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Annual Report 2020

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Annual Report 2020 Highlights Message from the CEO and Chairman Opyl Leadership Opyl Platform Technologies Director’s Report Auditor’s Declaration Statement of profit or loss and other income Statement of financial position Statement of changes in equity Statement of cash flows Notes to the financial statements Directors' declaration Auditor’s Report Shareholder information Corporate Directory 6 7 11 14 16 31 33 34 35 36 37 65 66 70 75 Share Register: Automic Pty Ltd Level 5, 126 Phillip Street Sydney NSW 2000, Australia Tel: +1300 288 664 (within Australia); +61 2 9698 5414 (outside Australia) Email: hello@automic.com.au Opyl Ltd | ABN 71 063 144 865 ASX:OPL Our mission is to improve health and clinical research by optimising digital and data assets to advance technologies for life. “ Opyl is utilising artificial intelligence, predictive analytics and real-world data from social media to disrupt, guide and accelerate, in a way the global health and medical research sector has not seen until now. Disruption is always uncomfortable, but there is a more accurate, faster, affordable and more personalised way to advance research and healthcare engagement. And we have the answer. “ Michelle Gallaher CEO, Opyl Ltd What we do Opyl’s core goal is to realise value from the scalable commercialisation of its two clinical trial optimisation platforms and our bespoke social media insights advisory offering to the global biopharma, medtech and health industry. Apply artificial intelligence and predictive analytics to optimise clinical trial design and improve investment outcomes Leverage social media and digital technologies to accelerate recruitment to clinical trials and support retention Deliver real-world insights from social media to support quality engagement, improved equity, and access to healthcare Our goals 1 Establish Opyl as the market leader in the novel digital clinical trial optimisation and deep social media health insights solutions in the USD$50Bn clinical trials market 2 Complete development and commercialisation of Opyl platform technologies and services generating exponential value for stakeholders 3 Attract and develop the best talent, to build a creative, ethical, ambitious, accountable, and collaborative culture 4 Work within and contribute to an informed and ethical digital health industry ecosystem Highlights 01 Clinical Trial Design/Prediction platform achieved proof of concept and accelerated into COVID-19 data trial. Currently at stage 3 of 4 stages toward full market launch. 02 Entered global non- exclusive scale agreement with huumun to increase client acquisition. 03 AI-driven social media insights consulting service attracts first major biopharma clients. 04 Commenced development of clinical trial recruitment platform to compliment social media recruitment services already in operation. 05 Accessed R&D tax incentive to further support research agenda. 06 Appointment of Mark Ziirsen to the Board. 6 Message from the CEO and Chairman Dear Shareholders, We are pleased to share with you our achievements over the past year and an update on our strategic goals and objectives for this current fiscal year and beyond. Over the course of an exceptionally eventful year, Opyl has delivered strong signs of growth and development, capitalising upon the increased global interest in digital tools to accelerate commerce and operational efficiencies and attention on the application of artificial intelligence and predictive analytics in global health care. Opyl has capitalised on the advantage the COVID-19 environment offered as the sector turned to digital solutions, to accelerate its core platforms applying AI and machine learning, in support of a more efficient healthcare industry and thus greater benefits for patients and physicians. The Board and Management team are pleased with the progress this year in building a tangible and attractive novel multiple platform and service offering, that unlock revenue from both a consulting model early on and an enterprise model as the opportunities are scaled. The leadership group would like to thank the Opyl team for their hard work, and we look forward to appropriately increasing our capacity as we continue to grow our business. The company name change in late November 2019 from ShareRoot to Opyl, marked a key point for the business positioning the organisation to take advantage of the escalating interest in the global digital health market and the abilities within Opyl. We thank shareholders for their ongoing support. In the past 12 months we have taken enormous steps forward in controlling costs whilst growing the scalable potential in our business, developing improvements to our services range and access into key markets in support of deeper and larger client acquisition. The company now has a firm foundation for ongoing growth into the new financial year and beyond. Michelle Gallaher CEO Dr Julian Chick Chairman 7 A year in review as we accelerate into future growth What we do Opyl is a business that leverages AI and machine learning to provide real-life market and predictive insights to create efficiencies in the healthcare industry. Our platforms and services are designed to enable patients, researchers and physicians to progress clinical research and access to care more precisely and efficiently as well as being more affordable and equitable. Delivering to plan, creating financial sustainability Opyl exceeded its financial sustainability and opportunity goals; building a pipeline of three core service offerings with scale potential, reducing operating loss down to 70.2% (compared to the previous period) and improving cash position with a successful rights issue and share placement in July 2019 raising $1.2million before capital raising costs which was used to invest in the early stage R&D pipeline, remove debt and improve working capital. Opyl opened a further share placement in June 2020 raising $730,000 before costs to invest in sales and implementation support, and the next development stage of the clinical trial recruitment and prediction platform beta roll out. Opyl forecasted a cash positive-neutral position by the end of Q4 and would have achieved the target if not for the direct impact on COVID-19 on several retainer and project customers. The variance included timing issues on customer receipts during the final quarter of the year, much of which will be reflected in Q1 and Q2. Overall, the company is heading in the right direction with significant increase in new customer enquiries (over 500% in June quarter) combined with ongoing containment and management of the cost base. Revenue declined by 33% to $739,000 compared to the same period last year, partly due to the shutdown of the US ShareRoot entity and Ludomade (previous acquisition) eliminating the unproductive, loss making business units The early impact of COVID on retainer customers had an impact with the loss of three customers, also contributing to the temporary decline in customer receipts. COVID-19 a driver of digital transformation and scale opportunity The company continues to build its profile and brand mark in the sector under Opyl Limited, which turned out to be perfect timing to enable the company to capitalise on the market conditions that were about to change with the rise of COVID-19. As biopharma and medtech sales teams were grounded for months during the pandemic, unable to visit doctors or attend medical and scientific conferences, marketing departments turned their attention to how social media networking sites could deliver valuable market intelligence, support sales and product awareness and recruit to clinical trials. Opyl was in the right place, with the right offering at exactly the right time as the Opyl platforms provide the digital infrastructure to deliver these activities for clients. With the rise of social distancing, the use of social media in healthcare sectors rose in parallel. Social networking sites reported gains of 50%-1000% as the world sought to stay connected to family and friends, to news and to online trade. Coronavirus made social media in healthcare more valuable than ever with healthcare providers using networking sites to share real world clinical data in an effort to collaborate to reduce infections and save lives. 8 Opyl identified the potential in creating scale alliances in being able to enter the global biopharma market more swiftly. The company entered into a two-year non-exclusive collaboration agreement with huumun, an established UK-based sales and marketing company which is working well, unlocking revenue and global biopharma client acquisition opportunities that has expanded steadily over time. This partnership has already delivered three revenue generating projects into the Opyl business. Advancing the research pipeline and commercialising platforms Following the outcome and recommendations of the strategic review late in the previous financial year, Opyl shifted its research and development focus into more responsive, agile products for the digital health market, leveraging the skills and relationships within the leadership team specifically in the artificial intelligence, life sciences and clinical trials market. The Opyl team parsimoniously advanced a healthy R&D pipeline of three novel artificial intelligence platforms, launching two of the beta- stage platforms into the Opyl client services offering, initiating the first critical stage of a scaled roll out and early revenue via a consulting model. The first novel platform technology was a deep social media listening market research tool and methodology, combined with the know-how of the strategic and creative team working in Opyl client services. This offering yielded pleasing early revenue as it was rolled out in late 2019 attracting new clients toward the end of the period leveraged via the huuman alliance. Clinical trial prediction and design optimisation As announced to the market on 19 February 2020, the company successfully completed the first critical proof-of-concept stage of a second algorithm-based software interface which can predict the likelihood of a clinical trial completing each phase and endpoints, and inform clinical trial designers on steps to take to improve the likelihood of success. The model ingested 300,000 registered clinical trials across multiple therapeutic areas, drugs, devices and diagnostics and trial protocol approaches. The second data trial on 475 COVID-19 vaccines and therapies in clinical development took place in August, evaluating the probability of success of candidates, important in identifying early procurement opportunities and potential return on investment in major clinical research initiatives. A further data trial is planned before the end of the 2020 calendar year. As with the social media insights tool, the Opyl clinical trial prediction model will be commercialised initially on a project-to-project consulting basis with future development designed to deliver an enterprise subscription model, aimed at pharmaceutical, biotechnology, government, hospitals, universities and research institutes, medical device companies, contract research organisations (CROs), fund managers and investment houses that can use the platform to enhance, refine and improve clinical studies, improve efficiencies and gain insight into clinical trial outcomes and how these can be improved. 9 Clinical trial recruitment services complimented with a third platform Toward the conclusion of the period Opyl began construction of a third novel digital platform – for clinical trial recruitment. One of Opyl’s great strengths is in working with clients to improve clinical trial recruitment and study compliance. Opyl services currently undertakes recruitment projects for customers, leveraging social media to identify and recruit participants into Phase I, II and III trials. Opyl’s service team expertise is unique in the sector and often called upon to rescue underperforming trials, addressing a very significant and expensive failure point in the life sciences market. A digital recruitment platform will augment this service, offering a scalable solution that will increase the revenue and profit opportunity. Board and leadership changes Mr David Lilja was appointed company secretary in December 2019. There were no other changes to the board or leadership team during the period. Since the conclusion of the financial year, Mr Mark Ziirsen was appointed to the board in October 2020 and Mr Damon Rasheed moved into an Executive Director role to support greater focus on the clinical trial prediction and design tool moving into the advanced stages of development and preparing for fill market launch in 2021. The company had 8FTE at the commencement of the year and 5.6FTE at the conclusion of the year, contracting slightly in response to COVID-19 impacts. At the time of writing this report, Opyl has commenced a search for additional sales, operational and fulfilment services support to match increasing customer enquiries and onboarding of new projects. Likely developments and expected results of operations There is a huge business opportunity in front of Opyl with it unique platforms and expertise. The digital healthcare industry is a rapidly growing industry which is estimated to be worth in the billions and growing at over 15% per annum. As Opyl Limited continues to grow and rolls out the new service offering and continues to commercialise the clinical trial predictor tool and recruitment solutions, it will continue to increase its revenue by expanding revenue generating client services, advances new digital and data technology offerings in healthcare and optimise overall company functionality and sustainability. Opyl’s opportunity in the digital healthcare industry is enormous and it will look to capture more and more of this market with its new services in the market and anticipates that the coming year will see these converted to significant contracts and therefore increase overall company revenue validating the strategy and services offering. The future for Opyl looks strong and exciting. Our strength lies in our growing leadership position within the clinical trials sector as a disruptive organisation combining creativity, strategy, digital and artificial intelligence tools. Our challenge will be creating a path to market for a unique service opportunity in clinical trial efficacy and influencing wide-scale adoption in an inherently conservative market. We have begun this journey and determined to succeed. 10 Opyl leadership Michelle Gallaher CEO Dr Julian Chick Chairman With over 25 years of experience in the biopharmaceuticals and healthcare sector and deep professional global networks, Michelle is an award-winning and recognised leader in the Australian health innovation industries. For the past 15 years Michelle has worked at an executive level in biotechnology, most recently as CEO of the peak body for biotechnology and medtech in Victoria. Establishing The Social Science in 2014, selling to ShareRoot in 2018 and guiding the medical application of ShareRoot’s key platform technology (MediaConsent), Michelle has a clear view of the opportunity and challenges that digital transformation in healthcare offers. Michelle holds an allied health qualification in applied science from La Trobe University, a postgraduate Diploma in Business from RMIT and is completing a Global Executive MBA at Monash University. Michelle is a NED on a number of health and technology related and clinical trial-centric boards and co-founder of Women in STEMM Australia, Telstra Victorian Business Woman of the Year and Entrepreneur of the Year in 2017 and inducted into the Victorian Honour Roll for Women in 2018. Michelle is a Graduate of the Australian Institute of Company Directors and a Fellow of the Australian Institute of Management. Julian has over 20 years’ experience in capital markets and LSHC, on both the investor and operational side of businesses, giving him a unique understanding of technology companies’ value drivers, value inflection points and commercialisation strategies. Included in his previous roles, Julian has worked in funds management and venture capital and private funding. Julian’s funds under management grew from $115 million to over $300 million over a 5-year period, with an average annual return of over 20%. Julian has spent the past 15 years at an Executive level of life sciences companies across therapeutics, diagnostics and medical devices (including 8 early stage and start-up companies and achieved one trade sale exit of an Australian contract services organisation), multiple IPOs and public offerings in Australia and Singapore, 3 global product approvals (including through the US FDA and the European Medicines Agency) and launches. Julian serves and an Executive Director and NED on a number of technology and health-related boards. Julian has a BSci and PhD in Physiology from La Trobe University and Oxford University. 11 Damon Rasheed Executive Director Marat Basyrov NED Damon’s skills and expertise in data science and analytics have been applied to a wide range of industries, specifically in financial services and professional services where he co-founded one of Australia's leading data and artificial intelligence companies, Advantage Data. Damon is also the founder of Rate Detective, an Australian financial service comparison site specialising in life insurance, income protection insurance and home loans. Damon holds a Masters in Economics from the University of Melbourne and has been involved in many start-up internet businesses, regularly appears in the media as a commentator and at events as a professional industry speaker on the value of data and digital in the growing sharing economy. Prior to running his own businesses, Damon worked as an economist at the Australian Competition and Consumer Commission (ACCC). Marat is an experienced technology investor and serial entrepreneur, applying creative and technology-forward data and digital solutions across a large cross section of industries to solve complex digital and data challenges. As a Chief Executive Officer of artificial intelligence software and app provider, EdwayApps and Intelligent Profit Solutions, Marat has a track record of success through building a number of data-driven startup companies including Adevi, Creative Smart Hub and Tech4Data. Marat has a broad, high value professional network of technology developers, investors and collaborators across the globe. Marat holds a Bachelor of Business in Accounting and Management from Central Queensland University and is a Certified Practicing Accountant (Australia). 12 Mark Ziirsen NED Mark is an experienced non-executive director and chief financial officer with public companies. He brings a strong track record in delivering growth and operational improvement across multiple industry sectors (medtech/health, technology, consumer) and geographies, having worked extensively in Asia for more than 25 years. His strong finance and operations credentials are complemented by extensive corporate finance, governance, risk management, strategy, M&A and investor relations skills. Much of Mark’s work has involved guiding high growth and early stage companies. He served as non-executive director and chair of Respiri Limited, an eHealth SaaS company, and as non-executive director and chair of the Audit and Risk Committee of Orcoda Limited, a SaaS- based technology company. His executive career includes senior finance leadership roles with major ASX listed companies including Cochlear Limited, Aristocrat Leisure Limited, Coca-Cola Amatil Limited and Goodman Fielder Limited. Mark served as CFO and company secretary for Wiseway Group Limited where he successfully led the company through an IPO, listing on ASX. Immediately prior to that he was CFO of listed global medtech company, Anteris Technologies Limited and before that, Director of Finance and IT for Asia Pacific at hearing implant maker Cochlear Limited. He commenced his career with EY in business advisory, tax and management consulting. Mark’s qualifications include a Bachelor of Commerce, CPA designation and an MBA majoring in international business. He is also a member of the Australian Institute of Company Directors. Our People One of the most valuable assets at Opyl are our people and their ability to be creative, experiment, challenge and grow. We are a company working at the ‘sandy edge’ of innovation and digital disruption, therefore the mindset and culture that we work to create is one that supports behaviours and an ecosystem that can support our ambitious, disruptive vision whilst providing growth and challenge for the individual. Our employees bring skills and experience from diverse backgrounds, converging knowledge in a novel way that delivers the unique mix we require to be able to develop and deliver Opyl services and technologies. Diversity is very important at Opyl. Diversity means we often need to work much harder to understand each other, to be understood, to challenge and to and collaborate effectively. But we know that diversity and the thinking and behaviours that it demands delivers far better results, particularly when disrupting a conservative system and building something that has never been seen before. 13 Opyl Platform technologies and core service offering Opyl’s unique point of difference is in the application of artificial intelligence and social media in building solutions that addresses the two core reasons why clinical trials fail – poor trial protocol design and failure to recruit participants. By improving the probability of success for approximately 25,000 clinical trials launched each year, Opyl will not only deliver a vastly improved return on investment, but will play a key role in bringing medicines, diagnostics and devices to market faster, safer and ultimately more affordably. There are two functional streams within the Opyl business model: services and technologies. Opyl services generates revenue via consulting with both project and retainer clients. The services team currently work with international and local pharmaceutical and medtech clients, medical research institutes and governments. The services we offer include: Deep social media listening and insights analysis for biopharma, medtech and government Recruitment to clinical trials via social media Creative content and social media strategies for the healthcare and lifesciences sector According to a report by the Tufts Centre for the Study of Drug Development (a leading think-tank at Tufts University, USA) 80-90% of clinical trials fail to hit recruitment targets on time. And 27% of trial sites are unable to recruit a single patient. 14 Opyl technologies is research and development-centric and focussed on building novel platforms to support current client services and future scalable enterprise solution growth opportunities. Two core platforms are in development at Opyl: 1) Clinical trial prediction/protocol design platform, and 2) Clinical trial recruitment platform The clinical trial prediction and protocol design platform is positioned to augment the role of clinical trial protocol (the trial plan) designers within biopharma and medtech companies. The platform uses artificial intelligence and predictive analytics to model the likely outcome of a trial protocol and suggest ways in which trials can be modified to improve the likelihood of successfully meeting primary endpoints (targets), hitting recruitment targets and completing trials stages. There is a second market opportunity for the clinical trial design and prediction platform – the investment and funds management market. The platform can be used to monitor and evaluate investment portfolios. A major data trial was achieved in August, evaluating 475 COVID-19 active clinical trials, ranking trials most likely to succeed. A second data trial is planned for November evaluating a selection of cell therapy trials. The clinical trial prediction and protocol design platform is at stage 3 of 4 stages, and expected to be ready for market launch early in 2021. The clinical trial recruitment platform is designed to enhance the current Opyl service offering of recruitment via social media. The digital platform achieved minimum viable product (MVP) stage in June. Key features of the platform will include data capture of patients with an interest in clinical trial opportunities matching them to trials seeking participants, digital triage, and retention support. "Digital transformation of clinical trials is critical to improving productivity - artificial intelligence will be the key driver" Deloitte - Intelligent Clinical Trials, 2019 15 Director's Report The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'consolidated entity') consisting of Opyl Limited (referred to hereafter as the 'company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2020. Directors The following persons were directors of the company during the whole of the financial year and up to the date of this report, unless otherwise stated: Julian Chick - Chairman and Non-Executive Director Damon Rasheed - Executive Director Marat Basyrov - Non-Executive Director Principal activities During the period, the principal activities of the company were predominantly the continued development of its digital tools that improve the healthcare experience for patients, deliver deep market insights from social media data and improve the efficiency and value of clinical research process. The company continues to focus on implementing the key recommendations of the major strategic and technology review delivered in April 2019, recalibrating the business plan and service offering to focus on developing digital and data technologies and services addressing the escalating needs of the global healthcare sector. Dividends There were no dividends paid, recommended or declared during the current or previous financial year. 16 Opyl Limited Directors' report 30 June 2020 Review of operations The loss for the company after providing for income tax amounted to $925,847 (30 June 2019: $3,105,138). Opyl Limited delivered to expectations for the financial year ended 30 June 2020. Completing the year of realignment in the global digital health market, Opyl parsimoniously advanced a healthy R&D pipeline of three novel artificial intelligence platforms, launching two of the platforms into beta testing within the Opyl client services offering, initiating the first critical stage of a scaled roll out. Operational Progress End of year results delivered an overall improved cash position. Opyl delivered a significant reduction in operating loss, down 70.2% on the corresponding period, reflecting: ● ● the focusing of the strategic direction to digital health; and completion of the US shutdown, of both ShareRoot Operations (US) and Ludomade, eliminating unproductive and significant expenditure but also relinquishing a small amount of revenue from the US-based client services team. Revenue declined by 33% to $739,000 compared to the same period last year, predominantly due to the early impact of COVID19 of which indicators suggest will be recovered in future periods. Opyl completed a successful rights issue and share placement in July 2019 raising $1.2million before capital raising costs which was used to invest in the early stage R&D pipeline, remove debt and improve working capital. Opyl opened a further share placement in June 2020 raising $730,000 before costs to invest in sales and implementation support, and the next development stage of the clinical trial recruitment and prediction platform beta roll out Following the outcome and recommendations of the strategic review late in the previous financial year, Opyl shifted its research and development focus into more responsive, agile products for the digital health market, leveraging the skills and relationships within the leadership team specifically in the artificial intelligence, life sciences and clinical trials market. The first novel technology was a deep social media listening market research tool, combined with the know-how of the strategic and creative team working in Opyl client services. This offering yielded pleasing early revenue as it was rolled out in late 2019 and new client acquisitions toward the end of the period were sales associated with this offering. As announced to the market on 19 February 2020, the company successfully completed the first critical proof-of-concept stage of a second algorithm-based software interface which can predict the likelihood of a clinical trial completing each phase and inform clinical trial practitioners on steps to take to improve this likelihood. As with the social media insights tool, the Opyl clinical trial prediction model will be commercialised initially on a consulting services project basis with future development designed to deliver a subscription model, aimed at pharmaceutical, biotechnology, government, hospitals, universities and research institutes, medical device companies, Contract Research Organisations (CROs) and investment houses. Opyl is in preliminary discussion with several organisations in this space. St Vincent’s Hospital Office of Research in Melbourne have provided valuable advice and development feedback through stage one and have agreed to continue to participate in the continued development of the tool in future stages as per the Media Consent Clinical MOU signed over a year ago. Toward the conclusion of the period Opyl trialed a third novel digital platform designed to improve efficiencies in clinical trial recruitment via social media channels and retention of participants, extending upon current service offering in this space and addressing a very significant failure point in the life sciences market. The company name change in late November from ShareRoot to Opyl, marked the operational turning point for the business into the global digital health market, validated by the announcement and implementation of a two year revenue-share alliance with UK-based global marketing communication solution provider huumun in February 2020. Opyl forecasted a cash positive-neutral position by the end of Q4, and would have achieved the target if not for the direct impact on COVID-19 on a number of university-based clients who reduced scope or did not renew retainer agreements. The variance included timing issues on customer receipts during the final quarter of the year, much of which will be reflected in Q1 and Q2. 17 Opyl Limited Directors' report 30 June 2020 Q4 results demonstrated Opyl is heading in the right direction with significant increase in new client enquiries (over 500%) combined with cost base management. Though initially detrimental to Opyl revenues, the COVID-19 environment has been helpful for the business as many clients have increased their interest in accessing novel data and digital solutions to maintain sales, marketing, market research and clinical trial recruitment strategies. Software research and development relates to the development of a machine learning/artificial intelligence (AI) algorithm which can predict the likelihood of a clinical trial passing its primary objective. An emerging branch of data science known as “explainable AI” has been adopted, which can help inform clinical trial practitioners on key elements of their trial protocols to help improve the chances of successful outcomes. Board and leadership changes Mr David Lilja was appointed company secretary in December 2019. There were no other changes to the board or leadership team during the period. Significant changes in the state of affairs As highlighted above, the company rebranded to Opyl Limited. As discussed previously, the significant change to the company was in executing the change in direction into digital health, rebuilding the R&D pipeline to deliver novel solutions to the global health and life sciences sector improving the current service offering but to also as upside value in terms of scalability potential of the artificial intelligence platforms in delivering market research and clinical trial efficiency outcomes. The strategic reset was then completed with the change in name from ShareRoot Limited to Opyl Limited, as voted upon by shareholders in late November 2019. Matters subsequent to the end of the financial year No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect the company's operations, the results of those operations, or the company's state of affairs in future financial years. The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has been financially negative for the consolidated entity up to 30 June 2020, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided. For details relating to capital raising activities conducted by the Company post balance date, please refer to the Going Concern note. No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect the company's operations, the results of those operations, or the company's state of affairs in future financial years. No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect the company's operations, the results of those operations, or the company's state of affairs in future financial years. Likely developments and expected results of operations Opyl Limited anticipates that as the group grows and rolls out the new service offering and continues to commercialise the clinical trial predictor tool and recruitment solutions, it will continue to increase its revenue and decrease its loss, quarter over quarter, as it drives operational efficiencies, expands revenue generating client services, advances new digital and data technology offerings in healthcare and optimise overall company functionality and sustainability. The company has a significant number of active client proposals and discussions associated with the new services in the market and anticipates that the coming year will see these start to convert to contracts and therefore increase overall company revenue validating the strategy and services. 18 Opyl Limited Directors' report 30 June 2020 As noted above, the company has entered into a two year non-exclusive collaboration agreement with huumun which is expected to provide greater revenue and client acquisition opportunities and has been one of the key drivers of new client enquiries. This, coupled with achieving the MVP and beta roll out of the artificial intelligence tools/platforms, delivering early revenue and refinement opportunities with active clients, provides the company with an excellent competitive foundation from which to grow. Environmental regulation The company is not subject to any significant environmental regulation under Australian Commonwealth or State law. 19 Opyl Limited Directors' report 30 June 2020 Information on directors Name: Title: Experience and expertise: Dr Julian Chick Chairman and Non-Executive Director Dr Chick is an executive with more than 25 years of experience in the biotechnology and medical technology industry as well as five years in investment banking. Leading public and private companies, Dr Chick's previous roles include investment adviser, healthcare analyst for private equity investors, portfolio manager, investment banker and venture capitalist. Dr Chick has advanced a number of technologies from discovery through to market as well as leading numerous capital raisings, M&A transactions, company restructuring, business development and licensing transactions. Dr Chick has a background with Opyl (previously ShareRoot), as a shareholder and later worked as an independent advisor on The Social Science acquisition in April 2018. N/A Other current directorships: Former directorships (last 3 years): N/A Interests in shares: Interests in options: 464,741 ordinary shares 184,998 Name: Title: Experience and expertise: Damon Rasheed Non-Executive Director Mr Rasheed has more than 20 years' experience in the tech sector, including founding several successful start-ups. He is the founder of Rate Detective Group, one of Australia's largest financial comparison websites. He is also the co-founder of Advantage Data, a leading machine learning and AI consultancy business. His most recent venture is Aurum Data which has built a propriety AI model to value data and discover commercialisation strategies for data sets. He has sat on the boards of several private technology companies both in Australia and overseas. Mr Rasheed's former roles include CEO of iBus Media Limited, one of the world's largest online media companies and as an economist assessing mergers at the Australian Competition and Consumer Commission (ACCC). Mr Rasheed holds a Masters Degree in Commerce (Hons) and a Degree in Economics (Hons) majoring in statistics. Other current directorships: Former directorships (last 3 years): N/A N/A Special responsibilities: 40,000 Interests in shares: 129,998 Interests in options: 20 Opyl Limited Directors' report 30 June 2020 Name: Title: Experience and expertise: Marat Basyrov Non-Executive Director Mr Basyrov is an experience investor and serial entrepreneur, applying creative and technology-forward data and digital solutions across a large cross-section of industries to solve complex challenges. He sits on the board of advisors to Forbes AI. As a Chief Executive Officer of artificial intelligence software and app solutions provider, Edway Apps Studio and Intelligent Profit Solutions, Mr Basyrov has a track record of success through building a number of data-driven startup companies including Adevi.io. Mr Basyrov has a broad high-value professional network of directors, investors and collaborators across the globe. Mr Basyrov holds a Bachelor of Business in Accounting and Management from Central Queensland University and is a Certified Practicing Accountant (Australia). N/A Other current directorships: Former directorships (last 3 years): N/A Interests in shares: Interests in options: 802,000 ordinary shares 129,998 'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. 'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and excludes directorships of all other types of entities, unless otherwise stated. Company secretary David Lilja (Appointed 10 December 2019) David Lilja (B.Bus, MBA, CTA, MIPA) is a qualified accountant and experienced company secretary with over 20 years’ within the professional services industry working closely across a wide range of industries. David will supply his services through his firm, DLK Advisory, which provides a breadth of support to its clients including outsourced CFO and Company Secretary services. David Hwang (Resigned 10 December 2019) Mr Hwang is an experienced corporate lawyer specialising in listings on ASX (IPOs and reverse listings), equity capital markets, mergers & acquisitions and providing advice on corporate governance and compliance issues. Mr Hwang is the Chief Compliance Officer at Automic Group. Meetings of directors The number of meetings of the company's Board of Directors ('the Board') held during the year ended 30 June 2020, and the number of meetings attended by each director were: Full Board Attended Held 11 11 11 11 11 11 Julian Chick Damon Rasheed Marat Basyrov Held: represents the number of meetings held during the time the director held office. There were 11 meetings of directors held during the year ended 30 June 2020. 21 Opyl Limited Directors' report 30 June 2020 Remuneration report (audited) The remuneration report details the key management personnel remuneration arrangements for the company, in accordance with the requirements of the Corporations Act 2001 and its Regulations. Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including all directors. The remuneration report is set out under the following main headings: ● ● ● ● ● Details of remuneration (continued) Service agreements Share-based compensation Additional information Additional disclosures relating to key management personnel Principles used to determine the nature and amount of remuneration The objective of the consolidated entity's executive reward framework is to ensure reward for performance is competitive and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic objectives and the creation of value for shareholders and it is considered to conform to the market best practice for the delivery of reward. The Board of Directors ("the Board") ensures that executive reward satisfies the following key criteria for good reward governance practices: ● ● ● ● ● Competitiveness and reasonableness Acceptability to shareholders Performance linkage / alignment of executive compensation Transparency Capital management The company has structured an executive remuneration framework that is market competitive and complimentary to the reward strategy of the organisation. Alignment to shareholders' and program participants' interests: ● ● ● ● Focuses on sustained growth in shareholder wealth Attracts and retains high calibre executives Rewards capability and experience Provides a clear structure for earning rewards In accordance with best practice corporate governance, the structure of non-executive director and executive director remuneration is separate. Non-executive directors remuneration Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive directors' fees and payments are reviewed annually by the board. The board may, from time to time receive advice from independent remuneration consultants to ensure non-executive director's fees and payments are appropriate and in line with the market. ASX listing rules require the aggregate non-executive director's remuneration be determined periodically by a general meeting. The most recent determinations was at the Annual General Meeting held on 30 October 2018, where the shareholders approved a maximum annual aggregate remuneration of $300,000. Voting and comments made at the Company's 2019 Annual General Meeting ('AGM') At the 2019 AGM, more than 75% of the votes received supported the adoption of the remuneration report for the year ended 30 June 2019. The company did not receive any specific feedback at the AGM regarding its remuneration practices. 22 Opyl Limited Directors' report 30 June 2020 Details of remuneration Amounts of remuneration Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables. The key management personnel of the consolidated entity consisted of the following directors and employees of Opyl Limited: ● ● ● ● Julian Chick - Chairman - Non-executive Director Damon Rasheed - Non-executive Director Marat Basyrov - Non-executive Director Michelle Gallaher - Chief Executive Officer The amount of remuneration of the directors and key management personnel is set out below: Details of remuneration (continued) Short-term benefits Post- employment benefits Long-term benefits Annual and Long service Share-based payments Equity- settled shares $ Equity- settled option $ Total $ Cash salary Cash Non- Super- and fees $ bonus $ monetary $ annuation $ leave $ 30 June 2020 Non-executive directors: Damon Rasheed* Marat Basyrov* Julian Chick* Other Key Management Personnel: Michelle Gallaher* 40,000 40,000 40,000 217,479 337,479 - - - - - - - - - - 3,800 3,800 3,800 - - - - - - 13,189 21,203 50,958 56,989 65,003 94,758 21,850 33,250 12,521 12,521 - - 53,100 138,450 304,950 521,700 *A portion of these equity settled options includes vesting charge for share-based payments granted in prior years. 23 Opyl Limited Directors' report 30 June 2020 30 June 2019 Non-Executive Directors: Damon Rasheed Marat Basyrov Julian Chick Lee Rodne^ Peter McLennan^ Harvey Kaplan^^ Executive Directors: Noah Abelson- Gertler^^^ Other Key Management Personnel: Michelle Gallaher^^^^ Short-term benefits Post- employment benefits Long-term benefits Annual and Long service Cash salary Cash Non- Super- and fees $ bonus $ monetary $ annuation $ leave $ Share-based payments Equity- settled shares $ Equity- settled option $ Total $ 16,667 13,333 6,087 46,667 23,333 10,580 272,516 - - - - - - - - - - - - - - 1,583 1,267 578 - 4,433 1,005 - 67,083 456,266 - - 132,500 132,500 6,373 15,239 - - - - - - - - - - - - - - - - 5,196 3,713 882 (12,266) (2,935) - 23,446 18,313 7,547 34,401 24,831 11,585 - 272,516 - - 26,626 21,216 232,582 625,221 ^ Resigned 1 February 2019 ^^ Appointed 1 February 2019, resigned 6 May 2019 ^^^ Resigned 1 March 2019. Included in this cash component is US$75,000 (A$104,814), 5 months payment in lieu of notice termination payment. ^^^^ Appointed 14 March 2019. Non-monetary benefit related to payment of $32,500 MBA tuition fees and $100,000 forgiveness and waiver of salary advance. 24 Opyl Limited Directors' report 30 June 2020 The proportion of remuneration linked to performance and the fixed proportion are as follows: Name Non-Executive Directors: Damon Rasheed Marat Basyrov Julian Chick Lee Rodne^ Peter McLennan^ Harvey Kaplan^^ Executive Directors: Noah Abelson-Gertler^^^ Other Key Management Personnel: Michelle Gallaher Fixed remuneration At risk - STI 30 June 2020 30 June 2019 30 June 2020 30 June 2019 30 June 2020 30 June 2019 At risk - LTI 77% 67% 46% - - - 78% 80% 88% 100% 79% 100% - 100% 83% 89% - - - - - - - - - - - - - - - - 23% 33% 54% - - - 22% 20% 12% - 21% - - - 17% 11% ^Resigned 1 February 2019 ^^Appointed 1 February 2019, resigned 6 May 2019 ^^^Resigned 1 March 2019 Service agreements Remuneration and other terms of employment for key management personnel are formalised in service agreements. Details of these agreements are as follows: Name: Title: Agreement commenced: Term of agreement: Michelle Gallaher Chief Executive Officer 14 March 2019 (a) Remuneration: Fixed annual salary $230,000 (inclusive of director's fees) plus 9.5% employer superannuation contribution; (b) Non-cash benefits: the Board may, at its discretion, determine that Ms Gallaher may participate in the company's share plan, subject to shareholder and regulatory approval; payment of remaining tuition fees in relation to MBA programme provided appointment is not terminated during the initial term (i.e. 12 months from commencement date); laptop computer; mobile phone and data service; forgive and waive recovery of salary advance provided agreement not terminated during the initial term of 12 months. (c) Termination: the company and Ms Gallaher may terminate the Executive Services Agreement without cause giving the other party six months' notice. Key management personnel have no entitlement to termination payments in the event of removal for misconduct. As at 30 June 2020, no other key management personnel have any service agreement with the consolidated entity. 25 Opyl Limited Directors' report 30 June 2020 Share-based compensation Issue of shares There were no shares issued to directors and other key management personnel as part of compensation during the year ended 30 June 2020. Options The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key management personnel in this financial year or future reporting years are as follows: Number of options granted Grant date Name Vesting date and exercisable date Expiry date Fair value per option Exercise price at grant date Damon Rasheed 20,000 Marat Basyrov Julian Chick 20,000 20,000 10 December 2019 10 December 2019 10 December 2019 10 December 2019 10 December 2019 10 December 2019 10 December 2024 10 December 2024 10 December 2024 $0.300 $0.113 $0.300 $0.113 $0.300 $0.113 Options granted carry no dividend or voting rights. Additional information The earnings of the company for the five years to 30 June 2020 are summarised below: 2020 $ 2019 $ 2018 $ 2017 $ 2016 $ Sales revenue Loss after income tax 620,783 (934,904) 927,041 (3,105,138) 390,956 (3,035,627) 169,094 (3,228,403) 56,037 (6,083,488) The factors that are considered to affect total shareholders return ('TSR') are summarised below: 2020 2019 2018 2017 2016 Share price at financial year end ($) Basic earnings per share (cents per share) Diluted earnings per share (cents per share) 0.087 (6.785) (6.785) 0.001 (0.180) (0.180) 0.005 (0.330) (0.330) 0.007 (0.810) (0.810) 0.034 (2.740) (2.740) 26 Opyl Limited Directors' report 30 June 2020 Additional disclosures relating to key management personnel Shareholding The number of shares in the company held during the financial year by each director and other members of key management personnel of the company, including their personally related parties, is set out below: Ordinary shares Julian Chick Michelle Gallaher Damon Rasheed Marat Basyrov Balance at Received the start of as part of the year remuneration Additions Disposals/ Balance at consolidation*/ the end of the year other 4,033,333 - - 80,200,000 84,233,333 - - - - - 424,408 100,000 40,000 - 564,408 (3,993,000) - - (79,398,000) (83,391,000) 464,741 100,000 40,000 802,000 1,406,741 *On 2 December 2019 the consolidated entity recorded the consolidation of ordinary shares, the ordinary shares were consolidated at a 100:1 ratio. The additions of ordinary shares to key management personnel arose from the purchase of on-market shares at market value. 27 Opyl Limited Directors' report 30 June 2020 Option holding The number of options over ordinary shares in the company held during the financial year by each director and other members of key management personnel of the company, including their personally related parties, is set out below: Options over ordinary shares Julian Chick Michelle Gallaher Damon Rasheed Marat Basyrov Balance at the start of the year Granted Exercised 16,500,000 9,000,000 11,000,000 11,000,000 47,500,000 20,000 - 20,000 20,000 60,000 Expired/ consolidation* / forfeited/ other Balance at the end of the year - - - - - (16,335,002) (8,910,000) (10,890,002) (10,890,002) (47,025,006) 184,998 90,000 129,998 129,998 534,994 *On 2 December 2019 the consolidated entity recorded the consolidation of options, the options were consolidated at a 100:1 ratio. Options over ordinary shares Julian Chick Michelle Gallaher Damon Rasheed Marat Basyrov Unvested options Balance at the end of the year Vested options 111,666 90,000 56,666 56,666 314,998 73,332 - 73,332 73,332 219,996 184,998 90,000 129,998 129,998 534,994 During the financial year ended 30 June 2020, the consolidated entity did not employ or use the services of remuneration consultants. Performance rights over ordinary shares There were no performance rights issued over ordinary shares during the financial year. This concludes the remuneration report, which has been audited. 28 Opyl Limited Directors' report 30 June 2020 Shares under option and performance rights Unissued ordinary shares of Opyl Limited under option at the date of this report are as follows: Grant date 07/01/2016 05/12/2016 27/06/2017 10/11/2017 21/02/2018 21/02/2018 21/02/2018 17/04/2018 19/02/2018 05/04/2018 05/04/2018 18/04/2018 06/03/2018 04/05/2018 06/02/2017 20/03/2017 20/03/2017 20/03/2017 01/04/2017 01/04/2017 01/04/2017 01/04/2017 26/01/2018 24/07/2018 15/10/2018 15/10/2018 15/10/2018 15/10/2018 08/02/2019 21/03/2019 13/05/2019 12/12/2019 12/12/2019 Expiry date 31/12/2020 05/12/2026 27/06/2022 10/11/2022 20/02/2023 05/06/2022 13/04/2022 17/04/2023 19/02/2023 05/04/2023 05/04/2023 18/04/2023 04/05/2023 04/05/2023 06/02/2027 20/03/2027 20/03/2027 20/03/2027 01/04/2027 01/04/2027 01/04/2027 01/04/2027 26/02/2028 24/07/2023 06/03/2023 06/03/2023 18/09/2023 09/06/2023 08/02/2024 21/03/2024 13/05/2024 10/12/2024 10/12/2024 Exercise price Number under option $5.000 $1.200 $0.500 $0.500 $0.600 $0.700 $0.500 $0.500 $0.500 $0.500 $0.500 $0.500 $0.500 $0.500 $0.800 $2.500 $2.500 $2.500 $0.600 $0.600 $0.600 $0.600 $0.600 $1.000 $0.400 $0.400 $0.400 $0.400 $0.500 $0.500 $0.500 $0.300 $0.800 210,000 42,480 30,000 36,666 30,000 80,000 118,421 3,000 30,000 2,000 2,000 3,000 90,000 25,000 6,000 4,250 5,666 5,000 15,000 7,500 15,000 15,000 7,500 250,000 20,000 7,500 3,000 3,000 109,998 109,998 109,998 60,000 2,335,000 3,791,977 Shares issued on the exercise of options There were no ordinary shares of Opyl Limited issued on the exercise of options during the year ended 30 June 2020 and up to the date of this report. 29 Opyl Limited Directors' report 30 June 2020 Indemnity and insurance of officers The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. Indemnity and insurance of auditor The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor. During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity. Proceedings on behalf of the company No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on behalf of the company, or to intervene in any proceedings to which the company is a party for the purpose of taking responsibility on behalf of the company for all or part of those proceedings. Non-audit services There were no non-audit services provided during the financial year by the auditor. Officers of the company who are former partners of William Buck There are no officers of the company who are former partners of William Buck. Auditor's independence declaration A copy of the auditor's declaration as required under section 307C of the Corporations Act 2001 is set out immediately after this director's report. Auditor William Buck continues in office in accordance with section 327 of the Corporations Act 2001. This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001. On behalf of the directors Damon Rasheed Director 27 August 2020 30 AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001 TO THE DIRECTORS OF OPYL LIMITED AND CONTROLLED ENTITIES I declare that, to the best of my knowledge and belief during the year ended 30 June 2020 there have been: — no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and — no contraventions of any applicable code of professional conduct in relation to the audit. William Buck Audit (Vic) Pty Ltd ABN 59 116 151 136 N. S. Benbow Director Melbourne, 27th August 2020 Opyl Limited Contents 30 June 2020 General information The financial statements cover Opyl Limited as an individual entity. The financial statements are presented in Australian dollars, which is Opyl Limited's functional and presentation currency. Opyl Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is: 105, Wellington Street St Kilda, VIC 3182, Australia A description of the nature of the company's operations and its principal activities are included in the directors' report, which is not part of the financial statements. The financial statements were authorised for issue, in accordance with a resolution of directors, on 27 August 2020. The directors have the power to amend and reissue the financial statements. 32 Opyl Limited Statement of profit or loss and other comprehensive income For the year ended 30 June 2020 Revenue from contracts with customers Other income Expenses Employee benefits expense Depreciation and amortisation expense Impairment Corporate compliance and management Finance costs Occupancy costs Administration Consultancy costs Loss before income tax expense Income tax expense Loss after income tax expense for the year attributable to the owners of Opyl Limited Other comprehensive income / (loss) Items that may be reclassified subsequently to profit or loss Foreign currency translation Other comprehensive income / (loss) for the year, net of tax Total comprehensive loss for the year attributable to the owners of Opyl Limited Note 30 June 2020 30 June 2019 $ $ 4 5 6 6 620,783 927,041 296,046 1,021,615 (802,565) (848) - (71,466) (25,105) (48,449) (758,338) (93,503) (1,601,374) (26,033) (1,862,584) (55,227) (8,747) (39,711) (1,043,110) (417,008) (883,445) (3,105,138) (42,402) - (925,847) (3,105,138) (9,057) 21,547 (9,057) 21,547 (934,904) (3,083,591) Cents Cents Basic earnings per share Diluted earnings per share 23 23 (6.785) (6.785) (0.183) (0.183) The above statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes 33 Opyl Limited Statement of financial position As at 30 June 2020 Assets Current assets Cash and cash equivalents Trade and other receivables Prepayments and other deposits Total current assets Non-current assets Property, plant and equipment Capitalised software development Total non-current assets Total assets Liabilities Current liabilities Trade and other payables Borrowings Deferred revenue Total current liabilities Total liabilities Net assets/(liabilities) Equity Issued capital Reserves Accumulated losses Total equity/(deficiency) Note 30 June 2020 30 June 2019 $ $ 7 8 9 10 800,088 60,990 8,098 869,176 8,539 58,054 66,593 99,140 177,999 53,015 330,154 - - - 935,769 330,154 216,593 - - 216,593 480,408 203,989 48,562 732,959 216,593 732,959 719,176 (402,805) 11 12 16,837,024 14,826,597 1,076,931 (16,306,333) 885,062 (17,002,910) 719,176 (402,805) The above statement of financial position should be read in conjunction with the accompanying notes 34 Opyl Limited Statement of changes in equity For the year ended 30 June 2020 Issued capital $ Accumulated Reserves $ losses $ Total deficiency in equity $ Balance at 1 July 2018 13,673,475 921,837 (13,201,195) 1,394,117 Loss after income tax expense for the year Other comprehensive income for the year, net of tax Total comprehensive income / (loss) for the year - - - - 21,547 (3,105,138) - (3,105,138) 21,547 21,547 (3,105,138) (3,083,591) Transactions with owners in their capacity as owners: Shares issued during the year Cost of issue Share option reserve on recognition of remuneration options 1,221,772 (68,650) - - - 133,547 - - - 1,221,772 (68,650) 133,547 Balance at 30 June 2019 14,826,597 1,076,931 (16,306,333) (402,805) Issued capital $ Reserves $ Accumulated losses $ Total equity $ Balance at 1 July 2019 14,826,597 1,076,931 (16,306,333) (402,805) Loss after income tax expense for the year Other comprehensive loss for the year, net of tax Total comprehensive loss for the year Shares issued during the year Cost of issue Lapse of expired options Vesting charge for share-based payments - - - - (9,057) (925,847) - (925,847) (9,057) (9,057) (925,847) (934,904) 2,119,612 (109,185) - - - - (229,270) 46,458 - - 229,270 - 2,119,612 (109,185) - 46,458 Balance at 30 June 2020 16,837,024 885,062 (17,002,910) 719,176 The above statement of changes in equity should be read in conjunction with the accompanying notes 35 Opyl Limited Statement of cash flows For the year ended 30 June 2020 Cash flows from operating activities Receipts from customers Government grants and tax incentives Payments to suppliers and employees Interest received Income taxes paid Note 30 June 2020 30 June 2019 $ $ 745,910 290,794 (2,057,499) 5,257 907,689 - (3,016,124) 5,578 (1,015,538) (13,454) (2,102,857) - Net cash used in operating activities 22 (1,028,992) (2,102,857) Cash flows from investing activities Payment for purchase of business, net of cash acquired Payments for property, plant and equipment Payments for intangibles Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Share issue transaction costs Proceeds from borrowings Repayment of borrowings Net cash from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the financial year - (9,387) (58,054) (687,853) - - (67,441) (687,853) 11 11 10 2,019,612 (109,185) - (103,989) 1,221,772 (68,650) 200,000 - 1,806,438 1,353,122 710,005 99,140 (9,057) (1,437,588) 1,546,284 (9,556) 800,088 99,140 7 7 The above statement of cash flows should be read in conjunction with the accompanying notes 36 Opyl Limited Notes to the financial statements 30 June 2020 Note 1. Significant accounting policies The principle accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, unless otherwise stated. New or amended Accounting Standards and Interpretations adopted The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (‘AASB’) that are mandatory for the current reporting period. Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted. Conceptual Framework for Financial Reporting (Conceptual Framework) The revised Conceptual Framework is applicable to annual reporting periods beginning on or after 1 January 2020 and early adoption is permitted. The Conceptual Framework contains new definition and recognition criteria as well as new guidance on measurement that affects several Accounting Standards. Where the company has relied on the existing framework in determining its accounting policies for transactions, events or conditions that are not otherwise dealt with under the Australian Accounting Standards, the company may need to review such policies under the revised framework. At this time, the application of the Conceptual Framework is not expected to have a material impact on the company's financial statements. The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial performance or position of the consolidated entity: The following Accounting Standards and Interpretations are most relevant to the company: AASB 16 Leases The company has adopted AASB 16 from 1 July 2019. The standard replaces AASB 117 'Leases' and for lessees eliminates the classifications of operating leases and finance leases. Except for short-term leases and leases of low-value assets, right- of-use assets and corresponding lease liabilities are recognised in the balance sheet. Straight-line operating lease expense recognition is replaced with a depreciation charge for the right-of-use assets (included in operating costs) and an interest expense on the recognised lease liabilities (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when compared to lease expenses under AASB 117. However, EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results improve as the operating expense is now replaced by interest expense and depreciation in profit or loss. For classification within the statement of cash flows, the interest portion is disclosed in operating activities and the principal portion of the lease payments are separately disclosed in financing activities. For lessor accounting, the standard does not substantially change how a lessor accounts for leases. The change in accounting standard does not affect the company as all accommodation agreements are less than 12 months, and as such, we have applied the short term lease exemption to the requirements of the standard. Comparative figures Certain comparative figures have been reclassified to reflect a more meaningful comparison. 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') and the Corporations Act 2001, as appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board ('IASB') Historical cost convention The financial statements have been prepared under the historical cost convention. Critical accounting estimates The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the consolidated entity'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 in note 2. 37 Opyl Limited Notes to the financial statements 30 June 2020 Note 1. Significant accounting policies (continued) Going concern The financial report has been prepared on the going concern basis, which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business. The consolidated entity has incurred net loss after tax of $934,904 and net cash outflows from operations of $1,028,992 for the year ended 30 June 2020, and had working capital surplus of $652,583 at 30 June 2020. Cash balance at 30 June 2020 was $800,088 while there was no borrowings as at 30 June 2020. These conditions give rise to a material uncertainty that casts significant doubt upon the consolidated entity's ability to continue as a going concern. Opyl Limited completed a rights issue and share placement subsequent to the year-end in July 2019 where for $1.2 million was raised before capital raising costs with a further share placement raise of $730,000 in June 2020 before capital raising costs. The money raised is used predominantly to scale the existing revenue-generating digital client services capabilities and capacity; complete and launch new technology projects and roll out marketing campaigns and continue the development of MediaConsent Clinical. As previously advised, the Board and Management decided to focus on the digital health market and introduce new data and digital technologies to expand the service offerings. As a consequence of this, it was also decided to reduce spending in other parts of the business, most notably with the closure of its US operations, Ludomade. The directors have prepared a revised cash flow forecast which takes into account: ● commercialisation of its new A1-powered digital insights platform (Opyl) which has already shown potential as well as other Opyl technologies; further reduction in expenditure for non-core parts of the business and rationalisation and streamlining of the company structure; and the change in operational focus and significant reduction in costs. ● ● This forecast indicates that the consolidated entity can continue as a going concern for at least the next 12 months. Furthermore, the directors are reviewing the Group's ability as a technology innovation company to apply for various government grants and incentives, which have not yet been factored into the cash flow forecast but will provide cash inflows to reduce the impact of expenditure should they be successfully granted. Should the commercialisation of new products and platforms take longer than forecast the directors may be required to raise further capital through either equity or debt. The company has a history of being able to raise capital and debt when required and the directors are confident that should the need arise they will be able to raise sufficient funds to meet their liabilities as they fall due. Should the consolidated entity be unable to implement the above strategies or source alternative funding, it may be necessary to realise some or all assets and discharge liabilities at amounts different to those stated in the financial statements No adjustments have been made to the recoverability and classification of asset and the amount and classification of liabilities that might be necessary should the consolidated entity be unable to continue as a going concern and meet its debts as and when they fall due. Parent entity information In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity only. Supplementary information about the parent entity is disclosed in note 19. The parent entity disclosure related to the legal parent entity, Opyl Limited. Principles of consolidation The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Opyl Limited ('company' or 'parent entity') as at 30 June 2020 and the results of all subsidiaries for the year then ended. Opyl Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'. 38 Opyl Limited Notes to the financial statements 30 June 2020 Note 1. Significant accounting policies (continued) Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvements with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases. Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity. The acquisitions of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent. Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity, The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss. Foreign currency translation The financial statements are presented in Australian dollars, which is Opyl Limited's functional and presentation currency. Foreign currency transactions Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Foreign operations The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity. The foreign currency reserve us recognised in profit or loss when the foreign operation or net investment is disposed of. Revenue recognition Revenue from contracts with customers Revenue is recognised at an amount that reflects the consideration to which the company is expected to be entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the company: identifies the contract with a customer; identifies the performance obligations in the contract; determines the transaction price which takes into account estimates of variable consideration and the time value of money; allocates the transaction price to the separate performance obligations on the basis of the relative stand-alone selling price of each distinct good or service to be delivered; and recognises revenue when or as each performance obligation is satisfied in a manner that depicts the transfer to the customer of the goods or services promised. Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts, rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts received that are subject to the constraining principle are recognised as a refund liability. 39 Opyl Limited Notes to the financial statements 30 June 2020 Note 1. Significant accounting policies (continued) Rendering of services The consolidated entity primarily generates revenue from sale of its annual subscription services, which enable its customer to access an online platform that allows them to search and source user generated content. The consolidated entity also sells advertising and contesting services that are sold in a one-off basis rather than a subscription model. The consolidated entity recognises subscription revenue over the subscription period (generally 1 year) on a straight-line basis. For contracts where the consolidated entity is able to provide advertising services for a specific contract period, advertising revenue is recognised ratably over the advertising term. Contest revenue is recognised when the contest has concluded. In relation to the revenue streams of the consolidated entity, the main revenue streams are recognised as follows: SaaS revenue - This refers to SaaS platform that customers pay for in order to be compliant in how they market to consumers, gather data and respect consumer privacy. Revenue from the sale of annual subscription services, which enable customers to access an online platform that allows then to search and source user generated content, is recognised over the subscription period (generally 1 year) on a straight line basis. The performance obligation is satisfied over time. As at 30 June 2020, there is no deferred SaaS revenue as the consolidated group's American subsidiary operations ceased during the 2020 financial year. Retainer revenue - For retainer contracts, revenue from its social media marketing agency arm is recognised when the performance obligations are satisfied over time. Project revenue - Project revenue is from ad-hoc projects. For project contracts, revenue is recognised when the performance obligations are satisfied at a point in time. Web revenue - Relates to Ludomade projects. For these contracts, revenue is recognised when the performance obligations are satisfied over time. Interest Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Other revenue Other revenue is recognised when it is received or when the right to receive payment is established. Deferred revenue Deferred revenue includes billings or payments received in advance of revenue recognition and is recognised as the revenue recognition criteria are met. Deferred revenue primarily consists of unearned portion of subscription fees. Government grants Government grants relating to costs are deferred and recognised in profit or loss over the period necessary to match them with the costs that they are intended to compensate. Income tax The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable. 40 Opyl Limited Notes to the financial statements 30 June 2020 Note 1. Significant accounting policies (continued) Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for: When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a ● transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or When the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the reversal can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. ● Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. 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 classified as current when: it is either expected to be realised or intended to be sold or consumed in the company's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised 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. A liability is classified as current when: it is either expected to be settled in the company's 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. Cash and cash equivalents Cash and cash equivalents includes 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. 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 allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days. The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost,less any allowance for expected credit losses. Capitalised development costs As the consolidated entity recognises development costs, these costs are capitalised. This means that expenditure arising during the development phase is recognised as an asset. Development costs are only capitalised if the project is assessed to be technically and commercially feasible, we are able to use or sell the asset and we have sufficient resources and intent to complete the development. Internally generated intangible assets have a finite life and are amortised on a straight-line basis over their useful lives, usually 3 years. Trade and other payables Trade and other payables present liabilities for goods and services provided to the consolidated entity prior to year end that are unpaid and arise when the consolidated entity becomes obliged to make future payments in respect of the purchase of those goods and services. The amounts are unsecured and are usually paid within 30 days of recognition. They are recognised initially at their fair value and subsequently measured at amortised cost using the effective interest method. 41 Opyl Limited Notes to the financial statements 30 June 2020 Note 1. Significant accounting policies (continued) 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 method. Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the loans or borrowings are classified as non-current. Lease liabilities A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the company's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred. Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down. Finance costs Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred. Employee benefits Defined contribution superannuation expense Contributions to defined contribution superannuation plans are expensed in the period in which they are incurred. Share-based payments Equity-settled and cash-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 of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the company receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions. The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods. 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. 42 Opyl Limited Notes to the financial statements 30 June 2020 Note 1. Significant accounting policies (continued) 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 increases the total fair value of the share-based compensation benefit as at the date of modification. If the non-vesting condition is within the control of the company or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the company or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited. If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification. Fair value measurement When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market. Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement. For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data. Issued capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit attributable to the owners of Opyl Limited, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year. Diluted earnings per share Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares. 43 Opyl Limited Notes to the financial statements 30 June 2020 Note 1. Significant accounting policies (continued) Goods and Services Tax ('GST') and other similar taxes 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. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority. Note 2. Critical accounting judgements, estimates and assumptions The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below. Share-based payment transactions The company measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Allowance for expected credit losses The allowance for expected credit losses assessment requires a degree of estimation and judgement. It is based on the lifetime expected credit loss, grouped based on days overdue, and makes assumptions to allocate an overall expected credit loss rate for each group. These assumptions include recent sales experience, historical collection rates, the impact of the Coronavirus (COVID-19) pandemic and forward-looking information that is available. The allowance for expected credit losses, as disclosed in note 8, is calculated based on the information available at the time of preparation. The actual credit losses in future years may be higher or lower. Impairment of non-financial assets The company assesses impairment of non-financial assets other than goodwill and other indefinite life intangible assets at each reporting date by evaluating conditions specific to the company and to the particular asset that may lead to impairment. If an impairment trigger exists, the recoverable amount of the asset is determined. This involves fair value less costs of disposal or value-in-use calculations, which incorporate a number of key estimates and assumptions. 44 Opyl Limited Notes to the financial statements 30 June 2020 Note 2. Critical accounting judgements, estimates and assumptions (continued) For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows (CGUs) from continuing use that are largely independent of the cash inflows of other assets of CGUs. The recoverable amounts of an assets or CGU is the greater of its value in use and its fair value less costs to sell. Value in use is based on estimated future cash flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset of CGU. An impairment loss is recognised if the carrying amount of an asset or CGU exceeds its recoverable amount. Impairment losses are recognised in profit or loss. Non-recognition of deferred tax assets We apply management judgement to recognise a deferred tax asset and review its carrying amount at each reporting date. The carrying amount is only recognised to the extent that it is probable that sufficient taxable profit will be available in the future to utilise this benefit. Any amount unrecognised could be subsequently recognised if it has become probable that future taxable profit will allow us to benefit from this deferred tax asset. Non-recognition of R&D tax offset receivable For financial reporting purposes, the R&D tax offset is analogised as other income see note 5. A credit will be recognised within other income when the entity satisfies the criteria to receive the credit. The criteria is usually satisfied post reporting date upon lodgment of the Consolidated group’s income tax return and as such management has opted to treat R&D tax refunds on a cash basis and recorded in the year they are received. Note 3. Operating segments Identification of reportable operating segments Performances are monitored per individual entity basis. The Chief Operating Decision Maker (CODM) reviews cash flows, revenue and profit / loss before tax. The CODM reviews the operations as one consolidated business. The accounting policies adopted for internal reporting to the CODM are consistent with those adopted in the financial statements. The information reported to the CODM is on a monthly basis. Types of products and services The principal products and services of each of these operating segments are as follows: Opyl Services - Formerly "The Social Science" Opyl's social media marketing agency providing client services and account management layer behind the group's technology properties. The main revenue streams are retainer revenue and project revenue. UGC Discovery platform - Opyl's Legal Rights Management protecting against unauthorised use of people's social and digital content. This platform forms part of SaaS revenue in ShareRoot Inc. Ludomade Inc. - Provides consumer data and privacy compliance. The main revenue stream is web revenue. Major customers The consolidated entity does not have any single customer which contributes more than 10% of the consolidated entity's revenue. 45 Opyl Limited Notes to the financial statements 30 June 2020 Note 3. Operating segments (continued) Operating segment information Opyl Services (formerly Opyl Limited (formerly ShareRoot ShareRoot Other The Social ShareRoot Science) $ Inc $ Ludomade Limited) $ $ Ops $ segments $ Total $ 541,648 57,736 599,384 (120,238) (848) 4,134 (21,074) 37,204 2,908 40,112 1,584 - - - 39,023 - 39,023 - 233,057 233,057 4,829 - - - (748,924) - 1,123 (4,031) (138,026) 1,584 4,829 (751,832) - - - - - - - - - - - - - - - - 617,875 293,701 911,576 (862,749) (848) 5,257 (25,105) (883,445) (42,402) (925,847) 30 June 2020 Revenue Sales to external customers Other revenue Total revenue EBITDA Depreciation and amortisation Interest revenue Finance costs Profit/(loss) before income tax expense Income tax expense Loss after income tax expense Opyl Services (formerly The Social ShareRoot Science) $ Inc $ Opyl Limited (formerly ShareRoot ShareRoot Other Ludomade Limited) $ $ Ops $ segments $ Total $ 30 June 2019 Revenue Sales to external customers Total revenue 575,898 575,898 239,092 239,092 112,813 112,813 - - EBITDA Depreciation and amortisation Impairment of assets Interest revenue Finance costs Fair value adjustments - deferred consideration Share based payments Profit/(loss) before income tax expense Income tax expense Loss after income tax expense (762) (762) (762) - - - - - - (196,064) (1,249,365) - (5,695) - (1,700,961) - - 4,713 (4,758) 58,769 (20,338) - - - (708,419) - (161,623) 865 (3,989) - - 1,016,037 - - - - (133,548) (196,109) (1,939,984) 38,431 (1,006,714) (762) 46 - - 927,041 927,041 - (2,095,841) - (26,033) - (1,862,584) - 5,578 - (8,747) - - - 1,016,037 (133,548) (3,105,138) - (3,105,138) Opyl Limited Notes to the financial statements 30 June 2020 Note 3. Operating segments (continued) Geographical information Australia USA Note 4. Revenue from contracts with customers SaaS revenue Retainer revenue Project revenue Web Other Revenue from contracts with customers Disaggregation of revenue The disaggregation of revenue from contracts with customers is as follows: Timing of revenue recognition Services transferred at a point in time Services transferred over time Sales to external customers 30 June 2020 30 June 2019 $ $ 541,648 76,227 575,136 351,905 617,875 927,041 30 June 2020 30 June 2019 $ $ 37,204 398,520 118,048 39,023 27,988 235,109 464,607 106,298 112,813 8,214 620,783 927,041 30 June 2020 30 June 2019 $ $ 185,059 435,724 227,325 699,716 620,783 927,041 47 Opyl Limited Notes to the financial statements 30 June 2020 Note 5. Other income Fair value adjustment - deferred consideration relating to Ludomade Government subsidy COVID 19 - Jobkeeper Interest income R&D tax refund Other income Note 6. Expenses Loss before income tax includes the following specific expenses: Finance costs Interest and finance charges paid/payable Rental expense relating to short-term leases Minimum lease payments Shares issued to employees Share based payments Superannuation expense Defined contribution superannuation expense Note 7. Cash and cash equivalents Current assets Cash on hand Cash at bank 48 30 June 2020 30 June 2019 $ $ - 75,820 30,000 5,252 184,974 1,016,037 - - 5,578 - 296,046 1,021,615 30 June 2020 30 June 2019 $ $ 30,214 8,747 48,449 39,711 46,458 133,548 66,498 8,328 30 June 2020 30 June 2019 $ $ 12 800,076 - 99,140 800,088 99,140 Opyl Limited Notes to the financial statements 30 June 2020 Note 8. Trade and other receivables Current assets Trade receivables Less: Allowance for expected credit losses Other receivables 30 June 2020 30 June 2019 $ $ 62,842 (1,852) 60,990 145,866 (12,472) 133,394 - 44,605 60,990 177,999 Allowance for expected credit losses The company has recognised a loss of ($1,852) (2019: ($12,472)) in profit or loss in respect of the expected credit losses for the year ended 30 June 2020. Management believes that the amounts that are past due by more than 30 days are still collectable in full, based on historical payment behaviour and extensive analysis of customer credit risk, including underlying customer's credit scores if they are available. The ageing of the consolidated entity's trade receivables that were not impaired was as follows: The ageing of the receivables and allowance for expected credit losses provided for above are as follows: 30 June 2020 30 June 2019 $ $ 22,517 - 2,735 35,738 44,972 6,721 28,178 53,523 60,990 133,394 30 June 2020 30 June 2019 $ $ 58,485 158,108 185,094 295,314 216,593 480,408 Neither past due not impaired Past due 1 - 30 days Past due 31 - 90 days Past due 90+ days Note 9. Trade and other payables Current liabilities Trade payables Other payables and accruals Refer to note 14 for further information on financial instruments. 49 Opyl Limited Notes to the financial statements 30 June 2020 Note 10. Borrowings Current liabilities Shareholder loan Refer to note 14 for further information on financial instruments. 30 June 2020 30 June 2019 $ $ - 203,989 On 1 April 2019, Mr Antanas Guoga ("Tony G") advanced a $200,000 loan to the company with maturity 30 March 2020. On 1 October 2019 the loan was partially converted to fully paid ordinary shares 100,000,000 at A$0.01 per share (A$100,000). The balance of the loan (A$100,000) was paid in cash with an interest payment of A$3,989. Note 11. Equity - issued capital Ordinary shares - fully paid 36,892,002 1,569,454,374 16,837,024 14,826,597 30 June 2020 30 June 2019 30 June 2020 30 June 2019 Shares Shares $ $ Movements in ordinary share capital Details Balance Issue of shares - placement Issue of shares - placement Issue of shares - placement Share issue costs Balance Issue of shares - rights issue Issue of shares - placement Issue of shares - placement Antanas Guoga - loan Issue of shares - placement Security consolidation Issue of shares - placement Share issue costs Balance Date Shares $ 1 July 2018 24 July 2018 29 November 2018 10 December 2018 30 June 2019 19 July 2019 24 July 2019 24 July 2019 1 October 2019 15 October 2019 2 December 2019 24 June 2020 1,231,699,788 13,673,475 521,272 568,500 132,000 (68,650) 104,254,587 189,499,999 44,000,000 - 1,569,454,374 14,826,597 509,612 444,731 325,269 100,000 10,000 - 730,000 (109,185) 509,611,125 444,731,041 325,268,959 100,000,000 10,000,000 (2,929,473,497) 7,300,000 - 30 June 2020 36,892,002 16,837,024 Ordinary shares Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the company does not have a limited amount of authorised capital. On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. 50 Opyl Limited Notes to the financial statements 30 June 2020 Note 11. Equity - issued capital (continued) Share buy-back There is no current on-market share buy-back. Capital risk management The consolidated entity's objectives when managing capital is to safeguard is ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders, issue new shares or sell assets to reduce debt. Capital is regarded as total equity, as recognised in the 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 consolidated entity may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as value adding relative to the current company's share price at the time of the investment. The consolidated entity is not actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in order to maximise synergies. Note 12. Equity - reserves Foreign currency reserve Options reserve 30 June 2020 30 June 2019 $ $ (381,075) 1,266,137 (372,018) 1,448,949 885,062 1,076,931 Foreign currency reserve The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign operations. Option reserve The reserve is used to recognise the value of equity benefits provided to employees, directors and other parties as part of their remuneration and compensation for services. Movements in reserves Movements in each class of reserve during the current financial half-year are set out below: 51 Opyl Limited Notes to the financial statements 30 June 2020 Note 12. Equity - reserves (continued) Movements in reserves Movements in each class of reserve during the current and previous financial year are set out below: Balance at 1 July 2018 Foreign currency translation Options issued during the year Balance at 30 June 2019 Foreign currency translation Options issued during the year Lapse of expired options Balance at 30 June 2020 Note 13. Dividends Foreign exchange reserve $ Option reserve $ Total $ (393,565) 21,547 - 1,315,402 - 133,547 921,837 21,547 133,547 (372,018) (9,057) - - 1,448,949 - 46,458 (229,270) 1,076,931 (9,057) 46,458 (229,270) (381,075) 1,266,137 885,062 There were no dividends paid, recommended or declared during the current or previous financial year. Note 14. Financial instruments Financial risk management objectives The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk. Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors ('the Board'). These policies include identification and analysis of the risk exposure of the company and appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the consolidated entity's operating units. Finance reports to the Board on a monthly basis. Market risk Foreign currency risk The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations. Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity's functional currency. As each of the individual entities in the group primarily transact in their own respective functional currency, foreign currency risk is deemed to be minimal. Price risk The consolidated entity is not exposed to any significant price risk. 52 Opyl Limited Notes to the financial statements 30 June 2020 Note 14. Financial instruments (continued) Interest rate risk Interest rate risk is deemed to be minimal as the consolidated entity exposure on interest risk is mainly on its cash at bank. Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the company. The company has a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit limits. The company obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for expected credit losses of those assets, as disclosed in the statement of financial position and notes to the financial statements. The company does not hold any collateral. The consolidated entity deemed its credit risk to be minimal as its financial assets are mainly cash held at financial institutions. Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual payments for a period greater than 1 year. Liquidity risk The company manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities. Remaining contractual maturities The following tables detail the company's remaining contractual maturity for its financial instrument liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of financial position. 30 June 2020 Non-derivatives Non-interest bearing Trade payables Other payables Total non-derivatives 30 June 2019 Non-derivatives Non-interest bearing Trade payables Other payables Interest-bearing - variable Other loans Total non-derivatives Weighted average interest rate % 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ Remaining contractual maturities $ - - 58,485 158,108 216,593 - - - - - - - - - 58,485 158,108 216,593 Weighted average interest rate % 1 year or less $ Between 1 and 2 years $ Between 2 and 5 years $ Over 5 years $ Remaining contractual maturities $ - - 185,094 295,314 8.00% 203,989 684,397 - - - - - - - - - - - - 185,094 295,314 203,989 684,397 53 Opyl Limited Notes to the financial statements 30 June 2020 Note 14. Financial instruments (continued) The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed above. Fair value of financial instruments Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. Note 15. Key management personnel disclosures Directors The following persons were directors of Opyl Limited during the financial year: Julian Chick Damon Rasheed Marat Basyrov Other key management personnel The following person also had the authority and responsibility for planning, directing and controlling the major activities of the company, directly or indirectly, during the financial year: Michelle Gallaher Compensation The aggregate compensation made to directors and other members of key management personnel of the company is set out below: Short-term employee benefits Post-employment benefits Long-term benefits Note 16. Remuneration of auditors 30 June 2020 30 June 2019 $ $ 337,479 33,250 150,971 588,766 15,239 21,216 521,700 625,221 During the financial year the following fees were paid or payable for services provided by William Buck, the auditor of the company. Audit services for the year ended 30 June 2020 were completed by William Buck, for the year ended 30 June 2019 audit services were completed by BDO East Coast Partnership (BDO). Audit services Audit or review of the financial statements - William Buck Audit or review of the financial statements - BDO 54 30 June 2020 30 June 2019 $ $ 25,000 - - 72,000 25,000 72,000 Opyl Limited Notes to the financial statements 30 June 2020 Note 17. Contingent liabilities The company had no contingent liabilities as at 30 June 2020. Note 18. Related party transactions Parent entity Opyl Limited is the parent entity. Key management personnel Disclosures relating to key management personnel are set out in note 15 and the remuneration report included in the directors' report. Transactions with related parties During the financial year ended 30 June 2020, RDI Consulting Pty Ltd have been engaged to develop software for a machine learning/artificial intelligence algorithm which can predict the likelihood of clinical trial passing its primary objective. The engagement is to the value of $150,000. $58,054 has been incurred as at 30 June 2020. Damon Rasheed being a shareholder of RDI Consulting is considered a related party. Receivable from and payable to related parties There were no trade receivables from or trade payables to related parties at the current and previous reporting date. Loans to/from related parties Michelle Gallaher has drawings from the company corporate credit card which are to be repaid to the company. The balance outstanding as at 30 June 2020 is $24,605 (2019:A$15,823). 55 Opyl Limited Notes to the financial statements 30 June 2020 Note 19. Parent entity information Set out below is the supplementary information about the parent entity. Statement of profit or loss and other comprehensive income Loss after income tax Total comprehensive income Statement of financial position Total current assets Total assets Total current liabilities Total liabilities Equity Issued capital Options reserve Accumulated losses Total equity/(deficiency) 30 June 2020 30 June 2019 $ $ (751,832) (751,832) (803,634) (803,634) 30 June 2020 30 June 2019 $ $ 781,305 781,305 133,100 133,100 10,879 10,879 413,813 413,813 18,586,126 16,653,323 1,613,088 (18,669,345) 1,266,137 (19,011,494) 840,769 (402,934) Guarantees entered into by the parent entity in relation to the debts of its subsidiaries The parent entity had no guarantees in relation to the debts of its subsidiaries as at 30 June 2020 and 30 June 2019. Contingent liabilities The parent entity had no contingent liabilities as at 30 June 2020 and 30 June 2019. Capital commitments - Property, plant and equipment The parent entity had no capital commitments for property, plant and equipment as at 30 June 2020 and 30 June 2019. Significant accounting policies The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 1, except for the following. ● ● ● Investments in subsidiaries are accounted for at cost, less impairment, in the parent entity. Investments in associates are accounted for at cost, less any impairment, in the parent entity. Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impairment of the investment. Note 20. Interest in subsidiaries 56 Opyl Limited Notes to the financial statements 30 June 2020 Note 20. Interest in subsidiaries (continued) (a) Ultimate parent Opyl Limited is the ultimate parent entity and the parent entity of the consolidation entity from a legal perspective. For accounting purposes, Opyl Limited is the deemed ultimate parent of the consolidated entity in line with reverse acquisition accounting. (b) Corporate structure The legal corporate structure of the consolidated entity is set out below; Name Principal place of business / Country of incorporation Legal parent Opyl Limited ShareRoot Inc ShareRoot (Australian Ops) Pty Ltd Opyl Services (Formerly The Social Science Pty Ltd) Ludomade, Inc Australia United States of America Australia Australia United States of America Note 21. Events after the reporting period Ownership of interest 2020 % 2019 % - 100.00% 100.00% - 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has been financially negative for the consolidated entity up to 30 June 2020, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided. For details relating to capital raising activities conducted by the Company post balance date, please refer to the Going Concern note. No other matter or circumstance has arisen since 30 June 2020 that has significantly affected, or may significantly affect the company's operations, the results of those operations, or the company's state of affairs in future financial years. 57 Opyl Limited Notes to the financial statements 30 June 2020 Note 22. Reconciliation of loss after income tax to net cash used in operating activities Loss after income tax expense for the year Adjustments for: Depreciation and amortisation Impairment of goodwill Share-based payments Fair-value adjustment of deferred consideration in relation to Ludomade Change in operating assets and liabilities: Decrease in trade and other receivables Decrease in prepayments Decrease/(increase) in other non-current assets Decrease in trade and other payables Increase/(decrease) in deferred revenue Net cash used in operating activities 30 June 2020 30 June 2019 $ $ (925,847) (3,105,138) 848 - 46,458 - 26,033 1,862,584 133,548 (1,016,037) 117,009 44,917 - (263,815) (48,562) 7,960 82,959 5,653 (24,242) (76,177) (1,028,992) (2,102,857) 58 Opyl Limited Notes to the financial statements 30 June 2020 Note 23. Earnings per share Loss after income tax attributable to the owners of Opyl Limited 30 June 2020 30 June 2019 $ $ (925,847) (3,105,138) Number Number Weighted average number of ordinary shares used in calculating basic earnings per share 13,645,211 1,694,417,552 Weighted average number of ordinary shares used in calculating diluted earnings per share 13,645,211 1,694,417,552 Basic earnings per share Diluted earnings per share Cents Cents (6.785) (6.785) (0.183) (0.183) The amount of the dilution is the average market price of ordinary shares during the period minus the issue price. Therefore, to calculate diluted earnings per share, potential ordinary shares are treated as consisting of both the following: ● ● a contract to issue a certain number of the ordinary shares at their average market price during the period. Such ordinary shares are assumed to be fairly priced and to be neither dilutive nor antidilutive. They are ignored in the calculation of diluted earnings per share. a contract to issue the remaining ordinary shares for no consideration. Such ordinary shares generate no proceeds and have no effect on profit or loss attributable to ordinary shares outstanding. Therefore, such shares are dilutive and are added to the number of ordinary shares outstanding in the calculation of diluted earnings per share. As the consolidated entity is in a loss position at the end of the financial year, the options on issue are not considered to be dilutive. 59 Opyl Limited Notes to the financial statements 30 June 2020 Note 24. Share based payments A share option plan has been established by the consolidated entity and approved by shareholders at a general meeting, whereby the consolidated entity may, at the discretion of the Board of Directors, grant options over ordinary shares in the company to certain personnel of the consolidated entity. Share options are issued at nil consideration. In addition, options may also be issued to advisers of the company for example to assist with capital raising activities. Set out below are summaries of options granted under the plan: 2020 60 Opyl Limited Notes to the financial statements 30 June 2020 Note 24. Share based payments (continued) Grant date Expiry date Exercise price Balance at the start of the year Granted Expired/ forfeited/ other Impact of share consolidation Balance at the end of the year 07/01/2016 05/12/2016 27/06/2017 10/11/2017 21/02/2018 21/02/2018 21/02/2018 17/04/2018 19/02/2018 05/04/2018 05/04/2018 18/04/2018 06/03/2018 04/05/2018 06/02/2017 20/03/2017 20/03/2017 20/03/2017 01/04/2017 01/04/2017 01/04/2017 01/04/2017 26/01/2018 24/07/2018 15/10/2018 15/10/2018 15/10/2018 15/10/2018 08/02/2019 21/03/2019 13/05/2019 10/12/2019 10/12/2019 10/12/2019 31/12/2020 05/12/2026 27/06/2022 10/11/2022 20/02/2023 05/06/2022 13/04/2022 17/04/2023 19/02/2023 05/04/2023 05/04/2023 18/04/2023 04/05/2023 04/05/2023 06/02/2027 20/03/2027 20/03/2027 20/03/2027 01/04/2027 01/04/2027 01/04/2027 01/04/2027 26/02/2028 24/07/2023 06/03/2023 06/03/2023 18/09/2023 09/06/2023 08/02/2024 21/03/2024 13/05/2024 28/02/2020 10/12/2024 10/12/2024 $5.000 21,000,000 4,248,000 $1.200 3,000,000 $0.500 3,666,667 $0.500 3,000,000 $0.600 $0.700 8,000,000 $0.500 11,842,105 300,000 $0.500 3,000,000 $0.500 200,000 $0.500 200,000 $0.500 300,000 $0.500 9,000,000 $0.500 2,500,000 $0.500 600,000 $0.800 425,000 $2.500 566,666 $2.500 500,000 $2.500 1,500,000 $0.600 750,000 $0.600 1,500,000 $0.600 $0.600 1,500,000 750,000 $0.600 $1.000 25,000,000 2,000,000 $0.400 750,000 $0.400 300,000 $0.400 $0.400 300,000 $0.500 11,000,000 $0.500 11,000,000 $0.500 11,000,000 - $0.800 - $0.300 - $0.800 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 250,000* 60,000 2,335,000* - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - (250,000) - - (20,790,000) (4,205,520) (2,970,000) (3,630,001) (2,970,000) (7,920,000) (11,723,684) (297,000) (2,970,000) (198,000) (198,000) (297,000) (8,910,000) (2,475,000) (594,000) (420,750) (561,000) (495,000) (1,485,000) (742,500) (1,485,000) (1,485,000) (742,500) (24,750,000) (1,980,000) (742,500) (297,000) (297,000) (10,890,002) (10,890,002) (10,890,002) - - - 210,000 42,480 30,000 36,666 30,000 80,000 118,421 3,000 30,000 2,000 2,000 3,000 90,000 25,000 6,000 4,250 5,666 5,000 15,000 7,500 15,000 15,000 7,500 250,000 20,000 7,500 3,000 3,000 109,998 109,998 109,998 - 60,000 2,335,000 139,698,438 2,645,000 (250,000) (138,301,461) 3,791,977 *Tranches issued to investors unconnected with share-based payments. 61 Opyl Limited Notes to the financial statements 30 June 2020 Note 24. Share based payments (continued) 2019 Grant date Expiry date Exercise price start of the Granted Exercised Balance at the 07/01/2016 05/12/2016 27/06/2017 11/07/2017 10/11/2017 21/02/2018 21/02/2018 21/02/2018 17/04/2018 19/02/2018 05/04/2018 05/04/2018 18/04/2018 06/03/2018 04/05/2018 06/02/2017 20/03/2017 20/03/2017 20/03/2017 01/04/2017 01/04/2017 01/04/2017 01/04/2017 26/01/2018 24/07/2018 15/10/2018 15/10/2018 15/10/2018 15/10/2018 08/02/2019 21/03/2019 08/02/2019 13/05/2019 31/12/2020 05/12/2026 27/06/2022 31/12/2018 10/11/2022 20/02/2023 05/06/2022 13/04/2022 17/04/2023 19/02/2023 05/04/2023 05/04/2018 18/04/2023 04/05/2023 04/05/2023 06/02/2027 20/03/2027 20/03/2027 20/03/2027 01/04/2027 01/04/2027 01/04/2027 01/04/2027 26/02/2028 24/07/2023 06/03/2023 06/03/2023 18/09/2023 09/06/2023 08/02/2024 21/03/2024 08/02/2024 13/05/2024 year $0.050 21,000,000 4,248,000 $0.012 $0.005 9,000,000 $0.010 22,000,000 $0.005 11,000,000 3,000,000 $0.006 $0.007 8,000,000 $0.005 11,842,105 300,000 $0.005 3,000,000 $0.005 200,000 $0.005 200,000 $0.005 300,000 $0.005 9,000,000 $0.005 2,500,000 $0.005 600,000 $0.008 425,000 $0.025 56,666 $0.025 500,000 $0.025 1,500,000 $0.006 750,000 $0.006 1,500,000 $0.006 1,500,000 $0.006 750,000 $0.006 $0.001 $0.004 $0.004 $0.004 $0.004 $0.005 $0.005 $0.005 $0.005 - - - - - - - - - - - - - - - - - - - - - - - - - 25,000,000 2,000,000 - 750,000 - 300,000 - - 300,000 - 11,000,000 - 11,000,000 - 11,000,000 - 11,000,000 Expired/ forfeited/ other Balance at the end of the year - 21,000,000 - 4,248,000 (6,000,000) 3,000,000 (22,000,000) - (7,333,333) 3,666,667 - 3,000,000 - 8,000,000 - 11,842,105 - 300,000 - 3,000,000 - 200,000 - 200,000 - 300,000 - 9,000,000 - 2,500,000 - 600,000 - 425,000 - 566,666 - 500,000 - 1,500,000 - 750,000 - 1,500,000 - 1,500,000 - 750,000 - 25,000,000 - 2,000,000 - 750,000 - 300,000 - 300,000 - 11,000,000 - 11,000,000 - - 11,000,000 (11,000,000) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 113,171,771 72,350,000 - (46,333,333) 139,698,438 62 Opyl Limited Notes to the financial statements 30 June 2020 Note 24. Share based payments (continued) Set out below are the options exercisable at the end of the financial year: Grant date 07/01/2006 05/12/2016 27/06/2017 11/07/2017 10/11/2017 21/02/2018 21/02/2018 21/02/2018 17/04/2018 19/02/2018 05/04/2018 05/04/2018 18/04/2018 06/03/2018 04/05/2018 06/02/2017 20/03/2017 20/03/2017 20/03/2017 01/04/2017 01/04/2017 01/04/2017 01/04/2017 26/01/2018 24/07/2018 15/10/2018 15/10/2018 15/10/2018 15/10/2018 08/02/2019 08/02/2019 08/02/2019 21/03/2019 21/03/2019 21/03/2019 13/05/2019 13/05/2019 13/05/2019 10/12/2019 10/12/2019 10/12/2019 Expiry date 31/12/2020 05/12/2026 27/06/2022 31/12/2018 10/11/2022 20/02/2023 05/06/2022 13/04/2022 17/04/2023 19/02/2023 05/04/2023 05/04/2023 18/04/2023 04/05/2023 04/05/2023 06/02/2027 20/03/2027 20/03/2027 20/03/2027 01/04/2027 01/04/2027 01/04/2027 01/04/2027 26/01/2028 24/07/2023 06/03/2023 06/03/2023 18/09/2023 09/06/2023 08/02/2024 08/02/2024 08/02/2024 21/03/2024 21/03/2024 21/03/2024 13/05/2024 13/05/2024 13/05/2024 10/12/2024 10/12/2024 10/12/2024 63 2020 Number 2019 Number 210,000 21,000,000 42,480 2,956,000 30,000 3,000,000 - 22,000,000 36,667 3,666,667 30,000 3,000,000 80,000 8,000,000 118,421 11,842,105 40,000 100,000 - 1,000,000 - 66,667 - 66,667 - 100,000 90,000 3,000,000 25,000 2,500,000 6,000 300,000 14,917 290,000 - 380,000 - 350,000 - 375,000 - 375,000 - 562,500 - 750,000 - 187,500 250,000 8,333,334 20,000 1,333,334 7,500 500,000 3,000 100,000 3,000 100,000 36,667 - 36,667 - 36,667 - 36,667 - 36,667 - 36,667 - 36,667 - 36,667 - 36,667 - 20,000 - 20,000 - 20,000 - 1,396,988 96,234,774 Opyl Limited Notes to the financial statements 30 June 2020 Note 24. Share based payments (continued) For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the grant date are as follow: Grant date Expiry date Share price Exercise at grant date price Expected volatility Dividend yield Risk-free Fair value interest rate at grant date 10/12/2019 10/12/2024 $0.170 $0.300 100.00% - 1.50% $0.113 64 Opyl Limited Directors' declaration 30 June 2020 In the directors' opinion: ● the attached financial statements and notes comply with the Corporations Act 2001, Accounting Standards AASB 134 'Interim Financial Reporting', the Corporations Regulations 2001 and other mandatory professional reporting requirements; ● The financial statements also comply with International Financial Reporting Standards as disclosed in note 1. ● ● the attached financial statements and notes give a true and fair view of the company's financial position as at 30 June 2020 and of its performance for the financial year ended on that date; and there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable. The directors have been given the declarations required by section 303(5)(a) of the Corporations Act 2001. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the directors Damon Rasheed Director 27 August 2020 65 Opyl Limited Independent auditor’s report to members Report on the Audit of the Financial Report Opinion We have audited the financial report of Opyl Limited (the Company) and its controlled entities (the Group), which comprises the consolidated statement of financial position as at 30 June 2020, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies and other explanatory information, 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 2020 and of its financial performance for the year ended on that date; 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 (including Independence Standards) (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 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 in the financial report, which indicates that the Group incurred a net loss of $934,904 during the year ended 30 June 2020 and, as of that date, the Group’s net cash outflows used in operations was $1,028,992. 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 Company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter. Other Matter The financial report of Opyl Limited (formerly named ShareRoot Limited) for the year ended 30 June 2019 was audited by another auditor, who expressed an unmodified opinion to that report. 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. In addition to the matter described in the Material Uncertainty Related to Going Concern section, we have determined the matters described below to be the key audit matters to be communicated in our report. REVENUE RECOGNITION Area of focus As required by AASB 15 Revenue from Contracts with Customers, revenue is disclosed in Note 1. This area is a key audit matter as each revenue stream requires a bespoke revenue recognition model to ensure that revenue is only recognised: a) when a performance milestone is achieved; b) can be reliably measured; and c) there is a low likelihood for dispute by the customer for revenues that are recognised which are beyond that originally scoped at the inception of the engagement. How our audit addressed it Our audit procedures included the following: • Understanding and documenting the design of key controls and testing their operational effectiveness on revenue recognition; • The evaluation of revenue recognition policies for all material sources of revenue to ensure that revenue is recognised in-accordance with AASB 15; • Examining management’s assessment of achievement of performance milestones relevant to material revenue contracts; • Performing detailed cut-off testing to ensure that revenue transactions throughout the year end had been recorded in the correct financial period. In-addition, we also examined key disclosures relating to the recognition of revenue in the financial statements. CLOSURE OF US OPERATIONS Area of focus How our audit addressed it During the year the Group wound down trading activity that it formerly conducted in the United States. As a result of this wind down, the Group has settled legacy liabilities with previous suppliers and employees that it had previously recorded in the Statement of Financial Position. In preparing these financial statements, the Directors have considered that the results of its US operations were sufficiently immaterial and inconsequential to merit the designation of a discontinued operation that may otherwise have been disclosed in the Statement of Financial Position. Our audit procedures included the following: • Legacy liabilities which were individually material were agreed to settlements and final cash payments; and • We consulted with the Group’s legal counsel to discuss any further liabilities not captured in the Statement of Financial Position, or the existence of contingent liabilities not otherwise disclosed in the financial statements; • We consulted with our Group Technical Team to discuss management’s assessment of its trading activity as not meeting the definition of a discontinued operation in assessing disclosures in the financial statements. Other Information The directors are responsible for the other information. The other information comprises the information in the Group’s annual report for the year ended 30 June 2020, but does not include the financial report and the auditor’s report thereon. Our opinion on the financial report does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the ability of the Group to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or has 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 these financial statements is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf This description forms part of our independent auditor’s report. Report on the Remuneration Report Opinion on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2020. In our opinion, the Remuneration Report of Opyl Limited, for the year ended 30 June 2020, complies with section 300A of the Corporations Act 2001. Responsibilities The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards. William Buck Audit (Vic) Pty Ltd ABN: 59 116 151 136 N. S. Benbow Director Melbourne, dated this 27th day of August, 2020 Opyl Limited Shareholder information 30 June 2020 The shareholder information set out below was applicable as at 15 July 2020 Distribution of equitable securities Analysis of number of equitable security holders by size of holding: 1 to 1,000 1,001 to 5,000 5,001 to 10,000 10,001 to 100,000 100,001 and over Holding less than a marketable parcel Number of holders of options over Number of holders of ordinary ordinary shares shares 2,609 335 151 278 82 3,455 - - 9 12 34 11 66 - 70 Opyl Limited Shareholder information 30 June 2020 Equity security holders Twenty largest quoted equity security holders The names of the twenty largest security holders of quoted equity securities are listed below: Ordinary shares % of total shares issued Number held SCINTILLA STRATEGIC INVESTMENTS LIMITED ALTOR CAPITAL MANAGEMENT PTY LTD (ALTOR ALPHA FUND A/C) HONGKONG FRANK PTY LTD (DAVIS SUPER FUND A/C) REWOP PTY LTD (SCOTT POWER SUPER FUND A/C) UBS NOMINEES PTY LTD MR MARAT BASYROV KAMAREL PTY LTD (K F & M L SMITH S/F A/C) DR DEREK ANTHONY JELLINEK CS THIRD NOMINEES PTY LIMITED (HSBC CUST NOM AU LTD 13 A/C) SUPERTANK PTY LTD (SUPERTANK SUPERFUND A/C) NOAH ABELSON MR ROBERT GARETH PRICE & MR STEVEN DAVID PRICE (SIMEST SUPER FUND A/C) MR ELIE CHAKKOUR DR THOMAS PETER CLARKE & MRS GILDA FRANCES CLARKE (TP&GF CLARKE SUPER FUND A/C) DLK INVESTMENTS GROUP PTY LTD (THE DLK INVESTMENTS UNIT A/C) MRS JACINTA MAY WILKIE CARTER HOSKING PTY LTD (CARTER HOSKING S/FUND A/C) DOLOC PTY LTD (THE CLIVE BRIGGS PSL S/F A/C) MR THOMAS ROBERT SARTOR RCKC NOMINEES PTY LTD 1,877,532 1,011,077 850,000 840,669 762,500 730,000 700,000 683,153 619,400 500,000 491,188 406,150 400,000 400,000 400,000 399,250 380,480 361,711 360,400 330,000 5.09 2.74 2.30 2.28 2.07 1.98 1.90 1.85 1.68 1.36 1.33 1.10 1.08 1.08 1.08 1.08 1.03 0.98 0.98 0.89 12,503,510 33.88 Twenty largest unquoted equity security holders The names of the twenty largest security holders of unquoted equity securities are listed below: 71 Opyl Limited Shareholder information 30 June 2020 ANTANAS GUOGA DDPEVCIC (WA) PTY LTD(DOMINIC FAMILY A/C) GE EQUITY INVESTMENTS PTY LTD SCINTILLA STRATEGIC INVESTMENTS LIMITED JULIAN CHICK FOSTER STOCKBROKING PTY LTD MR MARAT BASYROV DAMON RASHEED SANLAM PRIVATE WEALTH PTY LTD (WESTBOURNE LONG SHORT A/C) BLARNEY VENTURES WALSH PRESTIGE PTY LTD (WALSH FAMILY A/C) AUSTRALIAN TRAVEL DIRECTORY (AUST) PTY LTD MR MARK ANDREW TKOCZ MR BIN LIU HIRSCH FINANCIAL PTY LTD MICHELLE GALLAGHER HELMET NOMINEES PTY LTD (TIM WEIR FAMILY FUND A/C) DEMASIADO PTY LTD (DEMASIADO FAMILY A/C) JASON WEAVER (WEAVER FAMILY A/C) MRS LUYE LI Unquoted equity securities There are no unquoted equity securities. Options over ordinary shares % of total options issued Number held 690,000 233,333 166,667 166,667 159,998 140,000 129,998 129,998 125,000 118,421 100,000 100,000 100,000 100,000 100,000 90,000 83,333 83,333 80,000 80,000 2,976,748 18.20 6.15 4.40 4.40 4.22 3.69 3.43 3.43 3.30 3.12 2.64 2.64 2.64 2.64 2.64 2.37 2.20 2.20 2.11 2.11 78.53 72  Number on issue Number of holders 80,000 118,421 3,000 30,000 4,000 3,000 115,000 6,000 14,916 52,500 7,500 250,000 27,500 3,000 3,000 36,666 36,666 36,666 36,666 210,000 36,666 36,666 36,666 36,666 36,666 60,000 42,480 2,335,000 30,000 36,666 30,000 3,791,977 1 1 1 1 2 1 2 1 3 4 1 1 2 1 1 1 1 1 1 6 1 1 1 1 1 3 4 28 1 1 1 76 Opyl Limited Shareholder information 30 June 2020 Unlisted Options expiry and exercise price UNL OPTIONS EXP 05/06/2022 @ $0.70 UNL OPTIONS EXP 13/04/2022 @ $0.50 UNL OPTIONS EXP 17/04/23 @ $0.50 UNL OPTIONS EXP 19/02/23 @ $0.50 UNL OPTIONS EXP 05/04/23 @ $0.50 UNL OPTIONS EXP 18/04/23 @ $0.50 UNL OPTIONS EXP 04/05/23 @ $0.50 UNL OPTIONS EXP 06/02/27@ $0.80 UNL OPTIONS EXP 20/03/27@ $2.50 UNL OPTIONS EXP 01/04/27@ $0.60 UNL OPTIONS EXP 26/01/28 @ $0.60 UNL ESS OPT EXP 24/07/2023 @ $1.00 UNL OPT EXP 6/03/2023 @ $0.40 UNL OPT EXP 18/09/2023 @ $0.40 UNL OPT EXP 9/06/2023 @ $0.40 UNL OP EX 8/2/2024 @ $0.50 VEST 11/2/20 UNL OP EX 8/2/2024 @ $0.50 VEST 11/2/21 UNL OP EX 8/2/2024 @ $0.50 VEST 11/2/22 UNL OP EX 21/3/24 @ $0.50 VEST 21/3/20 UNL OPTIONS EXP 31/12/2020 @ $5.00 UNL OP EX 21/3/24 @ $0.50 VEST 21/3/21 UNL OP EX 21/3/24 @ $0.50 VEST 21/3/22 UNL OP EXP 13/5/24 @ $0.50 VEST 13/5/20 UNL OP EXP 13/5/24 @ $0.50 VEST 13/5/21 UNL OP EXP 13/5/24 @ $0.50 VEST 13/5/22 UNL OP EXP 10/12/24 @ $0.30 UNL OPTIONS EXP 10YRS GRANT DAY @ $1.20 UNL OP EXP 10/12/24 @ $0.80 UNL OPTIONS EXP 27/06/2022 @ $0.50 UNL OPTIONS EXP 10/11/2022 @ $0.50 UNL OPTIONS EXP 20/02/2023 @ $0.60 73 Opyl Limited Shareholder information 30 June 2020 Substantial holders Substantial holders in the company are set out below: SCINTILLA STRATEGIC INVESTMENTS LIMITED ALTOR CAPITAL MANAGEMENT PTY LTD (ALTOR ALPHA FUND A/C HONGKONG FRANK PTY LTD (DAVIS SUPER FUND A/C) REWOP PTY LTD (SCOTT POWER SUPER FUND A/C) UBS NOMINEES PTY LTD MR MARAT BASYROV ANTANAS GUOGA DDPEVCIC (WA) PTY LTD (DOMINIC FAMILY A/C) GE EQUITY INVESTMENTS PTY LTD SCINTILLA STRATEGIC INVESTMENTS LIMITED JULIAN CHICK FOSTER STOCKBROKING PTY LTD MR MARAT BASYROV DAMON RASHEED Voting rights The voting rights attached to ordinary shares are set out below: Ordinary shares % of total shares issued Number held 1,877,532 1,011,077 850,000 840,669 762,500 730,000 5.09 2.74 2.30 2.28 2.07 1.98 Options over ordinary shares % of total options issued Number held 690,000 233,333 166,667 166,667 159,998 140,000 129,998 129,998 18.20 6.15 4.40 4.40 4.22 3.69 3.43 3.43 Ordinary shares On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote. Options All quoted and unquoted options do not carry any voting rights 74 Corporate Directory Directors Julian Chick - Chairman and Non-Executive Director Damon Rasheed - Executive Director Marat Basyrov - Non-Executive Director Mark Ziirsen - Non-Executive Director Company Secretary David Lilja - Appointed 10 December 2019 David Hwang - Resigned 10 December 2019 Registered office 105, Wellington Street St Kilda, VIC 3182, Australia Principal place of business 105, Wellington Street St Kilda, VIC 3182, Australia Share register Automic Pty Ltd Level 5, 126 Phillip Street Sydney NSW 2000, Australia Telephone: +1300 288 664 (within Australia); +61 2 9698 5414 (outside Australia) Email: hello@automic.com.au Auditor William Buck 20/181, William St Melbourne VIC 3000 Solicitor Automic Legal Pty Ltd Level 5, 126 Philip Street Sydney NSW 2000, Australia Bankers Vault Legal 102/15 Corporate Drive Moorabbin VIC 3189, Australia Vasquez Benisek & Lindgren LLP 1150, Parkside Drive, Suite 130 Walnut Creek, CA 94596, USA Westpac Banking Corporation Level 13 109, St Georges Tce Perth WA 6000, Australia First Republic Bank 44, Montgomery Street San Francisco, CA 94104, USA Stock exchange listing Opyl Limited shares are listed on the Australian Stock Exchange (ASX code: OPL) Website www.opyl.ai Corporate Governance Statement www.opyl.ai/investors 75 

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