Appendix 4E Preliminary Final Report
9 Spokes International Limited
Year ended 31 March 2018























Users
-$6.0
-$5.0
-$4.0
-$3.0
-$2.0
-$1.0
$0.0
$1.0
$2.0
$3.0
Q1
Q2
Q3
Q4








9 Spokes International Limited
Preliminary Final Report
Financial Statements
Year ended 31 March 2018


9 Spokes International Limited - ABN 610 518 075
Preliminary Final Report
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2018


2018
2017

Notes
$'000
$'000




Revenue:







Operating revenue
1 (a)
5,866
1,162
Other operating income
1 (b)
812
1








Total revenue

6,678
1,163




Expenses:







Operational expenses
2 (a)
(6,778)
(4,081)
Research and development expenses
2 (b)
(4,144)
(2,894)
Administration expenses
2 (c)
(13,128)
(8,572)








Total expenses

(24,050)
(15,547)




Operating loss

(17,372)
(14,384)




Net finance income

306
344




Net loss before income tax

(17,066)
(14,040)




Income tax (expense) / benefit
4
(125)
4








Net loss from continuing operations

(17,191)
(14,036)




Other comprehensive income:



Translation of international subsidiaries


(175) (25)








Total comprehensive loss attributable to shareholders

(17,366)
(14,061)




Loss per share







Basic and diluted loss per share
11
($0.04)
($0.04)

The accompanying notes form an integral part of these financial statements.
9 Spokes International Limited - ABN 610 518 075
Preliminary Final Report
Consolidated Statement of Changes in Equity
For the year ended 31 March 2018



Share
capital
Share
based
payments
reserve
Foreign
currency
translation
reserve
Accumulated
losses
Total

Notes
$'000
$'000
$'000
$'000
$'000







Balance as at 1 April 2016


12,743

971
-

(12,812)
902







Proceeds from shares issued at
IPO
9

26,169
- -

- 26,169
Share option expense
10

-

687
-

- 687
Costs of capital raise
9

(2,767)
- -

-

(2,767)







Reserve arising on conversion of
foreign currency subsidiary

- - (25)
- (25)
Net loss for the year


- - -

(14,036)

(14,036)














Balance as at 31 March 2017


36,145

1,658

(25)

(26,848)
10,930







Proceeds from shares issued
9
12,955
- - - 12,955
Share option expense
10

-

180
-

- 180
Costs of capital raise
9

(1,012)
- -

-

(1,012)







Reclassification of previously
expensed amounts from share
based payments
9
940 (940) -
-
-







Reserve arising on conversion of
foreign currency subsidiary

- - (175)
- (175)
Net loss for the year


- - -

(17,191)

(17,191)














Balance as at 31 March 2018


49,028
898

(200)

(44,039)
5,687

The accompanying notes form an integral part of these financial statements.
9 Spokes International Limited - ABN 610 518 075
Preliminary Final Report
Consolidated Statement of Financial Position
For the year ended 31 March 2018



2018
2017

Notes
$'000
$'000




Assets







Non-current assets



Property, plant and equipment
5
480
535








Total non-current assets

480
535




Current assets







Cash and cash equivalents
6
7,297
7,484
Term deposits with maturities of more than three months

1,000
5,900
Trade and other receivables
7
2,077
1,278
Capitalised work in progress

660
1,073








Total current assets

11,034
15,735




Total assets

11,514
16,270




Equity







Share capital
9
49,028
36,145
Share based payments reserve
10
898
1,658
Foreign currency translation reserve

(200)
(25)
Accumulated losses

(44,039)
(26,848)








Equity attributable to the owners of the company

5,687
10,930




Total equity

5,687
10,930




Current liabilities







Trade and other payables
8
2,551
1,377
Deferred revenue

3,276
3,963








Total current liabilities

5,827
5,340




Total equity and liabilities

11,514
16,270

The accompanying notes form an integral part of these financial statements.
9 Spokes International Limited - ABN 610 518 075
Preliminary Final Report
Consolidated Statement of Cash Flows
For the year ended 31 March 2018


2018
2017

Notes
$'000
$'000




Cash flows from operating activities







Receipts from customers

5,227
2,595
Receipts from government grants

312
-
Payments to employees and suppliers

(22,445)
(16,212)






(16,906)
(13,617)




Interest received

323
293
Income tax credit received

- 144








Net cash flows from operating activities
12
(16,583)
(13,180)




Cash flows from investing activities







Purchase of property, plant and equipment

(183)
(442)
Transfer of term deposits

4,900 (5,900)








Net cash flows from investing activities

4,717 (6,342)




Cash flows from financing activities







Proceeds from the issue of share capital
9
12,955
26,542
Costs of raising capital

(992)
(2,767)








Net cash flows from financing activities

11,963
23,775




Net change in cash and cash equivalents

97
4,253




Cash and cash equivalents at the beginning of the year

7,484
3,381
Foreign exchange loss on cash and cash equivalents

(284)
(150)








Cash and cash equivalents at the end of the year
6
7,297
7,484

The accompanying notes form an integral part of these financial statements.
9 Spokes International Limited - ABN 610 518 075
Preliminary Final Report
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
1. Revenue

a) Operating revenue


2018
2017


$'000
$'000




Implementation revenue

1,732 339
Platform access revenue

4,134 823








Total operating revenue

5,866 1,162


b) Other operating income


2018
2017


$'000
$'000




Government grants

520
-
Other income

292 1








Total other operating income

812 1


2. Expenses by nature

a) Operational expenses


2018
2017

Note
$'000
$'000




Employee benefit expenses
3
4,509 2,217
Platform hosting

1,480 1,401
Third party contractors

323 105
Other operational expenses

466 358








Total operational expenses

6,778 4,081



9 Spokes International Limited - ABN 610 518 075
Preliminary Final Report
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
b) Research and development expenses


2018
2017

Note
$'000
$'000




Employee benefit expenses
3
2,650
2,673
Third party contractors

493
443
Depreciation expense

52
24
Other research and development expenses

536
526
Capitalisation of expenditure as work in progress

(265)
(850)
Amortisation of previously capitalised work in progress
expenditure

678
78








Total research and development expenses

4,144
2,894


c) Administration expenses


2018
2017

Notes
$'000
$'000




Depreciation expense

130
55
Directors' fees

344
301
Directors' consultancy services

304
134
Directors' IPO services

-
115
Remuneration of auditors

176
275
Expensed costs of capital raises

169
383
Employee benefit expenses
3
5,474
3,804
Marketing expenses

2,510
889
Travel

1,206
803
Professional, rent, office and other administration expenses

2,815
1,813








Total administration expenses

13,128
8,572



9 Spokes International Limited - ABN 610 518 075
Preliminary Final Report
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
3. Employee benefit expenses


2018
2017

Note
$'000
$'000




Wages and salaries

12,046
8,393
Share option expense
10
180 68
Other benefits

407
233








Total employee benefit expenses

12,633
8,694




Employee benefit expenses have been split between operational, research and development, and
administration expenses as follows:




Operational expenses
2 (a)
4,509
2,217
Research and development expenses
2 (b)
2,436
2,132
Research and development capitalised as work in progress
2 (b)
214
541
Administration expenses
2 (c)
5,474
3,804








Total employee benefit expenses

12,633
8,694


4. Income and Deferred Tax

Income tax (expense) / benefit is represented as follows:


2018
2017


$'000
$'000




Current tax (expense) / benefit

(125)
4








Total current tax (expense) / benefit

(125)
4




Deferred tax expense







Origination of temporary timing differences

(42)
(24)
Tax income / (deduction) of research and development expenses
deferred (net of income)
482 (216)
Tax losses

(4,955)
(3,513)
Deferred tax assets not recognised

4,515
3,753








Total deferred tax

-
-




Total income tax (expense) / benefit

(125)
4



9 Spokes International Limited - ABN 610 518 075
Preliminary Final Report
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
The Group has tax losses available to carry forward of $27.1 million (2017: $12.8 million) subject to
shareholder continuity being maintained. The Group has deferred research and development
deductions of $5.5 million (2017: $7.2 million), after offsetting related revenue. The deferred tax assets
have not been recognised as it is uncertain whether the Group will maintain shareholder continuity or
when it will generate taxable profits.

Reconciliation of effective tax rate:


2018
2017


$'000
$'000
Loss before income tax


(17,066)

(14,040)




Prima facie taxation at 28% (2017: 28%)


(4,778)

(3,931)




Expenses not deductible for tax purposes

138
182
Deferred tax assets not recognised:



Temporary timing differences

42
24
Research and development expenses (recognised) / deferred (net of
income)
(482)
216
Total losses not recognised

4,955
3,513




Total income tax (expense) / benefit


(125)

4


5. Property, plant and equipment


2018
2018
2018
2017
2017
2017

Office and
computer
equipment
Leasehold
improve-
ments
Total
Office and
computer
equipment
Leasehold
improve-
ments
Total

$'000
$'000
$'000
$'000
$'000
$'000







Carrying amount at start of
year

210

325

535

96
-

96
Additions
111
22
133
204
328
532
Disposals
(9)
-
(9)
(19)
- (19)
Depreciation expense
(96)
(86)
(182)
(76)
(3)
(79)
Depreciation on disposals
3
- 3
5
- 5














Carrying amount at end of
year

219

261

480

210
325

535
At cost

409

350

759

307
328

635
Accumulated depreciation

190

89

279

97
3

100



9 Spokes International Limited - ABN 610 518 075
Preliminary Final Report
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
6. Cash and cash equivalents


2018
2017


$'000
$'000




Cash at bank

1,266 866
Term deposits with maturities of three months or less

6,031
6,618








Total cash and cash equivalents

7,297
7,484


7. Trade and other receivables


2018
2017


$'000
$'000




Trade receivables


1,083 665
Prepayments and accrued income

690 406
Other receivables

304 207




Total trade and other receivables


2,077
1,278


8. Trade and other payables


2018
2017


$'000
$'000




Trade payables


838 366
Other creditors and accruals

1,396 938
Deferred rent

317 73




Total trade and other payables


2,551
1,377



9 Spokes International Limited - ABN 610 518 075
Preliminary Final Report
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
9. Share capital



2018
2018
2018
2017
2017
2017


$'000
Shares
000's
Options
000's
$'000
Shares
000's
Options
000's








Share capital at beginning of the year

36,145
391,744
39,866
12,743
266,744
39,866








Shares issued for cash at A$0.20 per share
($0.21)
- -
- 26,169
125,000
-
Shares issued for cash at A$0.13 per share
($0.14)
12,955
92,308
- - - -
Costs of capital raises

(1,012)
- - (2,767)
- -
Expired shareholder options

-
- (39,866)
- - -
Reclassification of previously expensed amounts
from share based payments (for shares issued)
940
-
- - - -








Share capital at the end of the year

49,028
484,052

- 36,145
391,744
39,866


10. Share based payments


2018
2017

Note
$'000
$'000




Share based payments reserve at beginning of the year
1,658
971




Reclassification of previously expensed amounts to share capital
(940)
-
Pre-IPO employee share options (a)

27
68
IPO advisory share options (b)

-
619
Employee ESOPs (c) (i)

109
-
NEDs ESOPs (c) (ii)

44
-




Total share option expense
3
180
687




Share based payments reserve at the end of the year
898
1,658



9 Spokes International Limited - ABN 610 518 075
Preliminary Final Report
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
Movements in the number of share options outstanding and their related weighted average exercise
prices are as follows:

Pre-IPO
employee
share options
IPO
advisor
share
options
Employee
ESOPs
NEDs
ESOPs

Weighted
average
exercise
price

Dec 2015
Jan 2016
Aug 2017
Sep 2017

Exercise price
NZ$0.16
AU$0.20
AU$0.20
AU$0.225
Total

'000's
'000's
'000's
'000's
'000's
$ per
option







Balance outstanding at 1
April 2016
1,875
-
-
- 1,875
0.16
Granted

-

8,750

-

-

8,750

0.21
Forfeited
(90)
-
- - (90)
0.16














Balance outstanding at 31
March 2017
1,785
8,750
-
- 10,535
0.20







Balance exercisable at 31
March 2017
595
-
-
- 595
0.16
Granted

-

-

2,721

1,713

4,434

0.23
Forfeited
(252)
-
(1,006)
- (1,258)
0.21














Balance outstanding at 31
March 2018
1,533
8,750
1,715
1,713
13,711
0.21







Balance exercisable at 31
March 2018
1,022
-
1,715
1,713
4,450
0.22


11. Loss per share


2018
2017


000's
000's




Total comprehensive loss attributable to shareholders

($17,366)
($14,061)
Ordinary number of shares

495,271 402,963
Weighted average number of shares on issue

462,039 397,521








Basic and diluted loss per share

($0.04)
($0.04)



9 Spokes International Limited - ABN 610 518 075
Preliminary Final Report
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
12. Reconciliation of reported loss after tax with cash flows from operating activities



2018
2017


$'000
$'000




Loss after income tax

(17,191)
(14,036)




Non-cash items:







Depreciation expense

182
79
Share based payments

- 619
Share option expense

180
68
Foreign exchange loss / (gain) on monetary assets

104 (237)




Changes in working capital:







Increase / (decrease) in trade and other payables

1,215 (168)
(Decrease) / increase in deferred revenue

(686)
2,102
(Increase) in trade and other receivables

(799)
(835)
Decrease / (increase) in capitalised work in progress

412 (772)








Net cash flow from operating activities

(16,583)
(13,180)


13. Consolidation

The Group had the following subsidiaries as at 31 March 2018:

Name
Country of
incorporation
and
place of
business
Nature of business
% of
ordinary
shares
held by
parent
Date of
incorporation
9 Spokes Australia Pty Limited Australia
Trading operation
100%
10 April 2014
9 Spokes US Holdings Limited New Zealand
Holding Company
100%
12 November 2014
9 Spokes Knowledge Limited
New Zealand
Holder of provisional patent 100%
5 May 2015
9 Spokes Trustee Limited
New Zealand
Non-trading
100%
16 July 2015
9 Spokes UK Limited
United Kingdom Trading operation
100%
21 December 2015
9 Spokes US, Inc.
U.S.A
Non-trading
100%
11 May 2017
9 Spokes Canada Limited
Canada
Trading operation
100%
16 August 2017

9 Spokes Asia Pte Limited, was incorporated in Singapore on 2 April 2018. 9 Spokes Asia Pte Limited
is 100% owned by 9 Spokes International Limited.

The ultimate holding company of the Group is 9 Spokes International Limited.



9 Spokes International Limited - ABN 610 518 075
Preliminary Final Report
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
14. Commitments

Capital commitments

The Group had no capital commitments as at 31 March 2018 (2017: Nil).

Lease commitments

The Group has lease agreements on certain premises. Future minimum rentals payable under non-
cancellable agreements are:


2018
2017


$'000
$'000




Not later than one year

1,221 712
Later than one year and no later than five years

1,985
1,947








Total lease commitments

3,206
2,659


15. Contingencies

As at 31 March 2018, the Group had a lease premise guarantee to the value of $831,000 for the
operating lease for the premises, held by ASB Bank Limited, this replaced the guarantee previously
held at 31 March 2017 of $404,000.