,771,545 ordinary shares and 59,877,819 performance shares on issue. The top 20 shareholders of Douugh as at 15 April 2020 are set out below.

Table 7 Douugh Shareholdings

Rank	Name	Total Units	% Issued Share Capital
1	THE DIGITAL BAKERY LIMITED	89,985,240	69.34%
2	SUZANNA POMEROY	4,315,652	3.33%
3	MONEX GROUP INC	3,125,000	2.41%
4	MARK TAYLOR	2,962,240	2.28%
5	CASTLETOWN INVESTMENTS LTD S Belloti	1,792,320	1.38%
6	ECCLESTON CORPORATION PTY LTD	1,562,500	1.20%
7	WENSLEY CARROLL	1,398,382	1.08%
8	SPRINGVALE INNOVATIONS LIMITED Nick Gardener	1,129,823	0.87%
9	BURRILL SKIES PTY LTD	955,448	0.74%
10	PAUL MITCHELL & KAREN ANNE MITCHELL	782,530	0.60%
11	Seed Space Venture Capital (tsf from TDB & Rice)	753,000	0.58%
12	BERNARD JOSEPH & SUSIE HEIDI BROOKES	700,000	0.54%
12	Madeleine Somerville	700,000	0.54%
13	BEN SMITH PTY LTD	625,000	0.48%
14	SEAFELL PTY LTD	507,734	0.39%
14	CRAIG JAMES	507,734	0.39%
15	BEN SMITH PTY LTD	500,000	0.39%
15	ANTHONY JAMES MURRAY	500,000	0.39%
15	OZEM KASSEM	500,000	0.39%
15	BRUCORP PTY LIMITED	500,000	0.39%
15	Kerry Suzanne Reade	500,000	0.39%
15	Eldridge Family	500,000	0.39%
15	Chemistry Interactive	500,000	0.39%
16	BEALE SERVICES PTY LTD	477,401	0.37%
17	MR MICHAEL MCKEEVER	441,964	0.34%
18	Anthony So	400,000	0.31%
19	18 Knot Ventures Pty Ltd	375,940	0.29%
19	Frontiera Pty Ltd	375,940	0.29%
19	Mark James CASEY (Brett Luntz)	375,940	0.29%
20	EML Investments Pty Ltd ATF Parkes Talbot Investment Trust	375,000	0.29%

	Total Top 20 Shareholding	118,124,788	91.03%

	Total Issued Capital	129,771,545	100.00%

6.12 The performance shares are held by 65 shareholders and vest in 3 tranches as detailed below – these performance shares will be cancelled on completion of the Proposed Transaction:

Tranche 1 Launching in the USA and achieving 10,000 customers;
Tranche 2 achieving 20,000 customers; and
Tranche 3 achieving 50,000 customers.

Financial performance

6.13 The following table sets out a summary of the financial performance of Douugh for the years ended 30 June 2019 and 30 June 2018 as extracted from the audited consolidated financial statements, and the half year ended 31 December 2019 as extracted from the draft interim consolidated financial statements.
6.14 The audit report in the financial statements for the year ended 30 June 2019 is dated 28 April 2020 and includes an emphasis of matter in relation to a material uncertainty over the group's ability to continue as a going concern. This was based on the loss-making position of the Douugh group and ongoing cash outflows, with the group being dependent on raising additional funding through the issue of new equity or convertible debt to fund ongoing activities. The Directors were of the opinion that sufficient funds will be available to meet ongoing obligations.
6.15 The interim financial statements of the Douugh consolidated group for the half year ended 31 December 2019 were reviewed by Douugh's auditors, who provided an unmodified opinion on 19 May 2020 whilst noting the material uncertainty regarding going concern as detailed above.

		Half year ended	Year ended	Year ended
		31-Dec-19	30-Jun-19	30-Jun-18
\$	Ref	Reviewed	Audited	Audited
Revenue	6.18	-	241,329	246,300
Other income	6.19	598,025	488,280	701,367

Research and development	6.17	(364,011)	(1,071,622)	(1,447,266)
Business development		(155,589)	(48,289)	(73,975)
Corporate and infrastructure	6.20	(711,093)	(1,118,421)	(103,455)
Depreciation and amortisation		-	(13,355)	(6,930)
Interest expense		(45,364)	(28,207)	(1,570)

Loss before income tax expense		(678,032)	(1,550,285)	(685,529)
Income tax expense		(61,349)	-	-
Loss before income tax expense	6.16	(739,381)	(1,550,285)	(685,529)

Table 8 Douugh Historical Financial Performance

6.16 Douugh recorded net losses of \$0.69 million in the year ended 30 June 2018, \$1.55 million in the year ended 30 June 2019 and \$0.74 million in the half year ended 31 December 2019.
6.17 Douugh is still investing heavily in research and development expenditure, therefore the company has been historically loss-making. All R&D costs are expensed in the period incurred.
6.18 The company recorded collaboration services revenue of \$0.25 million in the year ended 30 June 2018 and \$0.24 million in the year ended 30 June 2019 which relates to commercial arrangements with partners to fund research and development. No revenue was recorded in the half year ended 31 December 2019 but Douugh has subsequently begun generating a low level of operating revenue from interchange fees on the banking transactions of the 1,000 beta test users in the USA.

6.19 The company recorded R&D tax rebates in other income of \$0.70 million in the year ended 30 June 2018, \$0.49 million in the year ended 30 June 2019 and \$0.60 million in the half year ended 31 December 2019.
6.20 Significant overheads for all the above stated periods primarily relate to research and development expenditure, and corporate and infrastructure expenses.

Financial position

6.21 The table below sets out a summary of the financial position of Douugh as at 31 December 2019 and 30 June 2019.

Table 9 Douugh Historical Financial Position

		31-Dec-19	30-Jun-19
\$	Ref	Reviewed	Audited
ASSETS
Cash and cash equivalents	6.23	369,846	649,105
Trade and other receivables	6.24	538,998	363,100
Total current assets		908,844	1,012,205
Total Assets		908,844	1,012,205
LIABILITIES
Trade and other payables	6.25	560,061	603,444
Employee benefits		18,662	6,890
Other liabilities	6.26	846,378	647,359
Total current liabilities		1,425,101	1,257,693
Other liabilities		-	-
Total non-current liabilities		-	-
Total liabilities		1,425,101	1,257,693
Net Assets	6.22	(516,257)	(245,488)
EQUITY
Issued capital	6.27	2,922,934	2,456,101
Accumulated losses		(3,463,183)	(2,723,802)
Foreign exchange translation reserve		23,992	22,213

Total Equity		(516,257)	(245,488)

6.22 The Douugh consolidated group had net liabilities of \$0.25 million at 30 June 2019 and \$0.52 million at 31 December 2019. The net liability position of the company is primarily attributable to borrowings and unearned income recognised in other liabilities.
6.23 The Company held \$0.65 million of cash as at 30 June 2019 and \$0.37 million as at 31 December 2019.
6.24 The trade and other receivables as at 31 December 2019 primarily relate to R&D Tax Rebates.
6.25 Included in trade and other payables, Douugh recorded application monies in advance in relation to shares to be issued of \$0.23 million as at 30 June 2019.

6.26 Other liabilities of \$0.65 million at 30 June 2019 primarily comprised unearned income of \$0.33 million and an R&D Rebate loan of \$0.31 million from Radium Capital. As at 31 December 2019, the Radium Capital loan had increased to \$0.34 million (payable in October 2020 with 14% annual interest rate) and additional liabilities in relation to tax and superannuation were outstanding.
6.27 Douugh has undergone a number of investor share issues, with 103.6 million ordinary shares and 59.9 million performance shares issued in FY19 to raise a total of \$2.456 million. A further 3.7 million of shares were issued in the six months to 31 December 2019 to raise \$0.467 million.
6.28 The share registry of Douugh shows that the following share issues have been made in the last six months:
3.2 million shares in December 2019 investor round priced at \$0.133 per share;
0.5 million shares in January 2020 to raise \$66,500 at an issue price of \$0.133 each; and
21.9 million shares in March 2020 to existing shareholders, employees and suppliers to raise \$112,551.
6.29 We understand that the March 2020 issues were not part of an open investor offer and therefore were not provided on an arm's-length basis.

7. Valuation approach

Basis of evaluation

7.1 The valuation of ZIP prior to and post the Proposed Transaction has been prepared on the basis of Fair Market Value being the value that should be agreed in a hypothetical transaction between a knowledgeable, willing but not anxious buyer and a knowledgeable, willing but not anxious seller, acting at arm's length.

Valuation methodologies

7.2 In assessing the Fair Market Value of an ordinary ZIP Share prior to and immediately following the Proposed Transaction, we have considered a range of valuation methodologies. RG 111 proposes that it is generally appropriate for an expert to consider using the following methodologies:
the discounted cash flow ("DCF") method and the estimated realisable value of any surplus assets;
the application of earnings multiples to the estimated future maintainable earnings or cash flows added to the estimated realisable value of any surplus assets;
the amount which would be available for distribution on an orderly realisation of assets;
the quoted price for listed securities; and
any recent genuine offers received.
7.3 We consider that the valuation methodologies proposed by RG 111 can be split into three valuation methodology categories, as follows.

Market based methods

7.4 Market based methods estimate the Fair Value by considering the market value of a company's securities or the market value of comparable companies. Market based methods include:
the quoted price for listed securities; and
industry specific methods.
7.5 The recent quoted price for listed securities method provides evidence of the fair market value of a company's securities where they are publicly traded in an informed and liquid market.
7.6 Industry specific methods usually involve the use of industry rules of thumb to estimate the fair market value of a company and its securities. Generally, rules of thumb provide less persuasive evidence of the fair market value of a company than other market based valuation methods because they may not account for company specific risks and factors.

Income based methods

7.7 Income based methods estimate value by calculating the present value of a company's estimated future stream of earnings or cash flows. Income based methods include:
discounted cash flow; and
capitalisation of future maintainable earnings.
7.8 The DCF technique has a strong theoretical basis, valuing a business on the net present value of its future cash flows. It requires an analysis of future cash flows, the capital structure and costs of capital and an assessment of the residual value or the terminal value of the company's cash flows at the end of the forecast

period. This method of valuation is appropriate when valuing companies where future cash flow projections can be made with a reasonable degree of confidence.

7.9 The capitalisation of future maintainable earnings is generally considered a short form DCF, where an estimation of the Future Maintainable Earnings ("FME") of the business, rather than a stream of cash flows is capitalised based on an appropriate capitalisation multiple. Multiples are derived from the analysis of transactions involving comparable companies and the trading multiples of comparable companies.

Asset based methods

7.10 Asset based methodologies estimate the Fair Market Value of a company's securities based on the realisable value of its identifiable net assets. Asset based methods include:
orderly realisation of assets method;
liquidation of assets method; and
net assets on a going concern basis.
7.11 The value achievable in an orderly realisation of assets is estimated by determining the net realisable value of the assets of a company which would be distributed to security holders after payment of all liabilities, including realisation costs and taxation charges that arise, assuming the company is wound up in an orderly manner. This technique is particularly appropriate for businesses with relatively high asset values compared to earnings and cash flows.
7.12 The liquidation of assets method is similar to the orderly realisation of assets method except the liquidation method assumes that the assets are sold in a shorter time frame. The liquidation of assets method will result in a value that is lower than the orderly realisation of assets method and is appropriate for companies in financial distress or where a company is not valued on a going concern basis.
7.13 The net assets on a going concern method estimates the market values of the net assets of a company but unlike the orderly realisation of assets method it does not take into account realisation costs.
7.14 Asset based methods are appropriate when companies are not profitable, a significant proportion of the company's assets are liquid, or for asset holding companies.

Selection of valuation methodologies

Valuation of a ZIP Share pre the Proposed Transaction (control basis)

7.15 In assessing the value of a ZIP Share prior to the Proposed Transaction we have utilised the net assets on a going concern basis.
7.16 We have also utilised the quoted market price methodology as a secondary valuation methodology.
7.17 Our valuation methodologies were selected on the following basis:
The FME approach is not considered appropriate as the ZIP business has been operating at a loss for last three financial years, therefore we do not have reasonable grounds from which to base a future maintainable earnings figure.
We consider the Net Assets on a going concern methodology to be a suitable valuation approach given the high level of cash holdings and nature of the continuing business operations.
As ZIP's shares are listed and traded on the ASX we have considered the quoted market price methodology as a secondary valuation methodology. We note that for the quoted market price methodology to be considered a suitable approach, the market should be informed of ZIP's activities and its shares should be liquid.

Valuation of a ZIP Share post the Proposed Transaction (non-control basis)

7.18 In assessing the value of ZIP post the Proposed Transaction, we have used the pre Proposed Transaction value of ZIP and included the impact of the Proposed Transaction assuming it proceeds. In particular, we have made the following adjustments:
Include the assessed value of Douugh;
Include cash raised from the Capital Raising;
Include dilution effect from the issue of shares; and
Include specific costs associated with the Proposed Transaction.
7.19 We have then assessed the value of a ZIP Share post the Proposed Transaction on a non-controlling basis by adjusting for a minority discount.
7.20 Our valuation methodologies adopted for valuing Douugh were selected on the following basis:
We consider the DCF approach to be the most appropriate valuation methodology in valuing technology companies such as Douugh. We have been provided with financial forecasts prepared by Douugh for the three years ending 30 June 2023. However, RG111 states that an expert should not include prospective information (including forecasts and projections) or any other statements or assumptions about future matters (together, 'forward-looking information') in its report unless there are reasonable grounds for the forward-looking information. In our opinion, the DCF methodology cannot be used as future revenue and expenses cannot be forecast with a sufficient degree of confidence to meet the reasonable grounds requirements of RG111 given the current stage of Douugh operations.
The FME approach is not considered appropriate as Douugh is loss making, therefore we do not have reasonable grounds from which to base a future maintainable earnings figure.
Douugh is a privately owned company that is not listed on the ASX therefore the quoted market methodology would be inappropriate. However, Douugh does have a wide shareholder base and has undergone a number of investor rounds, therefore we have been cognisant of recent share issues by Douugh in our valuation assessment.
We have considered the net assets on a going concern value of Douugh, noting that Douugh has not recorded any value for intangible assets in its financial statements
Comparable transaction data is limited given the emerging neobank sector, however we have considered implied values based on customer numbers of existing operators.

8. Valuation of Ziptel Limited prior to the Proposed Transaction

8.1 As stated at paragraph 7.15, we have assessed the value of a ZIP Share prior to the Proposed Transaction on a net assets on a going concern basis and have also considered the quoted price of its listed securities. In both methodologies, we have included a premium for control.

Net assets on a going concern valuation

8.2 We have assessed the value of a ZIP Share on a control basis to be in the range of \$0.014 to \$0.016 per Share (undiluted) on a post-consolidation basis, prior to the Proposed Transaction, based on the net assets on a going methodology, as summarised in the table below.

Table 10 Assessed Fair Value of a ZIP Share

\$A	Ref	31-Dec-19	Low	High


Cash and cash equivalents	8.5	1,457,171	1,160,000	1,160,000
Net working capital		(105,343)	(105,343)	(105,343)
Net asset value		1,351,828	1,054,657	1,054,657

Listed shell value	8.6		400,000	600,000
Equity Value			1,454,657	1,654,657
Number of Shares on issue (pre-consolidation)	Table 2		189,133,899	189,133,899
Value per share (pre-consolidation)			\$0.008	\$0.009
Number of Shares on issue (post-consolidation)	Table 2		104,023,644	104,023,644
Value per share (post-consolidation)	8.2		\$0.014	\$0.016

Source: RSM Analysis

8.3 Our assessment has been based on the reviewed net assets of the Company as at 31 December 2019 of approximately \$1.35 million as set out in the Company's half-year statements.
8.4 In order to calculate the current market value of ZIP's Shares, we have made adjustments to the carrying values of the assets included in the Statement of Financial Position. These adjustments are set out below.

Cash

8.5 We have adjusted the cash balance to \$1.16 million as disclosed in the Company's Appendix 4C for the quarter ended 31 March 2020. The change in cash position for the quarter is primarily due to staff expenses and administration and corporate costs incurred by the company.

Listed Shell Value

8.6 Whilst ZIP does operate an ongoing business, we consider that it is effectively a listed shell and therefore has additional value beyond its recorded net assets. Whilst the transaction expense savings from undertaking a reverse takeover compared to IPO listing have narrowed in recent years, we consider there to be value in the existing shareholder spread of ZIP and lack of a controlling shareholder, which would make ZIP attractive as a reverse takeover entity. It is our view that a listed entity such as ZIP would have an attributed value of approximately \$0.5 million, therefore we have adopted a range of \$0.4 million to \$0.6 million in our assessment of value.

Quoted price of listed securities (secondary method)

8.7 In order to provide a comparison and cross check to our net assets valuation of ZIP, we have considered the recent quoted market price for ZIP shares on the ASX prior to the announcement of the Proposed Transaction.

Analysis of recent trading in ZIP Shares

8.8 The figure below sets out a summary of the closing Share price and volume of ZIP Shares traded in the 12 months prior to the Company's trading halt on the ASX on 22 January 2020.

Figure 5 ZIP daily closing Share price and traded volumes

Source: S&P Capital IQ/ ASX

8.9 During the 12-month period prior to the trading halt in the lead up to the announcement of the Proposed Transaction, ZIP's shares traded between \$0.010 and \$0.018 per Share.
8.10 The All Ordinaries Index fell by over 35% in the period from 21 February 2020 to 23 March 2020, reflecting the global impact on stock markets of the COVID-19 pandemic. As at the date of this report, the Index is currently around 25% lower than the highs recorded in February 2020.
8.11 We note that the analysis for ZIP shares does not include this period given the trading halt occurred on January 2020. We understand that the business of ZIP has not been materially affected by COVID-19, however note that the broader economic slowdown has had a negative impact on most traded share prices in Australia.
8.12 To provide further analysis of the quoted market prices for ZIP's Shares, we have considered the VWAP over a number of trading day periods ending 22 January 2020. An analysis of the volume in trading in ZIP's Shares for the 1, 10, 30, 60, 90, 180 and 360 day trading periods is set out in the table below:

# of Days	1 Day	5 Day	10 Day	30 Day	60 Day	90 Day	120 Day	180 Day

VWAP	0.017	0.015	0.015	0.014	0.013	0.013	0.013	0.013
Total volume (000's)	80.0	22,145	24,860	29,765	66,792	95,394	98,389	115,359
Total volume as a % of total shares	0.04%	11.71%	13.14%	15.74%	35.32%	50.44%	52.02%	60.99%
Low price	0.017	0.012	0.011	0.011	0.010	0.010	0.010	0.010
High price	0.017	0.018	0.018	0.018	0.018	0.018	0.018	0.018

Table 11 Traded volumes of ZIP Shares to 22 January 2020

Source: S&P Capital IQ/ ASX

8.13 The analysis shows that ZIP shares are liquid, with 60.99% of the issued capital being traded in the most recent 180-day trading period.

Value of ZIP Share on a non-control minority basis

8.14 In our opinion, the weighted average share price of ZIP over the last 30 days is reflective of the underlying value of a ZIP Share. As such, we consider a range of values of between \$0.014 and \$0.017 (1 – 30 day VWAP) reflects the quoted market price valuation of a ZIP Share on a minority basis prior to the Proposed Transaction.

Value of ZIP Share on a control basis

8.15 Our valuation of a ZIP Share, on the basis of the recent quoted market price including a premium for control is between \$0.015 and \$0.020 on a pre-consolidation basis and between \$0.028 and \$0.036 on a postconsolidation basis, as summarised in the table below.

Table 12 Assessed value of a ZIP Share – quoted price of listed securities

\$	Low	High

Quoted market price – minority basis (pre-consolidation)	0.014	0.017
Calculated market price (post-consolidation – 1.1 for 2)	0.025	0.031
Control premium	10%	15%
Quoted market price (control basis pre-consolidation)	0.015	0.020
Quoted market price (control basis post consolidation)	0.028	0.036

Source: RSM Analysis

Key assumptions

Control Premium

8.16 The value derived at paragraph 8.14 is indicative of the value of a marketable parcel of shares assuming the Shareholder does not have control of ZIP. RG 111.11 states that when considering the value of a company's Shares the expert should consider a premium for control. If the Proposed Transaction is successful, Douugh Shareholders will hold an interest of up to 60% in the issued capital of ZIP, and the Digital Bakery, an entity associated with Proposed Director Andy Taylor, will have a relevant subscription in the Company of up to 41.8% fully diluted at Minimum Subscription and 37.7% fully diluted at Maximum Subscription. Therefore, our

assessment of the Fair Value of a ZIP Share prior to the Proposed Transaction must include a premium for control.

8.17 RSM has conducted a study on 463 takeovers and schemes of arrangements involving companies listed on the ASX over the 11 years ended 30 June 2016¹ . In determining the control premium, we compared the offer price to the closing trading price of the target company 20, 5 and 2 trading days pre the date of the announcement of the offer. Where the consideration included shares in the acquiring company, we used the closing share price of the acquiring company on the date prior to the date of the offer.
8.18 This study showed that companies in sectors which traditionally have high asset backing values, such as real estate and banking, averaged a control premium of 15%. We consider that this premium is appropriate for application to ZIP given its level of cash holdings in comparison to cashflows generated from operating activities.
8.19 In valuing an ordinary ZIP Share prior to the Proposed Transaction using the quoted price of listed securities methodology we have reflected a premium for control in the range of 10% to 15%.

Valuation summary and conclusion

8.20 A summary of our assessed values of an ordinary ZIP Share on a control basis pre the Proposed Transaction, derived under the two methodologies, is set out in the table below.

Table 13 ZIP Share valuation summary

A\$	Ref	Low	High
Net assets on a going concern basis	Table 10	\$0.014	\$0.016
Quoted market price	Table 12	\$0.028	\$0.036
Preferred valuation		\$0.028	\$0.036

Source: RSM Analysis

8.21 We consider that the characteristics of a liquid market for shares includes the following indicators:
Regular trading in securities;
Average of 1% of total shares traded on a weekly basis; and
Spread of ownership, i.e. Top 10 shareholders do not control more than 50%.
8.22 Trading in ZIP shares displays all of the above characteristics and therefore we consider that the market is deep enough to rely on for valuation purposes.
8.23 In our opinion, we consider that the quoted market price valuation methodology provides a better indicator of the Fair Market Value of a ZIP Share as we consider that the net assets on a going concern methodology does not reflect the value of the existing business operations of ZIP in software development and the potential value of new opportunities which may be available to shareholders.
8.24 Therefore, in our opinion, the Fair Market Value of a ZIP Share prior to the Proposed Transaction is between \$0.028 and \$0.036 on a controlling, post-consolidation and undiluted basis.

¹ RSM Control Premium Study 2017

9. Valuation of ZIP after the Proposed Transaction

9.1 We summarise our valuation of a ZIP Share after the Proposed Transaction on a sum of parts basis in the table below.

Table 14 Assessed value of ZIP post the Proposed Transaction

	Ref	Low Value	High Value
		\$	\$
Assessed value of ZIP share pre Proposed Transaction	8.23	0.028	0.036
Number of ZIP shares (post-consolidation)	Table 2	104,023,644	104,023,644
Implied value of ZIP pre Proposed Transaction		2,912,662	3,744,851
Assessed value of Douugh	9.6	18,200,000	23,300,500
Cash raised from Capital Raising	9.4	4,000,000	6,000,000
Less: Capital raising fee (6%)	9.5	(240,000)	(360,000)
Less: Transaction costs	9.5	(350,000)	(500,000)
Value of ZIP post Proposed Transaction		24,522,662	32,185,351
Number of shares on issue (Post consolidation)	Table 2	534,440,310	601,106,977
Assessed value per Share on a controlling basis (post consolidation)		0.046	0.054
Discount for minority interest	9.39	-26%	-23%
Minority value per share (undiluted)	9.2	0.034	0.041
Source: RSM Analysis

9.2 We consider that the minority value of a ZIP Share post the Proposed Transaction is between \$0.034 and \$0.041 on a post-consolidation, undiluted basis and including the Capital Raising that is a condition precedent.
9.3 We have adjusted the assessed value and shares on issue of ZIP for the following:

Capital Raising

9.4 We have included the condition precedent capital raising which requires the Company to allot and issue a minimum of 133,333,333 Shares and a maximum of 200,000,000 Shares (on a post-consolidation basis) at an issue price of \$0.03 per Share to raise a minimum of AU\$4.0 million and a maximum of \$6.0 million.
9.5 We have deducted costs of \$0.59 million and \$0.86 million for the capital raising and transaction costs based on the agreed 6% capital raising fee for the Lead Manager and ZIP's estimated transaction costs of between \$0.35 million and \$0.5 million.

Value of Douugh

9.6 We have assessed the value of Douugh using a number of different approaches. Early stage technology companies are often difficult to assess for valuation purposes particularly in the pre-launch stage and in emerging sectors where comparable data is limited. Whilst Douugh has a proven product in testing phase, the success of Douugh's customer acquisition strategy, take-up rates and therefore widespread launch is as yet unknown.

9.7 A summary of our assessed values is set out below:

Table 15 Assessed value of Douugh

	Ref	Low	High	Preferred

Net asset value	Table 16	4,953,100	4,955,600	n/a
Comparable transactions - implied value per customer	Table 20	6,750,000	34,500,000	18,200,000
Historic share issues	Table 21	22,437,500	23,300,500	n/a
Preferred valuation range		18,200,000	23,300,500	n/a

Source: RSM Analysis

9.8 Given the early stage of development of Douugh and the neobank market in Australia, our valuation methodologies have resulted in a wide range of values. When selecting our preferred valuation, we have narrowed the range of values based on our opinion of the strength of each valuation methodology and how it applies to Douugh.
9.9 We do not consider the net asset valuation approach appropriately reflects the underlying value of Douugh's developed platform and associated commercial agreements, as it only considers costs expended to date not the potential value from future cash flows.
9.10 Whilst recognising the limitations of the comparable transactions data which underpins our implied value per customer analysis, we consider that this methodology provides an indicative range within which the value of Douugh would be expected to fall given the stage of product development and operations.
9.11 We consider the historic transactions in Douugh shares, as evidenced in previous capital raisings, to be a direct indication of the value placed on Douugh by investors which captures the potential upside to Douugh's service offerings in a new and growing market.
9.12 As such, our preferred range of values for Douugh is between \$18.2 million and \$23.30 million, being the preferred value under our comparable transactions methodology and the high end of the share transactions range.

Methodology 1: Net asset Value of Douugh

9.13 We have assessed the value of Douugh on a net assets on a going concern basis as summarised in the table below:

Table 16 Assessed net asset value of Douugh

A\$	Ref	31-Dec-19	Low Value	High Value

Net tangible liabilities		(507,500)	(507,500)	(507,500)
Less: Cash Burn (5 months)	9.15	-	(625,000)	(625,000)
Add: Cash raised from share issues in March 2020	9.16	-	112,500	112,500
Adjusted net tangible liabilities		(507,500)	(1,020,000)	(1,017,500)
Intangible assets	9.20	-	5,973,100	5,973,100
Equity value		(507,500)	4,953,100	4,955,600

9.14 Our assessment of the value of assets and liabilities has been based on the management prepared net assets of Douugh as at 31 December 2019 adjusted for the following factors:

Cash Movements

9.15 We have reflected the ongoing cash burn of the Douugh group at an estimated \$125,000 per month from 1 January 2020. We have assessed the operating cash requirements of the group based on a cashflow forecast provided by Douugh.
9.16 We have also incorporated \$112,500 of cash raised from share issues in March 2020. The issue of \$250,000 of DOU Convertible Notes in March and April 2020 will not have any impact on the assessed net assets as the funds raised would be offset by a corresponding liability.

Value of Intangible Assets

9.17 Douugh has expensed all research and development ("R&D") costs as incurred and therefore no value is recorded on the balance sheet for the Douugh platform and associated IP. As detailed previously, we do not consider that the existing forecasts provide a reasonable basis for undertaking a DCF valuation of Douugh or its intangible assets. We have therefore adopted a cost recovery basis to assess the value of Douugh's developed platform, i.e. the amount required to fully reimburse the costs incurred to date with respect to R&D activities undertaken by Douugh.
9.18 The underlying rationale for the cost recovery basis is the assumption that a third party acting at arm's length could achieve similar results and outcomes by making a similar financial investment in R&D activities, and would therefore not pay more than this amount to acquire the intellectual property developed by the entity.
9.19 We note that this methodology does not incorporate any potential value in the various contracts and agreements which Douugh is party to, and which underpin the ability of Douugh to operate in various jurisdictions.
9.20 The table below summarises the R&D costs incurred by Douugh to April 2020:

Table 17 R&D Expenditure

Financial Year incurred	R&D Costs (\$)
2016	787,199
2017	1,606,155
2018	1,118,231
2019	1,372,720
YTD2020	1,088,798
Total - R&D Expenditure	5,973,103

Source: Douugh Analysis

9.21 In adopting the cost recovery basis to value the software and IP, we have not taken into account the increase in value attributed to agreements entered into by Douugh, as noted above. As a result, we consider that the cost recovery basis effectively represents a low end value as it does not take into consideration future benefits that will arise from these agreements and contractual arrangements which Douugh has already established in order to operate its business.

Methodology 2: Comparable Transactions

9.22 Given the early stage of development of the neobank market both in Australia and globally, the information on comparable transactions data is limited and there is no widely accepted valuation methodology for prelaunch neobanks. We have considered the comparable transaction methodology as a secondary method of valuing Douugh, however there has only been one comparable neobank transaction in Australia publicly disclosed, as shown in the table below:

Table 18 Comparable Transactions

Target Name Country	Bidder	Completion date	Consideration	Stake in Target
86 400 Limited Australia	Morgan Stanley	31-Mar-20	\$34,000,000	30%

Source: MergerMarket

9.23 A key observation in neobanks is that growth and size of customer numbers, as well as the potential market size, are the key drivers behind implied valuations. Therefore, we consider the implied valuation by customer approach as a suitable secondary valuation methodology in valuing neobanks.
9.24 The implied valuation per customer methodology determines how much a customer contributes, on average, to the value of an enterprise, driven from current account numbers and the estimated value of operational neobanks which has been derived from their latest publicly disclosed funding rounds. The table below summarises the implied valuation per customer of various neobanks globally as presented by Goldman Sachs in March 2019:

Table 19 Analysis of Neobanks Implied Valuation per Customer

Enterprise Name	Country	Current account numbers	Estimated Valuation (US\$)	Implied Valuation per customer (US\$)
We Bank	China	60 million	\$21.3 billion	\$355
Paytm Payments Bank	India	42 million	\$10 billion	\$238
Nubank	Brazil	2.5 million	\$4 billion	\$1,600
N26	Germany	2.3 million	\$2.7 billion	\$1,174
Revolut	UK	1.7 million	\$1.7 billion	\$1,000
Monzo	UK	1.5 million	\$1.3 billion	\$867
Chime	USA	1.7 million	\$500 million	\$294
Min				\$238
Median				\$867
Average				\$790
Max				\$1,600

Source: Goldman Sachs Neobank Valuation Discussion Paper – March 2019

9.25 We note that the average implied valuation per customer is US\$790 which translates to A\$1,105 and the median is US\$867 which translates to A\$1,215 (at the March 2019 exchange rate of 1:1.4).
9.26 We have also undertaken research into Australian-based neobanks and note the following relevant recent transactions:
Xinja Bank (private company) investment by Dubai's World Investments for A\$433 million over 24 months to take a 40% holding, announced in March 2020. Xinja's latest press releases states total current accounts of 45,000 and Capital IQ analysis shows a latest pre-money valuation of A\$235 million, which results in an implied value per customer of A\$5,222. We note that Xinja's primary products are transactions and savings account, and it holds a full banking licence in Australia.
Volt Bank (private company) A\$70 million investment round in January 2020 with an implied market valuation of A\$200 million and had 45,000 customers on the wait list or holding savings accounts at that time. This results in an implied market value per customer of A\$4,444. Volt was the first neobank to be granted a full banking licence in Australia and is currently in beta testing with 10,000 users.
86 400 Bank (private company) A\$34 million investment led by Morgan Stanley for a 30% stake as announced in April 2020. 86 400's accompanying press release stated total customer accounts of 170,000 which represents an implied value per customer of A\$665. 86 400 is the only Australian neobank currently offering digital home loans and also holds a full banking licence in Australia.

9.27 We note that the comparable Australian transactions provide a wide spread of implied values per customer, from a low of A\$333 to a high of A\$5,222, with an average of A\$3,440. The overall average of global and Australian neobanks in our analysis is an implied value per customer of A\$1,810.
9.28 After assessing the relative nature of each of the above companies and transactions, and the fact that Douugh is still in beta testing stage similar to Volt, we consider that an appropriate value per customer to be applied to Douugh ranges from the 86 400 transaction value of A\$665 to the Australian neobanks average of A\$3,440.
9.29 Given the wide range, we have also adopted a preferred value of A\$1,810 based on the average of the global and Australian neobanks values when considered as a whole group.
9.30 Douugh currently has over 10,000 individual waitlist registrations for its banking platform as at the date of this report. Douugh has approximately 1,000 active users from the waitlist currently trialling its bank account (in partnership with Choice Bank) and Douugh branded MasterCard which are operating in beta testing stage. Douugh's current agreement with Choice Bank enables it to scale its platform beyond 1,000 users.
9.31 We consider that the 10,000 customers on Douugh's waitlist should be reflected when valuing Douugh as a result of the business' ability to upscale its platform on completion of its testing stage. We also note that the Volt transaction detailed above reflected a value for the waitlist customers whilst final beta testing was being completed.
9.32 We therefore assess the equity value of Douugh to be between \$6.75 million and \$34.5 million, with a preferred value of \$18.2 million, when adopting the implied valuation per customer methodology and adjusting for net cash of \$0.1 million as shown in the table below:

Ref	Low	High	Preferred
9.31	10,000	10,000	10,000
9.27	\$665	\$3,440	\$1,810
	\$6,650,000	\$34,400,000	\$18,100,000
	\$100,000	\$100,000	\$100,000
	\$6,750,000	\$34,500,000	\$18,200,000

Table 20 Assessed value of Douugh based on comparable transactions

Source: RSM Analysis

Methodology 3: Historic Douugh share transactions

9.33 When considering the value of Douugh, we have also considered recent capital raisings undertaken by Douugh. We note that there was a recent investor round undertaken by Douugh in December 2019 and January 2020, where \$533,273 was raised through the issue of 4.215 million shares at \$0.133 per share.
9.34 We have been informed by Douugh management that this equity placement was an open offer to a wide spread of investors on an arms-length basis. We note that the issue price effectively represents a minority interest value of a share in Douugh.
9.35 We have not considered the share issues in March 2020 as we understand that these were not conducted on an arms-length basis.
9.36 In order to estimate the value of Douugh based on previous capital raisings, we have applied the \$0.133 per share paid by investors to the existing capital of Douugh. This is set out in the table below:

Table 21 Assessed value of Douugh based on historic share transactions

	Value per share \$	Total number of shares on issue	Implied value of Douugh \$
Equity raising – December 2019	0.133	129,771,545	17,259,615
Value of equity (30% control premium)			22,437,500
Value of equity (35% control premium)			23,300,500

9.37 Based on the table above, the minority interest value of Douugh is \$17.26 million. We have applied a control premium in the range of 30% to 35% being the average control premium for companies in the software and communications sector in our Control Premium Study 2017, which results in an assessed value between \$22.44 million and \$23.30 million.
9.38 We note that this implied control value of Douugh equates to a value per customer in the range of \$2,244 to \$2,330 based on 10,000 waitlist customers which falls within the comparable transactions range.

Minority interest discount

9.39 In selecting a minority discount we have given consideration to our control premium applied to Douugh in paragraph 9.37, where we established a range for a control premium of between 30% and 35%. The resulting corresponding minority discount range based on said control premiums is between 23% and 26%.

Performance Shares and Options on issue

9.40 We have not considered the impact of Performance Shares to be issued to Douugh shareholders in our valuation of a ZIP share post the Proposed Transaction because there is too much uncertainty surrounding the likelihood of the performance milestone being achieved and therefore the Performance Shares converting. We also note that if the milestones are achieved by the Douugh business, then it is likely that a corresponding increase in the value of ZIP would be reflected and therefore it is not appropriate to include the Performance Shares in our assessed value of ZIP at the current date.
9.41 We note that the existing ZIP listed options expire on 6 July 2020, prior to the General Meeting, and therefore have not been reflected in our assessment.
9.42 The options to be issued to the Lead Manager of the Capital Raising, Canaccord Genuity, and the Douugh Vendors are exercisable at \$0.04 and therefore we have considered the dilutive effect of these options in our assessment of the fair value of a ZIP Share post the Proposed Transaction.
9.43 Our analysis is set out in the table below and results in an assessed value of \$0.033 to \$0.040 per Share.

Table 22 Assessed value of ZIP post the Proposed Transaction - Diluted

Ref	Low Value	High Value
	\$	\$
Table 14	24,522,662	32,185,351
9.44	3,000,000	3,000,000
9.45	800,000	1,200,000
	24,915,076	32,151,730
Table 2	534,440,310	601,106,977
9.44	75,000,000	75,000,000
9.45	20,000,000	30,000,000
	629,440,310	706,106,977
	\$ 0.045	\$ 0.052
9.39	-26%	-23%
	\$ 0.033	\$ 0.040
	1.9%	3.8%
Assessed value per Share on a controlling basis (diluted)

Source: RSM Analysis

9.44 The Consideration Options to be issued to the Vendors of Douugh total 75,000,000 at an exercise price of \$0.04. The exercise of these options would raise \$3.0 million.

9.45 The Lead Manager Options to be issued amount to 20,000,000 on a post-consolidation basis for the minimum subscription capital raising and 30,000,000 for the maximum subscription. The cash to be raised from exercise of these options at \$0.04 would be \$0.8 million and \$1.2 million respectively.
9.46 The dilutive effect of the Consideration and Lead Manager Options is between 1.9% and 3.8% and therefore we do not consider it to be material to the overall assessment of fairness.

10. Is the Proposed Transaction Fair to ZIP Shareholders?

10.1 Our assessed values of a ZIP Share prior to and immediately after the Proposed Transaction, on a postconsolidation basis, are summarised in the table and figure below.

Table 23 Assessed values of a ZIP Share pre and post the Proposed Transaction

		Value per Share
Assessment of fairness	Low	High	Mid-point
	\$	\$	\$

Fair value of a ZIP Share pre Proposed Transaction – Control basis	0.028	0.036	0.032
Fair value of a ZIP Share post Proposed Transaction – Minority basis	0.034	0.041	0.038

Source: RSM analysis

Table 24 ZIP Share valuation graphical representation

Source: RSM Analysis

10.2 The range of values of a ZIP Share post the Proposed Transaction is greater than the range of values of a ZIP Share prior to the Proposed Transaction. In our assessment of fairness, we have also had regard to the mid-point of the assessed value ranges.
10.3 In accordance with the guidance set out in ASIC RG 111, and in the absence of any other relevant information, for the purposes of complying with s611 of the Act, we consider the Proposed Transaction to be fair to the Non-Associated Shareholders of ZIP.

11. Is the Proposed Transaction Reasonable to Shareholders?

11.1 RG111 establishes that an offer is reasonable if it is fair. If an offer is not fair it may still be reasonable after considering the specific circumstances applicable to the offer. In our assessment of the reasonableness of the Proposed Transaction, we have given consideration to:
The future prospects of ZIP if the Proposed Transaction does not proceed; and
Other commercial advantages and disadvantages to the Non-Associated Shareholders as a consequence of the Proposed Transaction proceeding.

Future prospects of ZIP if the Proposed Transaction does not proceed

11.2 If the Proposed Transaction does not proceed then the Company will continue to seek alternative opportunities to improve shareholder value whilst continuing its current business activities.

Trading in ZIP shares following the announcement of the Proposed Transaction

11.3 As ZIP has been in a trading halt since 22 January 2020, there has been no share trading activity since announcement of the Proposed Transaction.

Advantages and disadvantages

11.4 In assessing whether the Non-Associated Shareholders are likely to be better off if the Proposed Transaction proceeds, than if it does not, we have also considered various advantages and disadvantages that are likely to accrue to the Non-Associated Shareholders.

Advantages of approving the Proposed Transaction

Advantage	Details
The Proposed Transaction is fair	The Proposed Transaction is fair to the Non-Associated Shareholders
Opportunity to benefit from emerging sector and consumer product	The Directors have been actively seeking opportunities to improve Shareholder value. The acquisition of Douugh will provide shareholders with the opportunity to benefit from an emerging sector and consumer product, which is disruptive to the existing bank offering.
Ability to maintain ASX Listing	The Proposed Transaction and associated capital raising will provide the Company with the ability to seek approval from the ASX for re-admission, thereby providing a market for existing Shareholders. ZIP shares have been suspended from trading since January 2020 leaving shareholders no opportunity to realise their investment.
Improvement in cash position from Public Offer	If the Proposed Transaction is approved, it will increase the cash position of the Company through the Capital Raising, although it is noted that these funds will primarily be used to launch the Douugh platform.

Disadvantages of approving the Proposed Transaction

Disadvantage	Details
Change in nature of activities and investment profile	If the Proposed Transaction is approved, the Company will be changing the nature of its activities to operate as a financial software and services company, which may not be consistent with the investment objectives of all Shareholders.
Dilution of Shareholders' interests	If the Proposed Transaction is approved, the issue of the Acquisition Shares to the Vendors and the Public Offer will dilute the shareholding of existing Shareholders from 100% to 13.3% on a fully diluted basis (assuming all Performance Shares vest, all issued Options are exercised and maximum subscription to the Capital Raising).

Disadvantage	Details
Vendor of Douugh will have a majority shareholding in ZIP	If the Proposed Transaction is approved, Douugh shareholders will collectively hold a voting power of up to 60.3% in ZIP. The Digital Bakery will hold an interest of up to 35.7% immediately following the Proposed Transaction and up to 41.8% on a fully diluted basis (assuming all Performance Shares vest, all Options are exercised and minimum subscription to the Capital Raising). A significant shareholding of greater than 25% allows a shareholder to block compulsory acquisitions and special resolutions of the Company, and may deter takeover bids.
Investment in development and marketing costs required to launch Douugh platform, together with exposure to different operational risks	If the Proposed Transaction is approved, it will result in the Company undertaking a significant new business which requires investment in development and marketing costs to launch its product. These costs intend to be funded from the Capital Raise but will significantly increase the ongoing operational cost base of the Company. The Company may be required to raise additional equity funding to fund Douugh's business activities, which would be dilutive to existing shareholders.
	In addition, the new business will expose the Company to new risks including commercial and execution risk associated with the successful commercialisation of a technology platform. Consequently, improved financial performance is not guaranteed and the ability of Douugh to achieve forecast levels of growth is uncertain.

Conclusion on Reasonableness

11.5 RG 111.11 states that if an offer is fair, then it is reasonable. In our opinion, the position of the Non-Associated Shareholders if the Proposed Transaction is approved is more advantageous than the position if it is not approved. Therefore, in the absence of any other relevant information and/or a superior offer, we consider that the Proposed Transaction is reasonable for the Non-Associated Shareholders of ZIP.
11.6 An individual Shareholder's decision in relation to the Proposed Transaction may be influenced by his or her individual circumstances. If in doubt, Shareholders should consult an independent advisor.

Yours faithfullys

RSM CORPORATE AUSTRALIA PTY LTD

N MARKE J AUDCENT

Director Director

APPENDICES

A. DECLARATIONS AND DISCLAIMERS

Declarations and Disclosures

RSM Corporate Australia Pty Ltd holds Australian Financial Services Licence 255847 issued by ASIC pursuant to which they are licensed to prepare reports for the purpose of advising clients in relation to proposed or actual mergers, acquisitions, takeovers, corporate reconstructions or share issues.

Qualifications

Our report has been prepared in accordance with professional standard APES 225 "Valuation Services" issued by the Accounting Professional & Ethical Standards Board.

RSM Corporate Australia Pty Ltd is beneficially owned by the partners of RSM Australia Pty Ltd (RSM) a large national firm of chartered accountants and business advisors.

Ms Nadine Marke and Mr Justin Audcent are directors of RSM Corporate Australia Pty Ltd. Both Ms Marke and Mr Audcent are Chartered Accountants with extensive experience in the field of corporate valuations and the provision of independent expert's reports for transactions involving publicly listed and unlisted companies in Australia.

Reliance on this Report

This report has been prepared solely for the purpose of assisting Shareholders of the Company in considering the Proposed Transaction. We do not assume any responsibility or liability to any party as a result of reliance on this report for any other purpose.

Reliance on Information

Statements and opinions contained in this report are given in good faith. In the preparation of this report, we have relied upon information provided by the Directors and management of Ziptel Limited and we have no reason to believe that this information was inaccurate, misleading or incomplete. RSM Corporate Australia Pty Ltd does not imply, nor should it be construed that it has carried out any form of audit or verification on the information and records supplied to us.

The opinion of RSM Corporate Australia Pty Ltd is based on economic, market and other conditions prevailing at the date of this report. Such conditions can change significantly over relatively short periods of time.

In addition, we have considered publicly available information which we believe to be reliable. We have not, however, sought to independently verify any of the publicly available information which we have utilised for the purposes of this report.

We assume no responsibility or liability for any loss suffered by any party as a result of our reliance on information supplied to us.

Disclosure of Interest

At the date of this report, none of RSM Corporate Australia Pty Ltd, RSM, Nadine Marke, Justin Audcent, nor any other member, director, partner or employee of RSM Corporate Australia Pty Ltd and RSM has any interest in the outcome of the Proposed Transaction, except that RSM Corporate Australia Pty Ltd are expected to receive a fee of approximately \$22,500 based on time occupied at normal professional rates for the preparation of this report. The fees are payable regardless of Ziptel Limited receives Shareholder approval for the Proposed Transaction, or otherwise.

Consents

RSM Corporate Australia Pty Ltd consents to the inclusion of this report in the form and context in which it is included with the Notice of Extraordinary General Meeting and Explanatory Memorandum to be issued to Shareholders. Other than this report, none of RSM Corporate Australia Pty Ltd or RSM Australia Pty Ltd or has been involved in the preparation of the Notice of Extraordinary General Meeting and Explanatory Memorandum. Accordingly, we take no responsibility for the content of the Notice of General Meeting and Explanatory Statement.

B. SOURCES OF INFORMATION

In preparing this Report we have relied upon the following principal sources of information:

Drafts and final copies of the Notice of Meeting;
Audited financial statements for ZIP for the years ended 30 June 2018 and 30 June 2019;
Reviewed financial statements for ZIP for the six months ended 31 December 2019;
Audited financial statements for Douugh for the years ended 30 June 2018 and 30 June 2019;
Draft financial statements for Douugh for the six months ended 31 December 2019;
Management prepared financial statements for Douugh for the three months ended 31 March 2020;
Management prepared cashflow forecast for Douugh from 31 December 2019 to 30 June 2023;
Binding term sheet between ZIP and Douugh;
Draft prospectus for ZIP for acquisition of Douugh;
Douugh Convertible Loan agreements;
ASX announcements of ZIP;
IBISWorld Industry Report K6221A National and Regional Commercial Banks in Australia issued in April 2019;
S&P Capital IQ database; and
Discussions with Directors and Management of ZIP and Douugh.

C. GLOSSARY OF TERMS

Term or Abbreviation	Definition
\$	Australian dollar
Act	Corporations Act 2001 (Cth)
Acquisition Resolutions	Resolutions 1 to 5 in the Notice of Meeting
Acquisition Securities	Consideration Shares, Performance Shares and Consideration Options
APES	Accounting Professional & Ethical Standards Board
ASIC	Australian Securities & Investments Commission
ASX	Australian Securities Exchange
ASX Listing Rules	The listing rules of ASX as amended from time to time
Capital Raising	Public offer for up to 200,000,000 ZIP Shares on a post-consolidation basis at \$0.03 each to raise a maximum of \$6.0 million (minimum subscription of 133,333,333 ZIP Shares to raise \$4.0 million)
Company	Ziptel Limited
Consideration Options	75,000,000 ZIP unlisted options on a post-consolidation basis to be issued to Vendors, exercisable at \$0.04 within four years of issue
Consideration Shares	275,000,000 ZIP Shares on a post-consolidation basis to be issued to Vendors
Consolidation	Consolidation of ZIP share capital on a 1.1 for 2 basis
Control basis	As assessment of the Fair Value on an equity interest, which assumes the holder or holders have control of the entity in which the equity is held
Directors	Directors of the Company
Douugh	Douugh Pty Ltd
Explanatory Statement	The explanatory statement accompanying the Notice
Fair Value	The amount at which an asset could be exchanged between a knowledgeable and willing but not anxious seller and a knowledgeable and willing but not anxious buyer, both acting at arm's length
FME	Future Maintainable Earnings
FOS	Financial Ombudsman Service
FSG	Financial Services Guide
IER	This Independent Expert Report
Non-Associated Shareholders	Shareholders who are not a party, or associated to a party, to the Proposed Transaction
Notice	The notice of meeting to vote on, inter alia, the Proposed Transaction
Option or Options	Unlisted options to acquire Shares with varying vesting conditions
Performance Shares	75,000,000 performance shares on a post-consolidation basis to be issued to Vendors, convertible into ZIP Shares on one-for-one basis on the achievement of various milestones
Proposed Transaction	On 20 March 2020, ZIP announced that it had signed a binding agreement to acquire all the issued capital of Douugh
Report	This Independent Expert's Report prepared by RSM dated 19 June 2020

Resolution	The resolutions set out in the Notice
RG 111	ASIC Regulatory Guide 111 Content of Expert Reports
RSM	RSM Corporate Australia Pty Ltd
S&P Capital IQ	An entity of Standard and Poors which is a third party provider of company and other financial information
Share or ZIP Share	Ordinary fully paid share in the capital of the Company
Shareholder	A holder of Share
Vendors	Shareholders of Douugh
VWAP	Volume weighted average share price
ZIP	Ziptel Limited

D. INDUSTRY OVERVIEW

National and Regional Commercial Banks in Australia

The following industry overview has been extracted from the IBISWorld Industry Report K6221A National and Regional Commercial Banks in Australia issued in April 2019.

Companies in this industry are Australian-owned and operated banks engaged in banking activities.

The industry has recorded a decline in industry revenue over the past five years. This decline has largely been due to low interest rates weighing on the industry with the cash rate falling to and remaining at a record low since August 2016. Overall, industry revenue is expected to decline at an annualised 0.3% over the five years through 2018-19.

Banks have increased interest rates due to higher capital adequacy requirements, increased funding costs and tighter lending standards over the past two years. These factors are expected to contribute to industry revenue growth of 1.4% in the current year.

Products and Services

The primary source of revenue for industry operators is interest earned on various types of loans like mortgages, business loans and personal loans. Banks also earn commissions and fees like establishment and application fees. Other sources of income include transaction and deposit account service fees.

Figure 6 Products and services segmentation

Source: IBISWorld

Key External Drivers

IBISWorld identified that the most important key external drivers for this industry are:

Cash rate;
Number of housing transfers;
Residential property yields;
Ratio of interest payments to disposable income; and
Total capital expenditure.

Competition

Traditional banks have faced growing competition from non-traditional rivals like neobanks, peer-to-peer lenders and other deposit-taking and non-deposit-taking financial institutions providing finance. These non-traditional rivals mainly compete on price and a greater focus on the customer experience. This has forced banks to offer competitively priced products and services and invest in their technological capabilities.

Technology

The industry is subject to a high level of technological disruption. The banking landscape has changed significantly with the emergence of financial technology (fintech) as consumers and households adopt more digital means of conducting their day-to-day banking. Contactless payments, mobile wallets, online and mobile platforms, buy now pay later services and peer-to-peer lending are just some of the ways in which fintech have disrupted the way in which the industry operates and consumers spend. Furthermore, neobanks are emerging as more nimble and flexible alternatives to traditional banks and financial institutions. Neobanks operate through a branchless model that is built on entirely new systems, providing a fully digital banking experience for consumers.

Key Success Factors

IBISWorld identified that the most important key success factors for this industry are:

Superior financial and debt management;
Willingness to outsource when appropriate;
Control of distribution arrangements; and
Access to the latest available and most efficient technologies.

Outlook

The industry is projected to grow over the next five years, largely due to increases in interest rates and the growth of banks' lending books.

As the economy improves, the RBA is anticipated to start lifting the cash rate to target inflation and to mitigate housing price growth. A higher cash rate is anticipated to curb demand for credit and will likely benefit the industry through higher interest revenue earned on loan portfolios. However, domestic banks are still anticipated to face several challenges over the next five years from higher capital adequacy requirements and potential banking reforms stemming from the Financial Services Royal Commission.

Despite potential challenges for the industry, revenue is forecast to grow at an annualised 3.1% over the five years through 2023-24. This revenue growth can largely be attributed to the greater likelihood of cash rate hikes over the next five years. As the economy improves over the next five years, interest rates are projected to rise, allowing banks to generate more revenue on their loan portfolios.

Neobanks in Australia

Neobanks, or digital banks, are new app-based banks that customers interact with entirely, or almost entirely, through a smartphone 24 hours a day.

Whilst neobanks are only recently developing in Australia following a change in banking regulations, they have operated for years in countries around the world, including Germany, Brazil, China and the UK.

Neobanks are able to operate more cost-efficiently as they eliminate the need to maintain national offices, hundreds of physical branches, and workforces running into the tens of thousands resulting in a low fixed cost base. The smaller their spending, the less money they need to make off their customers which can provide neobanks with a competitive advantage over traditional banks by paying higher deposit interest rates, charging minimal or no fees, and offering competitive mortgage rates.

Neobanks have also been able to develop and exploit new technology offerings such as Artificial Intelligence in order to optimise their service.

Competition

Xinja

Started by ex-NAB banker Eric Wilson, Xinja launched in September 2019 with a full banking licence. It currently offers a high-interest savings account named 'Stash' as well as a transaction account. While Wilson has ruled out credit cards – he says they aren't in the best interests of customers – Xinja plans on launching loans and mortgages later this year.

86 400

Operating on its own independent banking licence, 86 400 is wholly-owned by payment network Cuscal. It, in turn, is owned by credit unions, building societies, Bendigo Bank and Mastercard. It offers transaction and high-interest savings accounts, currently paying the same market-leading rate as Xinja. Additionally, they are the only digital bank that directly provides home loans.

Volt

Founded by ex-NAB banker Steve Weston, Volt was the first digital bank to receive their full banking licence, however Volt will be following a partnership model, meaning that it is taking longer to launch, but will strike agreements with different businesses to amass customers and provide perks like shopping discounts.

Up

Up launched in 2018 and operates on Bendigo and Adelaide Bank's licence. The head start has made it the biggest consumer digital bank in Australia currently. While not doing home loans itself, it has the advantage of being able to lend out those deposits via Bendigo Bank.

Judo

Judo is a digital bank specialising in business lending. It's been active in Australia since 2018, servicing small and medium businesses.

Schedule 2 - Vendor Shareholdings

Substantial Vendor – Andrew Taylor

Vendor	No. of Shares (Pre-consolidation)	Percentage shareholding	Contact
The Digital Bakery Limited (Andrew Taylor)	89,985,240	69.335%	governance@ pinnaclegroup.com.au

Vendors

Vendor	No. Ord Shares	%
Suzanna Pomeroy	4,315,652	3.325%
Monex Group Inc	3,125,000	2.408%
Mark Taylor	2,962,240	2.282%
Castletown Investments Ltd	1,792,320	1.381%
Eccleston Corporation Pty Ltd	1,562,500	1.204%
Wensley Carroll	1,398,382	1.077%
Springvale Innovations Limited	1,129,823	0.871%
Burrill Skies Pty Ltd	955,448	0.736%
Paul Mitchell &	782,530	0.603%
Seed Space Pty Ltd	753,000	0.580%
Bernard Joseph &	700,000	0.539%
Ms Madeliene Somerville	700,000	0.539%
Ben Smith Pty Ltd	625,000	0.482%
Seafell Pty Ltd	507,734	0.391%
Craig James	507,734	0.391%
Brucorp Pty Limited	500,000	0.385%
Ozem Kassem	500,000	0.385%
Ben Smith Pty Ltd	500,000	0.385%
Eldridge Family Pty Ltd	500,000	0.385%
Mrs Kerry Suzanne Reade	500,000	0.385%
Anthony James Murray	500,000	0.385%
Chemistry Interactive Limited	500,000	0.385%
Beale Services Pty Ltd	477,401	0.368%
Xianjin Khor	450,000	0.347%
Mr Michael McKeever	441,964	0.341%
Mr Anthony So	400,000	0.308%
18 Knot Ventures Pty Ltd	375,940	0.290%
Frontiera Pty Ltd	375,940	0.290%
Mark James Casey	375,940	0.290%
Eml Investments Pty Ltd	375,000	0.289%
Michael John Smaill	333,333	0.257%

Philip Beard	331,500	0.255%
Tanya Cross	315,385	0.243%
Tubbin Investments Pty Ltd	312,500	0.241%
Matthew Olde	307,997	0.237%
Glenn Graham	307,693	0.237%
Philip McVeigh	300,752	0.232%
Domestic Pants Pty Ltd	300,000	0.231%
Online Investments Pty Ltd	291,771	0.225%
Vi Ky Lam	291,429	0.225%
Mr Paul McKinnon	285,714	0.220%
ACN 088 178 303 Pty Ltd	285,714	0.220%
John W Pennay	276,857	0.213%
John Pennay	270,339	0.208%
Mr Frank Dilernia	265,179	0.204%
Steve Smith	257,143	0.198%
Bh Winchester Pty Ltd	250,000	0.193%
Sharon Fiona Johnson	225,564	0.174%
Blue Sky Ralph Pty Ltd	195,489	0.151%
Jaemie Christen Diakomichalis	175,000	0.135%
Mr Christopher Sabel	171,429	0.132%
Joyce Mehlman	160,000	0.123%
Limits Pty Limited	156,250	0.120%
I-Tien Chui Mather &	153,846	0.119%
Afm Solutions Pty Ltd	150,376	0.116%
Zouhair Diab	150,376	0.116%
Mr Boon Hwee Christopher Goh &	150,000	0.116%
Mr William So	150,000	0.116%
Mr Anthony Aboud	143,750	0.111%
Ram Investment Group Pty Ltd	133,333	0.103%
Sodor Holdings Pty Ltd	133,333	0.103%
Holmwood Investments Pty Ltd	130,000	0.100%
Bryamar Pty Limited	125,000	0.096%
R & F Snow Pty Ltd	125,000	0.096%
54 Awaba Holdings Pty Ltd	125,000	0.096%
Double Diamond Investments	125,000	0.096%
Ultra Alpha Investments Ltd	125,000	0.096%
Annabelle Lin Peishan	125,000	0.096%
Infoweblink Pty Ltd	120,000	0.092%
Jackson Miller	114,286	0.088%
Kaitlyn Lam	114,286	0.088%
Money Mart Financial Services	100,000	0.077%
Nelly Jones Pty Ltd	100,000	0.077%

Micha Wotton	100,000	0.077%
Stephen Mitchell	100,000	0.077%
Peng Hui Ang	100,000	0.077%
Mr Stephen Howard McQuillan &	100,000	0.077%
Su May Ang &	100,000	0.077%
Heights Corporation Pty Ltd	85,714	0.066%
Jonathan Searle	85,714	0.066%
Anthony John Kingsley &	84,571	0.065%
Dominic Demicco III &	84,219	0.065%
Minimum Risk Pty Ltd	75,940	0.059%
David O'Donnell	75,188	0.058%
Acorn Prospects Pty Ltd &	75,188	0.058%
Alexander Twigg	68,844	0.053%
Nick Forsyth	66,666	0.051%
Matthew Cullen	66,666	0.051%
Sebastian Michalandos	66,666	0.051%
Jan Nikolaus Albrecht &	62,500	0.048%
Darren Bragg	61,538	0.047%
Mr Philipe Gilbert &	57,143	0.044%
Mr Alastair Koenig	57,143	0.044%
Mr Geoff Granger	57,143	0.044%
Warakora Enterprises Pty Ltd	57,143	0.044%
Mr Bevin Clayton	57,143	0.044%
Mr Donald B Allan	56,000	0.043%
John W Pennay &	42,857	0.033%
Artisan Corporation Pty Ltd	42,286	0.033%
One More Superannuation	40,000	0.031%
Mr Harry Michael Spindler	40,000	0.031%
Mr Edy Hartono	37,600	0.029%
Mark Hansen	37,594	0.029%
McFaul Rosenthal Pty Ltd	37,594	0.029%
Butcher Property Unit Trust	37,500	0.029%
Blulen Pty Ltd	35,000	0.027%
Nikolai Pavlovic	33,333	0.026%
Neil Morley	31,250	0.024%
STKC Pty Limited	31,250	0.024%
Christopher Eng	30,075	0.023%
Ms Tegan Cumerford	30,000	0.023%
Kyle Ford	28,575	0.022%
Idv Pacific Pty Ltd	28,571	0.022%
Mr Robert Cornelius	20,000	0.015%
Mr Allan Isaacs	20,000	0.015%

Mr Jonathan Bennett	16,000	0.012%
Hinda Crosbie	16,000	0.012%
Mingfeng Chen	16,000	0.012%
Mr Harvey Johnstone	16,000	0.012%
Gavin Whelan	16,000	0.012%
Trading Wisdom Pty Ltd	12,500	0.010%
Jan Roos	10,000	0.008%
Mr Emmanuel Tugado	10,000	0.008%
Panchali Suhrid Sheth &	8,000	0.006%
Suhrid Sheth &	8,000	0.006%
Ms Natarsha Rappos	8,000	0.006%
Acronycal Pty Ltd	7,519	0.006%

Schedule 3 – Financial Reports

	Item	31 December 2019 \$	31 December 2018 \$	Change %
Revenue from ordinary activities	2.1	44,974	-	100%
Profit/(Loss) after tax attributable to members	2.2	(\$213,805)	(\$198,964)	7%
Net Profit/(Loss) attributable to members	2.3	(\$213,805)	(\$198,964)	7%
Dividend	2.4	ZipTel Limited did not declare a dividend during the current reporting or corresponding previous reporting period.
The record date for determining entitlements to the dividend	2.5	Not applicable
Explanatory information	2.6

	31 December 2019	31 December 2018
Net tangible asset per share (cents per share)	0.71 cents	0.89 cents

DIRECTORS' REPORT	3
AUDITOR'S INDEPENDENCE DECLARATION	5
INDEPENDENT AUDITOR'S REVIEW REPORT	6
DIRECTORS' DECLARATION	8
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME	9
CONSOLIDATED STATEMENT OF FINANCIAL POSITION	10
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY	11
CONSOLIDATED STATEMENT OF CASH FLOWS	12
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS	13

DIRECTORS	PERIOD OF DIRECTORSHIP
Josh Hunt (Non-Executive Chairman)	Since 12 June 2014
Umberto (Bert) Mondello (Non-Executive Director)	Since 12 June 2014
Salvatore Vallelonga (Non-Executive Director)	Since 12 June 2014

		2019	2018
	Note	\$	\$
Revenue
Sale of goods and services		44,974	-
Other income	3	9,525	28,782
Expenses
Cost of sales		-	(446)
Other expenses from ordinary activities
Administration and Operating Expenses	4	(129,884)	(137,748)
Employee benefits	4	(138,413)	(90,558)
Finance costs		(70)	(61)
Exchange gain		64	1,067
Total expenses		(268,304)	(227,746)
Loss before income tax		(213,805)	(198,964)
Income tax expense		-	-
Loss for the period		(213,805)	(198,964)
Other comprehensive loss		-	-
Total comprehensive loss for the period		(213,805)	(198,964)
Loss attributable to owners of the Company		(213,805)	(198,964)
Total comprehensive loss attributable to owners of the
Company		(213,805)	(198,964)
Basic and diluted loss per share attributable to the
ordinary equity holders of the Company (cents per share)		(0.12)	(0.1)

	Notes	31 December 2019 \$	30 June 2019 \$
Current Assets
Cash and bank balances		1,457,171	1,603,329
Trade and other receivables		12,310	11,873
Prepayments		7,192	17,778
Total Current Assets		1,476,672	1,632,980
Total Assets		1,476,672	1,632,980
Current Liabilities
Trade and other payables		124,845	107,347
Total Current Liabilities		124,845	107,347
Total Liabilities		124,485	107,347
Net Assets		1,351,828	1,525,633
Equity
Issued capital	5	14,423,876	14,383,876
Reserves		8,000	8,000
Accumulated losses		(13,080,048)	(12,866,243)
Capital and reserves attributable to owners of the Company		1,351,828	1,525,633
Total equity		1,351,828	1,525,633

	Issued Capital \$	Share-based Payments Reserve \$	Accumulated Losses \$	Total \$
Balance at 1 July 2018	14,052,249	-	(12,527,828)	1,524,421
Loss for the period	-	-	(198,964)	(198,964)
Total comprehensive loss for the period	-	-	(198,964)	(198,964)
Transactions with owners in their capacity as owners
Contribution of equity, net of transaction costs	-	-	-	-
Recognition of share-based payments	-	-	-	-
Balance at 31 December 2018	14,052,249	-	(12,726,792)	1,325,457

			Share-based
		Issued	Payments	Accumulated
	Notes	Capital	Reserve	Losses	Total
Balance at 1 July 2019		14,383,876	8,000	(12,866,243)	1,525,633
Loss for the period		-	-	(213,805)	(213,805)
Total comprehensive loss for the period		-	-	(213,805)	(213,805)
Transactions with owners in their
capacity as owners
Contribution of equity, net of
transaction costs		-	-	-	-
Recognition of share-based
payments		40,000	-	-	40,000
Balance at 31 December 2019		14,423,876	8,000	(13,080,048)	1,351,828

		2019	2018
	Notes	\$	\$
Cash flows from operating activities
Receipts from customers		45,000	772
Payments to suppliers and employees		(200,747)	(274,091)
Finance costs		-	-
Other income		9,525	20,518
Net cash used in operating activities		(146,222)	(252,801)
Net decrease in cash and cash equivalents		(146,222)	(252,801)
Cash and cash equivalents at the beginning of the period		1,603,329	1,643,149
Effects of exchange rate changes		64	1,137
Cash and cash equivalents at the end of the period		1,457,171	1,391,485

	31 December 2019 \$	31 December 2018 \$
NON-OPERATING ACTIVITIES
Interest	9,525	12,782
Write back of creditor balances TOTAL OTHER INCOME	- 9,525	16,000 28,782

	2019 \$	2018 \$
EMPLOYEE, DIRECTOR AND CONSULTANT BENEFITS
- Directors' fee and employee wages and salaries	98,413	90,558
- Share-based payments	40,000	-
TOTAL EMPLOYEE, DIRECTOR AND CONSULTANT BENEFITS	138,413	90,558
ADMINISTRATION AND OPERATING EXPENSES
- Administration	57,250	72,171
- Consulting	72,634	65,577
TOTAL ADMINISTRATION AND OPERATING EXPENSES	129,884	137,748

2019	Number
FULLY PAID ORDINARY SHARES	of shares	\$
Balance at 31 December 2018	149,733,899	14,052,249
Issue of shares under Placement	33,400,000	309,627
Issue of shares in return for service – Contractors	2,000,000	22,000
Balance at 1 July 2019	185,133,899	14,383,876
Issue of shares in return for service – Director	4,000,000	40,000
Balance at 31 December 2019	189,133,899	14,423,876

	Number of Options
	31 December	30 June
	2019	2019
MOVEMENTS IN OPTIONS
Balance at the beginning of the period	31,946,780	29,946,780
Issue of options under Rights Issue	-	2,000,000
BALANCE AT THE END OF THE PERIOD	31,946,780	31,946,780

	31 December	30 June
	2019	2019
	\$	\$
Option Reserve	8,000	-
BALANCE AT THE BEGINNING OF THE PERIOD Options granted during the year	8,000	-
- Share-based payments	-	8,000
Balance at the end of the period	8,000	8,000

INTERIM FINANCIAL REPORT FOR THE HALF YEAR ENDED 31 DECEMBER 2019

BluGlass Limited Page 1 of 15 Half Yearly Results 31 December 2009

DOUUGH LIMITED and CONTROLLED ENTITIES ABN 94 609 270 475

CONTENTS	Page

Directors' Report	3
Auditor's Independence Declaration	4
Consolidated Statement of Profit or Loss and Other Comprehensive Income	5
Consolidated Statement of Financial Position	6
Consolidated Statement of Changes in Equity	7
Consolidated Statement of Cash Flows	8
Notes to the Financial Statements	9
Directors' Declaration	13
Independent Auditor's Review Report	14

DIRECTORS' REPORT

Your directors present their report on Douugh Limited (the "Company") and its controlled entities (the "Group") for the half year ended 31 December 2019.

Directors

The names of directors in office at any time during or since the end of the year are:

Mr Stephen Bellotti

Mr Andrew Taylor

Mr Jeffrey Beaumont – resigned 6 September 2019 Mr Patrick Tuttle – appointed 6 September 2019

Principal Activities

The principal activity of the consolidated entity during the half year was to develop and get ready to launch an artificial intelligence (AI) first approach to reimagine banking, enabling our customers to better manage their money and achieve financial freedom through a smart mobile banking app.

There were no significant changes in the nature of the Group's principal activities during the period.

Operating Results

Revenue has decreased to \$598,025, down 21% from \$759,303 due to the following factors:

Commonwealth government R&D grants for December 2019 was \$598,025 (December 2018: \$489,543)
Revenue from sale of services December 2019 was nil (December 2018: \$269,760).

Gross expenditure has increased to \$1,276,057, up by 62% from \$789,809 in 31 December 2018.

The consolidated loss for the period increased to \$739,381 from a loss of \$30,506 in 31 December 2018.

The company's net assets as at 31 December 2019 was negative at \$516,257 (30 June 2019: net liabilities of \$245,488).

Dividends Paid or Recommended

No dividends were paid or declared during the period.

Matters Subsequent to the End of the Half Year Period

During March 2020, the Australian government imposed socia l distancing measures to reduce the contagion of COVID-19. The Group's employees are working from home during this time. Additionally, the US government is imposing lockdown measures to combat the same contagion. However, the timing, full extent of the imp act and recovery from COVID-19 on our employees and business operations continues to evolve. As such, the Group is unable to estimate the effects on the Group's financial position, liquidity and operations in the 2020 and 2021 financial years. Other than the above, there were no other events between the end of the financial year and the date of this report

that, in the opinion of the Directors, affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group.

Director: Steve Bellotti Director: Andrew Taylor

Dated: 19 May 2020

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE HALF YEAR ENDED 31 DECEMBER 2019
	Note	Consolidated Group
		31.12.2019	31.12.2018
		\$	\$
Revenue	3	-	269,760
Other Income	3	598,025	489,543
Research and development expenses		(364,011)	(558,651)
Business development expenses		(155,589)	(17,088)
Corporate and infrastructure expenses		(711,093)	(196,601)
Finance expenses		(45,364)	(10,209)
Depreciation and amortisation expenses		-	(7,260)
Profit (Loss) before income tax		(678,032)	(30,506)
Income tax expense		(61,349)	-
Profit (Loss) for the period		(739,381)	(30,506)
Other comprehensive income		-	-
Total comprehensive profit (loss) attributable to members of the parent entity		(739,381)	(30,506)
Profit (Loss) attributable to:
- members of the parent entity		(739,381)	(30,506)
		(739,381)	(30,506)
Total Comprehensive profit (loss) attributable
- members of the parent entity		(739,381)	(30,506)
		(739,381)	(30,506)
Earnings/(loss) per share
Basic earnings/(loss) per share (cents per share)		(0.007)	(305.06)
Diluted earnings/(loss) per share (cents per share)		(0.007)	(305.06)

These financial statements should be read in conjunction with the accompanying notes.

Note		Consolidated Group
		31.12.2019	30.06.2019
ASSETS		\$	\$
Current Assets
Cash and cash equivalents		369,846	649,105
Trade and other receivables		538,998	363,100
TOTAL CURRENT ASSETS		908,844	1,012,205
Non-Current Assets
Property, plant and equipment		-	-
Intangible assets		-	-
TOTAL NON-CURRENT ASSETS		-	-
TOTAL ASSETS		908,844	1,012,205
LIABILITIES
Current Liabilities
Trade and other payables	7	5 60,061	603,444
		18,662	6,890
Employee benefits		846,37 8	647,359
Other liabilities	8	1,4 25,101	1,257,693
TOTAL CURRENT LIABILITIES
Non-current Liabilities		-	-
Other liabilities
TOTAL NON-CURRENT LIABILITIES		-	-
TOTAL LIABILITIES		1,4 25,101	1,257,693
NET LIABILITIES		(516,257)	(245,488)
EQUITY
Issued capital	9	2, 922,934	2,456,101
Accumulated Losses		(3,463,183)	(2,723,802)
Effect of foreign currency translation		23,992	22,213
TOTAL EQUITY		(516,257)	(245,488)

These financial statements should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2019

	Issued Capital	Share-based Payments	Accumulated Losses	Forex Translation Reserve	Total
	\$	\$	\$	\$	\$
Balance at 1 July 2018	100	-	(1,173,517)	-	(1,173,417)
Shares issued during the period	-	-	-	-	-
Total comprehensive profit (loss) for the period	-	-	(30,506)	-	(30,506)
Restating share capital issue:	-	-	-	-	-
Balance at 31 December 2018	100	-	(1,204,023)	-	(1,203,923)
Balance at 1 July 2019	1,986,213	469,888	(2,723,802)	22,213	(245,488)
Shares issued during the period	466,833	-	-	-	466,833
Total comprehensive profit (loss) for the period	-	-	(739,381)	1,779	(737,602)
Restating share capital issued	-	-	-	-	-
Balance at 31 December 2019	2,453,046	469,888	(3,463,183)	23,922	(516,257)

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 31 DECEMBER 2019

	Consolidated Group
	31.12.2019	31.12.2018
	\$	\$
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers	363,000	269,760
Receipts for R&D grants	-	488,554
Interest & other income received	354	989
Payments to suppliers and employees	(1,045,601)	(687,310)
Net cash provided (used)\by in operating activities	(682,247)	71,993
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	-	(7,260)
Net cash (used) in investing activities	-	(7,260)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loan	171,46 7	385,483
Repayment of loan	(10,288)	(385,483)
Proceeds from shares application funds	240,035	340,475
Net cash provided by financing activities	401,214	340,475
Net (decrease)/increase in cash held	(281,038)	405,208
Effect of foreign currency translation	1,779	-
Cash and cash equivalents at beginning of period	649,105	886
Cash and cash equivalents at end of period	369,846	406,094

These financial statements should be read in conjunction with the accompanying notes.

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2019

Note 1: Nature of Operation

and achieve financial freedom through a smart mobile banking app. artificial intelligence (AI) first approach to reimagine banking, enabling our customers to better manage their money The principal activity of the consolidated entity during the half year was to develop and get ready to launch an

Note 2: Basis of Preparation

Accounting standards. IAS34 Interim Financial Reporting. The group is a for profit entity for financial reporting purposes under Australian Financial Reporting. Compliance with AASB 134 ensures compliance with International Financial reporting standard have been prepared in accordance with requirements of the Corporations Act 2001 and AASB 134: Interim The consolidated general purpose financial statements for the half year reporting period ended 31 December 2019

year ended 30 June 2019, together with any public announcements made during the half-year. recommended that this financial report be read in conjunction with the annual financial report of the Group for the represents relatively insignificant changes occurring during the half year within the Group. It is therefore Douugh Limited (the Company) and its controlled entities (the Group). As such, it does not contain information that This interim financial report is intended to provide users with an update on the latest annual financial statements of

were applied in the most recent annual financial statements, except in relation to the matters discussed below. The same accounting policies and methods of computation have been followed in this interim financial report as

Significant Accounting Policies

accordance with a resolution of the directors on 19 May 2020. The financial statements of Douugh Limited for the half year ended 31 December 2019 were authorised for issue in Group's last annual financial statements for the year ended 30 June 2019 except for R&D tax rebates noted below. The interim financial statements have been prepared in accordance with the accounting policies adopted in the

R&D Tax Rebate

straight-line basis. credited to deferred income at fair value and are credited to income over the expected useful life of the asset on a over the periods necessary to match the rebate to the costs they are compensating. Rebates relating to assets are recognised at fair value when the cash is received. Rebates relating to expense items are recognised as income Government grants are recognised at fair value when the entity is entitled to receive the grant. R & D rebates are

Going Concern

business activity and the realisation of assets and the settlement of liabilities in the normal course of business. The financial report has been prepared on the going concern basis, which contemplates the continuity of normal

inthe normal course of business. tocontinue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities Note 11. These conditions indicate a material uncertainty that may cast a significant doubt about the entity's ability operations of \$682,247. In addition, the Group may be impacted by the subsequent event (COVID-19) as noted in \$739,381; it has a cash balance of \$369,846, net liabilities of \$516,257 and had net cash outflows from continuing For the half year ended 31 December 2019, the Group has recorded a loss after tax from continuing operations of

the Group's cashflow requirements for the 12 months ended 31 May 2021 and are of the opinion that sufficient activities and for working capital. The Directors are currently reviewing a range of financing options and reviewed convertible debt, or a combination of these and other funding instruments as required to fund ongoing planned dependent on the Group being able to secure additional funding through either the issue of new equity, issue requirements. However, the Directors recognise that the ability of the Group to continue as a going concern is The Directors believe that sufficient funds will be available to meet the Group's immediate working capital

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2019

DOUUGH LIMITED and Controlled Entities ABN 94 609 270 475
NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 DECEMBER 2019
funds will be available in order to meet its ongoing obligations.
Should the Group not achieve the matters set out above, there is uncertainty whether the Group would continue as a going concern and therefore whether it would realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. The financial report does not include adjustments relating to the recoverability or classification of the recorded assets amounts nor to the amounts or classification of liabilities that might be necessary should the Group not be able to continue as a going concern.
The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Note 3: Loss for the Period
	Consolidated Group
	31.12.2019	31.12.2018
The following revenue and expense items are relevant in explaining the financial performance for the interim period:
Collaboration services	-	269,760
R&D tax rebate	59 7,671	487,871
Interest and other income received	354	1,672
	598,025	759,303
Note 4: Dividends
There were no dividends paid or declared during the period.
Note 5: Operating Segments

Note 5: Operating Segments

Business and geographical segments

The Group identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining t he allocation of resources.

The Group's operation has one main risk profile and performance assessment criteria. Operating segments are therefore determined on the same basis. For the last two reporting period the Group has been focused on the Australian market and has only one operating division, being the development of a smart mobile app for banking. Currently, the Group is focused in US market, with a plan to expand in Australian market in future.

NOTES TO THE FINANCIAL STATEMENTS FOR THE Half YEAR ENDED 31 DECEMBER 2019

Note 6: Losses Per Share

DOUUGH LIMITED and Controlled Entities ABN 94 609 270 475

NOTES TO THE FINANCIAL STATEMENTS FOR THE Half YEAR ENDED 31 DECEMBER 2019
Note 6: Losses Per Share
Both the basic and diluted losses per share have been calculated using the losses attributable to shareholders of the Parent Company (Douugh Limited) as the numerator, i.e. no adjustments to losses were necessary during the six (6) month period to 31 December 2019 and 2018.
The weighted average number of shares for the purposes of the calculation of diluted losses per share can be reconciled to the weighted average number of ordinary shares used in the calculation of basic losses per share as follows:
	6 months to 31.12.2019	6 months to 31.12.2018
Loss after income tax	739,381	30,506
Weighted average number of shares used in basic earnings per share (EPS)	104,156,360	100
Weighted average number of shares used in diluted earnings per share	104,156,360	100
Basic EPS	(0.007)	(305.06)
Diluted EPS	(0.007)	(305.06)
Note 7: Trade and other payables	Consolidated Group
	31.12.2019	30.06.2019
Trade and other payables	560,061	376,646
Application monies received	-	226,798
	560,061	603,444

Note 8: Other Liabilities	Consolidated Group 31.12.2019	30.06.2019
Unearned income	330,000	330,000
Loan – Radium Capital	516,378	307,071
Loan – Quick Fee	-	10,288
	846,378	647,359

Note 9: Issued Capital	Consolidated Group
	31.12.2019	30.06.2019
106,939,012 fully paid ordinary shares (30.06.2019: 103,599,830 fully paid ordinary shares)	2,922,934	2,456,101

Note 7: Trade and other payables		Consolidated Group
	31.12.2019	30.06.2019
Trade and other payables	560,061	376,646

	560,061	603,444

Note 8: Other Liabilities	Consolidated Group
	31.12.2019	30.06.2019



	846,378	647,359

Note 9: Issued Capital	Consolidated Group
	31.12.2019	30.06.2019
106,939,012 fully paid ordinary shares (30.06.2019: 103,599,830 fully paid ordinary shares)	2,922,934	2,456,101

		2,922,934	2,456,101
Reconciliation of issued shares follow:
	No. of Ordinary	No. of	Amount
	Shares	Performance Shares	\$
Balance at 30 June 2019	103,599,830	59,877,819	\$2,456,101
Shares issued during the half year	3,339,182		466,833
Balance at 31 December 2019	106,930,012	59,877,819	\$2,922,934

NOTES TO THE FINANCIAL STATEMENTS FOR THE Half YEAR ENDED 31 DECEMBER 2019

Note 10: Contingent liabilities

There has been no change in contingent liabilities since the last annual reporting date.

Note 11: Events subsequent to reporting date

During March 2020, the Australian government imposed social distancing measures to reduce the contagion of COVID-19. The Group's employees are working from home during this time. Additionally, the US government is imposing lockdown measures to combat the same contagion. However, the timing, full extent of t he impact and recovery from COVID-19 on our employees and business operations continues to evolve as at the date of this report. As such, the Group is unable to estimate the effects on the Group's financial position, liquidity and operations in the 2020 and 2021 financial years.

Other than the above, there were no other events between the end of the financial year and the date of this report that, in the opinion of the Directors, affect significantly the operations of the Group, the results of those operat ions, or the state of affairs of the Group.

DIRECTORS' DECLARATION

The directors of the company declare that: 1. the financial statements and notes as set out on pages [5] to [12] are in accordance with the Corporations Act 2001 and:
(a) comply with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and
(b) give a true and fair view of the financial position as at 31 December 2019 and of the performance for the half year ended on that date.
1. in the directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors pursuant to Section 303 (5) a of the Corporations Act 2001. Director Steve Bellotti Managing Director Andrew Taylor

Dated: 19 May 2020

Schedule 4 - Terms of Consideration Options

1. Entitlement

Each Option entitles the holder to subscribe for one Share upon exercise of the Option.

2. Exercise Price

The amount payable upon exercise of each Option will be 4 cents (Exercise Price).

3. Expiry Date

Each Option will expire at 5:00 pm (WST) on that date which is the earlier of:

(a) 31 August 2024; and
(b) the date on which Douugh Limited or its subsidiaries ceases to operate a subscription based financial wellness platform business and has not sold its main undertaking for greater than AUD\$8,250,000,

(Expiry Date).

An Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

4. Exercise Period

Subject to these terms, the Options are exercisable at any time on or prior to the Expiry Date (Exercise Period).

5. Notice of Exercise

The Options may be exercised during the Exercise Period by notice in writing to the Company in the manner specified on the Option certificate (Notice of Exercise) and payment of the Exercise Price for each Option being exercised in Australian currency by electronic funds transfer or other means of payment acceptable to the Company.

6. Exercise Date

A Notice of Exercise is only effective on and from the later of the date of receipt of the Notice of Exercise and the date of receipt of the payment of the Exercise Price for each Option being exercised in cleared funds (Exercise Date).

7. Timing of issue of Shares on exercise

Within five Business Days after the Exercise Date, the Company will:

(a) issue the number of Shares required under these terms and conditions in respect of the number of Options specified in the Notice of Exercise and for which cleared funds have been received by the Company;
(b) if required, give ASX a notice that complies with section 708A(5)(e) of the Corporations Act, or, if the Company is unable to issue such a notice, lodge with ASIC a prospectus prepared in accordance with the Corporations Act and do all such things necessary to satisfy section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors; and
(c) if admitted to the official list of ASX at the time, apply for official quotation on ASX of Shares issued pursuant to the exercise of the Options.

If a notice delivered under (g)(ii) for any reason is not effective to ensure that an offer for sale of the Shares does not require disclosure to investors, the Company must, no later than 20 Business Days after becoming aware of such notice being ineffective, lodge with ASIC a prospectus prepared in accordance with the Corporations Act and do all such things necessary to satisfy section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors.

8. Shares issued on exercise

Shares issued on exercise of the Options rank equally with the then issued shares of the Company.

9. Reconstruction of capital

If at any time the issued capital of the Company is reconstructed, all rights of an Optionholder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.

10. Participation in new issues

There are no participation rights or entitlements inherent in the Options and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options without exercising the Options.

11. Change in exercise price

An Option does not confer the right to a change in Exercise Price or a change in the number of underlying securities over which the Option can be exercised.

12. Transferability

The Options are transferable subject to any restriction set out at (m) below or escrow arrangements imposed by ASX or under applicable Australian securities laws.

Schedule 5 - Material Terms Consideration Performance Shares

The material terms consideration of the Performance Shares are as follows:

1. Entitlement

Each Performance Share entitles the holder (Holder) to subscribe for one Share upon satisfaction of the Milestone (defined below) and issue of the Conversion Notice (defined below) by the Holder.

2. Notice of satisfaction of Milestone

The Company shall give written notice to the Holder promptly following satisfaction of a Milestone (defined below) or lapse of a Performance Share where the Milestone is not satisfied.

3. No voting rights

A Performance Share does not entitle the Holder to vote on any resolutions proposed by the Company except as otherwise required by law.

4. No dividend rights

A Performance Share does not entitle the Holder to any dividends.

5. No rights to return of capital

A Performance Share does not entitle the Holder to a return of capital, whether in a winding up, upon a reduction of capital or otherwise.

6. Rights on winding up

A Performance Share does not entitle the Holder to participate in the surplus profits or assets of the Company upon winding up.

7. Not transferable

A Performance Share is not transferable.

8. Reorganisation of capital

If at any time the issued capital of the Company is reconstructed, all rights of a Holder will be changed in a manner consistent with the applicable ASX Listing Rules and Corporations Act at the time of reorganisation.

9. Application to ASX

The Performance Shares will not be quoted on ASX. However, the Company must apply for the official quotation of a Share issued on conversion of a Performance Share on ASX within the time period required by the ASX Listing Rules.

10. Participation in new issues

A Performance Share does not entitle a Holder (in their capacity as a holder of a Performance Share) to participate in new issues of capital offered to holders of Shares such as bonus issues and entitlement issues.

11. Conversion on change of control

Subject to paragraph (l) and notwithstanding the relevant Milestone has not been satisfied, upon the occurrence of either:

(a) a takeover bid under Chapter 6 of the Corporations Act 2001 (Cth) having been made in respect of the Company having received acceptances for more than 50% of the Company's shares on issue and being declared unconditional by the bidder; or
(b) a Court granting orders approving a compromise or arrangement for the purposes of or in connection with a scheme of arrangement for the reconstruction of the Company or its amalgamation with any other company or companies,

that number of Performance Shares that is equal to not more than 10% of the Shares on issue immediately following conversion under this paragraph will convert into an equivalent number of Shares. The conversion will be completed on a pro rata basis across each class of Performance Shares then on issue as well as on a pro rata basis for each Holder. Performance Shares that are not converted into Shares under this paragraph will continue to be held by the Holders on the same terms and conditions.

12. Deferral of conversion if resulting in a prohibited acquisition of Shares

If the conversion of a Performance Share under paragraph (k) or (n) would result in any person being in contravention of section 606(1) of the Corporations Act 2001 (Cth) (General Prohibition) then the conversion of that Performance Share shall be deferred until such later time or times that the conversion would not result in a contravention of the General Prohibition. In assessing whether a conversion of a Performance Share would result in a contravention of the General Prohibition:

(a) Holders may give written notification to the Company if they consider that the conversion of a Performance Share may result in the contravention of the General Prohibition. The absence of such written notification from the Holder will entitle the Company to assume the conversion of a Performance Share will not result in any person being in contravention of the General Prohibition.
(b) the Company may (but is not obliged to) by written notice to a Holder request a Holder to provide the written notice referred to in paragraph (l)(i) within seven days if the Company considers that the conversion of a Performance Share may result in a contravention of the General Prohibition. The absence of such written notification from the Holder will entitle the Company to assume the conversion of a Performance Share will not result in any person being in contravention of the General Prohibition.

13. No other rights

A Performance Share gives the Holders no rights other than those expressly provided by these terms and those provided at law where such rights at law cannot be excluded by these terms.

Conversion of the Performance Shares

14. Milestone

A Performance Share will be able to be converted into a Share by a Holder subject to the achievement of the following milestones:

(a) Class A Performance Share

25,000,000 Class A Performance Shares will convert to Shares on a one-for-one basis on:

(1) the acquisition of 10,000 Customer Accounts; or;
(2) the achievement of AUD\$100,000 in Monthly Recurring Revenue for three (3) consecutive calendar months,

whichever occurs first, within 3 years of the date on which the Company is re-instated to the Official List of ASX following completion of the Acquisition (Listing).

(b) Class B Performance Share

25,000,000 Class B Performance Shares will convert to Shares on a one-for-one basis on:

(1) the acquisition of 12,500 Customer Accounts; or
(2) the achievement of AUD\$125,000 in Monthly Recurring Revenue for three (3) consecutive calendar months,

whichever occurs first, within 3 years of Listing.

(c) Class C Performance Share

25,000,000 Class C Performance Shares will convert to Shares on a one-for-one basis on:

(1) the acquisition of 25,000 Customer Accounts; or
(2) the achievement of AUD\$250,000 in Monthly Recurring Revenue for three (3) consecutive calendar months,

whichever occurs first, within 3 years of Listing.

For the purposes of this paragraph:

Active Customer means a directly registered, active customer with a live account on the Douugh Platform who has undertaken one of the following activities within a 90-day period:

(a) activated their Douugh debit card and used their Douugh debit card to make a purchase; and/or
(b) funded their Douugh bank account (via a deposit by the customer or receipt of a cash transfer from a third party).

An "Active Customer" cannot be procured via the acquisition of another business.

Customer Accounts means total Active Customer accounts live on the Douugh platform.

Monthly Recurring Revenue means the reported revenue that Douugh Limited actually receives during a calendar month from the use of its online banking services by its customers and from third party partnerships in respect of its online banking services, calculated by using an AUD/USD exchange rate published on the last day of the month by the Reserve Bank of Australia on its website at www.rba.gov.au.

15. Independent Verification

A Performance Share will only be able to be converted into a Share by a Holder subject to the achievement of the milestones in paragraph (n), after the Company's auditor verifies that:

(a) in relation to a Customer Accounts milestone, based on the Company's audited accounts the relevant Customer Accounts milestone has been met; and
(b) in relation to a Monthly Recurring Revenue milestone, based on the Company's audited accounts:
(1) the relevant Monthly Recurring Revenue milestone has been met; and
(2) the revenue generated to meet the relevant Monthly Recurring Revenue milestone is directly attributable to the Douugh Limited business.

16. Conversion Notice

A Performance Share may be converted by the Holder giving written notice to the Company (Conversion Notice) prior to the date that is three (3) months after the date that the Milestone is achieved. No payment is required to be made for conversion of a Performance Share to a Share.

17. Lapse

The Performance Shares shall lapse on the date which is 3 years Listing (Expiry Date). If the relevant milestone attached to a class of Performance Shares has not been achieved by the Expiry Date, then the relevant Performance Shares will automatically lapse. For the avoidance of doubt, a Performance Share will not lapse in the event the relevant milestone is met before the Expiry Date and the Shares the subject of a conversion are deferred in accordance with paragraph (l) above.

18. Issue of Shares

The Company will issue the Share on conversion of a Performance Share within 10 business days following the conversion or such other period required by the ASX Listing Rules.

19. Holding statement

The Company will issue the Holder with a new holding statement for any Share issued upon conversion of a Performance Share within 10 business days following the issue of the Share.

20. Ranking upon conversion

The Share into which a Performance Share may convert will rank pari passu in all respects with existing Shares.

Schedule 6 – Material Terms of Canaccord Options

1. Entitlement

Each Option entitles the holder to subscribe for one Share upon exercise of the Option

2. Exercise Price

Subject to paragraph to these terms, the amount payable upon exercise of each Option will be 4 cents (Exercise Price).

3. Expiry Date

Each Option will expire at 5:00 pm (WST) on 31 July 2024 (Expiry Date). An Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

4. Exercise Period

Subject to these terms, the Options are exercisable at any time on or prior to the Expiry Date (Exercise Period).

5. Notice of Exercise

6. Exercise Date

7. Timing of issue of Shares on exercise

Within five Business Days after the Exercise Date, the Company will:

(a) issue the number of Shares required under these terms and conditions in respect of the number of Options specified in the Notice of Exercise and for which cleared funds have been received by the Company;
(b) if required, give ASX a notice that complies with section 708A(5)(e) of the Corporations Act, or, if the Company is unable to issue such a notice, lodge with ASIC a prospectus prepared in accordance with the Corporations Act and do all such things necessary to satisfy section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors; and
(c) if admitted to the official list of ASX at the time, apply for official quotation on ASX of Shares issued pursuant to the exercise of the Options.

If a notice delivered under (b) for any reason is not effective to ensure that an offer for sale of the Shares does not require disclosure to investors, the Company must, no later than 20 Business Days after becoming aware of such notice being ineffective, lodge with ASIC a prospectus prepared in accordance with the Corporations Act and do all such things necessary to satisfy section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors.

8. Shares issued on exercise

Shares issued on exercise of the Options rank equally with the then issued shares of the Company.

9. Reconstruction of capital

10. Participation in new issues

11. Change in exercise price

An Option does not confer the right to a change in Exercise Price or a change in the number of underlying securities over which the Option can be exercised.

12. Transferability

The Options are transferable subject to any escrow arrangements imposed by ASX or under applicable Australian securities laws.

Schedule 7 – Key Terms of the Employee Share Option Plan

The following are the key terms and conditions of the Employee Share Option Plan:

1. Only full time or part-time employee or consultant of the Company or a Related Body Corporate of the Company are eligible to participate in the Plan. Participation in the Plan is at the absolute discretion of the Board.
1. Subject to any applicable Listing Rules or laws, the Plan will take effect when the Board decides and may be suspended, terminated or amended at any time by resolution of the Board.
1. Eligible participants may from time to time be made offers to be issued Options under the Plan for no or nominal consideration.
1. The number of Options that may be offered under the Plan is limited in accordance with the limits prescribed in the Corporations Act.
1. The Options are exercisable wholly or in part at any time before 5.00 pm AWST on the last day of the exercise period. Options not exercised by that date shall lapse. The exercise of options may be subject to a restriction period.
1. Each Option shall entitle the option holder to acquire one fully paid ordinary Share upon payment of the sum of the exercise price specified in the offer accepted by the participant. The exercise price will be an amount determined by the Board prior to the offer of the Option as the subscription price per Share payable by a participant on exercise of the Option.
1. The Options are non-transferable unless to a nominee or otherwise approved by the Board.
1. Each Option may be exercised by notice in writing to the Company at any time before their date of expiry. Any notice of exercise of an Option received by the Company with payment in full of the exercise price will be deemed to be a notice of the exercise of that Option as at the date of receipt.
1. Application will not be made to ASX for official quotation of the Options. Application will be made for official quotation of the Shares issued upon exercise of Options.
1. An Option will lapse immediately upon the first to occur of its expiry date or the holder acting fraudulently or dishonestly in relation to the Company.
1. An Option will lapse 1 month after voluntary resignation from employment or engagement by the party to whom an offer of Options was made (whether or not the Options are held by that person or a nominee).
1. An Option will lapse one year after the death, permanent disability or redundancy of the party to whom an offer of Options was made (whether or not the Options are held by that person or a nominee).
1. There are no participating rights or entitlements inherent in the Options and option holders will not be entitled to participate in new issues of securities offered to Shareholders during the currency of the Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 7 business days after the issue is announced so as to give option holders the opportunity to exercise their Options before the date for determining entitlements to participate in any issue.
1. Shares allotted pursuant to the exercise of Options will be allotted following receipt of all the relevant documents and payments and will rank equally with the issued Shares.
1. In the event of a reconstruction (including consolidation, subdivision, reduction or return) of the issued capital of the Company, all rights of the option holder shall be reconstructed in accordance with the ASX Listing Rules.
1. If, from time to time, before the expiry of the Options the Company makes a pro-rata issue of Shares to shareholders for no consideration, the number of Shares over which an Option is exercisable will be increased by the number of Shares which the option holder would have received if the option had been exercised before the date for calculating entitlements to the prorata issue.
1. If, prior to the expiry of an Option, there is a bonus issue to the holders of shares in the Company, the number of shares over which the Option is exercisable may be increased by the number of shares which the Option holder would have received if the Option had been exercised before the record date for the bonus issue.

Schedule 8 – Key Terms of the Douugh Convertible Note

The Douugh and the Company has entered into 8 separate convertible loan agreements (Convertible Loan Agreements) with third parties (Lender) with an aggregate value of \$250,000 (Convertible Notes). The Convertible Noteholders are as follows:

1. Mr Stuart Green (\$20,000);
1. Richard Coombe Pty Ltd ACN 154 645 664 (\$40,000);
1. Seedspace Pty Ltd 624 772 961 (\$50,000);
1. RS and DE Butcher Pty Ltd ACN 001 319 740 (\$10,000);
1. Hardham Pension Fund Pty Ltd ACN 006 520 627 (\$35,000);
1. 1123 Capital Pty Ltd ACN 134 498 043 (\$25,000);
1. Arthur Lo Pty Ltd ACN 116 848 821 (\$50,000); and
1. Waitoa Peaks Pty Ltd ACN 605 717 333 (\$20,000).

All Convertible Noteholders are unrelated parties of the Company.

The Convertible Loan Agreements were executed on varying dates between 15 April 2020 and 24 April 2020, and possess the following terms and conditions:

(a) Each Noteholder agrees to lend Douugh a loan amount (Loan);
(b) On completion of the Acquisition, the Loan will convert into ZIP shares;
(c) Interest is payable on the value of the Loan at 30% per annum (Interest) which must be paid in cash to the Lender by the listed entity on completion of the Acquisition;
(d) On conversion, the Company must:
(1) issue the Lender the number of ZIP shares equal to the loan amount divided to by \$0.03 per Share (Issue Price) (Conversion Shares);
(2) deliver a holding statement or share certificate for the Conversion Shares to the Lender; and
(3) apply to ASX for quotation of all Conversion Shares, other than any Conversion Shares classified as restricted securities by ASX;
(e) in the event the Acquisition does not complete within 12 months of the execution of the Convertible Loan Agreement (Maturity Date), the Loan and accrued Interest will convert into Shares in the capital of Douugh;
(f) Douugh must give written notice to the Lender as soon as it is aware of any event of default occurring;
(g) in the event of default, the Lender may issue a written notice to Douugh declaring that the Loan and Interest is immediately due and payable to the Lender.

The funds borrowed pursuant to the Convertible Loan Agreements will be used for general working capital of Douugh.

Schedule 9 - Lead Manager Mandate

The Company has entered into an agreement to appoint Canaccord as lead manager to the Offer on an exclusive basis.

Under the Lead Manager Mandate, the Lead Manager will also assist the Company with a pre-IPO capital raising and post-IPO will support management, provide board advice and support for the promotion of the Company.

The Company has agreed to pay the Lead Manager:

(a) a management fee of 2.0% of the total amount raised under the Offer to be paid only on the issue or transfer of any Shares under the Prospectus lodged with ASIC
(b) a capital raising fee of 4.0% of the Offer proceeds to be paid only on the issue or transfer of any Shares under the Prospectus lodged with ASIC; and
(c) at the time of settlement of the Offer, the Company agrees to issue Canaccord between 20,000,000 (at Minimum Subscription) to 30,000,000 (at Maximum Subscription) options at a strike price of \$0.04 and an expiry date which 31 July 2024.

The Company has agreed to reimburse the Lead Manager in respect of expenses incurred incidental to their engagement and further indemnify the Lead Manager and their associates (except in the case of fraud, recklessness of wilful misconduct) against all loss, damage, claims, legal expenses and penalties (without limitation) in respect of their engagement.

Both the Company and the Lead Manager can terminate Lead Manager Mandate by giving seven (7) days' written notice to the respective party.

If the Company terminates the Lead Manager Mandate without cause prior to the term and on or prior to after 90 days after the termination of the Mandate enters into some other form of equity or hybrid fund raising other than the IPO or that conducted by the Company , the rights of the Lead Manager to fees and expenses continue in full force and effect.

Under the terms of the Mandate, Douugh agrees to offer Canaccord the opportunity to act as Lead Manager and Bookrunner on an exclusive basis for a period of 18 months from settlement of the Offer (Minimum Term). If, during the Minimum term, Douugh is the subject of a possible acquisition or change of control transaction in accordance with Chapter 6 or Part 5,1 of the Corporations Act), Douugh agrees to appoint Canaccord as its financial advisor under a separate agreement

ZIP

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	Return your completed form					All enquiries to Automic
	BY MAIL ≻⊲ IN PERSON BY EMAIL				WEBCHAT https://automicgroup.com.au/
Contact	Automic Automic [email protected] GPO Box 5193 Level 5, 126 Phillip Street Sydney NSW 2001 Sydney NSW 2000					PHONE Q 1300 288 664 (Within Australia) +61 2 9698 5414 (Overseas)
	Complete and return this form as instructed only if you do not vote online
Proxy	I/We being a Shareholder entitled to attend and vote at the General Meeting of ZipTel Limited, to be held at 10.00am (AWST) on Monday, 17 August 2020 at Suite 1, 437 Roberts Road, Subiaco WA 6008 and via an audio conferencing facility hereby:
	Appoint the Chairman of the Meeting (Chair) OR if you are not appointing the Chairman of the Meeting as your proxy, please write in the box provided below the name of the person or body corporate you are appointing as your proxy or failing the person
	so named or, if no person is named, the Chair, or the Chair's nominee, to vote in accordance with the following directions, or, if no directions have been given, and subject to the relevant laws as the proxy sees fit and at any adjournment thereof.
Appoint Your
$\div$	The Chair intends to vote undirected proxies in favour of all Resolutions in which the Chair is entitled to vote. Unless indicated otherwise by ticking the "for"," against" or "abstain" box you will be authorising the Chair to vote in accordance
STEP	with the Chair's voting intention. AUTHORITY FOR CHAIR TO VOTE UNDIRECTED PROXIES ON REMUNERATION RELATED RESOLUTIONS Where I/we have appointed the Chair as my/our proxy (or where the Chair becomes my/our proxy by default), I/we expressly authorise the Chair to exercise my/our proxy on Resolutions 6 - 9 (except where I/we have indicated a different voting intention below) even though Resolutions 6 - 9 are connected directly or indirectly with the remuneration of a member of the Key Management Personnel, which includes the Chair.
	Resolutions	For	Against Abstain	Resolutions	For	Against Abstain
	Approval of Change to Nature and Scale 1. of Activities			11. Approval of Issue of Shares to Advisors
	Consolidation of Capital 2.			Approval of Issue of Shares - Douugh 12. Convertible Notes
Direction	Approval for issue of new class of 3. securities			Employee Share Option Plan 13.
	Approval of Issue of Consideration 4. Shares, Consideration Options and Consideration Performance Shares			Re-election of Mr Umberto (Bert) 14. Mondello as a Director
Voting	5. Approval of Public Offer			Election of Mr Andy Taylor as a 15. Director
Joy	Approval for Issue of Shares to a Related 6. Party - Mr Joshua Hunt			16. Election of Mr Steven Bellotti as a Director
$\ddot{\bm{\mathsf{N}}}$	7. Approval for Issue of Shares to a Related Party - Mr Umberto (Bert) Mondello			17. Election of Mr Patrick Tuttle as a Director
$\frac{\Omega}{\Pi}$ — თ	Approval for Issue of Shares to a Related 8. Party - Mr Salvatore Vallelonga			Approval to Set Directors' Fees 18.
	Approval of issue of Shares - Mr Derek 9. Hall			Change of Name to Douugh Limited 19.
	Approval of Issue of Options to 10. Canaccord Genuity Pty Ltd
	Please note: If you mark the abstain box for a particular Resolution, you are directing your proxy not to vote on that Resolution on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.
	SIGNATURE OF SECURITYHOLDERS - THIS MUST BE COMPLETED
Contact	Individual or Securityholder 1		Securityholder 2		Securityholder 3
	Sole Director and Sole Company Secretary		Director	Director / Company Secretary
	Contact Name:
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$\boldsymbol{\dot{\bm{\beta}}}$	Email Address:
ո	Contact Daytime Telephone				Date (DD/MM/YY)
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	By providing your email address, you elect to receive all of your communications despatched by the Company electronically (where legally permissible).

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AI assistant

STAKK LIMITED — Proxy Solicitation & Information Statement 2020

65801_rns_2020-07-16_266a033a-2583-4ec6-b41d-0767118c66aa.pdf

ZipTel Limited ABN 41 108 042 593

Notice of Extraordinary General Meeting and Explanatory Memorandum

Notice of Extraordinary General Meeting

Impacts of COVID-19 on the Meeting

Agenda

1. Resolution 1: Approval of Change to Nature and Scale of Activities

Voting exclusion statement

2. Resolution 2: Consolidation of Capital

3. Special Resolution 3: Approval for issue of new class of securities

4. Resolution 4: Approval of Issue of Consideration Shares, Consideration Options and Consideration Performance Shares

Voting Exclusion

5. Resolution 5: Approval of Public Offer

Voting exclusion statement

6. Resolution 6: Approval for Issue of Shares to a Related Party – Mr Joshua Hunt

7. Resolution 7: Approval for Issue of Shares to a Related Party – Mr Umberto (Bert) Mondello

Voting exclusion statement

8. Resolution 8: Approval for Issue of Shares to a Related Party – Mr Salvatore Vallelonga

Voting exclusion statement

9. Resolution 9: Approval of issue of Shares – Mr Derek Hall

Voting exclusion statement

10. Resolution 10: Approval of Issue of Options to Canaccord Genuity Pty Ltd

Voting exclusion statement

11. Resolution 11: Approval of Issue of Shares to Advisors

Voting exclusion statement

12. Resolution 12: Approval of Issue of Shares – Douugh Convertible Notes

13. Resolution 13: Employee Share Option Plan

Voting exclusion statement

14. Resolution 14: Re-election of Mr Umberto (Bert) Mondello as a Director

15. Resolution 15: Election of Mr Andy Taylor as a Director

16. Resolution 16: Election of Mr Steven Bellotti as a Director

17. Resolution 17: Election of Mr Patrick Tuttle as a Director

18. Resolution 18: Approval to Set Directors' Fees

Voting exclusion statement

19. Special Resolution 19: Change of Name to Douugh Limited

General business

Introduction

Scope of Disclosure

Voting in person

Voting by Proxy

Power of Attorney

Corporate representatives

Eligibility to vote

Enclosures

Summary

Indicative Timetable

1. Background to the Acquisition

1.1 Background

Share Purchase Agreement

(1) Class A Performance Share

(2) Class B Performance Share

(3) Class C Performance Share

Conditions Precedent

Lead Manager Mandate

1.2 Overview of Douugh Limited

(a) Douugh Bank Account

(b) Douugh Mastercard Debit Card

(c) Douugh App and Platform

Business Strategy

Revenue Generation

Douugh Subsidiaries

(a) Douugh Labs Pty Ltd ACN 609 270 475

(b) Douugh (Australia) Pty Ltd

(c) Douugh USA LLC

(d) Douugh Wealth LLC

Material Agreements relevant to Operations of Douugh

(a) Master Program Agreement with Choice Bank

(Transactional Fees).

(b) Carrying Agreement with Drivewealth LLC

(c) Service Agreement with Blockscore

(d) Services Agreement with Galileo Processing, Inc.

(e) Co-Brand Agreement with Mastercard USA

(f) Douugh and Mastercard Australia Incentive Agreement

(g) Agreement with Stripe

(h) Partnership Agreement with Regional Bank Australia

(i) Master Services Agreement with Plaid Technologies, Inc.

(j) Agreement with Salesforce

(k) Joint Marketing Agreement with Empyr

STAKK LIMITED Proxy Solicitation & Information Statement 2020