STREAMPLAY STUDIO LIMITED — Annual Report 2018

Sep 30, 2018

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ASX:EM1 | ABN 31 004 766 376 Annual Report 2018

Contents CORPORATE DIRECTORY ........................................................................................................................................................ 3 DIRECTORS' REPORT .............................................................................................................................................................. 4 AUDITOR’S INDEPENDENCE DECLARATION .......................................................................................................................... 15 CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME .................................................. 16 CONSOLIDATED STATEMENT OF FINANCIAL POSITION ........................................................................................................ 17 CONSOLIDATED STATEMENT OF CASH FLOWS ..................................................................................................................... 18 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ......................................................................................................... 19 NOTES TO THE FINANCIAL STATEMENTS .............................................................................................................................. 20 ADDITIONAL ASX INFORMATION ......................................................................................................................................... 48 DIRECTORS’ DECLARATION .................................................................................................................................................. 51 INDEPENDENT AUDITOR'S REPORT ...................................................................................................................................... 52

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CORPORATE DIRECTORY

Emerge Gaming Limited (ABN 31 004 766 376) formerly Arrowhead Resources Limited

Directors	Mr Gregory Stevens – CEO, Executive Director
	Mr Umberto (Bert) Mondello - Non-Executive Chairman
	Mr Philip Re - Non-Executive Director
	Mr Jonathan Hart - Non-Executive Director
Company Secretary	Mr Derek Hall
Registered Office	C/- Regency Corporate
	Suite 1, 437 Roberts Road
	Subiaco WA 6008
Principal Place of Business	Suite 1, 437 Roberts Road
	Subiaco WA 6008
	Phone: +61 8 6380 2555
	Website: www.emergegaming.com.au
Securities Exchange Listing	Australian Securities Exchange (ASX)
	ASX Code: EM1
	ASX Code:EM1O
Share Registry	Automic Registry Services
	Level 2, 267 St Georges Terrace
	PERTH WA 6000
	Phone: +61 8 9324 2099
	Email: hello@automic.com.au
Auditor	Criterion Audit Pty Ltd
	Suite 1, 437 Roberts Road
	Subiaco WA 6008
Solicitors	Steinepreis Paganin
	Level 4, The Read Buildings
	16 Milligan Street
	Perth WA 6000

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EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

DIRECTORS’ REPORT

The Directors present their report with respect to the results of Emerge Gaming Limited ("Emerge" or "the Company") and its controlled entities (”the Group”) for the year ended 30 June 2018 ("the Balance Date") and the state of affairs of the Company and the Group at Balance Date.

DIRECTORS

The names, qualifications and experience of the Company’s Directors in office during the year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

Mr Gregory Stevens (CEO, Executive Director) – appointed 16 April 2018

Mr Stevens has 10 years’ successful management experience in gaming start-ups. Mr Stevens has extensive knowledge in venture capital, business strategy and international arbitration. Mr Stevens is a former director of a world-class eSports development agency collaborating with brands like Ubisoft, Blizzard and Activision. Mr Stevens leads a team of world-class technology developers and marketer leaders, with proven records building business value in online gaming, technology-driven start-ups and related industries.

Special responsibilities: Nil

Other current directorships of listed companies: Nil

Former directorships of Listed Companies in the last three years: Nil

Mr Umberto (Bert) Mondello (Non-executive Chairman) – appointed 16 April 2018

LLB

Mr Mondello has more than 20 years' experience across both the private and public sectors. An as Executive, Mr Mondello has substantial capital markets experience and knowledge of equity markets having participated in company restructures, IPOs, RTOs, investor placements and seed raisings. With experience spanning multiple industries, with a specialisation in technology. Across his career, including as CEO of ZipTel Limited (ASX: ZIP), Mr Mondello has been pivotal in challenging the status quo with innovation in new technologies across a myriad of products and offerings. Mr Mondello holds a Bachelor of Laws from The University of Notre Dame, Australia.

Special responsibilities: Nil

Other current directorships of listed companies: ZipTel Limited, ServTech Global Holdings Limited and WestStar Industrial Limited

Former directorships of Listed Companies in the last three years: Nil

Mr Philip Re (Non-executive Director) – appointed 21 June 2017 BBus, CA, CSA, MAICD

Mr Re is the managing director and founder of Regency Corporate, a chartered accountant and corporate advisory business. Mr Re has been a director of a number of publicly listed and unlisted companies and during that time, has been involved in property development and investment, technology, education, mining exploration and production, and renewable energy industry transactions. Mr Re has been directly involved in raising capital, mergers and acquisitions, initial public offerings and reverse takeovers for various ASX listed companies and unlisted property syndicates. Mr Re is the Chairman and one of the founders of the charity organisation, The Better Life Foundation WA.

Special responsibilities: Nil

Other current directorships of listed companies: The Agency Group Limited and WestStar Industrial Limited Former directorships of Listed Companies in the last three years: iCollege Limited

Mr Jonathan Hart (Non-executive Director) – appointed 16 April 2018 LLB, BCom

Mr Hart holds a Bachelor of Laws and Commerce. Mr Hart experience includes initial public offerings on ASX (AIM and JSE), reverse takeovers, due diligence investigations, general corporate and commercial drafting, public and private mergers and acquisitions, general corporate advice in relation to capital raisings, Corporations Act and ASX compliance, Australian Financial Services Licenses, managed investment schemes and anti-money laundering compliance.

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

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DIRECTORS’ REPORT

Special responsibilities: Nil

Other current directorships of listed companies: Nil

Former directorships of Listed Companies in the last three years: Nil

Previous directors

Mr Michael Rosenstreich (Chairman, Managing Director) – resigned 16 April 2018 Mr John Kenny (Non-executive Director) – resigned 16 April 2018

Company Secretary

Mr Derek Hall – appointed 16 April 2018

BCom, CA, AGIA, FFin

Mr Hall is a Chartered Accountant, Fellow of the Financial Services Institute and Member of Institute Chartered Secretaries and Administrators.

Previous company secretary

Mr Rowan Caren – resigned 16 April 2018

Interest in Securities of the Company and related bodies corporate

As at the date of this report, the interest of the directors in the shares and options of Emerge Gaming Limited were:

	Number of	Number of	Number of
	Ordinary Shares	Options over	Performance
		Ordinary Shares	Shares
Mr G Stevens	17,852,765	17,852,765	12,720,096
Mr B Mondello	10,893,751	10,893,750	5,353,872
Mr P Re	-	-	-
Mr J Hart	13,350,000	13,625,000	6,500,001

MEETINGS OF DIRECTORS

During the financial year, three meetings of directors were held. Attendances by each director during the year were as follows:

	Directors’ Meetings
	Eligible to Attend	Attended
Mr G Stevens	2		2
Mr B Mondello	2		2
Mr P Re	3		3
Mr J Hart	2		2
Mr M Rosenstreich	1		1
Mr J Kenny	1		1

PRINCIPAL ACTIVITIES

The principal activity of the Group during the year was the acquisition and development of an online eSport gamification platform via Gaming Battleground Pty Ltd which was renamed Emerge Gaming Solutions Pty Ltd (“EGS”) ABN 83 616 572 144. The Company announced the completion of the acquisition of 100% of the shares in EGS on 16 April 2018.

CONSOLIDATED RESULTS

The consolidated operating loss of the Group after providing for income tax amounted to $6,446,493 (2017: loss of $573,493), including an impairment expense of $5,449,862 in relation to the acquisition of EGS.

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

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DIRECTORS’ REPORT

Review of Operations

Emerge Gaming Limited, a leading provider of enhanced eSports capabilities, commenced trading on the ASX on 18 April 2018 following completion of a heavily oversubscribed public offer of AUD$5 million.

Development of Arcade X Completed

The Company completed of the development of its Arcade X Platform, an initiative which commenced 6 months prior to the capital raise and re-listing on the ASX. Arcade X provides Emerge with an internationally scalable and commercially ready platform against which to leverage the capital raised.

Arcade X

Arcade X is a cutting-edge online eSports and casual gaming tournament facilitation platform which has been designed to deliver a unique experience and content for gamers across a multitude of game titles and spectrum of skills. The platform will connect gamers to corporate advertisers and sponsors, while providing Emerge with immediate commercial revenue earning functionality, international reach and scale. Arcade X offers a hybrid environment that gives access to both eSports and casual game titles using proprietary coding and technological integrations. Arcade X consists of Arcade X Mobi and Arcade X eSports.

The Arcade X unique point of difference is the introduction of ‘Arcade X Mobi’ which has fully integrated over 300 casual games which allow the gamer to launch and play games embedded in the platform providing automated results providing direct access to the 1.9 Billion casual and social gamers globally. The casual game integration allows mobile casual and social gamers the opportunity to play integrated games on their smart phones and tablets in an effort to win prizes. Integrated casual games are available on the mobile devices in full screen view, allowing gamers to engage in a seamless competitive mobile gaming experience.

The platform uses its unique IP, advanced analytics tracking and proprietary algorithms to deliver an optimum tournament gaming experience for users while providing publishers the perfect vehicle for delivery of their messaging to a fully engaged audience.

MTN Agreement

The Company has executed a profit-sharing agreement with MTN Group under which MTN South Africa (part of MTN Group) will provide the Company with access to marketing support and its 31 million subscribers in that country. The agreement with MTN Group and the capital funds raised places Emerge Gaming in a strong position to grow and commercialise its user base quickly and further expand into emerging gaming markets like Africa, the Asian/Indian sub-continent and Latin America.

Emerge finalised the complex integration of Arcade X into MTN Group, ahead of the first dual eSports and casual games online tournament platform rollout ever seen in Africa. This integration allows the rollout of the signed content distribution agreement with MTN South Africa (ASX: 6 February 2018) to jointly market Arcade X Mobi to MTN Group’s 31 million South African subscribers, inviting gamers to subscribe to eSports and casual game tournaments and win prizes on an advanced eSports platform never experienced before in Africa. Emerge continues to work with MTN Group on this launch.

Detonator and Debonairs Agreements

The Company announced a partnership with Detonator Media Group (“Detonator”) in South Africa (ASX: on 3 May 2018). Detonator is a media and marketing agency with offices in Cape Town and Johannesburg. The partnership between Detonator and Emerge will help facilitate the launch of Arcade X’s Corporate Tournament and Sponsorship Revenue Model into South Africa.

The partnership with Detonator had an almost immediate return when the two companies signed an agreement under which media services were delivered for the leading pizza fast-food brand in Southern Africa, Debonairs Pizza (“Debonairs”) (ASX: 17 May 2018). Under this agreement Arcade X provides corporate online tournament services and advanced data analytics and benefit from no cost user acquisition from collaborative marketing campaigns.

The total expenditure committed by Debonairs to this eSports sponsorship and marketing initiative is ~AUD$100,000 (ZAR1,100,000) to be spent within the next 12 months. This revenue was banked by the Company post year end.

Subsequent to year end, the Company reported that Arcade X achieved high engagement numbers within three weeks of launching Arcade X to the public via the campaign with Debonairs.

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

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DIRECTORS’ REPORT

Tantalum International Ltd Update

Historical shareholders of the Group received shares of an unlisted, Australian public Company Tantalum International Limited (“TIL”). This distribution is a result of the spin out of subsidiary Tantalum International Pty Ltd (“TIPL”) from the Company. The effect of this distribution is that TIPL ceases to be part of the Group and the share capital of the Company is reduced by the amount to be assessed by the Company as the market value of the TIPL Shares (determined to be $829,577) – and historical shareholders as at the record date (3 November 2017) gain a proportionate shareholding in the new public company TIL.

The intention of the TIL spin-out was to provide long-term shareholders with exposure to a potentially successful legal claim against the Arab Republic of Egypt (“Egypt”) in proceedings which relate to the alleged expropriation (amongst other claims) of TIL’s 50% interest in the Abu Dabbab Tantalum-Tin-Feldspar project, located in southern Egypt. Although this process will be overseen by the management team of TIL, the Company is a named party to the proceedings as a claimant.

TIL and the Company confirm the registration on 28 June 2018 of their Request for Arbitration of their investment dispute with Egypt at the International Centre for the Settlement of Investment Disputes (ICSID) in Washington DC. The ICSID arbitration against Egypt is funded by a Guernsey-based subsidiary of Calunius Litigation Risk Funds, pursuant to an arbitration funding agreement, which was concluded after a thorough due diligence process. Under the funding agreement, the funder will recoup an agreed risk fee together with its costs if the claim is successful. TIL and the Company are represented by international law firm Clifford Chance.

The next stage of the ICSID arbitral process is the constitution of the arbitral tribunal. TIL and the Company have proposed a procedure to Egypt for doing so, and now await Egypt's response. The Company will keep shareholders informed as this progress.

Financial Position

The net assets of the Group have increased from $328,248 at 30 June 2017 to $3,929,126 at 30 June 2018. As at the Reporting Date the group had working capital of $3,030,683 (2017: $308,877).

DIVIDENDS

No dividends were declared or paid during the financial year.

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

The following significant changes in the of the Company occurred during the financial year:

• On 9 October 2017, shareholders voted to change the nature and scale of the activities of the Company from resources to technology (online gaming/eSports) with the acquisition of Gaming Battleground Pty Ltd, renamed Emerge Gaming Solutions Pty Ltd (“EGS”). Shareholders also approved a name change of the Company from Arrowhead Resources Limited to Emerge Gaming Limited.

• On 18 April 2018, the Company was reinstated to trading on the ASX under the ticker EM1 following completion of an oversubscribed public offering of Shares. Under the public offer:

• 250,000,000 Shares at an issue price of $0.02 were issued raising $5,000,000 before costs;

• 184,500,000 Shares, 184,500,000 listed options and 100,000,000 Performance Shares were issued to the vendors of EGS;

• 11,500,000 Shares and 11,500,000 listed options were issued to advisors;

• 5,000,000 Shares were issued to previous directors.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.

FUTURE DEVELOPMENTS

Other than information disclosed elsewhere in this annual report, likely future developments in the operations of the Group and the expected results of those operations in future financial years has not been included in this Directors’ Report because

EMERGE GAMING LIMITED

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AND CONTROLLED ENTITIES ABN 31 004 766 376

DIRECTORS’ REPORT

the Directors believe, on reasonable grounds, that to include such information would be likely to result in unreasonable prejudice to the Group.

ENVIRONMENTAL REGULATION AND PERFORMANCE

The Group's operations are not currently subject to any significant environmental regulations under either Commonwealth or State law.

INDEMNITY AND INSURANCE OF OFFICERS

During the financial year, the Company paid a premium in respect of a contract insuring the Directors of the Company (as named above), the company secretary, and all executive officers of the Company and of any related body corporate against a liability incurred as such a director, secretary or executive officer to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.

The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law, indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability incurred as such an officer or auditor.

PROCEEDINGS ON BEHALF OF COMPANY

Apart from the TIL proceedings outlined above, no person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. No proceedings have been brought or intervened in or on behalf of the Company with leave of the court under section 237 of the Corporations Act 2001.

NON-AUDIT SERVICES

No non-audit services were provided by the Company’s auditor, Criterion Audit Pty Ltd.

AUDITOR’S INDEPENDENCE DECLARATION

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 for the year ended 30 June 2018 has been received and can be found on page 15 of the directors’ report.

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EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

DIRECTORS’ REPORT

REMUNERATION REPORT (Audited)

This report outlines the remuneration arrangements in place for Directors and executives of Emerge Gaming Limited in accordance with the requirements of the Corporation Act 2001 and its Regulations.

For the purpose of this report, Key Management Personnel (KMP) of the Company are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Group, directly or indirectly, including any director (whether executive or otherwise) of the Group.

Details of key management personnel

Mr Gregory Stevens Chief Executive Officer, Executive Director Appointed 16 April 2018 Mr Bert Mondello Non-Executive Chairman Appointed 16 April 2018 Mr Philip Re Non-Executive Director Appointed 21 June 2017 Mr Jonathan Hart Non-Executive Director Appointed 16 April 2018 Mr Michael Rosenstreich Chairman and Managing Director Resigned 16 April 2018 Mr John Kenny Non-Executive Director Resigned 16 April 2018 Mr Rowan Caren Company Secretary Resigned 16 April 2018

Remuneration Policy

The remuneration policy of Emerge Gaming Limited has been designed to align director and executive objectives with shareholder and business objectives by providing a fixed remuneration component and offering specific long-term incentives.

The Board of Emerge Gaming Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best executives and directors to run and manage the Group, as well as create goal congruence between directors, executives and shareholders.

The Board's policy for determining the nature and amount of remuneration for board members and senior executives of the Group is as follows:

• The remuneration policy, setting the terms and conditions for the executive directors and other senior executives, is developed and approved by the board after seeking professional advice from independent external consultants as required. In the years presented, no external consultants have been used.

• All executives receive a base salary or fee (which is based on factors such as length of service and experience).

• The board reviews executive packages annually by reference to the Group's performance, executive performance and comparable information from industry sectors.

No relationship exists between the remuneration policy and the Company’s performance.

Voting and comments made at the company's 2017 Annual General Meeting

Emerge Gaming Limited received more than 95% of “yes” votes on its remuneration report for the 2017 financial year. The Company did not receive any specific feedback at the AGM or throughout the year on its remuneration practices.

Loans to Directors and Executives

There were no loans to directors and executives during the financial year ended 30 June 2018.

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EMERGE GAMING LIMITED

AND CONTROLLED ENTITIES ABN 31 004 766 376

DIRECTORS’ REPORT

Non-Executive Director Remuneration

The Board policy is to remunerate non-executive directors at market rates for time, commitment and responsibilities. The Board determines payments to the non-executive directors and reviews their remuneration annually, based on market practice, duties and accountability. Independent external advice is sought when required. In the current year, no advice was sought.

Upon appointment to the Board, all non-executive directors enter into a service agreement with the Company in the form of a letter of appointment. The letter summarises the policies and terms, including compensation, relevant to the office of the director.

The key terms of the non-executive director service agreements are as follows:

• Term of Agreement – ongoing subject to annual review and the Company’s constitution

• Non-Executive Directors’ Fees of $48,000 per annum

• Non-Executive Chairman’s Fees of $60,000 per annum

• There is a 6-month notice period stipulated to terminate the contract by either party

The maximum aggregate amount of fees that can be paid to non-executive directors is currently fixed at $250,000 with any change in this amount subject to approval by shareholders at the Annual General Meeting.

The Company does not have a Director’s Retirement Scheme in place at present.

Service Contracts

It is the Company’s policy that service contracts for executive directors and senior executives be entered into. A service contract with an executive director or senior executive would provide for the payment of benefits where the contract is terminated by the entity or the individual.

The executive directors and senior executives would also be entitled to receive on termination of employment their statutory entitlements of accrued annual and long service leave, together with any superannuation benefits. An executive director or senior executive would have no entitlement to termination payment in the event of removal for misconduct.

Major provisions of the agreements existing at reporting date relating to executive remuneration are set out below:

Mr Gregory Stevens – Chief Executive Officer, Executive Director

• Term of agreement: Until terminated in accordance with the agreement.

• Remuneration: $120,000 per annum, which will be reviewed annually.

• Period of notice for termination/resignation: Six month’s written notice by the consultant. Six month’s written notice by the Company.

• Details of remuneration entitlement on termination: Payment of fees up to the date of termination or payment of six month’s fees in lieu of notice.

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EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

DIRECTORS’ REPORT

Remuneration of key management personnel

Table 1: Remuneration for the year ended 30 June 2018

Key Management Personnel – 30 June 2018 Non-Executive Directors Mr B Mondello1 Mr P Re Mr J Hart1 Mr J Kenny2 Sub-total Executive Directors Mr G Stevens1 Mr M Rosenstreich2 Sub-total Other Key management personnel Mr R Caren2 Sub-total Total 1Appointed 16 April 2018. 2Resigned 16 April 2018.	Short-term Benefits Cash, salary and commissions Share-based Payment Shares and Options Post- employment Benefits Total Remuneration consisting of shares and options for the year $ $ $ $ % 15,000 - - 15,000 0.00% 39,000 - - 39,000 0.00% 12,000 - - 12,000 0.00% 27,000 50,000 - 77,000 64.94%
	93,000 50,000 - 143,000
	30,000 - - 30,000 0.00% 45,500 - - 45,500 0.00%
	75,500 - - 75,500
	45,000 - - 45,000 0.00%
	45,000 - - 45,000
	213,500 50,000 263,500

Table 2: Remuneration for the year ended 30 June 2017

Key Management Personnel – 30 June 2017 Non-Executive Directors Mr P Re1 Mr J Kenny Mr J Peterson2 Sub-total Executive Directors Mr M Rosenstreich Sub-total Other Key management personnel Mr R Caren Sub-total Total	Short-term Benefits Cash, salary and commissions Share-based Payment Shares and Options Post- employment Benefits Total Remuneration consisting of shares and options for the year $ $ $ $ % - - - - 0.00% 36,000 - - 36,000 0.00% - - - - 0.00%
	36,000 - - 36,000
	114,000 - - 114,000 0.00%
	114,000 - - 114,000
	103,000 - - 103,000 0.00%
	103,000 - - 103,000
	253,000 - - 253,000

1 Appointed 21 June 2017.

2 Resigned 21 June 2017.

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

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DIRECTORS’ REPORT

Compensation Options: Granted and vested during the year (consolidated)

There were no compensation options granted to or exercised by directors or other Key Management Personnel during the financial year. In addition, no directors or senior executives exercised options that were granted to them as part of their compensation during the financial year.

Share-based payment arrangements relating to key management personnel

The Emerge Gaming Limited public offer included an offer of fully paid ordinary shares to Mr John Kenny and former director Mr Jason Peterson (Director Offer). The Board agreed to provide 2,500,000 shares, in lieu of additional fees, to each of Messrs Kenny and Peterson for their contributions in relation to the public offer in consideration for services beyond their normal duties as Directors.

In addition, the Emerge Gaming Limited public offer included an offer of ordinary shares, free attaching listed options and performance shares to the vendors of Gaming Battleground Pty Ltd renamed Emerge Gaming Solutions Pty Ltd (“EGS”) which included the directors Mr Gregory Stevens, Mr Bert Mondello and Mr Jonathan Hart. Details of these securities are outlined in tables below.

Table 3: Shareholdings of key management personnel (consolidated)

Shares held in Emerge Gaming Limited (number) by key management personnel are:

Share holdings of key management personnel Directors Mr G Stevens1 Mr B Mondello1 Mr P Re Mr J Hart1 Mr M Rosenstreich Mr J Kenny2 Total	Balance 1.7.2017 Granted as compensation Net Change Other Balance 30.6.2018 Ord Ord Ord Ord - - 17,852,765 17,852,765 - - 10,893,751 10,893,751 - - - - - - 13,350,000 13,350,000 - - - - 23,013,272 2,500,000 (10,228,120) 15,285,1523 23,013,272 2,500,000 31,868,396 57,381,668*

1. As a vendor of EGS, these shares were issued as consideration for the acquisition of EGS. These shares are subject to a 24-month escrow.

2. The Net Change for Mr Kenny incorporates the capital reconstruction conducted during the year with a ratio of 1.8:1, resulting in a reduction of 10,228,120 shares and the grant of 2,500,000 shares under the Director Offer which formed part of the Emerge Gaming Limited public offer. 3. Balance as at date of resignation on 16 April 2018.

Table 4: Option holdings of key management personnel (consolidated)

The numbers of options over ordinary shares in the company held during the financial year by each director of Emerge Gaming Limited and specified executive of the Group, including their personally related parties, are set out below:

Option1holdings of key management personnel Directors Mr G Stevens2 Mr B Mondello2 Mr P Re Mr J Hart2 Mr M Rosenstreich Mr J Kenny3 Total	Balance 1.7.2017 Options Granted as compensation Options Net Change Other Options Balance 30.6.2018 Option Number of Options Vested and Exercisable*
	- - 17,852,765 17,852,765 - - - 10,893,750 10,893,750 - - - - - - - - 13,625,000 13,625,000 - - - - - - - - 12,785,152 12,785,152 12,785,1524
	- - 55,156,667 55,156,667 12,785,152

1. The listed options were issued on 16 April 2018 under various offers which formed part of the Emerge Gaming Limited public offer. The options have an exercise price of $0.02 and an expiry date of 18 April 2021.

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EMERGE GAMING LIMITED

AND CONTROLLED ENTITIES ABN 31 004 766 376

DIRECTORS’ REPORT

1. As a vendor of EGS, these free attaching options were issued as consideration for the acquisition of EGS. These options are subject to a 24-month escrow.

2. These options were issued under the Bonus Issue offer which formed part of the Emerge Gaming Limited public offer. The Bonus Issue offer granted options to Shareholders, on the basis of one (1) option for every one (1) Share held by Shareholders, as at the Bonus Issue Record Date - 27 October 2017. The Bonus Issue offer was not subject to escrow.

3. Balance as at date of resignation on 16 April 2018.

Table 5: Performance-based remuneration (consolidated)

During the year, performance shares were granted to the following Directors and other key management personnel as part of their performance- based remuneration:

Performance-based remuneration (consolidated) Directors Mr G Stevens Mr B Mondello Mr P Re Mr J Hart Mr M Rosenstreich Mr J Kenny Total	No. of performance shares No. of performance shares vested Performance shares Class Fair value of performance shares*
	4,240,032 - Class A - 4,240,032 - Class B - 4,240,032 - Class C -
	12,720,096
	1,784,624 - Class A - 1,784,624 - Class B - 1,784,624 - Class C -
	5,353,872
	- - - -
	- - - -
	2,166,667 - Class A - 2,166,667 - Class B - 2,166,667 - Class C -
	6,500,001
	- - - - - - - -
	24,573,969

• In relation to each class of performance shares, the Directors have assessed the probability of meeting the non-market based conditions as 0%. Accordingly, no amount in relation to these performance shares has been recognised in the Statement of Profit or Loss and Other Comprehensive Income or in the remuneration disclosures for Directors and key management personnel.

The vesting conditions attached to each class of performance share are as follows:

Class A : Attainment of a net cumulative player position of 25,000; and Share price of $0.04 based upon a 10 day volume weighted average price.

Class B : Attainment of a net cumulative player position of 50,000; and Share price of $0.06 based upon a 10 day volume weighted average price.

Class C : Attainment of a net cumulative player position of 75,000; and Share price of $0.08 based upon a 10 day volume weighted average price.

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EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

DIRECTORS’ REPORT

Related party transactions with key management personnel

Related party transactions with key management personnel, not including those already disclosed in this remuneration report, are as follows:

Post-acquisition of Emerge Gaming Solutions Pty Ltd (formerly Gaming Battleground Pty Ltd) Technical consultancy services fees paid to Indomain Enterprises Pty Ltd – an entity associated with Mr B Mondello Legal consulting fees paid to Hartness Consulting Pty Ltd – an entity associated with Mr J Hart Project and corporate evaluation, due diligence fees, paid to Keystone Resource Development – an entity associated with Mr M Rosenstreich Additional company secretarial service fees, paid to Dabinett Corporate Pty Ltd – an entity associated with Mr R Caren Pre-acquisition of Emerge Gaming Solutions Pty Ltd (formerly Gaming Battleground Pty Ltd) Research and consultancy service fees for the period from February 2017 to March 2018, paid to Mr G Stevens Technical consultancy services fees for the period from February 2017 to March 2018, paid to Indomain Enterprises Pty Ltd – an entity associated with Mr B Mondello Research and development fees paid to Technobrave Pty Ltd – an entity associated with Mr B Mondello Accounting, bookkeeping and corporate advisory fees, paid to Regency Corporate Pty Ltd – an entity associated with Mr P Re Corporate advisory fees for the period from February 2017 to March 2018, paid to Hartness Consulting Pty Ltd – an entity associated with Mr J Hart Corporate advisory fees paid or payable to CPS Capital Group – an entity associated with Mr J Peterson (Resigned 21 June 2017)

2018 2017 $ $

15,000 - 6,000 - 70,580 - 75,750 - 115,040 - 124,000 - 142,900 - 24,740 - 68,000 - - 60,000

[END OF REMUNERATION REPORT]

Signed in accordance with a resolution of the Board of Directors made pursuant to s.298(2) of the Corporations Act 2001 (Cth).

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BERT MONDELLO Chairman

Dated this 30[th] day of September 2018.

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

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Criterion Audit Pty Ltd

ABN 85 165 181 822

PO Box 2138 SUBIACO WA 6904 Suite 1 GF, 437 Roberts Road SUBIACO WA 6008

Phone: 6380 2555 Fax: 9381 1122

To The Board of Directors

Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

As lead audit director for the audit of the financial statements of Emerge Gaming Limited and Controlled Entities for the financial year ended 30 June 2018, I declare that to the best of my knowledge and belief, there have been no contraventions of:

• the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and

• any applicable code of professional conduct in relation to the audit.

Yours faithfully

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CHRIS WATTS CA Director

CRITERION AUDIT PTY LTD

DATED at PERTH this 30[th ] day of September 2018

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‘Liability limited by a scheme approved under Professional Standards Legislation’

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2018

Notes Continuing Operations Finance revenue 3(a) Total income - continuing operations Administration expenses Consulting expenses 3(b) Depreciation and amortisation Employee benefits expense 3(c) Finance costs Impairment 3(d) Research and development Marketing expenses Professional expenses 3(e) Project evaluation expenses Total Expenses (Loss)/Profit before income tax Income tax expense 4 (Loss)/Profit after income tax for the year Discontinued operations Loss for the year after income tax from discontinued operations 26 Other comprehensive income, net of income tax Total comprehensive (loss)/ profit for the year Profit/ (Loss) attributable to: Members of the parent Non-controlling interest Total comprehensive income/(loss) attributable to: Members of the parent Non-controlling interest Earnings per share From continuing and discontinued operations Basic earnings/ (loss) per share (cents per share) 5 Diluted earnings/ (loss) per share (cents per share) 5 From continuing operations Basic earnings/ (loss) per share (cents per share) 5 Diluted earnings/ (loss) per share (cents per share) 5	2018 2017 $ $
	16,345 13,791
	16,345 13,791
	(189,156) (61,233) (257,949) (27,610) (2,210) (9,708) (288,072) (221,228) (10,000) (1,039) (5,449,862) - (136,790) - (17,720) - (111,079) (119,648) - (146,818)
	(6,462,838) (587,284)
	(6,446,493) (573,493) - -
	(6,446,493) (573,493)
	- -
	- -
	(6,446,493) (573,493)
	(6,446,493) (573,493) - -
	(6,446,493) (573,493)
	(6,446,493) (573,493) - -
	(6,446,493) (573,493)
	(2.47) (0.26) (2.47) (0.26)
	(2.47) (0.26) (2.47) (0.26)

The accompanying notes form part of this Consolidated Statement of Profit or Loss and Other Comprehensive Income.

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

16

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018

Notes Current Assets Cash and cash equivalents 6 Trade and other receivables 7 Other assets 8 Total Current Assets Non-current Assets Property, plant and equipment 9 Intangible assets 10(b) Total Non-current Assets Total Assets Current Liabilities Trade and other payables 11 Provisions 12 Borrowings 13 Total Current Liabilities Total Liabilities Net Assets Equity Issued capital 14 Reserves 15 Accumulated losses 15 Total equity	2018 2017 $ $
	3,606,158 440,528 123,158 16,963 9,664 3,882
	3,738,980 461,373
	- 19,371 898,443 -
	898,443 19,371
	4,637,423 480,744
	658,297 146,561 - 5,935 50,000 -
	708,297 152,496
	708,297 152,496
	3,929,126 328,248
	58,880,614 51,584,487 1,921,667 534,662 (56,873,155) (51,790,901)
	3,929,126 328,248

The accompanying notes form part of this Consolidated Statement of Financial Position.

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

17

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2018

Notes Cash flows from operating activities Payments to suppliers and employees Interest received / (paid) Finance costs Net cash used in operating activities 6 Cash flows from investing activities Purchase of plant and equipment Purchase of subsidiary, net cash acquired 8(b) Net cash used in investing activities Cash flows from financing activities Proceeds from issue of fully paid shares Payment of transaction costs Proceeds from borrowing 13 Net cash provided by financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effects of exchange rate changes Cash and cash equivalents at the end of the year 6	2018 2017 $ $
	(1,396,215) (535,469) 900 13,791 - (1,039)
	(1,395,315) (522,717)
	- - 5,157 -
	5,157 -
	5,250,000 - (744,212) - 50,000 -
	4,555,788 -
	3,165,630 (522,717) 440,528 963,245 - -
	3,606,158 440,528

The accompanying notes form part of this Consolidated Statement of Cash Flows.

18

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2018

Notes Balance at 30 June 2016 14 Loss for the year Total comprehensive loss for the year Transactions with owners in their capacity as owners Contribution of equity, net of transaction costs Balance at 30 June 2017 Loss for the year Total comprehensive loss for the year Transactions with owners in their capacity as owners Contribution of equity, net of transaction costs 14 Transfer of expired options value 15(a) In-specie distribution of TIPL shares 14 Recognition of share-based payments 15 Balance at 30 June 2018 14	Issued Capital Accumulated Losses Option Reserve $ $ $	Total Equity $
	51,584,487 (51,217,408) 534,662 - (573,493) -	901,741 (573,493)
	- (573,493) -	(573,493)
	- - -	-
	51,584,487 (51,790,901) 534,662	328,248
	- (6,446,493) -	(6,446,493)
	- (6,446,493) -	(6,446,493)
	8,125,704 - - - 534,662 (534,662) (829,577) 829,577 - - - 1,921,667	8,125,704 - - 1,921,667
	58,880,614 (56,873,155) 1,921,667	3,929,126

The accompanying notes form part of this Consolidated Statement of Changes in Equity.

19

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

FOR THE YEAR ENDED 30 JUNE 2018

NOTES TO THE FINANCIAL STATEMENTS

1 CORPORATE INFORMATION

The financial report of Emerge Gaming Limited for the year ended 30 June 2018 was authorised for issue in accordance with a resolution of the directors on 30 September 2018.

Emerge Gaming Limited which is the ultimate parent company, is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange. The nature of the operations and principal activities of the Group was development of an online eSport gamification platform.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

• (a) Basis of Preparation

The financial report is a general purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001 and applicable Australian Accounting Standards.

The consolidated financial statements have been prepared on the basis of historical cost as explained in the accounting policies below. Historical cost is generally based on the fair values of the consideration given in exchange for goods and services. All amounts are presented in Australian dollars, unless otherwise noted. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these consolidated financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of AASB 2, leasing transactions that are within the scope of AASB 117, and measurements that have some similarities to fair value but are not fair value, such as net realisable value in AASB 2 or value in use in AASB 136.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

• Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

• Level 3 inputs are unobservable inputs for the asset or liability.

For the purpose of preparing the financial statements, the consolidated entity is a for-profit entity.

(b) Going Concern

The financial report has been prepared on a going concern basis which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.

As at 30 June 2018, the Group had available cash and cash equivalents of $3,606,158 and had incurred a loss for the year then ended of $6,466,493 and had a net cash outflow from operating activities of $1,412,776

During the year the Group prepared and lodged a prospectus raising $5,000,000 before associated costs, by the issue 250,000,000 Shares at an issue price of $0.02. The Group continued to develop its primary business operation being develop an online eSport gaming platform.

The Directors are satisfied that the Company will have sufficient funds for its ongoing activities. Accordingly, the Directors believe that it is appropriate to adopt a going concern basis of accounting in the preparation of the financial report.

20

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

(c) Discontinued Operations

The Company’s previously wholly owned subsidiary, Tantalum International Pty Ltd (“TIPL”), was a dormant entity in the current period. TIPL was spun out of the Company as part of the Emerge Gaming Public Offer and as a result is no longer part of the Group.

(d) Statement of Compliance

Compliance with Australian Accounting Standards ensures the financial report, the financial statements and notes comply with International Financial Reporting Standards (“IFRS”).

(e) New Standards and Interpretations Adopted

Standards and Interpretations applicable to 30 June 2018

In the year ended 30 June 2018, the Directors have reviewed all of the new and revised Standards and Interpretations issued by the AASB that are relevant to the Company and effective for the current annual reporting period.

As a result of this review, the Directors have determined that there is no material impact of the new and revised Standards and Interpretations on the Company and, therefore, no material change is necessary to Group accounting policies.

Standards and Interpretations in issue not yet adopted

The Directors have also reviewed all Standards and Interpretations in issue but not yet adopted for the year ended 30 June 2018. As a result of this review the Directors have determined that there is no material impact, of the Standards and Interpretations in issue but not yet adopted on the Group and, therefore, no change is necessary to Group accounting policies.

(f) Basis of consolidation

The consolidated financial statements comprise the financial statements of Emerge Gaming Limited and entities (including special purpose entities) controlled by Emerge Gaming Limited (its subsidiaries).

Control is achieved when the Company:

• has power over the investee;

• is exposed, or has rights, to variable returns from its involvement with the investee; and

• has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. Adjustments are made to bring into line any dissimilar accounting policies that may exist. All inter-company balances and transactions, including unrealised profits arising from intra-group transactions, have been eliminated in full. Unrealised losses are eliminated unless costs cannot be recovered.

Subsidiaries are consolidated from the date on which control is transferred to the group and cease to be consolidated from the date on which control is transferred out of the Group. Total comprehensive income of subsidiaries is attributed to the owners of the Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Specifically, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the date the Company gains control until the date when the Company ceases to control the subsidiary.

21

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the difference between:

• The aggregate of the fair value of the consideration received and the fair value of any retained interest; and

• The previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any noncontrolling interests.

Refer to Note 2(c) and Note 26 for deconsolidation.

All amounts previously recognised in other comprehensive income in relation to that subsidiary are accounted for as if the Group had directly disposed of the related assets or liabilities of the subsidiary (i.e. reclassified to profit and loss or transferred to another category of equity as specified/permitted by the applicable AASBs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under AASB 139, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

(g) Foreign currency translation

Both the functional and presentation currency of Emerge Gaming Limited and its Australian subsidiaries is Australian dollars ($AUD). Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the statement of financial position date.

All differences in the consolidated financial report are taken to the statement of profit or loss and other comprehensive income with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net investment, at which time they are recognised in the statement of profit or loss and other comprehensive income.

Tax charges and credits attributable to exchange differences on those borrowings are also recognised in equity.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

As at the reporting date the assets and liabilities of overseas subsidiaries are translated into the presentation currency of Emerge Gaming Limited at the rate of exchange ruling at the statement of financial position date and the statements of profit or loss and other comprehensive income are translated at the weighted average exchange rates for the year. The exchange differences arising on the retranslation are taken directly to a separate component of equity.

On disposal of a foreign entity, the deferred cumulative amount recognised in equity relating to that particular foreign operation is recognised in the statement of profit or loss and other comprehensive income.

(h) Cash and cash equivalents

Cash and short-term deposits in the statement of financial position comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

(i) Trade and other receivables

Trade receivables, which generally have 30 day terms, are recognised and carried at original invoice amount which represents fair value at that date less an allowance for any doubtful debts. An allowance of doubtful debts is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified.

(j) Other financial assets

Other financial assets in the parent company represent investments in subsidiaries held at cost less any impairment.

22

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

(k) Property, plant and equipment

Leasehold improvements, buildings and plant and equipment are stated at cost less accumulated depreciation and any impairment losses recognised.

Depreciation is calculated on a straight-line basis over the estimated useful life of the asset as follows: Plant and equipment - over 3 to 10 years

Impairment

The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.

For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cashgenerating unit to which the asset belongs. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount.

The recoverable amount of plant and equipment is the greater of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

Impairment losses are recognised in the statement of profit or loss and other comprehensive income.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued used of the asset.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the statement of profit or loss and other comprehensive income in the period the item is derecognised.

(l) Recoverable amount of assets

At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.

Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

(m) Trade and other payables

Trade and other payables are carried at amortised cost and due to their short term nature they are not discounted. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.

(n) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

23

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of profit or loss and other comprehensive income net of any reimbursement.

If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

(o) Loans and borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received.

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement.

(p) Contributed equity

Ordinary share capital is recognised at the fair value of the consideration received. Any transaction costs arising on the issue of shares are recognised directly in equity as a reduction of the share proceeds received.

(q) Share-based payment transactions

The Group provides remuneration to employees (including directors) of the Group in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares ('equity-settled transactions').

The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Emerge Gaming Limited ('market conditions').

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award ('vesting date').

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects -

• (i) the extent to which the vesting period has expired, and

• (ii) the number of awards that, in the opinion of the directors of the Group, will ultimately vest.

This opinion is formed based on the best available information at balance date. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition.

Where the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award, and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

24

EMERGE GAMING LIMITED

AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share (see Note 5).

(r) Leases

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. All other leases are classified as finance leases. Operating lease payments are recognised as an expense in the statement of profit or loss and other comprehensive income on a straight-line basis over the lease term. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

(s) Revenue

Revenue is recognised when it is probable that the economic benefit will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable. The following specific recognition criteria must also be met before revenue is recognised.

Interest

Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount on initial recognition.

Sponsorship, marketing and advertising revenue

Sponsorship, marketing and advertising revenue is recognised when it is received or when the right to receive payment is established.

Subscription revenue

Subscription revenue is recognised in the accounting period in which services are rendered.

All revenue is stated net of the amount of goods and services tax (GST).

(t) Income tax

In principle, deferred income tax is provided on all temporary differences at the statement of financial position date between the tax bases of assets and liabilities and their carrying amounts for the financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences:

• except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilised:

• except where the deferred income tax asset relating to the deductible temporary differences arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

25

EMERGE GAMING LIMITED

AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each statement of financial position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the statement of financial position date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in the statement of profit or loss and other comprehensive income.

(u) Financial instruments

Financial assets and financial liabilities are recognised when a group entity becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets

Financial assets are classified into the following specified categories: financial assets ‘at fair value through profit or loss’ (FVTPL), ‘held-to-maturity’ investments, ‘available-for-sale’ (AFS) financial assets and ‘loans and receivables’. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

Financial assets at FVTPL

Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL.

A financial asset is classified as held for trading if:

• it has been acquired principally for the purpose of selling it in the near term; or

• on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together and has a recent actual pattern of short-term profit-taking; or

• it is a derivative that is not designated and effective as a hedging instrument.

A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if:

• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise; or

• the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

• it forms part of a contract containing one or more embedded derivatives, and AASB 139 ‘Financial Instruments: Recognition and Measurement’ permits the entire combined contract (asset or liability) to be designated as at FVTPL.

26

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

Financial assets at FVTPL are stated at fair value, with any gains or losses arising on re-measurement recognised in profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the financial asset and is included in the ‘other gains and losses’ line item in the consolidated statement of profit or loss and other comprehensive income. Fair value is determined in the manner described in Note 24.

Loans and receivables

Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment. Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of financial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period of 60 days, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the current market rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss. When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other comprehensive income are reclassified to profit or loss in the period.

For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised. In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive income and accumulated under the heading of investments revaluation reserve.

(v) Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

• where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivables and payables are stated with the amount of GST included.

27

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. Cash flows are included in the Cash Flow statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(w) Employee entitlements

Provision is made for the Company's liability for employee benefits arising from services rendered by employees at balance date. Employee benefits expected to be settled within one year, together with entitlements arising from wages and salaries, annual leave and sick leave, which will be settled within one year, have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits. Contributions are made by the entity to employee superannuation funds and are charged as expenses when incurred.

(x) Derecognition of financial instruments

The derecognition of a financial instrument takes place when the Group no longer controls the contractual rights that comprise the financial instrument, which is normally the case when the instrument is sold, or all the cash flows attributable to the instrument are passed through to an independent third party.

(y) Segment information

Operating segments have been identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segments and to assess their performance. The chief operating decision maker has been identified as the board of directors of the Company.

(z) Intangible assets

Intangible assets acquired as part of a business combination, other than goodwill, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Indefinite life intangible assets are not amortised and are subsequently measured at cost less any impairment. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.

Intellectual property

Significant costs associated with intellectual property are deferred and amortised on a straight-line basis over the period of their expected benefit, being their finite life of 5 years.

Software

Significant costs associated with software are deferred and amortised on a straight-line basis over the period of their expected benefit, being their finite life of 5 - 6 years.

Impairment of non-financial assets

Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

28

EMERGE GAMING LIMITED

AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

(aa) Financial risk management policy

Details of the Group's financial risk management policy are set out in Note 24.

(bb) Compound financial instruments

The Group evaluates the terms of any financial instrument to determine whether it contains both a liability and an equity component. The separate components of a financial instrument that create a financial liability and grant an option to the holder of the instrument to convert it into an equity instrument are recognised separately on the statement of financial position.

(cc) Comparative figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

(dd) Research and development costs

Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset only when the Group can demonstrate:

• The technical feasibility of completing the intangible asset so that the asset will be available for use or sale;

• Its intention to complete and its ability and intention to use or sell the asset;

• How the asset will generate future economic benefits;

• The availability of resources to complete the asset; and

• The ability to measure reliably the expenditure during development.

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses. Amortisation of the asset begins when development is completed and the asset is available for use. It is amortised over the period of expected future benefit. Amortisation is recorded in the statement of profit and loss. During the period of development, the asset is tested for impairment annually.

(ee) Critical accounting judgements and key sources of estimation uncertainty

In the application of Australian Accounting Standards management is required to make judgments, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstance, the results of which form the basis of making the judgments. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the year in which the estimate is revised if the revision affects only that year, or in the year of the revision and future years if the revision affects both current and future years.

Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events is reported.

Share-based payments

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or BlackScholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Refer to notes 14 and 15 for details of inputs utilised in calculating the fair value of the equity instrument.

29

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

Estimation of useful lives of assets

The Group determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

Goodwill and other indefinite life intangible assets

The Group tests annually, or more frequently if events or changes in circumstances indicate impairment, whether goodwill and other indefinite life intangible assets have suffered any impairment, in accordance with the accounting policy stated in note 2(z). The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require the use of assumptions, including estimated pre-tax discount rates based on the current cost of capital and growth rates of the estimated future cash flows.

Income tax

The Group is subject to income taxes in the jurisdictions in which it operates. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations undertaken during the ordinary course of business for which the ultimate tax determination is uncertain. The Group recognises liabilities for anticipated tax audit issues based on the Group's current understanding of the tax law. Where the final tax outcome of these matters is different from the carrying amounts, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

30

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

3 REVENUES, OTHER INCOME AND EXPENSES

Revenue and expenses from continuing operations (a) Finance revenue Interest received Total finance revenue (b) Consulting Company secretarial General consultancy Total Consulting expenses (b) Employee benefits expense Payroll cost Total Employee benefits expense (d) Impairment expenses Impairment of goodwill from acquisition (Note 10) Other impairment expenses Total Impairment expenses (e) Professional expenses Audit fees Legal fees Tax and accounting fees Total tax and accounting fees	2018 2017 $ $
	16,345 13,791
	16,345 13,791
	(120,750) - (137,199) (27,610)
	(257,949) (27,610)
	(288,072) (221,228)
	(288,072) (221,228)
	(5,437,823) - (12,039) -
	(5,449,862) -
	(29,500) (21,500) (49,967) (89,908) (31,612) (8,240)
	(111,079) (119,648)

31

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

4 INCOME TAX

Major components of income tax expense for the years ended 30 June 2018 and 30 June 2017 are: Income statement Current income Current income tax charge (benefit) Adjustment in respect of previous current income tax Income tax expenses (benefit) reported in income statement A reconciliation of income tax expenses (benefit) applicable to accounting profit before income tax at the statutory income tax rate to income tax expense at the company’s effective income tax rate for the years ended 30 June 2018 and 2017 is as follows: Accounting profit (loss) before tax from continuing operations Accounting profit (loss) before income tax At the statutory income tax rate 27.5% (2017: 30%) Add: Accounting impairments Non-deductible expenses Temporary differences and losses not recognised Tax amortisation of capital raising costs Write back to income tax expenses Less: Gain on debt forgiveness Tax amortisation of capital raising costs At effective income tax rate 0% (2017: 0%) Unrecognised deferred tax assets/ (liabilities) Deferred tax assets/ (liabilities) have not been recognised in respect of the following items Accrued interest Trade and other payables Employee benefits Business related costs Foreign exchange Capital losses Tax losses Tax amortisation of Capital raising cost Other unrecognised deferred tax assets Unrecognised deferred tax assets	2018 2017 $ $
	- - - -
	- -
	(6,446,493) (573,493)
	(6,446,493) (573,493)
	(1,772,786) (172,048) 1,500,901 - 519 81,542 334,297 99,546 251,723 - (314,654) - - - (9,040)
	- -
	2018 2017 $ $
	(2,872) - - 6,450 - - - 27,119 - 463 - 2,536,172 329,056 3,018,311 251,723 - 8,113 -
	586,020 5,588,515

The tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not that future taxable profit will be available against which the Company can utilise the benefits.

32

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

5 EARNINGS PER SHARE

	2018	2017
	cents	cents
Basic earnings per share
From continuing operations	(2.47)	(0.26)
From discontinued operations	-	-
Total basic earnings per share	(2.47)	(0.26)
Diluted earnings per share
From continuing operations	(2.47)	(0.26)
From discontinued operations	-	-
Total diluted earnings per share	(2.47)	(0.26)
The following reflects the income and share date used in the basic and diluted earnings per share computations:
	2018	2017
	$	$
(a) Reconciliation of earnings used in calculating earnings per share
Loss attributable to ordinary equity holders of the Company from continuing
operations used in the calculation of basic earnings per share and diluted earnings
per share	(6,446,493)	(573,493)
Loss for the year from discontinued operations used in the calculation of basic
earnings per share and diluted earnings per share from discontinued operations	-	-
	Shares	Shares
(b) Weighted average number of shares used in the denominator
Weighted average number of ordinary shares used as the denominator in calculating
basic earnings per share	261,473,893	223,368,1461
Adjusted weighted average number of ordinary shares used in calculating diluted
earnings per share	261,473,893	223,368,1461

1 Total number of ordinary shares pre-consolidation on 19 October 2017.

33

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

6 CASH AND CASH EQUIVALENTS

Cash and cash equivalents Cash at bank and in hand	2018 2017 $ $
	3,606,158 440,528
	3,606,158 440,528

Cash at bank and in hand earns interest at floating rates based on daily bank rates. The fair value of cash and cash equivalents is $3,606,158 (2017: $440,528).

Reconciliation of cash Cash (a) Reconciliation of loss from ordinary activities after income tax to net cash used in operating activities Operating loss after income tax Adjustments for: Depreciation and amortisation Impairment Changes in assets and liabilities: (Increase)/decrease in trade and other receivables (Increase)/decrease in other assets (Decrease)/increase in provisions (Decrease)/increase in trade and other payables Net cash used in operating activities 7 TRADE AND OTHER RECEIVABLES (CURRENT) Trade and other receivables Other receivables Accrued interest (i) Trade receivables are non-interest bearing and are generally on 30-day terms. (ii) Other receivables relate to GST receivable from the Australian Taxation Office. 8 OTHER ASSETS Other assets Prepaid insurance	2018 2017 $ $
	3,606,158 440,528 (6,446,493) (573,493) 2,210 9,708 5,449,862 (10,445) (6,830) (879,072) (3,882) (5,935) - 494,558 51,780
	(1,395,315) (522,717)
	2018 2017 $ $
	112,713 16,963 10,445 -
	123,158 16,963
	2018 2017 $ $
	9,664 3,882
	9,664 3,882

34

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

9 PROPERTY, PLANT AND EQUIPMENT

Office equipment at cost Less accumulated depreciation Less impairment losses1 Computer equipment at cost Less accumulated depreciation Less impairment losses1 Furniture and fittings at cost Less accumulated depreciation Motor vehicles at cost Less accumulated depreciation Other plant and equipment at cost Less accumulated depreciation Less impairment losses1 Total property plant and equipment	2018 2017 $ $
	2,787 2,787 (1,842) (1,703) (945) -
	- 1,084
	38,332 38,332 (22,927) (21,010) (15,405) -
	- 17,322
	1,743 1,743 (1,743) (1,710)
	- 33
	62,203 62,203 (62,203) (62,203)
	- -
	2,415 2,415 (1,604) (1,483) (811) -
	- 932
	- 19,371

1 During the year, the Group carried out a review of the recoverable amount of the property, plant and equipment. The review led to an impairment loss of $17,161 on the basis of the assets’ recoverable amounts.

35

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

10 ACQUISITION OF EMERGE GAMING SOLUTIONS PTY LTD (FORMERLY GAMING BATTLE GROUND PTY LTD)

On 16 April 2018, the Group has completed an acquisition of 100% issued capital and voting rights in Gaming Battle Ground Pty Ltd renamed Emerge Gaming Solutions Pty Ltd (“EGS”).

(a) Acquisition Consideration

The consideration for the acquisition comprised the issue to the EGS shareholders of:

184.5 million fully paid ordinary shares and options to EGS shareholders

100 million performance shares to EGS shareholders

16.5 million fully paid ordinary shares and options to corporate advisor and directors

Under the principles of AASB 3, the assets and liabilities of EGS are measured at fair value on the date of acquisition.

(b) Intangible Asset

Management reviewed the assets acquired for impairment. Details of the transaction are as follows:

Consideration 184.5 million fully paid ordinary shares and options to EGS shareholders 184.5 million options to EGS shareholders 100 million performance shares to EGS shareholders Total consideration Fair value of assets and liabilities held at acquisition date: Cash Trade and other receivables Trade and other payables Loans Intellectual property Fair value of identifiable assets and liabilities assumed Consideration paid Less fair value of identifiable assets and liabilities assumed Less provision of impairment1	Fair Value $
	3,690,000 1,808,916 -
	5,498,916
	5,157 47,247 (724,754) (165,000) 898,443
	61,093
	5,498,916 (61,093) (5,437,823)
	-

1.Management conducted an impairment assessment of the intangible assets resulting from the acquisition of Emerge Gaming Solutions Pty Ltd. Based on impairment indicators and relevant information such as the Company’s market capitalisation, the above impairment expense was recognised. Management will conduct impairment assessments of intangible assets on a regular basis.

36

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

11 TRADE AND OTHER PAYABLES (CURRENT)

11 TRADE AND OTHER PAYABLES (CURRENT)
Trade and other payable Trade payables Accrued expenses	2018 2017 $ $
	583,097 60,126 75,200 86,435
	658,297 146,561

(i)	Trade payables and accruals are non-interest bearing and are normally settled on repayment terms between 7 and 30	Trade payables and accruals are non-interest bearing and are normally settled on repayment terms between 7 and 30
	days.
(ii)	Trade payables balance includes pre-acquisition amounts outstanding to KMP related entities as below:
		$
	Mr G Stevens and related entities	36,641
	Mr B Mondello and related entities	110,000
	Mr P Re and related entities	10,483
	Mr J Hart and related entities	25,000
	Total	182,124

12 PROVISIONS

Provisions Provision for annual leave 13 BORROWINGS Borrowings Loan from third party	2018 2017 $ $
	- 5,935
	- 5,935
	2018 2017 $ $
	50,000 -
	50,000 -

(i) Unsecured loan from Hunter Capital in relation to working capital purposes. Interest rate 10% per annum. This loan was repaid post year end.

37

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

14 CONTRIBUTED EQUITY

14 CONTRIBUTED EQUITY
Ordinary shares Ordinary shares fully paid Less: Capital raising costs	2018 2017 $ $
	60,218,722 51,778,299 (1,338,108) (193,812)
	58,880,614 51,584,487

Fully paid ordinary shares carry one vote per share and carry the right to dividends. Issued capital has no par value.

2018 FULLY PAID ORDINARY SHARES Balance at 1 July 2017 Issue of shares to raise capital Consolidation of shares (1.8:1) (i) Issue of shares under Emerge Gaming Limited Public Offer (ii) Issue of shares to the vendors of Emerge Gaming Solutions Pty Ltd (iii) Issue of shares in return for service – corporate advisors (iv) Issue of shares in return for service – Director related entities (v) In-specie distribution of TIPL shares (vi) Capital raising costs Balance at 30 June 2018 2017 FULLY PAID ORDINARY SHARES Balance at 1 July 2016 Balance at 30 June 2017	Number of shares $
	223,368,146 51,778,299 22,500,000 250,000 (109,274,569) - 250,000,000 5,000,000 184,500,000 3,690,000 11,500,000 230,000 5,000,000 100,000 - (829,577) - (1,338,108)
	587,593,577 58,880,614
	Number of shares $
	223,368,146 51,584,487
	223,368,146 51,584,487

i. The Company’s share on issue were consolidated on a 1.8:1 basis as approved by shareholders at the General Meeting held on 9 October 2017. ii. Under the Emerge Gaming Limited public offer 250,000,000 fully paid ordinary shares were issued at a price of $0.02 to raise $5,000,000 before costs together with one (1) free attaching option for every four (4) shares subscribed for.

iii. Refer to Note 8 for further details of the acquisition of Emerge Gaming Solutions Pty Ltd (formerly Gaming Battleground Pty Ltd).

iv. As part of the Emerge Gaming Limited public offer, advisors to the issue where offered 11,500,000 fully paid ordinary shares and 11,500,000 free attaching options. Refer to Note 11 for more information on the option issue to advisors.

v. As part of the Emerge Gaming Limited public offer, Mr John Kenny and former director Mr Jason Peterson were each offered 2,500,000 shares in lieu of additional fees in consideration for services beyond their normal duties as directors. The portion related to Mr John Kenny ($50,000) is reflected as share-based payment remuneration to a KMP in the current financial year.

vi. Tantalum International Pty Ltd (TIPL) was previously a wholly owned subsidiary of the Company. As part of its change in direction, the Company distributed and transferred the majority of its interest in this entity to Shareholders on a pro rata basis, prior to completion of the acquisition of Gaming Battleground Pty Ltd. This in-specie distribution spin out of TIPL is reflect as a reduction in the equity of the Company.

Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to the number of and amounts paid on the shares held. On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one (1) vote, and upon a poll each share is entitled to one (1) vote, in proportion to the number of and amounts paid on the shares held.

38

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

15 RESERVES AND ACCUMULATED LOSSES

(a) Reserves Option issue reserve Movements in Option issue reserve Movement in reserves were as follows: Balance 1 July Expired options value transferred to accumulated losses Issue of options to the vendors of Gaming Battle Ground Pty Ltd (i) Issue of shares in return for service – corporate advisors (ii) Balance 30 June	2018 2017 $ $
	1,921,667 534,662
	1,921,667 534,662
	2018 2017 $ $
	534,662 534,662 (534,662) - 1,808,916 - 112,751 -
	1,921,667 534,662

i. A total of 184,500,000 Consideration Options were issued to the shareholders of Emerge Gaming Solutions Pty Ltd in connection with the acquisition exercisable at $0.02 each on or before 18 April 2021. Using the Black & Scholes option pricing model, these options are valued at $0.0098 resulting in a share-based payment being recognised in the option reserve of $1,808,916.

ii. A total of 11,500,000 Options were to CPS Capital in consideration for corporate advisory services provided by CPS Capital to the Company exercisable at $0.02 on or before 18 April 2021. Using the Black & Scholes option pricing model, these options are valued at $0.0098 resulting in a share-based payment being recognised in the option reserve of $112,751.

The option issue reserve is used to record items recognised as expenses on the grant of share options.

The fair value of the equity-settled share Options granted is estimated as at the date of grant using the Black & Scholes option pricing model taking into account the terms and conditions upon which the options were granted.

Expected volatility (%)	81.83%
Risk-free interest rate (%)	2.10%
Expected life of Options	Three years from grant date
Exercise price (cents)	2 cents
Grant date share price	2 cents
Fair value per option	$0.0098

The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of options granted were incorporated into the measurement of fair value.

(b) Accumulated losses Movement in accumulated losses were as follows: Balance 1 July Net profit/ (loss) for the year Expired options value transferred from reserve In-specie distribution of TIPL shares Balance 30 June	2018 2017 $ $
	(51,790,901) (51,217,408) (6,446,493) (573,493) 534,662 - 829,577 -
	(56,873,155) (51,790,901)

39

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

16 INTERESTS IN CONTROLLED ENTITIES

The consolidated financial statements include the financial statements of Emerge Gaming Limited and the controlled entities listed in the following table:

Emerge Gaming Solutions Pty Ltd Tantalum International Pty Ltd Adobha Resources (Eritrea) Pty Ltd Tantalum Egypt JSC	Country of Incorporation Percentage of equity interest held by the Group 2018 2017 % %	Investment 2018 2017 $ $
	Australia 100 - Australia - 100 Australia 100 100 Egypt - 50	5,498,916 - - 100 100 100 - -
		5,499,016 200

Emerge Gaming Limited is the ultimate Australian parent entity and ultimate parent of the Group.

Emerge Gaming Solutions Pty Ltd was acquired as part of the Emerge Gaming Limited public offer.

Tantalum International Pty Ltd was spun out of the Group as an in-specie distribution to Shareholders and is no longer controlled by Emerge Gaming Limited.

Tantalum Egypt JSC was previously included in the consolidated financial statements on the basis that Emerge Gaming Limited controlled the activities of Tantalum Egypt JSC by way of Emerge’s casting vote on the Board of Directors. Emerge no longer controls Tantalum Egypt JSC.

17 EXPENDITURE COMMITMENTS

(a) Lease expenditure commitments

The Group has not entered into commercial leases for office accommodation. The Group has no future minimum rentals payable as at 30 June 2018.

(b) Bank guarantee

There are no bank guarantees of the Group at 30 June 2018.

(c) Capital Commitments

There are no capital commitments of the Group at 30 June 2018.

18 CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Contingent Liabilities

The Group did not have any contingent liabilities as at Balance Date.

19 SUBSEQUENT EVENTS

No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Group, the results of those operations, or the state of affairs of the Group in future financial years.

40

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

20 REMUNERATION OF AUDITORS

The auditor of Emerge Gaming Limited is Criterion Audit Pty Ltd (“Criterion”).

The auditor of Emerge Gaming Limited is Criterion Audit Pty Ltd (“Criterion”).
Amounts received or due and receivable by Criterion for: An audit or review of the financial report of the entity and any other entity in the Group Amounts received by auditors other than Criterion for: An audit or review of the financial report of the entity and any other entity in the Group	2018 2017 $ $
	21,500 -
	21,500 -
	- 21,500
	- 21,500

21 RELATED PARTY DISCLOSURES

The following table provides the total amount of transactions which have been entered into with related parties for the relevant financial year:

Post-acquisition of Emerge Gaming Solutions Pty Ltd (formerly Gaming Battleground Pty Ltd) Technical consultancy services fees paid to Indomain Enterprises Pty Ltd – an entity associated with Mr B Mondello Legal consulting fees paid to Hartness Consulting Pty Ltd – an entity associated with Mr J Hart Project and corporate evaluation, due diligence fees, paid to Keystone Resource Development – an entity associated with Mr M Rosenstreich Additional company secretarial service fees, paid to Dabinett Corporate Pty Ltd – an entity associated with Mr R Caren Pre-acquisition of Emerge Gaming Solutions Pty Ltd (formerly Gaming Battleground Pty Ltd) Research and consultancy service fees for the period from February 2017 to March 2018, paid to Mr G Stevens Technical consultancy services fees for the period from February 2017 to March 2018, paid to Indomain Enterprises Pty Ltd – an entity associated with Mr B Mondello Research and development fees paid to Techno brave Pty Ltd – an entity associated with Mr B Mondello Accounting, bookkeeping and corporate advisory fees, paid to Regency Corporate Pty Ltd – an entity associated with Mr P Re Corporate advisory fees for the period from February 2017 to March 2018, paid to Hartness Consulting Pty Ltd – an entity associated with Mr J Hart Corporate advisory fees paid or payable to CPS Capital Group – an entity associated with Mr J Peterson (Resigned 21 June 2017)

2018 2017 $ $

15,000 - 6,000 - 70,580 - 75,750 - 115,040 - 124,000 - 142,900 - 24,740 - 68,000 - - 60,000

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

41

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

22 KEY MANAGEMENT PERSONNEL COMPENSATION

(a) Details of key management personnel

Mr Gregory Stevens Chief Executive Officer, Executive Director (appointed 16 April 2018) Mr Bert Mondello Non-Executive Chairman (appointed 16 April 2018) Mr Philip Re Non-Executive Director Mr Jonathan Hart Non-Executive Director (appointed 16 April 2018) Mr Michael Rosenstreich Non-Executive Director (resigned 16 April 2018) Mr John Kenny Non-Executive Director (resigned 16 April 2018) Mr Rowan Caren Company Secretary (resigned 16 April 2018)

(b) Compensation of key management personnel

The aggregate compensation made to directors and other members of key management personnel of the Group is set out below:

Short-term employee benefits Post-employment benefits Share-based payments	2018 2017 $ $
	213,500 253,000 - - 50,000 -
	263,500 253,000

(c) Other transactions with key management personnel

Refer to Note 21 regarding other transactions with key management personnel to the Company.

23 SEGMENT INFORMATION

An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial informat -on is available. This includes start-up operations which are yet to earn revenues. Management will also consider other factors in determining operating segments such as the existence of a line manager and the level of segment information presented to the board of directors. During the year the Company only operated in one segment and that was the development of the Arcade X online gaming platform.

42

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

24 FINANCIAL INSTRUMENTS

(a) Financial risk management policy

• The Group's management of financial risk is aimed at ensuring net cash flows are sufficient to:

• meet all financial commitments as and when they fall due, and

• maintain the capacity to fund its forecast project development and exploration strategies.

The Group continually monitors and tests its forecast financial position against these criteria. The Group's principal financial instruments comprise cash and short-term deposits. The main purpose of these financial instruments is to raise finance for the Group operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. It is, and has been throughout the period under review, the Group's policy that no trading in financial instruments shall be undertaken.

The main risks arising from the Group's financial instruments presently are interest rate risk, foreign currency risk, credit risk, security risk and liquidity risk.

The Group uses different methods to measure and manage different types of risks to which it is exposed. These include monitoring levels of exposure to interest rate and foreign exchange risk and assessments of market forecasts for interest rate, foreign exchange and commodity prices. Ageing analyses and monitoring of specific credit allowances are undertaken to manage credit risk. Liquidity risk is monitored through the development of future rolling cash flow forecasts.

(b) Interest rate risk

The following table sets out the carrying amount of the financial instruments exposed to interest rate risk:

Financial assets Interest bearing Cash at bank Weighted average interest rate Non-interest bearing Cash at bank Trade receivables Financial liabilities Interest bearing Unsecured loan Fixed interest rate Non-interest bearing Trade and other payables	2018 2017 $ $
	2,500,000 250,000 2.50% 2.70% 1,106,158 190,528 123,158 16,963
	3,729,316 457,491
	50,000 - 10.00% - 658,297 146,561

The following table summarises the sensitivity of financial assets held at balance date to interest rate risk, following a movement of 100 basis points in interest rates at the reporting date would have increased (decreased) equity and profit or loss by the amounts shown below.

Consolidated Post-tax gain (loss)/ equity increase (decrease) +1% (100 basis points)	2018 2017 $ $
	25,000 733

43

EMERGE GAMING LIMITED

AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

(c) Fair values

Set out below is a comparison by category of carrying amounts and fair values of all of the Group's financial instruments recognised in the financial statements.

recognised in the financial statements.
Financial assets Cash Trade and other receivables – current Financial liabilities Trade and other payables Borrowings	Carrying Amount Fair Value 2018 2017 2018 2017 $ $ $ $
	3,606,158 440,528 3,606,158 440,528 123,158 16,963 123,809 16,963
	658,297 146,561 658,297 146,561 50,000 - 50,000 -

Cash, cash equivalents and security deposits: The carrying amount approximates fair value because of their short term to maturity.

Trade receivables and trade creditors: The carrying amount approximates fair value.

Financial assets Cash Trade and other receivables – current Other assets Total Financial liabilities Trade and other payables Borrowings Total	Fair value hierarchy as at 30 June 2018 Level 1 Level 2 Level 3 Total $ $ $ $
	3,606,158 - - 3,606,158 - 123,158 - 123,158 - - - -
	3,606,158 123,158 - 3,729,316
	- 658,297 - 658,297 - 50,000 - 50,000
	- 708,297 - 708,297

(d) Credit risk

Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents, and trade and other receivables. The Group's exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments.

The Group does not hold any credit derivatives to offset its credit exposure.

In addition, receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad debts is not significant.

There are no significant concentrations of credit risk within the Group.

EMERGE GAMING LIMITED

44

AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2018

(e) Liquidity risk

The Group's liquidity position is managed to ensure sufficient funds are available to meet financial commitments in a timely and cost-effective manner.

The Company continually reviews its liquidity position including cash flow forecast to determine the forecast liquidity position and maintain appropriate liquidity levels.

In addition to commitment disclosure in Note 17, the table below reflects the contractual maturity of financial instruments as at 30 June. Cash flows for financial instruments are presented on an undiscounted basis.

				Aging	analysis between		Currency of	payables
2018			Total	<30 days	30-60 days	>60 days	AUD	Other
			$	$	$	$	$	$
Cash	&	cash	(3,606,158)	(1,106,158)	(2,500,000)	-
equivalents
Trade	receivables		(123,158)	(123,158)	-	-
Trade	and other		658,297	259,819	118,427	280,051	658,297	-
payables
Borrowing			50,000	50,000	-	-	-	-
Total			(3,020,019)	(919,497)	(2,381,573)	280,051	658,297	-
				Aging	analysis between		Currency of	payables
2017			Total	<30 days	30-60 days	>60 days	AUD	Other
			$	$	$	$	$	$
Cash	&	cash	(440,528)	(440,528)	-	-
equivalents
Trade	receivables		(16,963)	(16,963)	-	-
Other	assets		(3,882)	(3,882)	-	-
Trade	and other		146,561	110,800	-	35,761	122,366	24,195
payables
Other	payables		-	-	-	-	-	-
Directors’ loans			-	-	-	-	-	-
Total			(314,812)	(350,573)	-	35,761	122,366	24,195

(f) Capital management policy

The Board's policy is to preserve its capital base as much as possible so as to maintain investor, creditor and market confidence and to sustain future development of the business.

There were no changes in the Group's approach to capital management during the year, other than that Group has been able to rely upon equity to finance its capital management, rather than short term debt finance.

Neither the Company nor any of its controlled entities are subject to externally imposed capital requirements.

(g) Foreign Exchange Risk

At 30 June 2018, the Group had no significant exposure to foreign currency.

(h) Equity price risk

The Group is no longer exposed to equity price risks arising from equity.

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

45

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

25 PARENT ENTITY INFORMATION

The accounting policies of the parent entity, which have been applied in determining the financial information shown below, are the same as those applied in the consolidated financial statements. Refer to Note 2 for a summary of the significant accounting policies relating to the Group.

(a) Financial Position Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Equity Contributed equity Accumulated losses Option issue reserve Total equity (b) Financial Performance Loss for the year Other comprehensive income Total comprehensive income	2018 2017 $ $
	3,688,640 456,369 898,444 -
	4,587,084 456,369
	179,070 122,366 48,732 -
	227,802 122,366
	58,880,614 51,584,487 (56,442,999) (51,785,146) 1,921,667 534,662
	4,359,282 334,003
	(6,192,655) (564,166) - -
	(6,192,655) (564,166)

(c) Guarantees entered into by the parent entity in relation to the debts of its subsidiaries

At the Balance Date there are no guarantees entered into by the Parent Entity in relation to the debts of its subsidiaries (2017: Nil).

(d) Contingent liabilities of the parent entity

The Parent Entity did not have any contingent liabilities as at Balance Date, other than as disclosed in Note 18.

(e) Commitments for capital expenditure entered into by the parent entity

The Parent Entity did not have any commitments for capital expenditure as at Balance Date.

EMERGE GAMING LIMITED

46

AND CONTROLLED ENTITIES ABN 31 004 766 376

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2018

26 DISCONTINUED OPERATIONS

Tantalum International Pty Ltd Refer to Note 2(c) for further information Discontinued operations Loss for the year after income tax from discontinued operations	2018 2017 $ $
	- -

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

47

ADDITIONAL ASX INFORMATION

NUMBER OF HOLDINGS OF EQUITY SECURITIES AS AT 31 JULY 2018

The fully paid issued capital of the Company consisted of 587,593,577 ordinary fully paid shares held by 727 shareholders. Each share entitles the holder to one vote.

There are 395,093,575 options over ordinary shares with an exercise price of $0.02 and expiry 3 years from issue date held by 527 optionholders. Options do not carry a right to vote.

DISTRUBUTION OF HOLDERS OF EQUITY SECURITIES AS AT 31 JULY 2018

**Spread of holdings **	Number of holders	Number of shares	% Held
1 - 1,000	87	21,318	0.00%
1,001 - 5,000	39	89,414	0.02%
5,001 - 10,000	13	99,927	0.02%
10,001 - 100,000	242	13,814,514	2.35%
100,001 - 9,999,999,999	346	573,568,404	97.61%
Totals	727	587,593,577	100.00%
Unmarketableparcels	Minimumparcel size	Holders	Units
Minimum$500parcel at$0.015per unit	33,333	208	1,909,309
**Spread of holdings **	Number of holders	Number of options	% Held
1 - 1,000	86	21,350	0.01%
1,001 - 5,000	38	88,425	0.02%
5,001 - 10,000	12	94,371	0.02%
10,001 - 100,000	177	7,838,669	1.98%
100,001 - 9,999,999,999	214	387,050,760	97.96%
Totals	527	395,093,575	100.00%

SUBSTANTIAL SHAREHOLDERS AS AT 31 JULY 2018

The names of substantial shareholders the Company is aware of from the register, or who have notified the Company in accordance with Section 671B of the Corporations Act are:

Substantial shareholder	Number of shares	% Held
LTL Capital Pty Ltd and Associated Entities	37,685,176		6.41%
Mr Luka Ciganek and Associated Entities	32,835,101		5.59%

48

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

ADDITIONAL ASX INFORMATION

TWENTY LARGEST SHAREHOLDERS OF QUOTED EQUITY SECURITIES

TOP 20 HOLDERS OF ORDINARY FULLY PAID SHARES AS AT 31 JULY 2018

Rank	Shareholder	Number of shares	% Held
1	Mr Luka Ciganek	32,835,101	5.59%
2	HSBC Custody Nominees (Australia) Limited	30,500,000	5.19%
3	LTL Capital Pty Ltd	30,281,195	5.15%
4	Albion Hawthorn Pty Ltd	19,779,501	3.37%
5	Mr Gregory Stevens	17,852,765	3.04%
6	LTL Capital Pty Ltd	16,750,000	2.85%
7	Baccello Pty Ltd	13,932,813	2.37%
8	Mr Jonathan Hart	13,350,000	2.27%
9	Mr Ryan Hart	13,150,000	2.24%
10	HSBC Custody Nominees (Australia) Limited	12,780,476	2.18%
11	Venture Works JDK Pty Ltd	12,555,556	2.14%
12	Sunset Capital Management Pty Ltd	11,480,990	1.95%
13	Crossbay Pty Ltd	11,304,416	1.92%
14	Indomain Enterprises Pty Ltd	10,893,751	1.85%
15	Gandel Metals Pl	10,000,000	1.70%
16	ECK Investments Pty Ltd	9,985,937	1.70%
17	Clive Waterson Superfund Pty Ltd	9,400,000	1.60%
18	Mr Dayle Reynolds	8,813,901	1.50%
19	Situate Pty Ltd	7,144,591	1.22%
20	Future Land Limited	7,000,000	1.19%
20	Rivergrade PtyLtd	7,000,000	1.19%
	Total	306,790,993	52.21%

49

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

ADDITIONAL ASX INFORMATION

TWENTY LARGEST OPTIONHOLDERS OF QUOTED EQUITY SECURITIES

TOP 20 HOLDERS OF OPTIONS AS AT 31 JULY 2018

Rank	Shareholder	Number of shares	% Held
1	Mr Luka Ciganek	32,835,101	8.31%
2	LTL Capital Pty Ltd	20,250,000	5.13%
3	Mr Gregory Stevens	17,852,765	4.52%
4	Baccello Pty Ltd	15,432,814	3.91%
5	Mr Jonathan Hart	13,625,000	3.45%
5	Mr Ryan Hart	13,625,000	3.45%
6	Venture Works JDK Pty Ltd	12,555,556	3.18%
7	Sunset Capital Management Pty Ltd	11,480,990	2.91%
8	Indomain Enterprises Pty Ltd	10,893,750	2.76%
9	Gandel Metals Pl	10,000,000	2.53%
10	ECK Investments Pty Ltd	9,985,938	2.53%
11	Mr Dayle Reynolds	8,813,901	2.23%
12	First Investment Partners Pty Ltd	7,925,000	2.01%
13	Situate Pty Ltd	7,144,591	1.81%
14	Rivergrade Pty Ltd	7,000,000	1.77%
15	HSBC Custody Nominees (Australia) Limited - A/C 2	6,250,000	1.58%
16	Chetan Enterprises Pty Ltd	6,208,334	1.57%
17	Church Street Trustees Limited	5,999,999	1.52%
18	Celtic Capital Pty Ltd	5,750,000	1.46%
19	Annlew Investments Pty Ltd	5,000,000	1.27%
20	Abbotsleigh PtyLimited	4,793,268	1.21%
	Total	233,422,007	59.11%

50

EMERGE GAMING LIMITED AND CONTROLLED ENTITIES ABN 31 004 766 376

DIRECTORS’ DECLARATION

The directors of Emerge Gaming Limited declare that:

• (a) in the directors’ opinion, the financial statements and notes on pages 16 to 47, and the remuneration disclosures that are contained in the Directors' report, set out on pages 9 to 14, are in accordance with the Corporations Act 2001 , including:

• i. giving a true and fair view of the Consolidated Entity's financial position as at 30 June 2018 and of its performance, for the year ended on that date; and

• ii. complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and Corporations Regulations 2001.

• (b) in the directors’ opinion, the financial report also complies with International Financial Reporting Standards issued by the International Accounting Standards Board as disclosed in Note 2(d) to the financial statements; and

• (c) 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.

The directors have been given the declarations required by Section 295A of the Corporations Act 2001 .

Signed in accordance with a resolution of the directors pursuant to Section 295(5) of the Corporations Act 2001 .

Dated 30[th] day of September 2018.

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BERT MONDELLO Chairman

EMERGE GAMING LIMITED

51

AND CONTROLLED ENTITIES ABN 31 004 766 376

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Criterion Audit Pty Ltd ABN 85 165 181 822 PO Box 2138 SUBIACO WA 6904 Suite 1 GF, 437 Roberts Road SUBIACO WA 6008

Phone: 6380 2555 Fax: 9381 1122

Independent Auditor’s Report

To the Members of Emerge Gaming Limited

Report on the Audit of the Financial Report

Opinion

We have audited the accompanying financial report of Emerge Gaming Limited (“the Company”) and Controlled Entitites (“the Consolidated Entity”) , which comprises the consolidated statement of financial position as at 30 June 2018, and the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration.

In our opinion:

• a. the accompanying financial report of the Consolidated Entity is in accordance with the Corporations Act 2001, including:

• i. giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2018 and of its financial performance for the year then ended; and

• ii. complying with Australian Accounting Standards and the Corporations Regulations 2001;

• b. The financial report also complies with International Financial Reporting Standards as disclosed in Note 2(d).

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Consolidated Entity in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

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‘Liability limited by a scheme approved under Professional Standards Legislation’

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter

How our audit addressed the key audit matter

Accounting for Business Combination The acquisition of Emerge Gaming Solutions Pty Ltd as disclosed in Note 10 of the consolidated financial statements is a key audit matter due to the size of the acquisition (purchase consideration of $5.49m) and complexities inherent in a business acquisition. Management has completed a process to allocate the purchase consideration to tangible assets, goodwill and separately identifiable intangible assets. This process involved estimation and judgement of future performance of the business and discount rates applied to future cash flows forecasted.

Procedures performed as part of our assessment of the transaction to determine if the appropriate accounting treatment was applied, included: • Reviewing the acquisition agreement to understand the key terms and conditions, and confirming our understanding of the transaction with management; • Assessed the deemed consideration with the terms of the acquisition agreement; • Reviewed acquisition date balance sheet to acquisition agreement and underlying supporting documentation; • Assessed the fair value of assets and liabilities acquired to the fair value assessment conducted by management, which included an estimation of the fair value of technology recorded at the date of acquisition; • We assessed the appropriateness of the disclosures included in Note 10 to the financial report.

Other Information

The directors are responsible for the other information. The other information comprises the information included in the Company’s annual report for the year ended 30 June 2018, but does not include the financial report and our auditor’s report thereon.

Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Directors’ Responsibility for the Financial Report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 2(d), the directors also state in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements , that the financial report complies with International Financial Reporting Standards.

In preparing the financial report, the directors are responsible for assessing the ability of the Company to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Auditor’s Responsibilities for the Audit of the Financial Report

Our responsibility is to express an opinion on the financial report based on our audit. Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report.

As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.

• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Consolidated Entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Consolidated Entity to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Company audit. We remain solely responsible for our audit opinion.

We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2018.

In our opinion, the Remuneration Report of the Company, for the year ended 30 June 2018, complies with section 300A of the Corporations Act 2001.

Responsibilities

The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with s 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards.

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CRITERION AUDIT PTY LTD

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CHRIS WATTS CA Director

DATED at PERTH this 30[th] day of September 2018

www.emergegaming.com.au

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ASX:EM1 | ABN 31 004 766 376