TALIUS GROUP LIMITED — Annual Report 2020

Mar 30, 2021

Annual Report 31 DECEMBER 2020

The information contained in this document should be read in conjunction with HSC Technology Group Ltd’s (formerly HomeStay Care Ltd) public announcements made in accordance with the continuous disclosure obligations arising from the Corporations Act 2001 and the ASX Listing Rules.

CONTENTS

Corporate Directory	2
Chairman’s Message	3
Letter from the Managing Director	4
Directors’ Report	5
Corporate Governance	21
Auditor’s Independence Declaration	22
Consolidated Statement of Profit or Loss and other Comprehensive Income	23
Consolidated Statement of Financial Position	24
Consolidated Statement of Changes In Equity	25
Consolidated Statement of Cashflows	26
Notes to the Consolidated Financial Statements	27
Directors’ Declaration	58
Independent Auditor’s Report	59
Additional Information	62

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CORPORATE DIRECTORY

DIRECTORS

Mr Leylan Neep Mr Graham Russell Mr Ramsay Carter

(Non-Executive Chairman) (Managing Director) (Non-Executive Director)

COMPANY SECRETARY

Marcus Fraumano (Joint Company Secretary) Stephen Rodgers (Joint Company Secretary)

REGISTERED OFFICE & CONTACTS

C/- Delphi Partners, Level 23 307 Queen Street BRISBANE QLD 4000 Ph: +61 1300 711 979 Web: www.hsctg.com.au Securities Exchange Listing - ASX Code: HSC

SOLICITORS

Delphi Partners Level 23 307 Queen Street BRISBANE QLD 4000 Ph: +61 7 3077 7167

AUDITORS

RSM Australia Partners Level 32 2 The Esplanade PERTH WA 6000 Ph: +61 8 9261 9100 Fax: +61 8 9261 9111

SHARE REGISTRY

Automic Registry Services Level 2 267 St Georges Terrace PERTH WA 6000 Ph: +61 8 9324 2099 Fax: +61 8 9321 2337

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CHAIRMAN’S MESSAGE

Dear Shareholders

On behalf of the Board of Directors, it is my pleasure to present the 2020 Annual Report of HSC Technology Group Ltd.

While 2020 was a challenging year for both global and domestic economies, it proved to be a year of opportunity and growth for HSC, during which we were able to demonstrate the value of our product offering and technology solutions.

All key financial metrics are trending in the right direction, with a significant increase in revenue, and an improved cash flow position.

HSC achieved substantial customer growth, demonstrating success in selling into key market segments including community housing, residential aged care and disability housing, in addition to entering the Singapore and New Zealand markets.

Our management team have worked tirelessly to ensure the successful delivery of projects for key customers such as ACH, Odyssey and St John’s Home for Elderly Persons in Singapore. It was very pleasing to see the Company enter new strategic partnerships and alliances that will see HSC in a much stronger position for the future.

The Company has continued to invest in Talius, our proprietary AI data analytics platform, as well as securing a licensing agreement with CSIRO which bolsters the technology offering for our clients.

With a total addressable market that is increasing, and industry tailwinds such as the Royal Commission’s recommendations and the 3G shutdown looming, the opportunity for HSC to deliver value over the coming years is compelling.

To this end, in the second half of the year, the Company undertook a number of corporate initiatives to position HSC for future growth. The Company began and completed a Board renewal, appointed a specialist Advisory Board, and increased our focus on corporate governance with the establishment of board sub-committees. While having a national presence, we have also aligned the corporate and commercial operations by moving the principal place of business to Brisbane.

Towards the end of the year, we determined to strengthen the balance sheet. The capital raising in December 2020 has improved the Company’s cash position and I would like to thank our shareholders, both new and existing, who supported us in the December placement.

I would like to thank our Managing Director, Graham Russell, for his relentless drive and commitment during the year. My thanks also to the rest of the executive team and all staff for their hard work and dedication during a challenging year in light of COVID-19 restrictions.

Finally, I would like to thank my fellow Non-Executive Director, Ramsay Carter for his significant contribution since his appointment mid-year, and of course our shareholders for your continued support.

Building on a successful 2020, we look forward to continuing our mission of improving the lives of seniors and people with disabilities while delivering long-term shareholder value.

Yours faithfully

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Leylan Neep Chairman and Non-Executive Director

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LETTER FROM THE MANAGING DIRECTOR

To Our Shareholders, Clients and Team,

What a difference a year makes! In just over 12 months as the Managing Director of HSC Technology Group, I can reflect on a year of many challenges but more importantly we’ve also experienced significant growth and success.

There has been a huge amount of work and dedication by our incredible team at HSC who truly believe in our purpose of “improving the lives of people, later in life”, which has made this transformation possible and delivered numerous highlights.

At a corporate level, we have lowered Company overheads by over 60%, refreshed the board of directors, recruited an Advisory Board and transitioned the business from HomeStay Care to HSC Technology Group - providing a broader approach to the market as we service much more than just Home Care, and working across all sectors and verticals of the healthcare industry.

In terms of the Company’s financial data, sales revenue has increased from less than $600,000 in 2019 to more than $3 million, we have significantly reduced the financial losses, and driven an increase in commercial subscribers to 4,700.

The Company has invested in the sales team to increase growth and aggressively scale the business, and this is positively reflected in the results:

• Entered new markets - Singapore and New Zealand

• Received signed contracts or purchase orders from:

 Bolton Clarke	 IRT	 ACH
 Enrich	 Feros	 Odyssey
 MS QLD	 Securely	 St Johns Singapore
 Enliven	 ADTSecurity	

 Entered into new strategic partnerships with:

 CSIRO	 HarveyNormanCommercial	 Harrison Tech
 Meditrak	 Intelligent Home	 Tek Call
 Azentro	 CardiacSense	 Tochtech

We have only just begun the journey of a true ageing in place technology shift in the market, and there is still a long way to go. However, the favourable tailwinds of change after Covid 19 helps drive the value of remote patient monitoring more than ever before, and we are at the forefront of this evolution.

The recent recommendations of the Royal Commission into Aged Care and Quality and Safety highlighted how technology is required for the sector to move from casual “spot-checking” to passive “continuous monitoring” and is a positive for our business model.

In addition, the impending 3G network shutdown and the required replacement of all medical alarms (some 300,000 plus) promises a very bright future for HSC. This current momentum is helping drive a wider market understanding of the value that actual live data brings.

In conclusion, I would like to thank the shareholders for their patience and support. We have seen a massive increase in shareholder value during the year, proving the market has appreciated the hard work and effort the HSC team has delivered over the past 12 months.

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Graham Russell Managing Director

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DIRECTORS’ REPORT

Your directors present their report, together with the financial statements on the consolidated entity, consisting of HSC Technology Group Ltd (or ‘the Company’) and the entities it controlled at the end of, or during, the year ended 31 December 2020 (‘consolidated entity’ or ‘Group’).

DIRECTORS

The names of directors in office at any time during or since the end of the year are listed below. Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

NAME OF PERSON POSITION Wayne Cahill Non-Executive Chairman Resigned 16 June 2020 Graham Russell Managing Director Appointed 3 December 2019 Shannon Robinson Non-Executive Director Resigned 1 September 2020 Sara Kelly Non-Executive Director Resigned 16 June 2020 Ramsay Carter Non-Executive Director Appointed 16 June 2020 Leylan Neep Non-Executive Chairman Appointed 1 September 2020

COMPANY SECRETARY

Marcus Fraumano (Joint Company Secretary) Stephen Rodgers (Joint Company Secretary)

OPERATING RESULTS

The loss of the consolidated entity amounted to $2,366,476 (2019: $4,412,504) after providing for income tax.

DIVIDENDS

No dividends were paid or declared since the start of the financial year. No dividend has been recommended.

PRINCIPAL ACTIVITIES

HSC Technology Group Ltd (”HSC” or “Company”) is a publicly listed company that provides a suite of technology enabled care solutions to the aged and disability sectors, across multiple verticals including retirement living, residential aged care, home and community settings. Through its IoT platform, Talius, HSC helps our elderly and those with a disability to live independently for longer whilst keeping them connected to family, friends and carers.

We partner with Aged Care service providers to deliver these solutions as it provides differentiation in the market, improves operational efficiencies, provides objective data metrics, creates financial recurring revenue opportunities but most importantly enables independence, autonomy and safety for their clients.

HSC’s solutions have a wide range of applications across a number of industry sectors including health, security and home automation, as well as being the exclusive distributor in the Asia Pacific region for the Essence Group, Cardiac Sense, uVue and many more.

Our IoT Partners select HSC because of its proprietary data-driven platform that can aggregate insights from thousands of data points for improved care, lower operating costs and enable simple, low-cost deployments.

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DIRECTORS’ REPORT

REVIEW OF OPERATIONS

During the financial year, the Company continued to progress key components of its corporate strategy, inclusive of the following:

• Increasing sales : There has been a 428% increase in sales relative to the corresponding period in 2019. This reflects the investment in the team and technologies which underpin the HSC go-to-market approach. Three additional business development managers have been appointed, and we have a number of major projects underway, and each win further validates our go-to-market approach. HSC has demonstrated success in selling into key market segments, including:

• Community Housing – Bolton Clarke

• Residential Aged Care – Aged Care and Housing (ACH) Group

• Disability Housing – Odyssey Lifestyle Care Communities

• International – St John’s Home for Elderly Persons in Singapore

• Focus on SaaS revenue: Each hardware sale delivers incremental recurring SaaS revenue for HSC. This SaaS revenue stream is rapidly increasing, and we expect SaaS recurring revenue to ultimately be the key revenue stream for the business.

• Successful delivery of strategic projects : Significant facility contracts have been signed with key customers such as ACH, Odyssey, and St John’s Home for Elderly Persons in Singapore. Each of these projects is further validating the market’s understanding of HSC’s strategic direction.

• Investment in its Talius IOT Platform : A key differentiator for the Company is its IOT platform, Talius, which integrates with best-of-breed telehealth solutions to deliver an optimised customer experience. We are continuing to invest and develop Talius, our proprietary AI data analytics platform. In consultation with our customers we are expanding the functionality and visibility with enterprise dashboards and support modules.

• ❖ Balance Sheet: HSC made a number of decisions in order to clean up the Balance Sheet and position HSC for growth in 2021. HSC has elected to fully write off intangible assets relating to prior expenditure on software development, as the software is no longer part of the new management’s strategy or focus. HSC has also initiated the shutdown of several overseas subsidiaries, across Singapore and the USA. The closure of these entities will simplify HSC’s corporate structure and enable management to focus on the key growth businesses.

• ❖ Investment in the distribution network : HSC has extended its relationship with Bolton Clarke and signed up a number of new reseller agreements to extend our distributor network. Since 30 June 2020, we have also signed partner agreements with Harvey Norman Commercial Division NSW, as well as UBAC in Singapore, Harrison Technologies, and MEA Technologies.

• Key partnerships : We have signed strategic partnerships with key telehealth manufacturers G Medical Innovations, CardiacSense, CSIRO and Tochtech. These specialist sensors will deliver vital signs data to the Talius Ecosystem and these extra data sets will continue to deliver improved patient outcomes.

• East Coast focus : The Company’s operations have team members nationally supporting our partners and distribution network, however our main operating hub is out of Queensland. We have continued focus on aligning the corporate activities and commercial operations by moving the registered address and principal place of business to Brisbane. We have also made changes to the teams providing Investor Relations, Public Relations, and Legal Counsel. The roles of Company Secretary and Chief Financial

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DIRECTORS’ REPORT

Officer have been in-sourced and also moved to the east coast. This will provide improved synergy and corporate governance.

• Governance : HSC has strengthened its approach to governance, through a change in Board membership and also the appointment of an Advisory Board.

In summary, the 2020 year has been very positive for HSC. Our new team has worked incredibly hard since joining in early December 2019 and we have achieved our objectives to turn around the past legacy issues of the Company.

HSC believes that there are a number of catalysts for change in the way aged care is delivered, and assistive technology will be at the forefront of these changes. Remote Patient Monitoring (RPM) provides access to key health data, which can be used to make better and more informed decisions on patient care. The Royal Commission into Aged Care has confirmed the need for innovative models of care, including the use of assistive technology. A number of existing healthcare solutions utilise the 3G mobile telephony network, which is due to shut down in 2024.

These catalysts validate the opportunity for HSC and its data-driven platform, which provides insights from thousands of data points for improved care, lower operating costs and low-cost deployments of assistive technology to deliver real and tangible benefits for care to vulnerable people.

FINANCIAL POSITION

The 2020 financial year for HSC was a successful year in terms of financial results. All key metrics are trending in a positive direction, with revenues up substantially, the prior years’ losses were also mitigated, and cashflow is improving relative to historical trends.

HSC’s revenue for the year ended 31 December 2020 was $3,107,445 which is an increase of $2,518,992 compared to $588,453 in the prior year. The 428% growth in revenue during 2020 has been significant, as HSC essentially commenced with a refreshed team and new set of solutions at the start of this year.

The total loss of the HSC Group for the year ended 31 December 2020 was $2,366,476 which is a decrease of $2,046,028 compared to the loss of $4,412,504 in the prior year. Of significance is that during the year HSC wrote down a prior investment in platform development, which resulted in a write-off expense of $814,420 being incurred in the Consolidated Statement of Profit or Loss. It should be noted that this write-off of an intangible asset is both non-cash in nature and also non-recurring.

While the Company did experience a net loss for the year, cashflow management is improving. This is reflected in the fact that HSC was cashflow positive at an operating level in the 4[th] quarter of 2020.

During 2020, HSC conducted a number of balance sheet initiatives. In addition to the write-off of intangible assets explained above, HSC has also commenced the shutdown of overseas subsidiaries across Singapore and the USA. In addition to three subsidiaries that were deregistered in 2019, the shutdown of another three subsidiaries was initiated during 2020:

• Application for the deregistration of HomeStay Care Solutions Pte Ltd was submitted on 3 November 2020. HomeStay Care Solutions Pte Ltd was deregistered on 8 February 2021.

• HomeStay Care (Singapore) Pte Ltd was deregistered on 21 September 2020.

• AEPI Midstream Inc was deregistered on 1 May 2020.

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DIRECTORS’ REPORT

The net asset position of the Company as at 31 December 2020 was $5,350,635 which is an increase of $1,880,610 compared to $3,470,025 as at 31 December 2019. There was a net increase in assets of $1.0 million, of which the largest items were a rise in inventory and a fall in the value of intangible assets. There was a net decrease in liabilities of $0.9 million, of which the largest items were a reduction in borrowings and a fall in trade payables. HSC has elected to invest in its inventory levels to support existing projects and future opportunities.

The consolidated entity’s net working capital, being current assets less current liabilities is a surplus of $5,049,166 (2019: $1,890,230).

In December 2020, the Company raised $3.0 million via a share placement. The proceeds of the placement, along with existing cash holdings, will be used to bolster working capital for an increased sales pipeline, strengthen the balance sheet, and position HSC for future growth opportunities. Cash and cash equivalents as at 31 December 2020 was $4.46 million.

SIGNIFICANT CHANGES IN STATE OF AFFAIRS

There were no significant changes in the state of affairs of the consolidated entity that occurred during the financial year.

EVENTS AFTER THE REPORTING PERIOD

In compliance with its continuous disclosure obligations, the Company will continue to update the market in regard to the impact of COVID-19 on its revenue channels and adverse impact on the Company. If any of these impacts appear material, the Company will notify investors through appropriate market updates.

The directors are not aware of any other matters or circumstances that have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

LIKELY DEVELOPMENTS

The Company will continue to develop and commercialise its assistive technology platform and deliver its existing client projects. After considering external factors such as the shut-down of the 3G telecommunications network and the final report from the Royal Commission into Aged Care, the Company expects continuing strong growth in the use of assistive technology.

ENVIRONMENTAL REGULATION

The Company’s operations are not subject to any significant environmental regulation under Australian Commonwealth or State law.

INFORMATION ON DIRECTORS

Mr Leylan Neep Director (Non-Executive Chairman) (appointed 1 September 2020)

Qualifications B.Comm, FCPA, GAICD, FGIA, FCIS

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DIRECTORS’ REPORT

Experience

Mr Neep is a highly experienced Director and C-Suite Executive who brings a wealth of market knowledge to his current role at HSC Technology Group.

He has held senior roles across a range of both ASX-listed and private entities, possessing over two decades of expertise in the financial services industry.

Mr Neep has a proven track record in finance, governance and funds management and has been involved in several IPO’s/ ASX listings and numerous capital raising efforts, including rights offers, institutional and private placements for both corporate entities and managed investment schemes.

He is a Fellow of CPA Australia (FCPA), a Fellow of Governance Institute of Australia (FGIA), and a Graduate of the Company Directors Course run by the Australian Institute of Company Directors (GAICD).

Interest in shares, options Nil and performance rights

Directorships held in Nil other listed entities

Mr Graham Russell Managing Director

Mr Russell has over 25 years’ experience in Systems Integration and Sensor Experience technology solutions across all verticals of Healthcare, Utilities, Mining and Governments. Mr Russell is incredibly passionate about helping our older generation stay independent, and pioneering the adoption of seamless technology solutions to help families, care providers and the elderly.

Mr Russell has been instrumental in developing and localising assistive technology that is a cost effective, scalable solution using Artificial Intelligence and an integrated IoT platform to detect health deterioration, fall alerts and provide early intervention, including the Essence Care@home solutions in the APAC region. Mr Russell currently works with numerous National Aged Care providers, Government, Utility and Telecommunication companies throughout APAC to transform their clients lives, connect with their families and provide operational efficiencies and financial returns to all involved.

Mr Russell was previously the CEO of the Ambush Group, a national Systems Integration business where he started on the tools as an Electronics Technician installing and integrating solutions like Nurse Call, CCTV, Access Control, Security, WiFi, Internet, Fibre solutions, etc for Hospitals, Residential Aged Care, Councils, Financial and Government facilities.

Interest in shares, options 120,800,000 fully paid ordinary shares and performance rights 55,000,000 performance rights Directorships held in Nil other listed entities

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DIRECTORS’ REPORT

Mr Ramsay Carter

Director (Non-Executive) (appointed 16 June 2020)

Qualifications LLB, B.Int.Bus., MAICD Experience Mr. Carter brings over 20 years’ experience in global investment banking holding senior positions in Australia, Tokyo, Hong Kong and Singapore. He has thorough knowledge and governance over multiple jurisdictions throughout his career, in a highly regulated industry, especially within Asia Pacific, UK and North America. Mr Carter is a proven leader with particular focus on clear lines of communication and accountability, aligned with interests and creating an environment of respect, diversity and challenge. Mr Carter has a Bachelor of Laws and International Business and is a member of AICD.

Interest in shares, options and performance rights

11,000,000 fully paid ordinary shares 6,000,000 performance rights

Directorships held in Nil other listed entities

MEETING OF DIRECTORS

Name	Number eligible to attend	Number attended
Wayne Cahill(resigned 16 June 2020)	5	5
Graham Russell(appointed 3 December 2019)	9	9
Shannon Robinson(resigned 1 September 2020)	7	7
Sara Kelly (resigned 16 June 2020)	5	5
Leylan Neep (appointed 1 September 2020)	2	2
RamsayCarter(appointed 16 June 2020)	4	4

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DIRECTORS’ REPORT

INDEMNIFICATION AND INSURANCE OF OFFICERS AND AUDITORS

The Company has indemnified the directors and executives of the Company for the costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of liability and the amount of the premium.

PROCEEDINGS ON BEHALF OF THE COMPANY

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 to 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 part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under section 237 of the Corporations Act 2001.

SHARES UNDER OPTION

At the date of this report there are 100,000,000 unissued ordinary shares in respect of which options are outstanding.

Expiry date Grant Date Exercise price 13 November 2023 13 November 2018 $0.03 1 August 2022 28 May 2019 $0.05 1 February 2023 28 May 2019 $0.065 3 February 2023 14 January 2020 $0.015 3 February 2022 14 January 2020 $0.05 Total number of options outstanding at the date of this report	Number of options 80,000,000 4,000,000 4,000,000 10,000,000 2,000,000
	100,000,000

Option holders do not have any rights to participate in any issues of shares or other interests of the Company or any other entity.

No person entitled to exercise any option referred to above has or had, by virtue of the option, a right to participate in any share issue of any other body corporate.

REMUNERATION REPORT (Audited)

This report details the nature and amount of the remuneration for each Key Management Person (‘KMP’) of the consolidated entity for year ended 31 December 2020.

The remuneration report is set out under the following headings:

• A Principles used to determine the nature and amount of remuneration B Details of remuneration

• C Service agreements

• D Share-based compensation

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DIRECTORS’ REPORT

E Shareholdings F Performance rights holdings G Options

The information provided under headings A-G includes remuneration disclosures that are required under Accounting Standard AASB 124 Related Party Disclosures. These disclosures have been transferred from the financial report and have been audited.

A. Principles used to determine the nature and amount of remuneration

The Board of Directors is responsible for determining and reviewing compensation arrangements for KMP. It assesses the appropriateness of the nature and amount of emoluments of such officers on a periodic basis by reference to relevant employment market conditions with the overall objective of ensuring maximum stakeholder benefit from the retention of high quality KMP.

The objective of the consolidated entity’s executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with achievement of strategic objectives and the creation of value for shareholders, and conforms with market best practice for delivery of reward. The Board ensures that executive reward satisfies the following key criteria for good reward governance practices:

• Competitiveness and reasonableness

• Acceptability to shareholders

• Transparency

• Capital management

The Board policy is to remunerate non-executive directors at fair market rates for comparable companies for the relevant 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. The maximum amount of fees that can be paid to directors is subject to approval by shareholders at General Meetings.

Fees for non-executive directors are currently not linked to the financial performance of the consolidated entity. However, to align director’s interests with shareholder interests, the directors are encouraged to hold shares in the Company and may be issued with additional securities as deemed appropriate.

The Board believes that the remuneration policy is appropriate given the stage of development of the Company and the activities which it undertakes and is appropriate for aligning KMP objectives with shareholder and business objectives. The Board will continue to develop new practices which are appropriate to the Company’s size and stage of development.

Engagement of Remuneration Consultants

During the financial year, no remuneration consultants were engaged.

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DIRECTORS’ REPORT

Fixed remuneration

Fixed remuneration consists of a base remuneration package, which includes directors’ fees (in the case of Directors), salaries, consulting fees and employer contributions to superannuation funds.

Fixed remuneration levels for KMP will be reviewed annually by the Board through a process that considers the employee’s personal development, achievement of key performance objectives for the year, industry benchmarks wherever possible and CPI data.

Appropriate key performance indicators (KPIs) will be developed by the Board for each KMP each year, and reflect an assessment of how that individual can fulfil their particular responsibilities in a way that best contributes to Company performance and shareholder wealth in that year.

Performance-based Remuneration

Remuneration packages do not include performance-based components. An individual members of staff’s performance assessment is done by reference to their contribution to the consolidated entity’s overall operational achievements.

During the year the Company issued performance rights to directors, as detailed in this Remuneration Report.

B. Details of remuneration

Remuneration expense details for the year ended 31 December 2020

The following table of benefits and payments represents the components of the current year and comparative year remuneration expenses for each member of KMP of the consolidated entity. Such amounts have been calculated in accordance with Australian Accounting Standards:

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DIRECTORS’ REPORT

KMP Executive Directors Mr Graham Russell 2020 2019 Ms Shannon Robinson (resigned 1 September 2020) 2020 2019 Non-Executive Directors Mr Wayne Cahill (resigned 16 June 2020) 2020 2019 Mr Damian Black (resigned 3 December 2019) 2020 2019 Ms Sara Kelly2 (resigned 16 June 2020) 2020 2019 Mr Ramsay Carter (appointed 16 June 2020) 2020 2019 Mr Leylan Neep (appointed 1 September 2020) 2020 2019 Chief Executive Officer Philippa Lewis (appointed 11 March 2019, resigned 18 October 2019) 2020 2019 Mr Aga Manhao (resigned 10 February 2019) 2020 2019 2020 2019	Short-term Benefits Post- employment Benefits Share based Payments Total Fixed remuneration Short-term incentive Long-term incentive Salary & Consulting fees Bonus Super- annuation Equity (Shares & Performance Rights) Options $ $ $ $ $ $ % % % 139,4541 - 13,191 367,500 - 520,145 29 - 71 7,273 - 691 150,000 - 157,964 5 - 95 33,525 - 3,167 11,700 - 48,392 76 - 24 50,000 - 4,750 - - 54,750 100 - - 34,659 - 3,293 - - 37,952 100 - - 68,750 - 6,531 - 59,783 135,064 56 - 44 - - - - - - - - - 44,000 - - - - 44,000 100 - - 22,133 - - - - 22,133 100 - - 48,000 - - 60,000 - 108,000 44 - 56 - - - 33,200 - 33,200 - - 100 - - - - - - - - - 16,667 - - - - 16,667 100 - - - - - - - - - - - - - - - - - - - - 227,596 - - - - 227,596 100 - - - - - - - - - - - 21,090 - - - - 21,090 100 - -
	246,438 - 19,651 412,400 - 678,489
	466,709 - 11,972 210,000 59,783 748,464

1. Included vehicle allowance of $12,000 per annum.

2. Paid through Saci Corporate Pty Ltd, of which Ms Kelly is a director.

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DIRECTORS’ REPORT

C. Service agreements

Contracts of KMP

Each member of the consolidated entity’s KMP is employed on open-ended employment contracts between the individual employee and the Company.

The below are the contract details at the date of the financial report:

Key Management Person	Appointment	Term of Agreement	Base Salary (excludes GST) $	Other (eg. Options and Performance Rights)	Termination Benefit
Mr Leylan Neep	Non-Executive Chairman	No fixed term, termination at any time	50,000 pa	3,000,000 performance rights in the capital of the Company subscribed for at $0.0001 each right vesting on the date that the 20 day volume weighted average price (vwap) of the Company’s shares is equal to or in excess of $0.03 per share on or before 15 June 2022 3,000,000 performance rights in the capital of the Company subscribed for at $0.0001 each right vesting on the date that the 20day vwap of the Company’s shares is equal to or in excess of $0.04 per share on or before 15 June 2022. Continue to remain a Director of the Company as at the date the vesting criteria is satisfied The offer for the issue of the performance rights will allow until 15 June 2025 to exercise the right to convert those rights to shares provided the vesting criteria has been satisfied Performance rights are to be ratified at the next Annual General Meeting on 20 May 2021.	Nil

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DIRECTORS’ REPORT

Mr Ramsay Carter	Non-Executive Director	No fixed term, termination at any time	NIL	2,000,000 performance rights vesting upon the completion of 4 months of service 2,000,000 performance rights vesting upon the completion of 8 months of service 2,000,000 performance rights vesting upon the completion of 12 months of service 2,000,000 performance rights vesting on the date that the 20 day volume weighted average price (vwap) of the Company’s Shares is equal to or in excess of $0.03 per share 2,000,000 performance rights vesting on the date that the 20 day volume weighted average price (vwap) of the Company’s Shares is equal to or in excess of $0.04 per share	Nil
Mr Graham Russell	Managing Director	No fixed term, two months’ written notice by either party	150,000 pa + superannuation	30,000,000 Fully Paid Ordinary Shares; 25,000,000 Performance rights vesting on $2m of revenue being received by the Company during any period between 3 December 2019 and 31 December 2020; 25,000,000 Performance rights vesting on $3m of revenue being received by the Company during any period between 3 December 2019 and 31 December 2020 10,000,000 performance rights vesting on the date that the 20 day volume weighted average price (vwap) of the Company’s Shares is equal to or in excess of $0.01 per share 15,000,000 performance rights vesting on the date that the 20 day volume weighted average price (vwap) of the Company’s Shares is equal to or in excess of $0.02 per share 15,000,000 performance rights vesting on the date that the 20 day volume weighted average price (vwap) of the Company’s Shares is equal to or in excess of $0.03 per share	Nil

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DIRECTORS’ REPORT

D Share-based compensation

Options

No options were granted as share-based compensation for key management personnel provided during the financial year affecting remuneration in this or future reporting periods.

Shareholdings

Refer to Sections E for details of fully paid ordinary shares on issue during 2020.

Performance Rights

Refer to Section F for details of performance rights on issue during 2020.

E Shareholdings

The number of fully paid ordinary shares in the Company held during the financial year by KMP of the consolidated entity, including their personally related parties, is set out below:

31 December 2020 Mr G Russell Ms S Robinson1 Mr W Cahill2 Ms S Kelly3 Mr R Carter4 Mr L Neep5	Balance at beginning of the year Granted as remuneration/ consideration during the year Purchased via Capital Raising On-market Transactions Other changes during the year (resignation) Balance at end of year 80,000,000 35,000,000 - 5,800,000 - 120,800,000 29,250,000 - - (1,000,000) (28,250,000) - - - - - - 10,062,500 - - 12,000,000 (22,062,500) - - - - 5,500,000 - 5,500,000 - - - - - -
	119,312,500 35,000,000 - 22,300,000 (50,312,500) 126,300,000

1Resigned 1 September 2020 2Resigned 16 June 2020

3Resigned 16 June 2020 4Appointed 16 June 2020

5Appointed 1 September 2020

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DIRECTORS’ REPORT

F Performance Rights Holdings

The number of performance rights in the Company held during the financial year by KMP of the consolidated entity, including their personally related parties, is set out below:

31 December 2020 Mr G Russell Ms S Robinson1 Mr R Carter2	Balance at beginning of the year Granted as remuneration/ consideration during the year Converted during the year Cancelled during the year Balance at end of year - 90,000,000 (35,000,000) - 55,000,000 - 6,000,000 - (6,000,000) - - 10,000,000 - - 10,000,000
	- 106,000,000 (35,000,000) (6,000,000) 65,000,000

1Resigned 1 September 2020

2Appointed 16 June 2020

G Options

The number of options in the Company held during the financial year by KMP of the consolidated entity, including their personally related parties, is set out below:

31 December 2020 Mr Graham Russell Ms Shannon Robinson1 Mr Wayne Cahill2 Ms Sara Kelly3 Mr Ramsay Carter4 Mr Leylan Neep5	Balance at beginning of the year Granted as remuneration during the year Exercised during the year Expired during the year/resigned Balance at end of year or date of resignation - - - - - 2,000,000 - - - 2,000,000 12,000,000 - (12,000,000) - 2,000,000 - - - 2,000,000 - - - - - - - - - -
	16,000,000 - - (12,000,000) 4,000,000

1Resigned 1 September 2020 2Resigned 16 June 2020 3Resigned 16 June 2020 4Appointed 16 June 2020 5Appointed 1 September 2020

Other Equity-related KMP Transactions

There have been no other transactions involving equity instruments apart from those described in the tables above relating to options, shareholdings and performance rights.

Other Transactions with KMP and/or their Related Parties

There were no other transactions conducted between the Group and KMP or their related parties, apart from those disclosed in Note 28 Related Parties and those above relating to equity and compensation, that were conducted other than in accordance with normal employee, customer or supplier relationships on terms no more favourable than those reasonably expected under arm’s length dealing with unrelated persons.

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DIRECTORS’ REPORT

Voting and comments made at the company's 2020 Annual General Meeting ('AGM')

At the 2020 AGM, 95% of the votes received supported the adoption of the remuneration report for the year ended 31 December 2019. The Company did not receive any specific feedback at the AGM regarding its remuneration practices.

Additional information

The losses of the consolidated entity for the three years to 31 December 2020 are summarised below:

	2020	2019	2018
	$	$	$
Sales revenue	3,104,466	577,372	39,663
EBITDA	(1,729,911)	(3,724,888)	(4,245,578)
EBIT	(2,326,984)	(4,375,172)	(4,505,967)
Loss after income tax	(2,366,476)	(4,412,504)	(4,501,024)

The factors that are considered to affect total shareholders’ return ('TSR') are summarised below:

	2020	2019	2018
Share price at financial year end ($)	0.016	0.005	0.036
Total dividends declared (cents per share)	Nil	Nil	Nil
Basic loss per share (cents per share)	(0.14)	(0.54)	(1.27)

This concludes the remuneration report, which has been audited.

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DIRECTORS’ REPORT

NON-AUDIT SERVICES

Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 24 to the financial statements.

The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001.

The directors are of the opinion that the services as disclosed in note 24 to the financial statements do not compromise the external auditor's independence requirements of the Corporations Act 2001 for the following reasons:

• all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and

• none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.

AUDITOR

RSM Australia Partners continues in office in accordance with section 327C of the Corporations Act 2001 .

AUDITOR’S INDEPENDENCE DECLARATION

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is included within this financial report.

This directors’ report, incorporating the remuneration report, is signed in accordance with a resolution of the Board of Directors.

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Graham Russell Managing Director Dated this 31[st] day of March 2021

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CORPORATE GOVERNANCE

Corporate Governance Overview Statement

The Directors and management of HSC Technology Group Ltd (“HSC or Company””) are committed to maintaining high standards of corporate governance to ensure that it operates in the best interests of shareholders to whom they are ultimately responsible to.

During the year ended 31 December 2020, the Company worked towards implementing corporate governance practices and policies as outlined in the ASX Corporate Governance Council’s Principles and Recommendations (4[th] Edition) (“ASX Recommendations”), with a view to making amendments where applicable after considering the Company's size and the resources it has available.

Details of these ASX Recommendations that HSC have adopted and those that have not been fully complied with are outlined in the Company’s annual Corporate Governance Statement.

Where there is deviation from the ASX Recommendations, the Company continues to review and update its policies and practices in order that these are consistent with the growth of the Company, the broadening of its activities, current legislation and good practice.

The ASX Corporate Governance Council’s (the Council) recommendations are not prescriptive but are rather guidelines. If certain recommendations are not appropriate for the Company given its circumstances, it may elect not to adopt that particular practice in limited circumstances. Where the Company’s practices do not correlate with the ASX Recommendations the Company does not consider that the recommended practices are appropriate, due to either the size of the Board or management team, or due to the current activities and operations being carried out by and within the Company.

A copy of HSC’s 2020-2021 Corporate Governance Statement, which provides detailed information about governance and a copy of the Company’s Appendix 4G which sets outs the Company’s compliance with the ASX Recommendations is available on the Investors page of the Company’s website at:

https://www.hsctg.com.au/investors-2/

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RSM Australia Partners

Level 32, Exchange Tower 2 The Esplanade Perth WA 6000 GPO Box R1253 Perth WA 6844

T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111

www.rsm.com.au

AUDITOR’S INDEPENDENCE DECLARATION

As lead auditor for the audit of the financial report of HSC Technology Group Ltd for the year ended 31 December 2020, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

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

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

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Perth, WA Dated: 31 March 2021

RSM AUSTRALIA PARTNERS

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TUTU PHONG Partner

THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING

RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.

RSM Australia Partners ABN 36 965 185 036

Liability limited by a scheme approved under Professional Standards Legislation

CONSOLIDATED STATEMENT OF PROFIT OR LOSS & OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020

Notes Revenue 3 Government grant 3 Cost of sales Amortisation and depreciation expense Consulting fees Employee benefits expenses Marketing expenses Rental expenses Finance costs Share based payments Write-off of intangible asset Other expenses Loss before income tax Income tax expense 4 Total loss for the year Other comprehensive (loss)/income Items that may be reclassified subsequently to operating result Exchange differences on translating foreign controlled entities Other comprehensive (loss)/income for the year Total comprehensive loss for the year Loss per share Basic and diluted loss (cents per share)	2020 2019 $ $ 3,107,445 588,453 71,864 561,919 (2,124,079) (449,090) (597,073) (650,284) (119,015) (823,831) (913,933) (1,825,206) (101,893) (316,337) (14,080) (110,881) (36,358) (48,413) (347,108) (210,568) (814,420) (33,509) (477,826) (1,094,757)
	(2,366,476) (4,412,504) - -
	(2,366,476) (4,412,504)
	(18,232) 19,282
	(18,232) 19,282
	(2,384,708) (4,393,222)
	(0.14) (0.54)

The accompanying notes form part of these financial statements.

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020

Notes ASSETS Current assets Cash and cash equivalents 5 Other assets 7 Trade and other receivables 6 Financial assets Inventory 8 Total current assets Non-current assets Plant and equipment 9 Right-of-use assets 10 Intangible assets 11 Total non-current assets Total assets LIABILITIES Current liabilities Trade and other payables 12 Contract liabilities 13 Lease liability 14 Borrowings 15 Provisions 16 Total current liabilities Non-current liabilities Lease liability 14 Total non-current liabilities Total liabilities Net assets EQUITY Issued capital 17 Reserves 18 Accumulated losses Total equity	2020 2019 $ $ 4,457,264 2,744,414 864,285 421,380 194,693 852,508 - 77,965 1,148,638 161,259
	6,664,880 4,257,526
	26,810 33,805 163,871 341,124 146,500 1,385,489
	337,181 1,760,418
	7,002,061 6,017,944
	1,126,692 1,426,512 325,598 270,491 128,552 155,152 - 514,056 34,872 1,085
	1,615,714 2,367,296
	35,712 180,623
	35,712 180,623
	1,651,426 2,547,919
	5,350,635 3,470,025
	15,985,123 11,917,250 1,109,323 930,110 (11,743,811) (9,377,335)
	5,350,635 3,470,025

The accompanying notes form part of these financial statements.

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020

Balance at 1 January 2019 Loss for the year Other comprehensive income Total comprehensive (loss) for the year Transactions with owners, directly in equity Issue of share capital Capital raising costs Issue of options Balance at 31 December 2019 Balance at 1 January 2020 Loss for the year Other comprehensive (loss) Total comprehensive (loss) for the year Transactions with owners, directly in equity Issue of share capital Capital raising costs Issue of options Balance at 31 December 2020	Issued Capital Accumulated Losses Foreign Currency Translation Reserve Share Based Payments Reserve Total $ $ $ $ $ 8,295,993 (4,964,831) 741 849,519 4,181,422 - (4,412,504) - - (4,412,504) - - 19,282 - 19,282
	- (4,412,504) 19,282 - (4,393,222)
	3,918,436 - - - 3,918,436 (297,179) - - - (297,179) - - - 60,568 60,568
	11,917,250 (9,377,335) 20,023 910,087 3,470,025
	11,917,250 (9,377,335) 20,023 910,087 3,470,025 - (2,366,476) - - (2,366,476) - - (18,232) - (18,232)
	- (2,366,476) (18,232) - (2,384,708)
	4,161,500 - - (182,500) 3,979,000 (93,627) - - - (93,627) - - - 379,945 379,945
	15,985,123 (11,743,811) 1,791 1,107,532 5,350,635

The accompanying notes form part of these financial statements.

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CONSOLIDATED STATEMENT OF CASHFLOWS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2020

Notes Cash flows from operating activities Receipts from customers R&D tax incentive receipts Payments to suppliers and employees (excluding research and development expenditure) Payments for research and development expenditure Interest received Interest paid Net cash used in operating activities 22 Cash flows from investing activities Payments for platform development expenditure Purchase of plant and equipment Proceeds from sale of plant and equipment Purchase of financial assets Proceeds from disposal of financial assets Net cash provided by / (used in) investing activities Cash flows from financing activities Proceeds from issue of shares Proceeds from issue of performance rights Transaction costs relating to the issue of shares Proceeds from borrowings Repayment of lease liability Net cash provided by financing activities Net increase / (decrease) in cash held Cash at the beginning of the financial year Cash at the end of the financial year 5	2020 2019 $ $ 4,119,733 84,929 71,864 561,919 (5,240,500) (4,019,329) (121,255) - 2,979 11,081 (39,492) (34,357)
	(1,206,671) (3,395,757)
	- (910,861) - (44,222) - 3,535 - (77,965) 77,965 -
	77,965 (1,029,513)
	2,998,000 3,518,436 5,600 - (70,627) (272,729) - 500,000 (91,417) (6,149)
	2,841,556 3,739,558
	1,712,850 (685,712) 2,744,414 3,430,126
	4,457,264 2,744,414

The accompanying notes form part of these financial statements.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

These consolidated financial statements and notes represent those of HSC Technology Group Ltd (or ‘the Company’) and its controlled entities (the “consolidated entity” or “Group”). The separate financial statements of the parent entity, HSC Technology Group Ltd have not been presented within this financial report as permitted by the Corporations Act 2001.

The financial statements were authorised for issue on 31 March 2021 by the directors of the Company.

1. Summary of significant accounting policies

Basis of Preparation

The financial statements are general purpose financial statements that have been prepared in accordance with Corporations Act 2001, Australian Accounting Standards, Interpretations of the Australian Accounting Standards Board (“AASB”) and International Financial Reporting Standards as issued by the International Accounting Standards Board. The consolidated entity is a for-profit entity for financial reporting purposes under Australian Accounting Standards. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless otherwise stated. Except for cash flow information, these financial statements have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

a) Comparatives

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

b) Principles of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company as listed in Note 19 (collectively the “consolidated entity” or “Group”). Control is achieved where the Company is exposed or has rights to variable returns from its involvement with the subsidiary and has the ability to affect those returns. All inter-company balances and transactions between entities, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries are consistent with those policies applied by the parent entity.

c) New accounting standards and interpretations

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

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

The following Accounting Standards and Interpretations are most relevant to the consolidated entity:

Conceptual Framework for Financial Reporting (Conceptual Framework)

The consolidated entity has adopted the revised Conceptual Framework from 1 January 2020. The Conceptual Framework contains new definition and recognition criteria as well as new guidance on measurement that affects several Accounting Standards, but it has not had a material impact on the consolidated entity's financial statements.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

1. Summary of significant accounting policies (continued)

d) Income tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Deferred tax is provided on all temporary differences at the reporting date arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements and are recognised for all taxable temporary differences:

• Except where the deferred 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 tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses can be utilised:

• Except where the deferred tax asset relating to the deductible temporary difference 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 the taxable profit or loss; and

• In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests and 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 to the extent that it is probable that the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting 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 tax asset to be utilised.

Deferred 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 reporting date.

Deferred and income taxes relating to items recognised directly in equity are recognised directly in equity.

e) Foreign Currency Transactions and Balances

Functional and Presentation Currency

The functional currency of each of the entities in the consolidated entity is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.

Transactions and Balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Nonmonetary items measured at historical cost continue to be carried at the exchange rate at the date when fair values were determined.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

1. Summary of significant accounting policies (continued)

e) Foreign Currency Transactions and Balances (continued)

Exchange differences arising on the translation of monetary items are recognised directly in profit or loss except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the extent that the underlying gain or loss is recognised in other comprehensive income; otherwise the exchange difference is recognised in profit or loss.

Group companies

The financial results and position of foreign operations whose functional currency is different from the presentation currency are translated as follows:

• assets and liabilities are translated at year-end exchange rates prevailing at that reporting date;

• income and expenses are translated at average exchange rates for the period; and

• retained earnings are translated at the exchange rates prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations with functional currencies other than Australian dollars are recognised in other comprehensive income and included in the foreign currency translation reserve in the statement of financial position. These differences are recognised in profit or loss in the period in which the operation is disposed.

f) Trade receivables

All trade debtors are recognised at the amounts receivable as they are due for settlement no more than 120 days from the date of recognition.

Collectability of trade debtors is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. An allowance for expected credit losses is raised when some doubt as to collection exists and in any event when the debt is more than 60 days overdue.

g) Inventories

Inventories are stated at the lower of cost and net realisable value on a moving average costs basis. Costs of purchased inventory are determined after deducting rebates and discounts received or receivable.

Stock in transit is stated at the lower of cost and net realisable value. Cost comprises of purchase and delivery costs, net of rebates and discounts received or receivable.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs necessary to make the sale.

h) Plant and equipment

Plant and equipment are measured on the cost basis.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

1. Summary of significant accounting policies (continued)

h) Plant and equipment (continued)

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred.

The depreciable amount of all plant and equipment is depreciated on a straight-line basis over their useful lives to the consolidated entity commencing from the time the asset is held ready for use.

The expected useful lives are as follows:  Office equipment 2 – 5 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in profit or loss.

i) Intangible assets

Intangible assets acquired separately are initially recognised at cost. 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.

Research and development

Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is probable that the project will be a success considering its commercial and technical feasibility; the consolidated entity is able to use or sell the asset; the consolidated entity has sufficient resources; and intent to complete the development and its costs can be measured reliably. Capitalised development costs, when available for use in the manner intended by management, are amortised on a straight-line basis over the period of their expected benefit.

The expected useful lives are as follows:

 Research and development 3 years  Customer lists 2 years  Licences 3 years

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in profit or loss.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

1. Summary of significant accounting policies (continued)

j) Impairment of assets

Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. A loss allowance for expected credit losses is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.

k) Trade and other payables

Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services received by the consolidated entity during the reporting period which remains unpaid. The balance is recognised as a current liability with the amount being normally paid within 30 days of recognition of the liability.

l) Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with short periods to maturity and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position.

m) Revenue and Other Income

Revenue from contracts with customers

Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated entity: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised.

Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using either the ‘expected value’ or ‘most likely amount’ method. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are initially recognised as deferred revenue in the form of a separate refund liability.

Sale of goods

Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, which is generally at the time of delivery.

Rendering of services

Revenue from a contract to provide services is recognised over time as the services are rendered based on a fixed price.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

1. Summary of significant accounting policies (continued)

m) Revenue and Other Income (continued)

Interest revenue

Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the rate inherent in the instrument.

Other revenue

Other revenue is recognised when it is received or when the right to receive payment is established.

n) Employee benefits

Provision is made for the consolidated entity’s liability for employee benefits arising from services rendered by employees to the reporting date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled. 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. In determining the liability, consideration is given to employee wages increases and the probability that the employee may satisfy vesting requirements. Those cash outflows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash flows.

Equity-settled compensation

From time to time, the consolidated entity provides benefits to employees (including directors) of the consolidated entity in the form of share-based payment transactions, whereby personnel 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. The fair value is determined using an appropriate valuation model.

In valuing equity-settled transactions, no account is taken of any performance 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 Company, 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.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

1. Summary of significant accounting policies (continued)

n) Employee benefits (continued)

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 recognized for the award is recognised immediately unless the original vesting conditions are not market related and those conditions have not been met. 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.

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

o) Right-of-use assets

A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.

Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.

The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.

p) Lease liabilities

A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the consolidated entity’s incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.

Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.

q) Borrowings

Borrowings are initially measured at fair value, net of transaction costs, and subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future payments through the expected life of the financial liability to the amortised cost of a financial liability.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

1. Summary of significant accounting policies (continued)

r) Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office (“ATO”). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST.

Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

s) Issued capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

t) Dividends

Dividends are recognised when declared during the financial year and no longer at the discretion of the company.

u) Earnings per share

(i) Basic earnings per share

Basic earnings per share is determined by dividing net profit after income tax attributable to members of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

v) Segment reporting

A business segment is identified for a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different to those of other business segments. A geographical segment is identified when products or services are provided within a particular economic environment subject to risks and returns that are different from those of segments operating in other economic environments.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

1. Summary of significant accounting policies (continued)

w) Provisions

Provisions are recognised when the consolidated entity has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period.

x) Finance costs

Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred.

y) Critical accounting judgments, estimates and assumptions

The preparation of consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. These estimates and associated assumptions are based on historical experience and various factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

Following is a summary of the key assumptions concerning the future and other key sources of judgement and estimation at reporting date that have not been disclosed elsewhere in these financial statements.

Estimation of useful lives of assets

The Group determines the estimated useful lives and related amortisation charges for its finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The 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.

Taxation

The Group is subject to income taxes in Australia and jurisdictions where it has foreign operations. Significant judgement is required in determining the worldwide provision for income taxes. 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 issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the current and deferred tax provisions in the period in which such determination is made.

Share based payment transactions

The Company 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 an appropriate valuation model. Management are required to make judgements on the probabilities of milestones being achieved to calculate the value of the transactions.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

2. Segment Information

The Directors have considered the requirements of AASB 8 Operating Segments and the internal reports that are reviewed by the Board in allocating resources and have concluded that at this time there are no separately identifiable segments. All revenues and costs are handled centrally and management reviews financial information on a consolidated basis. On this basis it is considered that there is only one operating segment, the details of which are disclosed within this financial report.

	Consolidated
	2020	2019
	$	$
3. Revenue and other income
Sale of goods and services	3,104,466	577,372
Interest revenue	2,979	11,081
	3,107,445	588,453
Other income
Government grant	71,864	561,919
	71,864	561,919
Disaggregation of revenue
The disaggregation of revenue from contracts with customers is as follows:
Geographical regions
Australasia	3,104,466	577,372
	3,104,466	577,372
Timing of revenue recognition
Goods and services transferred at a point in time	1,538,707	521,959
Goods and services transferred over time	1,565,759	55,413
	3,104,466	577,372

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

4. Income tax expense Loss before income tax expense Tax at the Australian tax rate of 26% (2019: 27.5%) Tax effect amounts which are not deductible in calculating taxable income: Expenditure not allowable for tax purposes Income not assessable for tax purposes Deferred tax assets not brought to account Income tax expense Unused tax losses for which no deferred tax asset has been recognised	Consolidated 2020 2019 $ $ (2,366,476) (4,412,504)
	(615,284) (1,213,439) 412,454 319,553 (54,272) (154,528) 257,102 1,048,414
	- -
	18,210,256 18,438,488

The deferred tax assets have not been brought to account, as the availability of future profits to recoup these losses is not considered probable at the date of this report, and they will only benefit the Company if future assessable income is derived of a nature and amount sufficient to enable the benefits to be realised, the conditions for deductibility imposed by the tax legislation continue to be complied with and the Company is able to meet the continuity of ownership and/or continuity of business tests.

5. Cash and cash equivalents

A reconciliation between cash and cash equivalents as disclosed in the statement of financial position and cash as disclosed in the statement of cash flows is as follows:

Cash at bank	4,457,264 2,744,414
	4,457,264 2,744,414

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

6. Trade and other receivables Trade receivables Accrued income Other receivables	Consolidated 2020 2019 $ $ 171,111 310,791 - 511,157 23,582 30,560
	194,693 852,508

Allowance for expected credit losses

The consolidated entity did not recognise any losses (2019: Nil) in profit or loss in respect of the expected credit losses for the year ended 31 December 2020.

Past due but not impaired

Customers with balances past due but without allowance for expected credit losses:

0 to 6 months overdue 6 to 12 months overdue 12 to 18 months overdue 7. Other assets Prepayments Security deposits Other assets	171,111 310,791 - - - -
	171,111 310,791
	536,152 330,897 11,000 90,483 317,133 -
	864,285 421,380

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

8. Inventory Inventory on hand 9. Plant and equipment Office equipment Less: accumulated depreciation Total office equipment Total plant and equipment	Consolidated 2020 2019 $ $ 1,148,638 161,259
	1,148,638 161,259
	44,974 51,650 (18,164) (17,845)
	26,810 33,805
	26,810 33,805

Reconciliations

Reconciliations of the carrying amounts of each class of plant and equipment at the beginning and end of the current financial year are set out below.

Consolidated Carrying amount at 1 January 2019 Additions Disposals Depreciation expense Foreign exchange movement Carrying amount at 31 December 2019 Depreciation expense Carrying amount at 31 December 2020	Office Equipment $ Total $ 32,010 32,010 45,803 45,803 (25,317) (25,317) (18,835) (18,835) 144 144
	33,805 33,805
	(6,995) (6,995)
	26,810 26,810

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

10. Right-of-use assets Carrying amount at beginning of year Additions Depreciation Carrying amount at end of year	Consolidated 2020 2019 $ $ 341,124 - - 413,733 (177,253) (72,609)
	163,871 341,124

The consolidated entity leases buildings for its offices, under agreements of between two to three years with, in some cases, options to extend. On renewal, the terms of the leases are renegotiated.

11. Intangible assets

Platform development expenditure At cost Less: Accumulated amortisation Net carrying amount Licences At cost Less: Accumulated amortisation Net carrying amount Other At cost Less: Accumulated amortisation Net carrying amount Total intangible assets	- 1,936,309 - (793,436)
	- 1,142,873
	250,000 250,000 (103,500) (7,384)
	146,500 242,616
	45,000 45,000 (45,000) (45,000)
	- -
	146,500 1,385,489

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

11. Intangible assets (continued)

Reconciliations

Reconciliations of the carrying amounts of each class of intangible assets at the beginning and end of the current financial year are set out below.

Consolidated Carrying amount at 1 January 2019 Additions Amortisation expense Write off/impairment of asset Foreign exchange movement Carrying amount at 31 December 2019 Additions Amortisation expense Write off of asset Foreign exchange movement Carrying amount at 31 December 2020 12. Trade and other payables Trade payables Other payables	Platform development expenditure $ Licences $ 840,447 - 827,759 250,000 (543,569) (7,384) - - 18,236 -	Other $ Total $ 5,097 845,544 37,672 1,115,431 (7,887) (558,840) (34,882) (34,882) - 18,236
	1,142,873 242,616	- 1,385,489
	- - (319,240) (96,116) (814,420) - (9,213) -	- - - (415,356) - (814,420) - (9,213)
	- 146,500	- 146,500
		Consolidated 2020 2019 $ $ 906,310 453,004 220,382 973,508
		1,126,692 1,426,512

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

13. Contract liabilities Contract liabilities	Consolidated 2020 2019 $ $ 325,598 270,491
	325,598 270,491

Related to income received in advance with performance obligations that are unsatisfied at the end of the reporting period. The amount is expected to be recognised as revenue within the next 12 months.

14. Lease liabilities

Carrying amount at beginning of year Lease liabilities recognised upon entering lease agreement Repayments of lease liabilities Carrying amount at end of year Breakdown of current and non-current Current Non-current Total 15. Borrowings Borrowings	335,775 - - 413,733 (171,511) (77,958)
	164,264 335,775
	128,552 155,152 35,712 180,623
	164,264 335,775
	-(2) 514,056(1)
	- 514,056

(1) In October 2019, the consolidated entity entered into Converting Loan Agreements with various parties to obtain $500,000 cash. Interest was payable at a rate of 12% pa. The loans were to be converted to shares at a share price of $0.005 (subject to receiving shareholder approval).

(2) On 14 January 2020, the Company held a General Meeting of Shareholders and received approval for the conversion of the $500,000 to shares. On 28 January 2020, 100,000,000 shares in the Company were issued to settle the $500,000. The interest payable was settled in cash in February 2020.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

16. Provisions Employee entitlements	Consolidated 2020 2019 $ $ 34,872 1,085
	34,872 1,085

Amounts not expected to be settled within the next 12 months.

The current provision for employee benefits includes all unconditional entitlements where employees have completed the required period of service and also those where employees are entitled to pro-rata payments in certain circumstances. The entire amount is presented as current, since the consolidated entity does not have an unconditional right to defer settlement. The consolidated entity expects all employees to take the full amount of accrued leave or require payment within the next 12 months.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

17. Issued Capital 1,886,739,337 (2019: 1,478,686,397) Ordinary shares – Fully paid (‘FPO’) Capital raising costs a) Movements in ordinary shares on issue At 1 January 2019 Shares issued during the 2019 year  9 October 2019 – Placement at $0.005  5 November 2019 – Rights issue at $0.005  8 November 2019 – Rights issue shortfall at $0.005  3 December 2019 – shares issued under amended Heads of Agreement at $0.005  3 December 2019 – share issued under employment contract at $0.005 Less capital raising costs At 31 December 2019 Shares issued during the 2020 year  28 January 2020 – FPO shares(1)  29 January 2020 – FPO shares(2)  2 November 2020 – Conversion of 25 million Performance Rights at $0.005  2 November 2020 – Conversion of 10 million Performance Rights at $0.0041  24 December 2020 – Placement of 176,352,940 shares at $0.017 Less capital raising costs At 31 December 2020	Consolidated 2020 2019 $ $ 17,397,436 13,235,936 (1,412,313) (1,318,686)
	15,985,123 11,917,250
	Number $
	694,999,296 8,295,993
	104,249,894 521,249 93,336,933 466,685 506,100,274 2,530,501 50,000,000 250,000 30,000,000 150,000 - (297,178)
	1,478,686,397 11,917,250
	176,700,000 897,500 20,000,000 100,000 25,000,000 125,000 10,000,000 41,000 176,352,940 2,998,000 - (93,627)
	1,886,739,337 15,985,123

(1) Included 500,000 shares issued on conversion of performance rights at fair value of $0.033 per share, 100,000,000 shares issued on conversion of convertible notes at fair value of $0.005 per share, and 76,200,000 shares issued to various suppliers, a director and an employee in lieu of cash payment for services received at fair value of $0.005 per share.

(2) Shares issued to an employee pursuant to employment agreement at fair value of $0.005 per share.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

17. Issued Capital (continued)

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 vote, and upon a poll, each share is entitled to one vote.

b) Options

For details of options issued, exercised and lapsed during the financial year and the options outstanding at yearend, refer to Note 18(a) Share-based payments.

c) Capital Management

The objectives of management when managing capital is to safeguard the Group’s ability to continue as a going concern, so that the Group may continue to provide returns for shareholders and benefits for other stakeholders.

The Group’s strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as required. The working capital position of the Group at 31 December 2020 and 2019 is as follows:

Cash and cash equivalents Other assets Trade and other receivables Financial assets Inventory Trade and other payables Contract liabilities Lease liabilities Borrowings Provisions Working capital position	Consolidated 2020 $ 2019 $ 4,457,264 2,744,414 864,285 421,380 194,693 852,508 - 77,965 1,148,638 161,259 (1,126,692) (1,426,512) (325,598) (270,491) (128,552) (155,152) - (514,056) (34,872) (1,085)
	5,049,166 1,890,230

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

18. Reserves Foreign currency translation Share based payments Movements in reserves Share based payments Balance at the beginning of the year Options issued during the year Options vested during the year Options lapsed during the year Performance rights issued during the year Performance rights converted to shares during the year Balance at the end of the year Foreign currency translation Balance at the beginning of the year Exchange differences on translating foreign controlled entities Balance at the end of the year	Consolidated 2020 2019 $ $ 1,791 20,023 1,107,532 910,087
	1,109,323 930,110
	910,087 849,519 27,237 60,568 2,500 - (7,205) - 357,413 - (182,500) -
	1,107,532 910,087
	20,023 741 (18,232) 19,282
	1,791 20,023

(a) Share-based payments – options

A summary of the movements of all options issued is as follows:

Options outstanding as at 31 December 2018 Granted on 28 May 2019(1) Options outstanding as at 31 December 2019 Granted on 14 January 2020(3) Lapsed on 16 June 2020(2) Expired on 23 June 2020 Options outstanding as at 31 December 2020	Number Weighted average exercise price 82,486,188 $0.037 12,000,000 $0.068 94,486,188 $0.041 12,000,000 $0.021 (4,000,000) $0.090 (2,486,188) $0.246 100,000,000 $0.031

The weighted average remaining contractual life of options outstanding at year end was 2.6 years. The weighted average exercise price of outstanding options at the end of the reporting period was $0.031.

Year ended 31 December 2019

(1) During the year the Company issued 12,000,000 options to the Chairman, Wayne Cahill as per his employment contract. The total value of the options issued was $59,783. The total amount recognised as share-based payments expense in the profit or loss for the year ended 31 December 2019 in relation to the options was $44,068.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

18. Reserves (continued)

Year ended 31 December 2020

(2) 4,000,000 options lapsed due to vesting conditions not being met (employment ceased before 1 February 2021). This resulted in a reversal of $7,205 recognised against the share-based payments expense in the profit or loss for the year ended 31 December 2020.

Of the 12,000,000 options granted on 28 May 2019, 4,000,000 options vested on 1 February 2020 upon satisfaction of vesting conditions (continued service). Fair value of $2,500 is recognised as share-based payments expense in the profit or loss for the year ended 31 December 2020.

(3) On 14 January 2020, the Company granted 12,000,000 options to various consultants, for nil cash consideration per their engagement agreements for services received in the year ended 31 December 2019. The options were issued on 3 February 2020. Fair value of $2,787 was recognised as marketing expenses in the profit or loss for the year ended 31 December 2019, and $24,450 was recognised as capital raising expenses in the statement of financial position at 31 December 2019. The fair value of these options of $27,237 was offset against the creditors in the year ended 31 December 2020.

The total amount recognised as share based payment expense in relation to the issue of options during the year is ($4,705).

Under AASB 2 Share-based Payment, the expense is recognised over the vesting period. The fair value inputs included in the option valuations using a Black Scholes model were as follows:

Exercise	No. of	Grant	Vesting	Expiry	Fair Value at	Risk-	Volatility
Price	options	Date	Date	Date	Grant Date	free rate	rate
$0.015	10,000,000	14 Jan 2020	3 Feb 2020	3 Feb 2022	$0.00244	0.81%	137%
$0.05	2,000,000	14 Jan 2020	3 Feb 2020	3 Feb 2022	$0.00139	0.82%	137%

(b) Share-based payments – performance rights

A summary of the movements of all performance rights issued is as follows:

A summary of the movements of all performance rights issued	is as follows:
Performance rights outstanding as at 31 December 2018 Granted on 2 February 2019(1) Granted on 4 April 2019(1) Lapsed during the year(1) Performance rights outstanding as at 31 December 2019 Converted to shares on 28 January 2020(2) Granted on 14 January 2020(3) Granted on 8 June 2020(4) Granted on 15 June 2020(5) Lapsed on 1 September 2020(6) Converted to shares on 2 November 2020(7) Granted on 2 November 2020(8) Performance rights outstanding as at 31 December 2020	Number
	-
	2,500,000 1,500,000 (3,500,000)
	500,000
	(500,000) 50,000,000 10,000,000 46,000,000 (6,000,000) (35,000,000) 10,000,000
	75,000,000

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

18. Reserves (continued)

Year ended 31 December 2019

(1) During the year ended 31 December 2019, the Company issued 4,000,000 performance rights to employees under the Incentive Performance Rights Plans. The total value of the performance rights issued was $115,500. During the year ended 31 December 2019, 3,500,000 performance rights were cancelled due to vesting conditions not being met. The total amount expensed during the year ended 31 December 2019 in relation to the performance rights was $16,500.

Year ended 31 December 2020

(2) On 28 January 2020, 500,000 performance rights were converted to shares by an employee upon satisfaction of vesting conditions (continued service).

(3) On 14 January 2020, the Company granted 50,000,000 performance rights to a Director, for nil cash consideration. Performance rights will vest subject to attainment of certain revenue values, together with employment continuity. Total fair value of $250,000 is recognised as share-based payments expense in the profit or loss for the year ended 31 December 2020.

(4) On 8 June 2020, the Company granted 10,000,000 performance rights to a Director, for cash consideration of $1,000. Performance rights will vest subject to the attainment of certain share price values, together with employment continuity. Total fair value of $24,139 is recognised as share-based payments expense in the profit or loss for the year ended 31 December 2020.

(5) On 15 June 2020, the Company granted 46,000,000 performance rights to Directors, for cash consideration of $4,600. Performance rights will vest subject to the attainment of certain share price values, together with employment continuity. Total fair value of $57,495 is recognised as share-based payments expense in the profit or loss for the year ended 31 December 2020.

(6) 6,000,000 performance rights lapsed due to vesting conditions not being met (employment ceased before 15 June 2022). This resulted in a reversal of $240 recognised against the share-based payments expense in the profit or loss for the year ended 31 December 2020.

(7) On 2 November 2020, 35,000,000 performance rights were converted to shares by a Director upon satisfaction of vesting conditions. 25,000,000 performance rights were linked to a vesting condition of $2,000,000 of revenue being received by the Company during the vesting period. The remaining 10,000,000 performance rights were linked to a vesting condition of the Company’s shares remaining at least $0.01 calculated upon the 20-day volume weighted average price, as well as continued service by the Director.

(8) On 2 November 2020, the Company granted 10,000,000 performance rights to employees, for nil cash consideration. Performance rights will vest subject to employment continuity. Total fair value of $20,419 is recognised as share-based payments expense in the profit or loss for the year ended 31 December 2020.

The total amount recognised in the share-based payments reserve in relation to the issue of performance rights during the period is $357,413, being share based payment expense of $351,813, and cash consideration of $5,600.

Under AASB 2 Share-based Payment, the expense is recognised over the vesting period. The performance rights have been valued at the share price of the Company on grant date. The fair value inputs included in the performance right valuations were as follows:

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

18. Reserves (continued)

No. of	Grant	Vesting date	Expiry date	Fair value at	Share
performance rights	date			grant date	price
25,000,000	14 Jan 2020	2 Nov 2020	14 Jan 2025	$0.005	$0.005
25,000,000	14 Jan 2020	31 Dec 2020	14 Jan 2025	$0.005	$0.005
2,000,000	8 Jun 2020	16 Oct 2020	15 Dec 2021	$0.005	$0.005
2,000,000	8 Jun 2020	16 Feb 2021	15 Dec 2021	$0.005	$0.005
2,000,000	8 Jun 2020	16 Jun 2021	15 Dec 2021	$0.005	$0.005
2,000,000	8 Jun 2020	15 Jul 2021	15 Dec 2021	$0.001	$0.005
2,000,000	8 Jun 2020	15 Jul 2021	15 Dec 2021	$0.0006	$0.005
10,000,000	15 Jun 2020	2 Nov 2020	15 Jun 2025	$0.0041	$0.005
15,000,000	15 Jun 2020	15 Jun 2022	15 Jun 2025	$0.0029	$0.005
15,000,000	15 Jun 2020	15 Jun 2022	15 Jun 2025	$0.0022	$0.005
3,000,000	15 Jun 2020	15 Jun 2022*	15 Jun 2025	$0.0022	$0.005
3,000,000	15 Jun 2020	15 Jun 2022*	15 Jun 2025	$0.0017	$0.005
5,000,000	2 Nov 2020	3 Aug 2021	3 Aug 2021	$0.013	$0.013
5,000,000	2 Nov 2020	3 May 2022	3 May 2022	$0.013	$0.013

• Performance rights lapsed on 1 September 2020 due to vesting conditions not being met (employment ceased before 15 June 2022).

The total amount recognised as share-based payments expense in the profit or loss for the year ended 31 December 2020 is $347,108, being share based payment expense of ($4,705) from options and $351,813 from performance rights.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

19. Controlled entities

		Percentage	Owned
Name	Country of Incorporation	2020	2019
Parent entity
HSC Technology Group Ltd	Australia
Name of controlled entity
HomeStay Care International Pty Ltd	Australia	100%	100%
Home Service Solutions Pty Ltd	Australia	100%	100%
HomeStay Care Solutions Pte Ltd(1)	Singapore	100%	100%
HomeStay Care (Singapore) Pte Ltd(2)	Singapore	-	100%
Advance Exploration and Production Inc	USA	100%	100%
AEPI Midstream Inc(3)	USA	-	100%
Advance Wolfberry Inc	USA	100%	100%

(1) An application for the deregistration of HomeStay Care Solutions Pte Ltd was submitted on 3 November 2020, however this was still in process as at 31 December 2020. HomeStay Care Solutions Pte Ltd was deregistered on 8 February 2021.

(2) HomeStay Care (Singapore) Pte Ltd was deregistered on 21 September 2020.

(3) AEPI Midstream Inc was deregistered on 1 May 2020.

20. Events after the reporting period

In compliance with its continuous disclosure obligations, the Company will continue to update the market in regard to the impact of COVID-19 on its revenue channels and adverse impact on the Company. If any of these impacts appear material, the Company will notify investors through appropriate market updates.

The directors are not aware of any other matters or circumstances that have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

21. Contingent Liabilities

The Group had no contingent liabilities as at 31 December 2020 and 31 December 2019.

In relation to the Company’s Contingent Liabilities for the Deferred Consideration Shares previously recorded under this Note, please refer to Note 25 on Commitments for Expenditure.

22. Cash flow information

a) Reconciliation of loss from ordinary activities after income tax to net cash outflow from operating activities Loss from ordinary activities after income tax Non-cash flow in loss from continuing operations: Depreciation Amortisation expense Share based payments Impairment Loss on disposal of assets Interest on borrowings Change in operating assets and liabilities: Trade and other receivables Other assets Inventory Trade and other payables Contract liabilities Provisions Net cash outflow from operating activities

Consolidated 2020 $ 2019 $ (2,366,476) (4,412,504) 181,717 91,444 415,356 558,840 347,108 210,568 814,420 34,882 1,859 21,782 (3,134) 14,056 657,815 (712,596) (442,905) (180,994) (987,379) (39,870) 86,054 802,924 55,107 270,491 33,787 (54,780)

(1,206,671) (3,395,757)

23. Loss per share

a) Reconciliation of loss to profit or loss: Net (loss) from operations attributable to ordinary shareholders for basic and diluted earnings per share b) Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS	Consolidated 2020 2019 $ $
	(2,366,476) (4,412,504)
	Number Number 1,670,317,882 814,798,230

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

24. Remuneration of Auditor

RSM Australia Partners Audit and review of financial statements Taxation services	Consolidated 2020 $ 2019 $ 52,000 45,998 25,584 38,996 77,584 84,994

25. Commitments for Expenditure

Contractual commitments

The contractual commitments for 2020 are under the licensing agreement with CSIRO for the minimum annual royalty and minimum research payments. 2019 contractual commitments relate to an arrangement with Automation Australia, which has been fulfilled. These are detailed in the table below:

Within 1 year Between 1 and 5 years More than 5 years Total	2020 $ 2019 $ - - 200,000 1,048,001 400,000 -
	600,000 1,048,001

Deferred Consideration

In the 2019 Annual Report, the Company recorded under the Contingent Liabilities note certain disclosures relating to Deferred Consideration Shares. This obligation has been reviewed and has now been re-classified as a contractual obligation to be included under this category.

As part of the transaction approved by shareholder on 23 August 2018 and as consideration for the issued capital of HomeStay Care International Pty Ltd, HSC Technology Group Ltd will be required to issue up to 200,000,000 deferred shares to the shareholders of HomeStay Care International Pty Ltd as contingent consideration, with 50,000,000 ordinary shares to be issued upon each of the following milestones being met:

• The Group generating cumulative revenue of $3,000,000 within 36 months of the date that HSC is re-admitted to the ASX List;

• The Group generating cumulative revenue of $6,000,000 within 48 months of the date that HSC is re-admitted to the ASX List;

• The Group generating cumulative revenue of $9,000,000 within 54 months of the date that HSC is re-admitted to the ASX List;’

• The Group generating cumulative revenue of $12,000,000 within 60 months of the date that HSC is re-admitted to the ASX List.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

25. Commitments for Expenditure (continued)

The Company has been granted a waiver of ASX Listing Rule 7.3.2 to permit it to issue Deferred Consideration Shares to the Vendors upon satisfaction of the milestones set out above.

Capital commitments

The capital commitments contracted for as at 31 December 2020 is nil (31 December 2019: nil).

26. Parent entity disclosures

(a) Financial Position Assets Current Assets Non-Current Assets Total Assets Liabilities Current Liabilities Total Liabilities Net Assets Equity Issued capital Reserves Accumulated losses Total Equity (b) Financial Performance Loss for the year Other comprehensive income Total Comprehensive Loss	2020 2019 $ $ 4,049,266 2,771,388 2,846,500 1,744,842
	6,895,766 4,516,230
	1,545,131 1,046,205
	1,545,131 1,046,205
	5,350,635 3,470,025
	50,741,364 46,673,490 1,115,532 918,087 (46,506,261) (44,121,552)
	5,350,635 3,470,025
	(2,384,709) (4,393,221) - -
	(2,384,709) (4,393,221)

(c) Contingent liabilities

The parent entity had no contingent liabilities as at 31 December 2020 and 31 December 2019.

(d) Commitments

The parent entity had no contractual and capital commitments as at 31 December 2020 and 31 December 2019.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

27. Financial Risk Management

The Group's activities expose it to a variety of financial risks: market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, and aging analysis for credit risk.

Risk management is carried out by the Directors and other KMP.

(a) Market risk

(i) Foreign exchange risk Foreign exchange risk arises from commercial transactions and recognised assets and liabilities denominated in a currency that is not the entity’s functional currency.

The Group’s exposure to foreign exchange risk at the reporting date is limited to the transfer of funding from the Australian head office to fund the Singaporean operations, where the exchange rate is relatively stable.

(ii) Cash flow and fair value interest rate risk Interest rate risk arises from both short and long-term borrowings and cash at bank. Borrowings issued at variable rates would expose the Group to cash flow interest rate risk. During 2020 and 2019, the Group had no borrowings at a variable rate of interest. The Group reviews its arrangements on a regular basis. The Group had no fixed rate borrowings as at 31 December 2020 (31 December 2019: The Group had fixed rate borrowings of 12% per annum).

Group sensitivity

At 31 December 2020, if interest rates had changed by -/+100 basis points from the weighted average rate for the year with all other variables held constant, post-tax loss for both the consolidated entity would have been $30 lower/higher as a result of lower/higher interest income from cash and cash equivalents. Management have deemed a movement of 100 basis points to be an appropriate measure for this sensitivity analysis.

(b) Credit risk

The Group has no significant concentrations of credit risk. The cash balances are held in financial institutions with high ratings and the receivables comprise of customer receivables. The Group has assessed that there is minimal risk that the cash and receivables balances are impaired.

(c) Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash to ensure the ability to meet operational cash flow requirements. The Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The Group aims at maintaining flexibility in funding by having in place operational plans to source further capital as required.

(i) Maturities of financial liabilities

The tables below analyse the Group’s material financial liabilities based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows as at 31 December 2020. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

27. Financial Risk Management (continued)

Consolidated 2020 Weighted- average interest rate Financial Liabilities Trade and other payables - Lease liabilities 6.1% Total Financial Liabilities Consolidated 2019 Weighted- average interest rate Financial Liabilities Trade and other payables - Borrowings 2.8% Lease liabilities 6.1% Total Financial Liabilities
	Within 1 year $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ Total contractual cash flows $ Carrying amount $
	1,126,692 - - - 1,126,692 1,126,692 151,256 41,200 - - 192,456 164,264
	1,277,948 41,200 - - 1,319,148 1,290,956
	Within 1 year $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ Total contractual cash flows $ Carrying amount $ 1,426,512 - - - 1,426,512 1,426,512 514,056 - - - 514,056 514,056 201,308 151,256 41,200 - 393,764 335,775
	2,141,876 151,256 41,200 - 2,334,332 2,276,343

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

27. Financial Risk Management (continued)

(d) Fair value estimation

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.

The fair value of financial instruments that are not traded in an active market is determined using valuation techniques. The Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance date. Quoted market prices or dealer quotes for similar instruments are used for long-term debt instruments held. Other techniques, such as estimated discounted cash flows, are used to determine fair value for the remaining financial instruments.

The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair values due to their short-term nature. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments.

28. Related Party Transactions

a) Transactions with related parties

• Directors and officers, or their personally-related entities, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of those entities. A number of these entities transacted with the Company in the reporting period. The terms and conditions of these transactions, which involved primarily the Companies, being charged by related entities for legal services, cost of goods sold, office, administration and company secretarial services, and for travel and accommodation costs, were no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to unrelated entities on an arm’s length basis.

The amounts paid to directors and their related parties during the financial year are disclosed in Section B of the Remuneration Report and note 29 below.

During the year, there were payments made to EMS Legal, a firm of which Ms Sara Kelly is a partner. The payments are for the provision of general legal fees and services related to the capital raising prospectus and distribution agreement. These fees amounted to $56,364 (2019: $212,698).

During the year, there were expenses and revenue transacted between the Company and Automation Australia Pty Ltd, a company of which Graham Russell is a shareholder and director. Expenditure for cost of goods sold and expense reimbursements amounted to $1,102,110 (2019: $15,276). Revenue related to customer sales amounted to $540,734 (2019: $41,502).

b) Payables owing to related parties as at 31 December

ayables owing to related parties as at 31 December
Saci Corporate Pty Ltd (A company of which Ms Sara Kelly is a director) EMS Legal (A firm of which Ms Sara Kelly is a partner) Automation Australia Pty Ltd (A company of which Mr Graham Russell is a director)	2020 $ 2019 $ - 65,000 - - 250,000 612,7251
	250,000 677,725

1. Payables owing to Automation Australia Pty Ltd as at 31 December 2019 include expenditure relating to cost of goods sold, royalties and expense reimbursements that were incurred pursuant to the heads of agreement dated 15 July 2019, before Automation Australia Pty Ltd became a related party of the Company.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 31 DECEMBER 2020

28. Related Party Transactions (continued)

c) Receivables due from related parties as at 31 December

Automation Australia Pty Ltd (A company of which Mr Graham Russell is a director)	2020 $ 2019 $ - 582,1042
	- 582,104

1. Receivables due from Automation Australia Pty Ltd as at 31 December 2019 include revenue from customers that was earned before Automation Australia Pty Ltd became a related party of the Company.

d) Loans to/from related parties

There were no loans to or from related parties at the current and previous reporting date.

29. Key Management Personnel Compensation

Short-term employee benefits Post-employment benefits Share based payments Total KMP compensation	2020 $ 2019 $ 246,438 466,709 19,651 11,972 412,400 269,783
	678,489 748,464

Short-term employee benefits

These amounts include fee and benefits paid to the non-executive directors as well as all salary, paid leave benefits for executive directors and other KMP.

Post-employment benefits

These amounts are the current year’s superannuation contributions made during the year.

Share-based payments

These amounts represent the expense related to the participation of KMP in equity-settled benefit schemes as measured by the fair value of the shares, options and performance rights granted on grant date.

Further information in relation to KMP remuneration can be found in the directors’ report.

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DIRECTORS’ DECLARATION

The directors of the Company declare that:

1. the financial statements and notes, as set out in the financial report, are in accordance with the Corporations Act 2001 and:

2. a) comply with Australian Accounting Standards, which, as stated in Note 1 to the financial statements, constitutes compliance with International Financial Reporting Standards; and

3. b) give a true and fair view of the financial position as at 31 December 2020 and of the performance for the year ended on that date of the consolidated entity;

4. 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; and

5. the directors have been given the declarations required by s295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of the Board of Directors.

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Graham Russell Managing Director

Dated this 31[st] day of March 2021

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RSM Australia Partners

Level 32, Exchange Tower 2 The Esplanade Perth WA 6000 GPO Box R1253 Perth WA 6844

T +61 (0) 8 9261 9100 F +61 (0) 8 9261 9111

www.rsm.com.au

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF HSC TECHNOLOGY GROUP LTD

Opinion

We have audited the financial report of HSC Technology Group Ltd (the Company) and its subsidiaries (the Group), which comprises the consolidated statement of financial position as at 31 December 2020, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors' declaration.

In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:

• (i) Giving a true and fair view of the Group's financial position as at 31 December 2020 and of its financial performance for the year then ended; and

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

Basis for Opinion

We conducted our audit in accordance with Australian Auditing Standards. 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 Group 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.

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

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

THE POWER OF BEING UNDERSTOOD AUDIT | TAX | CONSULTING

RSM Australia Partners is a member of the RSM network and trades as RSM. RSM is the trading name used by the members of the RSM network. Each member of the RSM network is an independent accounting and consulting firm which practices in its own right. The RSM network is not itself a separate legal entity in any jurisdiction.

RSM Australia Partners ABN 36 965 185 036

Liability limited by a scheme approved under Professional Standards Legislation

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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 this matter
Revenue Refer to Note 3 in the financial statements
As disclosed in the statement of profit or loss and other comprehensive income for the year ended 31 December 2020, the Group has recognised total revenue of $3,107,445. We determined revenue recognition to be a key audit matter due to the following:  The balance is material to the Group and there are risks associated with management judgements, which includes identification of contracts and performance obligations, determination of the transaction price and the timing of revenue recognition; and  Revenue recognition is a presumed fraud risk under the Australian Auditing Standards.	Our audit procedures included:  Ensuring the Group’s revenue recognition policies are in compliance with accounting standards;  On a sample basis, we agreed revenue transactions to supporting documentation to assess whether the revenue recognition criteria were met;  Reviewing revenue transactions before and after the reporting date to ensure that revenue is recognised in the correct financial period; and  Reviewing the disclosures in the financial statements.

Other Information

The directors are responsible for the other information. The other information comprises the information included in the Group's annual report for the year ended 31 December 2020 but does not include the financial report and the 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.

Responsibilities of the Directors 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 preparing the financial report, the directors are responsible for assessing the ability of the Group 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 Group or to cease operations, or have no realistic alternative but to do so.

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Auditor's Responsibilities for the Audit of the Financial Report

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.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: https://www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This description forms part of our auditor's report.

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 31 December 2020.

In our opinion, the Remuneration Report of HSC Technology Group Ltd for the year ended 31 December 2020, 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 section 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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RSM AUSTRALIA PARTNERS

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Perth, WA Dated: 31 March 2021

TUTU PHONG Partner

ADDITIONAL INFORMATION

Additional information required by Australian Stock Exchange Ltd and not shown elsewhere in this report is as follows. The information is current as at 8 March 2021.

(a) Distribution of equity securities

Analysis of numbers of equity security holders by size of holding:

Range	Total Holders	Units	% of Issued Capital
1 – 1,000	492	42,028	0.00%
1,001 – 5,000	47	106,852	0.01%
5,001 – 10,000	12	91,561	0.00%
10,001 – 100,000	569	33,136,814	1.75%
100,001 and above	853	1,857,362,082	98.23%
Total	1,973	1,890,739,337	100.00%

Unmarketable Parcels

	Minimum Parcel Size	Holders	Units
Minimum $500.00 parcel at $0.016 per unit	31,250	625	1,730,508

(b) Substantial shareholders

Name	Units
Russell Acquisitions Pty Ltd	120,800,000

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ADDITIONAL INFORMATION

(c) Twenty largest shareholders

The names of the twenty largest holders of quoted ordinary shares are:

Rank	Name	Units	% of Units
1	NETWEALTH INVESTMENTS LIMITED	252,324,095	13.35%
2	Russell Acquisitions Pty Ltd	120,800,000	6.39%
3	MS NICOLE GALLIN & MR KYLE HAYNES	90,000,000	4.76%
4	AUSTRALIAN EXECUTOR TRUSTEES LIMITED	51,000,000	2.70%
5	CELTIC CAPITAL PTY LTD	45,862,493	2.43%
6	CITICORP NOMINEES PTY LIMITED	31,213,917	1.65%
7	BERGER INVESTMENT FUND PTY LTD	28,250,000	1.49%
8	WIMALEX PTY LTD	26,000,000	1.38%
9	ALTOR CAPITAL MANAGEMENT PTY LTD	25,000,000	1.32%
10	MR SIMON WILLIAM TRITTON	22,750,000	1.20%
11	BNP PARIBAS NOMINEES PTY LTD	21,644,615	1.14%
12	NINETY THREE PTY LTD	21,500,000	1.14%
13	CELTIC CAPITAL PTE LTD	21,193,371	1.12%
14	ONSWITCH INVESTMENTS PTY LTD	20,400,000	1.08%
15	DAVHAL INVESTMENTS PTY LIMITED	20,143,647	1.07%
16	RAVENHILL INVESTMENTS PTY LTD	20,000,000	1.06%
16	TEMPLETON SWEETWATER PTY LTD	20,000,000	1.06%
17	MRS SHELLEY ANNE LINDERMAN	20,000,000	1.06%
17	SHARKY HOLDINGS PTY LTD	17,750,000	0.94%
18	TWENTY TEN ENTERPRISES PTY LTD	15,750,000	0.83%
	Totals: Top 20 holders of ORDINARY FULLY PAID SHARES (TOTAL)	891,592,138	47.16%

(d) Voting rights

All fully paid ordinary shares carry one vote per share on a poll.

(e) Unlisted Options

The following options are on issue:

80,000,000 unlisted options with an exercise price of $0.03 expiring 13 November 2023 4,000,000 unlisted options with an exercise price of $0.05 expiring 1 August 2022

4,000,000 unlisted options with an exercise price of $0.065 expiring 1 February 2023 10,000,000 unlisted options with an exercise price of $0.015 expiring 3 February 2023 2,000,000 unlisted options with an exercise price of $0.05 expiring 3 February 2022

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ADDITIONAL INFORMATION

(f) Schedule of interest in mining tenements

Oil and Gas Interests

Tenement Reference	Tenement	Location	Interest Held
Roman “27” #1 * API# 42-317-36123	Spraberry	Texas, USA RRC# 40739	WI 50% NRI 38.75%

• Interest is APO (after payout only) and the operator is Endeavor Energy Resources L.P.

Total acreage held is 160. The interest is held by the Company’s subsidiary, Advance Exploration and Production, Inc.

(g) Statement of Compliance

The Company confirms that the cash raised in 2018 has been used consistently with its business objectives.

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