Identitii Limited
Annual Report 2023

Plain-text annual report

Do Report Title 1 Identitii Limited Annual Report FY23 Contents A letter from our Chairperson .............................................................................. 3 A letter from our CEO .......................................................................................... 5 Directors Report ................................................................................................... 7 Auditor’s Independence Declaration ................................................................. 19 Consolidated Statement of Profit or Loss and Other Comprehensive Income . 20 Consolidated Statement of Financial Position ................................................... 22 Consolidated Statement of Changes in Equity ................................................. 23 Consolidated Statement of Cash Flows ............................................................ 25 Notes to the Consolidated Financial Statements .............................................. 26 Directors’ Declaration ........................................................................................ 52 Independent Auditor’s Report ............................................................................ 53 Additional ASX Information ................................................................................ 58 Corporate Directory ........................................................................................... 61 About Identitii Identitii is helping companies securely manage and share sensitive financial data. Identitii Limited Annual Report FY23 Chairperson’s Letter A letter from our Chairperson Dear Fellow Shareholders, As I reflect on the past year, I want to thank you for your patience and support for Identitii. It has been a challenging 12 months, driven partly by market sentiment and downward pressure on technology companies globally and by revenue growth within our Company that has not met expectations. to relentlessly The Board, the CEO and the entire team have worked “One Platform” strategy to position our product for a sustainable and profitable future while driving additional demand in a financial services market that has itself focused on reducing cost. implement our Market Opportunity The focus of global Regulators on data security (in the wake of significant cyber breaches) and financial crime reporting in the financial services industry has not diminished and, if anything, has become more intense. This presents our business with both an opportunity and a risk. The opportunity suggests that the industry will be under increasing pressure from regulators to reduce the risks associated with manual analysis, and insecure methods of sharing and reporting critical data both internally and to regulators. This is likely to lead to them investing more in technologies that make it easier to ensure the security of sensitive data both when it is stored or when regulations require it to be shared. This should present additional revenue generation opportunities for the Company, that may also be enhanced by changes to local and international privacy regulations and new companies falling under financial crime regulations, such as Tranche 2 in Australia. The risk is that this also demands a much higher standard and demonstrable data security standards by service providers, which is likely to result in expanded security assessments and vetting of companies like Identitii who are looking to provide these services to customers. I am confident we can meet these challenges given a significant focus by the entire business on ensuring information security we adopt standards. the highest Our Team We have rightsized our team over the past year in terms of numbers and skill sets to ensure that our costs are sustainable, and our skill sets are concentrated on our “One Platform” strategy. As we have evolved our platform and reduced or removed legacy software components, this has positioned us well to take advantage of future opportunities. The entire team continues to operate at an impressive level and is extraordinarily committed to the company's success. While demand for skilled software engineers in this field is incredibly high, we have consistently been able to retain our talented and capable team. To my observation, this is mainly due to the quality of our leadership, the clarity and importance of our purpose, and our people's “get stuff done” culture. Over the past year, our new CTO, Tim Dickinson, has developed an impressive and exciting product roadmap that not only builds on our history but also positions us very well to expand our product offering in the near future. With this roadmap, we expect to increase our sector sales without the need for extensive platform revisions. resulting Our new Head of Operations, Ben Jackson, has successfully established unparalleled information security standards, impeccable information security audit outcomes. With his unwavering passion and extensive knowledge, he has dramatically reduced our risk of compromise and secured our reputation as a highly reliable business entity in the eyes of our current and prospective customers. in During the year, we also secured the services of CFO Rebecca Shooter-Dodd, who significantly improved our financial management and provided long-term fiscal guidance to support sustainable product development. Cost Management We have also continued to look for opportunities to reduce operating costs responsibly to ensure we extend our cash runway without limiting our ability to meet our client’s expectations or restrain our ability to enhance our platform in areas that we believe will create new market and revenue opportunities. It is a constantly evolving balance that requires commitment and agility from everyone in the business. 3 Identitii Limited Annual Report FY23 Chairperson’s Letter Focus on Shareholder Value Our focus on creating increased shareholder value is uncompromising. We truly value your support and are determined to deliver long-term value. Our "One Platform" strategy is the key to our future success, and we are committed to achieving sustained growth and development, aligned with fiscal these strategies, we aim to drive higher revenue growth, increase customer usage, and improve our operating margins. responsibility. By implementing We look forward to a rewarding year ahead, and I am confident of a much more positive report in 12 months’ time. Tim Phillipps Board Chairperson 4 Identitii Limited Annual Report FY23 A letter from our CEO A letter from our CEO Dear shareholders and friends, Identitii and the exciting opportunity Thank you for your continued support and interest the in Company is pursuing in an ever-changing global marketplace. FY23 was a year of significant change for Identitii, and I am pleased to report that the Company made strong progress in several key areas that are already positively impacting our ability to deliver sustainable growth in the coming year/s. We delivered our One Platform Strategy to resolve legacy complexity, by focusing on only one platform, one cloud environment, one product roadmap and one future. As a result, we reduced technology costs, and increased research and development and innovation activities. We right-sized our team and recognised the need for key leaders with direct experience in scaling early-stage ventures like Identitii. As a result, we hired a new CTO, CFO and Head of Operations, who have all had tremendous impacts since joining. We sunsetted the DART product as part of the One Platform Strategy, exiting the contract with HSBC Hong Kong. As a result, not only did we lower operating costs, but we created significant capacity that was reinvested towards developing our product roadmap. Growing global opportunity ahead Identitii is pursuing a global opportunity to help the financial services industry collect and share sensitive data. Today our platform is being used by more than 160 teams around the world, helping our customers reduce the operational, technical, and regulatory burden of managing sensitive data, to accelerate cross border payments, manage the exchange of customer data, reduce manual exceptions, and streamline and automate regulatory include traditional institutions like HSBC, Mastercard and Rabobank, and newer fintechs like Novatti and Monoova. Incredibly, traditional institutions and newer fintech’s still use forms of communication which lack the secure data requirements needed to reporting. Our customers protect personal information, relying on people, emails and spreadsheets, to collect and share sensitive data both within and between organisations. Steady forward commercial progress The Company has been steadily building brand recognition within the financial services industry in Australia and other key global markets and is well- positioned for future commercial success. Our renewed focus this year on faster-moving fintech companies and partnerships that will enable rapid scale is yet to provide boosts to revenue, but we have seen increases in the total number of sales pipeline opportunities, and are simultaneously progressing existing prospects with a growing number of new prospects. Breaking new ground and being the first-to-market with a technology solution to a manual problem, as Identitii is, takes time and requires consistent forward momentum. Early success is very difficult to come by, but the disparate nature of new contracts does not mean we are pursuing the wrong opportunity. We are right to continue. Continued product & technology development Throughout the year, led by our new CTO, the team has been hard at work developing our product and our research and development initiatives, in the wake of our One Platform strategy. Our team has been exploring new technologies and solutions that have not only bolstered our core offerings but have opened up new avenues for problem solving. We this year, saw significant product progress launching new SMR reporting capability ahead of looming Tranche 2 reforms, being among the first to submit ISO 20022 reports to AUSTRAC, extending our automated FinCrime Reporting data platform into New Zealand, and growing our Patent Portfolio with a newly awarded patent in Singapore. These developments will all contribute to our ability to attract and win new business, ensuring that investments in innovation will continue to be a cornerstone of our long-term strategy. Our investment in Payble Payble, Identitii’s joint venture with CommBank’s x15ventures, is modernising household billing and payments, overlaying existing ERP systems and payment processors with their SaaS platform, enabling large billers to bridge the gap between their consumer capabilities expectations, without any complex technology internal and 5 Identitii Limited Annual Report FY23 A letter from our CEO further $1.2m integration or changes. The company grew its portfolio of customers during the year, ending the year with ten customers on SaaS contracts, eight of them local governments. During the year Payble received a from x15ventures, with Identitii also exercising its right to convert outstanding intellectual property licence fees into further equity. Under the leadership of founder Elliott Donazzan, Payble has continued to grow revenue, built out a strong and experienced team, and is on-track to break-even by the end of FY24. investment Summarising the year Operating an early-stage technology company in the current economic environment is a challenging task and operating a public one even more so. By many measures our Company is in its strongest position since first listing in late 2018. Activity on our platform is growing, we implemented several material reductions in operating costs that will fully materialise in FY24, the number of prospective customers engaged with us is the highest it has ever been, and our pipeline of opportunities is growing faster than ever. As we look to the future, we are increasingly optimistic. We believe our unwavering commitment to continuous innovation, financial prudence, and customer needs will be key drivers of our success. The momentum we've quietly built over the past year positions us well for many years of growth. Thank you for your continued support of the Board, the Executive Staff and our Team. Regards, John Rayment Chief Executive Officer FY23 highlights H1 • New patent awarded in Singapore, increases patent portfolio • Automated FinCrime Reporting data platform extended into New Zealand • Former Assembly Payments co-CEO, Tim • Dickinson joins as CTO x15ventures invested further $1.2 million in Payble, jointly owned by Identitii • New investor hub launched H2 • Monoova signed licence agreement to use Identitii's platform for AUSTRAC reporting • Rabobank starts reporting to AUSTRAC • • using the Identitii platform Industry roundtable series launched to accelerate new business acquisition Identitii commended during finals of the Pitch! RegTech event in Singapore • SMR reporting capability launched, ahead • of looming Tranche 2 reforms Identitii among the first to submit ISO 20022 reports to AUSTRAC • Partnership with the Financial Integrity Hub to increase awareness 6 Identitii Limited Annual Report FY23 Directors Report Directors Report The Directors present their report together with the consolidated financial statements of the Group comprising of Identitii Limited (the Company) and its subsidiaries for the year ended 30 June 2023 and the auditor’s report thereon. Directors The Directors of the Company at any time during the year ended 30 June 2023 and up to the date of this report are: Name, qualification and independence status Experience, special responsibilities and other directorships Executive Mr. John Rayment Dip Proj Mgt, Dip Bus Mgmt., Dip Bus Mktg Executive Director Non-Executive Mr. Timothy Phillipps Dip Arts Independent Non-Executive Director Chairperson Ms. Rhyll Gardner B. Comm, B. Econ, M. Applied Finance, MBA (Exec), F FIN, GAICD Independent Non-Executive Director Mr. Simon Griffin BA (Economics) Independent Non-Executive Director John brings a wealth of experience to Identitii, having supported many early-stage ventures through sharp periods of growth. He has held board and executive roles at Travelex across the globe and has proven success in helping businesses to scale in line with rapidly expanding customer demand. John is the Chief Executive Officer/Managing Director of the Company. Tim is a Financial Crime and RegTech expert with 45 years of industry experience, most recently at Deloitte, where he held Global and Asia-Pacific roles in financial crime compliance and analytics, and prior to that with ASIC as Director of Enforcement. Member of the Audit and Risk Committee and member of the Nomination and Remuneration Committee. Rhyll is an active and experienced Non-Executive Director, building on 35 years of senior executive experience in banking and finance with ASX listed banks including St. George, Westpac, BOQ and Suncorp. She also brings to the Company over 15 years of board and committee experience across multiple sectors. Chair of the Audit and Risk Committee. Simon brings over 14 years’ experience in global financial services, having worked in senior and executive roles in companies including Macquarie Bank, OFX, HiFX and XE.com. He also brings significant expertise in scaling technology businesses including Propsa and Car Next Door. Chair of the Nomination and Remuneration Committee. 7 Identitii Limited Annual Report FY23 Company secretary Directors Report Elissa Hansen has over 20 years’ experience advising boards and management on corporate governance, compliance, investor relations and other corporate related issues. She has worked with boards and management on a range of ASX listed companies including assisting companies through the IPO process. Elissa is a Chartered Secretary who brings best practice governance advice, ensuring compliance with the Listing Rules, Corporations Act and other relevant legislation. Directors’ meetings The number of Directors’ meetings and number of meetings attended by each of the Directors of the Company during the financial year are: Board of Directors Audit and Risk Committee Nomination and Remuneration Committee A 6 6 6 6 B 6 6 6 6 A 3 - 3 - B 3 - 3 - A 2 - - 2 B 2 - - 2 Timothy Phillipps John Rayment Rhyll Gardner Simon Griffin A B Eligible to attend Attended Principal activities Identitii is a regulatory technology (RegTech) company that helps financial services businesses and other regulated entities gain visibility into, and control over, the data needed to meet financial crime reporting obligations both in Australia and around the world. The Company’s cloud platform was built to make reporting to regulators, including AUSTRAC in Australia, easy and automated, and to give Boards and management teams complete confidence in their compliance. It is also helping its customers build trust, credibility and confidence within the industry and with regulators as they work together to combat increasing financial crime. The strategic highlights for the year ended 30 June 2023 are noted below. Review of operations During the year ended 30 June 2023, the Group achieved the following: • On 29 August 2022, Identitii was granted approval of a Singapore Patent for the same invention as they currently hold a U.S. Patent for. • On 27 October 2022, the Company announced a 1 for 2 Non-Renounceable Rights Issue to raise up to $4 million, with the rights issue shares to be issued at $0.04 per share, together with 1 free attaching option for every 2 shares applied for and issued. The options are exercisable at $0.08 with a two-year expiry. • On 8 December 2022, the Company launched its automated Financial Crime reporting to New Zealand’s Financial Intelligence Unit (Z FIU) via its anti-money laundering and counter terrorism financing (AML/CTF) reporting platform. • On 14 December 2022, the Company announced that it has agreed to end its agreement with HSBC Hong Kong, under which it provides support for HSBC’s Digital Accounts Receivables Tool (HSBC DART), which was built on Identitii technology. Ending this agreement resulted in cost savings for the Group. • On 28 December 2022, the Company closed its Non-Renounceable Rights Issue on 20 December 2022, and raised $416,868 before costs, with a shortfall balance of $3,607,320. On 29 December 2022, 10,421,706 shares were issued, along with 5,210,853 options. 8 Identitii Limited Annual Report FY23 Directors Report • On 30 January 2023, the Company announced that it had hired a new Chief Technology Officer - Tim Dickinson, and new Chief Financial Officer - Rebecca Shooter-Dodd. • On 15 March 2023, the Company announced that it has signed a new software license agreement with leading Australian B2B payments provider Monoova Global Payments Pty Ltd. Monoova will use Identitii’s cloud-hosted reporting platform to help further automate and improve auditability of their reporting obligations to AUSTRAC. • On 4 April 2023, the Company announced that it is among the first to successfully report ISO 20022 transactions to AUSTRAC 2.0, the regulator’s updated reporting system designed specifically to accept the new data rich ISO 20022 format. • On 20 June 2023, the Company announced that it has made it easier for financial services businesses to submit Suspicious Matter Reports (SMR) to AUSTRAC via its regulatory reporting platform, ahead of the proposed Tranche 2 reforms to the Australian AML/CTF Act. Review of financial conditions The Group reported revenue from contracts with customers of $1,363,063 for the year ended 30 June 2023 (30 June 2022: $1,457,627), a decrease of 6% from the prior year. The Group reported a net loss after tax of $5,997,504 for the year ended 30 June 2023 (30 June 2022: $4,997,031) which was substantially driven by salary and employee benefit expenses and expenditure on research and development (R&D) related activities. The Group had a positive net current asset balance of $855,569 (30 June 2022: $5,635,074) and a positive overall net asset balance of $2,324,906 (30 June 2022: $7,432,594) at 30 June 2023. The Group had $1,287,005 of cash and cash equivalents on hand at 30 June 2023 (30 June 2022: $5,074,133) and reported a net cash outflow from operating activities of $5,203,726 during the year ended 30 June 2023 (30 June 2022: $6,014,695). Significant changes in the state of affairs In the opinion of the Directors there were no significant changes in the state of affairs of the Group that occurred during the year ended 30 June 2023. Dividends No dividends were declared or paid by the Company during the financial year ended 30 June 2023 (30 June 2022: Nil). Events subsequent to reporting date On 5 September 2023, the Company announced that its Rights Issue closed on 30 August 2023, and raised $1,338,160 before costs, with a shortfall balance of $789,735. The Rights Issue was a pro-rata non-renounceable entitlement issue to eligible shareholders of one (1) New Share for every one (1) Existing Share held by eligible shareholders on the Record Date, at an issue price of $0.01 per New Share. 133,816,609 New Shares were issued and allotted on 5 September 2023. On 21 September 2023, the Company announced that it had successfully completed the Shortfall Offer, raising a further $789,735 via the issue of shortfall shares at the issue price of $0.01 per Share, bringing the total capital raised under the Rights Issue to $2,127,895 before costs. On 28 September 2023, the Company announced $1.0M in annualised cost savings, to further extend its cash runway. The operational changes to realise $1.0M in annualised cost savings have all been put into effect, and the Company expects to see the resulting decreases in cash outflows materialise in the coming quarters. Savings have been realised in cloud infrastructure (consolidating multiple suppliers), legal costs (finalising patent strategy work), operational costs (office downsizing and licence cancellations) and headcount (including some reallocations to offshore roles). Additionally, all three Non-Executive Directors on our Board have elected to reduce the cash component of their remuneration by 25%, substituting the reduced cash component for ordinary shares in the Company, subject to shareholder approval. Other than the matters discussed above, there has not arisen in the interval between the end of the year and the date of this report any item, transaction, or event of a material and unusual nature likely, in the opinion of the Directors, to affect significantly in future financial years the operations of the Group, the results of those operations, or the state of affairs of the Group. 9 Identitii Limited Annual Report FY23 Likely developments Directors Report The Group will continue to develop the Identitii platform whilst continuing to serve existing customers, sign new customers and grow its pipeline of partners. This will require further investment in product and business development and marketing. Further information about likely developments in the operations of the Group and the expected results of those operations in future financial years has not been included in this report because disclosure of the information would likely result in unreasonable prejudice to the Group. Environmental regulation The Group’s operations are not regulated by any significant law of the Commonwealth or of a State or Territory relating to the environment. Directors’ interests The relevant interest of each Director in the shares and options over shares issued by the companies within the Group, as notified by the Directors to the ASX in accordance with S205G(1) of the Corporations Act 2001, at the date of this report is as follows: Timothy Phillipps John Rayment (1) Rhyll Gardner Simon Griffin Ordinary shares Options over ordinary shares 2,538,464 4,771,824 - - 211,538 8,397,652 - - (1) Shares held by Elorey Pty Ltd, of which John Rayment is a beneficiary. Shares issued on exercise of options During or since the end of the financial year, no ordinary shares of the Company were issued by the Group as a result of the exercise of options. Indemnification and insurance of officers and auditors The Company has entered into a director protection deed with each Director. Under these deeds, the Company indemnifies the Directors against all liabilities to another person that may arise from their position as Director of the Company and its controlled entities. The Company has not indemnified or made a relevant agreement for indemnifying against a liability to any person who is or has been an auditor of the Group. The Group paid insurance premiums in respect of Directors’ and Officers’ liability and legal expenses insurance contracts for the year ended 30 June 2023 and subsequent to the year end. Such insurance contracts insure against certain liability (subject to specific exclusions), persons who are or have been Directors or Executive Officers of the Group. 10 Identitii Limited Annual Report FY23 Non-audit services Directors Report 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 19 to the financial statements. The Board are satisfied that the provision of non-audit services during the financial year, by the auditor, is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons: • • all non-audit services have been reviewed by the Board to ensure they do not impact integrity and objectivity of the auditor; and none of the services undermine the general principles relating to auditor independence as set out in the 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. Officers of the Company who are former partners of RSM There are no officers of the Company who are former partners of RSM. Proceedings on behalf of the Group No person has applied for leave of court to bring proceedings on behalf of the Group or intervene in any proceedings to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those proceedings. The Group was not a party to any such proceedings during the year. Auditor’s independence declaration A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 18 and forms part of the Directors’ report for the year ended 30 June 2023. Rounding of amounts to the nearest dollar In accordance with ASIC Corporations (Rounding of Financial/Directors’ Reports) Instrument 2016/191, the amounts in the Directors’ Report and consolidated financial statements have been rounded to the nearest dollar. 11 Identitii Limited Annual Report FY23 Audited Remuneration Report Directors Report The Directors present the Remuneration Report (the Report) for the Company and its subsidiaries (the Group) for the year ended 30 June 2023. This Report forms part of the Directors’ Report and has been audited in accordance with Section 300A of the Corporations Act 2001. The Report details the remuneration arrangements for the Group’s Key Management Personnel (KMP): • Executive Directors and other KMP • Non-Executive Directors KMP are those persons who, directly or indirectly, have authority and responsibility for planning, directing and controlling the major activities of the Group. 1. Principles of remuneration The performance of the Group depends upon the quality and commitment of the Directors and Executives. The philosophy of the Directors in determining remuneration levels is to: • • • set competitive remuneration packages to attract and retain high calibre employees; link executive rewards to shareholder value creation; and establish appropriate hurdles for variable executive remuneration. The Nomination and Remuneration Committee reviews and make recommendations to the Board on the Group’s remuneration policies, procedures and practices. It also defines the individual packages offered to Executive Directors and KMP, for recommendation to the Board. The Board may consider engaging an independent remuneration consultant to advise the Board on appropriate levels of remuneration relative to its industry peer group. In accordance with Corporate Governance best practice (Recommendation 8.2), the structure of Non-Executive Director and Executive remuneration is separate and distinct as follows: a) Non-Executive Directors Fixed and variable remuneration The Board seeks to set Non-Executive Directors’ remuneration at a level that provides the Group with the ability to attract and retain Directors of a high calibre whilst incurring a cost that is acceptable to shareholders. The ASX Listing Rules specify that the aggregate remuneration of Non-Executive Directors shall be determined from time to time by a general meeting. This amount has been fixed by the Company at $250,000. The amount of aggregate remuneration and the manner in which it is apportioned amongst directors is reviewed annually. The Board considers advice from shareholders and takes into account the fees paid to Non-Executive Directors of comparable companies when undertaking the annual review process. Non-Executive Directors’ base fees cover all main board activities and membership of all committees; however, they do not receive performance-related compensation and are not provided with retirement benefits apart from statutory superannuation. Non-executive Directors are entitled to participate in the Equity Incentive Plan. Year ended to Chairman’s fee Non-Executive Directors fee 30 June 2023 $ 30 June 2022 $ 75,000 50,000 75,000 50,000 12 Identitii Limited Annual Report FY23 Directors Report b) Executives and Executive Director remuneration Remuneration for Executives and Executive Directors consists of fixed and variable remuneration only. Fixed remuneration Fixed remuneration is reviewed annually by the Directors. The process consists of a review of relevant comparative remuneration in the employment market and within the Group. The Group may engage an independent remuneration consultant to advise the Board on appropriate levels of remuneration for the Group’s Executive Directors relative to its industry peer group. Variable remuneration Variable remuneration is provided in the form of share options under the Group Equity Incentive Plan (EIP). Under the EIP, one share option entitles the holder to one share in the Company subject to vesting conditions. Executives and Executive Directors vesting conditions are linked to continued years of service and may be linked to performance hurdles. The Board have the discretion to settle share options with a cash equivalent payment. Participants in the EIP will not pay any consideration for the grant of the share option unless determined otherwise. Share options will not be listed and may not be transferred, assigned or otherwise dealt with unless approved by the Directors. If the executive’s employment terminates before the share options have vested, the share options will lapse, unless approved otherwise by the Board. 2. Details of remuneration Details of the remuneration of the KMP as defined in AASB 124 Related Party Disclosures are set out in Table 1 which follows. The KMP of the Group have authority and responsibility for planning, directing and controlling the activities of the Group. The KMP make or participate in making decisions that affect the whole, or a substantial part, of the business or who have the capacity to affect significantly the Group’s financial standing. The KMP of the Group are the Executive and Non-Executive Directors and the Chief Financial Officer. 13 Identitii Limited Annual Report FY23 Directors Report Details of the nature and amount of each major element of remuneration of each Director of the Company, and other KMP of the Group are: Table 1 Short-term benefits Post-employment Other long-term benefits Termination benefits Share-based payments Total % Share-based payments Year ended 30 June 2023 $ $ Salary Superannuation (A) $ Executive Directors John Rayment 310,000 32,550 20,159 Non-Executive Directors Timothy Phillipps Rhyll Gardner Simon Griffin Other KMP Catherine Lin (1) Rebecca Shooter-Dodd (2) Total 75,000 50,000 53,978 48,710 59,750 597,438 - - 5,668 5,115 - 43,333 - - - - - 20,159 $ - - - - - - - Share options (B) (variable) $ $ 162,568 525,277 31% - - - - - 75,000 50,000 59,646 53,825 59,750 162,568 823,498 (1) Resigned 8 January 2023. (2) Appointed 8 January 2023. Remuneration invoiced via Traverse Accountants Pty Ltd of which Rebecca Shooter-Dodd is a beneficiary. This includes remuneration for CFO related services only. (A) In accordance with AASB 119 Employee Benefits, annual leave is classified as other long-term employee benefits. (B) The fair value of share options is calculated at the grant date using an option-pricing model and allocated to each reporting period from grant date to vesting date depending on the vesting conditions attached to the options. The value disclosed is the portion of the fair value of the options recognised as an expense in the reporting period. - - - - - 14 Identitii Limited Annual Report FY23 Directors Report Table 1 Short-term benefits Post-employment Other long-term benefits Termination benefits Share-based payments Total % share-based payments Salary Superannuation (variable) Year ended 30 June 2022 $ $ (A) $ Executive Directors John Rayment (1) Non-Executive Directors Timothy Phillipps Rhyll Gardner (2) Simon Griffin (2) Steven James (3) Nicholas Armstrong (4) Other KMP Catherine Lin (5) Trent Jerome (6) Total 285,000 28,500 19,107 50,000 4,030 4,030 69,165 12,266 12,500 95,833 532,824 - - - - 1,227 1,250 9,583 40,560 - - - - - 962 - 20,069 Share options (B) $ $ 201,616 534,223 38% - - - 16,084 - - (26,267) 191,433 50,000 4,030 4,030 85,249 13,493 14,712 92,123 797,860 - - - 19% - - - $ - - - - - - - 12,974 12,974 (1) (2) (3) (4) (5) (6) Salary increased from $260,000 to $310,000 per annum effective 1 January 2022. Appointed 2 June 2022. Remuneration invoiced via Aston Consulting Pty Ltd of which Steven James is a beneficiary. Resigned 2 June 2022. Resigned 7 October 2021. Appointed 15 June 2022. Resigned 30 November 2021. In accordance with AASB 119 Employee Benefits, annual leave is classified as other long-term employee benefits. (A) (B) The fair value of share options is calculated at the grant date using an option-pricing model and allocated to each reporting period from grant date to vesting date depending on the vesting conditions attached to the options. The value disclosed is the portion of the fair value of the options recognised as an expense in the reporting period. 15 Identitii Limited Annual Report FY23 3. Service agreements Directors Report The following is a summary of the current major provisions of the agreement relating to remuneration of the Executive Director. John Rayment – Chief Executive Officer John Rayment is the Chief Executive Officer of the Group and is considered a key member of the Group’s management team. John receives a base salary of $310,000 per annum plus superannuation and holds 8,000,000 share options with attached service and performance vesting conditions. During the year ended 30 June 2023, no bonuses were paid to John Rayment. Employment Conditions Commencement date: 19 March 2020 Term: Ongoing until notice is given by either party Review: Annually Notice period required on termination: 3 months by either party Termination benefits: None Independent Review To ensure the Group complies with industry best practice in relation to the remuneration of its Executive Director, the Non- Executive Directors of the Group will consider engaging the services of a remuneration consultant to conduct an independent assessment of the remuneration packages negotiated with its Executive Director. The following is a summary of the current major provisions of the agreement relating to remuneration of Executive KMP: Catherine Lin – Chief Financial Officer Catherine Lin was the Chief Financial Officer of the Group up to her resignation effective 8 January 2023. Catherine received a base salary of $275,000 per annum plus superannuation. 16 Identitii Limited Annual Report FY23 4. Equity instruments Directors Report All share options refer to options over ordinary shares of Identitii Limited, which are exercisable on a one-for-one basis under the Equity Incentive Plan (EIP). a) Options over equity instruments granted as compensation All options expire on the earlier of their expiry date or termination of the individual’s employment. Vesting is conditional on the individual remaining in employment during the vesting period unless determined by the Board otherwise. Share options were granted to KMP as compensation during the year ended 30 June 2023 as noted in the table below. b) Analysis of movements in equity instruments The movement during the year in the number of options over ordinary shares in Identitii Limited held, directly, indirectly or beneficially, by each KMP, including their related parties, is as follows: Held at 1 July 2023 Granted/ (forfeited) during the year Held at 30 June 2023 Vested during the year Vested at 30 June 2023 Exercisable at 30 June 2023 Timothy Phillipps - 211,538 211,538 - - - John Rayment 8,000,000 397,652 8,397,652 500,000 1,000,000 1,000,000 Rhyll Gardner Simon Griffin Catherine Lin Rebecca Shooter-Dodd - - - - - - - - - - - - - - - - - - - - - - - - 5. KMP transactions a) Loans from KMP and their related parties There were no loans outstanding at the end of the year from KMP and their related parties, where the individual’s aggregate loan balance exceeded $100,000 in the reporting period. b) Other transactions with KMP A number of KMP, or their related parties, hold positions in other entities that result in them having control, or joint control, over the financial or operating policies of that entity. Terms and conditions of transactions with KMP and their related parties are no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-KMP related entities on an arm’s length basis. 17 Identitii Limited Annual Report FY23 5. KMP transactions (continued) c) Movement in shares Directors Report The movement during the year in the number of ordinary shares in Identitii Limited held, directly, indirectly or beneficially, by each KMP, including their related parties, is as follows: Timothy Phillipps John Rayment Rhyll Gardner Simon Griffin Catherine Lin Rebecca Shooter-Dodd Held at 1 July 2022 Acquired Held at 30 June 2023 846,155 1,590,608 423,078 795,304 1,269,233 2,385,912 - - - - - - - - - - - - This Directors’ Report is signed in accordance with a resolution of the Board of Directors: Timothy Phillipps Chairperson Sydney 29 September 2023 18 RSM Australia Partners Level 13, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001 T +61 (0) 2 8226 4500 F +61 (0) 2 8226 4501 www.rsm.com.au AUDITOR’S INDEPENDENCE DECLARATION As lead auditor for the audit of the financial report of Identitii Limited for the year ended 30 June 2023, 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. RSM AUSTRALIA PARTNERS Gary Sherwood Partner Sydney NSW Dated: 29 September 2023 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 19 Identitii Limited Annual Report FY23 Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Profit or Loss and Other Comprehensive Income Revenue from contracts with customers Research and development tax incentive Government grants Interest income Gain on loss of control of subsidiary Total revenue and other income Expenses Note 2 30 June 2023 $ 30 June 2022 $ 1,363,063 1,490,084 36,303 21,114 - 2,910,564 1,457,627 1,190,700 43,284 498 1,860,064 4,552,173 Salaries and employee benefit expenses 2,179,630 3,109,750 14 Share based payments Consultants fees Advertising and marketing Depreciation and amortisation General expenses Interest expense Legal expenses Office expenses Travel and accommodation Short-term lease payments Reversal of impairment on trade receivables Research and development expenses Share of equity-accounted investee loss 22 Total expenses 405,977 564,062 148,983 13,875 738,465 52,694 163,532 537,878 191,926 55,449 (749) 3,425,480 430,866 8,908,068 541,737 707,506 296,876 99,254 797,291 67 290,293 495,521 153,208 55,721 (1,825) 2,736,559 267,246 9,549,204 20 Identitii Limited Annual Report FY23 Consolidated Statement of Profit or Loss and Other Comprehensive Income Loss before income tax Income tax expense Loss for the year Note 30 June 2023 $ 30 June 2022 $ (5,997,504) (4,997,031) 3 - - (5,997,504) (4,997,031) Other comprehensive income Items that may be reclassified subsequently to profit or loss Foreign currency translation (19,528) (73,375) Total comprehensive loss for the year (6,017,032) (5,070,406) Loss for the year attributable to: Owners of Identitii Limited Non-controlling interests Comprehensive loss for the year attributable to: Owners of Identitii Limited Non-controlling interests Basic and diluted loss per share (cents) (5,997,504) (4,833,962) 15 - (163,069) (5,997,504) (4,997,031) 15 4 (6,017,032) (4,907,337) - (163,069) (6,017,032) (5,070,406) (2.90) (2.64) 21 Identitii Limited Annual Report FY23 Consolidated Statement of Financial Position Consolidated Statement of Financial Position Note 30 June 2023 $ 30 June 2022 $ Assets Cash and cash equivalents Research and development tax incentive receivable Trade and other receivables Contract assets Loans to equity-accounted investees Current assets Property, plant and equipment Investment in equity-accounted investees Loans to equity-accounted investees Other non-current assets Non-current assets Total assets Liabilities Trade and other payables Employee provisions Contract liabilities Borrowings Current liabilities Total liabilities Net assets Equity Share capital Share options reserve Foreign currency translation reserve Retained losses Total equity 6 7 2 9 8 9 10 11 2 12 13 14 1,287,005 1,490,084 211,708 - - 5,074,133 1,193,963 512,390 120,250 120,000 2,988,797 7,020,736 49,860 1,392,307 - 27,170 1,469,337 4,458,134 583,029 251,820 318,379 980,000 2,133,228 2,133,228 2,324,906 88,052 903,154 779,144 27,170 1,797,520 8,818,256 644,317 481,633 259,712 - 1,385,662 1,385,662 7,432,594 33,438,200 32,934,833 4,306,491 (19,886) 3,900,514 (358) (35,399,899) (29,402,395) 2,324,906 7,432,594 22 Identitii Limited Annual Report FY23 Consolidated Statement of Changes in Equity Consolidated Statement of Changes in Equity Note Share capital Share option reserve $ $ Foreign currency translation reserve $ Retained losses Total equity $ $ Balance at 1 July 2022 32,934,833 3,900,514 (358) (29,402,395) 7,432,594 Loss after tax Other comprehensive income Total comprehensive loss Issue of ordinary share capital Costs of equity raising Equity-settled share-based payments 13 13 14 - - - 541,976 (38,609) - - - - - - 405,977 - (5,997,504) (5,997,504) (19,528) - (19,528) (19,528) (5,997,504) (6,017,032) - - - - - - 541,976 (38,609) 405,977 Balance at 30 June 2023 33,438,200 4,306,491 (19,886) (35,399,899) 2,324,906 23 Identitii Limited Annual Report FY23 Consolidated Statement of Changes in Equity Note Share capital Share option reserve $ $ Foreign currency translation reserve $ Other reserves Retained losses Total Non- controlling interest Total equity $ $ $ $ $ Balance at 1 July 2021 25,775,278 4,517,002 73,017 688,123 (26,414,781) 4,638,639 363,485 5,002,124 Loss after tax Other comprehensive income Total comprehensive loss Loss of control of subsidiary Issue of ordinary share capital Costs of equity raising Equity-settled share-based payments Transfer share-based payments reserve to retained earnings 13 13 14 14 - - - - 7,761,986 (602,431) - - - - - - - - 541,737 (1,158,225) Balance at 30 June 2022 32,934,833 3,900,514 (358) - (73,375) (73,375) - - - (4,833,962) (4,833,962) (163,069) (4,997,031) - (73,375) - (73,375) (4,833,962) (4,907,337) (163,069) (5,070,406) - - - - - (688,123) 688,123 - (200,416) (200,416) - - - - - - - - 7,761,986 (602,431) 541,737 1,158,225 - (29,402,395) 7,432,594 - - - - - 7,761,986 (602,431) 541,737 - 7,432,594 24 Identitii Limited Annual Report FY23 Consolidated Statement of Cash Flows Consolidated Statement of Cash Flows Cash flows from operating activities Receipts from customers Payments to suppliers and employees Cash flows utilised in operations Note 30 June 2023 $ 30 June 2022 $ 1,847,455 1,464,792 (8,218,360) (8,425,325) (6,370,905) (6,960,533) Receipts from government grants and tax incentives 1,240,015 945,340 Interest received Interest and other costs of finance paid 987 (73,823) 498 - Total cash flows used in operating activities 16 (5,203,726) (6,014,695) Cash flows from investing activities Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Cash flows from loans to equity-accounted investees Loss of control of subsidiary Other investing cash flows Total cash flows from/(used in) investing activities Cash flows from financing activities Proceeds from the issue of shares Transaction costs related to the issue of shares Proceeds from borrowings 12 Lease payments Transaction costs related to borrowings and leases Total cash flows from financing activities Net (decrease)/increase in cash held Opening cash balance Effect of movement in exchange rates Closing cash balance 6 - - 12,386 - - 12,386 416,868 (36,109) 980,000 - - 1,360,759 (3,830,581) 5,074,133 43,453 1,287,005 (65,335) 2,309 70,000 (547,423) (27,000) (567,449) 7,403,986 (327,813) - (13,039) (67) 7,063,067 480,923 4,489,311 103,899 5,074,133 25 Identitii Limited Annual Report FY23 Notes to the Consolidated Financial Statements Notes to the Consolidated Financial Statements 1. Significant Accounting Policies The principal accounting policies adopted in the preparation of the consolidated financial statements are set out either in the respective notes or below. These policies have been consistently applied to all the periods presented, unless otherwise stated. The financial statements are for the Group including Identitii Limited and its subsidiary. Basis of preparation These general-purpose financial statements have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”). The financial statements also comply with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. The financial statements comprise the consolidated financial statements of the Group which is a for-profit entity for financial reporting purposes under Australian Accounting Standards. Historical cost convention The consolidated financial statements, except for the cash flow information, 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. Critical accounting estimates The preparation of the consolidated financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed throughout the financial statements. Basis of consolidation The consolidated financial statements comprise the financial statements of the Group as at the end of the reporting period. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has: • Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee) • Exposure, or rights, to variable returns from its involvement with the investee, and • The ability to use its power over the investee to affect its returns When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including: The contractual arrangement with the other vote holders of the investee • • Rights arising from other contractual arrangements The Group’s voting rights and potential voting rights • The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income, and expenses of a subsidiary acquired or disposed of during the year are included in the statement of profit and loss and other comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary. Profit or loss and each component of other comprehensive income are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-Group assets and liabilities, equity, income, expenses, and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. 26 Identitii Limited Annual Report FY23 Going concern Notes to the Consolidated Financial Statements The financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course of business. As disclosed in the financial statements, the Group incurred a loss for the year ended 30 June 2023 of $5,997,504 (30 June 2022: $4,997,031) and total cash outflows from operating activities of $5,203,726 (30 June 2022: $6,014,695). As at that date, the Group had net current assets of $855,569 (30 June 2022: $5,635,074) and net assets of $2,324,906 (30 June 2022: $7,432,594). As such the Group needs to raise additional capital to support its operating activities. These factors indicate a material uncertainty which may cast significant doubt as to whether the Group will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report. The Directors believe there are reasonable grounds that the Group will continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report after considering the following: • • The Group has $1,287,005 in cash and cash equivalents as at the balance date; The Group successfully raised $980,000 in debt funding during the year and is evaluating plans to secure additional debt funding later in the calendar year; The Group successfully raised equity funding of $378,278 during the financial year; • • On 5 September 2023, the Group announced that its Rights Issue closed on 30 August 2023, and raised $1,338,160 before costs, with a shortfall balance of $789,735. The Rights Issue was a pro-rata non-renounceable entitlement issue to eligible shareholders of one (1) New Share for every one (1) Existing Share held by eligible shareholders on the Record Date, at an issue price of $0.01 per New Share. 133,816,609 New Shares were issued and allotted on 5 September 2023, and the Company expects the shortfall to be placed shortly. • On 21 September 2023, the Company announced that it had successfully completed the Shortfall Offer, raising a further $789,735 via the issue of shortfall shares at the issue price of $0.01 per Share, bringing the total capital raised under the Rights Issue to $2,127,895 before costs. • On 28 September 2023, the Company announced $1.0M in annualised cost savings, to further extend its cash runway. • The Group has the ability to further scale back a significant portion of its expenditure if required; and Accordingly, the Directors believe that the Group will be able to continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report. The financial report does not include any adjustments relating to the amounts or classification of recorded assets or liabilities that might be necessary if the Group does not continue as a going concern. Functional and presentation currency These consolidated financial statements are presented in Australian dollars which is the Group’s functional currency. The Group is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and in accordance with that instrument, amounts in the consolidated financial statements and directors’ report have been rounded off to the nearest Australian dollar, unless otherwise stated. Foreign currency transactions Transactions in foreign currencies are translated to the functional currency of the Group at the exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign currency differences are generally recognised in profit or loss and presented within general expenses. Current and non-current classification Assets and liabilities are presented in the statement of financial position based on current and non-current classification. An asset is current when it is expected to be realized or intended to be sold or consumed in normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realized within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current. 27 Identitii Limited Annual Report FY23 Notes to the Consolidated Financial Statements A liability is current when it is expected to be settled in normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current. Deferred tax assets and liabilities are always classified as non-current. Research and development tax incentive The R&D tax incentive encourages companies to engage in R&D benefiting Australia, by providing a tax offset (or a cash refund if in a tax loss position) for eligible R&D activities. The Group recognises the R&D tax incentive in profit or loss when the Group incurs the eligible R&D expenditure. The R&D tax incentive income is presented on a gross basis and is not netted off against the R&D costs to which it relates. Goods and services tax (GST) Revenues, expenses, and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense. Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position. Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows. New, revised or amended accounting standards adopted The Group has retrospectively adopted, as at the date of incorporation, all of the new, revised or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) and the International Financial Reporting Interpretations Committee (IFRIC) that are relevant to its operations and effective for the year commencing 1 July 2022. There was no material impact on the group’s financial statements on the adoption of these Standards and Interpretations. Revised or amending Accounting Standards or Interpretations that are not yet mandatory for the year ended 30 June 2023 have not been early adopted. 2. Revenue The Group generates revenue primarily from the licensing of software and the provision of professional and maintenance services to its customers. During the period the Group also generated revenue from its new Software-as-a-Service (SaaS) platform. a) Disaggregation of revenue In the following table, revenue is disaggregated by nature of product and service and is done so in conjunction with the Group’s reporting segment. For the year ended 30 June Nature of product and service Licence and usage fees Maintenance fees Professional services SaaS fees 2023 $ 645,703 21,827 635,533 60,000 2022 $ 598,682 27,551 808,144 23,250 Revenue from contracts with customers 1,363,063 1,457,627 28 Identitii Limited Annual Report FY23 2. Revenue (continued) b) Timing of revenue recognition Notes to the Consolidated Financial Statements The following table, revenue is disaggregated by timing of revenue recognition For the year ended 30 June Services transferred at a point in time Services transferred over time c) Contract balances 2023 $ 635,533 727,530 2022 $ 808,144 649,483 The following table provides information about trade receivables, contract assets and contract liabilities from contracts with customers. Trade receivables Contract assets Contract liabilities 30 June 2023 $ 30 June 2022 $ 17,049 - 264,302 120,250 (318,379) (259,712) Reconciliation of the written down values of contract assets and contract liabilities at the beginning and end of the current and prior financial year are set out below: Contract assets Opening balance 1 July Additions Transfer to trade receivables Closing balance 30 June Contract liabilities Opening balance 1 July Payments received in advance Transfer to revenue – in opening balance Transfer to revenue – other balances Closing balance 30 June 30 June 2023 $ 30 June 2022 $ 120,250 - (120,250) - 26,400 240,250 (146,400) 120,250 30 June 2023 $ 30 June 2022 $ 259,712 603,424 (259,712) (285,045) 318,379 179,650 504,873 (179,650) (245,161) 259,712 No information has been provided about remaining performance obligations at 30 June 2023 that have an original expected duration of one year or less, as allowed by AASB 15. 29 Identitii Limited Annual Report FY23 2. Revenue (continued) Accounting Policy - Revenue Notes to the Consolidated Financial Statements Under its contracts, the Group grants a licence to the customer for the use of its software. The contract will specify the term of the licence, the jurisdictions in which the licence may be utilised and protocols to be followed to extend the licence beyond the agreed licence term. The contracts also facilitate the provision of certain software, training, maintenance, customisation and configuration or other services from the Group in consideration for the payment of fees. The customer is granted, for the term of each contract, a non-exclusive, perpetual, irrevocable and royalty-free licence to use the software in a specific use case. The Group retains all rights, title and interest in the intellectual property of the software. The Group is currently recognising revenue under these enterprise level and SaaS contracts for licence fees, maintenance fees, usage fees and professional services, each regarded as a separate performance obligation. Revenue is measured based on the consideration specified in the contract and is recognised when the Group transfers control over the product or service to the customer. Charges are determined by a number of factors including transaction volume, customisation requirements, ongoing support and maintenance and new feature releases. Pricing changes for each renewal term are to be mutually agreed in writing. The following table provides information about the nature and timing of the satisfaction of performance obligations in its contracts with customers including the related revenue recognition policies. Product and services Nature and timing of satisfaction of performance obligations Licence fees The contracts require the Group to undertake maintenance and software enhancement activities throughout the licence period that significantly affects the intellectual property (IP) to which the customers have rights. The nature of the Group’s performance obligation in granting a licence is regarded as a right to access the IP and thus the Group recognises licence fee revenue over time. Licence fee revenue is recognised in equal monthly instalments from the date the licence is first transferred and for the term of the contract. The licence fee is a fixed annual fee as specified in the contract. Maintenance fees Maintenance (software, equipment and hosted services maintenance) is to be provided to customers on an ongoing basis from the date the licence is first transferred and throughout the term of the contract. The maintenance fee is a fixed annual fee as specified in the contract. Under AASB 15, the performance obligation to provide maintenance services is first met upon transfer of the licence and is ongoing throughout the term of the contract. The total maintenance fee revenue to be billed under the contract is recognised in equal monthly instalments over time from the date the licence is first transferred. Usage fee revenue is determined by the number of successful transactions (as defined in the contract) and is based on information provided to the Group by the customer. Usage fees are recognised only when the later of the usage occurs and the licence fee obligation has been satisfied. Usage fees are variable fees and may be subject to an annual cap as specified in the contract. The Group recognises usage fee revenue over time based on when the usage occurs. Professional services include setup, training, and support costs as well as individual customisation projects that are separate and distinct performance obligations. The Group recognises revenue at a point in time based on time and materials incurred in delivering the product and services to its customers as per the terms and prices specified in the contract. Invoices are generated on confirmation of product and service delivery and revenue is recognised at that point in time. Usage fees Professional services (Including setup, training, and other support costs) 30 Identitii Limited Annual Report FY23 Notes to the Consolidated Financial Statements 2. Revenue (continued) Accounting Policy - Revenue (continued) Where revenue is billed in advance, a contract liability is recognised and amortised over the period of the invoice. Where revenue is billed in arrears, a contract asset is recognised at the time of revenue recognition and transferred to trade receivables when the invoice is generated. Warranties, returns and refunds The warranty period will run from the licence start date and over a specified period of time. Under the warranty period the Group undertakes that the product and services supplied are of satisfactory quality and fit for purpose, free from defects in design, operate in accordance with the contract and that appropriate master copies are maintained by the Group. In the event of an unresolved third-party intellectual property rights claim, customers may elect to return all deliverables under the contract and be refunded in full for all charges paid by the customer to date. Revenue is recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. Due to the absence of any third-party intellectual property rights claims during the current and prior period, no adjustment has been made to revenue recognised during the period for expected returns. Customers may terminate or partially terminate the contract by written notice to the Group. Due to the absence of any such written notices to the Group during the current and prior period, no adjustment has been made to revenue recognised during the period for expected refunds on termination. Accounting policy - Contract assets Contract assets are recognised when the Group has transferred goods or services to the customer but where the Group is yet to establish an unconditional right to consideration. Contract assets are treated as financial assets for impairment purposes. Accounting policy - Contract liabilities Contract liabilities represent the Group’s obligation to transfer goods or services to a customer and are recognised when a customer pays consideration, or when the Group recognises a receivable to reflect its unconditional right to consideration (whichever is earlier) before the Group has transferred the goods or services to the customer. 3. Income tax expense Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to items recognised directly in equity. a) Amounts recognised in profit or loss Current tax expense Deferred tax expense Aggregate income tax expense 30 June 2023 $ 30 June 2022 $ - - - - - - 31 Identitii Limited Annual Report FY23 Notes to the Consolidated Financial Statements 3. Income tax expense (continued) b) Reconciliation of accounting loss to taxable loss Loss before tax Adjustments to accounting loss Non-deductible expenses Tax exempt income Taxable loss Income tax expense 30 June 2023 $ 30 June 2022 $ (5,997,504) (4,997,031) 4,066,247 3,196,755 (1,566,921) (3,250,429) (3,498,178) (5,050,705) - - The Group is in a net tax loss position and does not recognise a deferred tax asset. c) Unrecognised deferred tax assets Deferred tax assets have not been recognised in respect of the following items, because it is not probable that future taxable profit will be available against which the Group can use the benefits therefrom. 30 June 2023 30 June 2022 Gross amount $ Tax effect $ Gross amount $ Tax effect $ Tax losses 19,472,746 4,868,187 16,951,800 4,237,950 Accounting Policy - Income Tax Expense Current tax Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to incomes taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax liability arising from dividends. Current tax assets and liabilities are offset only if certain criteria are met. Deferred tax Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for: temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination • and that affects neither accounting nor taxable profit or loss; and temporary differences related to investments in subsidiaries to the extent that the Group is able to control the timing • of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future. 32 Identitii Limited Annual Report FY23 Notes to the Consolidated Financial Statements 3. Income tax expense (continued) Deferred tax assets are recognised for unused tax losses, tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilised. Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset in full, the future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves. Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that is has become probable that future taxable profits will be available against which they can be used. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date. The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset only if certain criteria are met. 4. Loss per share The calculation of basic and diluted loss per share has been based on the following loss attributable to ordinary shareholders and weighted-average number of ordinary shares outstanding. 30 June 2023 $ 30 June 2022 $ Loss for the year attributable to owners of Identitii Limited (5,997,504) (4,833,962) Weighted-average number of ordinary shares Issued ordinary shares at 1 July Effect of shares issued during the year 200,809,923 151,791,071 6,041,066 31,333,234 Weighted-average number of ordinary shares at 30 June 206,850,989 183,124,305 Basic and diluted loss per share (cents) (2.90) (2.64) Share based payment options have not been included in the calculation of diluted loss per share as these are considered anti-dilutive as at 30 June 2023 and 30 June 2022. 5. Operating segments An operating segment is a component of the Group • • that engages in business activities from which it may earn revenues and incur expenses (including revenue and expenses relating to transactions with the Group’s other components), and whose operating results are reviewed regularly by the Group’s chief operating decision maker for the purpose of making decisions about allocating resources to the segment and assessing its performance. 33 Identitii Limited Annual Report FY23 Notes to the Consolidated Financial Statements 5. Operating segments (continued) The Group currently has one reportable segment, which develops and licenses software for regulated entities. The revenues and profits generated by the Group’s operating segment and segment assets are summarised below: For the year ended 30 June Sales to external customers Other revenue and income Total segment revenue and income Unallocated revenue: Interest revenue Total revenue and other income For the year ended 30 June EBITDA Depreciation and amortisation Interest revenue Interest expense Loss before income tax Income tax expense Loss for the year Segment assets Segment liabilities Geographic information Software Development and Licensing 2023 $ 1,363,063 1,526,387 2,889,450 2022 $ 1,457,627 3,094,048 4,551,675 21,114 498 2,910,564 4,552,173 Software Development and Licensing 2023 $ 2022 $ (5,952,049) (4,898,208) (13,875) 21,114 (52,694) (99,254) 498 (67) (5,997,504) (4,997,031) - - (5,997,504) (4,997,031) 4,458,134 2,133,228 8,818,256 1,385,662 The Group’s main operations and place of business is in Australia, with majority of its revenue being derived in Asia. Revenue from contracts with customers Asia Australia United States of America 30 June 2023 $ 30 June 2022 $ 292,493 623,988 446,582 561,660 443,765 452,202 1,363,063 1,457,627 Revenue is based on the location of the customer. Refer to Note 2 for further detail on major customers, products, and services. 34 Identitii Limited Annual Report FY23 Notes to the Consolidated Financial Statements 5. Operating segments (continued) Location of current assets Australia Location of non-current assets Australia 30 June 2023 $ 30 June 2022 $ 2,988,797 2,988,797 7,020,736 7,020,736 30 June 2023 $ 30 June 2022 $ 1,469,337 1,469,337 1,797,520 1,797,520 Non-current assets include intangibles, property, plant and equipment, investment in and loans to equity-accounted investees. Location of current liabilities Australia 6. Cash and cash equivalents Bank balances Term deposits 30 June 2023 $ 30 June 2022 $ 2,133,228 2,133,228 1,385,662 1,385,662 30 June 2023 $ 30 June 2022 $ 1,287,005 5,000,288 - 73,845 1,287,005 5,074,133 Accounting Policy - Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. 7. Trade and other receivables Trade receivables Prepayments Other receivables 30 June 2023 $ 30 June 2022 $ 17,046 145,012 49,650 211,708 264,302 192,541 55,547 512,390 35 Identitii Limited Annual Report FY23 Notes to the Consolidated Financial Statements 7. Trade and other receivables (continued) Accounting Policy - Trade and other receivables Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Trade receivables generally have 30-to-45-day payment terms. Collectability of trade receivables is reviewed on an ongoing basis in accordance with the expected credit loss (“ECL”) model. Credit losses are measured at the present value of all cash shortfalls (i.e., the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset. The ECL assessment completed by the Group as at 30 June 2023 has resulted in an immaterial credit loss and no impairment allowance has been recognised by the Group (30 June 2022: $Nil). Critical accounting judgements, estimates and assumptions The provision for impairment of receivables and the ECL calculation assessment requires a degree of estimation and judgment. The level of provision is assessed by considering the recent sales experience, the ageing of receivables, historical collection rates and specific knowledge of the individual debtor’s financial position. 8. Equity-accounted investees 30 June 2023 $ 30 June 2022 $ Investment in associates - Payble 1,392,307 903,154 On 15 November 2021, x15ventures invested $0.7 million into Payble, diluting Identitii’s shareholding in Payble from 60.1% to 44.2%. On this date it was determined that Identitii no longer retained control of Payble and, as a result, Payble went from being a subsidiary to an investment in associate. Refer to Note 22 for further information on investment in associates. On 22 December 2022, x15ventures invested a further $1.2 million in Payble. During the funding round, Identitii exercised its right to convert the outstanding intellectual property license fee, payable to the Company over three years, into additional equity. As of 30 June 2023, Identitii’s investment in Payble was 32.8%. See Note 9 for loans to equity-accounted investees. 9. Loans to equity-accounted investees Current Non-current Loan to Payble Pty Ltd 30 June 2023 $ 30 June 2022 $ - - - 120,000 779,144 899,144 36 Identitii Limited Annual Report FY23 10. Trade and other payables Trade payables Other payables and accruals Notes to the Consolidated Financial Statements 30 June 2023 $ 30 June 2022 $ 399,014 184,015 583,029 299,212 345,105 644,317 Accounting Policy - Trade and other payables These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. Due to their short-term nature, they are measured at amortized cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition. 11. Employee provisions Provision for annual leave Superannuation payable Employee taxes withheld Other 30 June 2023 $ 30 June 2022 $ 184,538 67,282 - - 251,820 222,468 96,690 156,646 5,829 481,633 Amounts not expected to be settled within the next 12 months The provision for annual leave includes all unconditional entitlements where employees have completed the required period of service and also where employees are entitled to pro-rata payments in certain circumstances. The entire amount is presented as current, since the Group does not have an unconditional right to defer settlement. However, based on past experience, the Group does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. Accounting Policy - Employee Provisions Short-term employee benefits Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. Other long-term employee benefits The Group’s net obligation in respect of long-term employee benefits is the amount of future benefit that employees have earned in return for their service in the current and prior periods. That benefit is discounted to determine its present value. Re-measurements are recognised in profit or loss in the period in which they arise. Termination benefits Termination benefits are expensed at the earlier of when the Group can no longer withdraw the offer of those benefits and when the Group recognises costs for a restructuring. If benefits are not expected to be settled wholly within 12 months of the reporting date, they are discounted. 37 Identitii Limited Annual Report FY23 12. Borrowings Current R&D Loan Facility R&D Loan Facility Notes to the Consolidated Financial Statements 30 June 2023 $ 30 June 2022 $ 980,000 980,000 - - On 8th March 2023, the Company entered into a new term loan facility of $980,000, secured against future R&D refunds to be received by the Company. The facility is a prepayment of the forecasted R&D tax incentive claim for the year ended 30 June 2023, with a termination date of 20 October 2023. The facility attracts interest at a rate of 16% p.a., which has been fully paid in advance on the date of draw down. Accounting Policy - Borrowings Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They are subsequently measured at amortised cost using the effective interest rate method. 13. Share capital Ordinary shares 30 June 2023 30 June 2022 $ Number of shares $ Number of shares In issue at beginning of the year 32,934,833 200,809,923 25,775,278 151,791,071 Issued in settlement of Director loan Issued for cash, net of costs of equity – placement Issued for cash, net of costs of equity – rights issue Issued not for cash – consideration for marketing services Issued not for cash – consideration for capital raise management services Issued not for cash – consideration for investor relation services Issued not for cash - consideration to employee in accordance with employment contract In issue at end of the year – authorised, fully paid and no par value - - - - 20,000 285,714 5,467,154 37,500,000 378,278 10,421,706 1,334,401 8,774,914 - - - - 30,000 375,000 181,000 1,131,250 105,089 1,189,474 127,000 951,974 20,000 377,359 - - 33,438,200 212,798,462 32,934,833 200,809,923 All ordinary shares rank equally with regard to the Company’s residual assets. Holders of ordinary shares are entitled to dividends as declared from time to time and are entitled to one vote per share at general meetings of the Company. 38 Identitii Limited Annual Report FY23 13. Share capital (continued) Issue of ordinary shares Notes to the Consolidated Financial Statements On 1 September 2022, the Company issued 400,000 shares at a price of $0.095 per share to a consultant as consideration for investor relation services. On 25 November 2022, the Company issued 394,737 shares at a price of $0.095 per share to a consultant as consideration for investor relation services. On 25 November 2022, the Company issued 377,359 shares at a price of $0.053 per share to an employee in accordance with their employment contract. On 29 December 2022, as part of a rights issue to existing shareholders, the Board approved the issue of 10,421,706 ordinary shares in the Company at a price of $0.04 per share. Share issue costs of $38,590 were incurred in relation to this issuance. On 24 May 2023, the Company issued 394,737 shares at a price of $0.095 per share to a consultant as consideration for investor relation services. Share issue costs of $7,911 were incurred in relation to issuances for investor relation services throughout the year. Accounting policy - Share capital Incremental costs directly attributable to the issue of ordinary shares are recognised as a deduction from equity. Income tax relating to transaction costs of an equity transaction is accounted for in accordance with AASB 112. Capital management The Group’s objective is to maintain a strong capital base so as to maintain investor, creditor, and market confidence and to sustain future development of the business. Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents. In order to maintain or adjust the capital structure, the Group may issue new shares or sell assets to reduce debt. 14. Share based payment arrangements For the year ended 30 June 2023, the Group recognised a share-based payment expense of $405,977 in the statement of profit or loss (30 June 2022: $541,737) under the following share-based payment arrangements. Share options & performance rights 30 June 2023 30 June 2022 $ Number of options $ Number of options Director options PAC Partners options 979,674 12,358,082 817,106 12,358,082 79,196 5,000,000 79,196 5,000,000 Equity incentive plan - options 3,188,760 10,728,769 3,004,212 16,241,405 Equity incentive plan - performance rights (i) 58,861 3,800,000 Options issued on rights offering (ii) - 5,210,834 - - - - On issue at end of year 4,306,491 37,097,685 3,900,514 33,599,487 The number and weighted-average exercise price of share options under the share-based payment arrangements noted above were as follows: 39 Identitii Limited Annual Report FY23 Notes to the Consolidated Financial Statements 14. Share based payment arrangements (continued) Number of options Weighted average exercise price Number of options Weighted average exercise price 2023 2023 2022 Outstanding at 1 July 33,599,487 $0.26 35,332,499 Forfeited during the year (2,766,344) $0.15 (3,208,012) Expired during the year (2,746,292) $0.75 (6,950,000) Granted during the year 5,210,834 $0.08 8,425,000 Outstanding at 30 June 33,297,685 $0.20 33,599,487 2022 $0.28 $0.15 $0.36 $0.23 $0.26 (i) Performance Rights Issued On 6 March 2023, the Company granted a total of 3,800,000 Performance Rights in the following tranches: • • • Tranche 1: 1,650,000 Rights, vesting 1 July 2023, expiring 31 December 2024. Tranche 2: 1,650,000 Rights, vesting 1 July 2024, expiring 31 December 2024. Tranche 3: 500,000 Rights, vesting on satisfaction of set Milestones, expiring 31 October 2027. All Rights have nil exercise prices. The tranches have the following vesting conditions: • • • Tranche 1: Maintain continuous employment to 1 July 2023. Tranche 2: Maintain continuous employment to 1 July 2024. Tranche 3: Maintain continuous employment to 1 July 2024, and Identitii recording revenue of at least $5 million in the preceding 12-month period. The Rights have no exercise price, and as such have been valued as per the ID8 share price as at the date of acceptance, weighted based on the likelihood of the vesting conditions being met. (ii) Options Issued on Rights Offering On 20 December 2022 the Non-Renounceable Rights Offering closed, with 5,210,834 share options granted to participants on 29 December 2022. No expense has been recognised in respect of these options for the period ended 30 June 2023, as they were issued to equity shareholders in their capacity as shareholders. The options have an exercise price of $0.08 and vest over a two-year period. 40 Identitii Limited Annual Report FY23 Notes to the Consolidated Financial Statements 14. Share based payment arrangements (continued) (iii) Share-based Payment Valuations Year Ending 30 June 2022 The following inputs were used in the measurement of the fair values at grant date of the share-based payment awards granted during the prior financial year. Director options Supplier options Nicholas Armstrong Steven James PAC Partners Number of options 1,000,000 1,000,000 5,000,000 Fair value at grant date Share price at grant date Exercise price $0.0161 $0.0920 $0.2500 $0.0161 $0.0920 $0.0158 $0.0950 $0.2500 $0.2400 Expected volatility (1) 75 – 85% 75 – 85% 70 – 80% Contractual life of options (years) Expected dividends Risk free rate (2) 3 Nil 3 Nil 2 Nil 0.19% 0.19% 0.78% Valuation method Black-Scholes Black-Scholes Black-Scholes Expiry date 8 July 2024 8 July 2024 21 January 2024 Employee Incentive Plan options Number of options 75,000 75,000 75,000 150,000 150,000 187,500 375,000 187,500 150,000 Fair value at grant date $0.0457 $0.0594 $0.1110 $0.1045 $0.0603 $.0441 $.0441 $0.0467 $0.0392 Share price at grant date $0.0910 $0.1100 $0.1750 $0.1600 $0.1050 $0.0790 $0.0790 $0.0790 $0.0720 Exercise price $0.1500 $0.1500 $0.1500 $0.1500 $0.1500 $0.1500 $0.1500 $0.1500 $0.1500 Expected volatility (1) 80-90% 80-90% 80-90% 80-90% 80-90% 80-90% 80-90% 80-90% 80-90% Contractual life (yrs) Expected dividends 5 Nil 5 Nil 5 Nil 5 Nil 5 Nil 5 Nil 5 Nil 5 Nil 5 Nil Risk free rate (2) 0.77% 0.59% 0.63% 1.44% 1.47% 1.75% 1.75% 1.75% 2.14% Valuation method Black- Scholes Black- Scholes Black- Scholes Black- Scholes Black- Scholes Black- Scholes Black- Scholes Monte Carlo Black- Scholes Expiry date 1 Jul 2026 1 Jul 2026 1 Jul 2026 1 Jul 2026 7 Jan 2027 2 Mar 2027 2 Mar 2027 2 Mar 2027 14 Mar 2027 Vesting conditions (A) (A) (A) (A) (A) (B) (C) (D) (A) (1) Expected volatility - a measure of the amount by which a share price is expected to fluctuate during a period and is based on the historical share price volatility of a group of comparable companies, including Identitii Limited, as at the grant date. (2) Risk free rate - the yield available on Australian Government bonds with a term comparable to the likely term of the options. (A) Share options vest in three equal annual tranches, commencing from grant date, subject to continued service with the Company. (B) Share options vest in four equal annual tranches, commencing from grant date, subject to continued service with the Company. (C) 187,500 share options vest when the Group records revenue of at least $5 million in the preceding twelve month period and 187,500 share options vest when the Group records revenue of at least $10 million in the preceding twelve month period. (D) Share options vest when the Company’s closing share price on the ASX is at or above $0.46 per share for twenty consecutive trading days. 41 Identitii Limited Annual Report FY23 Notes to the Consolidated Financial Statements 14.Share based payment arrangements (continued) Accounting Policy - Share-based payments Equity Incentive Plan (EIP) On 10 January 2018 the Group established the Equity Incentive Plan (EIP). This is a long-term plan under which share options or performance rights to subscribe for shares may be offered to eligible employees and consultants as selected by the Directors at their discretion. Currently only share options have been awarded under the EIP. Under the EIP, one share option entitles the holder to one share in the Company subject to vesting conditions such as the satisfaction of performance hurdles and/or continued employment. The Board have the discretion to settle share options with a cash equivalent payment. Participants in the EIP will not pay any consideration for the grant of the share option unless determined otherwise. Share options will not be listed and may not be transferred, assigned or otherwise dealt with unless approved by the Board. If the employee’s employment terminates before the share options have vested, the share option will lapse, unless approved otherwise by the Board. Eligible employees holding a share option pursuant to the EIP have no rights to dividends and are not entitled to vote at shareholder meetings until that share option is vested and, where required, exercised. Share based payment arrangements Equity-settled share-based compensation benefits are provided to employees. Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. The cost is measured at fair value on grant date using a suitable option pricing model such as Black Scholes, Binomial or Monte Carlo. The grant date fair value of equity settled share-based payment arrangements is recognised as an expense, with a corresponding increase in equity over the vesting period of the award. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and non- market performance conditions at the vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is measured to reflect such conditions and there is no true up for differences between expected and actual outcomes. Market conditions are taken into consideration in determining fair value. Therefore, any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied. If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increase the total fair value of the share-based compensation benefit as at the date of modification. The share-based payment reserve in equity is transferred to retained earnings when the unexercised option expires. Critical accounting judgements, estimates and adjustments 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 the Black Scholes option pricing model, using the assumptions noted above. 15. Non-controlling interest The below table summarises the information relating to each of the Group’s subsidiaries that have a material non- controlling interest (NCI), after intra-group eliminations. On 15 November 2021, the Company’s ownership interest in Payble further decreased from 60.1% to 44.2% and it was determined the Company no longer retained control of Payble. 42 Identitii Limited Annual Report FY23 Notes to the Consolidated Financial Statements 15.Non-controlling interest (continued) Reconciliation of NCI Balance 1 July Initial investment in subsidiary Loss allocated to NCI NCI acquisition without loss of control Loss of control of subsidiary Balance 30 June 16. Reconciliation of cash flows from operating activities Loss for the year Adjustments for: Equity settled share-based payment transactions Annual leave provision Depreciation and amortisation Loss on disposal of asset Gain on loss of control of subsidiary Bank revaluation and unrealised FX gains and losses Interest (income)/expense and other finance costs Bad and doubtful debts Equity settled consulting fees Share of equity-accounted investee loss Other non-cash generating expenses Changes in: Trade and other receivables R&D tax receivable Contract assets Trade and other payables Employee provisions Contract liabilities 30 June 2023 $ 30 June 2022 $ - - - - - - 363,485 - (163,069) - (200,416) - 30 June 2023 $ 30 June 2022 $ (5,997,504) (4,997,031) 405,977 - 37,054 257 - (62,033) (21,129) (749) 123,750 430,866 (12,592) 541,737 8,259 116,222 12,469 (1,860,064) (105,815) 67 (1,825) 67,000 267,246 (9,329) (5,096,103) (5,961,064) 300,682 (296,121) 120,250 (61,288) (229,813) 58,667 (131,139) (288,644) (93,850) 373,208 6,732 80,062 Net cash from operating activities (5,203,726) (6,014,695) 43 Identitii Limited Annual Report FY23 Notes to the Consolidated Financial Statements 17. Financial instruments – fair values and risk management i. Accounting classifications and fair values The carrying amount of the Group’s financial assets and financial liabilities is a reasonable approximation of fair value due to their short-term nature. ii. Financial risk management The Group has exposure to the following risks arising from financial instruments: • • • credit risk (see ii (b)) liquidity risk (see ii (c)) foreign currency risk (see ii (d)) a) Risk management framework The Company’s Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Board of Directors has established the Audit and Risk Committee, which is responsible for developing and monitoring the Group’s risk management policies. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies are reviewed regularly to reflect changes in market conditions and the Group’s activities. b) Credit risk Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Group’s receivables from customers. The carrying amount of financial assets and contract assets represents the maximum credit exposure. Impairment losses on financial assets and contract assets recognised in profit or loss are as follows: Decrease in impairment loss on trade receivables and contract assets arising from contracts with customers Trade receivables and contract assets 30 June 2023 $ 30 June 2022 $ (749) (1,825) The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. Management also considers the factors that may influence the credit risk of its customer base including the default risk associated with the industry and country in which the customers operate. The Group limits its exposure to credit risk from trade receivables by establishing a maximum payment period of 45 days for corporate customers. Expected credit loss assessment for corporate customers The Group uses a provision matrix to measure ECLs of trade receivables from corporate customers, which comprise of a small number of large balances. The Group is still in its early stages of revenue generation with a small customer base and therefore doesn’t have extensive historical information on which to base its loss rates. Its loss rates are management’s best estimate based on industry comparatives and will be updated at every reporting period to reflect current and forecast credit conditions including other business, financial and economic factors. To date no customer balances have been written off or credit impaired at the reporting date. For the year ending 30 June 2023, an ECL of nil (2022: Nil) has been assessed as the closing trade receivables balance of $17,046 is considered immaterial. 44 Identitii Limited Annual Report FY23 Notes to the Consolidated Financial Statements 17. Financial instruments – fair values and risk management (continued) Cash and cash equivalents and other receivables The Group held cash and cash equivalents of $1,287,005 at 30 June 2023 (30 June 2022: $5,074,133). The majority of cash and cash equivalents are held with financial institution counterparties, which are rated A- to AA, based on credit agency ratings. The Group considers its cash and cash equivalents to have low credit risk based on the external credit ratings of the counterparties. The Group held other receivables of $194,662 at 30 June 2023 (30 June 2022: $248,088). The Group considers its other receivables to have low credit risk based on historical data available, the reputation of the counterparties and the systematic ease with which the receivables are recoverable. The Group did not recognise an impairment allowance for cash and cash equivalents and other receivables during the current and prior year under review. Movements in the allowance for impairment in respect of trade receivables, contract assets and other financial assets The movement in the allowance for impairment in respect of trade receivables, contract assets and other financial assets during the year was as follows. Balance at 1 July Net remeasurement of loss allowance Balance at 30 June c) Liquidity risk 30 June 2023 $ 30 June 2022 $ 749 (749) - 2,574 (1,825) 749 Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due without incurring unacceptable losses or risking damage to the Group’s reputation. The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate, but manageable, borrowing facilities are maintained. The Group also monitors the level of expected cash inflows on trade and other receivables together with expected cash outflows on trade and other payables. Exposure to liquidity risk The following are the contractual maturities of financial liabilities at the reporting date. The amounts are gross, undiscounted and include contractual interest payments where applicable. 30 June 2023 Carrying amount $ Total $ 2 months or less $ 2-12 months $ 12 months or more $ Contractual cash flows Trade and other payables 583,029 583,029 583,029 - Borrowings 980,000 980,000 - 980,000 1,563,029 1,563,029 583,029 980,000 - - - 45 Identitii Limited Annual Report FY23 Notes to the Consolidated Financial Statements 17. Financial instruments – fair values and risk management (continued) Contractual cash flows 30 June 2022 Carrying amount $ Total $ 2 months or less $ 2-12 months $ 12 months or more $ Trade and other payables 644,317 644,317 644,317 644,317 644,317 644,317 - - - - d) Foreign currency risk The Group is exposed to transactional foreign currency risk to the extent that there is a mismatch between the currencies in which sales, purchases, receivables, and borrowings are denominated and the respective functional currencies of the Group companies. The Group’s exposure to foreign currency risk is concentrated primarily in cash and trade receivables as some customers are invoiced in United States Dollars (USD). The Group reduces this foreign currency risk by using the USD from customer sales to pay expenses that are incurred in USD. Other foreign currency risk is not material at present. Exposure to foreign currency risk The following is the summary quantitative data about the Group’s exposure to currency risk as reported to the management of the Group: Cash and cash equivalents 588,140 1,065,395 30 June 2023 USD 30 June 2022 USD Trade receivables Trade payables Net statement of financial position exposure Sensitivity analysis - (60,219) 527,921 36,366 (4,495) 1,097,266 If foreign exchange rates were to increase / decrease by 10 per cent from rates used to determine fair values as at the end of the reporting period, assuming all other variables that might impact fair value remain constant, then the impact on profit or loss for the year would be as follows: Impact on profit after tax 10% increase in USD/AUD exchange rate 10% decrease in USD/AUD exchange rate 30 June 2023 $ 30 June 2022 $ 22,311 (10,993) 159,283 (144,803) There has been no change in assumptions or method used to determine foreign currency sensitivity from the prior year. 18. Commitments The Group has no commitments or contingencies. 46 Identitii Limited Annual Report FY23 19. Auditors’ remuneration Notes to the Consolidated Financial Statements During the financial year the following fees were paid or payable for services provided by RSM, the auditor of the Company, its network firms and unrelated firms: 30 June 2023 $ 30 June 2022 $ Audit and review services RSM (Australia) Audit and review of financial statements 63,750 68,420 RSM (Hong Kong) Audit and review of financial statements 5,685 69,435 5,299 73,719 47 Identitii Limited Annual Report FY23 20. Related parties Notes to the Consolidated Financial Statements Parent and ultimate controlling party Identitii Limited is the parent and ultimate controlling party of the Group. Transactions with Key Management Personnel (KMP) a) KMP compensation KMP compensation comprised the following: Compensation by category Short-term employment benefits Post-employment benefits Other long-term employment benefits Termination benefits Share-based payments 30 June 2023 $ 30 June 2022 $ 597,438 43,333 20,159 - 162,568 823,498 532,824 40,560 20,069 12,974 191,433 797,860 Compensation of the Group’s KMP includes salaries, non-cash benefits and mandatory contributions to post- employment superannuation and provident funds. Certain Directors as well as senior employees of the Group are entitled to participate in the Equity Incentive Plan. b) KMP transactions KMP of the Company control approximately 1% of the voting shares of the Company as at 30 June 2023. Terms and conditions of transactions with KMP and their related parties are no more favourable than those available, or which might reasonably be expected to be available, on similar transactions to non-KMP related entities on an arm’s length basis. The aggregate value of transactions and outstanding balances related to KMP and entities over which they have control or significant influence were as follows: Transaction values for year ended 30 June Balance outstanding as at 30 June Transactions 2023 $ 2022 $ Loan from Director – John Rayment - 20,000 2023 $ - 2022 $ - 21. List of subsidiaries The table below lists the controlled entities of the Group as at 30 June 2023. Name Principal place of business Ownership interest Identitii Hong Kong Limited Hong Kong 100% 100% 30 June 2023 30 June 2022 The Company provided $6,152 (30 June 2022: $79,966) of financial support during the year to Identitii Hong Kong Limited to assist with the payment of current and ongoing general operating costs mostly in relation to salaries and employee benefit expenses. 48 Identitii Limited Annual Report FY23 Notes to the Consolidated Financial Statements 22. Investment in associates Investment in associates is accounted for using the equity method of accounting. Information relating to associates that are material to the Group are set out below: Name Principal place of business Ownership interest 30 June 2023 30 June 2022 Payble Pty Ltd Australia 32.8% 44% The following table summarises the financial information of Payble, as included in its own financial statements, and reconciles it to the carrying amount of the Group’s interest in Payble. The information presented in the 30 June 2022 table includes the results of Payble for the period from 15 November – 30 June 2022 when Payble was an equity-accounted investee. Summarised statement of financial position Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets Summarised statement of profit or loss and other comprehensive income Loss after tax Total comprehensive loss Reconciliation of the carrying amount in associate Opening carrying amount Fair value on date control was lost Forgiveness of loan in exchange for shares Share of associate loss after tax Closing carrying amount Payble Pty Ltd 30 June 2023 $ 30 June 2022 $ 679,891 1,017,908 1,697,799 348,248 - 604,228 982,777 1,587,005 223,955 779,144 348,248 1,003,099 1,349,551 583,906 1,312,416 1,312,416 604,628 604,628 903,154 - - 1,170,400 920,019 (430,866) 1,392,307 - (267,246) 903,154 49 Identitii Limited Annual Report FY23 Notes to the Consolidated Financial Statements 22. Investment in associates (continued) Accounting Policy - Associates Associates are entities over which the Group has significant influence but not control or joint control. Investments in associates are accounted for using the equity method. Under the equity method, the share of the profits or losses of the associate is recognised in profit or loss and the share of the movements in equity is recognised in other comprehensive income. Investments in associates are carried in the statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associate. Goodwill relating to the associate is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Dividends received or receivable from associates reduce the carrying amount of the investment. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including any unsecured long-term receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. The Group discontinues the use of the equity method upon the loss of significant influence over the associate and recognises any retained investment at its fair value. Any difference between the associate's carrying amount, fair value of the retained investment and proceeds from disposal is recognised in profit or loss. 23. Parent entity disclosures As at, and throughout, the financial year ended 30 June 2023, the parent entity of the Group was Identitii Limited. Results of parent entity Total comprehensive loss for the year (5,983,799) (6,191,579) 30 June 2023 $ 30 June 2022 $ Financial position for the parent entity Current assets Total assets Current liabilities Total liabilities Total equity of the parent entity Share capital Reserves Retained losses Total equity Contingent liabilities 4,023,778 5,493.114 2,121,151 2,121,151 8,050,015 8,944,678 1,373,686 1,373,686 33,438,181 32,934,833 4,292,785 3,900,514 (34,359,003) (29,264,355) 3,371,963 7,570,992 The parent entity had no contingent liabilities as at 30 June 2023 and 30 June 2022. Capital commitments The parent entity had no capital commitments for property, plant, and equipment as at 30 June 2023 and 30 June 2022. 50 Identitii Limited Annual Report FY23 24. Fair value measurements Notes to the Consolidated Financial Statements The carrying amount of the Group’s financial assets and financial liabilities is a reasonable approximation of fair value. 25. Subsequent events On 5 September 2023, the Company announced that its Rights Issue closed on 30 August 2023, and raised $1,338,160 before costs, with a shortfall balance of $789,735. The Rights Issue was a pro-rata non-renounceable entitlement issue to eligible shareholders of one (1) New Share for every one (1) Existing Share held by eligible shareholders on the Record Date, at an issue price of $0.01 per New Share. 133,816,609 New Shares were issued and allotted on 5 September 2023, and the Company expects the shortfall to be placed shortly. On 21 September 2023, the Company announced that it had successfully completed the Shortfall Offer, raising a further $789,735 via the issue of shortfall shares at the issue price of $0.01 per Share, bringing the total capital raised under the Rights Issue to $2,127,895 before costs. On 28 September 2023, the Company announced $1.0M in annualised cost savings, to further extend its cash runway. The operational changes to realise $1.0M in annualised cost savings have all been put into effect, and the Company expects to see the resulting decreases in cash outflows materialise in the coming quarters. Savings have been realised in cloud infrastructure (consolidating multiple suppliers), legal costs (finalising patent strategy work), operational costs (office downsizing and licence cancellations) and headcount (including some reallocations to offshore roles). Additionally, all three Non-Executive Directors on our Board have elected to reduce the cash component of their remuneration by 25%, substituting the reduced cash component for ordinary shares in the Company, subject to shareholder approval. Other than the matters discussed above, there has not arisen in the interval between the end of the year and the date of this report any item, transaction, or event of a material and unusual nature likely, in the opinion of the Directors, to affect significantly in future financial years the operations of the Group, the results of those operations, or the state of affairs of the Group. 51 Identitii Limited Annual Report FY23 Directors’ Declaration 1. In the opinion of the Directors of Identitii Limited (‘the Company’): Directors’ Declaration a. the consolidated financial statements and notes that are set out on pages 20 to 51 are in accordance with the Corporations Act 2001, including: i. giving a true and fair view of the Group’s financial position as at 30 June 2023 and of its performance for the financial year ended on that date; and complying with Australian Accounting Standards and the Corporations Regulations 2001; and ii. b. There are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. 2. 3. The Directors draw attention to Note 1 to the financial statements, which includes a statement of compliance with International Financial Reporting Standards. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2023. Signed in accordance with a resolution of the Board of Directors: Timothy Phillipps Chairperson Sydney 29 September 2023 52 INDEPENDENT AUDITOR’S REPORT To the Members of Identitii Limited Opinion RSM Australia Partners Level 13, 60 Castlereagh Street Sydney NSW 2000 GPO Box 5138 Sydney NSW 2001 T +61 (0) 2 8226 4500 F +61 (0) 2 8226 4501 www.rsm.com.au We have audited the financial report of Identitii Limited (the Company) and its controlled entity (the Group), which comprises the consolidated statement of financial position as at 30 June 2023, 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 30 June 2023 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 Group, would be on 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. Material Uncertainty Related to Going Concern We draw attention to Note 1 of the financial report, which indicates that the Group incurred a net loss of $5,997,504 during the year ended 30 June 2023. As stated in Note 1, these events or conditions, along with other matters as set forth in Note 1, indicate that a material uncertainty exists that may cast significant doubt on the Group's ability to continue as a going concern. Our conclusion is not modified in respect of this matter. 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 53 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 Equity method of accounting for investments with significant influence Refer to Note 8 and Note 22 in the financial statements. Investments in associates are carried at a value of $1,392,307 after to equity of $920,019 loans to the associate and accounting for the company shares of losses of $430,866. the conversion It was determined in FY22 that the Company no longer retained control of Payble and, as a result, to an Payble went investment in associate. from being a subsidiary its right During the FY23 financial year, the Company exercised the outstanding intellectual property license fee, amounting to $0.9m payable by the associate to Identitii into additional equity. to convert As of 30 June 2023, the Company’s investment in Payble was 32.8%. We consider this to be a key risk due to the following reasons: • • The variability of the Company’s interest for the period as a result of conversion of the loan and x15venture’s further investment. Accounting for investments in associates is non-routine and can be technically complex in nature. Our audit procedures included the following: • Obtained and reviewed the Subscription and Set-off Deed signed between the Company and Payable. • Obtained and reviewed managements’ calculation for the loan conversion including agreements to the Subscription and Set-off Deed. • Obtained and reviewed the application of equity method of accounting to the Company’s share of equity-accounted investee losses. • Obtained the financial statements for Payble and recalculated the share of associate loss after tax. • Verified that the amounts and disclosures in financial statements were Note 22 of consistent with the financial statements of Payble. the • Critically evaluated managements assessment of whether the asset was impaired. • Assessing presentation requirements Standards. the compliance of the disclosures with Australian financial the Accounting and of 54 Key Audit Matter How our audit addressed this matter Share-based payments – Refer to Note 14 in the financial statements. The Group recognised a share-based payment expense of $405,977 in the statement of profit or loss for the year ended 30 June 2023 under various share-based payment arrangements. Management has accounted for these arrangements in accordance with AASB 2 Share-Based Payments. Accounting for share-based payments and the share option reserve are considered key audit matters due to the following: • • Accounting for share-based payments is non-routine and complex. into inputs There is significant judgement in relation to the the valuation models, including the likelihood of vesting conditions and performance hurdles being met, and the appropriate valuation methodology to apply. Our audit procedures in relation to the share-based payments included the following: • Making enquiries of management about the the the rationale behind, nature of, and instruments issued. • Reviewing the terms and conditions of the instruments issued. • Reviewing managements expert's valuation their report, giving due consideration independence and capability. to • Reviewing the valuation methodology to ensure it is in compliance with AASB 2. • Verifying the mathematical accuracy of the underlying model. • Management engaged a third-party expert for the valuation process. • Reviewing the inputs to the valuation model for reasonableness. • Critically evaluating the key assumptions used, considering the market, the grant date share the price and current date share price, expected volatility in the share price, the vesting period, and the number of instruments expected to vest. • Recalculating the value of the share-based payment expense to be recognised and the reserve balance, for accuracy, factoring in any cancellations, modifications, expiry, or vesting. • Reviewing the adequacy of the relevant in disclosures, respect of judgements made, in the financial statements. the disclosures including 55 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 30 June 2023 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 Group 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. 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 pages 12 to 18 of the directors' report for the year ended 30 June 2023. In our opinion, the Remuneration Report of Identitii Limited, for the year ended 30 June 2023, complies with section 300A of the Corporations Act 2001. 56 Responsibilities The directors of the Group 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. RSM AUSTRALIA PARTNERS G N Sherwood Partner Sydney, NSW Dated: 29 September 2023 57 Identitii Limited Annual Report FY23 Additional ASX Information Additional ASX Information In accordance with ASX Listing Rule 4.10, the Directors provide the following information as at 25 September 2023. Securities on Issue Identitii has the following securities on issue as at 25 September 2023: Type Security ASX Listed ASX Listed Unlisted Unlisted Fully paid ordinary shares (ID8) Options exercisable at $0.08 and expiring 29 December 2024 (ID8O) Options Performance Rights Number of securities 425,588,014 5,210,834 Number of security holders 2,110 136 22,457,685 3,800,000 31 11 Voting rights Each ordinary share is entitled to one vote when a poll is called, otherwise each member present at a meeting or by proxy has one vote on a show of hands. Distribution schedule of the number of holders of ordinary shares Holdings Ranges Holders Total Units 1-1,000 1,001-5,000 5,001-10,000 10,001-100,000 100,001-9,999,999,999 57 371 386 912 384 16,839 1,210,047 2,961,570 34,231,518 387,168,040 Totals 2,110 425,588,014 % 0.000 0.280 0.700 8.040 90.970 100.000 Marketable Parcels Identitii has 1,421 shareholders holding less than a marketable parcel 41,666 shares each (i.e., less than $500 per parcel of shares) based on the closing price of AUD 0.012 on 22 September 2023 representing a total of 425,588,014 shares. On-Market Buy-Back Identitii is not undertaking an on-market buy-back. Restricted securities Identitii does not have any restricted securities on issue. 58 Identitii Limited Annual Report FY23 Twenty largest shareholders Shareholder Additional ASX Information Number of shares held % of issued capital 1 2 3 4 5 6 7 8 9 13 14 BEAUVAIS CAPITAL PTY LTD 70,668,757 16.605% LINK TRADERS (AUST) PTY LTD MR FREDERICK BART O'DWYER TECHNOLOGY TRAINING PTY LIMITED 20,822,412 4.893% 19,631,740 4.613% 18,000,000 4.229% MR CAMERON BEAVIS 14,025,030 3.295% BART SUPERANNUATION PTY LIMITED <4F INVESTMENTS SUPERFUND A/C> 11,608,500 2.728% MR EVAN PHILIP CLUCAS & MS LEANNE JANE WESTON 8,976,000 2.109% PAT PROPERTY PTY LTD CITICORP NOMINEES PTY LIMITED 10 FANE LEVY INVESTMENTS PTY LTD 11 ELOREY PTY LTD 12 MR SURESHKUMAR RAJALINGAM JAMBER INVESTMENTS PTY LTD 6,829,837 1.605% 5,991,064 1.408% 5,937,500 1.395% 4,771,824 1.121% 4,463,702 1.049% 3,250,000 0.764% BANNABY INVESTMENTS PTY LIMITED 3,149,193 0.740% 15 MISS MICHELLE JOHANNE SEAGROTT 3,027,493 0.711% 16 MR STEVEN ROBERT HEATH 3,000,000 0.705% 17 PINTIA PTY LTD 2,973,754 0.699% 18 THIRD PARTY NOMINEES PTY LTD 2,904,725 0.683% 19 MR HANS RICHARD EBERSTALLER 2,800,000 0.658% 20 SUPAROSE PTY LTD 2,588,762 0.608% Total Securities of Top 20 Holdings 215,420,293 50.617% Total Securities 425,588,014 59 Identitii Limited Annual Report FY23 Additional ASX Information Substantial shareholders The following shareholders have disclosed a substantial holding: Holder Name Cameron Beavis Fred Bart Link Traders (Aust) Pty Ltd O’Dwyer Technology Training Pty Limited Number of Shares % Voting Power 84,693,787 31,240,240 21,002,412 18,000,000 19.90% 9.0% 6.06% 5.19% 60 Corporate Directory Directors Timothy Phillipps, Chairperson John Rayment Rhyll Gardner Simon Griffin Company Secretary Elissa Hansen Registered Office 388 George Street Sydney NSW 2000 Telephone: (02) 9056 4160 ABN 83 603 107 044 Company Website https://identitii.com/ Auditors RSM Australia Pty Ltd Level 13 60 Castlereagh Street Sydney NSW 2000 Solicitors Law Squared Level 13 50 Carrington St Sydney NSW 2000 Securities Exchange Listing Identitii Limited shares are Listed on the Australian Securities Exchange. ASX Code: ID8 Share Registry Boardroom Pty Limited Level 12 225 George Street Sydney NSW 2000 Telephone: (02) 9290 9600 61 62 

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