ADNEO LIMITED — Capital/Financing Update 2016

Jun 21, 2016

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prospecTus
applydirect limited
acn 123 129 162
FOR AN INITIAL PUBLIC OFFERING OF 40,000,000 SHARES
AT AN OFFER PRICE OF $0.20 PER SHARE TO RAISE $8 MILLION
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This prospecTus is an imporTanT documenT and should be read in iTs enTireTy

If you do not understand its contents or if you have any questions about the Shares being offered under this Prospectus, or any other matter relating to an investment in the Company, you should consult your professional adviser without delay.

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This is an important document which should be read in its entirety before making any investment decision. you should obtain independent advice if you have any questions about any of the matters contained in this prospectus.

applydirect limited acn 123 129 162 is a public company incorporated in australia.

lodgement and listing

The Prospectus is dated 31 May 2016 and has been lodged with the Australian Securities and Investments Commission ( asic ). This is a replacement prospectus which replaced the prospectus dated 17 May 2016 and lodged with ASIC on that date ( original prospectus ). This Prospectus expires on 16 June 2017 ( prospectus expiry date ). No Shares will be allotted, issued, transferred or sold on the basis of this Prospectus after the Prospectus Expiry Date.

A summary of the material differences between the Original Prospectus and this Replacement Prospectus is as follows:

• additional disclosures in sections 1.4, 3.4 and 3.5 in relation to financial matters, to disclose:

• the amount and proportion of sales revenue in the year ended 30 June 2015 and the half year ended 31 December 2015 derived from non-recurring project-based revenue from the NSW Government;

• further detail regarding the accounting treatment of the Convertible Notes; and

• further detail in respect of the pro forma adjustments and subsequent events which form part of and are reflected in the Pro Forma Historical Income Statement and Pro Forma Historical Balance Sheet;

• additional disclosures in the Chairman’s Letter and sections 1.1, 1.6 and 4 regarding ApplyDirect’s short operating history and loss making history, the current status of ApplyDirect’s solvency and the timing of its ability to pay its debts as and when they fall due;

• additional disclosures in the Chairman’s Letter and sections 1.6 and 4 regarding the:

• proposed expenditure program of ApplyDirect from the net proceeds of the Offer; and

• quantum and timing of the increases in revenue that the Directors consider are required in order for ApplyDirect to be likely to avoid a further capital raising by around 31 December 2017;

• additional disclosures in sections 1.4 and 6.15 regarding the non-participation of substantial shareholders Bryan Petereit and Potentate in the Offer;

• additional disclosures in section 2.3 regarding clarification of ApplyDirect’s view of the strategic points of difference in its

• business model in relation to other e-recruitment industry participants;

• additional disclosures in section 3.9 regarding the kinds of holders of Convertible Notes issued by ApplyDirect in March 2016; and

• additional disclosures in section 8.4 regarding:

• ApplyDirect’s key personnel and the terms of their contractual arrangements with ApplyDirect; and

• an overview of the general nature and terms of ApplyDirect’s customer contracts.

The Company has applied to ASX Limited ( asX ) for admission to the Official List and for Official Quotation of the Shares on issue as at the date of this Prospectus and the Shares issued under the Offer.

Neither ASIC nor ASX takes any responsibility for the content of this Prospectus. Admission to the Official List is in no way an indication of the merits of the Offer or the Company.

As set out in the section headed ‘Highlights of the Offer’ on page 6, the Company expects the Shares will be quoted on ASX initially on or about 20 June 2016. The Company and Share Registry disclaim all liability, whether in negligence or otherwise, to persons who trade Shares before receiving their holding statements.

offer

This Prospectus contains an invitation by the Company to you to apply for Shares. This Prospectus is issued by the Company and supports the initial public offering ( ipo ) of the Company.

The Minimum Subscription is $8 million. No Shares will be issued until the Minimum Subscription has been received.

No person is authorised to provide any information, or to make any representation, about the Company or the Offer that is not contained in this Prospectus. Potential investors should rely only on the information contained in this Prospectus. Any information or representation not contained in the Prospectus may not be relied on as having been authorised by the Company or any other person in connection with the Offer. Except as required by law and only to the extent required by such law, none of the Company, any person named in the Prospectus nor any other person associated with the Company or the Offer guarantees or warrants the future performance of the Company, the return on an investment made under the Prospectus, the repayment of capital or the payment of dividends on the Shares.

Before deciding to invest in the Company, investors should read the entire Prospectus. The information contained in individual sections of the Prospectus is not intended to and does not

provide a comprehensive review of the business or the financial affairs of the Company or the Shares offered under the Prospectus. The Offer does not take into account the investment objectives, financial situation or particular needs of individual investors. An investment in the Company should be considered speculative. You should carefully consider the risks (including those set out in section 4) that impact on the Company in the context of your personal requirements (including your financial and taxation position) and, if required, seek professional guidance from your stockbroker, solicitor, accountant or other professional adviser prior to deciding to invest in the Company. No cooling-off regime (whether provided for by law or otherwise) applies in respect of the application for or acquisition of Shares under the Offer made in this Prospectus.

statements of past performance

This Prospectus includes information regarding the past performance of the Company. Investors should be aware that past performance is not indicative of future performance.

Forward-looking statements

This Prospectus contains forward-looking statements, statements identified by use of the words ‘believes’, ‘estimates’, ‘anticipates’, ‘expects’, ‘predicts’, ‘intends’, ‘targets’, ‘plans’, ‘goals’, ‘outlook’, ‘aims’, ‘guidance’, ‘forecasts’, ‘may’, ‘will’, ‘would’, ‘could’ or ‘should’ and other similar words that involve risks and uncertainties.

These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions and contingencies that are subject to change without notice and involve known and unknown risks and uncertainties and other factors which are beyond the control of the Company, its Directors and its management. They are provided as a general guide only and should not be relied upon as an indication or guarantee of future performance.

Except as set out above, the Company and its Directors cannot and do not make any representation, express or implied, in relation to forward-looking statements and you are cautioned not to place undue reliance on these statements. The Company does not intend to update or revise forward-looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this Prospectus, except where it is required by law.

These statements are subject to various risk factors that could cause the Company’s actual results to differ materially from the results expressed or anticipated in these statements. Key risk factors are set out in section 4. These and other factors could cause actual results to

ApplyDirect Limited Prospectus

Important notice

differ materially from those expressed in any statement contained in this Prospectus.

To the extent that this Prospectus, including the Company overview in section 2, uses market data and third party estimates or projections, there is no assurance that any of the market data or third party estimates or projections contained in this Prospectus are correct or will be achieved. The Company has not independently verified this information. Further, estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed in the risk factors set out in section 4.

Foreign jurisdictions

This Prospectus does not constitute an offer or invitation to acquire Shares in any place in which, or to any person to whom, it would be unlawful to make such an offer or invitation. No action has been taken to register or qualify the Shares or the Offer or to otherwise permit a public offering of the Shares in any jurisdiction outside Australia and New Zealand.

This Prospectus is not to be distributed to, for the account or benefit of, or relied on by, persons in the United States. The Shares have not been, and will not be, registered under the US Securities Act or the securities laws of any state or other jurisdiction of the United States and may not be offered, sold, or otherwise transferred in the United States or to, or for the account or benefit of, any US persons except in a transaction exempt from, or not subject to, registration under the US securities Act and applicable US state securities laws.

Further, the distribution of this Prospectus (including in electronic form) in any jurisdictions outside Australia or New Zealand may be restricted by law and, therefore, any persons who come into possession of this Prospectus outside Australia or New Zealand should seek advice on, and observe, any such restrictions. Any failure to comply with such restrictions may constitute a violation of the applicable securities laws.

important information for new Zealand investors

This Offer to New Zealand investors is a regulated offer made under Australian and New Zealand law. In Australia, this is Chapter 8 of the Corporations Act and the Corporations Regulations 2001 (Cth) ( regulations ). In New Zealand, this is subpart 6 of Part 9 of the Financial Markets Conduct Act 2013 and Part 9 of the Financial Markets Conduct Regulations 2014 .

This Offer and the contents of this Prospectus are principally governed by Australian rather than New Zealand law. In the main, the Corporations Act and Regulations set out how the Offer must be made.

There are differences in how financial products (including the Shares) are regulated under

Australian law. For example, the disclosure of fees for managed investment schemes is different under the Australian regime. The rights, remedies and compensation arrangements available to New Zealand investors in Australian financial products may differ from the rights, remedies and compensation arrangements for New Zealand financial products.

Both the Australian and New Zealand financial markets regulators have enforcement responsibilities in relation to this Offer. If you need to make a complaint about this Offer in New Zealand, please contact the Financial Markets Authority, New Zealand (http://www.fma.govt.nz). The Australian and New Zealand regulators will work together to settle your complaint.

The taxation treatment of Australian financial products is not the same as for New Zealand financial products. If you are uncertain about whether this investment is appropriate for you, you should seek the advice of an appropriately qualified taxation or financial adviser.

The Offer Price is set in Australian dollars and, therefore, the Offer may involve a currency exchange risk. The value of the Shares will go up or down according to changes in the exchange rate between the Australian dollar and the New Zealand dollar. These changes may be significant.

If the Company pays any amounts (e.g. dividends) in a currency that is not New Zealand dollars, you may incur significant fees in having the funds credited to a bank account in New Zealand dollars (in New Zealand or elsewhere).

If the Shares are able to be traded on a financial products market and you wish to trade the Shares through that market, you will have to make arrangements for a participant in that market to sell the Shares on your behalf. If the financial product market does not operate in New Zealand, the way in which that market operates, the regulation of participants in the market, and the information available to you about the Shares and trading may differ from financial product markets that operate in New Zealand.

A copy of this Prospectus and other documents relating to the Offer have been, or will be, lodged on with the New Zealand Disclose Register (http://www.business.govt.nz/disclose) under the mutual recognition regime.

While the Offer is being extended to New Zealand investors under the mutual recognition regime, no application for listing and quotation is being made to NZX Limited.

hong Kong

WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it been authorised by the Securities and

Futures Commission in Hong Kong pursuant to the Securities and Futures Ordinance (Cap. 571) of the Laws of Hong Kong ( sFo ). No action has been taken in Hong Kong to authorise or register this document or to permit the distribution of this document or any documents issued in connection with it. Accordingly, the Shares have not been and will not be offered or sold in Hong Kong other than to ‘professional investors’ (as defined in the SFO and any rules made under that ordinance).

No advertisement, invitation or document relating to the Shares has been or will be issued, or has been or will be in the possession of any person for the purpose of issue, in Hong Kong or elsewhere that is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Shares that are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors (as defined in the SFO and any rules made under that ordinance). No person allotted Shares may sell, or offer to sell, such securities in circumstances that amount to an offer to the public in Hong Kong within six months following the date of issue of such securities.

The contents of this document have not been reviewed by any Hong Kong regulatory authority. You are advised to exercise caution in relation to the Offer. If you are in doubt about any contents of this document, you should obtain independent professional advice.

exposure period

Pursuant to the Corporations Act, this Prospectus is subject to an exposure period of 7 days after the date of lodgement of the Prospectus with ASIC, which 7 day period may be extended by ASIC by a further period of 7 days.

The Exposure Period enables this Prospectus to be examined by market participants prior to the raising of funds. The examination may result in the identification of deficiencies in this Prospectus. If deficiencies are detected, the Company may need to deal with Applications in accordance with section 724 of the Corporations Act.

Application Forms received prior to the expiration of the Exposure Period will not be processed until after the Exposure Period. No preference will be conferred on Application Forms received during the Exposure Period and all Application Forms received during the Exposure Period will be treated as if they were simultaneously received on the date on which the Offer opens (i.e. 9.00am (Melbourne time) on 1 June 2016).

electronic prospectus

The Prospectus is available to Australian and New Zealand investors in electronic form at https://www.applydirect.com.au.

ApplyDirect Limited Prospectus 1

Important notice

The Offer pursuant to this Prospectus is available only to Australian and New Zealand residents accessing the website (and receiving the electronic version of this Prospectus) within Australia or New Zealand. It is not available to persons in other jurisdictions (including the United States). The Company is entitled to refuse an Application for Shares under this Prospectus if it believes the Applicant received the Offer outside Australia or New Zealand or not in compliance with the laws of the relevant foreign jurisdictions.

Shares to which this Prospectus relates will only be issued on receipt of an Application Form issued together with the Prospectus.

Applications must be made by completing the Application Form that is included in, is attached to, or accompanies this Prospectus or by applying online at www.applydirect.com.au/public-offer. Application Forms must be completed in accordance with the accompanying instructions.

Applicants may apply online for the Shares. Any Applicants applying online must personally complete the online Application Form and pay the Application Moneys. Application Forms completed online must not be completed by third parties, including authorised third parties (e.g. the Applicant’s broker).

The Corporations Act prohibits any person from passing on to another person the Application Form unless it is included in or is accompanied by a hard copy of this Prospectus or accompanies the complete and unaltered electronic version of this Prospectus.

During the Offer period, any person who is not in the United States, not a US person and is not acting for the account of any US person, may obtain a paper copy of this Prospectus by contacting the Share Registry’s Offer Information Line on 1800 647 819 (within Australia) or +61 2 8280 7100 (outside Australia), between 8:30am and 5:30pm (Melbourne time). Questions relating to the Offer may also be directed to the Share Registry’s Offer Information Line.

privacy

By completing an Application Form, you are providing personal information to the Company and Link Market Services Limited, as the Share Registry, which is contracted by the Company to manage Applications, and you consent to the collection and use of that personal information in accordance with these terms. That personal information will be collected, held and used both in and outside of Australia by the Company, and the Share Registry on its behalf, to process your Application, service your needs as a holder of Shares, provide facilities and services that you request and carry out appropriate administration of your investment. If you do not wish to provide this information, the Company may not be able to process your Application.

Once you become a Shareholder, the Corporations Act requires information about you (including your name, address and details of the Shares you hold) to be included in the Company’s public share register. This information must continue to be included in the Company’s share register even if you cease to be a Shareholder.

The Company and the Share Registry may disclose your personal information for purposes related to your investment to their agents and service providers (which may be located outside of Australia) including those listed below or as otherwise authorised under the Privacy Act 1988 (Cth):

• the Share Registry for ongoing administration of the Company’s public share register;

• printers and other companies for the purposes of preparation and distribution of documents and for mail;

• market research companies for the purpose of analysing the Company’s Shareholder base and for product development and planning; and

• legal and accounting firms, auditors, management consultants and other advisers for the purpose of administering and advising on the Offer and for associated actions.

Under the Privacy Act 1988 (Cth), you may request access to your personal information that is held by, or on behalf of, the Company. You can request access to your personal information or obtain information about the Company’s privacy practices by contacting the Company or its Share Registry (contact details are set out elsewhere in this Prospectus). The Company aims to ensure that the personal information it retains about you is accurate, complete and up-to-date. To assist with this, please contact the Company or the Share Registry if any of the details you have provided change.

In accordance with the Corporations Act, information on the Company’s share register will be accessible by the public.

currency & Time

References in this Prospectus to currency are to Australian dollars unless otherwise indicated. All references in this Prospectus to time are to the legal time in Melbourne, Australia.

Glossary

Certain terms and abbreviations in this Prospectus have defined meanings that are explained in the Glossary in section 9 of this Prospectus. Defined terms are generally identifiable by the use of an upper case first letter. Unless expressly stated to the contrary, references to sections are to sections of this Prospectus.

photographs and diagrams

Photographs and diagrams used in this Prospectus that do not have descriptions are for illustration only and should not be interpreted to mean that any person shown in them endorses this Prospectus or its contents or that the assets shown in them are owned by the Company. Diagrams used in this Prospectus are illustrative only and may not be drawn to scale. Unless otherwise stated, all data contained in charts, graphs and tables is based on information available at the date of the Prospectus.

applications

By lodging an Application Form, you declare that you were given access to the entire Prospectus, together with an Application Form. The Company will not accept a completed Application Form if it has reason to believe that an Application Form lodged by an Applicant was not included in, accompanied by or attached to the Prospectus or if it has reason to believe that the Application Form has been altered or tampered with in any way.

Detailed instructions on completing the Application Form are on the back of the Application Form. The acceptance of an Application Form and the allocation of Shares is at the discretion of the Company.

company website

Any references to documents included on the Company’s website are provided for convenience only, and none of the documents or other information on that website is incorporated by reference into this Prospectus.

independent limited assurance report on historical Financial information

The Independent Limited Assurance Report on Historical Financial Information is provided in section 7.

Questions

If you have any questions on how to apply for Shares, please call your broker. Instructions on how to apply for Shares are set out in section 6 of this Prospectus and on the back of the Application Forms. If you have any questions in relation to the Offer, please contact the Offer Information Line on 1800 647 819 (within Australia) or +61 2 8280 7100 (outside Australia), between 8:30am and 5:30pm (Melbourne time).

2 ApplyDirect Limited Prospectus

Contents

	Chairman’s Letter	4
	Highlights of the Offer	6
1.	Investment Overview	8
2.	The Company	21
3.	Financial Information	29
4.	Risks	45
5.	Key People, Interests and Benefits	56
6.	Details of the Offer	65
7.	Independent Limited Assurance Report	75
8.	Additional Information	80
9.	Glossary	88
	Corporate Directory	Inside Back Cover

ApplyDirect Limited Prospectus 3

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31 May 2016

Dear Investor

On behalf of the Board of ApplyDirect Limited, I am delighted to offer you the opportunity to become a shareholder in an exciting new player in online recruiting.

Our mission at ApplyDirect is to disrupt and change the very nature of the recruitment process, by connecting employees directly with employers.

Sounds simple. However, like most entrepreneurial endeavours, ApplyDirect is the combination of a profound insight into a customer problem and years of hard work in creating what appears to be, to the users and those outside the Company, a simple solution. It is in fact a complex piece of proprietary software which, to the best of our knowledge, is unique and difficult to replicate in terms of both the intricacy of the system and the investment of time to iterate a basic search engine to ApplyDirect’s level of sophistication.

Having been the CEO of two well-known companies with large staff numbers, I am aware of the enormous cost of staff turnover. Recruitment was a constant frustration. The recruitment value chain is replete with ‘middle men’, agencies, aggregators and jobs boards, all taking a cut of the costs. Not only is the current value chain inefficient, in my experience, the quality of candidates facilitated by this process has been variable. After years of frustration at the cost and quality of the recruitment process, I was delighted to have the opportunity to join ApplyDirect and be part of its goal to deliver better candidates for employers at lower cost.

ApplyDirect is not a jobs board. It is neither an aggregator nor an agency. ApplyDirect is a powerful search engine that delivers candidates directly into the employers’ careers pages and electronically connects the job applicants directly into the employers’ automated recruitment systems. No advertising on jobs boards, no agency commissions, no phone calls, no emails or other costly human intervention. In addition, ApplyDirect’s powerful cataloguing system allows employers to create bespoke job titles (jobs boards typically have limited categories) and has the capability of matching applicants to the right job.

The result for the employer is very significant cost savings and higher quality candidates.

Over the past 5 years, our founder, Bryan Petereit, and his team have developed the ApplyDirect system and intellectual property to a point where it works seamlessly for both employer and candidate. The proof of this is the extent to which it is now used: March 2016 saw over 690,000 visitors to the website; 14.8 million job search results and over 32,000 jobs posted on the website for a wide range of employers, including many household names such as Optus and Bupa. The NSW Government, one of Australia’s largest employers, has also recently moved its recruitment system onto the ApplyDirect platform.

The ApplyDirect system works for small and medium sized businesses too. Anyone who wants to employ high quality candidates at a lower cost is a potential customer of ApplyDirect. We have a solution for everyone from large governments to the corner store.

In order to test the system and the business model, ApplyDirect gave some 700 early adopting employers access to the system for free. The Company now has 75 employers paying to use the platform. To put this in perspective, according to Australian Bureau of Statistics, there are 6,000 large employers in Australia (employers with more than 200 employees). The entire market comprises 827,000 employers. The Board believes the model is proven and it is now time to take ApplyDirect to the market, segmented by the size of employer, with a sophisticated marketing and sales strategy.

ApplyDirect has only a short operating and performance history, and has never been profitable. In fact, and as noted in section 3.4, ApplyDirect has historically made significant losses, including recently. In this regard, ApplyDirect incurred an operating loss of $1.28 million for the year ended 30 June 2015 and incurred further actual losses of $1.54 million for the six months ended 31 December 2015.

In March 2016, the Company raised $1.35 million in the form of Convertible Notes. The Notes are not redeemable until after Listing. Following the raising of these funds through the issue of the Convertible Notes, ApplyDirect remains solvent and, as noted and for the reasons set out in sections 1.6, 3.10 and 4, the Directors expect this will continue to be the case without the need for further fundraising until around 31 July 2016. In this regard, ApplyDirect’s financial performance and position have been the subject of ongoing review by the Directors, in consultation with ApplyDirect’s existing auditor and accounting advisers.

Having regard to the above, if the Offer has not been successfully completed by 31 July 2016, the Company will need to raise additional capital from other sources to remain solvent and be able to continue to pay its debts as and when they fall due. Therefore, based on the current solvency position of ApplyDirect, this investment should be considered high risk and speculative, and I urge you to read this Prospectus in its entirety and to consult with your professional adviser if you have any queries.

4 ApplyDirect Limited Prospectus

Chairman’s Letter

The proposed use of the proceeds of the Offer as described in section 6.5 has been determined on the basis that the net proceeds of the Offer (after payment of the Offer costs) will fund ApplyDirect’s business plans and strategic initiatives as set out in this Prospectus until around 31 December 2017.

It should be noted that ApplyDirect does not presently have substantial financial commitments or liabilities. ApplyDirect’s expenditure is therefore essentially of a discretionary nature. As noted in section 6.5, from the net proceeds of the Offer, the Directors intend to spend, through to around 31 December 2017:

• around $520,000 on system development and technology;

• around $1,470,000 on the establishment and development of a dedicated B2B sales and marketing team; and

• around $3,200,000 on a brand marketing and awareness program, to be carried out through on-line and traditional forms of media.

The Directors consider this expenditure as being important in driving the profile of the business to a point where it is able to generate materially higher revenues than has historically been the case.

In this regard, ApplyDirect’s recent average annual revenues have been around $600,000 per annum, including around $180,000 of annual non-recurring project based revenue. The Directors consider that in order for ApplyDirect to avoid having to raise additional capital before 31 December 2017, revenues must increase substantially between Listing and that time, with total revenues needing to increase to:

• around $1,650,000 in the year ending 30 June 2017 (an increase of almost 300% on historical recurring revenues); and

• around $1,270,000 in the half-year ending 31 December 2017 (an increase of 505% on historical recurring revenues).

Please refer to sections 1.6 (pages 17-19) and 4 (pages 49-51) for further detail, including commentary on the Directors’ plans to generate additional revenue.

This also demonstrates the high risk and speculative nature of an investment in ApplyDirect.

The funds raised through this offering will be used in large part for the development of internal sales and marketing capabilities and the retention of external agencies to assist in the development of strategy and creative. The skills sets on our Board fit well with this strategic imperative and we are excited to have the opportunity to work closely with management to realise the potential of ApplyDirect and endeavour to increase revenues. The balance of funds raised will be used for ongoing systems development, working capital and costs associated with this public offer. The Directors will adopt a responsible approach to the expenditure of the net proceeds of the Offer, and particularly so if revenues are not increasing in the amount and at the times referred to above.

Many of you will recall that this is the second time ApplyDirect has sought to undertake a public offer and ASX listing in recent months. In November/December 2015, ApplyDirect lodged a prospectus with ASIC and made a public offer with a view to being listed on ASX before the end of 2015. Largely on the basis of feedback received from potential investors during the initial offer, the decision was made by the Board to withdraw that offer. Since that time, and as noted above, the Company has raised $1.35 million in the form of a Convertible Note issue which has been used, in part, to settle all costs associated with that initial offer. The Directors are of the view that the pricing and structure of this Offer more acutely recognises the Company’s status as an early phase, developmental entity, the business of which faces significant challenges and risks.

This Prospectus contains information about the Offer and the material risks inherent in an investment in the Company at this early stage of its development. I encourage you to read this document carefully and in its entirety (particularly the risks associated with investing in the Company – refer sections 1.6 and 4) before making an investment decision.

On behalf of my fellow Directors, I commend this opportunity to you and look forward to welcoming you as a shareholder of ApplyDirect.

Yours faithfully

Michael Kay executive chairman ApplyDirect Limited

ApplyDirect Limited Prospectus 5

Highlights of the Offer

Key daTes

Lodgement of this Replacement Prospectus with ASIC	Tuesday, 31 May 2016
Opening Date for Offer	Wednesday, 1 June 2016
Closing Date for Offer	5.00pm (Melbourne time)
	on Friday, 10 June 2016
Completion of the Offer (issue of the Shares)	Thursday, 16 June 2016
Despatch of Holding Statements	Friday, 17 June 2016
Trading of Shares expected to commence on ASX	Monday, 20 June 2016

Dates may change

The timetable for the Offer is indicative only and may change without notice.

The Company reserves the right to vary any and all of the above dates without notice to any investor, recipient of this Prospectus or other person (including to accept late Applications (either generally or in particular cases), to extend the Closing Date, to close the Offer early or to cancel or withdraw the Offer at any time before the Shares are issued).

If the Offer is cancelled or withdrawn before the issue of the Shares, all Application Moneys received by the Company will be refunded (without interest) to Applicants in accordance with the requirements of the Corporations Act as soon as practicable after the cancellation or withdrawal.

Investors are encouraged to apply for Shares as soon as possible after the Offer opens. Applications received are irrevocable and may not be varied or withdrawn except as required by law. No cooling off rights apply under the Offer.

The admission of the Company to the Official List and the commencement of quotation of the Shares is subject to confirmation by ASX.

In addition, ASIC may extend the Exposure Period by an additional 7 calendar days in which case the Opening Date for the Offer and other dates may be varied accordingly without notice.

How to invest

Applications for Shares can only be made by completing and lodging the Application Form included in, attached to or accompanying this Prospectus or by applying online at www.applydirect.com.au/public-offer. Instructions on how to apply for Shares are set out in sections 1.5 and 6 of this Prospectus and on the Application Form.

Questions

Please contact the Offer Information Line on 1800 647 819 (within Australia) or +61 2 8280 7100 (outside Australia), between 8.30am and 5.30pm (Melbourne time). If you are unclear in relation to any matter or uncertain as to whether ApplyDirect is a suitable investment for you, you should seek professional guidance from your stockbroker, solicitor, accountant, financial adviser or other independent and qualified professional adviser before deciding to invest.

6 ApplyDirect Limited Prospectus

Highlights of the Offer

Key oFFer inFormaTion

Key oFFer inFormaTion
Proposed ASX Code	AD1
Total number of Shares on issue at the date of this Prospectus	124,271,826
(ie. held by Existing Shareholders)
Total number of Shares available under the Offer	40,000,000
Total number of Shares on issue at the completion of the Offer	164,271,826
Total Shares on issue on completion of the Offer	171,021,826
(assuming all Convertible Notes are converted to Shares)
Pro forma net cash & cash equivalents	$8.82 million
(assuming all Convertible Notes are converted to Shares)
Pro forma net cash & cash equivalents	$7.47 million
(assuming all Convertible Notes are redeemed)
Market capitalisation (at the Offer Price)	$32.85 million
(assuming no Convertible Notes are converted to Shares)
Market capitalisation (at the Offer Price)	$34.20 million
(assuming all Convertible Notes are converted to Shares)

Notes

1. The amount sought to be raised under this Prospectus is $8 million ( minimum subscription ). There is no provision under the Prospectus for the Company to accept oversubscriptions or any amount less than the Minimum Subscription. The Offer is not underwritten.

2. The pro forma Financial Information set out in section 3 has been prepared on the basis of the general and specific assumptions set out in section 3 (and in particular sections 3.4 and 3.5) and should be read in conjunction with the Statement of Significant Accounting Policies set out in section 3.12 and the risk factors in section 4.

3. Certain Shares (and Options and possibly Convertible Notes) held by the Existing Shareholders on the completion of the Offer will be subject to either ASX imposed escrow or voluntary escrow arrangements. Further details of the expected transfer restrictions, including the expected number of Shares, Options and Convertible Notes subject to escrow and the likely release dates are set out in section 6.15. The actual escrow restrictions to be imposed by ASX are, as at the Prospectus Date, under discussion with ASX.

4. Indicative market capitalisation is calculated as the total number of Shares on issue at completion of the Offer multiplied by the Offer Price.

5. Pro forma net cash is calculated as the pro forma cash and cash equivalents as at 31 December 2015, following adjustment for the impact of the Offer and the impact of other material events that have taken place subsequent to 31 December 2015 up to the Prospectus Date. Refer section 3 for further details.

6. As at the date of the Prospectus, and other than in respect of the Company’s repayment obligations under the Convertible Notes, the Company is debt free.

ApplyDirect Limited Prospectus 7

1. Investment Overview

8 ApplyDirect Limited Prospectus

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1.1 Introduction to the Company
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Topic	summary	For more information
What is the business	ApplyDirect is an innovative on-line database and search platform	Section 2.1
of the Company?	that links employers and job candidates directly to live job
	opportunities on employer websites. The ApplyDirect platform
	facilitates direct recruitment by employers.
What is the industry	The Company operates in the recruitment (or e-recruitment)	Section 2
sector in which the	industry.
Company operates?
Why is the Offer	The primary purpose of the Offer is to provide funds for the	Sections 2.4, 2.5
being conducted?	Company to:	and 6.5
	�establish and develop a B2B and retail sales and marketing
	team (including the recruitment and training of the staff that
	the Company requires to implement its business plan);
	�undertake a brand development and awareness program,
	using both on-line and traditional media;
	�further develop its systems and technology;
	�provide working capital;
	�provide funding for the payment of any Convertible Notes
	that are redeemed; and
	�pay the costs of the Offer.
	The Directors expect that the Company is likely to experience
	an increase in public profile of the Company as a result of the
	Offer and the Company’s listing on ASX. This, together with
	the Company’s likely enhanced ability to incentivise employees
	with tradeable Shares as an ASX listed company, is expected
	to also enhance its ability to attract and retain high calibre
	employees to execute its strategy.
What is the key highlight	The ApplyDirect platform is a new paradigm in the on-line	Sections 2.3,
of the Offer?	recruitment sector. Its business model is focussed on maximising	2.4 and 2.5
	the leverage of the ApplyDirect platform that facilitates direct
	relationships between employers and job candidates in an
	environment where:
	�employers are increasingly looking to have direct relationships
	with job candidates; and
	�business is increasingly wanting effective on-line business models
	to improve efficiency and reduce costs.
Risks of an investment	An investment shares is inherently speculative and the risk factors	Sections 1.6,
in ApplyDirect	associated with an investment in ApplyDirect’s Shares are described	3.10 and 4
	in detail in sections 1.6 and 4. In particular, there are significant
	risk factors associated with ApplyDirect’s unprofitable historical
	financial performance, low historical revenues and current
	solvency position.
	ApplyDirect has historically made significant losses. In this regard,
	ApplyDirect incurred an operating loss of $1.28 million for the
	year ended 30 June 2015 and incurred further actual losses
	of $1.54 million for the six months ended 31 December 2015.
	ApplyDirect also had a net asset deficiency of $177,476 as at
	31 December 2015.

ApplyDirect Limited Prospectus 9

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1.2 Key Features of the ApplyDirect Business Model
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Topic	summary	For more information
What does ApplyDirect	ApplyDirect intends to facilitate the disintermediation (i.e. removal	Section 2.3
intend to do?	of the use of intermediaries) of the recruitment sector by providing
	employers with a means (via the ApplyDirect platform) to deal
	directly with job candidates, thereby reducing the time and cost
	of the recruitment process to employers.
What is the business	The ApplyDirect business model is based on saving time and	Section 2.3
model of ApplyDirect?	cost (including by removing recruitment intermediaries from the
	process) for employers in the recruitment process by facilitating
	direct relationships between the employer and job candidates.
	ApplyDirect aims to deliver high quality job candidates to
	employers for the lowest practicable cost.
What is ApplyDirect’s	ApplyDirect’s growth strategy is to build on its base of 75 paying	Section 2.5
growth strategy?	employer customers (as at the date of this Prospectus) by:
	�building a strong and capable business development, sales
	and marketing team;
	�undertaking a multimedia brand awareness and recognition
	campaign; and
	�building a network of distribution partners,
	to market the ApplyDirect platform broadly to employers (large
	and small, and including those companies which have previously
	had free access), governments and industry groups. The ApplyDirect
	platform is easily scalable, and the Company’s principal focus will
	be on building the number of employers who pay to use the
	ApplyDirect platform and the size of the employee community.
How does ApplyDirect	ApplyDirect intends to generate revenues principally from annual	Sections 2.3 and 6.5
intend to generate	subscription fees and ‘per job’ advertising fees paid by employers.
its revenue?	ApplyDirect will also derive revenue from bespoke projects (for
	example, establishing and hosting the www.iworkfor.nsw.gov.au
	site for the NSW Government).
	Job candidates will not ordinarily pay fees to access the
	ApplyDirect platform.
What will be ApplyDirect’s	The major costs likely to be incurred by ApplyDirect in generating	Sections 2.3 and 6.5
key costs incurred in	its revenues are employment costs and other indirect costs of its
generating its revenues?	sales, marketing and business development teams in building the
	employer customer base, the multimedia sales, marketing and
	brand recognition/awareness campaigns, systems development
	and upgrade costs and occupancy expenses.
What are ApplyDirect’s	While the manner in which the platform will be used is likely	Sections 2.3, 2.4
key market segments	to vary according to the nature and size of the employer, the	and 2.5
and target clients?	ApplyDirect platform is applicable to and has been demonstrated
	to provide benefits to large and small employers, government
	and industry groups.

10 ApplyDirect Limited Prospectus

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1.3 Key strengths
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1.3 Key strengths
Listed below is a summary of	ApplyDirect’s key strengths.
Topic	summary	For more information
Direct employment	The ApplyDirect search engine, by directing job candidates	Sections 2.1 and 2.3
opportunities – no	electronically into the employers’ recruitment system and process,
intermediaries	allows the employers to avoid the use of expensive intermediaries
	and control the recruitment process, thereby substantially reducing
	the transaction costs and improving the quality of job candidates.
Lower costs for employers	The capacity and ability of an employer to deal directly with job	Section 2.3
	candidates reduces recruitment costs in several critical areas – the
	on-line model reduces advertising costs, it removes the fees and
	costs of intermediaries and, for employers with automated
	applicant tracking and other sophisticated HR systems, on-line
	direct recruitment offers significant efficiencies in time and cost.
Transparency for	As each job advertisement has the prospective employer’s details	Section 2.3
job candidates	and direct contact points, the ApplyDirect platform does not post
	anonymous or fictitious jobs and there is no need to deal with
	intermediaries or recruitment consultants.
Readily searchable	An easily searchable central database with a comprehensive	Section 2.3
central database	listing of job opportunities saves job candidates significant time
	in the search process. Further, the ApplyDirect proprietary job
	cataloguing system delivers accurate results in response to the
	specific search criteria entered by job candidates. The system also
	provides for job candidates to access ApplyDirect’s job alerts tool.
	This is able to be tailored to a candidate’s preferences, which can
	be as specific as choosing a specific role with a preferred employer
	or employers.
Better job candidates	As its cataloguing system accurately identifies jobs in response to	Section 2.3
	a specific job search, and then allows the job candidate to apply
	directly for the advertised job using the employer’s application
	process and website, ApplyDirect believes that employers are
	more likely to have responses from job candidates better qualified
	for and/or otherwise better suited to the advertised job than if the
	candidate uses other on-line job boards.
Bespoke services for	The ApplyDirect on-line platform can be tailored to provide	Section 2.3
Government and	bespoke direct recruitment systems to meet the needs of
Industry Groups	employers and other organisations.
	For example, ApplyDirect developed a tailored system for the
	NSW Government, one of Australia’s largest employers with more
	than 400,000 employees, accessible via www.iworkfor.nsw.gov.au.
	The ApplyDirect system streamlines and simplifies access for job
	candidates to all job opportunities in the NSW Government, and
	its many departments and agencies.
	ApplyDirect has also developed a tailored platform for the VTIC
	to automatically advertise open jobs for the VTIC and its 550
	member organisations.

ApplyDirect Limited Prospectus 11

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1.4 The Company
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1.4 The Company
Topic	summary	For more information
Directors and	The Directors of ApplyDirect, at the date of this Prospectus, are:	Sections 5.1 and 5.2
proposed Director	�Michael Kay (Executive Chairman)
	�Bryan Petereit (Managing Director)
	�Drew Ilsley (Non-executive Director)
	Mr Anthony Charles has been invited to join the Board as
	a non-executive Director on the completion of the Offer, and
	Mr Charles has agreed to become a Director of ApplyDirect
	at that time.
	Further details of the expertise and experience of each of the
	Directors and Mr Charles, as a proposed Director, are set out
	in section 5.2.
	ApplyDirect intends to appoint an additional independent
	non-executive Director within two years of Listing.
What is the capital	At the date of this Prospectus, the Company has 124,271,826	Sections 3.6, 3.8, 3.9
structure of the Company?	Existing Shares.	and 5.4
	In addition, there are 30,635,469 Options on issue, each entitling
	the holder, on exercise of the Option, to subscribe for one Share.
	Details of the Options, including the exercise price and final exercise
	date are set out in section 3.8. The holders of the Options include
	related entities of the Directors (refer to section 5.4), employees
	and other third parties.
	In March 2016, the Company also issued 1,350,000 Convertible
	Notes for a total issue price of $1,350,000. Each Convertible Note
	entitles the holder to convert the Note into 5 new Shares (ie. at an
	effective issue price of $0.20 per new Share) or redeem their Notes
	for a cash amount equal to the Principal Amount. No interest is
	payable on the Convertible Notes, however, upon redemption or
	conversion of a Convertible Note, the holder of the Note will be
	issued 5 Options for each Note converted or redeemed. Each such
	Option will have an exercise price of $0.25 and an expiry date
	of 3 years from the date of issue.
	Details of the terms of the Convertible Notes, and the Options
	issued on the redemption or conversion of Convertible Notes,
	are set out in section 3.9.

12 ApplyDirect Limited Prospectus

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1.4 The Company
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1.4 The Company
Topic	summary	For more information
What is the financial	In the financial year ended 30 June 2015, ApplyDirect derived sales	Sections 3 and 6.5
position of the Company?	revenues of $675,531 and made a net loss for the year, after tax,
	of $1,280,976. Sales revenues for the year ended 30 June 2015
	of $675,531 included $180,000 of non-recurring project-based
	revenue from the NSW Government.
	In the 6 months ended 31 December 2015, ApplyDirect derived
	sales revenues of $305,821 and made a net loss for the half year,
	after tax, of $1,538,398. Sales revenues for the period ended
	31 December 2015 of $305,821 included $70,000 of non-recurring
	project-based revenue from the NSW Government. The net loss
	includes costs in respect of the November/December 2015 initial
	public offering of Shares by ApplyDirect.
	As at 31 December 2015, ApplyDirect’s accumulated accounting
	losses exceeded $8.6 million and its total liabilities (current and
	non-current) exceeded its total assets (current and non-current)
	by $177,476.
	The Company undertook a capital raising event subsequent to
	31 December 2015. The Company raised an additional $1,350,000
	cash through the issue of Convertible Notes in March 2016. The full
	amount raised through the issue of the Convertible Notes will need
	to be repaid if all Convertible Notes are redeemed. The Convertible
	Note is a compound financial instrument and has increased the
	Company’s net asset position by $161,213 (refer to section 3.5 for
	further details).
	While ApplyDirect has been able to develop its platform, it has
	had very limited resources to market the platform and build its
	employer customer base. The Offer is primarily focussed on raising
	the funding necessary for ApplyDirect to implement its strategies
	for growing its business.
	Refer to sections 3.4 (Pro-forma Historical Income Statement), 3.5
	(Pro-forma Historical Balance Sheet) and 6.5 (Purpose of the Offer
	and use of proceeds).
Substantial shareholders	At the date of this Prospectus, the only substantial shareholders	Section 6.15
	of the Company are:
	�Bryan Petereit*– 24,851,967 Shares (19.998%); and
	�Potentate – a seed capital provider unrelated to the Company
	and/or its Directors – 23,119,383 Shares (18.604%).
	No other Existing Shareholder holds in excess of 5% of the issued
	share capital of the Company.
	Bryan Petereit and Potentate will not be applying for Shares under
	the Offer. Accordingly, on completion of the Offer, the holdings of
	Bryan Petereit and Potentate will be:
	�Bryan Petereit – 24,851,967 Shares (15.129%); and
	�Potentate –23,119,383 Shares (14.074%).
	* Bryan Petereit has a relevant interest in 24,851,967 Shares through two
	shareholders, Werndex (23,601,967 Shares – 18.992%) and B&C Super Fund
	(1,250,000 Shares – 1.006%).
Will any related party have	Other than as detailed in the paragraph above (Bryan Petereit,	Sections 3.7, 5.4
a significant interest in the	a Director, who has a relevant interest in shares through his	and 6.15
Company or the Offer?	associated entities, Werndex and B&C Super Fund, is a substantial
	shareholder and will continue to be a substantial shareholder after
	the completion of the Offer) and in sections 3.7 and 5.4, no related
	party will have a significant interest in the Company or the Offer.

ApplyDirect Limited Prospectus 13

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1.5 Overview of the Offer
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Topic	summary	For more information
Who is the issuer	ApplyDirect Limited ACN 123 129 162, a company registered
of the Prospectus?	in Victoria.
What is the Offer?	The Offer is an initial public offering of 40 million Shares to raise	Sections 6.1,
	$8 million. The Shares being offered will represent approximately	6.4 and 8.3
	24.35% of the total number of Shares on issue following Listing.
	The Company will not be accepting oversubscriptions under the
	Offer or an amount less than the Minimum Subscription.
	For details relating to the rights and liabilities of the Shares,
	refer to Section 8.3.
What is the Offer Price?	The Offer Price is $0.20 per Share.	Section 6.1
	All successful Applicants will pay the Offer Price per Share.
Who can participate in	The Offer is open to all investors that have a registered address	Section 6.2
the Offer?	in Australia or New Zealand.
What is the Minimum	The minimum amount to be raised under the Prospectus is	Section 6.4
Subscription?	$8 million.
	No Shares will be issued until the Minimum Subscription has
	been received.
	If the Minimum Subscription is not received by the Company
	within 4 months after the date of this Prospectus, the Offer
	will not proceed and all Applications will be refunded in full
	without interest.
What is the minimum	You may apply for a minimum of 10,000 Shares (i.e. $2,000) with	Section 6.7
application size?	incremental multiples of 5,000 Shares (i.e. in incremental multiples
	of $1,000).
How can I apply?	Applicants should complete the Application Form	Section 6.7
	accompanying or included in this Prospectus or online at
	www.applydirect.com.au/public-offer. Any Applicants applying
	online must personally complete the online Application Form.
	Application Forms completed online must not be completed
	by third parties, including authorised third parties (e.g. the
	Applicant’s broker).
	All Application Forms must be completed in accordance with
	the instructions set out on the reverse of the Application Form.
Is there a Lead Manager	There is no lead manager to the Offer. The Company has engaged	Section 8.4
to the Offer?	third parties that are the holders of an AFSL to assist in the raising
	of Application Moneys pursuant to the Offer, but has not engaged
	any such third party in a formal capacity to manage the Offer.
Is the Offer underwritten?	No, the Offer is not underwritten.	Section 6.6
Will the Shares	The Company has applied to ASX for admission to the Official List	Section 6.16
be quoted?	and for its Shares to be granted Official Quotation by ASX. The
	Company is not currently seeking a listing of its Shares on any
	financial market other than ASX.
	Completion of the Offer is conditional on ASX approving the
	Company’s application. If approval is not given by ASX within
	3 months after the date of this Prospectus, the Offer will be
	withdrawn, no Shares will be issued under the Offer and all
	Application Moneys will be refunded (without interest) as soon
	as practicable in accordance with the requirements of the
	Corporations Act.

14 ApplyDirect Limited Prospectus

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1.5 Overview of the Offer
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Topic	summary	For more information
What do Applicants pay	All Applicants under the Offer will pay $0.20 for each Share	Section 6.7
when applying under	offered under this Prospectus.
the Offer?
Will any Shares/Options/	Yes, it is expected that around 92.43% of the Existing Shares	Section 6.15
Convertible Notes be subject	(and around 77.02% of the Options) will be subject to either
to escrow arrangements?	ASX imposed escrow or voluntary escrow arrangements for
	periods of between 6 months and 2 years.
	Convertible Notes that have been issued (directly or indirectly)
	to a Director or proposed Director may also be subject to ASX
	imposed escrow, but the Convertible Notes will not be subject
	to voluntary escrow.
	Further details of the expected transfer restrictions, including the
	expected number of Shares, Options and Convertible Notes subject
	to escrow and the likely release dates are set out in section 6.15.
What is the	The allocation of Shares will be determined by the Company,	Section 6.9
allocation policy?	in its absolute discretion. In allocating the Shares, a primary
	objective will be to ensure that the Company has an adequate
	spread of Shareholders.
	Current shareholders, Directors and employees of ApplyDirect
	may participate in the Offer (if they elect to do so).
Is there any brokerage,	No brokerage, commission or stamp duty is payable by Applicants	Section 6.11
commission or stamp duty	on the acquisition of Shares under the Offer.
payable by Applicants?
What are the tax	The tax consequences for an investor of any investment in the	Section 6.17
implications of investing	Shares will depend on the investor’s particular circumstances.
in Shares?	Applicants should obtain their own tax advice before deciding
	whether to invest.
	A general overview of the tax treatment for Australian resident
	investors is included in section 6.17.
Can the Company issue	The Company will not be accepting oversubscriptions under	Section 6.1
additional Shares or	the Offer.
other securities?
When will I receive	The Company expects that holding statements will be sent by	Section 6.8
confirmation that my	standard post on or around 17 June 2016. If you receive an
Application has been	allocation through your broker, please contact your broker to
successful?	confirm your allocation.
Can the Offer be	The Company reserves the right not to proceed with the Offer	Section 6.3
withdrawn?	at any time before the issue of Shares to successful Applicants.
	If the Offer does not proceed, Application Moneys will be refunded.
	No interest will be paid on any refunded Application Moneys.
Is there a cooling-off period?	No.	Important Notices
When can I sell my	It is expected that trading of Shares will commence on ASX	Section 6.8
Shares on ASX?	(on a normal settlement basis) on or about 20 June 2016.
	It is the responsibility of each Applicant to confirm their holding
	of Shares before trading Shares. Applicants who sell Shares before
	they receive an initial holding statement do so at their own risk.

ApplyDirect Limited Prospectus 15

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1.5 Overview of the Offer
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Topic	summary	For more information
How can I obtain further	If you would like more information or have any questions	Important Notices
information?	relating to the Offer, please call the Offer Information Line on
	1800 647 819 (within Australia) or +61 2 8280 7100 (outside
	Australia), between 8.30am and 5.30pm (Melbourne time).
	If you are unclear or uncertain in relation to any matter pertaining
	to the Offer or as to whether an investment in the Company is
	suitable for you, you should seek professional guidance from
	your stockbroker, solicitor, accountant, financial adviser or other
	independent professional adviser before deciding whether to invest
	in the Company.

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1.6 Key investment risks
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An investment in the Company involves risk. There are a number of potential risks associated with ApplyDirect’s business and future plans, all of which may materially impact on ApplyDirect, its business, its financial performance and the value of the Shares. Some of the key risks are summarised below. A detailed discussion of key risks is set out in section 4 of the Prospectus. You should give full consideration to both this section and section 4 before deciding whether to invest in the Shares of ApplyDirect.

Shares. Some of the key risks are You should give full consideration	summarised below. A detailed discussion of key risks is set out in section 4 of the Prospectus. to both this section and section 4 before deciding whether to invest in the Shares of ApplyDirect.
Topic	summary
Limited operating history	The Company has only a short operating and performance history, and has never been
and acceptance of its	profitable. As noted in section 3.4, ApplyDirect has historically made significant losses.
business strategy, and	In this regard, ApplyDirect incurred an operating loss of $1.28 million for the year ended
no profitability	30 June 2015 and incurred further actual losses of $1.54 million for the six months ended
	31 December 2015.
	The Company’s limited financial and operating track record is not sufficient to provide
	any certainty or assurance that the Company can or will achieve the objectives set out in
	the Prospectus.
Impact of competition	ApplyDirect operates in a competitive industry and is subject to increasing competition,
on ApplyDirect's	through a combination of established organisations and new entrants to the market. Many of
business model	the established organisations competing with ApplyDirect, such as Seek, Indeed and Adzuna,
	are well established, reputable and well funded organisations.
	The actions of an existing competitor or competitors may become more focussed on
	ApplyDirect's sector of the market or more effective. New competitors may enter the
	market. If ApplyDirect is unable to compete effectively against these threats and attract
	new customers, ApplyDirect's ability to grow its revenue base and become profitable will
	be materially adversely affected.
Inability or failure to protect	ApplyDirect’s proprietary cataloguing system and search engine are not protected through
intellectual property	any patent or other form of registered intellectual property.
	ApplyDirect considers that, in practical terms, its proprietary cataloguing system and search
	engine are not likely to be capable of intellectual property registration.
	This inability or failure by ApplyDirect to adequately protect its intellectual property rights may
	result in ApplyDirect being less able to effectively capitalise on its intellectual property rights
	in the future. It may also increase the risk of ApplyDirect’s proprietary cataloguing system and
	search engine being unlawfully infringed in the future.
Breach of third party	A challenge by a third party in respect of ApplyDirect’s ownership or right to use of know-
intellectual property	how, methodologies or techniques relevant to its systems and central database may cause the
and/or confidentiality	Company to incur significant cost in defending the challenge and may prevent the Company
	from using certain intellectual property in its business or require the Company to pay damages
	or royalties to a third party.
	There is a risk that employees or contractors of ApplyDirect could disclose confidential
	information to a third party in breach of their agreements with the Company or otherwise,
	which disclosure could cause material loss to the Company.

16 ApplyDirect Limited Prospectus

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Topic	summary
Withdrawal of the	In November/December 2015, the Company lodged a prospectus with ASIC and made an
Company’s initial	initial public offering of Shares, seeking to raise a minimum of $10 million and a maximum
public offering	of $15 million. The Company withdrew that initial public offering on 16 December 2015.
	It is possible that withdrawal of the initial public offering may result in there being less interest
	in the Shares after their quotation on ASX and a reduction of the prevailing price at which
	Shareholders are able to sell their Shares.
Decline in economic	A downturn in the Australian economy, structural changes to the recruitment industry or a
conditions, unanticipated	slower than expected transition to direct recruitment or other industry drivers could lead to
changes and adverse shifts	reduced demand for ApplyDirect’s services and negatively impact the financial performance
in industry drivers	of the Company.
Failure to execute	The ability of ApplyDirect to achieve growth of its business is dependent on successful
strategic initiatives	implementation of the business plans and strategic initiatives outlined in this Prospectus.
	An inability to successfully implement these plans and initiatives, whether wholly or partially,
	could adversely affect the Company’s operating and financial performance.
Solvency	ApplyDirect has historically made significant losses. In this regard, ApplyDirect incurred an
	operating loss of $1.28 million for the year ended 30 June 2015 and incurred further actual
	losses of $1.54 million for the six months ended 31 December 2015. ApplyDirect also had
	a net asset deficiency of $177,476 as at 31 December 2015.
	In March 2016, ApplyDirect raised $1.35 million in the form of Convertible Notes. The Notes
	are not redeemable until after Listing. Following the raising of these funds through the issue
	of the Convertible Notes, ApplyDirect remains solvent and, as noted in section 3.10, the
	Directors expect this will continue to be the case without the need for further fundraising
	until around 31 July 2016.
	The Directors have formed the view that ApplyDirect is currently solvent and will remain so
	until around 31 July 2016 on the basis of their review of ApplyDirect’s financial performance
	and position, in consultation with ApplyDirect’s existing auditor and accounting advisers.
	Having regard to the above, if the Offer has not been successfully completed by 31 July 2016,
	ApplyDirect will need to raise additional capital to remain solvent and be able to continue to
	pay its debts as and when they fall due.
	This Prospectus, and in particular section 4 regarding the risk factors associated with
	ApplyDirect’s business and an investment in the Shares, should be read in its entirety as
	this investment should be considered high risk and speculative.
The possibility of further	The proposed use of the proceeds of the Offer as described in section 6.5 has been
capital being required	determined on the basis that the net proceeds of the Offer (after payment of the Offer costs)
	will fund ApplyDirect’s business plans and strategic initiatives as set out in this Prospectus until
	around 31 December 2017.
	ApplyDirect’s plans for growth, as outlined in this Prospectus, include establishing a B2B sales
	and marketing team and conducting a brand marketing and awareness program. While
	the Directors expect that those and other initiatives should ultimately translate to increased
	revenues at a greater rate and for a greater amount than the amounts referred to below, there
	is no guarantee that those initiatives will be successful or that, even if successful, they will lead
	to a material increase in revenue at the times and in the amounts referred to below, or at all.
	It should be noted that ApplyDirect does not presently have substantial financial commitments
	or liabilities. ApplyDirect’s expenditure is therefore essentially of a discretionary nature. As
	noted in section 6.5, from the net proceeds of the Offer, the Directors intend to spend,
	through to around 31 December 2017:

• around $520,000 on system development and technology;

• around $1,470,000 on the establishment and development of a dedicated B2B sales and marketing team; and

• around $3,200,000 on a brand marketing and awareness program, to be carried out through on-line and traditional forms of media.

ApplyDirect Limited Prospectus 17

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Topic

The possibility of further capital being required (continued)

summary

The Directors consider this expenditure as being important in driving the profile of the business to a point where it is able to generate materially higher revenues than has historically been the case.

As noted in section 3.4:

• in the financial year ended 30 June 2015, ApplyDirect derived sales revenues of $675,531, including $180,000 of non-recurring project-based revenue from the NSW Government; and

• in the 6 months ended 31 December 2015, ApplyDirect derived sales revenues of $305,821, including $70,000 of non-recurring project-based revenue from the NSW Government.

Therefore, and as outlined in the table below, on an annualised basis in the 18 months between 1 July 2014 and 31 December 2015, ApplyDirect derived total annual sales revenues of around $600,000, including around $180,000 annually of non-recurring project based revenue.

The Directors consider that ApplyDirect is likely to need to raise additional capital by around 31 December 2017, unless revenues increase over and above historical revenues by the amounts and in the proportions set out below:

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FY17 1H FY18
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	FY17	1H FY18
Historical revenues	$600,000	$300,000
Less: Non-recurring revenues	$(180,000)	$(90,000)
Historical recurring revenues	$420,000	$210,000
New revenues required*	$1,230,000	$1,060,000
Total revenues required*	$1,650,000	$1,270,000
Increase in total revenues required*
as a % of historical recurring revenues	293%	505%

• Note: The amount of revenues the Directors consider are required in order to avoid the need to raise additional capital by 31 December 2017.

It should be noted that the revenue figures as set out in the table above are not forecasts nor an indication of the expected revenue of ApplyDirect. Rather, they reflect the Directors’ views (based on ApplyDirect’s budget and business plan) of the increased levels of revenue required to avoid the need to raise additional capital by around 31 December 2017.

The Director’s assessment of the working capital requirements of ApplyDirect, as referred to above, includes consideration of the expected rate of expenditure of ApplyDirect. The Directors do not expect the rate of expenditure to increase directly in connection with an increase in sales revenue. In this regard, as an internet-based business, expenses are not normally expected to increase in line with an increase in revenue (as would be in expected in, for example, a manufacturing business). Rather, the Directors expect ApplyDirect’s expenditure of the net proceeds of the Offer, and any revenues raised after completion of the Offer, to be undertaken in a structured manner in accordance with its business plan on the items referred to in the table in section 6.5. The Directors will adopt a responsible approach to the expenditure of the net proceeds of the Offer, and particularly so if revenues are not increasing in the amount and at the times referred to above.

The above figures assume a 30 day lead time of converting revenues to cash flow, consistent with ApplyDirect’s past practice. The above figures also assume that every Convertible Note is redeemed after Listing.

18 ApplyDirect Limited Prospectus

1. Investment Overview

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1.6 Key investment risks
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Topic	summary
The possibility of further	The Directors consider that the following are events, matters and circumstances that are likely
capital being required	to result in increased revenue for ApplyDirect above historical recurring levels:
(continued)	�the implementation of ApplyDirect’s key strategies outlined in section 2.5 (using the net
	proceeds of the Offer), which include (among other things):
	– building a sales team to convert current non-paying corporate users and drive sales to
	new corporate customers;
	– building a network of distribution partners that can leverage ApplyDirect into new, larger
	customers;
	– undertaking a retail sales and marketing campaign targeting one-off sales and smaller
	employers; and
	– building on the recent success with the NSW State Government to expand the federal,
	state and local government client base; and
	�as noted in section 2.3, historical rates charged to customers have been lower than the
	commercial rates that are now in place for all new customers.
	However, if ApplyDirect’s plans and initiatives (including those referred to above) are
	unsuccessful, for whatever reason, and ApplyDirect’s revenue does not materially increase
	from historical levels after Listing to the extent referred to above, there is likely to be a need
	for ApplyDirect to raise additional capital by 31 December 2017.
	Additional funding may also be required prior to 31 December 2017 in the event costs exceed
	the Company’s estimates or unanticipated liabilities are incurred. There are other risks, as
	outlined in this section 4, which may result in ApplyDirect’s revenue not increasing from
	historical levels or may otherwise adversely affect the financial performance of ApplyDirect.
Cyber security, computer	Cyber security threats, computer crime and privacy breaches could cause damage to
crime and privacy breaches	ApplyDirect’s reputation, loss of customers, loss of revenue and involve significant cost to
	investigate or remediate, to recover data, to repair or replace information systems and/or
	protect against similar future events.
Failure of information	A failure of ApplyDirect’s internal systems for any reason, such as catastrophic events, security
technology systems	breaches, computer viruses, cyber-based attacks, malicious or deliberate hacking, or power
	outages could cause major disruption to ApplyDirect’s business and could adversely affect its
	operating and financial performance.
Failure to meet client	The ApplyDirect model is relatively new. While it has been tested extensively, the complex
objectives and expectations	and challenging nature of software development and the changing nature of industry needs
	and expectations could potentially render it more difficult than ApplyDirect expects to gain
	traction for its business model and win new customers.
Inability to secure,	ApplyDirect is dependent on building its base of paying customers. There can be no guarantee
or loss of, key contracts	that ApplyDirect will be able to do so, or that it will be able to retain its existing customers.
	Further, the majority of ApplyDirect’s contracts are short to medium term and may not be
	able to be renewed on the expiry of their term. This could adversely affect ApplyDirect’s
	financial performance.
Inability to secure, or loss	ApplyDirect’s senior executives, including its Board (for example, Michael Kay, the Executive
of, key management	Chairman, and Bryan Petereit, the founder, CEO and Managing Director), and other key
	technical personnel (for example, Rolf Mueller, the proposed Chief Information Officer) are
	central to the Company’s growth plans and the achievement of the objectives set out in this
	Prospectus. The loss of any one or more of these personnel could adversely affect the
	Company’s operating and financial performance.
Inability to secure, or loss	ApplyDirect’s growth will rely, in part, on its ability to attract and retain skilled and experienced
of, key technical employees/	employees and contractors as it builds its management team and marketing, sales and business
contractors	development teams. A failure to be able to attract and retain such skilled and experienced
	employees could adversely affect the Company’s operating and financial performance.

ApplyDirect Limited Prospectus 19

1. Investment Overview

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1.6 Key investment risks
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Topic	summary
Failure to obtain repeat	ApplyDirect’s contracts with its customers do not carry any guarantee concerning extension
business from existing clients	or repeat business. While (at the date of this Prospectus) no one contract is material in the
	context of its business, the loss of one or more significant customer contracts could adversely
	affect its operating and financial performance.
Reputational damage	Failure of the ApplyDirect model to work as expected or failure to address operational and/or
	regulatory aspects of ApplyDirect’s business (for example, privacy or IT security) may harm
	the reputation of ApplyDirect and damage its business prospects.
Ineffective implementation	A failure to implement, or implement successfully, some or all of the strategies detailed in
of growth strategies	this Prospectus for the growth of the business of ApplyDirect could adversely affect the
	Company’s operating and financial performance.
Changes in political and	Changes in the political and regulatory landscape in which ApplyDirect operates could
regulatory environment	adversely affect the Company’s operating and financial performance.
What are the additional risks	In addition to the key risks detailed above, there are further risks associated with the Company
of investing in the Shares?	and an investment in the Shares, including in the following areas:
	�potential conflicts of interest;
	�counterparty and service provider risk;
	�operational costs;
	�interest rate risk; and
	�changes in taxation laws and policies.
	Investors should bear the above risks in mind when considering whether to participate
	in the Offer. For more detail on the general risks faced by the Company, refer to section 4.3
	of the Prospectus.

In addition to reading the detailed discussion of risks set out in section 4 of the Prospectus before deciding whether to invest in the Shares, investors are strongly advised to regard any investment in the Company as a long term proposition and be aware that substantial fluctuations in the value of their investment may occur during that period. More detail about these and other risks associated with the Company can be found in section 4.

20 ApplyDirect Limited Prospectus

2. The Company

ApplyDirect Limited Prospectus 21

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2.1 Overview

ApplyDirect has developed an innovative on-line platform that links job candidates directly to live job opportunities on employer websites. The jobs are collated and advertised on the ApplyDirect platform using a sophisticated search engine to enable easy access by job candidates. ApplyDirect provides a seamless way for candidates to identify job opportunities and then apply directly to the employer via the employer’s internal recruitment system.

ApplyDirect has established a position in direct recruitment and now has had in excess of 8.5 million individual job candidate users[1] and 75 corporate subscribers to the platform. ApplyDirect recorded 1.9 million total site visits by candidates in the March quarter 2016, including more than 690,000 site visits during the month of March 2016. More than 32,000 jobs were posted on the ApplyDirect site in March 2016. Customers of ApplyDirect range from some of Australia’s largest employers including NSW Government, Optus and Bupa through to smaller companies with fewer than 50 employees.

The ApplyDirect system has been developed to capitalise on the increasing trend of companies to recruit directly through their own websites. Employers are looking to attract and communicate directly with candidates so that they can manage their recruitment and HR strategies internally. This approach can deliver substantial reductions in both recruitment and administration costs to employers, and simplifies the employment process for job seekers.

A key difficulty faced by companies is attracting the right applicants to their websites. ApplyDirect helps to solve this problem by providing a central online database with a proprietary cataloguing system and search engine that is structured to enable job candidates to find and apply for their preferred jobs. ApplyDirect allows employers to reach a wider pool of candidates without losing the benefits of the direct recruitment approach.

With the establishment of the existing on-line ‘job board’ model in the late 1990s, there was a transition from printed classified advertisements to jobs being advertised on on-line ‘job boards’. The recruitment industry saw a rapid move from paper based applications and communications to electronic communications based on emailed letters and resumes.

While on-line job boards have been very successful, and have made it easier to search for jobs, they suffer from inefficiencies due to:

• the minimal reduction in advertising costs for employers;

• communication being predominantly email based, which requires extensive manual entry of data into the employer’s in-house recruitment systems, which limits the administrative cost savings and efficiencies for employers; and

• the ongoing involvement of recruitment consultants in the process in many cases, with their associated fees and costs.

The trend towards direct recruitment is being driven by employers seeking to reduce the time and cost of recruitment by the use of on-line systems and automated applicant tracking software to facilitate direct interaction between themselves and potential employees. ApplyDirect facilitates this process and aims to lead the disruption of the traditional job board recruitment market.

ApplyDirect is the result of a concept developed by Mr Bryan Petereit, the founder and Managing Director of ApplyDirect. As an experienced IT recruitment professional, Mr Petereit believed the on-line recruitment market was inefficient and that there was an opportunity for a unique tool that connected employers to job candidates. The idea is simple – link the employer and job candidate directly and as simply as practicable, thereby reducing time and costs, and eliminating the traditional third party (and intermediary), the recruitment agency.

For employers it is easy – the ApplyDirect system automatically uploads job advertisements posted by employers on their website into a central database (catalogued using a proprietary system) where they can be easily accessed by job candidates. Alternatively, for smaller employers without a careers page, ApplyDirect can host an outsourced careers page on their behalf. A further alternative for smaller employers is that they are able to simply and cheaply use the ApplyDirect platform as a job advertising medium and still obtain all the benefits associated with no intermediary involvement and without being deluged by spam candidates.

For job candidates, it is as simple as searching the database and, if a suitable job advertisement is found, clicking on the link in the advertisement to respond directly to the employer.

The ApplyDirect platform is readily scalable. It requires no changes to the core proprietary cataloguing system to increase capacity. Additional servers can be added rapidly, as required, to cater for any increase in the size of the central job database, the number of corporate clients and/or the number of active job candidates.

2.2 Recruitment industry overview

In February 2016, there were 11.9 million people employed in Australia, earning an estimated $703 billion per annum. Based on the average staff turnover across a broad range of industries in the last 12 months of 16%, more than 1.9 million of these employees are likely to leave their jobs in the next 12 months. Staff turnover costs Australian employers billions of dollars annually after taking into account:

• direct recruitment costs, including the cost of advertising a job vacancy, fees paid to recruitment agencies, fees paid to consultants for conducting tests, checking references and pre-employment medicals; and

• Based on individual independent IP addresses.

22 ApplyDirect Limited Prospectus

2. The Company

• indirect costs, including:

• the cost of employees involved in recruitment, screening and selection processes;

• training and induction costs; and

– loss of productivity in the early stages of employment.

Staff turnover cost estimates typically range from 50% to 150% of annual salary, depending on the role and level of seniority. Thus, for an organisation with 100 employees earning an average salary of $75,000, staff turnover in the next 12 months could cost the organisation approximately $900,000 (assuming a staff turnover rate of 16% and a turnover cost per employee of 75% of annual salary).

A significant proportion of recruitment costs are represented by recruitment agencies, which typically charge between 7.5% and 25% of a candidate’s annual salary for a successful placement. The recruitment industry in Australia generated revenue in excess of $11 billion in 2014. Another component of direct recruitment costs is advertising on jobs boards. The price to advertise a job on Australia’s leading jobs board can exceed $250 plus GST.

The considerable costs of staff turnover have driven many employers to a direct recruitment model that cuts recruitment agencies and other intermediaries out of the recruitment process.

2.3 The ApplyDirect Business Model

ApplyDirect is an innovative database and search platform that facilitates direct recruitment by employers.

Direct recruitment eliminates the need for intermediaries (for example, recruitment consultants) in the recruitment process as the employers communicate directly with potential employees (and vice versa).

Evidence of the trend to direct recruitment is apparent from the number of companies, organisations and governments that have career pages on their website. The websites are typically linked to applicant tracking and other HR software to efficiently and effectively deal with employment candidates that contact them directly. ApplyDirect expects this trend in recruitment to continue as more employers, both large and small, realise the cost savings, efficiencies and other benefits of recruiting directly via their own websites.

Traditional on-line ‘job boards’ tend to replicate the inefficiencies of conventional recruitment processes as highlighted in the following graphic:

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Traditional Job Board
RECRUITMENT EMAIL
CV & PERSONAL AGENCY CONTACT
INFO CAPTURED
JOB BOARD
CANDIDATE EMAIL TO E-RECRUITMENT EMPLOYER
EMPLOYER SYSTEM
EMAIL TO
CANDIDATE
EMAIL
CONTACT
----- End of picture text -----

The ApplyDirect model connects employers directly with applicants to simplify and streamline the recruitment process.

==> picture [56 x 12] intentionally omitted <==

----- Start of picture text -----

ApplyDirect
----- End of picture text -----

==> picture [241 x 7] intentionally omitted <==

----- Start of picture text -----

CANDIDATE EMPLOYER
----- End of picture text -----

ApplyDirect Limited Prospectus 23

2. The Company

The core aspect of the ApplyDirect business model is its central database of jobs (created by directly uploading the details of each job listed on the respective employers’ websites). No recruitment agencies or other intermediaries are permitted to place job advertisements in the central database.

competitors of applydirect

ApplyDirect operates in the e-recruitment market. Broadly, the market comprises sector and candidate specific participants, and established participants that operate through the use of traditional ‘job board’ models and ‘aggregator’ models. The main competitors of ApplyDirect include:

• Participants using the traditional ‘job board’ model, such as Seek and CareerOne.

• Participants using the ‘aggregator’ model, including Indeed, Adzuna and Jora (formerly Jobseeker).

Seek is a dominant player in the ‘job board’ sector as well as the broader e-recruitment market. Seek and the other market participants referred to above are all owned by, or are in their own right, traditional and well-known industry participants. These well established industry participants pose a significant threat to the business of ApplyDirect, which is a relatively new enterprise that does not have a similar level of reputation or entrenchment in the industry or similar access to funding.

There is a risk that those competitors could, with their access to substantial funding and industry knowledge, seek to directly compete with the ApplyDirect business model.

Key strategic differences from competitors

Notwithstanding these competitive threats, ApplyDirect’s Directors consider that there are some material differences between the ApplyDirect platform as a whole and the traditional models and other participants in the e-recruitment industry, in the following key respects:

• ApplyDirect does not allow jobs to be posted by recruitment agencies.

• ApplyDirect provides full transparency on all posted jobs. The actual employer is identified for each advertised position and the application process is clear to the candidate from the outset.

• There are no ‘double ups’. Where positions are advertised by recruitment agencies, it is possible that the same position may be advertised by multiple agencies, giving rise to inefficiency for both candidates and employers.

• The only people who have access to a candidate’s CV are the candidate and the prospective employer. ApplyDirect does not capture, nor does it seek to capture or request to be given in any circumstances, a candidate’s CV.

• ApplyDirect’s proprietary cataloguing system, combined with its ability to integrate with employers’ e-recruitment systems, provides for candidates to be linked directly to the those e-recruitment systems.

cataloguing system

ApplyDirect’s Directors consider that ApplyDirect’s proprietary cataloguing system is a key point of difference from other e-recruitment industry participants.

Traditional ‘job boards’ typically use classification systems where advertisers of positions (for example, employers or recruiters) are required to manually select the category under which the position will be advertised. The ‘aggregator’ model aims to secure as many job postings as possible, from as many sources as possible, which, in the view of ApplyDirect, makes it difficult to implement an effective cataloguing system.

The ApplyDirect cataloguing system is designed to make ApplyDirect’s job search tool easier for the candidate to use. The ApplyDirect cataloguing system borrows position descriptions from the relevant employer’s website and converts them into a search tool for candidates. Over the course of the last 7 years, ApplyDirect has processed more than 1.7 million jobs to refine this cataloguing system. The refinement process has involved a team of recruitment professionals reviewing many of the position descriptions from employer websites to ensure the cataloguing system can cater accurately for variations in descriptions that different employers use to describe the same or similar jobs.

The development of the cataloguing system also provides a job alert system for the candidates. Candidates subscribing to the alert system only receive alerts from employers that match their chosen preferences. In addition, the alert system enables candidates to select specific positions and specific employers for further tailoring of their preferences. ApplyDirect is not aware of this level of tailoring being available in other search tools.

integrating the cataloguing system and the employer e-recruitment systems

A feature of ApplyDirect’s model is the ability to integrate the ApplyDirect site and cataloguing system with employers’ e-recruitment systems.

Many employers now have sophisticated e-recruitment systems that are designed to handle online applications from candidates. Often, these unique systems step candidates through a customised application process that is designed to shortlist the most suited candidates. These systems are designed to streamline the recruitment process for the employer and result in efficiencies and a reduction of recruitment costs.

24 ApplyDirect Limited Prospectus

2. The Company

Traditional ‘job board’ or ‘aggregator’ models capture a candidate’s CV and transmit candidate data to employers by providing the candidate’s CV by email. This increases the workload of employers and can lead to spamming of CVs, as well as reducing the utilisation and effectiveness of the employer’s e-recruitment systems.

ApplyDirect’s site provides a direct interface with the employer’s e-recruitment system that does not require ApplyDirect having access to the candidate’s CV.

For employers

The ApplyDirect platform can deliver benefits to businesses of all sizes.

For large employers, governments and other organisations, accessing the benefits of ApplyDirect is simple. ApplyDirect provides an interface to the ‘careers’ pages on the employer’s website (and to the applicant tracking and HR software that usually sits behind the website). Once access is granted, job opportunities posted on the employer’s ‘careers’ page will be automatically uploaded and catalogued within the ApplyDirect system, and then posted as an employer branded job advertisement on the ApplyDirect platform where it can be viewed by any job applicant.

For mid-sized employers who do not have an automated HR system or applicant tracking software, the ApplyDirect platform can provide a complete solution. Using simple application software, ApplyDirect creates a ‘virtual’ careers web page for the employer onto which it can upload details of its job requirements. ApplyDirect automatically integrates the job data into the ApplyDirect system and then creates a job advertisement in the central database which has a similar look and feel to any job advertisement from a large employer.

Small employers, with only occasional need for job advertisements, can use the ApplyDirect system on a one-off basis. This is as easy as using a credit card to purchase a single job advertisement placed in the central database or to buy a ‘job pack’ (which allows an employer to place up to 100 job advertisements).

ApplyDirect also provides bespoke system solutions for Governments and associations. As an example, ApplyDirect developed a tailored system for the NSW Government, one of Australia’s largest employers with more than 400,000 employees, accessible via www.iworkfor.nsw.gov.au. The ApplyDirect system streamlines and simplifies access for job candidates to all NSW Government job opportunities, and provides administration and cost benefits to the NSW Government and its many departments and agencies. Amongst other benefits, the ApplyDirect system database is updated (by the addition and removal of job advertisements) automatically, ensuring all jobs offered are current.

As another example, ApplyDirect developed a tailored platform for the VTIC to automatically advertise open jobs for the VTIC and its 550 member organisations, only around 50 of which have careers web pages. ApplyDirect provides valuable traffic to the VTIC jobs site. ApplyDirect has the ability to benefit from value added services such as banner advertisements, targeted job campaigns, front page branding and affinity marketing campaigns.

The benefits for employers include:

• increased visibility and access to job candidates;

• improved candidate flow;

• removal of inefficiencies and increased control of the recruitment process;

• elimination of email processes;

• seamless integration with in-house e-recruitment systems;

• substantial savings in advertising, administration and recruitment processing costs;

• ensures no spam candidates;

• improves candidate quality;

• easy implementation – no IT project required; and

• no time is wasted on posting jobs – fully automated process.

For Job applicants

The ApplyDirect model is very easy for job applicants to use. The core of the system is a sophisticated, proprietary cataloguing system that, whenever a search of the central database takes place, ensures only the job advertisements matching the specific criteria set by the job applicant are presented for review.

The ApplyDirect proprietary cataloguing system has been built using the data, key word descriptions and experience gained from reviewing and cataloguing over 1.7 million job advertisements. In contrast to the keyword search facilities used by many on-line job aggregators, which often produce mixed and inefficient results, the ApplyDirect system provides accurate results due to its sophistication and capacity to recognise differing language types, styles and role descriptions.

Job candidates are able to search the database using multiple criteria. The accuracy of the system also allows for highly targeted email alerts. For example, a job applicant can search the system by job description, by a particular job specialisation, by employer name and/or by location. Alternatively, a job applicant can request automatic notifications by email if, for example, a specific job or jobs are available in a specific location or with a specific employer (or any group of employers).

ApplyDirect Limited Prospectus 25

2. The Company

In addition to the flexibility, ease of use and accuracy of database searching, the other real advantage for the job applicant is that, if a job advertisement is found that the applicant wishes to pursue, one click on the job advertisement will take the applicant directly to the ‘careers page’ on the employer’s website where the applicant can read the full job description and apply directly using the employer’s job application system.

The other comfort for the job applicant is knowing that there are no ‘false’ jobs. Each job advertisement must clearly identify the employer and provide contact details. There are no recruitment intermediaries and no jobs with anonymous employers. The benefits for job applicants are significant:

• transparency – no anonymous or fictitious jobs;

• no need to deal with intermediaries or recruitment consultants;

• one central database with a comprehensive listing of job opportunities directly listed by employers;

• accurate cataloguing which saves significant time in the search process; and

• as the opportunity is placed directly by the employer, all job applications are made directly to the employer which, in ApplyDirect’s view, gives rise to a greater likelihood of a response.

revenue model

Employers are the focus of the ApplyDirect revenue model. To access and use the ApplyDirect platform, larger employers pay an annual subscription which is based on the expected annual use of the site (i.e. number of jobs advertised annually) of approximately $100 per job (early adopters have historically paid a lower rate than this). Smaller employers pay a fee of $200 for an individual job posting or they can purchase job packs to cover multiple vacancies. A job pack which covers 10 postings can be purchased, as at the date of this Prospectus, for $1,590. It is likely these prices will be increased in the future such that, while competitive, they are more closely aligned with current market rates of $160 per job for large employers and $250 per job for one-off job advertisements.

In subsequent years, for employers paying an annual subscription, the fee is adjusted by reference to both usage of the site in the previous year and the anticipated future use. The annual subscription fee will remain fixed for the year, with rare exceptions based on unexpectedly higher or lower usage.

Use of the ApplyDirect website by job candidates is free – it costs nothing for an individual job candidate to search the website (the central database) for all suitable jobs.

The ApplyDirect platform is readily scalable and, as such, the major costs likely to be incurred by ApplyDirect in generating its revenues are the employment and other indirect costs of its sales, marketing and business development teams, the costs of its multimedia sales, marketing and brand recognition/awareness campaigns, systems development and upgrade costs and occupancy expenses.

Over time, if, as expected by ApplyDirect, the community of users (both employers and job candidates) continues to grow, it is envisaged that other revenue streams will become available from advertisers and other stakeholders with an interest in the user community.

2.4 Customers and Commercialisation Strategy

To establish a market presence, ApplyDirect’s initial strategy was to provide free access to employers to trial the platform. The strategy, which has been rolled out over a number of years, has resulted in over 700 employers being given access to the ApplyDirect platform on an unpaid basis. ApplyDirect considers this has been successful. By making available job opportunities from these 700 employers, ApplyDirect has been able to build a large community of job candidates using the platform, comprising more than 8.5 million users, measured by individual IP addresses.

These employers, who represent many hundreds of thousands of workers, have helped prove the concept and value of the ApplyDirect model in terms of efficiency, candidate quality and cost. The number of job candidates using the ApplyDirect platform has underpinned the effectiveness of the platform in sourced job candidates for employers. ApplyDirect estimates that it is now processing approximately 15% of the advertised jobs in the Australian market, although the majority of these are currently on an unpaid basis.

Despite very limited marketing resources, ApplyDirect has converted a number of trial employers into paying subscribers, acquired new subscription customers and opened the ApplyDirect platform to smaller employers and one-off job advertisements.

ApplyDirect now has 75 employers paying an annual subscription (or package fees) to use the ApplyDirect platform and the number of paying customers (large and small employers, industry sectors and government) is growing. Customer revenues in the 2014/15 financial year of $675,531 (which include revenues in relation to the development of the tailored system for the NSW Government referred to on page 25) and for the 6 months ended 31 December 2015 of $305,821 reflect limited sales and marketing resources, two key priorities that will be addressed upon completion of the Offer.

26 ApplyDirect Limited Prospectus

2. The Company

Growth and commercialisation strategy

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----- Start of picture text -----

use sales and
employers pay
marketing funding
for job listings
employers see and capability to:
and additional
growth in direct 1. Accelerate
benefits
increased job applications acquisition of
Conversion of
candidate Recognise benefits: paying large
traffic existing corporate clients;
– applicant quality employers and
complimentary listings for 700+ Boost level of candidate – lower recruiting new sales 2. Open up ApplyDirect to
employers to response to costs 65 paying the entire
establish platform employers – time and corporate employer market
Ensured job administration clients – large and small
numbers & drove cost savings
growth in candidate
traffic
2011 2012 2013 2014 2015 2016+
----- End of picture text -----

As an indication of its potential for growth:

• over 32,000 jobs were advertised on the ApplyDirect site in March 2016;

• candidate traffic to the site has more than doubled in the last two years to approximately 690,000 site visits in March 2016 with job candidates completing more than 14.8 million job search results in that month; and

• the ApplyDirect model is now used in some way by all tiers of government – Federal, State and local.

The growth in individual users of the ApplyDirect platform is indicated by the growth in candidates accessing the site as shown in the graph below.

recent monthly candidate Growth[*]

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----- Start of picture text -----

700,000
600,000
500,000
400,000
300,000
200,000
100,000
0
Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16
----- End of picture text -----

• In ApplyDirect’s experience, the monthly site visits by candidates for the month of December is normally subject to a drop off from the number of site visits for other months. The typical hiring cycle for a position vacancy is around 4 weeks and December is usually subject to a reduction in advertising and job seeking activity in the lead up to Christmas.

ApplyDirect’s business model has been validated by its employer and job candidate users. Despite the minimal marketing and business development expenditure to date, ApplyDirect has been able to attract a core base of major Australian employers. Its paying customer list already includes large employers like Toyota Materials Handling, Optus, Metro Trains, iSentia, NSW Government, Weightwatchers, Red Cross, Bupa and Creative Activation (Clemenger).

ApplyDirect Limited Prospectus 27

2. The Company

ApplyDirect is confident that its achievements to date, with minimal marketing spending, can be leveraged with the greater financial resources and capacity available to it (assuming successful completion of the Offer).

2.5 Strategy and Future Growth

As the ApplyDirect service works for all employers (from large to small employers), government and industry groups/associations, ApplyDirect is able to target customers across the whole employer market.

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----- Start of picture text -----

Government & customised search
large enterprise engine systems
10,000+ employees subscription advert sales
6,000 enterprises subscription advert sales
200+ employees Targeted Job campaigns
& promotions
81,000 enterprises
20 – 199 employees
Virtual career page
solution
Job advertisement packs
231,000 enterprises
5 – 19 employees
one-off Job
509,000 enterprises advertisements
1 – 4 employees automated process
----- End of picture text -----

The strategy of ApplyDirect is to maximise the leverage of its direct relationship model in an environment where:

• employers are increasingly looking for direct relationships with job candidates; and

• business is increasingly wanting effective on-line business models to improve efficiency and reduce costs.

The key strategies for doing so involve:

• the appointment of senior executives including an experienced sales and marketing director and the building of a sales team;

• undertaking a broad multimedia marketing campaign to build ‘ApplyDirect’ brand awareness and profile targeted to jobseekers and all employers – both large and small;

• building a sales team to convert current non-paying corporate users and drive sales to new corporate customers;

• a retail sales and marketing campaign targeting one-off sales and smaller employers;

• building a network of distribution partners that can leverage ApplyDirect into new customers; and

• building on the recent success with the NSW State Government to expand the federal, state and local government client base.

On completion of the Offer, with the sales and marketing resources to do so, one of ApplyDirect’s immediate strategies will be to build on its base of 75 paying employer customers (as at the date of this Prospectus) by targeting the conversion of those non-paying employers among the over 700 employers given early access to the ApplyDirect platform from non-paying users into paying customers. ApplyDirect believes that it has demonstrated that it delivers a compelling business case to encourage employers to become subscribers to the platform. The Company recognises that not all of the current early access customers will become paying subscribers, and it expects at some point to exclude from the platform those who are unwilling to pay for the service.

In addition to the above initiatives, which will primarily be focussed on building employer numbers, ApplyDirect also intends to undertake several other initiatives to build its business.

By utilising its central data base and proprietary cataloguing system, ApplyDirect has the capacity to become the default site for the promotion of job opportunities for the members of associations and organisations as it has been used for large enterprises such as jobs.nsw.

28 ApplyDirect Limited Prospectus

3. Financial Information

ApplyDirect Limited Prospectus 29

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3.1 Introduction

The Financial Information for the Company contained within this section 3 includes:

• the Pro Forma Historical Income Statement;

• the Pro Forma Historical Balance Sheet; and

• key accounting policies of the Company relevant to the Financial Information.

All amounts presented in this section 3 are in Australian dollars unless otherwise specified.

The 31 December 2015 half year financial statements have been reviewed, but not audited. The 30 June 2015 annual financial statements (with 30 June 2014 comparatives) have been audited whereas the 30 June 2013 annual financial statements are unaudited and do not appear in this Prospectus. In this regard, the business of the Company in the 30 June 2013 financial year was in an early development stage, and earned lower revenue and made similar losses to the 30 June 2014 financial year. In these circumstances, the Company considers it appropriate to only include the reviewed financial statements for the period ended 31 December 2015 as well as the audited financial statements for the year ended 30 June 2015 (with audited comparatives for the year ended 30 June 2014).

In respect of the financial reports for the year ended 30 June 2015 and the period ended 31 December 2015, Daniel Allison & Associates Assurance ( daaa ) has issued unmodified reports, however has drawn attention to a material uncertainty in respect of going concern (further details are set out in section 3.10).

The information in this section 3 should also be read in conjunction with the risk factors set out in section 4 and the other information contained in this Prospectus.

3.2 Basis of Preparation and Presentation of Financial Information

The Financial Information has been reviewed, but not audited, by PKF Melbourne Audit & Assurance Pty Ltd as set out in the Independent Limited Assurance Report on Historical Financial Information contained in section 7. Investors should note the scope limitations of the Independent Limited Assurance Report (refer to section 7 for further information).

Except as specified below, the Financial Information has been prepared and presented in accordance with the recognition and measurement principles of the Australian Accounting Standards issued by the Australian Accounting Standards Board, which are consistent with those issued by the International Accounting Standards Board.

The Financial Information is presented in an abbreviated form insofar as it does not include all the presentation and disclosures required by Australian Accounting Standards and other mandatory professional reporting requirements applicable to general purpose financial reports in accordance with the Corporations Act.

ApplyDirect’s significant accounting policies have been consistently applied throughout the periods and are set out in section 3.12.

basis of pro Forma historical income statement

The Pro Forma Income Statement has been derived from the following information:

• the 31 December 2015 half year financial report of ApplyDirect, which has been reviewed, but not audited, by DAAA;

• the 30 June 2015 annual financial report of ApplyDirect, which has been audited by DAAA;

• the impact of the Offer; and

• the impact of other material transactions which have taken place subsequent to 31 December 2015 and up to the date of this Prospectus including the issue of Convertible Notes.

Pro forma adjustments incorporated into the Pro Forma Historical Income Statement are detailed below in section 3.4 of this Prospectus, as if they had occurred at 31 December 2015.

No adjustment has been made in respect of the additional costs of being a listed entity.

30 ApplyDirect Limited Prospectus

3. Financial Information

basis of pro Forma historical balance sheet

The Pro Forma Historical Balance Sheet has been derived from the following information:

• the 31 December 2015 half year financial report of ApplyDirect, which has been reviewed, but not audited, by DAAA;

• the 30 June 2015 annual financial report of ApplyDirect, which has been audited by DAAA;

• the impact of the Offer; and

• the impact of other material transactions which have taken place subsequent to 31 December 2015 and up to the date of this Prospectus including the issue of Convertible Notes.

Pro forma adjustments incorporated into the Pro Forma Historical Balance Sheet are detailed below in section 3.5 of this Prospectus, as if they had occurred on 31 December 2015.

No adjustment has been made in respect of the additional costs of being a listed entity.

non-iFrs Financial information

Potential investors should be aware that certain financial information included in this section is ‘non-IFRS financial information’ under Regulatory Guide 230 ‘Disclosing non-IFRS financial information’ published by ASIC.

The Directors believe that this non-IFRS financial information provides useful information to potential investors in measuring the financial performance and condition of the Company. As non-IFRS measures are not defined by recognised standard setting bodies, they do not have a prescribed meaning. Therefore, the way in which the Company calculates these measures may be different to the way other companies calculate similarly titled measures. Potential investors are cautioned not to place undue reliance on any non-IFRS financial information.

3.3 Forecast Financial Information

The Directors have considered the matters set out in ASIC Regulatory Guide 170 and believe that they do not have a reasonable basis to forecast earnings, considering that the operations of the Company are inherently uncertain. Accordingly, any forecast or projection of Financial Information would contain such a broad range of potential outcomes and possibilities that it is not possible to prepare a reliable best estimate forecast or projection.

As a consequence, the Directors believe the Company is not in a position to disclose a reliable forecast of Financial Information in this Prospectus. Accordingly, only the Pro Forma Historical Income Statement and Pro Forma Historical Balance Sheet have been included as set out below.

ApplyDirect Limited Prospectus 31

3. Financial Information

3.4 Pro Forma Historical Income Statement

The table below sets out the reviewed financial performance of the Company for the 6 months ended 31 December 2015 and the audited financial performance of the Company for the financial years ended 30 June 2014 and 30 June 2015, the subsequent events and the pro forma adjustments. Details of the pro forma adjustments and subsequent events made to the reviewed financial performance for ApplyDirect for the 6 months ended 31 December 2015 are set out in the notes to the Pro Forma Historical Income Statement below.

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Reviewed
Audited Audited 31 December Subsequent Pro-forma Pro-forma
30 June 2014 30 June 2015 2015 Events Adjustments after Offer
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	$	$	$	$	$	$
Revenue*	449,208	675,531	305,821	–	–	305,821
Research & Development
Rebates	140,713	215,380	–	–	–	–
Cost of Sales	–	–	–	–	–	–
Gross profit	589,921	890,911	305,821	–	–	305,821
Employee Benefits Expense	(647,144)	(1,028,161)	(341,749)	–	–	(341,749)
Marketing Expense	(554,439)	(435,373)	(406,480)	–	–	(406,480)
Professional fees	(26,169)	(32,901)	(491,520)	–	(350,201)	(841,721)
Share Based Payments	(800,000)	–	(52,967)	–	–	(52,967)
Other Expenses	(484,895)	(669,649)	(536,775)	–	–	(536,775)
earnings before interest,
Taxes, depreciation and
amortisation	(1,922,726)	(1,275,173)	(1,523,670)	–	(350,201)	(1,873,871)
Depreciation and
Amortisation Expense	(7,268)	(5,803)	(2,979)	–	–	(2,979)
earnings before interest
and Taxes	(1,929,994)	(1,280,976)	(1,526,649)	–	(350,201)	(1,876,850)
Interest Revenue	–	–	–	–	–	–
Interest Expense	–	–	(11,749)	–	–	(11,749)
profit/(loss) before Tax	(1,929,994)	(1,280,976)	(1,538,398)	–	(350,201)	(1,888,599)
Income Tax Benefit/(Expense)**	–	–	–	–	–	–
net profit/(loss) after Tax	(1,929,994)	(1,280,976)	(1,538,398)	–	(350,201)	(1,888,599)

• Revenue of $675,531 for the year ended 30 June 2015 included $180,000 of non-recurring project-based revenue from the NSW Government. Revenue of $305,821 for the half year ended 31 December 2015 included $70,000 of non-recurring project-based revenue from the NSW Government.

** No income tax expense or benefit has been recognised as ApplyDirect has carry forward tax losses at 30 June 2015 amounting to $4,249,127.

pro forma adjustments

Note 1: The pro forma adjustment reflects the cost of the Offer in relation to Existing Shares which has been recognised in the Pro Forma Historical Income Statement assuming the Minimum Subscription of $8,000,000 (being the issue of 40,000,000 Shares at $0.20) is raised under the Offer.

As noted in section 6.11, the total expenses of the Offer are $856,527. Of this total amount, the sum of $350,201 is comprised of expenses that relate to the proposed listing of ApplyDirect on ASX and are treated as an item for inclusion in the Pro Forma Historical Income Statement as a pro forma adjustment. The balance of the total expenses of the Offer disclosed in section 6.11 (i.e. $506,326) relate to the expenses of the Offer that are attributable to the issue of capital in ApplyDirect and have therefore been treated as a deduction from Share Capital in the Pro Forma Historical Balance Sheet (refer pro forma adjustment note 2 in section 3.5).

32 ApplyDirect Limited Prospectus

3. Financial Information

Note 2: The expenses associated with the original initial public offering of the Company in November/December 2015 have been settled by the Company and are included in the financial results for the 6 months ended 31 December 2015.

The pro forma adjustment noted above relates to a matter or event that has not been finalised at the date of this Prospectus. There are significant assumptions, which are outlined above and in this section 3, that have been used in determining the pro forma adjustment. The Pro Forma Income Statement is therefore provided for illustrative purposes only, and is not represented as being necessarily indicative of ApplyDirect’s view on its future financial performance.

3.5 Pro Forma Historical Balance Sheet

The table below sets out the reviewed financial position of the Company for the 6 months ended 31 December 2015 and the audited financial position of the Company for the financial years ended 30 June 2014 and 30 June 2015, the subsequent events and the pro forma adjustments. Details of the pro forma adjustments and subsequent events made to the reviewed financial position for ApplyDirect as at 31 December 2015 are set out in the notes to the Pro Forma Historical Balance Sheet below.

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Reviewed
Audited Audited 31 December Subsequent Pro-forma Pro-forma
30 June 2014 30 June 2015 2015 Events Adjustments after Offer
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	$	$	$	$	$	$
Cash & Cash Equivalents	153,032	78,235	342,448	1,350,000	7,123,821	8,816,269
Trade and Other Receivables	289,152	440,292	87,194	–	19,652	106,846
Total current assets	442,184	518,527	429,642	1,350,000	7,143,473	8,923,115
Trade and Other Receivables	16,500	16,500	16,500	–	–	16,500
Property, Plant & Equipment	13,052	11,927	11,994	–	–	11,994
Deferred Tax Asset*	–	–	–	–	–	–
Total non-current assets	29,552	28,427	28,494	–	–	28,494
Trade and Other Payables	354,318	433,673	562,714	–	–	562,714
Loans Payable**	–	250,000	–	–	–	–
Provisions	26,649	30,651	37,700	–	–	37,700
Other Debt – Convertible Note	–	–	–	1,188,787	–	1,188,787
Total current liabilities	380,967	714,324	600,414	1,188,787	–	1,789,201
Provisions	13,194	24,675	35,198	–	–	35,198
Total non-current
liabilities	13,194	24,675	35,198	–	–	35,198
net assets	77,575	(192,045)	(177,476)	161,213	7,143,473	7,127,210
Share Capital	4,953,415	5,607,415	7,085,165	161,213	7,493,674	14,740,052
Share Option Reserve	954,264	1,311,620	1,386,837	–	–	1,386,837
Accumulated Losses	(5,830,104)	(7,111,080)	(8,649,478)	–	(350,201)	(8,999,679)
Total equity	77,575	(192,045)	(177,476)	161,213	7,143,473	7,127,210

• ApplyDirect has carry forward tax losses at 30 June 2015 amounting to $4,249,127. A Deferred Tax Asset has not been recognised due to the uncertainty of timing of the full recoupment of these losses. A Deferred Tax Asset in respect of deductible temporary differences has also not been recorded due to the uncertainty that future taxable amounts will be available to utilise those temporary differences.

** Loan payable of $250,000 at 30 June 2015 was from the Franklin Street Trust. Drew Ilsley (a Director of ApplyDirect) is the sole director and shareholder of the Franklin Street Trustee (i.e. the trustee of the Franklin Street Trust), but is not a direct beneficiary of the Franklin Street Trust. The loan was repaid on 6 October 2015.

ApplyDirect Limited Prospectus 33

3. Financial Information

subsequent events

Note 1: The following subsequent events have occurred between 31 December 2015 and the date of issue of the Prospectus.

• A Share consolidation of 3:4 took place in January 2016. References to Shares, Options, issue prices and exercise prices in this section 3.5 take into account this 3:4 Share consolidation.

• 1,350,000 Convertible Notes were issued at $1.00 per Note in March 2016, raising gross proceeds of $1,350,000. The Convertible Notes are able to be redeemed or converted at any time from the Listing Date to the date that is 6 months after the Listing Date (provided the Listing Date occurs within 12 months of the Note Issue Date). The Convertible Notes are interest free but include a right to be issued 5 Options for each Convertible Note (whether the Convertible Note is converted or redeemed) as well as 5 Shares (if the Convertible Note is converted).

As the number of Shares and Options that will be issued on conversion or redemption is fixed from the Note Issue Date, the Convertible Notes have been classified (in accordance with Australian accounting standards) as a compound financial instrument with both an equity and debt component. As there is a contractual obligation for the Company to pay cash should the Convertible Notes be redeemed, a large portion of the total face value of the Convertible Notes (i.e. $1,188,787) is a debt instrument and classified as a current liability, with the balance (i.e. $161,213) being classified as equity, in accordance with AASB 132 and AASB 139. The fair value of the debt component of the instrument has been determined using the net present value of future cash flows methodology and assuming a discount rate of 22% and a conversion or redemption date of 7 months after the Note Issue Date. Accordingly, based on those assumptions and calculations, the fair value of the debt component of the Convertible Notes (i.e. $1,188,787) has been disclosed as a current liability and the residual balance (i.e. $161,213) has been recorded as a part of equity.

However, it should be noted that if all Convertible Notes are redeemed, ApplyDirect will be liable to repay the full amount of $1.35 million to the holders of the Convertible Notes. The table in section 6.5 that sets out the proposed use of funds raised by the Offer has been prepared on the basis that all Convertible Notes are redeemed.

• Of the total number of Convertible Notes issued:

• 100,000 Notes were issued to Doveton Kay Investments, an entity controlled by Michael Kay, a Director of ApplyDirect.

• 50,000 Notes were issued to Anthony Charles, who will become a Director on the completion of the Offer.

pro forma adjustments

Note 2: The pro forma adjustments (in the Pro Forma Historical Balance Sheet above) reflect proceeds from the Offer assuming the Minimum Subscription of $8,000,000 (being the issue of 40,000,000 Shares at $0.20) is raised under the Offer in relation to these Shares less the costs of the Offer which have been taken to equity.

The pro forma net cash balance of $7,123,821 referred to in the Pro Forma Historical Balance Sheet above is equal to the Minimum Subscription amount (of $8 million), less the total expenses of the Offer of $856,527 (as outlined in section 6.11) and less the claimable GST component of those expenses of $19,821 (which is referred to in the Pro Forma Historical Balance Sheet above as a receivable).

The pro forma adjusted Share Captial amount of $7,493,674 referred to in the Pro Forma Historical Balance Sheet above is equal to the Minimum Subscription amount (of $8 million), less that portion of the expenses of the Offer that are attributable to the issue of capital in ApplyDirect (i.e. $506,326).

The pro forma adjustments noted above relate to matters or events that have not been finalised at the date of this Prospectus. There are significant assumptions, which are outlined above and in this section 3, that have been used in determining the pro forma adjustments. The Pro Forma Historical Balance Sheet is therefore provided for illustrative purposes only, and is not represented as being necessarily indicative of ApplyDirect’s view on its future financial position.

34 ApplyDirect Limited Prospectus

3. Financial Information

3.6 Share Capital

The table below shows the number of Shares on issue and respective shareholdings in ApplyDirect following the close of the Offer. The table also shows the issued capital of the Company on a fully diluted basis (i.e. assuming all Convertible Notes on issue at the Prospectus Date have been converted during the Note Exercise Period and all Options on issue at the Prospectus Date and those issued under the Convertible Notes have been exercised). Refer to sections 3.8 and 3.9 for further details regarding the terms of the Options and Convertible Notes.

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Value at $0.20
Capital Structure No. of Shares per Share Shareholding
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post ipo
Existing Shareholders	124,271,826	$24,854,365	75.65%
New Equity Raised through IPO	40,000,000	$8,000,000	24.35%
	164,271,826	$32,854,365	100.00%
Fully diluted (options and convertible notes completely exercised)
Existing Shareholders	124,271,826	$24,854,365	59.63%
New Equity Raised through IPO	40,000,000	$8,000,000	19.19%
Convertible Notes	6,750,000	$1,350,000	3.24%
Convertible Notes – Option Coupon	6,750,000	$1,350,000	3.24%
Options – Directors*	22,844,352	$4,568,870	10.96%
Options – Employees	1,041,117	$208,223	0.50%
Options – Other Options	6,750,000	$1,350,000	3.24%
	208,407,295	$41,681,459	100.00%

• These Options include 3,150,348 Options held by Ms Catherine Brandon, the wife of Bryan Petereit. The exercise of these Options is controlled by Ms Brandon.

ApplyDirect Limited Prospectus 35

3. Financial Information

3.7 Related Party Disclosures

Other than as disclosed in this Prospectus, ApplyDirect has been party to the following related party transactions in respect of the financial years ended 30 June 2014 and 30 June 2015 and the 6 months ended 31 December 2015:

	30 June 2014	30 June 2015	31 December 2015
Financial Year	$	$	$
Directors Fees Paid to Cattegate Pty Ltd*	72,000	48,000	24,000
Reimbursement of employment related costs received from
Great Skin Pty Ltd*	–	27,273	–
Wages paid to Bryan Petereit	150,000	150,000	75,000
Loan owed to related entity of Bryan Petereit**	365,886	–	–
Loan provided by the Franklin Street Trust	–	250,000	–
Loan repaid to the Franklin Street Trust (with interest)	–	–	261,747
Issue of Shares to the Franklin Street Trust***	800,000	–	200,000
ToTal	1,387,886	475,273	560,747
Financial Period	30 June 2014	30 June 2015	31 December 2015
Other Transactions:	No. of Securities	No. of Securities	No. of Securities
Options issued to Directors or related entities	2,439,240**	18,000,000****	–
Convertible Notes issued to Directors or related entities	–	–	150,000*

Notes:

The numbers of Shares and Options in this section 3.7 have been adjusted to reflect the 3:4 Share consolidation that occurred in January 2016.

• Cattegate Pty Ltd and Great Skin Pty Ltd are entities controlled by Drew Ilsley, a Director of ApplyDirect. Unpaid Director fees owing to Mr Ilsley of $100,000 (plus GST) ($88,000 of which was accrued at 30 June 2015) were paid by way of an issue of Shares (600,000 Shares at $0.1667) to the Franklin Street Trust (refer to note *** below). These Shares have since been transferred to another shareholder unrelated to the Company.

• ** During the financial year ended 30 June 2014, an entity then controlled by Bryan Petereit, the Managing Director of the Company, provided a loan to ApplyDirect in the amount of $365,886.

• During that year, the loan was assigned by Bryan Petereit’s entity to Potentate (an entity unrelated to any of the Directors). This loan was then owed to Potentate by ApplyDirect and was settled by the grant of 2,439,240 Options to Potentate. Potentate subsequently exercised those Options and was issued 2,439,240 Shares upon such exercise.

• *** On 9 August 2013, a total of 6,000,000 Shares were issued to the Franklin Street Trust (at an issue price of $0.133 per Share). In October 2015, a total of 1,200,000 Shares were issued to Franklin Street Trust at an issue price of $0.1667 per Share. Of the $200,000 consideration for the Shares, $100,000 was paid in cash and $100,000 was in lieu of accrued Director fees owing to Mr Drew Ilsley (refer to note * above).

• **** These Options were issued during the financial year ended 30 June 2015 to the following entities:

• 15,000,000 Options to Doveton Kay Investments, an entity controlled by Michael Kay, a Director of ApplyDirect;

• 1,500,000 Options to Cattegate Pty Ltd, an entity controlled by Drew Ilsley, a Director of ApplyDirect; and

• 1,500,000 Options to Catherine Brandon, the wife of Bryan Petereit (ApplyDirect’s Managing Director).

• * These Convertible Notes were issued in March 2016 (i.e. following the end of the period ended 31 December 2015) to the following entities:

• 100,000 Notes were issued to Doveton Kay Investments; and

• 50,000 Notes were issued to Anthony Charles.

As at the date of this Prospectus, there are no ongoing related party transactions other than as set out in section 5.4.

36 ApplyDirect Limited Prospectus

3. Financial Information

3.8 Share Options

At the date of this Prospectus, there are 30,635,469 Options. The rights and liabilities attaching to those Options are summarised as follows:

register

The Company maintains a register of holders of Options in accordance with section 168(1)(b) of the Corporations Act.

Transfer/transmission

Options will not be quoted on ASX. Options are transferrable with the approval of the Board.

issue and lapse

Options issued to a holder will lapse on the relevant expiry date if not exercised on or before that date.

exercise

An Option may be exercised at any time prior to its expiry by delivery to the Company of a duly completed notice of exercise of Options ( exercise notice ), signed by the registered holder of the Option, together with payment to the Company of the relevant exercise price per Option being exercised and the relevant option certificate.

Options which are validly exercised will be deemed to have been exercised on the date that an Exercise Notice in respect of those Options is lodged with the Company. A notice of exercise of Options is only effective when the Company has received the full amount of the exercise price in cash or cleared funds.

dividend entitlement

Options do not carry any dividend entitlement until they are exercised. Shares issued on exercise of Options rank equally with other Shares then on issue from their date of issue and are entitled to dividends paid on and from this date where the record date for the dividends occurs after the date of issue of the Shares.

participation rights

For determining entitlements to the issue, an Optionholder may only participate in new issues of securities to holders of applicable Shares if the Option has been exercised and Shares allotted in respect of the Option before the relevant record date.

The Company must give at least 6 Business Days’ notice to Option holders of any new issue before the relevant record date for determining entitlements to the issue in accordance with the ASX Listing Rules.

If between the date of issue and the date of exercise of an Option the Company makes one or more rights issues (being a pro rata issue of Shares in the capital of the Company that is not a bonus issue) in accordance with the ASX Listing Rules, the exercise price of Options on issue will be reduced in respect of each rights issue according to the following formula:

NE = OE –[E][[][P – ][(][S+D][)]]

N +1

where:

ne is the new exercise price of the Option;

oe is the old exercise price of the Option;

e is the number of underlying Shares into which one Option is exercisable;

p is the average closing sale price per Share (weighted by reference to volume) during the 5 trading days ending on the day before the ex-rights date or ex entitlements date (excluding special crossings and overnight sales);

s is the subscription price for a Share under the rights issue;

d is the dividend due but not yet paid on each Share at the relevant time; and

n is the number of Shares that must be held to entitle holders to receive a new Share in the rights issue.

If there is a bonus issue to the holders of Shares in the capital of the Company, the number of Shares over which the Option is exercisable will be increased by the number of Shares which the holder of the Option would have received if the Option had been exercised before the relevant record date for the bonus issue.

ApplyDirect Limited Prospectus 37

3. Financial Information

reconstructions and alteration of capital

Any adjustment to the number of outstanding Options and the exercise price under a reorganisation of the Company’s share capital must be made in accordance with the ASX Listing Rules at the time of the reorganisation.

Valuing options

In determining the fair value of the Options issued by ApplyDirect subsequent to 30 June 2015, the Black Scholes model has been applied. The significant assumptions used to measure the fair value of instruments granted or to be granted are contained in the table below:

table below:
	No. of	Cost per	Exercise	Vesting	Expiry	Expected	Risk Free	Value per	Total
Recipient	Options	Option ($)	Price ($)	Period	Date	Volatility	Rate	Option ($)	Value ($)
Directors	467,532	Nil	0.07	None	Jun-18	57.23%	2.300%	0.022	10,362
Directors	233,766	Nil	0.07	None	Jun-18	55.84%	2.355%	0.110	25,714
Directors	467,532	Nil	0.07	None	Jun-18	55.84%	2.300%	0.107	50,027
Directors and related
parties of Directors*	2,475,522	Nil	0.11	12 months	Jul-18	55.84%	2.355%	0.066	162,834
Directors	1,200,000	Nil	0.08	None	Jun-18	55.15%	2.710%	0.100	120,400
Directors	15,000,000	Nil	0.28	Upon Listing	Apr-20	40.05%	2.075%	0.023	345,000
Directors and related
parties of Directors**	3,000,000	Nil	0.33	12 months	Apr-20	40.05%	2.100%	0.019	56,000
Employees	441,309	Nil	0.11	12 months	Jun-17	55.84%	2.545%	0.065	28,538
Employees	194,808	Nil	0.25	12 months	Sep-18	39.84%	3.335%	0.031	6,039
Employees	405,000	Nil	0.33	12 months	Apr-20	40.05%	2.100%	0.019	7,560
Other	4,800,000	Nil	0.08	None	Jun-18	55.15%	2.710%	0.100	481,600
Other	1,200,000	Nil	0.17	None	Dec-18	39.84%	3.345%	0.067	80,000
Other	750,000	Nil	0.33	None	Sep-20	40.25%	2.200%	0.030	22,250
Total	30,635,469								1,396,324

• Includes 1,650,348 Options held by Ms Catherine Brandon, the wife of Bryan Petereit.

** Includes 1,500,000 Options held by Ms Catherine Brandon, the wife of Bryan Petereit.

The expected volatility is based on the fluctuation of the historical share price of Australian listed comparable companies over a five (5) year period and which are considered to be comparable to that of ApplyDirect.

The risk free rate is based on the Treasury Bond yields current at each grant date, with a maturity approximating the expiry date

of the Options.

Separately, and as noted in section 3.9 below, following the conversion or redemption of all the Convertible Notes, a total of 6,750,000 new Options will be issued to the holders of the Convertible Notes. If ApplyDirect is admitted to the Official List, these new Options will be issued by no later than the date that is 6 months after the Listing Date.

3.9 Convertible Notes

At the date of this Prospectus, there are 1,350,000 Convertible Notes. Each Convertible Note was issued by the Company for $1.00. Accordingly, at the Prospectus Date the total Principal Amount of all issued Notes is $1,350,000.

The rights and liabilities attaching to those Convertible Notes are summarised as follows:

register

The Company maintains a register of Noteholders.

38 ApplyDirect Limited Prospectus

1. Financial Information

composition of noteholders

The Convertible Notes have been issued to and are held by a combination of current and proposed Directors and persons who are not related parties of ApplyDirect (including existing Shareholders), as set out in the table below.

	Number of	Number of
Noteholders	Noteholders	Notes held
Doveton Kay Investments (an entity controlled by Michael Kay, a Director)	1	100,000
Anthony Charles (who will become a Director on completion of the Offer)	1	50,000
Shareholders who are not substantial holders or related parties of ApplyDirect	7	490,000
Persons who are not Shareholders or related parties of ApplyDirect	8	710,000
Total	17	1,350,000

class of security

The Convertible Notes are unsecured obligations of the Company and are convertible or redeemable as set out in this section 3.9.

note issue date

The Convertible Notes were issued on 10 March 2016 ( note issue date ). At the Prospectus Date, the Company does not intend to issue further Convertible Notes.

interest

The Convertible Notes are interest free. However, as noted below, Options will be issued on the conversion or redemption of the Convertible Notes, with no additional consideration being payable on the grant of those Options.

Transfer/transmission

Convertible Notes will not be quoted on ASX. Convertible Notes are transferable provided the transferee undertakes to observe, perform and be bound by the terms of the unsecured convertible note agreement applying to the relevant Notes.

conversion by the noteholders

Provided the Listing Date occurs within 12 months of the Note Issue Date, the Noteholder may elect, at any time between the Listing Date and the date that is 6 months after the Listing Date ( note exercise period ), to convert all of their Notes into Shares and Options.

On conversion, the Noteholder is entitled to be issued 5 Shares and 5 Options for every Note converted. In these circumstances, the Noteholder is not entitled to receive a payment of any money on account of conversion.

By way of example, if all 1,350,000 Convertible Notes are converted during the Note Exercise Period, then the Company:

• must issue a total of 6,750,000 Shares and 6,750,000 Options to the Noteholders (and an individual Noteholder holding, say, 1,000 Notes having a Principal Amount of $1,000 is entitled to be issued with 5,000 Shares and 5,000 Options on the conversion of those Notes); and

• is not required to repay any of the total Principal Amount of $1,350,000 raised by the issue of the Convertible Notes.

redemption by the noteholder

Provided the Listing Date occurs within 12 months of the Note Issue Date, the Noteholder may elect, at any time during the Note Exercise Period, to redeem some or all of their Notes.

On redemption, the Noteholder is entitled to receive:

• the Principal Amount of the Notes redeemed as a cash payment (without interest); and

• 5 Options for every Note held.

By way of example, if all 1,350,000 Convertible Notes are redeemed during the Note Exercise Period, then the Company must:

• repay the full Principal Amount of $1,350,000 to the Noteholders; and

• issue a total of 6,750,000 Options to the Noteholders.

By way of further example, if an individual Noteholder redeems 1,000 Notes then that Noteholder is entitled to receive a cash payment of $1,000 and be issued 5,000 Options.

ApplyDirect Limited Prospectus 39

3. Financial Information

Failure to convert or redeem

If a Noteholder does not convert or redeem their Notes during the Note Exercise Period, then (at the Company’s election):

• the Notes will be converted and the Noteholder is entitled to be issued 5 Shares and 5 Options for each Note converted; or

• the Notes will be redeemed, in which case the Noteholder will be entitled to receive the Principal Amount of the Notes as a cash payment (without interest) and 5 Options for every Note redeemed.

automatic conversion if no listing within 12 months of the note issue date

The terms of the Notes include conditions requiring automatic conversion of the Notes if Listing does not occur within 12 months of the Note Issue Date.

If Listing does not occur within 12 months of the Note Issue Date each Note will automatically convert into 10 Shares and 5 Options.

options issued under a convertible note

Any Options issued on the conversion or redemption of a Convertible Note will have an exercise price of $0.25 and an expiry date of 3 years after the date of issue of the relevant Options. The terms of issue of the Options will otherwise be consistent with those set out in section 3.8.

reconstructions and alteration of capital

On a reorganisation or alteration of the Company’s Share capital, the number of Shares and Options into which Convertible Notes are convertible will be adjusted to provide that the Notes are convertible into the same percentage of the issued Share capital and/or number of Options as the percentage into which they are convertible immediately before the relevant any reorganisation or alteration of the Company’s Share capital. Note, this adjustment does not apply in respect of the number of Options to be issued on the redemption of the Convertible Note.

3.10 Going Concern

The Financial Information has been prepared on a going concern basis which assumes continuity of normal business activities and the realisation of assets and the settlement of liabilities in the ordinary course of business.

Historically the Company has generated losses and net cash outflows from operating activities and at 31 December 2015 had negative net assets of $177,476 and an excess of current liabilities over current assets.

In March 2016 the Company raised an additional $1,350,000 in the form of the Convertible Notes which was utilised to pay the costs and expenses incurred by the Company in relation to its original initial public offering in November/December 2015, with the balance contributed to fund working capital commitments. Based on this capital raising, the historical operating cash outflows of the Company and the fact that the Convertible Notes may only be redeemed if the Listing occurs within 12 months of the Note Issue Date, the Company will have sufficient funds to pay its debts as and when they fall due until around 31 July 2016 without additional capital being raised.

The Directors have formed the view that ApplyDirect is currently solvent and will remain so until around 31 July 2016 on the basis of their review of ApplyDirect’s financial performance and position, in consultation with ApplyDirect’s existing auditor and accounting advisers.

Having regard to the above, if the Offer has not been successfully completed by 31 July 2016, ApplyDirect will need to raise additional capital to remain solvent and be able to continue to pay its debts as and when they fall due.

Notwithstanding the circumstances above the Directors are confident that the Company will be able to continue as a going concern given they believe they will be able to raise additional funds in future periods as required and the demonstrated ability to raise funds in the past evidenced by the raising of, subsequent to 31 December 2015, $1,350,000 in Convertible Notes (which may only be redeemed if the Listing occurs within 12 months of the Note Issue Date).

Should the Company be unable to raise further funds there would be a significant uncertainty regarding the ability of the Company to continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities other than in the normal course of business and at the amounts stated in the Financial Information.

The Financial Information does not include any adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts and classification of liabilities that might be necessary should the Company not continue as a going concern.

40 ApplyDirect Limited Prospectus

3. Financial Information

3.11 Dividend Policy

While the Company implements its growth strategy for the business, it is likely that all available capital will be invested into maximising the growth of the business. Therefore, it is not expected that the Company will pay dividends in the short to the medium term until the Company’s business is more mature and is generating stable revenues and profits.

If and when the Company is in a position to pay dividends, it is the current intention of the Company to pay dividends to Shareholders on an annual basis (that is, after the end of the relevant financial year) or a semi-annual basis (that is, after the end of the first half of the relevant financial year and also after the end of that financial year).

It is also the current policy of the Board that all dividends paid to Shareholders will be franked to the maximum extent legally permissible without exposing the Company to liability to pay any franking deficits or any other tax or impost.

Despite the Company’s policy, no assurances can be given by any person, including the Directors, about the future payment of any dividend or the level of franking on any such dividend. While the Company will work diligently to achieve its business objectives, there are many factors that will affect the ability of the Company to pay dividends and, if dividends are paid, the quantum of those dividends. Examples of the factors affecting dividend payments are the capital requirements and available cash flows of the Company, the Company’s expectations of future earnings and future prospects, changes in trading, market and financial conditions, changes in capital markets, the capital requirements of the Company, taxation position of the Company, changes in laws and accounting standards and general business and financial conditions. Many of those factors are outside the control of the Company.

Therefore, there can be no guarantee that the Company will achieve its stated objectives and, accordingly, there can be no guarantee concerning its future ability (if ever) to pay dividends or, if it does pay dividends, the quantum of those dividends. Dividends may not ever be paid or, if paid, the actual dividends may be lower than expected, and there may be subsequent periods in respect of which dividends are not paid at all.

Please note that the payment of dividends (and all returns to investors under the Offer) is subject to the risks set out in section 4.

3.12 Statement of Significant Accounting Policies

The significant accounting policies which have been adopted in the preparation of the Financial Information set out in section 3 of this Prospectus are set out below.

(a) basis of preparation of historical financial information

The historical financial information has been prepared in accordance with the recognition and measurement principles, but not all the disclosure requirements, of the Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board and the Corporations Act, as appropriate for for-profit orientated entities.

(b) revenue

Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured.

ApplyDirect currently has four revenue streams:

• (i) subscription revenue from use of its website. Subscription revenue is generally recognised on a straight line basis over the period the service is delivered. Deferred revenue relates to subscription revenue which has been billed to the customer for which the services are yet to be performed;

• (ii) fee-for-service revenue for building websites for governments and associations;

• (iii) one-off job advertisements purchases which are transacted on-line using a credit card; and

• (iv) interest revenue. Interest revenue is recognised using the effective interest method, which for floating rate financial assets is the rate inherent in the instrument.

All revenue is stated net of the amount of GST.

(c) 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.

ApplyDirect Limited Prospectus 41

3. Financial Information

(d) Trade and other receivables

Trade and other receivables are initially recognised as fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment.

The recoverability of trade receivables is reviewed on an ongoing basis. Amounts which are determined not to be recoverable are written off by reducing the carrying amount to its recoverable amount, the difference is charged to the profit or loss in that period. A provision for impairment of trade receivables is recognised where there is objective evidence that the Company is unable to collect part or all of the amounts due. Factors such as previous trading relationship, financial position, and probability of recoverability are considered when determining the extent the debtor is impaired.

(e) property, plant and equipment

Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation and impairment losses.

The carrying amount of property, plant and equipment is reviewed annually by 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 value in determining recoverable amounts. Plant and equipment that have been contributed for no cost or for a nominal cost are valued and recognised as the fair value of the asset at the date it is acquired.

The depreciable amount of all fixed assets is recognised on a straight line basis over the asset’s estimated useful life to the Company commencing from the time the asset is held ready for use. The useful life for each class of depreciable assets is:

• Computer equipment 1-3 years

• Plant and equipment 2-10 years

• Furniture and fittings 2-50 years

The asset’s residual values and useful lives are reviewed and adjusted, if appropriate, at the end of each reporting period.

(f) intangible assets – intellectual property

Research costs are expensed as incurred. An intangible asset arising from development expenditure on an internal project is recognised only when the Company can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible asset during its development. Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Any expenditure so capitalised is amortised over the period of expected benefit from the related project.

Development costs are capitalised only in accordance with this accounting policy. Initial capitalisation of costs is based on management’s judgement that technological and economic feasibility is confirmed, usually when a product development project has reached a defined milestone according to an established project management model. As of the date of this Prospectus, further work of a research nature remains to be completed before capitalisation can occur.

(g) Trade and other payables

Trade and other payables represent the liabilities for goods and services received by the Company that remain unpaid at the end of the reporting period. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability.

(h) leases

Operating leases are arrangements under which the lessor effectively retains substantially all the risks and benefits incidental to ownership of leased assets. Operating lease payments, net of any incentives received from the lessor, are charged to profit or loss on a straight line basis over the term of the lease.

(i) employee benefits

short-term employee benefit obligations

Liabilities for wages and salaries, including non-monetary benefits and accumulating sick leave expected to be settled wholly within 12 months after the end of the reporting period are recognised in other liabilities in respect of employees’ services rendered up to the end of the reporting period and are measured at amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when leave is taken and measured at the actual rates paid or payable.

42 ApplyDirect Limited Prospectus

3. Financial Information

other long-term employee benefit obligations

Liabilities for long service leave and annual leave are not expected to be settled wholly within 12 months after the end of the reporting period. They are recognised as part of the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees to the end of the reporting period using the projected unit credit method. Consideration is given to expected future salaries and wages levels, experience of employee departures and periods of service. Expected future payments are discounted using corporate bond rates at the end of the reporting period with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows.

Regardless of when settlement is expected to occur, liabilities for long service leave and annual leave are presented as current liabilities in the statement of financial position if the entity does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period.

(j) share-based payment Transactions

The Company provides benefits to employees (including Directors) in the form of share-based payment transactions, whereby employees render services in exchange for Shares or rights over Shares (“equity settled transactions”).

Share-based compensation benefits are provided to employees via the Company’s EEIP. In addition to this, other Share based payments are undertaken for certain goods and services provided to the Company.

The fair value of Options granted under the EEIP is recognised as an employee benefits expense with a corresponding increase in equity (other Share based payments are recognised in the statement of profit or loss or directly in equity depending upon the goods or services received).

The total amount to be expensed is determined by reference to the fair value of the Options granted, which includes any market performance conditions and the impact of any non-vesting conditions but excludes the impact of any service and non-market performance vesting conditions. Non-market vesting conditions are included in assumptions about the number of Options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied. At the end of each period, the Company revises its estimates of the number of Options that are expected to vest based on the non-marketing vesting conditions. It recognises the impact of the revision to original estimates, if any, in profit or loss, with a corresponding adjustment to equity.

The EEIP is designed to provide long-term incentives for staff to deliver long-term shareholder returns. Under the EEIP, participants may be granted Shares, Options and/or performance rights. Participation in the plan is at the Board’s discretion and no individual has a contractual right to participate in the EEIP or to receive any guaranteed benefits.

(k) contributed equity

• (i) Ordinary shares are classified as equity.

• (ii) Incremental costs directly attributable to the issue of new Shares or Options are shown as a deduction from equity proceeds net of any income tax benefit.

(l) Goods and services Tax

Revenue, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the ATO, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item.

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial position.

(m) income Tax

• (i) The income tax expense for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax base of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

• (ii) Deferred tax assets and liabilities are recognised for all temporary differences, between carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases, at the tax rates expected to apply when the assets are recovered or liabilities settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. Exceptions are made for certain temporary differences arising on initial recognition of an asset or a liability if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit.

• (iii) Deferred tax assets are only recognised for deductible temporary differences and unused tax losses if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

• (iv) Current and deferred tax balances relating to amounts recognised directly in other comprehensive income and equity are also recognised directly in other comprehensive income and equity, respectively.

ApplyDirect Limited Prospectus 43

3. Financial Information

• (v) The Research and Development Tax Offset is recognised as a government grant in profit before tax to match the benefit with the costs for which it is intended to compensate. It is recognised in the period when there is a reasonable expectation that the Company will be able to realise the benefit.

• (vi) The carrying value of deferred tax assets is reviewed at each balance date.

(n) critical accounting estimates and judgements

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. Actual results may differ from these estimates, though estimates and underlying assumptions are reviewed on an ongoing basis. Revisions of accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.

The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are discussed below.

provision for impairment of receivables

The provision for impairment of receivables assessment requires a degree of estimation and judgement. The level of provision is assessed by taking into account the recent sales experience, the ageing of receivables, historical collection rates and specific knowledge of the individual debtor’s financial position.

estimation of useful lives of assets

The entity determines the estimated useful lives and related depreciation and amortisation charges for its property, plant and equipment and finite life intangible assets. The useful lives could change significantly as a result of technical innovations or some other event. The depreciation and amortisation charge will increase where the useful lives are less than previously estimated lives, or technically obsolete or non-strategic assets that have been abandoned or sold will be written off or written down.

Financial instruments (other debt – convertible notes)

The Directors consider that the carrying value of the financial liability in respect of the Convertible Notes recognised in the statement of financial position approximates its fair value as at the Note Issue Date.

intangible assets

Management has determined that the development costs do not meet all the criteria for recognition as it is not yet possible to determine the probable future economic benefits and, accordingly, such costs have been expensed.

deferred Tax asset

Taxable losses of ApplyDirect as at 30 June 2015 were $4,249,127. A Deferred Tax Asset has not been recognised in respect of these losses due to the uncertainty of timing of their recoupment.

44 ApplyDirect Limited Prospectus

4. Risks

ApplyDirect Limited Prospectus 45

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4.1 Introduction

This section 4 describes the risks associated with ApplyDirect’s business and the risks associated with an investment in the Shares.

Investing in the Shares involves a high degree of risk. You should carefully consider the risks involved in acquiring the Shares, including those risks described below and all of the other information set out in this Prospectus before deciding to invest in the Shares.

If any of the events or developments described below occur, the Company’s business, financial condition or results of operations could be negatively affected. In that case, the market price of the Shares could decline, and you could lose part or all of your investment.

You should note that on quotation of the Shares on the Official List of ASX, the market price may differ significantly to the Offer Price paid for the Shares and/or may not reflect the fair value of the Company.

While not exhaustive, this section 4 identifies the risks that the Directors regard as the major risks associated with an investment in the Company. The occurrence of, or consequences of, some of the risks described in this section 4 are partially or completely outside of the control of ApplyDirect, its Directors and its management team. You should read the whole of this Prospectus (with particular emphasis on this section 4) in order to fully appreciate the risks of an investment in the Shares, and the manner in which the Company intends to operate, before any decision is made to apply for Shares.

The inclusion of the risks below in this Prospectus has been based on an assessment of a combination of the probability of the risk occurring, the ability to mitigate the risk and the impact of the risk if it did occur. That assessment is based on the knowledge of the Directors at the date of this Prospectus, but there is no guarantee or assurance that the importance of different risks will not change or that other risks will not emerge.

While prudent management and investment techniques may be effective in reducing the risks to Shareholders, no guarantee can be given that ApplyDirect will deliver on its business strategy or that the objectives stated in this Prospectus will be achieved or realised. Investors should note that past performance is not a reliable indicator of future performance. An investment in ApplyDirect should be considered in light of the risks outlined in this Prospectus. Each of these risks could, if they eventuate, have a material adverse impact on the operating and financial performance of ApplyDirect.

Further, no assurances can be given by the Company as to the investment returns or the market price at which the Shares may trade on ASX. To that extent, as with any equity investment, substantial fluctuations in the value of an investment may and often do occur.

Before applying for Shares, investors should satisfy themselves that they have a sufficient understanding of the risks and should consider whether the Shares are a suitable investment for them, having regard to their own investment objectives, financial situation and particular needs. If investors are unclear in relation to any matter or are uncertain as to whether ApplyDirect is a suitable investment for them, they should seek professional guidance from their solicitor, stockbroker, accountant or other independent and qualified professional adviser before deciding whether to invest in the Shares or ApplyDirect.

46 ApplyDirect Limited Prospectus

4. Risks

4.2 Specific risks associated with an investment in ApplyDirect

There are a range of specific risks associated with the Company’s operations. Potential investors in the Company should note the following risks prior to investing.

Competition	ApplyDirect operates in a competitive industry which is subject to increasing competition
	from companies in Australia and throughout the world, through a combination of established
	organisations and new entrants to the market. ApplyDirect cannot predict the timing and
	scale of its competitors’ actions or whether new competitors will emerge in the online
	recruitment advertising market.
	Many existing competitors of ApplyDirect (such as Seek, Indeed and Adzuna) are well
	established organisations with long standing reputations in the marketplace. Further, these
	and other existing competitors are, or are financially backed by, well funded organisations.
	Those competitors could, with their industry knowledge and access to substantial funding,
	seek to directly compete with the ApplyDirect business model.
	The actions of an existing competitor may become more focussed in ApplyDirect’s specific
	sector of the market or more effective. New competitors may enter the market. If ApplyDirect
	is unable to compete effectively, attract new customers and expand its employer base,
	ApplyDirect’s financial performance and/or operating margins may suffer. Competitor action
	may cause ApplyDirect’s existing employer base to migrate to a new platform, which will in
	turn materially affect ApplyDirect’s ability to grow its revenues and profitability, and may
	reduce the value of an investment in Shares.
Short operating history	The Company has only a short operating and performance history, and has never been profitable.
and no profitability	As noted in section 3.4, ApplyDirect has historically made significant losses, including recently.
	In this regard, ApplyDirect incurred an operating loss of $1.28 million for the year ended
	30 June 2015 and incurred further actual losses of $1.54 million for the six months ended
	31 December 2015.
	The Company’s limited financial and operating track record is not sufficient to provide any certainty
	or assurance that the Company can or will achieve the objectives set out in the Prospectus.
	The information in this Prospectus about the business strategies and objectives of the Company
	are not forecasts, projections or the result of any simulation of future performance. There is
	a real risk that the Company’s strategic business objectives and growth will not be achieved.
Failure to protect	ApplyDirect’s ability to leverage its innovation and expertise largely depends on its ability to
intellectual property	protect its intellectual property and any improvements to it. Intellectual property (including
	copyright and know how) that is important to ApplyDirect includes, but is not limited to, its
	trade names, database, cataloguing systems and associated software.
	The Company’s proprietary cataloguing system and search engine is not protected through
	any patent or other form of registered intellectual property.
	ApplyDirect considers that, in practical terms, its proprietary cataloguing system and search
	engine are not likely to be capable of intellectual property registration.
	A lack of registered protection is likely to enhance the risk that ApplyDirect’s intellectual
	property may be the subject of unauthorised disclosure or unlawfully infringed. ApplyDirect
	may need to incur substantial costs in monitoring, asserting or defending its intellectual
	property rights.
	Without there being any existing registration of its intellectual property rights, there is a risk
	that ApplyDirect may be unable to adequately protect those intellectual property rights, in
	which event ApplyDirect may be less able to effectively capitalise on its intellectual property
	rights in the future.
Breach of third party	A challenge by a third party in respect of ApplyDirect’s ownership or right to use of
intellectual property	know-how, methodologies or techniques relevant to its systems and central database may
and/or confidentiality	cause the Company to incur significant cost in defending the challenge and may prevent the
	Company from using certain intellectual property in its business or require the Company to
	pay damages or royalties to a third party.
	There is a risk that employees or contractors of ApplyDirect could disclose confidential
	information to a third party in breach of their agreements with the Company or otherwise,
	which disclosure could cause material loss to the Company.

ApplyDirect Limited Prospectus 47

4. Risks

Withdrawal of the	In November/December 2015, the Company lodged a prospectus with ASIC and made an
Company’s original	initial public offering of Shares, seeking to raise a minimum of $10 million and maximum of
initial public offering	$15 million. The Company withdrew that initial public offering on 16 December 2015. At the
	time the original offer was withdrawn, the minimum subscription amount in respect of that
	offer had not been reached.
	Rather than extend the offer period of the Company’s original initial public offering to allow
	more time to reach the minimum subscription, the Directors decided to withdraw that offer
	with the intention of reviewing its structure and pricing.
	Following that review, the Directors undertook a 3:4 Share consolidation and in preparing this
	Offer have determined that the Offer Price will be $0.20 per Share (compared with $0.25 per
	Shares for the original initial public offering). On this basis, the Directors are of the view that
	this Offer is structured and priced to be more attractive to potential investors and it is the
	intention of the Directors that the Offer will encourage broader investor support and a
	supportive secondary market for the Shares after their quotation on ASX.
	However, there is a risk that withdrawal of the Company’s original initial public offering may
	result in negative sentiment toward the Offer and the Company and less interest in the Shares
	after their quotation on ASX. There is also a risk that this Offer will not encourage broader
	investor support to the level intended by the Directors. These factors may reduce the liquidity
	of the Shares and lead to a reduction of the prevailing price at which Shareholders are able to
	sell their Shares.
Sales and marketing risk	Following completion of the Offer, ApplyDirect intends to invest in sales and marketing
	activities. Selling its brand and system will be critical to ApplyDirect’s sustained growth and
	success. By its nature, there is no guarantee that a sales and marketing campaign will be
	successful. If its future sales and marketing campaigns are unsuccessful, ApplyDirect may have
	difficulty growing its customer and user base, which would have a material adverse impact on
	future revenue and profitability.
Reliance on key personnel	ApplyDirect will rely heavily on the talent, experience and knowledge of its senior executives
	and key personnel (for example: Bryan Petereit, the founder of ApplyDirect and its Managing
	Director, Michael Kay, the Executive Chairman of ApplyDirect, who has an established record of
	building businesses, and Rolf Mueller, the proposed Chief Information Officer of ApplyDirect).
	Continuity and retention of senior executives and other key personnel are important for
	customer retention and ongoing customer negotiations, and for the ongoing implementation
	of the business growth initiatives and the achievement of the objectives set out in this
	Prospectus. The loss of key personnel might significantly delay or prevent the achievement
	of ApplyDirect’s business strategy.
	It may be difficult to replace such key personnel, and to do so in a timely manner or at
	comparable expense. Additionally, any key personnel who leave to work for a competitor
	may adversely impact ApplyDirect.
Information technology	ApplyDirect relies heavily on information technology systems to ensure the efficient and
	effective operation of its business.
	These information technology systems could be damaged or cease to function properly due
	to any number of causes, such as catastrophic events, power outages, security breaches,
	computer viruses or cyber-based attacks and malicious or deliberate hacking could cause
	major disruption to ApplyDirect’s business and could adversely affect its operating and
	financial performance. While there are contingency plans in place to prevent or mitigate the
	impact of these events, if they were to occur and ApplyDirect’s disaster recovery plans do not
	effectively address the issues on a timely basis, ApplyDirect could suffer interruptions in its
	ability to manage its operations, which may adversely affect its business and financial results.
	Further, as with all technology based products, there is a risk that ApplyDirect’s technology
	and platform could be superseded by new technologies that have various advantages over
	ApplyDirect’s offerings or deliver employer to candidate communications in a more efficient,
	engaging and reliable manner.

48 ApplyDirect Limited Prospectus

4. Risks

Cyber security, computer	Increased cyber-security threats and computer crime also pose a potential risk to the security
crime and privacy breaches	of ApplyDirect’s information technology systems, including those of contracted third party
	service providers, as well as the confidentiality, integrity and availability of the data stored
	on those systems. Any breach in information technology security systems could result in the
	disclosure or misuse of confidential or proprietary information, including sensitive employer,
	employee or investor information maintained in the ordinary course of business.
	Any such event could cause damage to reputation, loss of valuable information or loss of
	revenue and could result in large expenditures to investigate or remediate, to recover data, to
	repair or replace networks or information systems, or to protect against similar future events.
Failure to execute strategic	The Company’s strategy involves a significant expansion of its sales, marketing and business
initiatives/operating costs	development teams. It will involve the Company in the recruitment of additional senior
and margins	management personnel and the undertaking of an extensive multi-media brand recognition
	and awareness campaign.
	The ability of ApplyDirect to achieve growth of its business is dependent on the successful
	implementation of the Company’s growth strategies, business plans and strategic initiatives
	outlined in this Prospectus. An inability to successfully implement these plans and initiatives,
	whether wholly or partially, could adversely affect the Company’s operating and financial
	performance.
	For example, there can be no guarantee that the Company will be successful in recruiting the
	personnel for the respective roles, and even if such personnel are able to be recruited, that the
	salaries, wages, other benefits and overall operational costs for the Company will not exceed
	the expected budgeted levels.
	Similarly, there can be no guarantee that the Company’s planned multi-media brand recognition
	and awareness campaign will be successful in delivering the benefits to the Company that
	it expects.
Solvency	ApplyDirect has historically made significant losses. In this regard, ApplyDirect incurred an
	operating loss of $1.28 million for the year ended 30 June 2015 and incurred further actual
	losses of $1.54 million for the six months ended 31 December 2015. ApplyDirect also had
	a net asset deficiency of $177,476 as at 31 December 2015.
	In March 2016, the Company raised $1.35 million in the form of Convertible Notes. The Notes
	are not redeemable until after Listing. Following the raising of the funds through the issue
	of these Convertible Notes, the Company remains solvent and, as noted in section 3.10, the
	Directors expect this will continue to be the case without the need for further fundraising
	until around 31 July 2016. If the Offer has not been successfully completed by 31 July 2016,
	the Company will need to raise additional capital to remain solvent and be able to continue
	to pay its debts as and when they fall due.
The possibility of further	The proposed use of the proceeds of the Offer as described in section 6.5 has been
capital being required	determined on the basis that the net proceeds of the Offer (after payment of the Offer costs)
	will fund ApplyDirect’s business plans and strategic initiatives as set out in this Prospectus until
	around 31 December 2017.
	ApplyDirect’s plans for growth, as outlined in this Prospectus, include establishing a B2B sales
	and marketing team and conducting a brand marketing and awareness program. While the
	Directors expect that those and other initiatives should ultimately translate to increased
	revenues at a greater rate and for a greater amount than the amounts referred to below, there
	is no guarantee that those initiatives will be successful or that, even if successful, they will lead
	to a material increase in revenue at the times and in the amounts referred to below, or at all.
	It should be noted that ApplyDirect does not presently have substantial financial commitments
	or liabilities. ApplyDirect’s expenditure is therefore essentially of a discretionary nature. As
	noted in section 6.5, from the net proceeds of the Offer, the Directors intend to spend,
	through to around 31 December 2017:
	�around $520,000 on system development and technology;
	�around $1,470,000 on the establishment and development of a dedicated B2B sales and
	marketing team; and
	�around $3,200,000 on a brand marketing and awareness program, to be carried out
	through on-line and traditional forms of media.

ApplyDirect Limited Prospectus 49

4. Risks

The possibility of further capital being required (continued)

The Directors consider this expenditure as being important in driving the profile of the business to a point where it is able to generate materially higher revenues than has historically been the case.

As noted in section 3.4:

• in the financial year ended 30 June 2015, ApplyDirect derived sales revenues of $675,531, including $180,000 of non-recurring project-based revenue from the NSW Government; and

• in the 6 months ended 31 December 2015, ApplyDirect derived sales revenues of $305,821, including $70,000 of non-recurring project-based revenue from the NSW Government.

Therefore, and as outlined in the table below, on an annualised basis in the 18 months between 1 July 2014 and 31 December 2015, ApplyDirect derived total annual sales revenues of around $600,000, including around $180,000 of annual non-recurring project based revenue.

The Directors consider that ApplyDirect is likely to need to raise additional capital by around 31 December 2017, unless revenues increase over and above historical revenues by the amounts and in the proportions set out below:

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----- Start of picture text -----

FY17 1H FY18
----- End of picture text -----

	FY17	1H FY18
Historical revenues	$600,000	$300,000
Less: Non-recurring revenues	$(180,000)	$(90,000)
Historical recurring revenues	$420,000	$210,000
New revenues required*	$1,230,000	$1,060,000
Total revenues required*	$1,650,000	$1,270,000
Increase in total revenues required*
as a % of historical recurring revenues	293%	505%

• Note: The amount of revenues the Directors consider are required in order to avoid the need to raise additional capital by 31 December 2017.

It should be noted that the revenue figures as set out in the table above are not forecasts nor an indication of the expected revenue of ApplyDirect. Rather, they reflect the Directors’ views (based on ApplyDirect’s budget and business plan) of the increased levels of revenue required to avoid the need to raise additional capital by around 31 December 2017.

The Director’s assessment of the working capital requirements of ApplyDirect, as referred to above, includes consideration of the expected rate of expenditure of ApplyDirect. The Directors do not expect the rate of expenditure to increase directly in connection with an increase in sales revenue. In this regard, as an internet-based business, expenses are not normally expected to increase in line with an increase in revenue (as would be in expected in, for example, a manufacturing business). Rather, the Directors expect ApplyDirect’s expenditure of the net proceeds of the Offer, and any revenues raised after completion of the Offer, to be undertaken in a structured manner in accordance with its business plan on the items referred to in the table in section 6.5. The Directors will adopt a responsible approach to the expenditure of the net proceeds of the Offer, and particularly so if revenues are not increasing in the amount and at the times referred to above.

The above figures assume a 30 day lead time of converting revenues to cash flow, consistent with ApplyDirect’s past practice. The above figures also assume that every Convertible Note is redeemed after Listing.

50 ApplyDirect Limited Prospectus

4. Risks

The possibility of further capital being required (continued)

The Directors consider that the following are events, matters and circumstances that are likely to result in increased revenue for ApplyDirect above historical recurring levels:

The possibility of further capital being required (tid)	The Directors consider that the following are events, matters and circumstances that are likely to result in increased revenue for ApplyDirect above historical recurring levels:
connue	�the implementation of ApplyDirect’s key strategies outlined in section 2.5 (using the net
	proceeds of the Offer), which include (among other things):
	– building a sales team to convert current non-paying corporate users and drive sales
	to new corporate customers;
	– building a network of distribution partners that can leverage ApplyDirect into new,
	larger customers;
	– undertaking a retail sales and marketing campaign targeting one-off sales and smaller
	employers; and
	– building on the recent success with the NSW State Government to expand the federal,
	state and local government client base; and
	�as noted in section 2.3, historical rates charged to customers have been lower than the
	commercial rates that are now in place for all new customers.
	However, if ApplyDirect’s plans and initiatives (including those referred to above) are
	unsuccessful, for whatever reason, and ApplyDirect’s revenue does not materially increase
	from historical levels after Listing to the extent referred to above, there is likely to be a need
	for ApplyDirect to raise additional capital by 31 December 2017.
	Additional funding may also be required prior to 31 December 2017 in the event costs exceed
	the Company’s estimates or unanticipated liabilities are incurred. There are other risks, as
	outlined in this section 4, which may result in ApplyDirect’s revenue not increasing from
	historical levels or may otherwise adversely affect the financial performance of ApplyDirect.
Failure to meet client	The ApplyDirect model is relatively new. While it has been rigorously tested, the complex
objectives and expectations	and challenging nature of software development and the changing nature of industry needs
	and expectations could potentially render it more difficult than ApplyDirect expects to gain
	traction for its business model and win new customers.
Inability to secure,	ApplyDirect is dependent on building its base of paying customers. There can be no guarantee
or loss of, key contracts	that ApplyDirect will be able to so, or that it will be able to retain its existing customers.
	Further, the majority of ApplyDirect’s contracts are short to medium term and may not be
	able to be renewed on the expiry of their term. This could adversely affect ApplyDirect’s
	financial performance.
Loss of or inability to	ApplyDirect’s performance will also be dependent on the skills and efforts of the personnel
secure key staff	forming part of its sales, technical, marketing and business development teams. The Company’s
	ability to implement its business plan effectively is dependent on its ability to recruit, retain and
	motivate its sales, technical, marketing and business development teams. There can be no
	guarantee that the Company will be able to recruit skilled, experienced and suitable sales,
	technical, marketing and business development teams or that the Company will be able to
	attract and retain personnel of sufficient skill, experience and expertise to implement its
	business plan effectively.
Failure to obtain repeat	ApplyDirect’s contracts with its customers do not carry any guarantee concerning extension
business from existing clients	or repeat business. While no one customer contract is material in the context of its business,
	the loss of one or more significant customer contracts could adversely affect its operating
	and financial performance.

ApplyDirect Limited Prospectus 51

4. Risks

Reputational damage	ApplyDirect’s strategy includes accelerating the uptake of its services in employer organisations
	around Australia, and maintaining its reputation and brand recognition are crucial to the
	success of the strategy.
	ApplyDirect’s failure to protect its reputation could have a material adverse effect on the
	image of the ApplyDirect brand and the growth of its user and customer base. As with all
	service businesses, issues may arise from time to time which would give rise to reputational
	risk and cause harm to ApplyDirect and its business dealings and prospects. These issues
	include inappropriately dealing with legal and regulatory requirements, failure of the ApplyDirect
	model to work as expected, issues of ethics, dealing with anti-corruption and bribery legislation,
	privacy, information and technology security, sales and trading practices. Failure to address
	these issues appropriately could also give rise to additional legal, financial and operational
	risks, subject ApplyDirect to regulatory actions, fines and penalties or harm the reputation
	of ApplyDirect, its customers and investors.
	The actions of external employers and industry participants may also affect ApplyDirect’s
	brand if users do not have a positive experience using ApplyDirect’s system, or if users find
	the system fails to adequately address their employer/candidate engagement needs.
	If ApplyDirect fails to successfully maintain its brand and industry reputation, the implementation
	of its operational strategy could suffer, resulting in its business and operating results being
	adversely affected.
Ineffective implementation	A failure to implement, or implement successfully, some or all of the strategies detailed in this
of growth strategies	Prospectus for the growth of the business of ApplyDirect could adversely affect the Company’s
	operating and financial performance.
Changes in political and	Changes in the political and regulatory landscape in which ApplyDirect operates could
regulatory environment	adversely affect the Company’s operating and financial performance.
	ApplyDirect’s business is subject to numerous laws and regulations (federal and state) and
	the policies of regulatory authorities (for example, ASX, ASIC and the ATO). Changes in laws
	and regulations and policies, including their interpretation or enforcement, that affect, or
	may in the future affect, ApplyDirect’s business or services, including changes in accounting
	standards, tax laws and regulations, restrictions or requirements related to privacy, licensing,
	reporting and consumer protection, could adversely effect ApplyDirect’s financial results.
	Non-compliance may result in financial penalties being levied against the Company.
Reliance on internet	The ApplyDirect business is reliant on the ability of its users to access the internet. Internet
	access is provided by various entities in the internet access marketplace. Should any of those
	entities disrupt or restrict access to the ApplyDirect platform, user experience may be negatively
	impacted, which could effect the users’ receptiveness to subscribe for further product offerings
	or continued subscription.
Website/Search engines	ApplyDirect’s revenues are affected by its ability to attract employers and job candidates to
	its website, and any downturn in web traffic could lead to a decline in ApplyDirect’s ability to
	attract and retain employer customers and users, which may in turn affect profitability. Web
	traffic is affected by numerous factors, including the success of marketing campaigns and
	other promotions, brand or reputational damage and search engines. Search engines
	(for example, Google) direct traffic to ApplyDirect’s website. The search result rank of the
	website is not under ApplyDirect’s control, and if these search engines make changes to their
	algorithms or procedures or otherwise limit or make it more difficult to access the ApplyDirect
	website, there could be a substantial drop in users and customers visiting the website.
Database	Like other market participants, ApplyDirect will maintain an extensive and confidential database
	of job advertisements, employers and job candidates. Disruptions to, or corruptions of, the
	database and/or failure of the cataloguing system used in respect of the database could have
	a material detrimental effect on the day-to-day operations of ApplyDirect.

52 ApplyDirect Limited Prospectus

4. Risks

Unforeseen expenditure ApplyDirect’s future growth is dependent on having adequate capital available to fund its and future funding business strategy. ApplyDirect expects that the proceeds from this Offer will provide sufficient capital resources to enable ApplyDirect to achieve its stated business strategy.

However, expenditure may need to be incurred that has not been taken into account in the preparation of this Prospectus, resulting in further funding being required to support ongoing activities and operations. Further, ApplyDirect may seek to pursue opportunities that will require it to raise additional capital from debt or equity sources.

There can be no assurance that the Company will not need to raise additional capital to fully exploit business opportunities available to it. There can be no assurance that the Company will be able to raise such capital on favourable terms (or at all) or, if it is able to raise the capital, that it will be able to invest that capital efficiently.

If the Company is unable to obtain or invest such additional capital, the Company may be required to reduce the scope of its business activities or forego an investment opportunity, which could adversely affect its business, financial condition and results of operation.

4.3 General risks associated with an investment in ApplyDirect

The operating results and profitability of the Company are also sensitive to a number of general risks which affect investments generally, including the risks set out below. The risks identified below are not an exhaustive list and should be carefully considered in evaluating the Company and its prospects.

Market risk Investment returns are influenced by a wide variety of general market factors, both in Australia and internationally, and by factors specific to each security. In particular, the market prices of the shares of many listed entities have in recent times experienced wide fluctuations which in many cases reflect a diverse range of non-entity specific influences (most of which are beyond the control of the particular company).

The price of the Shares quoted on ASX may rise or fall and the Shares may trade below or above the Offer Price due to a number of factors, including:

• general economic conditions, including interest rates, exchange rates, inflation rates and commodity prices;

• fluctuations in the local and global market for listed stocks;

• changes to government policy, legislation or regulation;

• inclusion in or removal from market indices (including the various S&P/ASX indices);

• the nature of markets in which ApplyDirect operates;

• general and operational business risks;

• global hostilities, tensions and acts of terrorism;

• changes to accounting policies may also influence the approach taken in determining the fair value of assets or investments held by the Company; and

� other factors beyond ApplyDirect’s control. There is no assurance that the price of the Shares will increase following their quotation on ASX, even if ApplyDirect’s earnings increase and/or ApplyDirect becomes profitable.

ApplyDirect Limited Prospectus 53

4. Risks

Liquidity risk	Prior to the Offer, there was no public market for the Shares. Once the Shares are quoted on
	ASX, there can be no guarantee that an active market for the Shares will develop or that the
	price of the Shares will increase.
	Turnover is a function of a wide variety of factors including the size of a company and the
	cumulative investment intentions of all current and possible investors in the Company at any
	one point in time.
	Given the nature of the Company, its size, the traditionally lower trading volumes experienced
	by small caps and the significant escrow arrangements in relation to the Company’s securities
	on its Listing, it is likely that there will be a low level of liquidity in trading of the Shares on
	ASX. As a result, Shareholders may not be able to sell their Shares at any particular time
	and/or in the volumes or at a price they desire.
	There may also be relatively few potential buyers or sellers of the Shares on ASX at any time.
	This may increase the volatility of the price of the Shares. It may also affect the prevailing price
	at which Shareholders are able to sell their Shares. This may result in Shareholders receiving a
	price for their Shares that is less than the price that Shareholders paid.
	Following completion of the Offer, a large proportion of Existing Shares and Options will be
	subject to either ASX imposed or voluntary escrow arrangements. The number of Existing
	Shares which are subject to escrow is likely to cause, or at least contribute to, limited liquidity
	in the market for the Shares. This could affect the prevailing price at which Shareholders are
	able to sell their Shares. It is important to recognise that Shareholders may receive a market
	price for their Shares that is less than the price that Shareholders paid.
Dilution	ApplyDirect may elect or need to engage in various types of capital raisings to fund future
	growth or acquisitions. There are also a significant number of existing Options, a substantial
	proportion of which have an exercise price that is less than or equal to the Offer Price, and
	these may be exercised before their expiry. There are also up to a total of 6,750,000 new
	Shares that may be issued on the conversion of the Convertible Notes.
	While ApplyDirect will be subject to the constraints of the ASX Listing Rules regarding the
	percentage of its capital that it is able to issue in any 12 month period (other than where
	exceptions apply, including generally the issue of shares upon the exercise of options or the
	conversion of convertible notes), Shareholders at the time may be diluted as a result of capital
	raisings or the exercise of Options or the conversion of the Convertible Notes.
Taxation law changes	Tax laws are in a continual state of change and reform which may affect the Company
	and its Shareholders. Tax liabilities are the responsibility of each individual investor. There
	may be tax implications arising from ownership of the Shares, the receipt of franked and
	unfranked dividends (if any) from the Company, receiving returns of capital and the disposal
	of the Shares.
	Changes to tax laws may adversely affect the Company’s financial performance and/or the
	returns achieved by investors. Dividends paid by the Company to certain investors may not
	be recognised as frankable by the ATO.
	The Company is not responsible for either taxation or penalties incurred by investors. You
	should carefully consider these tax implications and obtain advice from an accountant or other
	professional tax adviser in relation to the application of the tax legislation to your investment
	in the Company.
Dividends and franking	There can be no guarantee that the Company will achieve its stated objectives and, accordingly,
	there can be no guarantee concerning its future ability (if ever) to pay dividends or, if it does
	pay dividends, the quantum of those dividends. Dividends may not ever be paid or, if paid, the
	actual dividends may be lower than expected, and there may be subsequent periods in respect
	of which dividends are not paid at all.
	If dividends are paid, ApplyDirect cannot guarantee that the dividends which may be paid to
	Shareholders will be wholly or partially franked. If ApplyDirect pays a dividend, the extent to
	which it will be franked will depend on, among other things, the availability of franking credits.
	Shareholders should be aware that the value of any franking credits will depend on the
	individual Shareholder’s particular taxation and financial circumstances. Shareholders should
	seek their own taxation advice in relation to any potential tax offset or refund claim which they
	may be entitled to in any particular financial year.
	There is also a risk that the franking system may be subject to legislative review and/or reform.

54 ApplyDirect Limited Prospectus

4. Risks

Australian Accounting Australian Accounting Standards are set by the AASB and are outside the control of Standards ApplyDirect. The AASB is due to introduce new or refined Australian Accounting Standards during the period from 2016 to 2018, which may affect future measurement and recognition of key income statement and balance sheet items, including revenue and receivables. There is also a risk that interpretations of existing Australian Accounting Standards, including those relating to the measurement and recognition of key income statement and balance sheet items, including revenue and receivables, may differ. Changes to Australian Accounting Standards issued by the AASB or changes to the commonly held views on the application of those standards could materially adversely affect the financial performance and position reported in ApplyDirect’s financial statements. Force majeure events Events may occur within or outside Australia that could impact on the Australian economy, the operations of ApplyDirect and the price of the Shares. These events include, but are not limited to, acts of terrorism, an outbreak of international hostilities, fires, floods, earthquakes, labour strikes, civil wars, natural disasters, outbreaks of disease or other natural or man made events or occurrences that may have a material and adverse effect on the demand for ApplyDirect ‘s products and services and its ability to conduct its business. ApplyDirect has only a limited ability to insure against some of these risks.

4.4 Timeframe for investment

The Company should not be seen as a predictable, low risk investment as it involves a business model and on-line platform that has a short operating history and has not, as yet, been widely commercialised in its industry sector. As the Company only has a short and, to date, unprofitable trading history, none of the Company or its Directors and officers guarantees the quantum (if any) of any return of capital or dividends paid in respect of the Shares, the market value of the Shares or the financial performance of the Company.

Investors are strongly advised to regard any investment in the Company as a long term proposition and to be aware that, as with any equity investment, substantial fluctuations in the value of their investment may occur.

In addition, the above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the Shares. Therefore, there is no guarantee with respect to the payment of dividends, returns of capital or the market value of the Shares.

You should consider that an investment in the Company is speculative and consult your professional adviser before deciding whether to apply for Shares.

ApplyDirect Limited Prospectus 55

5. Key People, Interests and Benefits

56 ApplyDirect Limited Prospectus

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5.1 Board of Directors

This section provides background information about the qualifications and experience of the Directors and senior management of the Company. It also summarises the corporate governance policies and procedures of the Company. Full documentation may be viewed at the Company’s website: www.applydirect.com.au.

5.2 Directors, Proposed Director and Other Key Personnel

directors

(a) michael Kay – executive chairman

Most recently, Michael was Chief Executive Officer and Managing Director of listed salary packaging company, McMillan Shakespeare Ltd, a position he held for six years. Previously Michael had been CEO of the national insurer, AAMI, after serving in a variety of senior roles with that company. Prior to joining AAMI, Michael spent 12 years in private legal practice.

Michael is a director of Lovisa Holdings Limited, Royal Automobile Club Insurance (WA), IMF Bentham Limited and TFS Corporation Ltd. He is a former member of the Commonwealth Consumer Affairs Advisory Council, the Administrative Law Committee of the Law Council of Australia, the Victorian Government Finance Industry Council and the Committee for Melbourne.

The Board considers Michael is well placed to guide ApplyDirect in its business of the delivery of efficient cost reducing recruitment services to the HR departments of Australian companies. The Board also believes that Michael’s sound track record of building successful businesses augurs well for ApplyDirect’s operating and corporate growth objectives.

Michael holds a Bachelor of Laws from the University of Sydney.

(b) bryan petereit – managing director

Bryan is the founder and Managing Director of ApplyDirect. Bryan combined his previous industry experience in both the recruitment and IT sectors to develop the concept of a seamless process to connect job candidates directly with hiring employers, thus saving the employers substantial time and money. Following the completion of a Bachelor of Science Degree (with a major in Computer Science), Bryan commenced his working career with IBM Australia. Subsequently, he has worked in the IT sector in management roles with Ferntree Computer Corporation and, following its acquisition, with the IT division of GE Capital.

Prior to his current role at ApplyDirect, Bryan commenced, ran and ultimately sold (to the Finite Group) his own IT recruitment business.

Bryan also holds a Master of Applied Finance from Macquarie University.

(c) drew ilsley – non-executive director

Drew has had an extensive career assisting growth companies achieve their corporate objectives. With thirty years’ experience spanning chartered accounting, investment banking, small cap fund management and private equity, Drew has extensive experience in the areas of strategy and corporate advice.

Drew successfully advised, and was a non-executive director of, ASX listed managed security services provider, Securenet Ltd, which reached a market capitalisation in excess of A$1 billion before being acquired by the US listed Betrusted Inc.

Drew has a Bachelor of Commerce from the University of Melbourne and was a practicing member of the Institute of Chartered Accountants for many years.

proposed director

anthony charles – proposed non-executive director

The Company has invited Anthony to join the Board on the completion of the Offer and Anthony has accepted this invitation. Accordingly, provided the Minimum Subscription is raised, Shares are issued and allotted pursuant to the Offer and ASX agrees to admit the Company to the Official List of ASX, Anthony will become a non-executive Director upon the issue and allotment of Shares under this Prospectus. Details of the background, qualifications and experience of Anthony are set out below.

Over the last 20 years Anthony has guided the communications and commercial rights strategies of some of Australia’s largest sports administration brands including Cricket Australia, the AFL, NRL, MCC and many others. Most recently, Anthony was Group Managing Director, rights management, sponsorship and production at Aegis Media after being with the combined group for over 13 years. During that period Anthony started Stadia Media, Australia’s largest sports advertising business, for Mitchell & Partners (now Dentsu Aegis). At Dentsu Aegis, Anthony also had responsibility for acquisition integration as well as a number of business start-ups. Anthony has wide experience and contacts in the media strategy, buying and advertising areas.

Anthony has a Bachelor of Business, Marketing from Monash University.

ApplyDirect Limited Prospectus 57

5. Key People, Interests and Benefits

company secretary

phillip hains

The Company Secretary of ApplyDirect is Mr Phillip Hains. Mr Hains is the principal of The CFO Solution, which is a provider of outsourced financial and company secretarial services and support tailored to the specific needs of its client companies.

Mr Hains has almost 30 years experience in corporate accounting, administration, and general management and has served on a number of public company boards and related committees. He has a depth of experience in the provision of company secretarial and financial services. Phillip holds an MBA from RMIT University and obtained his Public Practice Certificate from the Institute of Chartered Accountants in 1998.

While the roles of certain Board members in the management of the Company are expected to change in the near future (as explained in section 5.3 below), apart from the invitation to Mr Charles to join the Board, it is not expected that there will be any further immediate invitations extended to other persons to join the Board in a non-executive capacity. It is, however, expected that a further non-executive Director will be appointed to the Board within two years of Listing.

other Key personnel

rolf mueller – proposed chief information officer

Rolf has been involved with ApplyDirect since inception. He is responsible for managing the design, development and implementation of the ApplyDirect platform including management of the team of developers, QA – testers and Social Media staff, and will be ApplyDirect’s Chief Information Officer upon Listing.

Rolf has over 20 years of experience in senior roles encompassing management consulting and management of large IT projects for organisations such as Deloitte and BHP.

Rolf commenced his career at ANZ Bank and has since worked for major corporations both overseas and in Australia.

Rolf holds a Master of Applied Finance from Macquarie University and a Bachelor of Commerce.

5.3 Future management plans

Following the IPO, one of the key objectives of the Company will be to activate plans to strengthen the depth, expertise and experience of its senior executive team.

The plan involves several steps. Foremost, as noted in section 2.5, the Company will be seeking to appoint senior executives to build and manage the business development and sales and marketing teams to be established by the Company. This position will be critical to the success of the overall implementation of the Company’s future business strategy and plans.

To date, the Company has used external service providers (on an ‘as needed’ basis) for all necessary financial and company secretarial services. In the short term, the Company expects to continue its existing contractual arrangements with its service providers, noting in particular its appointment of Phillip Hains from The CFO Solution, a specialist provider of company secretarial and financial accounting services, to provide those services until the Company appoints a full time Chief Financial Officer/Company Secretary (which the Company intends to do in the period of 12 to 18 months after Listing).

Mr Petereit is currently the Managing Director of the Company. In large part, this reflects the current stage of development of the Company’s senior management team. As detailed in his biographical description, Mr Petereit is the original designer and founder of the ApplyDirect model. While Mr Petereit has significant experience in the recruitment and IT sectors, his experience and expertise primarily relates to product development and execution.

To provide direct support and assistance to Mr Petereit, particularly in the business development, sales and marketing areas, as noted above, the Chairman of the Board, Mr Kay will have certain executive responsibilities in the short to medium term.

In the longer term, given the Company’s future business strategy and expansion plans, it is intended that the Company, within 12 months of Listing, will recruit a new senior executive with specific business development, sales and marketing expertise and experience to lead the Company (as its chief executive officer) as it implements its business plan.

When that occurs, while Mr Petereit will remain as an executive Director, it is anticipated that his duties and responsibilities in the Company will return to being more directly focussed on product innovation and development.

Similarly, at or about that time, it is planned that Mr Kay will step down from his executive role and thereafter continue solely as the non-executive Chairman of the Company.

58 ApplyDirect Limited Prospectus

5. Key People, Interests and Benefits

5.4 Interests and benefits

This section sets out the nature and extent of the interests and fees of certain persons involved in the Offer.

Except as disclosed in the Prospectus:

• no Director or proposed Director has, or has had within two years of the date of lodgement of this Prospectus with ASIC, any interest in:

• the formation or promotion of the Company;

• any property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offer; or

• the Offer; and

• no person has paid or agreed to pay any amount, and no one has given or agreed to give any benefit, to any Director or any proposed Director or to any firm in which any Director or proposed Director is or was a partner:

• to induce that person to become, or to qualify as, a Director of the Company; or

• for services rendered by that person or by the firm in which that person is or was a partner in connection with the formation or promotion of the Company or the Offer.

The following is a summary of the interests and benefits payable to the Directors and other persons connected with the Company or the Offer, and any significant related party transactions.

Subject to the provisions of the Company’s Constitution, the ASX Listing Rules and the Corporations Act, Directors and related parties of the Company (and/or their nominees and associates) can participate in the Offer and will have equal rights with any other investor to do so.

no shareholding qualifications

The Constitution of the Company does not require a Director to hold any Shares in the Company as a prerequisite to his or her appointment as a Director.

interests of directors – existing security interests

At the date of this Prospectus, the Company has 124,271,826 Shares, 30,635,469 Options and 1,350,000 Convertible Notes on issue. Of these Shares, Options and Notes, as at the Prospectus Date, the Directors hold the following interests (direct and indirect):

	Current	Current Option	Current Note
Directors/Proposed Director	Shareholding	holdings**	holdings***
Michael Kay	1,500,000	15,000,000	100,000
Bryan Petereit	24,851,967*	Nil*	Nil
Drew Ilsley	2,001,369	4,694,004	Nil
Anthony Charles	Nil	Nil	50,000

Notes:

• Mr Petereit has a relevant interest in 24,851,967 Shares, which are held by Werndex (23,601,967 Shares) and B&C Super Fund (1,250,000 Shares). Separately, Ms Catherine Brandon, the wife of Mr Petereit, holds a total of 894,606 Shares and 3,150,348 Options. The voting and disposal of these Shares and the exercise of these Options is controlled by Ms Brandon.

• ** The principal terms of the Options held by the Directors are:

Mr Kay 15,000,000 Options: exercise price – $0.28;

final exercise date – 30 April 2020

Mr Ilsley 233,766 Options: exercise price – $0.067; final exercise date – 19 July 2018 935,064 Options: exercise price – $0.067; final exercise date – 22 June 2018 1,200,000 Options: exercise price – $0.083; final exercise date – 30 June 2018 825,174 Options: exercise price – $0.113; final exercise date – 27 June 2018 1,500,000 Options: exercise price – $0.333; final exercise date – 30 April 2020

The principal terms of the Options held by Ms Catherine Brandon, the wife of Bryan Petereit are:

1,650,348 Options: exercise price – $0.113; final exercise date – 27 June 2018; and 1,500,000 Options: exercise price – $0.333; final exercise date – 30 April 2020.

*** On Conversion, a Noteholder will receive 5 Shares and 5 Options for each Note converted. The terms that apply to the Convertible Notes and the Options issued on the conversion or redemption of Convertible Notes are set out in section 3.9.

ApplyDirect Limited Prospectus 59

5. Key People, Interests and Benefits

interests of directors – remuneration

executive directors

� CEO and Managing Director

The Company has entered into an employment contract with Bryan Petereit to govern his employment with the Company, in the position of Managing Director, on standard commercial terms and conditions relevant to that position. From the date of the Shares first being quoted on ASX, Mr Petereit will receive an annual salary of $300,000 (exclusive of any payments that the Company may be required to make under applicable superannuation legislation). Mr Petereit’s employment contract will be subject to immediate termination for cause (for example, breach, unsatisfactory performance, inappropriate conduct etc). Alternatively, either the Company or Mr Petereit can terminate the contract (without cause) by giving not less than 12 months notice. Mr Petereit will be entitled to participate in any incentive performance scheme that the Company considers appropriate.

The employment contract of Mr Petereit also includes standard restrictions in relation to not competing with the business of ApplyDirect, providing services exclusively for ApplyDirect, maintaining the confidentiality of ApplyDirect’s confidential information and assigning all relevant intellectual property rights to ApplyDirect.

Mr Petereit’s employment contract also makes provision for the change in his position and duties that may occur if, as detailed in section 5.3, ApplyDirect recruits a new senior executive with specific business development, sales and marketing expertise and experience to take on the role of the Company’s Chief Executive Officer.

� Executive Chairman

The Company has entered into a consulting agreement with Michael Kay to provide services to the Company, in the position of Executive Chairman. From the date of the Shares first being quoted on ASX, Mr Kay will be entitled to receive an annual director’s fee, as the Chairman of the Company, of $150,000 and, for so long as Mr Kay occupies an executive role with the Company, an annual consulting fee of an additional $125,000. He will be entitled to participate in any incentive performance scheme that the Company considers appropriate.

Mr Kay’s consulting agreement with ApplyDirect does not include the non-compete and exclusivity of service provisions that are included in the employment agreement of Mr Petereit. This recognises that, unlike Mr Petereit, Mr Kay is not a full-time employee of ApplyDirect. However, as a Director of ApplyDirect, Mr Kay will be subject to statutory and fiduciary duties, including a duty to act in good faith in the best interests of ApplyDirect.

Non-Executive Directors

Each of the existing and proposed non-executive Directors (being Drew Ilsley and Anthony Charles respectively) has executed an appointment letter with the Company confirming the terms of his appointment, his roles and responsibilities and the Company’s expectations of him as a Director.

The terms of the appointment of Mr Ilsley and Mr Charles do not include the non-compete and exclusivity of service provisions that are included in the employment agreement of Mr Petereit. This recognises that, unlike Mr Petereit, Mr Ilsley and Mr Charles are not full-time employees of ApplyDirect. However, as Directors of ApplyDirect, Mr Ilsley and Mr Charles will be subject to statutory and fiduciary duties, including a duty to act in good faith in the best interests of ApplyDirect.

The Constitution provides that the non-executive Directors are entitled to remuneration as determined by the Company in general meeting to be apportioned among them in such manner as the Directors agree and, in default of agreement, equally. Under the Constitution, the maximum aggregate amount that may be paid per annum to non-executive Directors by way of fees is $550,000. Any increase to that maximum aggregate sum needs to be approved by Shareholders.

Under the ASX Listing Rules, the remuneration of the Directors must not include a commission on, or a percentage of, profits or operating revenue.

It is the intention of the Company that the fees payable to each of its non-executive Directors will be $80,000 per annum (inclusive of any payments that the Company may be required to make under applicable superannuation legislation).

If a Director performs additional services which, in the opinion of the Directors, are outside the scope of the ordinary duties of a Director, the Company may remunerate that Director by payment of a fixed sum determined by the Directors in addition to or instead of the remuneration referred to above. However, no payment can be made if the payment would be in breach of any applicable laws or if the effect would be to exceed the maximum aggregate amount payable to Directors under the Constitution.

Directors will be reimbursed for business expenses necessarily incurred in attending to the Company’s affairs, including attending and returning from general meetings of the Company or meetings of the Board or Board committees, provided the expenses are reasonable and all Company policies in relation to expenses are complied with.

There are no retirement benefit schemes for Directors, other than statutory superannuation contributions.

60 ApplyDirect Limited Prospectus

5. Key People, Interests and Benefits

Directors – Appointment and rotation

Under the Constitution, the minimum number of Directors that may comprise the Board is three and the maximum is fixed by the Directors but may not be more than ten, unless the Shareholders pass a resolution varying that number. Directors are elected at general meetings of the Company. Retirement will occur on a rotational basis so that no Director (excluding the Managing Director (if there is one)) will hold office without re-election beyond the third annual general meeting following the meeting at which the Director was last elected. The Directors may also appoint a Director to fill a casual vacancy on the Board or in addition to the existing Directors. Any person appointed as a Director under this provision of the Constitution will hold office until the next annual general meeting of the Company (at which meeting, if he or she is eligible for election, he or she may seek election as a Director).

directors – Voting

Questions arising at a meeting of the Board will be decided by a majority of votes of the Directors present at the meeting and entitled to vote on the matter. In the case of an equality of votes on a resolution, the chairperson of the meeting has a casting vote.

indemnities

In accordance with the Constitution and to the extent permitted by the Corporations Act:

• (a) the Company will indemnify the Directors and officers for certain liabilities to persons other than the Company or its related bodies corporate that they may incur while acting in the capacity of an officer of the Company, excluding in circumstances prohibited by the Corporations Act; and

• (b) the Company intends to pay insurance premiums in respect of a contract insuring the Directors and other officers of the Company against any liability incurred by those Directors or officers in their capacity as officers of the Company except in circumstances prohibited by the Corporations Act.

In addition to the above rights, the Company and each Director have entered into a Deed that grants the Director a contractual right, both while the Director is a director of the Company and after the Director ceases to hold office:

• (c) to indemnity from the Company (to the extent permitted by the Corporations Act) for certain liabilities incurred as an officer of the Company (or a controlled entity of the Company) and reasonable ‘Legal Costs’ (as that term is defined in the Deed) incurred by the Director in defending an action for any such liability incurred by the Director as an officer of the Company (or a controlled entity of the Company). The Deed stipulates that, subject to the Company’s directors’ and officers’ insurance policy, the indemnities are unconditional, continuing and irrevocable;

• (d) to directors’ and officers’ insurance cover (as permitted by the Corporations Act) against certain liabilities incurred by the person as a Director for the period that each Director is a director of the Company and for 7 years after that Director ceases to hold office; and

• (e) to access documents and records of the Company both while the Director is a director of the Company and after that Director ceases to hold office for the purposes expressly permitted by the Deed.

The indemnity provided for under the Deed operates indefinitely from the date of appointment as a Director. Further, if a Director is entitled to be indemnified under the Deed, the Company will pay the relevant amount to discharge the liability or legal cost. The Deed also allows in certain cases for the Company to make advance payments to an indemnified Director for an amount owing in respect of legal costs covered by the deed of indemnity, access and insurance.

related party transactions

As at the date of this Prospectus, except as set out in this section 5 and in section 3.7 of the Prospectus, there are no related party transactions.

5.5 Corporate Governance

This section explains how the Board will oversee the management of ApplyDirect’s business. The main policies and practices adopted by the Company are summarised below. Details of ApplyDirect’s key policies and practices and the charters for the Board and each of its committees are available at www.applydirect.com.au.

The Board is responsible for the overall corporate governance of ApplyDirect. The Board monitors the operational and financial position and performance of ApplyDirect and oversees its business strategy, including approving the strategic goals of ApplyDirect and considering and approving a business plan and an annual budget.

The Board is committed to maximising performance, generating appropriate levels of Shareholder value and financial return, and sustaining the growth and success of ApplyDirect.

ApplyDirect Limited Prospectus 61

5. Key People, Interests and Benefits

In conducting ApplyDirect’s business, the Board will seek to ensure that ApplyDirect is properly managed to protect and enhance Shareholder interests, and that ApplyDirect and its Directors, officers and personnel operate in an appropriate environment of corporate governance. Accordingly, the Board has created a framework for managing ApplyDirect, including adopting relevant internal controls, risk management processes and corporate governance policies and practices which it believes are appropriate for ApplyDirect’s business and which are designed to promote the responsible management and conduct of ApplyDirect.

The ASX Recommendations articulate a number of core principles and associated recommendations that the ASX Corporate Governance Council believes underlie good corporate governance.

The Board endorses generally the ASX Recommendations and has considered the ASX Recommendations in determining an appropriate system of control and accountability, commensurate with these guidelines, to best fit its business and operations.

The Company will seek to follow the ASX Recommendations and, as required under the ASX Listing Rules, where the Company determines it would be inappropriate to follow the ASX Recommendations because of its circumstances (including as identified below), the Company will provide reasons for not doing so in its annual report. For further detail on this issue, please refer to the sub-section below headed ‘ASX Recommendations’.

The Board intends to regularly review its corporate governance procedures and, in particular, their appropriateness in the future given the expected changes in the nature and scale of the Company’s operations.

corporate governance policies

The Company intends that the following policies and procedures will be implemented by the Company. The policies and procedures will be available on the Company’s website prior to the admission of the Company to the Official List of ASX.

board charter

The Board has adopted a written charter to clarify the roles and responsibilities of Board members. This charter addresses:

• the Board’s composition;

• the Board’s role and responsibilities;

• the relationship and interaction between the Board and management; and

• the manner in which the Board monitors its own performance.

The role of the Board is to identify the expectations of Shareholders and the ethical and regulatory obligations of the Company.

The Board Charter formalises the functions and responsibilities of the Board. The Board is ultimately responsible for all matters relating to the running of the Company.

The responsibilities of the Board include:

• (a) formulation, review and approval of the objectives and strategic direction of the Company;

• (b) reviewing, monitoring and approving any related party transaction;

• (c) monitoring the financial performance of the Company by reviewing and approving budgets and results;

• (d) approving all significant business transactions including acquisitions, divestments and capital expenditure;

• (e) ensuring that adequate internal control systems and procedures exist and that compliance with these systems and procedures is maintained;

• (f) review of performance and remuneration of Directors;

• (g) review of performance and remuneration of the CEO/Managing Director; and

• (h) the establishment and maintenance of appropriate corporate governance and ethical standards.

The Board has established an Audit & Risk Committee and a Nomination & Remuneration Committee, each of which has a separate charter outlining its terms of reference. The Board has also adopted a risk management policy.

The Board has procedures to allow Directors, in the furtherance of their duties, to seek independent professional advice at the Company’s expense.

Responsibility for the operation and administration of the Company is delegated by the Board to the CEO/Managing Director and the senior management team. The Board must ensure that the CEO/Managing Director and senior executives are appropriately qualified and experienced to discharge their responsibilities. The performance of the CEO/Managing Director and senior executives is assessed annually with reference to agreed milestones.

The Board intends to perform a strategic review of the Company and its business at regular intervals, considering the performance of both itself and individual Directors. This review will be carried out by the Board as a whole, with reference to Company strategy and previously agreed milestones.

62 ApplyDirect Limited Prospectus

5. Key People, Interests and Benefits

code of conduct

The Code of Conduct for Directors addresses matters relevant to the Company’s legal and ethical obligations to its stakeholders. The policy outlines its requirements with respect to:

• (a) relationships;

• (b) compliance with laws and ethics;

• (c) conflicts of interest;

• (d) confidentiality; and

• (e) use of Company assets.

securities Trading policy

The Securities Trading Policy sets out the Company’s policy with regard to trading in Company securities. The policy applies to all Directors and key management personnel (if any) of the Company and their associates. The policy outlines the policy and procedure for all trading by such persons in the Company’s securities, including the restrictions on trading (and the blanket prohibition on insider trading), the additional restrictions on short-term trading, the procedures and permissions required if a Director (or senior employee) wishes to trade and the required notifications to the Company and ASX of any trades in the Company’s securities.

Subject to certain exceptions, including severe financial hardship, the Securities Trading Policy defines certain ‘closed periods’ during which trading in Shares by Directors, officers and certain senior executives is prohibited. Those closed periods are currently defined as any of the following periods:

• the period commencing one month prior to the release of the Company’s half-year results to ASX and ending 24 hours after such release;

• the period commencing one month prior to the release of the Company’s full-year results to ASX and ending 24 hours after such release;

• the period commencing two weeks prior to the Company’s annual general meeting and ending 24 hours after the annual general meeting; and

• any additional periods determined by the Board from time to time.

In all instances, buying or selling of Shares is not permitted at any time by any person to whom the policy applies and who possesses price-sensitive information that is not generally available.

risk management policy

The Risk Management Policy outlines the composition of the Audit & Risk Committee, its responsibilities (in respect of the financial management, reporting, audit and the risk management systems of the Company), authorities, meeting requirements and reporting procedures.

continuous disclosure policy

The Continuous Disclosure Policy has been adopted with a view to ensuring that the Company complies with the continuous disclosure requirements of the Corporations Act and the ASX Listing Rules. The policy highlights the requirements for immediate notification, the procedure for disclosing material information, the persons responsible for disclosing information and for ensuring compliance generally by the Company with its disclosure obligations.

shareholder communication policy

The Board aims to ensure that Shareholders are informed of all major developments. The Shareholder Communication Policy outlines the processes and responsibilities for reports issued to Shareholders, ASX announcements, annual general meetings and the maintenance of Company specific information on the Company website.

remuneration policy

The Remuneration Policy outlines the composition of the Nomination & Remuneration Committee, its responsibilities (in respect of the structure and composition of the Board and the remuneration policies of the Company), authorities, meeting requirements and reporting procedures.

asX recommendations

Condition 13 of ASX Listing Rule 1.1 provides that the Company must provide a statement disclosing the extent to which it will follow, as at the date of its admission to the Official List of ASX, the ASX Recommendations. If the Company does not intend to follow all the ASX Recommendations on its admission to the Official List of ASX, the Company must identify those recommendations that will not be followed and give reasons for not following them.

ApplyDirect Limited Prospectus 63

5. Key People, Interests and Benefits

The Board believes the Company complies with the ASX Recommendations, except in respect of:

• Recommendation 2.4 (which recommends that a majority of the Board should be independent directors); and

• Recommendation 2.5 (which recommends that the chair of the Board should be an independent director),

and the Recommendations made under Principles 2, 4 and 8 relating to the structure and composition of the Board’s Audit & Risk Committee and Nomination & Remuneration Committee. In each case, the Principles recommend the committees be chaired by an independent director (who is not the Chairman of the Board) and comprise of at least three members, a majority of whom are independent directors.

The size and the current composition of the Company’s Board preclude the Company from complying with Principles 2, 4 and 8 relating to the structure and composition of the Board’s governance committees.

Having regard to the indicators of independence set out in Principle 2.3 of the ASX Recommendations, the Board considers an independent Director to be a non-executive Director who is not a member of the Company’s management and who is free of any business or other relationship that could materially interfere with or reasonably be perceived to interfere with the independent exercise of their judgment. The Board reviews the independence of each Director in light of interests disclosed to the Board from time to time.

The Board considers that Mr Anthony Charles (when appointed) will be an independent Director for the purpose of the ASX Recommendations as he is free from any interest, position, association or relationship that could materially interfere with or reasonably be perceived to materially interfere with, the independent exercise of their judgement.

Neither Mr Michael Kay (Chairman) nor Mr Bryan Petereit (Managing Director) is an independent Director by virtue of their executive roles in the Company. While Mr Ilsley does not have an executive role in the Company, as a result of his long involvement in advising the Company on its strategic direction and fund raising, the Board does not consider Mr Ilsley to be an independent Director.

In the immediate future, the Audit & Risk Committee is likely to comprise all Board members (other than the Managing Director) and the Nomination & Remuneration Committee is likely to comprise two Board members only, Mr Kay and Mr Charles. Each of the respective Committees is expected to be chaired by a non-executive Director (being either Mr Ilsley or Mr Charles).

The Board considers that, having regard to the wealth of experience and knowledge which Mr Kay possesses, despite not being ‘independent’ within the context of the ASX Recommendations, he is the most suitable person to occupy the position of Chairman of the Company.

Further, the Board considers that any perceived independence-related concerns regarding the position of Mr Kay as Chairman, Mr Petereit as Managing Director and Mr Ilsley as a non-independent Director are to a large extent, countered by the presence of Mr Charles (when appointed) who has wide business and management experience and expertise and is familiar with requirements and expectations of listed companies, particularly in respect of corporate governance. These concerns will also be addressed by the proposed appointment of an additional non-executive Director to the Board within the next two years, once such an appointment is made.

64 ApplyDirect Limited Prospectus

6. Details of the Offer

ApplyDirect Limited Prospectus 65

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6.1 What is the Offer?

This Prospectus relates to an initial public offering by the Company, comprising the issue of 40 million Shares by the Company at an issue price of $0.20 per Share. The Offer, if successfully completed, will raise gross proceeds of $8 million ( minimum subscription ). The Company will not be accepting oversubscriptions under the Offer or an amount less than the Minimum Subscription.

Based on the Minimum Subscription being raised, the Shares offered under this Prospectus will represent approximately 24.35% of the Shares on issue on completion of the Offer. The total number of Shares on issue at completion of the Offer is expected to be 164,271,826, based on the Minimum Subscription being raised. All Shares will rank equally with each other.

If the Minimum Subscription is not raised within 4 months after the date of this Prospectus, no Shares will be issued pursuant to the Offer and all Application Moneys received will be returned to Applicants in full (without interest).

Successful Applicants under the Offer will pay the Offer Price, being $0.20 per Share.

A description of the rights and liabilities attaching to the Shares is set out in section 8.3.

6.2 Structure of the Offer

The Offer is a general offer open to investors who have a registered address in Australia or New Zealand.

Details of the allocation policy under the Offer are set out in the following sections.

Applicants under the Offer will be required to pay the Application amount of $0.20 per Share, for each Share they apply for under the Offer.

The key dates for the Offer are set out in the sub-section headed ‘Key Dates’ in ‘Highlights of the Offer’ (on page 6). Unless otherwise stated, all times are Melbourne time. The dates (and, in particular, the Closing Date) may change.

6.3 Discretion under the Offer

The Company reserves the right not to proceed with the Offer at any time before the allotment of the Shares under the Offer. If the Offer does not proceed, all Application Moneys received by the Company will be refunded in full (without interest). The Company takes no responsibility for Application Moneys until these are received by the Company.

The Company reserves the right to decline any Application in whole or in part without giving any reason. An Application may be accepted by the Company in respect of the full number of Shares specified in the Application or any number of them without further notice to the Applicant. Acceptance of an Application will give rise to a binding contract.

The Company reserves the right to close the Offer early, to accept late Applications or extend the Offer without directly notifying any recipient of this Prospectus or any Applicant.

6.4 Minimum Subscription

The Minimum Subscription under the Offer is $8 million. If the Minimum Subscription is not obtained within four months after the date of this Prospectus, the Offer will not proceed and the Company will repay all Application Moneys in full without interest as soon as practicable.

6.5 Purpose of the Offer and use of proceeds

The Offer is being conducted to:

• achieve a listing of the Company on ASX to broaden the Company’s Shareholder base and provide a market for its Shares;

• improve the Company’s future access to capital markets;

• provide ApplyDirect with additional financial resources to pursue its business strategies and plans for growth (for further details, refer to the table overleaf and section 2.5);

• provide ApplyDirect with the benefits of an increased profile that flows from being an ASX listed entity;

• assist ApplyDirect in attracting and retaining qualified and high calibre staff; and

• pay the expenses of the Offer.

66 ApplyDirect Limited Prospectus

6. Details of the Offer

The table below details the proceeds and use of funds raised by the Offer in the period from completion of the Offer until 31 December 2017. Depending on, among other things, the Company’s progress and the success of the initiatives outlined in this section and elsewhere in this Prospectus, the Company may be required to raise additional capital prior to 31 December 2017 to continue with the growth and development of its business.

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Minimum Subscription
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Details	$ million	%
Gross proceeds of the Offer	8.0
use of Funds:
System development & technology	0.52	6.5
Establishment & development of B2B sales and marketing team	1.47	18.4
Brand marketing and awareness program – on-line and traditional media	3.20	40.0
Working capital	0.60	7.5
Repayment of Convertible Notes	1.35	16.9
Payment of costs associated with the Offer*	0.86	10.7
Total proceeds	8.0	100

• Refer to section 6.11 for further details of the costs of the Offer.

The actual level and break up of expenditure itemised above may change on an ongoing basis depending on factors which may include changes in market conditions, the development of new and existing opportunities and other factors (including the risk factors listed in section 4).

6.6 Is the Offer underwritten?

The Offer is not underwritten.

6.7 How to subscribe for Shares under the Offer?

Who can apply for shares under the offer?

The Offer is open to Retail Applicants and Wholesale Applicants resident in Australia or New Zealand. The Company reserves the right in its absolute discretion not to issue Shares to Applicants under the Offer. All Applicants under the Offer must have an eligible residential address in Australia or New Zealand.

how do i apply under the offer?

In order to apply for Shares under the Offer, please complete the Application Form that is included in or accompanies this Prospectus (or a printed copy of the Application Form attached to the electronic version of the Prospectus) or apply online at www.applydirect.com.au/public-offer. Application Forms must be completed in accordance with the accompanying instructions (on the reverse side of the Application Form).

Applicants applying online must personally complete the online Application Form and pay the Application Moneys via BPAY[®] (registered to BPAY Pty Ltd ABN 69 079 137 518) only. Application Forms completed online must not be completed by third parties, including authorised third parties (e.g. the Applicant’s broker).

For printed Applications, once completed, please lodge your Application Form and Application Moneys so that it is received at the address set out below by the Closing Date.

By mail to:

ApplyDirect Limited – Share Offer C/Link Market Services Limited Level 12, 680 George Street Sydney, NSW 2000 Australia

ApplyDirect Limited Prospectus 67

6. Details of the Offer

What is the minimum and maximum application under the offer?

Applications must be for a minimum of 10,000 Shares, being Shares of a value of $2,000. Applications in excess of the minimum number of Shares must be in multiples of 5,000 Shares ($1,000).

There is no maximum number of Shares or amount that may be applied for under the Offer. The Company reserves the right to aggregate any Applications under the Offer which it believes may be multiple Applications from the same person.

The Company reserves the right to reject any Application or to allocate a lesser number of Shares than that which is applied for.

how to pay the application moneys under the offer

paying your application moneys by cheque

Application Moneys may be paid by cheque(s) or bank draft(s). Cheque(s) or bank draft(s) must be in Australian currency, drawn on an Australian branch of a financial institution, crossed ‘Not Negotiable’ and made payable to ‘ApplyDirect – IPO Account’.

Applicants should ensure that sufficient funds are held in the relevant account(s) to cover their cheque(s). If the amount of your cheque(s) or bank draft(s) for Application Moneys (or the amount for which those cheques clear in time for the allocation) is insufficient to pay for the number of Shares you have applied for in your Application Form, you may be taken to have applied for such lower amount as your cleared Application Moneys will pay for (and to have specified that amount in your Application Form) or your Application may be rejected.

paying your application moneys by bpay[®]

Australian investors under the Offer may apply for Shares online and pay their Application Moneys by BPAY[®] . Australian investors wishing to pay by BPAY[®] should complete the online Application Form accompanying the electronic version of this Prospectus which is available at http://www.applydirect.com.au/public-offer and follow the instructions on the online Application Form (which includes the Biller Code and your unique Customer Reference Number ( crn )).

All Applicants applying online must personally complete the online Application Form and pay the Application Moneys. Application Forms completed online must not be completed by third parties, including authorised third parties (e.g. the Applicant’s broker).

You should be aware that you will only be able to make a payment via BPAY[®] if you are the holder of an account with an Australian financial institution which supports BPAY[®] transactions.

When completing your BPAY[®] payment, please make sure you use the specific Biller Code and your unique CRN provided on the online Application Form. If you do not use the correct CRN, your Application will not be recognised as valid.

It is your responsibility to ensure that payments are received by 5.00pm (Melbourne time) on the Closing Date. Your bank, credit union or building society may impose a limit on the amount which you can transact on BPAY[®] , and policies with respect to processing BPAY[®] transactions may vary between banks, credit unions or building societies.

The Company accepts no responsibility for any failure to receive Application Moneys or payments by BPAY[®] before the Closing Date arising as a result of, among other things, processing of payments by financial institutions.

allocation of shares under the offer

The Company has absolute discretion regarding the allocation of Shares to Applicants under the Offer and may reject an Application, or allocate fewer Shares than the number applied for, in its absolute discretion.

When does the offer open?

The Offer is expected to open for Applications at 9.00am (Melbourne time) on the Opening Date. However, this may be delayed if ASIC extends the Exposure Period for the Prospectus.

What is the deadline to submit an application under the offer?

It is your responsibility to ensure that your Application Form and Application Moneys are received by the Share Registry before 5.00pm (Melbourne time) on the Closing Date.

6.8 Confirmation of your Application and trading on ASX

When will i receive confirmation that my application has been successful?

Applicants under the General Offer will be able to call the offer information line on 1800 647 819 (within Australia) or +61 2 8280 7100 (outside Australia), between 8.30am and 5.30pm (Melbourne time), from the date 2 Business Days after the Closing Date of the Offer to confirm their allocation.

Holding statements and allotment notices confirming Applicants allocations under the Offer are expected to be sent to successful Applicants on or around 17 June 2016.

68 ApplyDirect Limited Prospectus

6. Details of the Offer

When will i receive my shares and when can i trade my shares?

Subject to ASX granting approval for the Company to be admitted to the Official List, the Company will issue the Shares to successful Applicants as soon as practicable after the Closing Date. Allotment is expected to occur on 16 June 2016.

Trading of the Shares on ASX is expected to commence on 20 June 2016.

If you sell your Shares before receiving an initial holding statement or allotment notice, you do so at your own risk, even if you have obtained details of your holding from your broker or the Share Registry’s offer information line.

Who do i contact if i have further queries?

If you have queries about investing under the Offer, you should contact your stockbroker, financial adviser, accountant or other professional adviser.

If you have queries about how to apply under the Offer or would like additional copies of this Prospectus, please call the Share Registry on 1800 647 819 (within Australia) or +61 2 8280 7100 (outside Australia) between 8.30am and 5.30pm (Melbourne time).

6.9 Allocation policy

The basis of allocation of Shares under the Offer will be determined by the Company in its absolute discretion. Certain Applicants nominated by the Company may be given preference in the allotment of the Shares.

It is currently expected that certain Existing Shareholders, directors and employees of ApplyDirect may submit Applications under the Offer.

6.10 Application Moneys

Once received by the Company (or its Share Registry), all Application Moneys will be held by the Company on trust in a separate account until the Shares are issued to successful Applicants.

Application Moneys will be refunded in Australian dollars to the extent that an Application is rejected or scaled back, or the Offer is withdrawn. No interest will be paid on refunded amounts. The Company will retain any interest earned on all Application Moneys.

6.11 Fees and costs

is there any brokerage, commission or stamp duty payable by applicants?

No brokerage, commission or stamp duty is payable by Applicants on the acquisition of Shares under the Offer.

What are the costs of the offer and who is paying them?

The costs of the Offer include the legal, accounting, advisory and other costs associated with the production of the Prospectus and associated documentation. At the Prospectus Date, the costs payable by the Company (inclusive of GST but excluding claimable GST) are estimated to be:

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Amount
including GST
but excluding
Expenses of the Offer claimable GST ($)
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Fees to AFSL holders in respect of Applications	438,438
Legal fees	132,000
Investigating Accountant's Report and financial due diligence	22,000
ASX listing fee	90,050
Corporate advisory fees	82,000
Accounting support & audit fees	56,625
Other miscellaneous costs and overrun contingency	35,414
ToTal	856,527

The Company will pay the costs of the Offer from the proceeds of the Offer (see section 6.5).

ApplyDirect Limited Prospectus 69

6. Details of the Offer

6.12 Pro forma Historical Statement of Financial Position and Income Statement

Financial information concerning ApplyDirect, including ApplyDirect’s Pro Forma Historical Income Statement and Pro Forma Historical Balance Sheet (including details of the pro-forma adjustments), following completion of the Offer and based on the assumptions set out therein, is set out in section 3.

6.13 Indebtedness

As at the Prospectus Date, ApplyDirect has no external debt other than its obligation to repay the Principal Amount on the redemption of any Convertible Notes. If all Convertible Notes are redeemed, the amount of cash that must be paid by the Company on redemption is $1,350,000.

6.14 Working capital

The Directors believe that on completion of the Offer, the Company will have sufficient working capital available from the cash proceeds of the Offer to carry out its stated objectives (and the purposes of the Offer) as set out in the Prospectus.

6.15 Shareholding structure

Details of the capital structure of the Company on the Prospectus Date are set out in the table in section 3.6.

As at the Prospectus Date, the only substantial shareholders of the Company are:

• Bryan Petereit[*] – 24,851,967 Shares (19.998%); and

• Potentate – a seed capital provider unrelated to the Company and/or its Directors – 23,119,383 Shares (18.604%).

Bryan Petereit and Potentate will not be applying for Shares under the Offer. Accordingly, on completion of the Offer, the holdings of Bryan Petereit and Potentate will be:

• Bryan Petereit – 24,851,967 Shares (15.129%); and

• Potentate – 23,119,383 Shares (14.074%).

No other Existing Shareholder holds in excess of 5% of the issued capital of the Company.

On completion of the Offer, assuming that no Existing Shareholder subscribes for Shares under the Offer, successful Applicants will collectively hold approximately 24.35% of the Shares on issue.

• Bryan Petereit has a relevant interest in 24,851,967 Shares through two shareholders, Werndex (23,601,967 Shares – 18.992%) and B&C Super Fund (1,250,000 Shares – 1.006%).

control implications of the offer

On completion of the Offer, it is expected that the largest single Shareholder will hold approximately 15.13% of the Shares on issue (assuming Bryan Petereit and Potentate are not issued any Shares under the Offer).

As at the date of this Prospectus, there is no new cornerstone investor that is expected to take a large proportionate Shareholding in the Company on completion of the Offer. Accordingly there is unlikely to be any single Shareholder who will have the ability to exert control over the Company or the composition of the Board.

escrow – asX mandatory escrow, voluntary escrow and application for asic relief in relation to voluntary escrow

A substantial number of the Existing Shares and Options will be subject to ASX imposed escrow. Whilst a final decision on ASX escrow is yet to be made by ASX, ApplyDirect expects that, of the 124,271,826 Existing Shares, approximately 60.97 million will be subject to ASX imposed escrow, with the likely release date for most of those Shares being 24 months after the date of official quotation of the Shares on ASX.

In addition to the ASX imposed escrow applying to the Existing Shares, there are also 30,635,469 existing Options. These Options are similarly expected to be subject to ASX imposed escrow. Whilst no final decision has been made by ASX on the ASX escrow restrictions on the Options, ApplyDirect expects that around 77.02% of the Options will be subject to ASX escrow restrictions similar to that imposed by ASX on the Existing Shares.

ASIC has granted relief to ApplyDirect by modifying section 609 of the Corporations Act to permit the Company to enter into voluntary escrow arrangements with the Existing Shareholders whereby approximately 53.89 million Shares will be voluntarily held in escrow (i.e. transfer restricted) for a period of 6 months after the date of official quotation of the Shares on ASX. Each Existing Shareholder (with limited exceptions only) will enter into a voluntary escrow deed with the Company for this purpose.

70 ApplyDirect Limited Prospectus

6. Details of the Offer

Of the total of 1,350,000 Convertible Notes, those held (directly or indirectly) by a Director or proposed Director, being 100,000 Notes issued to Doveton Kay Investments and 50,000 Notes issued to Anthony Charles (together comprising 11.11% of the Convertible Notes), may also be subject to ASX imposed escrow. It is not expected that any other Convertible Notes will be subject to mandatory escrow. No voluntary escrow arrangements will be in place in respect of any of the Convertible Notes.

The expected combined effect of the ASX imposed escrow and the voluntary escrow is that, of the 124.27 million Existing Shares, only 9.41 million Shares (i.e. 7.57% of the Existing Shares) will be free from some form of escrow and therefore able to be traded on ASX immediately following official quotation of the Shares on ASX. In general terms, it is expected that the Shares that will be subject to escrow will have a restriction period ranging from 6 months to 2 years after quotation of the Shares on ASX.

Apart from the above escrow arrangements, there are no other ASX imposed or voluntary escrow arrangements between the Company and any of the Existing Shareholders.

6.16 ASX listing

The Company has applied to ASX for admission to the Official List and for its Shares to be granted Official Quotation by ASX. The Company is not currently seeking a listing of its Shares on any financial market other than ASX.

The fact that ASX may admit the Company to the Official List and grant Official Quotation of the Shares is not to be taken in any way as an indication of the merits of the Company or the Shares offered under the Offer. ASX takes no responsibility for the contents of this Prospectus. Normal settlement trading in the Shares, if Official Quotation is granted, will commence as soon as practicable after the issue of holding statements to successful Applicants.

It is the responsibility of Applicants to determine their allocation of Shares prior to trading in them. Applicants who sell Shares before they receive confirmation of their allotment will do so at their own risk.

If ASX does not grant permission for the Shares to be quoted within 3 months after the date of this Prospectus, no Shares will be issued under the Offer and all Application Moneys will be refunded (without interest) as soon as practicable.

6.17 Tax implications of investing in the Company

The taxation consequences of an investment in the Shares will depend on your particular circumstances. It is your responsibility to make your own enquiries concerning the taxation consequences of an investment in the Company.

The following comments provide a general summary of Australian tax issues for Australian tax resident Shareholders who acquire Shares under this Prospectus.

The categories of Shareholders considered in this summary are limited to individuals, certain companies, trusts, partnerships and complying superannuation funds, each of whom hold their Shares on capital account. This summary does not consider the consequences for non-Australian tax resident Shareholders, or Australian tax resident Shareholders that are insurance companies, banks, Shareholders that hold their Shares on revenue account or carry on a business of trading in shares or Shareholders who are exempt from Australian tax.

This summary also does not cover the consequences for Australian tax resident Shareholders who are subject to Division 230 of the Income Tax Assessment Act 1997 (Cth) (the Taxation of Financial Arrangements or ‘TOFA’ regime), acquired their Shares on conversion of Convertible Notes or are employees who have acquired their interest under any employee share or option plan.

This summary is based on the tax law in Australia in force as at the date of this Prospectus. This summary does not take into account the tax law of countries other than Australia. This summary is general in nature and is not intended to be an authoritative or complete statement of the potential tax implications for each Shareholder. The taxation laws of Australia or their interpretation may change, possibly retrospectively. The precise implications of ownership or disposal of the Shares will depend on each Shareholder’s specific circumstances.

Shareholders (particularly if tax resident in a jurisdiction other than Australia (for example, New Zealand tax residents) should obtain their own advice on the taxation implications of holding or disposing of the Shares, taking into account their country of tax residence and any circumstances specific to them.

dividends on a share

The Company may attach ‘franking credits’ to dividends. Franking credits broadly represent the extent to which a dividend is paid by the Company out of profits that have been subject to Australian tax. It is possible for a dividend to be fully franked, partly franked or unfranked.

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6. Details of the Offer

australian tax implications

individuals and complying superannuation entities

Dividends paid by the Company on a Share will constitute assessable income of an Australian tax resident Shareholder. Australian tax resident Shareholders that are individuals or complying superannuation entities should include the dividend in their assessable income (some superannuation funds may be exempt in relation to Shares set aside solely to support current pension liabilities) in the year the dividend is paid, together with any franking credit attached to that dividend if they are a ‘qualified person’ (refer further comments below).

These Shareholders should be entitled to a tax offset equal to the franking credit attached to the dividend subject to being a ‘qualified person’. The tax offset can be applied to reduce the tax payable on the Shareholder’s taxable income. Where the tax offset exceeds the tax payable on the Shareholder’s taxable income in an income year, these Shareholders should be entitled to a tax refund.

If an unfranked dividend is paid, the Shareholder will generally be taxed at their marginal tax rate on that dividend with no tax offset.

corporate shareholders

Australian tax resident corporate Shareholders are also required to include both the dividend and attached franking credit in their assessable income subject to being a ‘qualified person’. A tax offset is then allowed up to the amount of the franking credit on the dividend, subject to being a ‘qualified person’, with the result that a tax resident corporate Shareholder should not pay any additional tax on a fully franked dividend.

An Australian resident corporate Shareholder should be entitled to a credit in its own franking account to the extent of the franking credit attached to the dividend received. This should then allow these corporate Shareholders to pass on the benefit of the franking credits to their own shareholder(s) on a subsequent payment of dividends.

Excess franking credits received cannot give rise to a refund for a corporate Shareholder, but may in certain circumstances be able to be converted into carry forward tax losses.

Trusts and partnerships

Shareholders that are Australian resident trustees (other than trustees of complying superannuation entities) or partnerships should include the dividend and attached franking credit in their assessable income in determining the net income of the trust or partnership. Subject to being a ‘qualified person’, the relevant beneficiary or partner may be entitled to a tax offset equal to the beneficiary’s or partner’s share of the franking credit received by the trust or partnership.

shares held at risk

The benefit of franking credits can be denied where a Shareholder is not a ‘qualified person’ in which case the Shareholder will not be able to include an amount for the franking credits in their assessable income and will not be entitled to a tax offset.

Broadly, to be a ‘qualified person’, a Shareholder must satisfy the holding period rule and, if necessary, the ‘related payment rule’. The ‘holding period rule’ requires a Shareholder to hold the Shares ‘at risk’ for more than 45 days continuously in the ‘primary qualification period’, which is the period beginning the day after the day on which the Shareholder acquires the Shares and ending on the 45th day after the day on which the Shares become ex-dividend. Any day on which a Shareholder has a materially diminished risk or loss of opportunity for gain (through transactions such as granting options or warrants over Shares or entering into a contract to sell the Shares) will not be counted as a day on which the Shareholder held the Shares ‘at risk’ and neither will the days that the Shares are acquired and disposed of by the Shareholder. This holding period rule is subject to certain exceptions, including where the total franking offsets of an individual in a year of income do not exceed $5,000.

Special rules apply to trusts and beneficiaries. Specifically, there are particular difficulties in satisfying the holding period rule where an investor holds Shares through a discretionary trust where no family trust election has been made. In these cases, the holding period rule may not be capable of being satisfied (though an exception still applies in the case of individual beneficiaries who have franking credit entitlements of less than $5,000 in an income year). If a Shareholder is the trustee of a discretionary trust, it is strongly recommended that professional advice be obtained.

Under the ‘related payment rule’, a different testing period applies where the Shareholder has made, or is under an obligation to make, a related payment in relation to a dividend. The related payment rule requires the Shareholder to have held the Shares at risk for a continuous 45 day period within the ‘secondary qualification period’ commencing on the 45th day before, and ending on the 45th day after the day the Shares become ex-dividend. Practically, this should not impact Shareholders who do not pass the benefit of the dividend to another person. Shareholders should obtain their own tax advice to determine if these requirements, as they apply to them, have been satisfied.

Dividend washing rules can apply so that no tax offset is available for the franking credits (nor is the franking credit amount required to be included in your assessable income) associated with a dividend received where the Shareholder receives a franked dividend on a replacement Share after disposing of a substantially identical Share. Shareholders should consider the impact of these rules having regard to their own personal circumstances and seek professional advice to determine if this or any integrity rules could apply to them.

72 ApplyDirect Limited Prospectus

6. Details of the Offer

disposal of shares

australian tax implications

The disposal of a Share by a Shareholder will be a CGT event. An Australian tax resident Shareholder will make a capital gain where the capital proceeds received in relation to the disposal exceeds the cost base of the Share. The CGT cost base of a Share will broadly be the amount paid to acquire the Share plus any non deductible transaction/incidental costs. In the case of an arm’s length transaction, the capital proceeds should generally be the cash proceeds received from the sale of a Share plus the market value of any property received from the sale of the Share.

A CGT discount may be available on the capital gain (after reduction of total capital gains by capital losses) where the Shareholder is an individual, complying superannuation entity or trustee, the Shares have been held for more than 12 months and certain other requirements have been met. Where the CGT discount applies, any capital gain made by individuals and entities acting as trustees (other than trustees of a trust that is a complying superannuation entity) may be reduced by one half after offsetting current year or prior year capital losses. For a complying superannuation entity, any capital gain may be reduced by one third, after offsetting current year or prior year capital losses. Shareholders that are companies (including limited partnerships or trusts that are deemed to be companies under Australian tax law) are not entitled to the CGT discount.

Where the Shareholder is the trustee of a trust that has held the Shares for more than 12 months before disposal, the CGT discount may flow through to the beneficiaries of the trust if those beneficiaries are individuals, trustees or complying superannuation entities. The CGT discount rules applying to trusts are complex and Shareholders that are trustees should seek specific advice regarding the tax consequences of distributions to beneficiaries who may qualify for discounted capital gains.

An Australian tax resident Shareholder will make a capital loss on the disposal of Shares if the reduced cost base of the Share exceeds the capital proceeds in relation to the disposal. Capital losses may only be offset against capital gains made by the Shareholder in the same income year or future income years, subject to certain loss recoupment tests being satisfied. Capital losses cannot be offset against other assessable income.

Goods and services Tax

The issue of Shares by the Company under this Prospectus should not be subject to GST. The acquisition of the Shares by an Australian resident (that is registered for GST) should be an input taxed financial supply and therefore should not be subject to GST.

No GST should be payable in respect of dividends paid to investors.

An Australian resident investor that is registered for GST may not be entitled to claim full input tax credits in respect of GST on expenses they incur that relate to the acquisition, redemption or disposal of the Shares (e.g. lawyers’ and accountants’ fees). Investors should seek their own advice on the impact of GST in their own particular circumstances.

stamp duty

Under current stamp duty legislation, investors acquiring Shares under this Prospectus will not be liable for stamp duty on the acquisition.

Tax file numbers

An Australian tax resident Shareholder is not required to quote their TFN to the Company. However, if TFN or exemption details are not provided, Australian tax may be required to be deducted or withheld by the Company from dividends and/or distributions that are not fully franked dividends at the maximum marginal tax rate including where relevant, the ‘Medicare Levy’ and ‘Temporary Budget Repair Levy’.

An investor that holds Shares as part of an enterprise may quote its Australian Business Number instead of its TFN.

Australian tax resident Shareholders may be able to claim a tax credit/rebate (as applicable) in respect of any tax withheld on dividends from the ATO.

While the information in this section is based on current tax law and ATO rulings, it is not intended as a substitute for investors obtaining independent tax advice in relation to their personal circumstances.

6.18 Overseas distribution

No action has been taken to register or qualify the offer of Shares under this Prospectus, or to otherwise permit a public offering of Shares, in any jurisdiction outside Australia and New Zealand.

offer only made where lawful to do so

The distribution of this Prospectus in jurisdictions outside Australia and New Zealand may be restricted by law. This Prospectus does not constitute an offer in any place in which, or to whom, it would not be lawful to make such an offer. Persons who come into possession of this document should inform themselves about and observe any restrictions on acquisition or distribution of the Prospectus. Any failure to comply with these restrictions may constitute a violation of securities laws.

ApplyDirect Limited Prospectus 73

6. Details of the Offer

united states residents

The Shares being offered pursuant to this Prospectus have not been registered under the US Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration under the US Securities Act and applicable state securities laws. This Prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful. In addition, any hedging transactions involving these securities may not be conducted unless in compliance with the US Securities Act.

hong Kong

This Prospectus has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it been authorised by the Securities and Futures Commission in Hong Kong pursuant to the Securities and Futures Ordinance (Cap. 571) of the Laws of Hong Kong ( sFo ). No action has been taken in Hong Kong to authorise or register this Prospectus or to permit the distribution of this Prospectus or any documents issued in connection with it. Accordingly, the Shares have not been and will not be offered or sold in Hong Kong other than to ‘professional investors’ (as defined in the SFO and any rules made under that ordinance).

No advertisement, invitation or document relating to the Shares has been or will be issued, or has been or will be in the possession of any person for the purpose of issue, in Hong Kong or elsewhere that is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Shares that are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors (as defined in the SFO and any rules made under that ordinance). No person allotted Shares may sell, or offer to sell, such securities in circumstances that amount to an offer to the public in Hong Kong within six months following the date of issue of such securities.

The contents of this Prospectus have not been reviewed by any Hong Kong regulatory authority. You are advised to exercise caution in relation to the Offer. If you are in doubt about any contents of this Prospectus, you should obtain independent professional advice.

overseas ownership and resale representation

It is your responsibility to ensure compliance with all laws of any country relevant to your Application. The return of a duly completed Application Form will be taken by the Company to constitute a representation and warranty made by you to the Company that there has been no breach of such laws and that all necessary consents and approvals have been obtained.

74 ApplyDirect Limited Prospectus

7. Independent Limited Assurance Report

ApplyDirect Limited Prospectus 75

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31 May 2016

The Directors ApplyDirect Ltd C/- Level 23, 525 Collins Street Melbourne 3000

Dear Directors

INDEPENDENT LIMITED ASSURANCE REPORT ON FINANCIAL INFORMATION

Introduction

The directors of ApplyDirect Limited (‘ ApplyDirect’ or ‘ Company ’) have requested PKF Melbourne Audit & Assurance Pty Ltd (‘ PKF ’) to prepare this Independent Limited Assurance Report (‘ Report ’) for inclusion in the Prospectus to be dated on or about 31 May 2016 relating to the issue of a minimum of 40 million new fully paid ordinary shares in the Company to raise $8 million (‘minimum subscription’) (the ‘ Offer ’).

Expressions and terms defined in the Prospectus have the same meaning in this report, unless otherwise specified.

Scope

You have requested PKF to perform a limited assurance engagement in relation to the Financial Information included in Section 3 of the Prospectus (‘ Financial Information ’).

Financial Information

The Financial Information comprises:

• (a) the Pro Forma Historical Income Statement and Pro Forma Historical Balance Sheet derived from:

• the audited historical statements of profit or loss of ApplyDirect for the years ended 30 June 2014 and 30 June 2015;

• the reviewed historical statement of profit or loss of ApplyDirect for the 6 month period ended 31 December 2015;

• the audited historical statements of financial position of ApplyDirect as at 30 June 2014 and 30 June 2015;

• the reviewed historical statement of financial position of ApplyDirect as at 31 December 2015;

• the impact of any significant transactions relating to ApplyDirect since 31 December 2015; and

• the impact of selected pro forma adjustments (‘ Pro Forma Adjustments ’) and the assumptions on which they are based as described in Section 3 of the Prospectus, including relevant notes to the Financial Information; and

• (b) the key accounting policies of the Company relevant to the Financial Information.

76 ApplyDirect Limited Prospectus

1. Independent Limited Assurance Report

The half year 31 December 2015 financial statements of ApplyDirect have been reviewed by Daniel Allison & Associates Assurance and the 30 June 2015 financial report (including 30 June 2014 comparatives) of ApplyDirect have been audited by Daniel Allison & Associates Assurance. In respect of the half year 31 December 2015 financial statements and 30 June 2015 financial statements Daniel Allison & Associates Assurance issued an unqualified opinion with an emphasis of matter in respect of going concern.

The Historical Financial Information is presented in an abbreviated form insofar as it does not include all of the presentation and disclosures required by Australian Accounting Standards and other mandatory professional reporting requirements applicable to general purpose financial reports prepared in accordance with the Corporations Act 2001 .

However the Historical Financial Information has been prepared in accordance with the recognition and measurement principles prescribed in Australian Accounting Standards and other mandatory professional reporting requirements, and the significant accounting policies summarised in Section 3.12 of the Prospectus.

The stated basis of preparation of the Pro Forma Historical Financial Information is the recognition and measurement principles contained in Australian Accounting Standards applied to the historical financial information and the event(s) or transaction(s) to which the Pro Forma Adjustments relate, as described in Section 3 of the Prospectus, as if those event(s) or transaction(s) had occurred as at the date of the historical financial information. Due to its nature, the Pro Forma Historical Financial Information does not represent the Company’s actual or prospective financial performance and position.

Directors’ Responsibility

The Directors of the Company are responsible for the preparation of the Financial Information, including the selection and determination of pro forma adjustments made to the historical financial information and included in the Financial Information.

This includes responsibility for such internal controls as the Directors determine are necessary to enable the preparation of Financial Information that is free from material misstatement, whether due to fraud or error.

Our Responsibility

Our responsibility is to express a limited assurance conclusion on the Financial Information based on the procedures performed and the evidence we have obtained. We have conducted our engagement in accordance with the Standard on Assurance Engagements ASAE 3450 Assurance Engagements involving Corporate Fundraisings and/ or Prospective Financial Information .

A limited assurance engagement consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A limited assurance engagement is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain reasonable assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Our engagement did not involve updating or re-issuing any previously issued audit or limited assurance report on any financial information used as a source of the financial information.

Review of Financial Information

PKF has conducted a review of the Pro Forma Historical Financial Information included in Section 3 of the Prospectus in order to state whether on the basis of the procedures described, anything has come to our attention that would indicate that the Financial Information is not presented fairly in accordance with the Pro Forma Adjustments and recognition and measurement requirements (but not all of the disclosure requirements) of applicable Accounting Standards in Australia and the accounting policies adopted by the Company as referred to in Section 3 of the Prospectus.

2

ApplyDirect Limited Prospectus 77

7. Independent Limited Assurance Report

Our procedures included such inquiries and procedures as we, in our professional judgement, considered reasonable in the circumstances and consisted primarily of:

• enquiry of and discussions with, Company Directors, management, personnel and advisors;

• review of the auditor’s working papers and records in respect of the historical statements of financial position and profit or loss of ApplyDirect as at and for the years ended 30 June 2014 and 30 June 2015 and the half year 31 December 2015;

• review of relevant documents and information of the Company in support of the Pro Forma Adjustments;

• consideration of the reasonableness and appropriateness of the subsequent events and Pro Forma Adjustments as a basis for compiling the Financial Information; and

• performing analytical procedures applied to the Financial Information.

Subsequent Events

Apart from the matters dealt with in this Report and elsewhere in the Prospectus, and having regard to the scope of our engagement, nothing has come to our attention that would cause us to believe that matters arising after 31 December 2015, other than matters dealt with in this Report, would require comment on, or adjustments to, the Financial Information contained in Section 3 of the Prospectus, or would cause that information to be misleading or deceptive.

Conclusions

Based on our limited assurance engagement, which is not an audit, nothing has come to our attention which causes us to believe that the Financial Information of ApplyDirect as described in Section 3 of the Prospectus is not presented fairly, in all material respects, in accordance with the stated basis of preparation as described in Section 3.12 of the Prospectus.

Prospective investors should be aware of the material risks and uncertainties in relation to an investment in the Company, which are detailed in the Prospectus. Accordingly, prospective investors should have regard to the investment risks as described in Section 4 of the Prospectus. We express no opinion as to the future financial performance of the Company.

We disclaim any assumption of responsibility for any reliance on this Report, or on the Historical Financial Information to which it relates, for any purpose other than that for which it was prepared. We have assumed, and relied on representations from certain members of management of the Company, that all material information concerning the prospects and proposed operations of ApplyDirect have been disclosed to us and that the information provided to us for the purpose of our work is true, complete and accurate in all respects. We have no reason to believe that those representations are false.

Emphasis of Matter

Without qualification to the opinion expressed above, we draw attention to Section 3.10 in the Prospectus which indicates the Company has generated losses and net cash outflows from operating activities and is reliant on its ability to raise sufficient capital to fund its operations and have sufficient funds to pay its debts as and when they fall due.

This statement indicates the existence of a material uncertainty which may cast significant doubt about the Company’s ability to continue as a going concern.

Restrictions on Use

Without modifying our conclusions, we draw attention to Section 3 of the Prospectus, which describes the purpose of the Financial Information, being for inclusion in the Prospectus. As a result, the Financial Information may not be suitable for use for another purpose.

3

78 ApplyDirect Limited Prospectus

7. Independent Limited Assurance Report

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----- Start of picture text -----

This Report relates only to th e Financial Information and does not extend t o any other financial
information included in the Pros p ectus.
Consent
PKF has consented to the inclu s ion of this Independent Limited Assurance Rep o rt in the Prospectus
in the form and context in which it is included.
Liability
The liability of PKF is limited to the inclusion of this report in the Prospectus. PKF makes no
representation regarding, and has no liability, for any other statements or o ther material in, or
omission from the Prospectus.
Independence & Disclosure of Interest
PKF does not have any pecuni a ry interests that could reasonably be regarded as being capable of
affecting its ability to give an u n biased conclusion in this matter. PKF will recei v e a professional fee
for the preparation of this Inde p endent Limited Assurance Report and particip a tion in due diligence
procedures.
Yours faithfully
PKF Melbourne Audit & Assura n ce Pty Ltd
Steven Bradby
Director
4
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ApplyDirect Limited Prospectus 79

8. Additional Information

80 ApplyDirect Limited Prospectus

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8.1 Incorporation

The Company was registered in Victoria on 14 December 2006 as a proprietary company limited by shares. A change in the company type of the Company from a proprietary company limited by shares to a public company limited by shares occurred on 20 November 2015.

As at the Prospectus Date, the Company does not have any subsidiaries.

8.2 Financial year

The Company expects to be taxed in Australia as a public company. The financial year of the Company ends on 30 June annually.

8.3 Rights and liabilities attaching to Shares

The rights and liabilities attaching to the ownership of Shares arise from a combination of the Constitution, the Corporations Act, other statutes, the ASX Listing Rules and general law.

A summary of the significant rights, liabilities and obligations attaching to the Shares and a description of other material provisions of the Constitution are set out below. This summary is not exhaustive nor does it constitute a definitive statement of the rights and liabilities of Shareholders. The summary assumes that the Company is admitted to the Official List.

Voting at a general meeting

At a general meeting of the Company, every Shareholder present in person or by proxy, representative or attorney has one vote on a show of hands.

On a poll, every member (or his or her proxy, attorney or representative) is entitled to one vote for each Share held.

meetings of members

Each Shareholder is entitled to receive notice of, attend and vote at, general meetings of the Company and to receive all notices, accounts and other documents required to be sent to Shareholders under the Constitution, the Corporations Act and the ASX Listing Rules. The Company must give at least 28 days’ written notice to Shareholders of a general meeting of the Company.

dividends

The Board may from time to time resolve to pay dividends to Shareholders and fix the amount of the dividend, the time for determining entitlements to the dividend and the timing and method of payment. For further information in respect of the Company’s proposed dividend policy, see section 3.11.

Transfer of shares

Subject to the Constitution, Shares may be transferred by a proper transfer effected in accordance with the ASX Listing Rules and the ASX Settlement Operating Rules, by a written instrument of transfer which complies with the Constitution or, subject to compliance with the ASX Listing Rules and the ASX Settlement Operating Rules, by any other form approved by the Directors.

The Board may refuse to register a transfer of Shares where permitted to do so under the Corporations Act, the ASX Listing Rules or the ASX Settlement Operating Rules. The Board must refuse to register a transfer of Shares when required to by the Corporations Act, the ASX Listing Rules or the ASX Settlement Operating Rules.

issue of further shares

Subject to the Corporations Act, the ASX Listing Rules, and the Constitution, the Directors may issue and allot, or dispose, of Shares on terms determined from time to time by the Directors at an issue price that the Directors determine from time to time. The Directors’ power under the Constitution includes the power to grant Options over unissued Shares.

Winding up

Without prejudice to the rights of the holders of Shares issued on special terms and conditions, if the Company is wound up, the liquidator may, with the sanction of a special resolution of the Company, divide among the Shareholders in kind all or any of the Company’s assets; and for that purpose, determine how it will carry out the division between the different classes of Shareholders, but the liquidator may not require a Shareholder to accept any Shares or other securities in respect of which there is any liability.

ApplyDirect Limited Prospectus 81

8. Additional Information

non-marketable parcels

The Company may effect the sale of the Shares of a Shareholder who holds less than a marketable parcel of Shares.

share buy-backs

Subject to the Corporations Act and the ASX Listing Rules, the Company may buy Shares on terms and at times determined by the Board.

Variation of class rights

At present, the Company’s only class of shares on issue is ordinary shares. The rights attached to any class of shares may be varied in accordance with the Corporations Act.

dividend reinvestment plan

The Directors may establish a plan under which Shareholders may elect to reinvest cash dividends paid or payable by the Company by acquiring by way of issue or transfer (or both) Shares or other securities.

amendment

The Constitution may be amended only by special resolution.

asX listing rules

At all times while the Company is admitted to the Official List of ASX, then despite anything in the Constitution:

• if the ASX Listing Rules prohibit an act being done, the act must not be done;

• nothing in the Constitution prevents an act being done that the ASX Listing Rules require to be done. If the ASX Listing Rules require an act to be done or not to be done, authority is given for that act to be done or not to be done (as the case may be);

• if the ASX Listing Rules require the Constitution to contain a provision or not to contain a provision, the Constitution is deemed to contain that provision or not to contain that provision (as the case may be); and

• if a provision of the Constitution is or becomes inconsistent with the ASX Listing Rules, the Constitution is deemed not to contain that provision to the extent of the inconsistency.

8.4 Material Agreements

The Directors consider that certain agreements are material to the Company or the Offer or are of such a nature that an investor may wish to have particulars of them when making an assessment of whether to apply for the Shares.

The provisions of the material contracts are summarised below. As this section 8.4 only contains a summary, the provisions of each agreement are not fully described. To understand fully all rights and obligations pertaining to the material contracts, it would be necessary to read each agreement in full.

customer contracts

As specified in section 4.2, no individual customer contract is material in the context of ApplyDirect’s business. The general terms of ApplyDirect’s customer contracts vary from contract to contract.

However, a number of contractual terms are generally consistent across a number of ApplyDirect’s customer contracts. In this regard, the term of the customer contract is generally 12 months, and may (in some, but not all cases) be terminated by the customer (without cause) after 3 months. If not terminated at that time, the customer contract runs for the full 12 month fixed term unless terminated for cause.

employment arrangements with directors and key personnel

As detailed in section 5.4, ApplyDirect has entered into contractual arrangements with Michael Kay (Executive Chairman), Bryan Petereit (CEO and Managing Director), Drew Ilsley (current non-executive Director) and Anthony Charles (proposed non-executive Director).

In addition to the current and proposed Directors, at the date of this Prospectus, ApplyDirect has only one other key person, Rolf Mueller. ApplyDirect has entered into an employment contract with Rolf Mueller to govern his employment as the Chief Information Officer of ApplyDirect from completion of the Offer, on standard commercial terms and conditions relevant to that position. From the date of the Shares first being quoted on ASX, Mr Mueller will receive an annual salary of $180,000 (exclusive of any payments that ApplyDirect may be required to make under applicable superannuation legislation).

82 ApplyDirect Limited Prospectus

8. Additional Information

Mr Mueller’s employment contract is subject to immediate termination for cause (for example, breach, unsatisfactory performance, inappropriate conduct etc). Alternatively, either ApplyDirect or Mr Mueller can terminate the contract (without cause) by giving not less than 3 months notice. Mr Mueller will be entitled to participate in any incentive performance scheme that the Company considers appropriate.

The employment contract of Mr Mueller also includes standard restrictions in relation to not competing with the business of ApplyDirect, providing services exclusively for ApplyDirect, maintaining the confidentiality of ApplyDirect’s confidential information and assigning all relevant intellectual property rights to ApplyDirect.

proposed employment arrangements with future key personnel

For the future members of the management team that ApplyDirect intends to employ after Listing, it is proposed that ApplyDirect will enter into employment contracts consistent with industry standards and conditions (bearing in mind the age, duties, expertise and experience of the executive) and with notice periods ranging from 3 months to 6 months. It is expected that, subject to a qualifying period, all senior executives will be eligible to participate in any incentive performance schemes that the Company considers appropriate. It is also expected that these employment contracts will include standard restrictions in relation to not competing with the business of ApplyDirect, providing services exclusively for ApplyDirect, maintaining the confidentiality of ApplyDirect’s confidential information and assigning all relevant intellectual property rights to ApplyDirect.

agreements with aFsl holders in relation to the offer

ApplyDirect has arrangements with a number of AFSL holders in respect of the Offer. Under those arrangements, an AFSL holder will be paid an amount of up to 5% of the gross amount raised from successful Applicants directly introduced to the Offer by that AFSL holder.

employee and executive incentive plan

ApplyDirect has adopted the EEIP to encourage executives and employees to have a greater involvement in the achievement of ApplyDirect’s objectives. Under the EEIP, eligible employees (including executives, officers, employees and executive Directors) selected by the Board or the committee which has been delegated power by the Board to administer the EEIP may be offered Shares or granted Options or Rights.

ApplyDirect may offer additional incentive schemes to the management and employees over time.

eligibility

Eligibility to participate in the EEIP and the number of Shares, Options or Rights offered to each individual participant, will be determined by the Board. Non-executive Directors of ApplyDirect are not permitted to participate in the EEIP.

Grants

Under the rules of the EEIP, Shares, Options and/or Rights may be offered or granted to eligible employees of ApplyDirect from time to time, subject to the absolute discretion of the Board.

Terms and conditions

The Board has the absolute discretion to set the terms and conditions (including conditions in relation to vesting, disposal restrictions or forfeiture and any applicable exercise price) on which it will offer Shares or grant Options or Rights under the EEIP and may set different terms and conditions which apply to different participants in the EEIP. The Board will determine the procedure for offering Shares or granting Options or Rights (including the form, terms and content of any offer, invitation or acceptance procedure) in accordance with the rules of the EEIP.

Vesting conditions

Shares, Options and Rights will be subject to vesting conditions determined by the Board from time to time and specified at the time of the grant. Vesting conditions may include conditions relating to continuous employment or service, the individual performance of the participant and/or ApplyDirect’s performance and the exercise price (if any) being less than the current market price of the underlying Share as at vesting.

ranking of shares

Shares issued (including Shares issued upon exercise of Options or Rights granted) under the EEIP will rank equally in all respects with the other issued Shares.

ApplyDirect Limited Prospectus 83

8. Additional Information

rights attaching to unvested shares

The Board may determine (as part of the terms and conditions applicable to an offer or grant of Shares, Options or Rights to a participant) whether the participant is entitled to:

• all dividends declared or paid on unvested Shares (and whether any such dividends are to be held in escrow until the Shares are fully vested);

• any bonus Shares which may accrue to unvested Shares (noting if the participant is entitled to the bonus Shares, any such bonus Shares issued will be deemed to be unvested Shares issued at the time the original unvested Shares were issued); and

• any other rights or entitlements which accrue to unvested Shares including voting rights (and deal with them accordingly).

Voting and dividend rights of options and rights

Options and Rights do not carry any voting or dividend rights. Shares issued or transferred to participants on exercise of an Option or Right carry the same rights and entitlements as other issued Shares, including voting and dividend rights.

exercise of options or rights

A participant may exercise Options or Rights in respect of which the Board has given a vesting notice and which have not expired or been forfeited. To exercise an Option or Right, the participant must lodge with ApplyDirect a signed notice of exercise and comply with any requirements under the rules of the EEIP or as specified by the Board.

expiry of options or rights

Options and Rights which have not been exercised will expire if the applicable vesting conditions and any other conditions to exercise are not met during the prescribed performance period or if they are not exercised before the applicable expiry date. In addition, Options and Rights will lapse if the participant deals with the Options and Rights in breach of the rules of the EEIP or in the opinion of the Directors, a participant has acted fraudulently or dishonestly.

Vested options or rights

The Board intends that any vested Options or Rights held by a participant must be exercised within 12 months of the date the vesting conditions are satisfied (or such later date determined by the Board).

Quotation

Options and Rights will not be quoted on ASX. The Company will apply for official quotation of any Shares issued under the EEIP either upon the issue of unvested Shares or issue of Shares upon exercise of Options or Rights, in accordance with the ASX Listing Rules.

options exercise price

The Board may in its absolute discretion determine that a participant is required to pay an exercise price to exercise the Options offered or granted to that participant. As a general rule, for Options, it is intended that the exercise price of the Options will be at a premium to the ten day volume weighted average sale price of the Shares up to the date of issue of the relevant Options.

approval

Grants of Shares, Options or Rights under the EEIP to an executive Director may be subject to the approval of Shareholders, to the extent required under the ASX Listing Rules.

no transfer or encumbrance

Without the prior approval of the Board, unvested Shares, or Options or Rights which have not been exercised, may not be sold, transferred, encumbered or otherwise dealt with.

other terms of the eeip

The EEIP also contains customary and usual terms having regard to Australian law for dealing with the administration and variation of the EEIP.

The Company has also reserved the right under the EEIP to assist participants in the acquisition of securities under the EEIP by the provision of loans or other financial assistance. Any such loans or other financial assistance will be provided subject to and in compliance with all applicable provisions of the Corporations Act and the ASX Listing Rules.

84 ApplyDirect Limited Prospectus

8. Additional Information

To date, no Shares, Options or other securities convertible into Shares have been issued under the EEIP and there are no current plans to issue any such Shares, Options or other securities under the EEIP. Further, no Shares, Options or other securities will be issued under the EEIP to the Directors without prior Shareholder approval or as otherwise permitted by the ASX Listing Rules.

8.5 Directors’ interests, benefits and related party transactions

Details of all the existing agreements or arrangements and/or currently proposed transactions in which the Company is, or is to be, a participant and in which any related party of the Company (which includes any Director or entity associated with any Director) has or will have a direct or indirect interest in the Company or the Offer are set out in section 5.4 of this Prospectus.

8.6 Interests and benefits of experts and advisers

As at the date of this Prospectus, other than as set out below or elsewhere in this Prospectus:

• (a) no person named in the Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of the Prospectus or as a promoter of the Company has, or during the last 2 years prior to the date of the Prospectus has had, an interest in:

• (i) the formation or promotion of the Company;

• (ii) any property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offer under this Prospectus; or

• (iii) the Offer under this Prospectus; and

• (b) no amounts, whether in cash or shares or otherwise, have been paid or agreed to be paid and no value or benefit has been given or agreed to be given to any person named in the Prospectus as performing a function in a professional advisory or other capacity for services rendered in connection with the formation or promotion of the Company or the Offer under this Prospectus.

auditor

The historical financial statements of the Company for the financial year ended 30 June 2015 (and also the comparative financial statements for the financial year ended 30 June 2014) have been audited by DAAA. DAAA has also reviewed, but not audited, the historical financial statements of the Company for the 6 months ended 31 December 2015. The financial information included in section 3 of the Prospectus has been extracted from those reports.

The Company has paid or agreed to pay estimated fees of approximately $20,000 (exclusive of GST) plus out of pocket expenses in respect of services performed by DAAA in relation to the Prospectus. Further amounts may be paid to DAAA in accordance with its usual time based charge out rates.

investigating accountant

PKF has acted as investigating accountant and adviser to the Company on the financial information contained in section 3 of this Prospectus and performed work in relation to due diligence enquiries concerning the financial information included in the Prospectus. The Company has paid or agreed to pay estimated fees of approximately $20,000 (exclusive of GST) plus out of pocket expenses in respect of services performed by PKF in relation to the Prospectus. Further amounts may be paid to PKF in accordance with its usual time based charge out rates.

australian legal adviser

MinterEllison has acted for the Company as its legal adviser in respect of the Offer. The Company has paid or agreed to pay MinterEllison estimated fees of approximately $120,000 (exclusive of GST) plus out of pocket expenses in respect of services performed in relation to the Prospectus to the Prospectus Date. Further amounts may be paid to MinterEllison for legal services provided from the Prospectus Date in accordance with its usual time based charge out rates.

share registry

Link has been engaged by the Company to maintain its Share register. The Company will pay Link fees in accordance with Link’s standard commercial terms.

ApplyDirect Limited Prospectus 85

8. Additional Information

8.7 Consents and disclaimers

Each of the parties who are named below:

• (a) has not made any statement that is included in this Prospectus, or any statement on which a statement is made in this Prospectus is based, other than as specified in this section 8.7;

• (b) has not authorised or caused the issue of any part of this Prospectus;

• (c) makes no representations or warranty, express or implied, as to the fairness, accuracy or completeness of information contained in this Prospectus; and

• (d) to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any statements made in, or omissions from, this Prospectus, other than as specified in this section 8.7, and excludes and disclaims all liability for any damage, loss (including direct, indirect or consequential loss), cost or expense that may be incurred by an investor as a result of this Prospectus being inaccurate or incomplete in any way or for any reason.

australian legal adviser

MinterEllison has given, and as at the time of lodgement of this Prospectus, has not withdrawn its consent to be named in the Prospectus as the legal adviser to the Offer, in the form and context in which it is named.

auditor – daaa

DAAA, has given, and as at the time of lodgement of this Prospectus, has not withdrawn its consent to be named in the Prospectus as the Auditor of the Company (in relation to the audit of the Company’s financial statements for the financial year ended 30 June 2015 (with 30 June 2014 comparatives) and as having undertaken a review (but not an audit) of the financial statements of the Company for the 6 months ended 31 December 2015) and to the inclusion in this Prospectus of information extracted from those financial statements in the form and context in which it is named and that information appears in section 3.

proposed auditor – Grant Thornton

Grant Thornton Audit Pty Ltd has given, and as at the time of lodgement of this Prospectus, has not withdrawn its consent to be named in the Prospectus as the proposed new Auditor of the Company (subject to the Listing occurring) in the form and context in which it is named.

investigating accountant

PKF Melbourne Audit & Assurance Pty Ltd has given, and as at the time of lodgement of this Prospectus, has not withdrawn its consent to be named in the Prospectus as the Investigating Accountant in connection with the Offer and to the inclusion of the Independent Limited Assurance Report on the historical and pro forma financial information of the Company in the form and context in which it is named and that information appears in section 7.

share registry

Link Market Services Limited has given, and as at the time of lodgement of this Prospectus, has not withdrawn its consent to be named in the Prospectus as the Share Registry of the Company, in the form and context in which it is named.

Link has had no involvement in the preparation of any part of the Prospectus other than being named as the Company’s Share Registry. Link has not authorised or caused the issue of, and (as noted in section 8.7(d) above, to the maximum extent permitted by law) expressly disclaims and takes no responsibility for, any part of the Prospectus.

8.8 Legal proceedings

To the knowledge of the Directors, there is no material current, pending or threatened litigation with which the Company is directly or indirectly involved.

8.9 ASIC relief

Other than the application made by ApplyDirect to ASIC for a modification of section 609 of the Corporations Act to facilitate the voluntary escrow detailed in section 6.15, as at the date of the Prospectus, no relief or waiver from the provisions of the Corporations Act has been obtained by the Company or is necessary in order to permit the Offer being made in the form and in the context in which it is made in this Prospectus.

86 ApplyDirect Limited Prospectus

8. Additional Information

8.10 ASX waiver

Condition 11 of ASX Listing Rule 1.1 provides for the minimum exercise price for options to be $0.20. Of the Company’s 30,635,469 Options, 11,285,661 Options have an exercise price of below $0.20. The exercise price of these 11,285,661 Options ranges from $0.07 to $0.17.

The Company has applied to ASX for a waiver from Condition 11 of ASX Listing Rule 1.1 to allow these 11,285,661 Options to have an exercise price of less than $0.20. ASX has informed the Company that it has decided, in-principle, to grant the waiver sought.

8.11 Investor considerations

Before deciding to participate in this Offer, you should consider whether the Shares to be issued are a suitable investment for you. There are general risks associated with any investment in a financial market. The value of the Shares, when listed on ASX, may rise or fall depending on a range of factors beyond the control of the Company.

If you are in doubt as to the course you should follow, you should seek advice on the matters contained in this Prospectus from a professional adviser.

The potential tax effects relating to the Offer will vary between investors. Investors should consider the possible tax consequences of participating in the Offer by consulting a professional tax adviser.

8.11 Directors’ statement and approval

The Directors’ report that, in their opinion, after having made relevant inquiries:

• except as disclosed in this Prospectus, they are not aware of any circumstances that have materially affected or will materially affect the assets and liabilities, the financial position, the profits and losses, or the prospects of the Company on completion of the Offer; and

• they have reasonable grounds to believe, and do believe, that this Prospectus contains no statements that are false or misleading and that there are no material omissions from this Prospectus.

This Prospectus has been approved by unanimous resolution of the Directors and proposed Director of the Company and each of the Directors of the Company and the proposed Director of the Company have authorised the lodgement of this Prospectus with ASIC.

8.12 Governing Law

This Prospectus, the Offer and the contracts formed on acceptance of Applications under the Offer are governed by the laws in force in the State of Victoria and each Applicant submits to the non-exclusive jurisdiction of the courts of Victoria.

ApplyDirect Limited Prospectus 87

9. Glossary

88 ApplyDirect Limited Prospectus

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The following terms used in this Prospectus have the following meanings unless the context otherwise requires:

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Term Description
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$ora$	Australian dollars.
aasb	the Australian Accounting Standards Board.
aFsl	Australia financial services licence.
allotment date	the date the Company anticipates the Shares will be issued (on completion of the Offer)
	to Applicants.
applicant	a person who makes an Application for Shares under this Prospectus.
application	an application for Shares under this Prospectus.
application Form	the application form that is included in, is attached to, or accompanies this Prospectus.
application moneys	the moneys payable by an Applicant in connection with an Application.
applydirect	ApplyDirect Limited ACN 123 129 162.
asic	the Australian Securities and Investments Commission.
asXoraustralian	ASX Limited ACN 008 624 691 or the financial market known as the Australian Securities
securities exchange	Exchange which it operates, as the context requires.
asX listing rulesor	the official listing rules of ASX.
listing rules
asX recommendations	the Corporate Governance Principles and Recommendation (third edition, March 2014)
	published by the ASX Corporate Governance Council and available on the ASX’s website
	at www.asx.com.au.
asX settlement	ASX Settlement Pty Limited ACN 008 504 532.
asX settlement	the operating rules of ASX Settlement as amended from time to time, except to the extent
operating rules	of any express written waiver by ASX Settlement.
aTo	the Australian Taxation Office.
b&c super Fund	B & C Super Fund Pty Ltd ACN 610 943 005 (as trustee for the B & C Superannuation Fund).
b2b	‘business to business’, being the exchange of products, services or information between
	businesses, rather than between businesses and consumers.
boardorboard of directors	the board of directors of the Company.
business day	a day, other than a Saturday, Sunday or public holiday on which Australian banks
	(as defined in the Corporations Act) are open for business in Melbourne, Australia.
cGT	capital gains tax.
chess	Clearing House Electronic Sub-register System operated in accordance with the
	Corporations Act.
closing date	10 June 2016.
company	ApplyDirect Limited ACN 123 129 162.
constitution	the constitution of the Company, as amended from time to time.
convertible noteornote	an unsecured convertible note of $1.00 issued by the Company, redeemable or convertible
	in accordance with its terms (as outlined in section 3.9).
corporations act	Corporations Act 2001(Cth), as amended from time to time.
cV	curriculum vitae (a written overview of a person’s experience and other qualifications).
daaa	Daniel Allison & Associates Assurance.

ApplyDirect Limited Prospectus 89

9. Glossary

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Term Description
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deed	the deed of indemnity, access and insurance entered into by each Director with the Company.
doveton Kay investments	Doveton Kay Investments Pty Ltd ACN 163 958 272 (as trustee for the Doveton Kay Investment
	Trust), of which Michael Kay, a Director of ApplyDirect and his wife, Sally Elizabeth Kay, are
	the directors and shareholders.
directors	the directors of the Company.
eeip	the Company’s employee and executive incentive plan.
existing share	one of the 124,271,826 Shares that is on issue in the capital of the Company as at the
	Prospectus Date.
existing shareholder	a person registered as a holder of one or more Existing Shares as at the Prospectus Date.
exposure period	the period of 7 days after the date of lodgement of this Prospectus with ASIC, which period
	may be extended by ASIC by 7 days pursuant to section 727(3) of the Corporations Act.
Financial information	the Pro Forma Historical Income Statement, the Pro Forma Historical Balance Sheet and the
	key accounting policies of the Company relevant to the Financial Information.
Franklin street Trust	the Franklin Street Investment Unit Trust No. 6, of which the trustee is the Franklin
	Street Trustee.
Franklin street Trustee	Franklin Street Investments Pty Ltd ACN 074 276 369, of which Drew Ilsley, a Director of
	ApplyDirect, is the sole director and shareholder.
Grant Thornton	Grant Thornton Audit Pty Ltd ACN 130 913 594.
GsT	Goods and Services Tax as defined in the GST Act.
GsT act	the_A New Tax System (Goods and Services Tax) Act 1999_(Cth).
hr	human resources (i.e. the group of individuals who make up the workforce of an organisation,
	business sector, or economy (and is often synonymously interchanged with ‘human capital’).
investigating accountant	PKF Melbourne Audit & Assurance Pty Ltd ACN 600 749 184.
ipo	initial public offer (and, in this instance, refers to the initial public offer of the Company).
issue	the proposed issue of Shares pursuant to this Prospectus.
issue date	the date of the issue of the Shares pursuant to this Prospectus.
iT	information technology.
listing	the admission of the Company to the Official List and the grant of Official Quotation in
	respect of the Shares.
listing date	the date on which Official Quotation is granted in respect of the Shares.
minimum subscription	the minimum subscription being sought by the Company under the Offer, being $8 million.
note exercise period	the period between the Listing Date and 5:00pm (Melbourne time) on the date that is 6
	months after the Listing Date.
note issue date	10 March 2016.
noteholder	a person registered from time to time on the Company's register of Convertible Notes as a
	holder of one or more Notes.
offer	the offer of Shares as detailed in this Prospectus.
offer price	the price ($0.20) payable by Applicants for each Share offered under this Prospectus.
official list	the official list of ASX.
official Quotation	official quotation of securities (in this instance, the Shares) by ASX.

90 ApplyDirect Limited Prospectus

9. Glossary

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Term Description
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Term	Description
opening date	1 June 2016.
option	an option to acquire one Share (by way of issue).
optionholder	a person registered from time to time on the Company’s register of Options as a holder
	of one or more Options.
original prospectus	means the prospectus dated 17 May 2016 and lodged with ASIC on that date
	(which is replaced by this Prospectus).
potentate	Potentate Investments Pty Ltd ACN 112 551 612 (as trustee for the Norster Family Trust).
principal amount	the total amount paid by a Noteholder for its Note or Notes.
pro Forma historical	pro forma historical statement of financial position as at 30 June 2014, 30 June 2015 and
balance sheet	31 December 2015.
pro Forma historical	pro forma historical income statements for the years ended 30 June 2014, 30 June 2015 and
income statement	31 December 2015 reflecting the Directors’ pro forma adjustments.
prospectus or	this document (including the electronic copy of this prospectus) dated 31 May 2016, and any
replacement prospectus	supplementary or replacement prospectus in relation to this document.
prospectus date	the date that this Prospectus, being 31 May 2016, is lodged with ASIC.
related body corporate	has the meaning given in the Corporations Act.
retail applicantor	an Applicant or investor who is a retail investor under section 761G or section 761GA of the
retail investor	Corporations Act, and who is not a Wholesale Applicant or Wholesale Investor.
right	a right issued to a participant under the EEIP to acquire by way of issue or transfer a Share
	or an Option.
share	a fully paid ordinary share in the capital of the Company.
share registryorlink	Link Market Services Limited ACN 083 214 537.
shareholder	a person registered from time to time on the Company’s register of Shares as a holder of one
	or more Shares.
TFn	tax file number.
us securities act	the U.S. Securities Act of 1933 as amended from time to time.
VTic	the Victorian Tourism Industry Council.
Werndex	Werndex Pty Ltd ACN 082 764 172 (as trustee for the Petereit Family Trust), of which
	Bryan Petereit, a Director of ApplyDirect, is the sole director and shareholder.
Wholesale applicantor	an Applicant or investor who is (in either and in each case) not a retail client under section
Wholesale investor	761G or section 761GA of the Corporations Act.

ApplyDirect Limited Prospectus 91

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92 ApplyDirect Limited Prospectus

ApplyDirect Limited ABN 29 123 129 162

Broker Code

Adviser Code

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Public Offer Application Form

This is an Application Form for Shares in ApplyDirect Limited under the Public Offer on the terms set out in the Replacement Prospectus dated 31 May 2016 ( Prospectus ). You may apply for a minimum of 10,000 Shares and multiples of 5,000 thereafter. This Application Form and your cheque or bank draft must be received by 5:00pm (Melbourne time) on 10 June 2016.

If you are in doubt as to how to deal with this Application Form, please contact your accountant, lawyer, stockbroker or other professional adviser. The Prospectus contains information relevant to a decision to invest in Shares and you should read the entire Prospectus carefully before applying for Shares.

Shares applied for Price per Share Application Monies A , , at A$0.20 B A$ , , . (minimum 10,000, thereafter in multiples of 5,000) PLEASE COMPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names) +

PLEASE COMPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names) Applicant #1 Surname/Company Name

C

D

E

Title First Name	Middle Name	Middle Name
Joint Applicant #2
Surname
Title First Name	Middle Name
Designated account e.g. (or Joint Applicant #3)
TFN/ABN/Exemption Code
First Applicant Joint Applicant #2			Joint Applicant #3
TFN/ABN type – if NOT an individual, please mark the appropriate box	Company		Partnership	Trust	Super Fund

PLEASE COMPLETE ADDRESS DETAILS	PLEASE COMPLETE ADDRESS DETAILS
PO Box/RMB/Locked Bag/Care of (c/-)/Property name/Building name (if applicable)
Unit Number/Level Street Number	Street Name
Suburb/City or Town				State	Postcode
Email address (only for purpose of electronic communication of shareholder information)

CHESS HIN (if you want to add this holding to a specific CHESS holder, write the number here)

F X

+

Please note: that if you supply a CHESS HIN but the name and address details on your Application Form do not correspond exactly with the registration details held at CHESS, your Application will be deemed to be made without the CHESS HIN and any Shares issued as a result of the Offer will be held on the issuer sponsored sub-register.

Telephone Number where you can be contacted during Business Hours Contact Name (PRINT)

G ( )

Cheques or bank drafts should be made payable to “ApplyDirect Limited” in Australian currency and crossed “Not Negotiable”.

Cheque or Bank Draft Number BSB Account Number H - Total Amount A$ , , .

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LODGEMENT INSTRUCTIONS

You must return your application so it is received before 5:00pm (Melbourne time) on 10 June 2016 to: Link Market Services Limited, Locked Bag A14, Sydney South NSW 1235. AD1 IPO001

Your Guide to the Application Form

Please complete all relevant white sections of the Application Form in BLOCK LETTERS, using black or blue ink. These instructions are cross-referenced to each section of the form.

The Shares to which this Application Form relates are ApplyDirect Limited Shares. Further details about the Shares are contained in the Replacement Prospectus dated 31 May 2016 ( Prospectus ) issued by ApplyDirect Limited. The Prospectus will expire on 16 June 2017. While the Prospectus is current, ApplyDirect Limited will send paper copies of the Prospectus, any supplementary document and the Application Form, free of charge on request. The Australian Securities and Investments Commission requires that a person who provides access to an electronic application form must provide access, by the same means and at the same time, to the relevant Prospectus. This Application Form is included in the Prospectus.

The Prospectus contains important information about investing in the Shares. You should read the Prospectus before applying for Shares.

• E Please enter your postal address for all correspondence. All communications to you from ApplyDirect Limited and the Share Registry will be mailed to the person(s) and address as shown. For joint Applicants, only one address can be entered.

• A Insert the number of Shares you wish to apply for. The Application must be for a minimum of 10,000 Shares and thereafter in multiples of 5,000. You may be issued all of the Shares applied for or a lesser number.

• B Insert the relevant amount of Application Monies. To calculate your address can be entered. Application Monies, multiply the number of Shares applied for by the F If you are already a CHESS participant or sponsored by a CHESS issue price. Amounts must be in Australian dollars. Please make sure participant, write your Holder Identification Number (HIN) here. If the the amount of your cheque or bank draft equals this amount. name or address recorded on CHESS for this HIN is different to the

• C Write the full name you wish to appear on the register of Shares. This details given on this form, your Shares will be issued to ApplyDirect must be either your own name or the name of a company. Up to three Limited’s issuer sponsored subregister.

• C Write the full name you wish to appear on the register of Shares. This must be either your own name or the name of a company. Up to three joint Applicants may register. You should refer to the table below for the correct registrable title.

• G Please enter your telephone number(s), area code and contact name in case we need to contact you in relation to your Application.

• H Please complete the details of your cheque or bank draft in this section. The total amount of your cheque or bank draft should agree with the amount shown in section B.

• D Enter your Tax File Number (TFN) or exemption category. Business enterprises may alternatively quote their Australian Business Number (ABN). Where applicable, please enter the TFN or ABN for each joint Applicant. Collection of TFN(s) and ABN(s) is authorised by taxation laws. Quotation of TFN(s) and ABN(s) is not compulsory and will not affect your Application. However, if these are not provided, ApplyDirect Limited will be required to deduct tax at the highest marginal rate of tax (including the Medicare Levy) from payments.

• Make your cheque or bank draft payable to “ApplyDirect Limited” in Australian currency and cross it “Not Negotiable”. Your cheque or bank draft must be drawn on an Australian bank. Sufficient cleared funds should be held in your account, as cheques returned unpaid are likely to result in your Application being rejected.

• If you receive a firm allocation of Shares from your Broker make your cheque payable to your Broker in accordance with their instructions.

LODGEMENT INSTRUCTIONS

This Application Form and your cheque or bank draft must be mailed or delivered so that it is received before 5:00pm (Melbourne time) on 10 June 2016 at:

Mailing Address Hand Delivery ApplyDirect Limited ApplyDirect Limited C/- Link Market Services Limited C/- Link Market Services Limited Locked Bag A14 1A Homebush Bay Drive Sydney South NSW 1235 Rhodes NSW 2138 (do not use this address for mailing purposes)

PERSONAL INFORMATION COLLECTION NOTIFICATION STATEMENT

Personal information about you is held on the public register in accordance with Chapter 2C of the Corporations Act 2001. For details about Link Group’s personal information handling practices including collection, use and disclosure, how you may access and correct your personal information and raise privacy concerns, visit our website at www.linkmarketservices.com.au for a copy of the Link Group condensed privacy statement, or contact us by phone on 1800 502 355 (free call within Australia) or +61 2 8280 7100 (outside Australia), 9:00am–5:00pm (Melbourne time) Monday to Friday (excluding public holidays) to request a copy of our complete privacy policy.

CORRECT FORMS OF REGISTRABLE NAMES

Note that ONLY legal entities are allowed to hold Shares. Applications must be in the name(s) of natural persons or companies. At least one full given name and the surname is required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the examples of correct forms below.

Type of Investor	Correct Form of Registration	Incorrect Form of Registration
Individual Usegiven names in full,not initials	Mrs Katherine Clare Edwards	K C Edwards
Company Use Company’s full title,not abbreviations	Liz Biz Pty Ltd	Liz Biz P/L or Liz Biz Co.
Joint Holdings Use full and complete names	Mr Peter Paul Tranche & Ms Mary Orlando Tranche	Peter Paul & Mary Tranche
Trusts Use the trustee(s) personal name(s)	Mrs Alessandra Herbert Smith	Alessandra Smith Family Trust
Deceased Estates Use the executor(s) personal name(s)	Ms Sophia Garnet Post & Mr Alexander Traverse Post	Estate of late Harold Post or Harold Post Deceased
Minor (a person under the age of 18 years) Use the name of a responsible adult with an appropriate designation	Mrs Sally Hamilton	Master Henry Hamilton
Partnerships Use the partners’ personal names	Mr Frederick Samuel Smith & Mr Samuel Lawrence Smith	Fred Smith & Son
Long Names	Mr Hugh Adrian John Smith-Jones	Mr Hugh A J Smith Jones
Clubs/Unincorporated Bodies/Business Names Use offce bearer(s) personal name(s)	Mr Alistair Edward Lilley	Vintage Wine Club
Superannuation Funds Use the name of the trustee of the fund	XYZ Pty Ltd	XYZ Pty Ltd Superannuation Fund

Put the name(s) of any joint Applicant(s) and/or account description using < > as indicated above in designated spaces at section C on the Application Form.

ApplyDirect Limited ABN 29 123 129 162

Broker Code

Adviser Code

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Public Offer Application Form

This is an Application Form for Shares in ApplyDirect Limited under the Public Offer on the terms set out in the Replacement Prospectus dated 31 May 2016 ( Prospectus ). You may apply for a minimum of 10,000 Shares and multiples of 5,000 thereafter. This Application Form and your cheque or bank draft must be received by 5:00pm (Melbourne time) on 10 June 2016.

If you are in doubt as to how to deal with this Application Form, please contact your accountant, lawyer, stockbroker or other professional adviser. The Prospectus contains information relevant to a decision to invest in Shares and you should read the entire Prospectus carefully before applying for Shares.

Shares applied for Price per Share Application Monies A , , at A$0.20 B A$ , , . (minimum 10,000, thereafter in multiples of 5,000) PLEASE COMPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names) +

PLEASE COMPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names) Applicant #1 Surname/Company Name

C

D

E

Title First Name	Middle Name	Middle Name
Joint Applicant #2
Surname
Title First Name	Middle Name
Designated account e.g. (or Joint Applicant #3)
TFN/ABN/Exemption Code
First Applicant Joint Applicant #2			Joint Applicant #3
TFN/ABN type – if NOT an individual, please mark the appropriate box	Company		Partnership	Trust	Super Fund

PLEASE COMPLETE ADDRESS DETAILS	PLEASE COMPLETE ADDRESS DETAILS
PO Box/RMB/Locked Bag/Care of (c/-)/Property name/Building name (if applicable)
Unit Number/Level Street Number	Street Name
Suburb/City or Town				State	Postcode
Email address (only for purpose of electronic communication of shareholder information)

CHESS HIN (if you want to add this holding to a specific CHESS holder, write the number here)

F X

+

Please note: that if you supply a CHESS HIN but the name and address details on your Application Form do not correspond exactly with the registration details held at CHESS, your Application will be deemed to be made without the CHESS HIN and any Shares issued as a result of the Offer will be held on the issuer sponsored sub-register.

Telephone Number where you can be contacted during Business Hours Contact Name (PRINT)

G ( )

Cheques or bank drafts should be made payable to “ApplyDirect Limited” in Australian currency and crossed “Not Negotiable”.

Cheque or Bank Draft Number BSB Account Number H - Total Amount A$ , , .

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LODGEMENT INSTRUCTIONS

You must return your application so it is received before 5:00pm (Melbourne time) on 10 June 2016 to: Link Market Services Limited, Locked Bag A14, Sydney South NSW 1235. AD1 IPO001

Your Guide to the Application Form

Please complete all relevant white sections of the Application Form in BLOCK LETTERS, using black or blue ink. These instructions are cross-referenced to each section of the form.

The Shares to which this Application Form relates are ApplyDirect Limited Shares. Further details about the Shares are contained in the Replacement Prospectus dated 31 May 2016 ( Prospectus ) issued by ApplyDirect Limited. The Prospectus will expire on 16 June 2017. While the Prospectus is current, ApplyDirect Limited will send paper copies of the Prospectus, any supplementary document and the Application Form, free of charge on request. The Australian Securities and Investments Commission requires that a person who provides access to an electronic application form must provide access, by the same means and at the same time, to the relevant Prospectus. This Application Form is included in the Prospectus.

The Prospectus contains important information about investing in the Shares. You should read the Prospectus before applying for Shares.

• E Please enter your postal address for all correspondence. All communications to you from ApplyDirect Limited and the Share Registry will be mailed to the person(s) and address as shown. For joint Applicants, only one address can be entered.

• A Insert the number of Shares you wish to apply for. The Application must be for a minimum of 10,000 Shares and thereafter in multiples of 5,000. You may be issued all of the Shares applied for or a lesser number.

• B Insert the relevant amount of Application Monies. To calculate your address can be entered. Application Monies, multiply the number of Shares applied for by the F If you are already a CHESS participant or sponsored by a CHESS issue price. Amounts must be in Australian dollars. Please make sure participant, write your Holder Identification Number (HIN) here. If the the amount of your cheque or bank draft equals this amount. name or address recorded on CHESS for this HIN is different to the

• C Write the full name you wish to appear on the register of Shares. This details given on this form, your Shares will be issued to ApplyDirect must be either your own name or the name of a company. Up to three Limited’s issuer sponsored subregister.

• C Write the full name you wish to appear on the register of Shares. This must be either your own name or the name of a company. Up to three joint Applicants may register. You should refer to the table below for the correct registrable title.

• G Please enter your telephone number(s), area code and contact name in case we need to contact you in relation to your Application.

• H Please complete the details of your cheque or bank draft in this section. The total amount of your cheque or bank draft should agree with the amount shown in section B.

• D Enter your Tax File Number (TFN) or exemption category. Business enterprises may alternatively quote their Australian Business Number (ABN). Where applicable, please enter the TFN or ABN for each joint Applicant. Collection of TFN(s) and ABN(s) is authorised by taxation laws. Quotation of TFN(s) and ABN(s) is not compulsory and will not affect your Application. However, if these are not provided, ApplyDirect Limited will be required to deduct tax at the highest marginal rate of tax (including the Medicare Levy) from payments.

• Make your cheque or bank draft payable to “ApplyDirect Limited” in Australian currency and cross it “Not Negotiable”. Your cheque or bank draft must be drawn on an Australian bank. Sufficient cleared funds should be held in your account, as cheques returned unpaid are likely to result in your Application being rejected.

• If you receive a firm allocation of Shares from your Broker make your cheque payable to your Broker in accordance with their instructions.

LODGEMENT INSTRUCTIONS

This Application Form and your cheque or bank draft must be mailed or delivered so that it is received before 5:00pm (Melbourne time) on 10 June 2016 at:

Mailing Address Hand Delivery ApplyDirect Limited ApplyDirect Limited C/- Link Market Services Limited C/- Link Market Services Limited Locked Bag A14 1A Homebush Bay Drive Sydney South NSW 1235 Rhodes NSW 2138 (do not use this address for mailing purposes)

PERSONAL INFORMATION COLLECTION NOTIFICATION STATEMENT

Personal information about you is held on the public register in accordance with Chapter 2C of the Corporations Act 2001. For details about Link Group’s personal information handling practices including collection, use and disclosure, how you may access and correct your personal information and raise privacy concerns, visit our website at www.linkmarketservices.com.au for a copy of the Link Group condensed privacy statement, or contact us by phone on 1800 502 355 (free call within Australia) or +61 2 8280 7100 (outside Australia), 9:00am–5:00pm (Melbourne time) Monday to Friday (excluding public holidays) to request a copy of our complete privacy policy.

CORRECT FORMS OF REGISTRABLE NAMES

Note that ONLY legal entities are allowed to hold Shares. Applications must be in the name(s) of natural persons or companies. At least one full given name and the surname is required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the examples of correct forms below.

Type of Investor	Correct Form of Registration	Incorrect Form of Registration
Individual Usegiven names in full,not initials	Mrs Katherine Clare Edwards	K C Edwards
Company Use Company’s full title,not abbreviations	Liz Biz Pty Ltd	Liz Biz P/L or Liz Biz Co.
Joint Holdings Use full and complete names	Mr Peter Paul Tranche & Ms Mary Orlando Tranche	Peter Paul & Mary Tranche
Trusts Use the trustee(s) personal name(s)	Mrs Alessandra Herbert Smith	Alessandra Smith Family Trust
Deceased Estates Use the executor(s) personal name(s)	Ms Sophia Garnet Post & Mr Alexander Traverse Post	Estate of late Harold Post or Harold Post Deceased
Minor (a person under the age of 18 years) Use the name of a responsible adult with an appropriate designation	Mrs Sally Hamilton	Master Henry Hamilton
Partnerships Use the partners’ personal names	Mr Frederick Samuel Smith & Mr Samuel Lawrence Smith	Fred Smith & Son
Long Names	Mr Hugh Adrian John Smith-Jones	Mr Hugh A J Smith Jones
Clubs/Unincorporated Bodies/Business Names Use offce bearer(s) personal name(s)	Mr Alistair Edward Lilley	Vintage Wine Club
Superannuation Funds Use the name of the trustee of the fund	XYZ Pty Ltd	XYZ Pty Ltd Superannuation Fund

Put the name(s) of any joint Applicant(s) and/or account description using < > as indicated above in designated spaces at section C on the Application Form.

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Directors

Michael Kay (Executive Chairman) Bryan Petereit (Executive Director) Drew Ilsley (Non-executive Director)

Proposed Director

Anthony Charles (Non-executive Director)

Secretary

Phillip Hains

Registered Office

Suite 3, 3 Wellington Street Kew VIC 3101 Telephone: (03) 8199 0411 Website: www.applydirect.com.au

Lawyers to the Company and the Offer

MinterEllison Level 23 525 Collins Street Melbourne, Victoria 3000 Website: www.minterellison.com

Auditor

(of the Company’s financial statements for the year ended 30 June 2015)

Investigating Accountant

PKF Melbourne Audit & Assurance Pty Ltd Level 12, 440 Collins Street, Melbourne, Victoria 3000 Website: www.pkf.com.au

Auditor

(proposed to be appointed in relation to the audit of the Company’s financial statements for the year ending 30 June 2016, subject to the Listing occurring)

Grant Thornton Audit Ltd Level 30 525 Collins Street Melbourne, Victoria 3000 Website: www.grantthornton.com.au

Share Registry

Link Market Services Limited Level 12, 680 George Street Sydney, NSW 2000 General enquiries: +61 2 8280 7100 Email: registrars@linkmarketservices.com.au Website: www.linkmarketservices.com.au

Shareholder Enquiries

Telephone: 1800 647 819 (within Australia) and +61 2 8280 7100 (outside Australia), between 8:30am-5:30pm (Melbourne time)

Daniel Allison & Associates Assurance 35 Market Street, South Melbourne, Victoria 3205 Website: www.daassociates.com.au

www.colliercreative.com.au #ADP0001

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www.applydirect.com.au