K2fly : K2F Quarterly Activities Report and Appendix 4C

ASX Release

ASX code: K2F21 July 2022

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Highlights
• Net operating cash flow was positive ($1.7m) in the June quarter, a function of strong sales and
	ongoing business improvement initiatives.
• Record Annual Recurring Revenue, Invoices Raised and Cash Receipts from Customers in the
use	June quarter and for the full year FY2022 on the back of continued contract wins, confirming the
Company's growth strategy and growing track record
Cash Receipts from Customers; $5.4m in Q4 FY2022, up 200% from Q3 and 170% compared to
•
	Q4 FY2021; full year FY2022 up 77% on FY2021
• Record quarterly Invoices Raised; $3.8m in Q4 FY2022, up 15% from Q3 and 46% compared to
	Q4 FY2021
• Annual Recurring Revenue (ARR)2 of $6.0m in Q4 FY2022, 76% higher than in Q4 FY2021

June Q4 FY2022 Quarterly Activities Report

Record Growth in Key Metrics for the Quarter and Financial Year FY2022

• Total Contract Value (TCV)2 of $17.8m in Q4 FY2022, 80% higher than Q4 FY2021 (TCV is the remaining value of current contracts)

• Contracts: material contract signed during the quarter with BHP Iron Ore (TCV $2.12m / ARR $620k) and new non-material contracts: additional services agreement with Rio Tinto (purchase order $423k) and Asarco (subsidiary of Grupo Mexico) signs 3-year Tailings monitoring contract for $145k ARR $468k TCV

• Maptek strategic investment in K2fly (largest global private mining software group) as part of placement; Maptek's Chairman Peter Johnson appointed to K2fly's Board as Non-Executive

personal	Director. Maptek accounted for $4.05m of the overall $6.2m placement, becoming a 13.2%
shareholder in K2fly
Capital raising (placement) of $6.2m before costs to Maptek, existing institutional investors, key
•
	K2fly executives and existing sophisticated investors in April 2022. The placement shares were
	issued in a single tranche at a 4.1% premium to the 15-day VWAP
• Cash balance on 30 June 2022 was $8.3m (no debt); includes placement proceeds
For

K2fly Limited (K2F, K2fly or the Company) (ASX: K2F), is the leading provider of Resource Governance solutions for 'net positive impact' in Environmental, Social and Governance (ESG) compliance, disclosure, and technical assurance. We focus on the operations of mining and asset intensive industries through our platform-basedSaaS cloud solutions. K2fly is pleased to provide commentary regarding its activities for the June quarter, Q4 FY2022.

K2fly Limited ACN 125 345 502

www.k2fly.com|[e-mail]

[phone]

4/502 Hay Street Subiaco WA 6006

CONTRACTS AND FINANCIAL RESULTS1

TCV & ARR2:

For personal use only

• ARR grew 15% to $6.0m compared to the prior quarter (Q3 FY2022) and was up 76% compared to Q4 FY2021
• TCV grew 80% to $17.8m compared to Q4 FY2021 and was up 7% compared to Q3 FY2022
  The quarter-to-quarter movement in TCV is due to the addition of new contracts and the depletion of existing contracts as the remaining term reduces
• A major contract was signed with BHP Iron Ore during the quarter (see Major Contracts section of this report for more detail) and a purchase order signed with Rio Tinto (contributing to TCV but not impacting ARR due to its one-off nature)

K2fly Limited ACN 125 345 502

www.k2fly.com|[e-mail]

[phone]

4/502 Hay Street Subiaco WA 6006

Invoices Raised and Cash Receipts:

Cash Receipts from Customers during the quarter were up 170% over Q4 FY2021 at $5.4m. Compared to the prior quarter Q3 FY2022, Cash Receipts were up 200%. Full year Cash Receipts were up 77% on FY2021.

onlyThe timing and collection of Invoices Raised into Cash Receipts throughout the year vary by month and quarter and are historically concentrated in the June and September quarters due to a niversary dates of annual contracts. Cash receipts are also influenced by timing of implementation fees against project milestones on individual contracts and payment terms (annual billing cycle).

usepersonalInvoices Raised during the quarter were $3.8m, up 15% over the prior quarter and 46% higher compared to Q4 FY2021. The timing of Invoices Raised varies as explained above.

ForNet Operating Cashflow:

Net operating cashflow was positive in the June quarter at $1.7m, a function of the timing of receipts and payables, and recent sales.

This sets a pathway for the business to achieve a positive net operating cash position on an annualised basis as we achieve growth in recurring revenue through new contracts being signed.

Due to the variation in timing of quarterly invoicing, we however expect net operating cash flow to fluctuate on a quarterly basis over coming quarters until recurring revenues have sufficiently reached a level that net operating cash is positive on an annualised basis (see reference to the annual billing cycle explained in the paragraphs above).

K2fly Limited ACN 125 345 502

www.k2fly.com|[e-mail]

[phone]

4/502 Hay Street Subiaco WA 6006

Nic Pollock CEO of K2fly said "We are very pleased with the quarterly and annual growth achieved across our key financial metrics in closing out the financial year FY2022 to record levels. Our management team is demonstrating a strong track record of delivering high growth whilst implementing ongoing business improvement initiatives across sales, product, delivery, and finance. onlyConsequently, we delivered a new record quarterly invoicing amount, new milestones in ARR and TCV and a positive June quarter net operating cash flow ($1.7m) which reduced our annual net operating cash flow deficit to just over one million dollars for the year end. This sets a pathway for

the business to achieve a net positive operating cash position on an annualised basis.

We are extremely proud to now count BHP as another one of the global Tier 1 customers to the K2fly list having signed our first contract in the quarter. This shows strong relevance of our solutions to Tier 1 miners and beyond. Annual Recurring Revenue base has grown to $6.0m from $3.4m in FY2021.

In line with our other Tier 1 clients, we see considerable potential to win further work with BHP. More usebroadly, we will continue to focus on Tier 1 and 2 miners globally for which we see a strong runway within our existing customer base to roll out our additional, complimentary solutions. There remains great scope to service and penetrate, more broadly geographically and more deeply into,

commodity types of our existing customers.

Our strong expectation of future growth is underpinned by our leading solutions being more relevant to our customers than ever. This is driven by a growing expectation among our customers key

stakeholders of seeing a more sustainable mining sector. We remain bullish on the thematic that personalintegrating ESG solutions into their businesses is no longer a choice but a necessity being driven by

investors, community expectations and regulators."

MAJOR CONTRACTS

BHP Iron Ore: An initial one-year contract was signed for K2fly's Ground Disturbance Solution to roll ut across its iron ore operations, WA Iron Ore (WAIO), in the Pilbara of Western Australia. TCV is $2.12m and ARR is $620k. This contract was deemed as material to K2fly. See ASX announcement 9

May 2022.

The Ground Disturbance Solution sits within K2fly's Natural Resource Governance area. Read more about this solution here. This solution is the only COTS solution available in the market today and is transforming the way resource and infrastructure landowners manage and govern their land assets.

Rio Tinto: An additional services agreement was recently signed with Rio Tinto for K2fly's Heritage Management Solution for the Rio Tinto Iron Ore Division. The financial impact is deemed not material to K2fly. Read more about this solution here.

ForThe purchase order for services has a value of $423k relating to K2fly's solution enhancements. The services contribute to growth in TCV however are one-off in nature thereby not impacting ARR.

The new agreement for additional services by Rio Tino for K2fly's Heritage Solution marks a second phase of contract signing in the area of Heritage in its iron ore division (see ASX announcement 4 ebruary 2021) and sits alongside existing contracted K2fly solutions including: Resource Inventory

& Reconciliation, Dams & tailings and Mine Geology Data Management.

Asarco (a subsidiary of Grupo Mexico): One of the major copper producers in the world, Asarco have contracted with K2fly for a tailings monitoring solution across three sites in the Americas (Mexico, Peru, and US). The contract ARR is $145k for a three-year contract making the TCV $468k including one off services.

K2fly Limited ACN 125 345 502

www.k2fly.com|[e-mail]

[phone]

4/502 Hay Street Subiaco WA 6006

CORPORATE

Strategic investment and capital raise (placement):

On 8 April 2022, K2fly announced the strategic investment in K2fly by Maptek (largest global private onlymining software group with revenues in excess of A$120m) as part of a $6.2m placement, before costs. The placement shares were issued at $0.18 per ordinary share in a single tranche at a 4.1% premium to the 15-day VWAP, to Maptek, existing institutional investors, key K2fly executives and existing sophisticated investors. The new shares were issued pursuant to the Company's existing

placement capacity under ASX Listing Rule 7.1 and 7.1.A.

Maptek accounted for $4.05m of the overall $6.2m placement, becoming a 13.2% shareholder in K2fly. Maptek dominates the sector globally for mine planning and geological modelling software as well as solutions across a wide span of the mining value chain. Maptek have entered a 12-month

usestandstill agreement limiting their ability to acquire shares above 19.9% without K2fly board approval.

Funds raised will be used for product development and working capital requirements to deliver continued growth. The placement was completed on 14 April 2020 with all proceeds received. See announcement 8 April 2022for further details.

personalBoard and executive changes:

Board appointment: As part of Maptek's 13.2% strategic investment in K2fly, Maptek's Chairman, Peter Johnson, has been appointed to K2fly's board as Non-Executive Director. Peter is a mechanical engineer with over 20 years' experience in the development and application of technology in the global mining industry and has worked at Maptek since 1999, including as General Manager (Australia) since 2006, and was responsible for expanding Maptek's footprint beyond geological modelling and mine design into mine operations, scheduling, drill and blast and production management and success in these areas at a global scale.

Executive changes: Brian Miller has retired from his executive position and became a Non-Executive Director of the Company (effective 1 July 2022). In addition, Brian has been engaged pursuant to a consultancy agreement to provide advisory services to assist K2fly with business and relationship management. Jenny Cutri, Non-Executive Chair of K2fly said: "Brian has been of tremendous support and brought much success including seeing rapid growth of the Company over the last 6 years, initially leading the Company as CEO at which time K2fly was largely a consulting business to what we see K2fly as today." See announcement 29 June 2022.

ForOngoing investigation: The investigation into the suspected fraud event in K2fly's South African registered subsidiary linked to a former employee is ongoing. See announcement 8 March 2022.

Cash position: The Company held a cash balance on 30 June 2022 of $8.3m (no debt), which include placement proceeds (before costs) of $6.2m. Trade receivables at 30 June 2022 were $1.8m.

Operating expenditure: Cash outflows related to ongoing operating expenditures to run business

operations and deliver K2fly's platform of 9 solutions to clients which include the key items of: R&D, product manufacturing and operating costs, advertising and marketing, staff costs and administration and corporate costs. Net Cash from Operating Activities was an inflow of $1.7m (Section 1.9, Appendix 4C). Gross expenditure in the June quarter amounted to cash outflows of $3.8m (Section 1.2, Appendix 4C).

K2fly Limited ACN 125 345 502

www.k2fly.com|[e-mail]

[phone]

4/502 Hay Street Subiaco WA 6006