Pointerra
Annual Report 2022

Plain-text annual report

ABN 39 078 388 155 ANNUAL REPORT F o r t h e y e a r e n d e d 3 0 J u n e 2 0 2 2 Corporate Information Pointerra Limited ABN 39 078 388 155 Directors Ian Olson, Managing Director Paul Farrell, Non-Executive Director Neville Bassett, Non-Executive Director (Chairman) Company Secretary Neville Bassett Registered Office Level 4, 216 St Georges Terrace Perth, WA 6000 Telephone: +61 8 6268 2622 Facsimile: +61 8 6268 2699 Principal Office Level 2, 27 Railway Road Subiaco, WA 6008 Internet Website: www.pointerra.com info@pointerra.com Email: Auditor Hall Chadwick WA Audit Pty Ltd 283 Rokeby Road Subiaco, WA 6008 Share Registry Advanced Share Registry Services Ltd 110 Stirling Highway Nedlands, WA 6009 admin@advancedshare.com.au Email: Telephone: +61 8 9389 8033 Facsimile: +61 8 9262 3723 Solicitors Steinepreis Paganin Level 4, The Read Buildings 16 Milligan Street Perth, WA 6000 Telephone: +61 8 9321 4000 Facsimile: +61 8 9262 3723 Stock Exchange Listing Pointerra Limited shares are listed on the Australian Securities Exchange (ASX Code: 3DP) Contents About Pointerra Operational Highlights Financial Highlights Managing Director’s Review of Operations Directors’ Report Auditor’s Independence Declaration Financial Statements 1 2 3 4 9 22 23 Consolidated Statement of Profit or Loss and Other Comprehensive Income 24 Consolidated Statement of Financial Position Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Notes to the Financial Statements Directors’ Declaration Independent Auditor’s Report Corporate Governance Statement Additional Information for Shareholders 25 26 27 28 50 51 56 57 About Pointerra Pointerra is a leading global geospatial technology company that is changing the way people use 3D data to build digital twins and manage the physical world. Pointerra3D is the world’s fastest true end-to-end digital twin solution, leveraging proprietary technology and an innovative, unique cloud subscription business model. We help our customers answer almost any physical asset management question and solve numerous traditional workflow problems when using 3D digital twin data to plan, design, construct, own, operate, insure and regulate the physical world around us. Pointerra3D’s digital twin solution stores, processes, manages, analyses, extracts, visualises and shares the key insights from massive 3D datasets at a new level of speed, smarts and scale. Pointerra3D ANSWERS delivers the predictive insights that enable definitive answers to physical asset management questions. Pointerra3D ANALYTICS creates a digital twin to enable intelligent analysis of physical assets. Pointerra3D CORE is the baseline platform access and 3D data workflow offering. Pointerra’s business targets customers across 6 key sectors, each of which represents total addressable market (TAM) of at least US$50 million in annual contract value (ACV) opportunities. SURVEY & MAPPING AEC UTILTIES TRANSPORT MINING, OIL & GAS DEFENSE & INTELLIGENCE ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 1 Operational Highlights Expanded core platform development team in AUS and US Created product team to sit between platform development and business development Opened US office and scaled business development team across 6 target market sectors Rebranded Pointerra corporate and Pointerra3D solution architecture Launched AI program to build on and accelerate existing 3D data analytics capability Successfully won and deployed material contracts in strategic US power utility sector 2 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Financial Highlights Annual Contract Value US$18.2m 86% (2021: US$9.8m) Underlying EBITDA* A$0.025m Customer Revenue A$9.8m 146% (2021: A$3.98 million) Customer Cash Receipts A$7.75m 102% (2021: -A$1.27 million) [*adjusted for share based payments expense] 91% (2021: A$4.10 million) Customer Receivables A$2.70m Cash Balance A$3.60m 407% (2021: A$0.53 million) 30% (2021: A$5.18 million) FY22 Highlights – step change in scale lead by US Utilities • • • • • • Growth across Pointerra’s 6 key market sectors delivered 86% annual improvement in ACV with majority delivered by the Company’s standout US Utilities sector Growth in revenue from customers to A$9.8m reflects award of material contracts coupled with increased spend by existing customers plus new customers added during the year Underlying EBITDA of A$0.025m (FY21 -A$1.27m) reflects scaling customer revenue compared to more modest growth in operating costs Growth in cash receipts tracks growth in revenue and ACV with these metrics expected to align as the business continues to mature in coming reporting periods Cash balance of A$3.60m and trade and other receivables of $3.50m demonstrates self-funding business model Pointerra enters FY23 funded for continued organic growth in platform development and customer acquisition with new hires being sought across the operation – development, product and sales ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 3 Managing Director’s Review of Operations Dear Shareholder I’m pleased to provide a review of our operations for FY22, a year in which your company continued to mature its world-class digital twin platform and solution, while also achieving growth across the business in terms of customers, people and process. Record Financial Performance During FY22 the business generated step-change improvements across all key financial metrics with continued growth in ACV delivering record revenue, cashflow and underlying EBITDA. Pointerra has consistently sought to build a capital-light business model capable of generating very high gross margins and over recent quarters has also demonstrated an ability to scale organically in a self-funding manner. FY23 therefore presents an opportunity to exploit emerging positive operational leverage to deliver a maiden earnings result for the Company. Operational Achievements FY22 marked a clear transition in Covid related border and general movement restrictions, which facilitated a return to in-person meetings across the AUS and US operations. Whilst Pointerra is a cloud SaaS business, people still buy from people and the resumption of travel and trade show attendance in the US and more recently Australia has helped re-establish important face to face contact with customers, prospects and technology partners in both countries. Initiatives including the rebranding of both Pointerra corporate and Pointerra3D product/solution messaging, opening our first US office in Virginia and making new BD appointments in key target market sectors in Australia and the US were important. During the year Pointerra secured a number of material enterprise sales in the strategically important US power utilities sector. Onboarding these customers was another operational highlight for FY22 and required overcoming numerous complex organisational challenges to deliver customer success. In the emerging key target market sectors of Mining, Oil & Gas, the business development and product teams successfully leveraged the Company’s proven power utility sector approach of working with customers and prospects to systematically cloudify slow, inefficient desktop workflows to Pointerra3D, delivering operational productivity, safety and regulatory compliance to the sector. As a result Pointerra now counts a number of Tier 1 global resources companies as customers that are expected to scale their use to become material enterprise customers in coming periods. Whilst Pointerra3D Defence & Intelligence and Transport sector digital twin solutions are less mature, the foundational Pointerra3D Core platform facilitated the onboarding of enterprise customers during the year, with sector-specific solutions also emerging via Pointerra3D Analytics and Answers. 4 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Industry & Market Update The global geospatial sector continues to experience material levels of year-on-year growth in both hardware and software solutions, with ready access to the creation and consumption of 3D data also becoming democratised down to the consumer via recent LiDAR hardware and software enhancements available on newer iPhone and iPad models. Importantly, the geospatial sector (surveying & mapping) supports the AEC sector (architecture, engineering and construction) in planning, designing, building and operating infrastructure assets for end-user customers across key Pointerra target market sectors. With post-Covid government infrastructure funding at unprecedented levels, the AEC sector (Pointerra’s largest TAM) is accelerating the adoption of workflow technology solutions (like Pointerra3D) in order to deliver the required infrastructure projects. These structural tailwinds and innovation drivers are helping grow Pointerra’s sales pipeline as well as shrinking the sales cycle. Larger enterprise customers that were cloud-cautious prior to 2020 have also embraced cloud migration across their operations, aiding in the accelerated adoption of cloud SaaS platforms like Pointerra3D. ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 5 As we move further into FY23 the Company remains laser-focused on balancing our ambitions to deliver exceptional organisational and financial growth with a disciplined approach to financial management. 6 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Growth Strategy The Company’s growth strategy remains consistent: 1. Identify and on-board quality people in development, product and business development across Pointerra’s 6 key target market sectors. 2. Continue to work with customers, prospects and partners to identify problematic and clumsy desktop digital twin workflows that can be migrated to the cloud, building out Pointerra3D Analytics and Answers solutions with sector-specific tools that leverage the power of Pointerra3D Core. 3. Leverage the Company’s proven success in the power utility sector to provide a pathway for growth across other key target market sectors. 4. Retain a disciplined focus on scaling sticky, recurring SaaS ACV, revenue and cashflow so that the resulting operational leverage can drive sustainable profitability. Outlook & Focus Areas for FY23 As we move further into FY23 the Company remains laser-focused on balancing our ambitions to deliver exceptional organisational and financial growth with a disciplined approach to financial management. Success will likely result if we are able to focus on the biggest drag on growth – identifying, onboarding, nurturing and retaining exceptional people. The absolute irony of scaling a cloud platform business is a magnified reliance on the need for exceptional people to conceive, build and sell digital twin solutions to our customers and prospects across the Company’s key target market sectors. Your team at Pointerra is up to the challenge and we look forward to delivering through FY23 and beyond. Ian Olson Managing Director ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 7 8 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Directors’ Report ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 9 Directors’ Report The directors of Pointerra Limited (“the Company”) present their report, together with the financial statements of the Company, for the financial year ended 30 June 2022. The names of the directors in office at any time during or since the end of the year are: NAME OF PERSON POSITION DATE APPOINTED Ian Olson Managing Director 30 June 2016 Neville Bassett Non-executive Chairman 30 June 2016 Paul Farrell Non-executive Director 9 November 2018 Information on Directors Mr Ian Olson – Managing Director CA, B.Com, MAICD Mr Olson is a Chartered Accountant and professional public company director with a 30-year career in finance and the capital markets sector and has helped numerous high-growth companies move from private to public status via the ASX and International stock exchanges. Mr Olson started his career with Ernst & Young and has worked in London and New York with global investment banks. He is also the Non-Executive Chairman of Good Drinks Australia Limited. In addition to being one of the co-founders of Pointerra in 2015, Mr Olson has more than 15 years’ experience in the geospatial sector, having previously owned and operated a surveying business that specialised in the generation of 3D data for customers in the mining, oil & gas and AEC sectors. Mr Neville Bassett – Non-Executive Director (Chairman) AM, FCA Mr Bassett is a Chartered Accountant operating his own corporate consulting business, specialising in the area of corporate, financial and management advisory services. He consults to a number of publicly listed companies and private company groups in a diversity of industry sectors, and is a director or company secretary of a number of public and private companies. Mr Bassett has been involved with numerous public company listings and capital raisings. His involvement in the corporate arena has also included mergers and acquisitions, and includes significant knowledge and exposure to the Australian financial markets. He has a wealth of experience in matters pertaining to the Corporations Act, ASX listing requirements, corporate taxation and finance. Mr Bassett is the principal director of Westar Capital Limited, the holder of an Australian Financial Services License and is a Fellow of Chartered Accountants Australia and New Zealand. He was previously State Chairman and a former National Director of the Royal Flying Doctor Service. Mr Paul Farrell – Non-Executive Director B.Sc, GDip Mgt, MBA Mr Farrell is the Managing Director of NGIS Australia, which was established in 1993 and has grown from being a boutique map maker and digitising house to an integrated provider of mapping and location-based technology solutions to large enterprise nationally and internationally, working with globally recognised technology companies such as Google. Mr Farrell has tertiary qualifications in both Science and Management, completing an MBA in 2005. Outside of NGIS, Paul is involved and has sat on many private, government and research boards including the WA Regional Development Trust and Frontier SI. He is a past National Chairman of SIBA (Spatial Industry Business Association) and Vice-Chair of the AIIA (Australian Information Industry Association) in WA. 10 Pointerra Limited ABN 39 078 388 155 1 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Directors’ Report Directorships of other listed companies Directorships of other listed companies held by directors during the 3 years immediately before the end of the financial year are as follows: Name Company Period of directorship Mr Ian Olson Good Drinks Australia Limited (Non-executive Chairman) 12 November 2007 – current Mr Neville Bassett Metalsearch Ltd (Formerly Laconia Resources Ltd) Yowie Group Ltd Auris Minerals Ltd PharmAust Ltd 8 May 2015 – 16 October 2019 5 August 2019 – 27 November 2020 20 April 2018 – current 2 October 2018 – current Tennant Minerals Ltd 28 November 2019 – current Bulletin Resources Ltd 15 October 2021 - current Pointerra Limited ABN 39 078 388 155 2 11 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Directors’ Report Directors’ interests in shares and options At the date of this report, the direct and indirect interests of the Directors in the ordinary shares and options of the Company were: Ian Olson Neville Bassett Paul Farrell Directors’ meetings Ordinary shares Options 42,814,889 4,732,266 3,000,000 - - - Attendances by each Director at directors’ meetings during the year were as follows: Directors Meetings Number Eligible to Attend Number Attended Ian Olson Neville Bassett Paul Farrell 3 3 3 3 3 3 Directors’ meetings held during the year, included above, do not include meetings held via circular resolution. Directors held an additional 8 meetings via circular resolution, attended by all directors, for a total of 11 meetings. Company Secretary Mr Neville Bassett – appointed 30 June 2016. For further information about Mr Bassett, please refer to the information on directors in this Directors’ Report. Principal Activities Pointerra is an Australian headquartered company with operations in the Australasian and North American regions, focused on the global commercialisation of its proprietary 3D technology solution to support digital asset management activities across a range of sectors, including civil infrastructure, mining, oil & gas, architecture, engineering & construction, and government agencies at all levels. Pointerra’s cloud-based solution is based on compression, visualisation and analytics algorithms that index massive 3D datasets, for which Pointerra has both granted and provisional Patent Applications in a range of countries and jurisdictions. Customers 3D data hosted by Pointerra can be dynamically searched, accessed, visualised, analysed and shared by anyone, anywhere, on any device and at any time. Review of Operations Sales & Platform During the year the Company continued to generate growth in sales and cash receipts across target sectors, increasing the number of paying customers and regularly reporting cumulative Annual Contract Value (ACV) of Pointerra’s customers. Further investment in Pointerra3D’s Analytics and Answers solutions during FY22 broadened the appeal of the Company’s platform, attracting new customers and prospects as well as growing sales from existing Pointerra3D Core customers in Australia and the US. During FY22 the Company’s R&D team continued to work with customers and partners to build-out the platform and analytics stack, responding to the simple questions that Pointerra uses in determining the suitability of its platform: • What physical asset management problems are you trying to solve? (using 3D digital twin data); and/or • What questions are you trying to ask of 3D digital twin data? Responding to growth in demand for Pointerra’s 3D digital twin solution, the Company made a number of appointments during the year to support the R&D team and the Company’s business development and sales activities. 12 Pointerra Limited ABN 39 078 388 155 3 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Directors’ Report Financial Review During the year the Company grew cash receipts from customers to $7.75 million from $4.07 million in FY21 and reported ACV subscription growth from US$9.80 million (July 2021) to US$18.20 million by July 2022. Operating cash outflows were in line with management expectations during the year. The Company continues to operate a lean, agile, low-cost operating model as it scales customer sales and will continue to add R&D and sales resources in line with growth in the sales pipeline. This approach generated multiple cashflow positive quarters during FY22 and for the full year, Pointerra generated near cashflow breakeven from operating activities. The Company notes that quarter-on-quarter cash receipts may continue to be variable as new customers are on-boarded following contract award with a variety of different payment cycles including monthly, quarterly, annually and even multi-year in advance agreements. This ongoing variability in quarterly cash receipts is however expected to smooth out in time as ACV continues to grow and the size and diversity of Pointerra’s customer base continues to mature. COVID-19 Pointerra team members now reside in 2 Australian and 5 US states and since the global outbreak of the COVID-19 pandemic, Pointerra has followed and adopted hygiene, health and work practice advice from relevant state and federal health departments and agencies in Australia and the US. To date COVID-19 has had minimal impact on the ability of Pointerra’s team to continue to operate the Company’s business. The Board has considered a range of operational risk management initiatives, which will continue to be monitored in this fluid and rapidly changing global environment. First and foremost, the safety of our people will continue to remain a priority. Operating Results The loss for the financial year after providing for income tax was $2,673,599 (2021: $1,509,332 (loss)). Financial Position As at 30 June 2022, the Company had cash of $3,596,423 (2021: $5,179,363) and net assets of $3,289,036 (2021: $4,588,729). Future Developments The Company will continue to commercialise its technology stack via a recurring subscription-based revenue model. Pointerra’s vision is to become a globally relevant 3D digital twin geospatial technology business focused on solving the numerous challenges of using 3D digital twin data to manage the physical world – simplifying the complex and doing it faster than anyone else. Operational & Financial Risks The Company faces a number of operational and financial risks as it seeks to scale operations in Australia and the US. Operational risks include the ability to find and retain people, the continued suitability of Pointerra’s cloud platform to support solving customer problems, potential competitors and wider macro-economic headwinds including rising interest rates and stagnating global growth. Financial risks include currency (foreign exchange) risk and having sufficient cash reserves to fund ongoing investment in people and platform. Dividends Paid or Recommended No dividends were paid or declared since the start of the financial year. Pointerra Limited ABN 39 078 388 155 4 13 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Directors’ Report Environmental Issues The Company has a policy of at least complying, but in most cases exceeding, its environmental performance obligations. No environmental breaches have been notified by any government agency during the year ended 30 June 2022. The Board believes that the Company has adequate systems in place for the management of its environmental regulations. The Company also believes that the adoption of its cloud platform for 3D data by customers around the world generates positive ESG (Environmental, Social and Governance) outcomes by allowing customers to manage their physical world using Pointerra’s browser-based interface, resulting in fewer physical site visits. Shares under Option At the date of this report, there were no unissued ordinary shares of Pointerra Limited under option. Refer to Note 18 for further information on terms of options. Indemnifying officers or auditor During or since the end of the financial year the Company has given an indemnity or entered into an agreement to indemnify, or paid or agreed to pay insurance premiums as follows: • The Company has entered into agreements to indemnify all Directors and provide access to documents, against any liability arising from a claim brought by a third party against the Company. The agreement provides for the company to pay all damages and costs which may be awarded against the Directors. • No indemnity has been paid to auditors. Remuneration Report (audited) This report details the nature and amount of the remuneration for each member of key management personnel of Pointerra Limited for the year ended 30 June 2022. For the purposes of this report, Key Management Personnel of the company are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company, directly or indirectly. For the purposes of this Remuneration Report, the term ‘Executive’ encompasses all Directors, the Company Secretary, the Chief Operating Officer, Chief Research Officer and Chief Technical Officer of the company. Remuneration Philosophy The performance of the company depends upon the quality of its Directors and Executives. To prosper, the company must attract, motivate and retain highly skilled Directors and Executives. To this end, the company embodies the following principles in its remuneration framework: ‘The Board as a whole is responsible for considering remuneration policies and packages applicable both to board members and senior executives of the company. The Board remuneration policy is to ensure the remuneration package, which is not linked to the performance of the company, properly reflects the person’s duties and responsibilities and that remuneration is competitive in attracting, retaining and motivating people of the highest quality.’ Remuneration Structure In accordance with best practice corporate governance, the structure of non-executive director and senior manager remuneration is separate and distinct. The company does not engage remuneration consultants. Non-executive Director Remuneration Objective The Board seeks to set aggregate remuneration at a level which provides the company with the ability to attract and retain directors of the highest calibre, whilst incurring a cost which is acceptable to shareholders. Structure The Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive directors shall be determined from time to time by a general meeting. An amount not exceeding the amount determined is then divided between the Directors as agreed. The current aggregate remuneration pool is $500,000 per year. The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst Directors is reviewed annually. The Board may consider advice from external consultants as well as the fees paid to non-executive Directors of comparable companies when undertaking the annual review process. Each director receives a fee for being a Director of the company. Non-executive Directors are encouraged by the Board to hold shares in the company. It is considered good governance for directors to have a stake in the Company on whose board he or she sits. 14 Pointerra Limited ABN 39 078 388 155 5 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Directors’ Report Voting on the Remuneration Report At the Company’s 2021 Annual General Meeting a resolution to adopt the 2021 Remuneration Report was passed by poll, with the poll indicating majority (98.61%) support in favour of adopting the Remuneration Report. Managing Director and Executive Remuneration Structure Based on the current stage in the company’s development, its size, structure and strategies, the Board considers that the key performance indicator in assessing the performance of Executives and their contribution towards increasing shareholder value is commercially based, inclusive of share price performance over the review period. Individual and company operating targets associated with traditional financial and non-financial measures are difficult to set given the small number of Executives and their need to be flexible and multi-tasked, as the company responds to a continually changing business environment. Consequently, a formal process of defining Key Performance Indicators (KPI’s) and setting targets against the KPI’s has not been adopted at the present time. The proportion of fixed remuneration and variable remuneration is established for each Executive by the Board. Fixed Remuneration The level of fixed remuneration is set so as to provide a base level of remuneration, which is both appropriate to the position and is competitive in the market. Fixed remuneration is reviewed annually by the Board; having regard to the Company and individual performance, relevant comparable remuneration in the industry sector and, where appropriate, external advice. Executives receive their fixed remuneration in cash. Variable Remuneration – Short-Term Incentive (STI) The objective of the STI is to link the achievement of corporate and operational objectives over the year with the remuneration received by the Executives charged with achieving that increase. The total potential STI available is set at a level so as to provide sufficient incentive to the Executives to achieve the performance goals and such that the cost to the company is reasonable in the circumstances. Annual STI payments granted to each Executive depend on their performance over the preceding year and are based on recommendations from the Managing Director and/or the Chairman following collaboration with the Board. Typically included are measures such as contribution to strategic initiatives, risk management and leadership/team contribution. The aggregate of annual STI payments available for Executives across the company is subject to the approval of the Board. Payments are usually delivered as a cash bonus. Variable Remuneration – Long-Term Incentive (LTI) The objective of the LTI plan is to reward Executives in a manner, which aligns the element of remuneration with the creation of shareholder wealth. As such LTI’s are made to Executives who are able to influence the generation of shareholder wealth and thus have an impact on the company’s performance. The level of LTI granted is, in turn, dependent on a number of factors including, the seniority of the Executive and the responsibilities the Executive assumes in the company. LTI grants to Executives are typically delivered in the form of options, performance rights or loan shares. These options, performance rights or loan shares are issued at an exercise price determined by the Board at the time of issue. However, under certain circumstances, including breach of employment conditions, the Directors may cause the options to expire prior to their vesting date. In addition, individual performance is more commonly rewarded over time by STIs. No LTI options were issued during the financial year. Company performance, shareholder wealth and Director and executive remuneration The remuneration policy has been tailored to increase goal congruence between shareholders, Directors and executives. Options issued to Directors have an exercise price higher than the current share price of the Company. The table below shows the performance of the Company for the five years to 30 June 2022: 2022 2021 2020 2019 2018 Net profit / (loss) (2,673,599) (1,509,332) ($2,525,453) ($1,907,036) ($1,660,843) Revenue 9,801,575 3,983,603 1,228,165 443,504 312,068 Earnings per share Share price at year end (0.39) $0.24 (0.23) $0.49 (0.45) $0.040 (0.37) (0.41) $0.046 $0.043 Pointerra Limited ABN 39 078 388 155 6 15 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Directors’ Report Employment Details of Members of Key Management Personnel The following table provides employment details of persons who were, during the financial year, members of key management personnel of the Company. The table also illustrates the proportion of remuneration that was performance and non-performance based and the proportion of remuneration received in the form of options, rights or loan shares. Position Contract details Proportions of elements of remuneration Proportions of elements of remuneration not (duration and termination) related to performance related to performance Non-salary cash-based Shares/ Options/ Fixed Salary/ Employee loan incentives Units Rights Fees Shares Total % % % % % % Key Management Personnel Ian Olson Managing Ongoing commencing 30 - Director June 2016. 6 months’ notice to terminate. Neville Bassett Chairman Service agreement in place - with termination upon resignation, non-election at shareholders meeting or prohibited by law. Paul Farrell Director Service agreement in place - with termination upon resignation, non-election at shareholders meeting or prohibited by law. Randy Rhoads Chief Operating Employment agreement in - Officer place. 1 month’s written notice to terminate by Company, 3 months by employee. If employment is terminated by the Company with notice, employee is entitled to severance payment of 6- months base salary, including the notice period. Mark Morrison Chief Technology Employment agreement in - Officer place. 4 weeks written notice to terminate by Company, 1 month by employee. David Lowe Chief Revenue Employment agreement in - Officer place. 4 weeks written notice to terminate by Company, 1 month by employee. - - - - - - - - 100 100 - - 100 100 - 100 - 100 - 100 - 100 - 100 - 100 - 100 - 100 16 Pointerra Limited ABN 39 078 388 155 7 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Directors’ Report Details of remuneration for the year ended 30 June 2022 Name Short-term benefits Post-employment benefits Share- based payments Share- based payments Employee service entitlements Total Performance related Non- cash benefit Superannuation Options $ $ Cash salary, fees & commission $ 36,000 411,000 36,000 346,276 200,000 220,000 1,249,276 Paul Farrell Ian Olson (1) Neville Bassett Randy Rhoads Mark Morrison David Lowe - - - - - - - - 37,500 - 20,055 20,000 22,000 99,555 Employee loan Shares $ Long service leave - - - - - - - - 43,755 - - 25,669 - 69,424 $ 36,000 492,255 36,000 366,331 245,669 242,000 1,418,255 % - - - - - - - $ - - - - - - - (1) Includes directors fees of $36,000 for the full financial year ended 30 June 2022. Details of remuneration for the year ended 30 June 2021 Name Short-term benefits Post-employment benefits Share-based payments Share-based payments Total Performance related Cash salary, fees & commission $ 36,000 455,000 36,000 346,405 170,000 263,608 1,307,013 Non- cash benefit $ Superannuation $ - - - - - - - - 26,125 - 23,467 16,150 15,675 81,147 Paul Farrell Ian Olson (2) Neville Bassett Randy Rhoads (1) Mark Morrison (1) David Lowe (1) Options $ - - - - - - - Employee loan Shares $ - - - - - - - $ 36,000 481,125 36,000 369,872 186,150 279,283 1,388,430 % - - - 21% - 35% - (1) During the year the Board determined that existing employees Mr Rhoads (Chief Operating Officer), Mr Morrison (Chief Technology Officer) and Mr Lowe (Chief Revenue Officer) would form part of the key management personnel of the Group. (2) Included in the salary of Mr Olson was a one-off cash bonus of $144,000 Pointerra Limited ABN 39 078 388 155 8 17 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Directors’ Report Ordinary Shares Held by Key Management Personnel – 30 June 2022 Key Management Person Paul Farrell Ian Olson (1) Neville Bassett Randy Rhoads Mark Morrison David Lowe Balance at beginning of year 3,000,000 42,814,889 4,732,266 8,000,000 20,409,452 - 78,956,607 Granted as remuneration during year - - - - - - - Issued on exercise of options during year - - - - - - - Other changes during the year - - - - - - - Balance at end of year 3,000,000 42,814,889 4,732,266 8,000,000 20,409,452 - 78,956,607 (1) 33,960,950 ordinary shares of the 42,814,889 held at 1 July 2021, were held by Mr Olson’s spouse. This did not change as at the reporting date 30 June 2022. Ordinary Shares Held by Key Management Personnel – 30 June 2021 Key Management Person Paul Farrell Ian Olson (2) Neville Bassett Randy Rhoads (1) Balance at beginning of year 3,000,000 47,514,889 4,732,266 9,000,000 Mark Morrison (1) 24,010,778 David Lowe (1) - 88,257,933 Granted as remuneration during year - - - - - - - Issued on exercise of options during year - - - - - - - Other changes during the year - Balance at end of year 3,000,000 (4,700,000) 42,814,889 - (1,000,000) (3,601,326) - 4,732,266 8,000,000 20,409,452 - (9,301,326) 78,956,607 (1) During the year the Board determined that existing employees Mr Rhoads (Chief Operating Officer), Mr Morrison (Chief Research Officer) and Mr Lowe (Chief Technical Officer) would form part of the key management personnel of the Group. (2) 37,960,950 ordinary shares of the 47,514,889 ordinary shares, held at 1 July 2020, were held by Mr Olson’s spouse. As at the reporting date 30 June 2021, 33,960,950 ordinary shares of the 42,814,889 were held by Mr Olson’s spouse. Options Held by Key Management Personnel – 30 June 2022 Key Management Person Ian Olson Neville Bassett Paul Farrell Balance at beginning of year Granted as remuneration during year Issued on exercise of options during year - - - - - - - - - - - - Other changes during the year - Balance at end of year - Vested and exercisable at end of year - - - - - - - - - - Options Held by Key Management Personnel – 30 June 2021 Key Management Person Ian Olson Neville Bassett Paul Farrell Balance at beginning of year Granted as remuneration during year Issued on exercise of options during year - - - - - - - - - - - - Other changes during the year - Balance at end of year - Vested and exercisable at end of year - - - - - - - - - - 18 Pointerra Limited ABN 39 078 388 155 9 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Directors’ Report Employee loan shares – 30 June 2022 The limited recourse loan provided under the Plan to Mr Farrell, Mr Olson and Mr Bassett as outlined below, remain outstanding, in full at the reporting date. The Company will maintain a lien over the Shares in respect of which a loan is outstanding. Employee loan shares – 30 June 2021 The limited recourse loan provided under the Plan to Mr Farrell, Mr Olson and Mr Bassett as outlined below, remain outstanding, in full at the reporting date. The Company will maintain a lien over the Shares in respect of which a loan is outstanding. Key Management Personnel Participant Number issued Grant date Share price at date of issue Exercise price Vesting condition Expected Volatility Date of expiry Risk free interest rate Value per loan share Valuation Paul Farrell 3,000,000 07.05.20 $0.032 Ian Olson 10,000,000 07.05.20 $0.032 $0.060 $0.060 Neville Bassett 3,000,000 07.05.20 $0.032 $0.060 Nil Nil Nil 89.75% 89.75% 30.04.25 0.41% $0.0186 $55,908 30.04.25 0.41% $0.0186 $186,359 89.75% 30.04.25 0.41% $0.0186 $55,908 Total 16,000,000 Vesting conditions $298,175 The key terms of the Employee Share Plan (ESP) and of each limited recourse loan provided under the Plan are as follows: - - - - - - - - The loan will be interest free; The loan made available to a Participant shall be applied by the Company directly toward payment of the issue price of the Shares; The loan repayment date is five years from the date of issue; A Participant must repay the Loan in full by the loan repayment date but may elect to repay the Loan amount in respect of any or all of the Shares at any time prior to the loan repayment date; The Company shall have a lien over the Shares in respect of which a Loan is outstanding and the Company shall be entitled to sell those Shares in accordance with the terms of the ISP; A loan will be non-recourse except against the Shares held by the Participant to which the loan relates; The Board may, in its absolute discretion, agree to forgive a Loan made to a Participant; and The total loan will be $0.06 per Share which shall be deemed to have been drawn down at Settlement upon issue of the Loan Shares. Sale of Loan Shares Shares may be subject to restriction conditions (such as a period of employment) which must be satisfied before the Shares can be sold, transferred, or encumbered. Shares cannot be sold, transferred or encumbered until any loan in relation to the Shares has been repaid or otherwise discharged under the ESP. Related party transactions No related party transactions were entered into during the year. -End of Remuneration Report- Pointerra Limited ABN 39 078 388 155 10 19 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Directors’ Report Subsequent events No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years. Non-audit services No non-audit services were provided by the auditor during the year. Explanation for differences between 4E and Annual Report As indicated in the Company’s ‘Appendix 4E – Preliminary final report, for the year ended 30 June 2022’, and lodged on the ASX platform on 31 August 2022, at the time of lodgement, the accounts were in the process of being audited. In the period following lodgement of the 4E, a number of adjustments were processed. The following table provides a reconciliation between the Company’s Appendix 4E and the Annual Report. Consolidated statement of profit or loss and other comprehensive income & Consolidated statement of financial position Loss before income tax for the year Total Assets Total Liabilities Net Assets/Equity Appendix 4E $ 3,388,105 7,636,898 (4,821,076) 2,815,822 Statutory Adjustments Financial Report $ (Annual Report) $ 2,963,662 7,651,366 (4,362,330) 3,289,036 (424,443) 14,468 458,746 473,214 The adjustments indicated were general in nature and mainly related to an increase in R&D receivable and the reversal of previously accrued balances. 20 Pointerra Limited ABN 39 078 388 155 11 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Directors’ Report Auditor’s Independence Declaration The lead auditor’s independence declaration as required under section 307C of the Corporations Act 2001 has been received and can be found directly following the directors’ report. This Report of the Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of the Board of Directors made pursuant to s.298(2) of the Corporations Act of 2001. Ian Olson Director 29 September 2022 Pointerra Limited ABN 39 078 388 155 21 12 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Auditor’s Independence Declaration To the Board of Directors AUDITOR’S CORPORATIONS ACT 2001 INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE As lead audit director for the audit of the financial statements of Pointerra Limited for the financial year ended 30 June 2022, I declare that to the best of my knowledge and belief, there have been no contraventions of: • the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and • any applicable code of professional conduct in relation to the audit. Yours Faithfully, HALL CHADWICK WA AUDIT PTY LTD D M BELL CA Director Dated this 29th day of September 2022 Perth, Western Australia 22 Pointerra Limited ABN 39 078 388 155 13 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Financial Statements ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 23 23 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 30 June 2022 Revenue Other income Cost of Services Employee benefits expense Administrative expenses Advertising and marketing expenses Compliance and regulatory expenses Research and development expenses Share based payment expenses Impairment expense Other expenses Loss before income tax Income tax benefit Note 2022 $ 2021 $ 9,801,575 3,983,603 6 7 8 18 13 9 858,531 (910,837) 591,011 (312,155) (4,997,620) (2,779,106) (1,084,310) (346,454) (222,080) (567,764) (17,046) (423,735) (1,463,001) (1,462,279) (1,302,448) (235,723) (1,360,434) (1,715,274) - (507,448) (2,963,662) (1,509,332) 3 290,063 - Loss after income tax for the year (2,673,599) (1,509,332) Other comprehensive income Items that may be reclassified subsequently to profit or loss: Exchange differences on translating foreign operations 17,285 36,836 Total comprehensive loss for the year attributable to members of the Company (2,656,314) (1,472,496) Earnings per share Cents Cents Basic and diluted loss per share 15 (0.39) (0.23) The accompanying notes form part of these financial statements 24 Pointerra Limited ABN 39 078 388 155 14 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Consolidated Statement of Financial Position as at 30 June 2022 CURRENT ASSETS Cash and cash equivalents Trade and other receivables Other TOTAL CURRENT ASSETS NON-CURRENT ASSETS Plant and equipment Intangible assets Right of use assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Lease liabilities Deferred revenue Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Lease Liabilities Provisions Deferred tax liability TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY Note 2022 $ 2021 $ 10 11 12 13 26 14a 27 14b 14c 27 14c 3 3,596,423 3,501,614 8,340 5,179,363 1,051,698 12,765 7,106,377 6,243,826 182,704 77,669 284,616 204,034 1,584,332 332,711 544,989 2,121,077 7,651,366 8,364,903 2,231,547 1,710,531 64,263 85,228 1,287,491 1,134,275 406,619 229,273 3,989,920 3,159,307 284,318 88,092 - 372,410 304,951 - 311,916 616,867 4,362,330 3,776,174 3,289,036 4,588,729 16 17 13,836,745 13,782,572 3,830,716 2,510,983 (14,378,425) (11,704,826) 3,289,036 4,588,729 The accompanying notes form part of these financial statements Pointerra Limited ABN 39 078 388 155 15 25 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Consolidated Statement of Changes in Equity for the year ended 30 June 2022 Note Issued Capital $ Option Reserves Foreign exchange reserve Accumulated Losses $ $ $ Total $ BALANCE AT 1 JULY 2020 9,175,895 2,255,037 (16,613) (10,195,494) 1,218,825 Loss for the year Other comprehensive income Total comprehensive loss for the year Transactions with owners recorded directly in equity - - - Shares issued 16 4,606,677 Share issue transaction costs Share-based payments 18 - - - - - - - 235,723 - (1,509,332) (1,509,332) 36,836 - 36,836 36,836 (1,509,332) (1,472,496) - - - - - - 4,606,677 - 235,723 BALANCE AT 30 JUNE 2021 13,782,572 2,490,760 20,223 (11,704,826) 4,588,729 BALANCE AT 1 JULY 2021 13,782,572 2,490,760 20,223 (11,704,826) 4,588,729 Loss for the year Other comprehensive income Total comprehensive loss for the year Transactions with owners recorded directly in equity Cash receipt from employee loan share participants - - - 16 54,173 Share issue transaction costs Share-based payments 18 - - - - - - - 1,302,448 - (2,673,599) (2,673,599) 17,285 - 17,285 17,285 (2,673,599) (2,656,314) - - - - - - 54,173 - 1,302,448 BALANCE AT 30 JUNE 2022 13,836,745 3,793,208 37,508 (14,378,425) 3,289,036 The accompanying notes form part of these financial statements 26 Pointerra Limited ABN 39 078 388 155 16 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Consolidated Statement of Cash Flows for the year ended 30 June 2022 CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest and other costs of finance paid Interest received Government grants and tax incentives Note 2022 $ 2021 $ 7,753,581 4,069,794 (9,908,200) (4,885,089) (56,177) (30,379) - 1,146 618,371 590,258 Net cash used in operating activities 22(b) (1,592,425) (254,270) CASH FLOWS FROM INVESTING ACTIVITIES Payments to acquire property, plant and equipment Payments to acquire intangible and other assets Net cash used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of shares Repayment of loan shares Lease payments Net cash (used in) / provided by financing activities Net (decrease) / increase in cash held Effect of movement in exchange rates on cash held Cash and cash equivalents at beginning of the period (74,032) (108,425) (36,527) (28,605) (110,559) (137,030) - 3,300,000 54,173 - (61,586) (59,218) (7,413) 3,240,782 (1,710,397) 2,849,482 127,457 (6,992) 5,179,363 2,336,873 Cash and Cash Equivalents at the end of the period 22(a) 3,596,423 5,179,363 The accompanying notes form part of these financial statements Pointerra Limited ABN 39 078 388 155 17 27 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 NOTE 1. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Pointerra Limited is a for-profit company limited by shares incorporated in Australia whose shares are publicly traded on the ASX. The registered office is: C/- Westar Capital Limited, Level 4, 216 St Georges Terrace, Perth WA 6000 The principal place of business is: Level 2, 27 Railway Road, Subiaco WA 6008 The financial report for the year ended 30 June 2022 was authorised for issue in accordance with a resolution of the Directors on 29 September 2022. NOTE 2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The consolidated financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated financial statements also comply with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB). The consolidated financial statements comprise the financial statements of Pointerra Limited and its subsidiaries at the reporting date (the “Group”). The consolidated financial statements have been prepared on an accruals basis and are measured at historical cost, except for assets and liabilities acquired in business combinations, which are initially measured at fair value. All amounts are presented in Australian dollars. Accounting policies have been consistently applied, unless otherwise stated. Basis of consolidation Subsidiaries are fully consolidated from the date the Group obtains control until such time as control ceases. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses arising from intra-group transactions are eliminated in full. Going Concern The consolidated financial statements have been prepared on the going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlements of liabilities in the ordinary course of business. As at 30 June 2022, the Group had cash and cash equivalents of $3,596,423 (2021: $5,179,363) and had a working capital surplus of $3,116,457 (2021: $3,084,519). The Group incurred a loss after tax of $2,673,599 for the year ended 30 June 2022 (2021: $1,509,332) and net cash outflows from operating activities amounting to $1,592,425 (2021: $254,270). Included in the loss for the year were non-cash items including share based payments of $1,302,448, impairment expense of $1,360,434, and depreciation and amortisation expense of $326,539. The Directors have prepared a cash flow forecast which indicates that the Group will have sufficient cash flows to meet all commitments and working capital requirements for the 12 month period from the date of signing this financial report. The Directors believe it is appropriate to prepare these accounts on a going concern basis because of the following factors: • • the Directors have an appropriate plan to grow revenue and generate positive cash flows from operations; the Group has the ability to curtail discretionary expenditure as and when required in order to manage cash flows. In the event the above is unable to be achieved the Company can raise capital as and when required. Based on the cashflow forecast and other factors referred to above, the Directors are satisfied that the going concern basis of preparation is appropriate. 28 Pointerra Limited ABN 39 078 388 155 18 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Basis of consolidation Subsidiaries are fully consolidated from the date the Group obtains control until such time as control ceases. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses arising from intra-group transactions are eliminated in full. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition method involves recognising at acquisition date, separately from goodwill, the identifiable assets acquired, the liabilities assumed and any non- controlling interest in the acquiree. The identifiable assets acquired and the liabilities assumed are measured at their acquisition date fair values. The difference between the above items and the fair value of the consideration (including the fair value of any pre-existing investment in the acquiree) is goodwill or a discount on acquisition. Investments in subsidiaries are accounted for at cost in the separate financial statements of Pointerra Limited. Income tax The income tax expense / (benefit) for the year comprises current income tax expense / (income) and deferred tax expense / (income). Current income tax expense charged to profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities / (assets) are therefore measured at the amounts expected to be paid to / (recovered from) the relevant taxation authority. Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year and unused tax losses. Current and deferred income tax expense / (benefit) is charged or credited directly to equity instead of profit or loss when the tax relates to items that are credited or charged directly to equity. Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss. Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates enacted or substantively enacted at reporting date. Their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised. Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future. Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where a legally enforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled. Tax consolidation legislation Pointerra Limited and its wholly-owned Australian subsidiary have not implemented tax consolidation legislation. Plant and equipment Plant and equipment are measured on the cost basis and therefore carried at cost less accumulated depreciation and any accumulated impairment. In the event the carrying amount of plant and equipment is greater than the estimated recoverable amount, the carrying amount is written down immediately to the estimated recoverable amount and impairment losses are recognised either in the profit and loss or as a revaluation decrease if the impairment losses relate to a revalued asset. A formal assessment of recoverable amount is made when impairment indicators are present. Pointerra Limited ABN 39 078 388 155 19 29 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) The carrying amount of plant and equipment is reviewed annually by the directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. All other repairs and maintenance are charged to profit or loss during the financial period in which they are incurred. Intangibles Other intangible assets, including customer relationships, patents and trademarks, that are acquired by the Group and have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses. Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognised in profit or loss as incurred. Amortisation is calculated to write off the cost of intangible assets less their estimated residual values using the straight-line method over their estimated useful lives, and is generally recognised in profit or loss. Goodwill is not amortised. The estimated useful lives for current and comparative periods are as follows: – patents and trademarks: 5–20 years Financial Instruments Initial recognition and measurement Financial instruments, incorporating financial assets and financial liabilities, are recognised when the entity becomes a party to the contractual provisions of the instrument. Financial instruments are initially measured at fair value plus transactions costs where the instrument is not classified as at fair value through profit or loss. Transaction costs related to instruments classified as at fair value through profit or loss are expensed to profit or loss immediately. Financial instruments are classified and measured as set out below. Classification and subsequent measurement Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the assets or liability, assuming the market participants acts in their economic best interests. The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards specifically applicable to financial instruments. (i) (ii) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. Loans and receivables are included in current assets, except for those which are not expected to mature within 12 months after the end of the reporting period. (All other loans and receivables are classified as non-current assets.) Financial liabilities Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost. Gains or losses are recognised in profit and loss through the amortisation process and when the financial liability is derecognised. Derivative instruments The Group does not trade or hold derivatives. Financial guarantees The Group has no material financial guarantees. Impairment of assets At the end of each reporting period, the Company assesses whether there is any indication that an asset may be impaired. The assessment will include the consideration of external and internal sources of information including dividends received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the statement of comprehensive income. 30 Pointerra Limited ABN 39 078 388 155 20 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. Employee Benefits Liabilities for wages and salaries, including non-monetary benefits, and annual leave expected to be settled within twelve months after the end of the period in which the employees render the related service are recognised in respect of employees’ services up to the end of the reporting date and are measured at the amounts expected to be paid when the liabilities are settled. The liability for annual leave is recognised in the provision for employee benefits. No liabilities are recognised for non- accumulating sick leave. The liability for long service leave and other employee entitlements expected to be settled more than 12 months from the reporting date is recognised and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and years of service. Expected future payments are discounted using market yields at the reporting date on corporate bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows. Contributions to defined contribution superannuation funds are recognised as an expense as they become payable. Foreign currency translation Functional and presentation currency The financial report is presented in Australian dollars, which is the Company’s functional currency. Transactions and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined. Exchange differences arising on the translation of monetary items are recognised in profit or loss, except where deferred in equity as a qualifying cash flow or net investment hedge. Exchange differences arising on the translation of non-monetary items are recognised directly in other comprehensive income to the extent that the underlying gain or loss is recognised in other comprehensive income; otherwise the exchange difference is recognised in profit or loss. Share-based payment transactions The Company measures the cost of equity-settled transactions with Directors and 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 an internal valuation using a Black- Scholes and Monte Carlo option pricing model. For equity transactions with consultants and other employees, the fair value reflects the value attributable to services where applicable. Where there is no quantifiable value of services, the value of options is calculated using the Black-Scholes and Monte Carlo option pricing model, or the quoted bid price where applicable. Cash and cash equivalents Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheet. Trade and other payables Trade and other payables represent liabilities for goods and services provided to the Company prior to the end of the financial year which are unpaid. The amounts are unsecured and are usually paid within thirty days of recognition. Trade and other payables are presented as current liabilities unless payment is not due within twelve months from the reporting date. They are recognised at their fair value and subsequently measured at amortised cost using the effective interest method. Issued capital Issued and paid up capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction net of tax of the share proceeds received. Pointerra Limited ABN 39 078 388 155 21 31 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 2. STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued) Earnings per share Basic earnings per share Basic earnings per share is calculated by dividing the profit or loss attributable to owners of the Company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for any bonus elements in ordinary shares issued during the 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-tax effect of interest and other financing costs associated with dilutive potential ordinary shares; and the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares. Revenue and other income Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade discounts and volume rebates allowed. Any consideration deferred is treated as the provision of finance and is discounted at a rate of interest that is generally accepted in the market for similar arrangements. The difference between the amount initially recognised and the amount ultimately received is interest revenue. Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets. Revenue from the rendering of a service is recognised upon the delivery of the service to the customers. All revenue is stated net of the amount of goods and services tax (GST). Goods and Services Tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows. Comparatives When required by accounting standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. Critical accounting estimates and judgments The Directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Company. Key Estimate – Share-based payments The Company measures the cost of equity-settled transactions with Directors and employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using the Black-Scholes and Monte Carlo model using the assumptions disclosed in Note 18. The accounting estimates and assumptions relating to equity settled share-based payments would have no impact on assets and liabilities within the next reporting period but may impact expenses and equity. Key Judgement – Coronavirus (COVID-19) pandemic Judgement has been exercised in considering the impacts that the Coronavirus (COVID-19) pandemic has had, or may have, on the Group, based on known information. This consideration extends to the nature of the supply chain, staffing and geographic regions in which the Group operates. Other than as addressed in specific notes, there does not currently appear to be either any significant impact upon the financial statements or any significant uncertainties with respect to events or conditions which may impact the Group unfavourably as at the reporting date or subsequently as a result of the Coronavirus (COVID-19) pandemic. New Accounting Standards and Interpretations There are no Australian accounting standards and Interpretations that have recently been issued or amended but are not yet effective and have not been adopted by the Company for the year ended 30 June 2022 which are expected to have a material impact on the Company in future reporting period. 32 Pointerra Limited ABN 39 078 388 155 22 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 3. INCOME TAX (a) The components of tax expense comprise: Current Deferred Income tax expense (b) Reconciliation of income tax expense to prima facie tax payable The prima facie tax on profit from ordinary activities before income tax is reconciled to income tax expense as follows: Prima facie tax on operating loss at 25% (2021: 26%) Add / (Less): Tax effect of: Non-assessable income Research & Development refundable offset Other permanent differences Deferred tax assets not brought to account Income tax expense/(benefit) (c) Deferred tax assets Accrued expenses Capital raising costs Tax losses Total deferred tax assets Set-off deferred tax liabilities pursuant to set-off provisions Less deferred tax assets not recognised Net deferred tax assets (d) Deferred tax liabilities Acquisition (Note 28) Other Set-off deferred tax liabilities Net deferred tax liabilities (e) Tax losses Unused tax losses for which no deferred tax asset has been recognised 2022 2021 $ - - - $ - - - (740,916) (392,426) - (336,998) 349,393 438,458 (290,063) 243,893 367,702 1,124,020 1,735,615 (58,274) (153,366) (255,899) 65,658 736,033 - 248,051 382,410 950,687 1,581,148 (66,020) (1,677,341) (1,515,128) - - 58,274 (58,274) - - - 311,916 66,020 (66,020) 311,916 - Potential tax benefit @ 25% (2021: 26%) 1,124,020 1,515,128 The benefit for tax losses will only be obtained if: i. ii. iii. The company and group derive future assessable income of a nature and an amount sufficient to enable the benefit from the deductions for the losses to be realised; The company and group continue to comply with the conditions for deductibility imposed by law; and No changes to the tax legislation adversely affect the ability of the company and group to realise these benefits. Pointerra Limited ABN 39 078 388 155 23 33 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 4. AUDITOR’S REMUNERATION Remuneration of the auditor for: - Auditing or reviewing the financial report 2022 $ 42,871 42,871 2021 $ 31,328 31,328 NOTE 5. KEY MANAGEMENT PERSONNEL COMPENSATION AND RELATED PARTY TRANSACTIONS Key management personnel compensation Short-term employee benefits Post-employment benefits Long service leave entitlement NOTE 6. OTHER INCOME Research and development refundable tax offset Cashflow Boost Interest Income NOTE 7. ADMINISTRATIVE EXPENSES Accounting and audit fees Consulting and contracting expenses Director fees NOTE 8. RESEARCH AND DEVELOPMENT EXPENSES Employee benefits expense Other research and development expenses NOTE 9. OTHER EXPENSES Depreciation and amortisation expense Legal fees Bad debts Travel expenses General operating expenses 1,249,276 1,307,013 99,555 69,424 81,417 - 1,418,255 1,388,430 858,531 - - 858,531 552,366 37,500 1,145 591,011 (186,055) (790,255) (108,000) (1,084,310) (177,454) (25,000) (144,000) (346,454) (776,218) (686,783) (1,077,916) (384,363) (1,463,001) (1,462,279) (326,539) (17,900) (437,497) (474,724) (458,614) (124,005) (39,329) - - (344,114) (1,715,274) (507,448) 34 Pointerra Limited ABN 39 078 388 155 24 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 10. CASH AND CASH EQUIVALENTS Cash at bank Deposits on call NOTE 11. TRADE AND OTHER RECEIVABLES Trade receivables R&D tax offset receivable GST receivable 2022 2021 $ 3,546,423 50,000 $ 5,129,363 50,000 3,596,423 5,179,363 2,704,417 792,401 4,796 533,343 552,367 (34,012) 3,501,614 1,051,698 Trade receivables disclosed above include amounts (see below for aged analysis) that are past due at the end of the reporting period for which the Group has not recognised an allowance for doubtful debts because there has not been a significant change in credit quality and the amounts are still considered recoverable. Age of receivables that are past due but not impaired 60-90 days 91-120 days 121+ days Total 21,470 13,250 1,783 36,503 - 2,662 247,344 250,006 In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the end of the reporting period. The concentration of credit risk is limited due to the fact that the customer base is unrelated. NOTE 12. PLANT AND EQUIPMENT At cost Accumulated depreciation Movement in the carrying amounts or plant and equipment during the year: Balance at beginning of year Additions (1) Depreciation expense Balance at end of year 430,714 (248,010) 182,704 353,582 (149,548) 204,034 204,034 77,131 (98,461) 182,704 82,411 171,849 (50,226) 204,034 (1) For the year ended 30 June 2021, $107,000 of the $171,849 related to the Airovant acquisition (Note 28). Pointerra Limited ABN 39 078 388 155 25 35 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 13. INTANGIBLE ASSETS At cost Accumulated amortisation Movement in the carrying amounts or intangible assets during the year: Balance at beginning of year Additions (1) Amortisation expense Impairment expense (1) Balance at end of year 2022 $ 206,811 (129,142) 2021 $ 1,681,455 (97,123) 77,669 1,584,332 1,584,332 36,950 (183,179) (1,360,434) 74,501 1,534,891 (25,060) - 77,669 1,584,332 Intangible assets consist of patents, website development costs, intellectual property and customer relationships. (1) The Company acquired US-drone based digital asset management business, Airovant LLC (“Airovant”) on 4 June 2021. $1,511,593 relates to intellectual property and customer relationships. The Business Combination was provisionally accounted for at the prior year reporting date and was subsequently impaired in full during the current reporting period, resulting in a $Nil balance being recorded against Airovant at the 30 June 2022 reporting date (Note 28). NOTE 14. TRADE AND OTHER PAYABLES, DEFERRED REVENUE AND PROVISIONS (a) TRADE AND OTHER PAYABLES CURRENT Trade Payables Sundry creditors and accrued expense All amounts are unsecured and expected to be settled on 30-day terms. (b) DEFERRED REVENUE CURRENT Deferred Revenue (c) PROVISIONS CURRENT Annual Leave Other NON-CURRENT Long Service Leave 705,685 1,525,862 2,231,547 582,283 1,128,248 1,710,531 1,287,491 1,287,491 1,134,275 1,134,275 399,421 7,198 406,619 88,092 88,092 229,273 - 229,273 - - 36 Pointerra Limited ABN 39 078 388 155 26 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 15. EARNINGS PER SHARE Earnings used in calculating basic loss per share (2,673,599) (1,509,332) Weighted average number of ordinary shares used as the denominator in calculating basic loss per share 677,806,204 669,246,504 No. No. This calculation does not include instruments that could potentially dilute basic earnings per share in the future, as these instruments are anti-dilutive, since their inclusion would reduce the loss per share. NOTE 16. ISSUED CAPITAL 677,806,204 (2021: 677,806,204) fully paid ordinary shares Capital raising fees Cash receipt from employee loan share participants at $0.06 Net issued capital Movements: As at 30 June 2020 Share placement: 14 July 2021 Option exercise at $0.05 (3DPAF): 24 July 2020 Option exercise at $0.06 (3DPAF): 10 August 2020 Option exercise at $0.05 (3DPAF): 01 September 2020 Option exercise at $0.06 (3DPAF): 03 September 2020 Option exercise at $0.05 (3DPAF): 22 September 2020 Option exercise at $0.06 (3DPAF): 22 September 2020 Option exercise at $0.09 (3DPAF): 22 September 2020 Option exercise at $0.06 (3DPAF): 15 February 2021 Option exercise at $0.06 (3DPAF): 17 March 2021 Option exercise at $0.09 (3DPAF): 17 March 2021 Acquisition of Airovant (Note 28) As at 30 June 2021 2022 $ 2021 $ 13,782,572 15,050,803 - (1,268,231) 54,173 - 13,836,745 13,782,572 $ No. 9,175,895 613,223,112 2,500,000 50,000,000 75,000 148,200 115,000 30,000 10,000 14,700 26,550 3,000 44,100 333,450 1,306,677 1,500,000 2,470,000 2,300,000 500,000 200,000 245,000 295,000 50,000 735,000 3,705,000 2,583,092 13,782,572 677,806,204 Employee loan share repayment at $0.06 per share 54,173 - As at 30 June 2022 13,836,745 677,806,204 Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held. At the shareholders’ meetings, each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands. Year ended 30 June 2022 During the reporting period, two participants holding employee loan shares re-paid a total $54,173 cash to the Company at $0.06 per ordinary share. Pointerra Limited ABN 39 078 388 155 27 37 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 16. ISSUED CAPITAL (continued) Year ended 30 June 2021 On 14 July 2020, the Company announced that Australian tech entrepreneur Bevan Slattery had invested $2.5million in the Company via the placement of 50 million shares at $0.05 per share. Funds to be used to accelerate the Company’s global expansion. The Company acquired US-drone based digital asset management business, Airovant LLC (“Airovant”) on 4 June 2021 (Note 28). Total purchase consideration was USD$1million. Pursuant to the Business and Assets Sale Agreement, the Company resolved to issue to Airovant 2,583,092 fully paid ordinary shares in the Company in exchange for acquiring the business assets and undertakings of Airovant. The number of shares issued to Airovant was calculated based on the closing price of Pointerra shares and the AUD/USD exchange rate on 4 June 2021. 1,292,546 shares are subject to voluntary escrow for a period of 12 months from the date of issue. Options As at the reporting date, no options over unissued ordinary shares were outstanding. Capital Management The Directors' objectives when managing capital are to ensure that the Company can fund its operations and continue as a going concern, so that they may continue to provide returns for shareholders and benefits for other stakeholders. Due to the nature of the Company's activities, the Company does not have ready access to credit facilities, with the primary source of funding being equity raisings. Therefore, the focus of the Company's capital risk management is the current working capital position against the requirements of the Company to meet business development and corporate overheads. The Company's strategy is to ensure appropriate liquidity is maintained to meet anticipated operating requirements, with a view to initiating appropriate capital raisings as required. NOTE 17. RESERVES Option Reserves Balance at beginning of year Employee loan shares vesting over multiple periods Performance rights forfeited during the period Performance rights vesting over multiple periods Balance at end of year Foreign Exchange Reserves Balance at beginning of year Foreign currency translation difference Balance at end of year 2022 $ 2021 $ 2,490,760 2,255,037 52,612 (385,671) 1,635,507 3,793,208 52,612 - 183,111 2,490,760 20,223 17,285 37,508 (16,613) 36,836 20,223 38 Pointerra Limited ABN 39 078 388 155 28 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 18. SHARE-BASED PAYMENTS (a) Options outstanding at end of year The following table illustrates the number and weighted average exercise prices (WAEP) of share options granted as share- based payments on issue during the year. Outstanding at 1 July Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at 30 June 2022 Number - 2022 WAEP $ - - - - - - - - - - - 2021 Number 17,000,000 - - (12,000,000) (5,000,000) - 2021 WAEP $ 0.07 - - 0.067 0.05 - The weighted average remaining contractual life for options outstanding as at 30 June 2022 was Nil (2021: Nil). (b) Share-based Payments summary Class Quantity recognised during year Value Forfeited during the year Expiry date Exercise Vesting price date Value recognised in future years 2021 Tranche 1 Performance Rights 2,666,668 114,444 Tranche 2 Performance Rights 2,666,666 45,778 Tranche 3 Performance Rights 2,666,666 22,889 Total 8,000,0000 183,111 Loan Shares 7,000,000 52,612 Total 235,723 Performance rights grant date: 1 June 2021 Loan shares grant date: 7 May 2020 2022 Tranche 1 - - - - - - 31/05/2024 N/a 31/05/2022 1,258,890 31/05/2024 N/a 31/05/2023 1,052,889 31/05/2024 N/a 31/05/2024 801,110 3,112,889 06/05/2025 0.06 Note 1 70,054 3,182,943 Performance Rights 2,666,668 1,115,833 (200,271) 31/05/2024 N/a 31/05/2022 - Tranche 2 Performance Rights 2,666,666 369,370 (136,189) 31/05/2024 N/a 31/05/2023 236,042 Tranche 3 Performance Rights 2,666,666 150,304 (49,211) 31/05/2024 N/a 31/05/2024 219,351 Total 8,000,000 1,635,507 (385,671) 455,393 Loan Shares 7,000,000 52,612 - 06/05/2025 0.06 Note 1 17,443 Total 1,302,448 472,836 Performance rights grant date: 1 June 2021 Loan shares grant date: 7 May 2020 Pointerra Limited ABN 39 078 388 155 29 39 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 18. SHARE-BASED PAYMENTS (continued) Note 1. Vesting over multiple periods. 7million loan shares are subject to the following vesting conditions. Conditions shall cease to apply upon the holders remaining continually employed by the Company throughout the vesting period: - One-third on the first anniversary of commencement of employment; - One-third on the second anniversary of commencement of employment; and - One-third on the third anniversary of commencement of employment The Company acquired US-drone based digital asset management business, Airovant LLC (“Airovant”) on 4 June 2021 (Note 28). The Company has entered into employment agreements with the four Airovant founder employees. These employment agreements include an offer made pursuant to the Company’s employee incentive share plan for the issue of 2 million ordinary shares in the Company to each of the four Airovant employees (8 million shares in total), with the shares vesting in three equal tranches of 666,667 shares over a three-year period on the anniversary of 1, 2 and 3 years continuous employment with the Company. As at 30 June 2021, the following probabilities were assigned. Tranche 1: Assigned probability of 100% for satisfaction of vesting condition (1-year continuous employment with the Company). Tranche 2: Assigned probability of 80% for satisfaction of vesting condition (2-years continuous employment with the Company). Tranche 3: Assigned probability of 60% for satisfaction of vesting condition (3-years continuous employment with the Company). Share price on grant date was $0.515. As at 30 June 2022, the following probabilities were assigned. Tranche 1: Vested during the year ended 30 June 2022 for any eligible participants. Tranche 2: Updated assigned probability of 75% for satisfaction of vesting condition (2-years continuous employment with the Company). Tranche 3: Updated assigned probability of 50% for satisfaction of vesting condition (3-years continuous employment with the Company). At the reporting date, two of the four Airovant employees had resigned and were no long eligible participants of the Company. Amounts previously expensed through the statement of profit and loss and other comprehensive income as share-based payments applicable to these two employees were reversed during the reporting period ended 30 June 2022. Employee loan shares During the year ended 30 June 2020, remuneration in the form of Employee Loan Shares were issued to Key Management Personnel and employees. Key Management Personnel Participant Number issued Grant date Share price at date of issue Paul Farrell 3,000,000 07.05.20 $0.032 Ian Olson 10,000,000 07.05.20 $0.032 Exercise price $0.060 $0.060 Neville Bassett 3,000,000 07.05.20 $0.032 $0.060 Vesting condition s Expected Volatility Date of expiry Risk free interest rate Value per loan share Valuation Nil Nil Nil 89.75% 30.04.25 0.41% $0.0186 $55,908 89.75% 30.04.25 0.41% $0.0186 $186,350 89.75% 30.04.25 0.41% $0.0186 $55,908 Total 16,000,000 $298,166 40 Pointerra Limited ABN 39 078 388 155 30 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 18. SHARE-BASED PAYMENTS (continued) Employees Participant Number issued Grant date Share price at date of issue Exercise price Vesting condition s Expected Volatility Date of expiry Risk free interest rate Value per loan share Valuation Employees 19,000,000 07.05.20 $0.032 $0.060 Nil 89.75% 30.04.25 0.41% $0.0186 $354,082 Employees Note 1 7,000,000 07.05.20 $0.032 $0.060 Note 1 89.75% 30.04.25 0.41% $0.0186 $130,451 Total 26,000,000 $484,533 Note 1. 7 million loan shares are subject to the following vesting conditions. Conditions shall cease to apply upon the holders remaining continually employed by the Company throughout the vesting period: - One-third on the first anniversary of commencement of employment; - One-third on the second anniversary of commencement of employment; and - One-third on the third anniversary of commencement of employment – 29 October 2022. The Loan Shares represent an option arrangement. Those with vesting conditions attached to the Loan Shares are expensed over the vesting period. Vesting conditions The key terms of the Employee Share Plan and of each limited recourse loan provided under the Plan are as follows: - - - - - - - - The loan is interest free; The loan made available to a Participant shall be applied by the Company directly toward payment of the issue price of the Shares; The loan repayment date is 5 years from the date of issue; A Participant must repay the Loan in full by the loan repayment date but may elect to repay the Loan amount in respect of any or all of the Shares at any time prior to the loan repayment date; The Company shall have a lien over the Shares in respect of which a Loan is outstanding and the Company shall be entitled to sell those Shares in accordance with the terms of the ISP; A Loan will be non-recourse except against the Shares held by the Participant to which the loan relates; The Board may, in its absolute discretion, agree to forgive a Loan made to a Participant; and The total loan will be $0.06 per Share which shall be deemed to have been drawn down at Settlement upon issue of the Loan Shares Sale of Loan Shares Shares may be subject to restriction conditions (such as a period of employment) which must be satisfied before the Shares can be sold, transferred, or encumbered. Shares cannot be sold, transferred or encumbered until any loan in relation to the Shares has been repaid or otherwise discharged under the ISP. NOTE 19. COMMITMENTS The lease liability is now recognised in the balance sheet, in line with AASB 16. Refer to Note 27. There are no other leasing or capital commitments for the year ended 30 June 2022 (2021: Nil). NOTE 20. CONTINGENT LIABILITIES AND ASSETS There are no contingent assets or liabilities. Pointerra Limited ABN 39 078 388 155 31 41 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 21. OPERATING SEGMENTS The Group has two reportable segments: For the year ended 30 June 2022 Segment revenue Segment expenditure Segment result Material expenditure items Employee benefits expense Impairment Research and development expenses Share based payments Assets by geographical segment Segment assets Segment liabilities Australia $ United States $ Adjustments/ Eliminations $ Total $ 5,063,054 (6,954,096) (1,891,042) 8,590,604 (8,150,705) 439,899 (2,993,552) 1,771,096 (1,222,456) 10,660,106 (13,333,705) (2,673,599) (2,212,584) (1,360,434) (1,394,114) (1,302,448) (2,785,036) - (68,887) - - - - - (4,997,620) (1,360,434) (1,463,001) (1,302,448) 7,562,838 2,496,293 (2,407,765) 7,651,366 3,146,685 1,603,387 (387,742) 4,362,330 For the year ended 30 June 2021 Australia $ United States United States $ $ Total $ Segment revenue Segment expenditure Segment result Material expenditure items 1,645,994 (4,054,455) (2,408,461) 2,928,620 (2,029,491) 899,129 - - - 4,574,614 (6,083,946) (1,509,332) Employee benefits expense Research and development expenses (1,082,315) (1,462,279) (1,696,791) - - - (2,779,106) (1,462,279) Assets by geographical segment Segment assets Segment liabilities 7,948,148 1,467,402 (1,050,647) 8,364,903 2,688,102 1,088,072 - 3,776,174 Information about major customers: The Group has generated revenue from two of its largest customers of approximately $3 million (2021: $1.4 million). No other single customers contributed 10% or more of the Group’s revenue for the year. 42 Pointerra Limited ABN 39 078 388 155 32 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 22. CASH FLOW INFORMATION (a) Reconciliation of cash 2022 $ 2021 $ Cash at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the balance sheet as follows: Cash and cash equivalents 3,596,423 5,179,363 (b) Reconciliation of cash flow from operations with operating profit after income tax Operating loss after income tax Non-cash flows in loss from ordinary activities Depreciation and amortisation Share-based payments Foreign exchange Changes in assets and liabilities (2,673,599) (1,509,332) 1,638,881 1,302,448 (68,728) 75,910 235,723 151,305 (Increase)/Decrease in trade and other receivables (2,445,492) (419,777) (Increase)/Decrease in right to use assets Increase/(Decrease) in trade and other payables Increase/(Decrease) in Lease liabilities Increase/(Decrease) in Deferred revenue Increase/(Decrease) in Provisions Increase/(Decrease) in Tax liabilities Net Cash Used In Operating Activities 48,155 521,016 (20,965) 153,216 258,241 (305,598) (1,592,425) 48,094 917,214 (37,244) 323,065 (39,228) - (254,270) NOTE 23. EVENTS AFTER THE BALANCE SHEET DATE No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years. Pointerra Limited ABN 39 078 388 155 33 43 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 24. FINANCIAL INSTRUMENTS (a) Financial Risk Management The Company's financial instruments consist mainly of deposits with banks and accounts payable. The main purpose of non-derivative financial instruments are to raise finance for company operations. The Company does not have any derivative instruments at 30 June 2022 (30 June 2021: $Nil). i. Liquidity Risk Liquidity risk arises from the possibility that the company might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Company manages liquidity risk by continuously monitoring forecast and actual cash flows and ensuring sufficient cash and marketable securities are available to meet the current and future commitments of the Company. Due to the nature of the Company's activities, the Company does not have ready access to credit facilities, with the primary source of funding being equity raisings. The Board of Directors constantly monitor the state of equity markets in conjunction with the Company's current and future funding requirements, with a view to initiating appropriate capital raisings as required. Any surplus funds are invested with major financial institutions. The financial liabilities of the Company are confined to trade and other payables and lease liabilities, as disclosed in the statement of financial position. All trade and other payables are non-interest bearing and due within 12 months of the reporting date. Lease liabilities are non-interest bearing and have fixed terms of repayment. ii. Market Risk The Board meets on a regular basis to analyse currency and interest rate exposure and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts. iii. Interest rate risk Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The Company is also exposed to earnings volatility on floating rate instruments. Interest rate risk is not material to the Company as no debt arrangements have been entered into. iv. Foreign exchange risk The Group 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. The risk is measured using sensitivity analysis and cash flow forecasting. 44 Pointerra Limited ABN 39 078 388 155 34 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 24. FINANCIAL INSTRUMENTS (continued) v. Credit Risk Credit risk related to balances with banks and other financial institutions is managed by the Directors in accordance with approved Board policy. Such policy requires that surplus funds are only invested with counterparties with a Standard & Poor's rating of at least AA-. The following table provides information regarding the credit risk relating to cash and money market securities based on Standard & Poor's counterparty credit ratings. Cash and cash equivalents - AA- Rated (b) Interest Rate Risk 2022 $ 3,596,423 2021 $ 5,179,363 The Group’s exposure to interest rate risk, which is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates and the effective weighted average interest rate for each class of financial assets and financial liabilities comprises: 2021 Floating interest rate Fixed interest Fixed interest maturing in maturing over 1 year or less 1 to 5 years Non-interest bearing $ $ $ $ Total $ Financial assets Cash and cash equivalents Trade and other receivables Weighted average interest rate Financial liabilities Trade and other payables Lease liability 5,179,363 - 5,179,363 - - - - - - - - - - - - - - - - 1,064,463 5,179,363 1,064,463 1,064,463 6,243,826 1,710,531 390,179 1,710,531 390,179 2,100,710 2,100,710 2022 Floating interest rate Fixed interest Fixed interest maturing in maturing over 1 year or less 1 to 5 years Non-interest bearing $ $ $ $ Total $ Financial assets Cash and cash equivalents Trade and other receivables Weighted average interest rate Financial liabilities Trade and other payables Lease liability 3,596,423 - 3,596,423 - - - - - - - - - - - - - - - - 3,509,954 3,509,954 3,596,423 3,509,954 7,106,377 2,231,547 348,581 2,231,547 348,581 2,580,128 2,580,128 Pointerra Limited ABN 39 078 388 155 35 45 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 24. FINANCIAL INSTRUMENTS (continued) Sensitivity Analysis The sensitivity analysis below has been determined on the exposure to interest rates at the reporting date and on the basis of the stipulated change taking place at the beginning of the year and held constant throughout the reporting period. A sensitivity of 2.5% has been selected, as this is considered reasonable considering the current market conditions (2021: 0.5%). At 30 June 2022, if interest rates had moved, as illustrated in the table below, with all other variables held constant, profit/(loss) would have been affected as follows: Profit/(loss) and equity + 2.5% (50 basis points) (2021: +0.5% (50 basis points)) - 2.5% (50 basis points) (2021 -0.5% (50 basis points)) 2022 $ 89,911 (89,911) 2021 $ 25,897 (25,897) Fair value estimation The carrying amounts of financial assets and financial liabilities are equal to their fair value based on their short-term nature. No financial assets or liabilities are required to be measured at their fair value on a recurring basis. 46 Pointerra Limited ABN 39 078 388 155 36 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 25. PARENT ENTITY INFORMATION Pointerra Limited is the legal parent entity. Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Accumulated losses Total equity Total comprehensive loss Legal subsidiaries 2022 $ 2,519,901 3,573,175 6,093,076 2,431,630 372,410 2,804,040 3,289,036 2021 $ 4,206,018 3,082,191 7,288,209 (2,082,279) (616,867) (2,699,146) 4,589,063 19,400,598 19,346,425 3,793,208 2,509,675 (19,904,770) (17,267,037) 3,289,036 4,589,063 (2,656,314) (1,472,163) Name Country of Incorporation Class of share Pointerra Australia Ordinary % Equity interest % Equity interest 2021 100% 2020 100% Technologies Pty Ltd(i) Principal activities Provision of 3D digital asset management solutions Pointerra US, Inc(ii) United States of Ordinary 100% 100% Provision of 3D America i. ii. Acquired 30 June 2016 Incorporated 18 January 2018 digital asset management solutions Pointerra Limited ABN 39 078 388 155 37 47 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 26. RIGHT TO USE ASSETS The Group’s lease portfolio includes buildings, plant and equipment. These leases have an average of 3 years as their lease term. i) AASB 16 related amounts recognised in the balance sheet Right of use assets Leased Building Accumulated depreciation Total Right of use asset Movement in carrying amounts: Leased Buildings: Opening balance Depreciation expense Net carrying amount ii) AASB 16 related amounts recognised in the statement of profit or loss Depreciation charge related to right-of-use assets Interest expense on lease liabilities Total cash outflows for leases NOTE 27. LEASES Current Non-current 2022 $ 429,032 (144,416) 284,616 2021 $ 429,032 (96,321) 332,711 332,711 (48,095) 284,616 380,805 (48,094) 332,711 2022 $ 48,095 20,193 68,288 2022 $ 64,263 284,318 348,581 2021 $ 48,094 22,171 59,218 2021 $ 85,228 304,951 390,179 48 Pointerra Limited ABN 39 078 388 155 38 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Notes to the Financial Statements for the year ended 30 June 2022 (continued) NOTE 28. ACQUISITION On 4 June 2021 (prior year), the Company purchased the business assets and undertakings of US drone-based digital asset management business, Airovant LLC (“Airovant”). Pursuant to the Business and Assets Sale Agreement (“the Agreement”), the consideration was USD$1 million which was agreed to be issued in shares using the closing price on execution of the Agreement. The net assets acquired have been impaired in full at the reporting date, 30 June 2022. For the year ended 30 June 2021 Details of the purchase consideration, and the net assets acquired, as recorded in the prior year were as follows: Consideration 2,583,092 ordinary shares Plant and equipment Intangible assets (intellectual property and customer relationships) (Note 13) Deferred tax liability Net Assets acquired No goodwill was recognised upon acquisition of the business. For the year ended 30 June 2022 $ 1,306,677 107,000 1,511,593 (311,916) 1,306,667 The Airovant acquisition and the net assets acquired, in addition to any costs capitalised during the period were impaired in full. An impairment expense of $1,360,434 has been recognised in the statement of profit or loss and other comprehensive income for the year ended 30 June 2022. Pointerra Limited ABN 39 078 388 155 39 49 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Directors’ Declaration The directors of the Group, declare that: (1) the financial statements, notes and additional disclosures included in the directors’ report designated as audited, of the Group are in accordance with the Corporations Act 2001, including; (a) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and (b) giving a true and fair view of the Company’s and Group’s financial position as at 30 June 2022 and of their performance for the year ended on that date. (2) The financial report also complies with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in Note 1 to the financial report. (3) In the directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. (4) This declaration has been made after receiving the declarations required to be made to the directors in accordance with section 295A of the Corporations Act 2001 for the financial year ended to 30 June 2022. This declaration is made in accordance with a resolution of the Board of Directors of Pointerra Limited. Ian Olson Director 29 September 2022 50 Pointerra Limited ABN 39 078 388 155 40 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Independent Auditor’s Report INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF POINTERRA LIMITED Report on the Audit of the Financial Report Opinion We have audited the financial report of Pointerra Limited (“the Company”) and its subsidiaries (“the Consolidated Entity”), which comprises the consolidated statement of financial position as at 30 June 2022, the consolidated statement of profit or loss and other comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, and the directors’ declaration. In our opinion: a. the accompanying financial report of the Consolidated Entity is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Consolidated Entity’s financial position as at 30 June 2022 and of its financial performance for the year then ended; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 2. 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 Consolidated Entity in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Pointerra Limited ABN 39 078 388 155 41 51 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Independent Auditor’s 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. Key Audit Matter How our audit addressed the Key Audit Matter Revenue recognition During the year, the Consolidated Entity generated Our procedures included, amongst others: revenue of $9,801,575 and as at balance date had deferred revenue of $1,287,491. recognition of The revenue and associated deferred revenue was considered a key audit to the matter due involved obligations are met and revenue is recognised. judgement and estimates in determining when performance • Obtaining an understanding of the processes relating to revenue recognition; • Reviewing the revenue recognition policy for from compliance with AASB 15 Revenue Contracts with Customers; • Testing revenue on a sample basis to supporting documentation; • Assessing cut-off of revenue at year end to ensure the correct in revenue has been recorded reporting period; and • Assessing the adequacy of the Consolidated Entity’s revenue disclosures within the financial statements. Accounting for Share-Based Payments As disclosed in note 18 to the financial statements, Our procedures amongst others included: the year ended 30 June 2022 during Consolidated Entity incurred the share-based payments expense of $1,302,448. Share based payments are considered to be a key audit matter due to • • • the value of the transactions; the complexities involved in the recognition and measurement of these instruments; and the judgement involved in determining the inputs used in the valuations. • • • • Analysing agreements to identify the key terms and conditions of share-based payments issued and relevant vesting conditions in accordance with AASB 2 Share Based Payments; Evaluating management’s assessing the assumptions and inputs used; valuations and Assessing the amount recognised during the year in accordance with the vesting conditions of the agreements; and Assessing the adequacy of the disclosures included in Note 18 to the financial statements. 52 Pointerra Limited ABN 39 078 388 155 42 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Independent Auditor’s Report Other Information The directors are responsible for the other information. The other information comprises the information included in the Consolidated Entity’s annual report for the year ended 30 June 2022 but does not include the financial report and our auditor’s report thereon. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. 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 Note 2, the directors also state in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial report complies with International Financial Reporting Standards. In preparing the financial report, the directors are responsible for assessing the Consolidated Entity’s ability 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 Consolidated Entity 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. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Pointerra Limited ABN 39 078 388 155 43 53 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Independent Auditor’s Report • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Consolidated Entity’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Consolidated Entity’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Consolidated Entity to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Consolidated Entity to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Consolidated Entity audit. We remain solely responsible for our audit opinion. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. Report on the Remuneration Report We have audited the Remuneration Report included in the directors’ report for the year ended 30 June 2022. The directors of the Company are responsible for the preparation and presentation of the remuneration report in accordance with s 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the remuneration report, based on our audit conducted in accordance with Australian Auditing Standards. 54 Pointerra Limited ABN 39 078 388 155 44 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Independent Auditor’s Report Auditor’s Opinion In our opinion, the Remuneration Report of Pointerra Limited, for the year ended 30 June 2022, complies with section 300A of the Corporations Act 2001. HALL CHADWICK WA AUDIT PTY LTD D M BELL CA Director Dated this 29th day of September 2022 Perth, Western Australia Pointerra Limited ABN 39 078 388 155 43 55 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Corporate Governance Statement The Board of Directors of the Company is responsible for the Corporate Governance of the Company. The Board is committed to achieving and demonstrating the highest standard of corporate governance applied in a manner that is appropriate to the Company’s circumstances. The Company has taken note of the Corporate Governance Principles and Recommendations 4th edition, which became effective for the first full financial year commencing on or after 1 January 2020. The Company’s Corporate Governance Statement is current as of the date of this report and it has been approved by the Board. The Corporate Governance Statement is available on the Company’s website at: www.pointerra.com 56 Pointerra Limited ABN 39 078 388 155 45 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Additional Information for Shareholders The shareholder information set out below was applicable as at 26 September 2022. Distribution of equity securities: Analysis of numbers of equity security holders by size of holding: Holding 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - 999,999,999,999 Total Less than marketable parcel Total holders Number of Shares % of issued capital 1,649 4,195 1,631 2,678 541 726,361 11,185,674 13,007,840 83,981,332 568,904,997 0.11 1.65 1.92 12.39 83.93 10,694 677,806,204 100.00 Holders 3,799 Units 4,302,707 The names of the 20 largest holders of fully paid ordinary shares as at 26 September 2022: Name Number of shares Percentage CARTOVISTA PTY LTD 60,777,958 BNP PARIBAS NOMINEES PTY LTD 47,905,771 1. 2. 3. 4. 5. 6. CAPITAL B ASSET MANAGEMENT PTY LTD CARTOVISTA PTY LTD JENNIFER OLSON CITICORP NOMINEES PTY LIMITED 7. MICHAEL FREETH 8. MRS ALISON ADRIENNE MORRISON + MR MARK WILLIAM MORRISON 14,586,710 9. HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 10. JENNIFER OLSON 11. MR BLAZE JASPER 12. MR RANDAL KARL RHOADS 13. MR HOANG HUY NGUYEN 14. IAN OLSON 15. LIVELY ENTERPRISES PTY LTD 16. MARK MORRISON & ALISON MORRISON 8.97 7.07 6.66 3.58 2.95 2.61 2.51 2.15 1.69 1.48 1.22 1.18 0.94 0.90 0.89 0.86 0.74 0.73 0.70 0.62 45,140,940 24,261,426 19,983,793 17,962,551 17,016,407 11,452,194 10,000,000 8,282,072 8,000,000 6,395,241 6,077,796 6,000,000 5,822,742 5,000,000 4,945,000 4,750,694 4,200,000 17. STEPHEN SAKHAROV 18. MR KEIRAN JAMES SLEE 19. MR MICHAEL FREETH 20. JAMES YOUNG Total Total all ordinary shares 328,291,295 48.34 677,806,204 Pointerra Limited ABN 39 078 388 155 46 57 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 Additional Information for Shareholders Substantial holders: Substantial holders in the Company are set out below: Name Cartovista Pty ltd Jennifer Olson Capital B Asset Management Pty Ltd Restricted Securities The Company has no restricted securities on issue. On-market Buy-back There is no current on-market buy-back. Number of shares 89,078,209 33,960,950 45,140,940 Class of shares Ordinary Ordinary Ordinary 58 Pointerra Limited ABN 39 078 388 155 47 ANNUAL REPORT FOR THE YEAR ENDED 30 JUNE 2022 | POINTERRA LIMITED | ABN 39 078 388 155 ASX:3DP | www.pointerra.com 

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