Ann: Response to ASX Query, page-115

I'm afraid I'm simply not going to get enough time to unpack everything in the announcement, however each new announcement gives us more information, another piece to the puzzle of what is going on. I will make the following comments which I believe are fundamental to the new information.

1. It seems the investigation is by the ASX and ASIC and it's specific to ISX operations and structure.
2. While the investigation is carried out, ASX and ASIC have deemed share price volatility as a major risk to market participants. It's still not clear if ISX asked ASIC to do this or ASIC did it of their own volition. However, current evidence still suggests ISX did approach ASIC
3. Crypto currency transactions are central to the investigation and how they may have contributed to revenue targets and performance shares.
4. Ethershack loan - (I won't be providing comment as I have no information to make an objective assessments)

I think within point 1 and 2 have ownership has been covered enough, we have enough information on Red 5 at this point to know it has been discussed and is probably kosher.

The new information we have is issues around crypto-currency. So i'd like to talk about this point in more detail. First some background as to how it works.

in 2017, we saw a boom in ICO's which for all intents and purposes were the same as IPO's. New idea, new business we float on the Ethereum blockchain and sell our tokens to investors. Regulators pushed back and said "hang on, how are these things different to IPO's, they are unregulated, no PDS is being provided, personal circumstances aren't being taken into account and disclosures aren't being met." The crypto community responded by calling tokens a "utility" item, essentially seeking to circumvent U.S regulators by claiming they weren't financial products, instead they served a critical infrastructure role for their protocol. This was debated and ICO's eventually got banned in the U.S with the rest of the world left consider their positions.

This area was hugely controversial for crypto and ultimately I believe lead to the crash, and surge for that matter. This leads us to how to access crypto and ICO's, that is through an exchange just the same as you access Australian shares. Cryptocurrencys are all different but fundamentally they run of a public ledger system, which while public has private identifiers which cannot be hacked/revealed based on current computing power.

The integrity of cryptocurrency exchanges is only as strong as it's KYC process. Because the public ledger has unique private identifiers the only way to know who has what account is a KYC process. In most of the developed world, this is quite heavily regulated and policies and procedures are fairly robust. The KYC procedure in Australia was the same as opening a bank account or share trading account, certified ID, government documents etc etc.

in 2017, we saw a huge boom in crypto, and exchanges could not keep up with manual applications, these exchanges were small and the number of people wanting new accounts was numbering in the thousands for each exchange. They simply couldn't keep up and the money just kept piling in. ISX's KYC software would have been a godsent for an exchange looking to speed that process up. This would represent the boom in crypto related revenue in 2017, so the integrity of those numbers i have absolutely 0 doubt that would be correct.

However, you have to remember this was a hugely controversial area, and regulators were scared, playing catch up at every step. It's not surprising to me that ASIC would want clarity on the crypto related revenue and operations.

Based on my intimate understanding of the area, the revenue figures provided marry up perfectly with what you would expect from the crypto currency cycle.

What would be alarming to me is if we saw crypto representing an unusually large amount of revenue post the 2017 crash, money simply wasn't going back into exchanges. This wasn't the case in the information provided. Additionally, they did not provide a KYC service in the ICO phase, which would have been hugely controversial (So thank your lucky stars). That was a very grey area.

What is suspect ASIC was investigating, is whether:

1. ISX operated in the grey area associated with ICO's (which they didn't)
2. Did ISX push money through cryptocurrency to bump up their revenue through related/unrelated parties?

My answer to that is no, quite clearly the transactions are consistent with what we would expect to see in the financials.

I won't have time to go through everything else, but hopeful that is helpful to some.