AVECHO BIOTECHNOLOGY LIMITED — Capital/Financing Update 2016

Jan 11, 2016

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ASX Limited

Market Announcements Office

Reconciliation of Non-Quoted Securities

12 January 2016, Melbourne, Australia

Phosphagenics Limited (ASX: POH; OTCQX: PPGNY) advises and reconciles the following movements in non-quoted securities:

1 2011 Conditional Rights [POHAI]

• 2 2015 Conditional Rights [POHAI], and

• 3 May 2019 Options [POHAS]

Since the Reconciliation of the Non-Quoted Securities in August 2015 and the Financial Report for the half-year ended 30 June 2015 the following changes/movements have occurred to the Company’s non-quoted securities arising from retirements; resignations; redundancies and expiry of Rights:

1 2011 Conditional Rights Plan (“2011 Rights”

Following staff retirements, resignations, redundancies and expiry of Rights since the Reconciliation of Non-Quoted Securities in August 2015 a total of 10,300,000 - 2011 Rights have automatically lapsed.

2 2015 Conditional Rights Plan (“2015 Rights”

The 2015 Rights were issue pursuant to the terms and conditions as approved by shareholders at the 2015 Annual General Meeting and as set out in the Explanatory Statement to the Notice of Meeting documentation.

Following staff retirements, resignations and redundancies since the Reconciliation of Non-Quoted Securities in August 2015 a total of 9,050,000 - 2015 Rights have automatically lapsed.

3 May 2019 Options

No change.

The Company has on issue the 3,000,000 Options as approved by shareholders at the 2014 Annual General Meeting. These Options are fully vested, have an exercise price of A$0.172 per option and expire in May 2019.

4 Appendix 3B Notice and Summary

Attached is an Appendix 3B Notice covering the above mentioned changes/movements in the Company’s non-quoted securities and showing that the Company’s issued securities now comprise:

Phosphagenics Limited ACN 056 482 403 ABN 32 056 482 403 11 Duerdin Street, Clayton VIC 3168 PO Box 1415, Clayton South MDC VIC 3169 Australia Tel: +61 (0)3 9565 1119 Fax: +61 (0)3 9565 1151 www.phosphagenics.com Email: info@phosphagenics.com

Non-Quoted Securities (i) 2011 Conditional Rights [POHAI] NIL (ii) 2015 Conditional Rights [POHAI] 30,960,000 (iii) May 2019 Options [POHAS] 3,000,000 Quoted Securities (iv) Ordinary Fully Paid Shares [POH] 1,261,965,957

Enquiries

Anna Legg Company Secretary Phosphagenics Limited +61 3 9565 1119

About Phosphagenics

Phosphagenics Limited is focused on developing and commercialising innovative Human Health, Animal Health and Personal Care products using its proprietary drug delivery system called TPM[®] (Targeted Penetration Matrix). TPM[®] is derived from Vitamin E using a unique, proprietary and patented process and has been proven to enhance the solubility and oral, dermal and transdermal absorption of drugs and nutrients.

Amongst its major projects, Phosphagenics’ is developing a TPM[®] enhanced oxycodone patch for the treatment of pain associated with Postherpetic neuralgia (presently completing Phase 2a) and is also developing TPM[®] to enhance the feed efficiency and health of livestock.

Phosphagenics' shares are listed on the Australian Securities Exchange (POH) and its ADR – Level 1 program in the US is with The Bank of New York Mellon (PPGNY).

www.phosphagenics.com

Page 2 of 2

Appendix 3B New issue announcement

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX’s property and may be made public.

Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12, 04/03/13

Name of entity

PHOSPHAGENICS LIMITED

ABN

32 056 482 403

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

• 1 +Class of +securities issued or to (i) 2011 Conditional Rights; be issued (ii) 2015 Conditional Rights

2 Number of[+] securities issued or (i) 2011 Conditional Rights ‐ 10,300,000 to be issued (if known) or Rights ‐ LAPSED maximum number which may be issued (ii) 2015 Conditional Rights – 9,050,000 Rights ‐ LAPSED

• See chapter 19 for defined terms.

Appendix 3B Page 1

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Appendix 3B New issue announcement

3 Principal terms of the (i) 2011 Conditional Rights – in the period +securities (e.g. if options, 01 07 2015 to 31 12 2015 10,300,000 exercise price and expiry date; if Rights have been cancelled upon partly paid +securities, the eligible employees resignations per the amount outstanding and due terms of the Plan together with the dates for payment; if +convertible securities, the expiry of the Rights on 31 December 2015; conversion price and dates for conversion) (ii) 2015 Conditional Rights – of the Rights granted as a result of and arising from resolutions passed at the Company’s 2015 Annual General Meeting held in May 2015 adopting the 2015 Conditional Rights Plan and approving the issue of 15,000,000 Rights to Dr R Murdoch the Company has – in the period 01 07 2015 to 31 12 2015 cancelled a total of 9,050,000 Rights upon eligible employees resignations and redundancies.

• 4 Do the[+] securities rank equally in all respects from the[+] issue date with an existing[+] class of quoted[+] securities?

• If the additional[+] securities do not rank equally, please state:

• the date from which they do

• the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment

No However, should the conditional Milestones for the Conditional Rights as set out in the Explanatory Statement incorporated in the 2015 Annual General Meeting Notice of Meeting documentation be achieved and the eligible holders exercise the rights attaching to the Rights then one new ordinary fully paid share will be issued for each one Right as exercised. Such new shares would rank equally with the Company’s quoted ordinary shares.

• the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

5 Issue price or consideration 6 Purpose of the issue (If issued as consideration for the acquisition of assets, clearly identify those assets) 6a Is the entity an+eligible entity that has obtained security holder approval under rule 7.1A? If Yes, complete sections 6b – 6h in relation to the+securities the subject of this Appendix 3B, and comply with section 6i 6b The date the security holder resolution under rule 7.1A was passed 6c Number of+securities issued without security holder approval under rule 7.1 6d Number of+securities issued with security holder approval under rule 7.1A 6e Number of+securities issued with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting) 6f Number of+securities issued under an exception in rule 7.2 6g If+securities issued under rule 7.1A, was issue price at least 75% of 15 day VWAP as calculated under rule 7.1A.3? Include the +issue date and both values. Include the source of the VWAP calculation.	Nil
	The Conditional Rights have been cancelled following resignations; redundancies and expiry of the 2011 Rights.
	Not applicable
	Not applicable
	Not applicable
	Not applicable
	Not applicable
	Not applicable
	Not applicable

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

6h If[+] securities were issued under Not applicable rule 7.1A for non‐cash consideration, state date on which valuation of consideration was released to ASX Market Announcements 6i Calculate the entity’s remaining issue capacity under rule 7.1 and rule 7.1A – complete Annexure 1 and release to ASX Market Announcements 7 +Issue dates Cancelled w.e.f. 31 12 2015 Note: The issue date may be prescribed by ASX (refer to the definition of issue date in rule 19.12). For example, the issue date for a pro rata entitlement issue must comply with the applicable timetable in Appendix 7A. Cross reference: item 33 of Appendix 3B. Number +Class 8 Number and +class of all +securities quoted on ASX 1,261,965,957 ORD Shares (POH) ( including the +securities in section 2 if applicable) Number +Class 9 Number and +class of all 3,000,000 Non‐Quoted Options expiring 22 +securities not quoted on ASX 05 2019 (A$0.17.2 an option) ( including the +securities in (POHAS) section 2 if applicable) 30,960,000 2015 Conditional Rights (POHAI) 10 Dividend policy (in the case of a Refer Part 1.4 above trust, distribution policy) on the increased capital (interests)

• See chapter 19 for defined terms.

Appendix 3B Page 4

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Appendix 3B New issue announcement

Part 2 - Pro rata issue

11	Is security holder approval
	required?
12	Is the issue renounceable or non‐
	renounceable?
13	Ratio in which the+securities
	will be offered
14	+Class of+securities to which the
	offer relates
15	+Record date to determine
	entitlements
16	Will holdings on different
	registers (or subregisters) be
	aggregated for calculating
	entitlements?
17	Policy for deciding entitlements
	in relation to fractions
18	Names of countries in which the
	entity has security holders who
	will not be sent new offer
	documents
	Note: Security holders must be told how their
	entitlements are to be dealt with.
	Cross reference: rule 7.7.
19	Closing date for receipt of
	acceptances or renunciations
20	Names of any underwriters
21	Amount of any underwriting fee
	or commission
22	Names of any brokers to the
	issue

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

23	Fee or commission payable to
	the broker to the issue
24	Amount of any handling fee
	payable to brokers who lodge
	acceptances or renunciations on
	behalf of security holders
25	If the issue is contingent on
	security holders’ approval, the
	date of the meeting
26	Date entitlement and acceptance
	form and offer documents will be
	sent to persons entitled
27	If the entity has issued options,
	and the terms entitle option
	holders to participate on
	exercise, the date on which
	notices will be sent to option
	holders
28	Date rights trading will begin (if
	applicable)
29	Date rights trading will end (if
	applicable)
30	How do security holders sell
	their entitlements_in full_through
	a broker?
31	How do security holders sell_part_
	of their entitlements through a
	broker and accept for the
	balance?
32	How do security holders dispose
	of their entitlements (except by
	sale through a broker)?
33	+Issue date

• See chapter 19 for defined terms.

Appendix 3B Page 6

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Appendix 3B New issue announcement

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

• 34 Type of[+] securities ( tick one )

• (a) +Securities described in Part 1

• (b) All other[+] securities

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

• 35 If the[+] securities are[+] equity securities, the names of the 20 largest holders of the additional[+] securities, and the number and percentage of additional[+] securities held by those holders

• 36 If the[+] securities are[+] equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories 1 ‐ 1,000

• 1,001 ‐ 5,000 5,001 ‐ 10,000 10,001 ‐ 100,000 100,001 and over

• 37 A copy of any trust deed for the additional[+] securities

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

Entities that have ticked box 34(b)

38 Number of[+] securities for which +quotation is sought 39 +Class of +securities for which quotation is sought 40 Do the[+] securities rank equally in all respects from the[+] issue date with an existing[+] class of quoted +securities? If the additional[+] securities do not rank equally, please state:  the date from which they do  the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment  the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 41 Reason for request for quotation now Example: In the case of restricted securities, end of restriction period (if issued upon conversion of another[+] security, clearly identify that other[+] security) Number +Class 42 Number and +class of all +securities quoted on ASX ( including the +securities in clause 38)

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

Quotation agreement

• 1 +Quotation of our additional +securities is in ASX’s absolute discretion. ASX may quote the[+] securities on any conditions it decides.

• 2 We warrant the following to ASX.

• The issue of the[+] securities to be quoted complies with the law and is not for an illegal purpose.

• There is no reason why those[+] securities should not be granted +quotation.

• An offer of the[+] securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any[+] securities to be quoted and that no‐one has any right to return any[+] securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the[+] securities be quoted.

• If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the[+] securities be quoted.

• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.

• 4 We give ASX the information and documents required by this form. If any information or document is not available now, we will give it to ASX before +quotation of the +securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

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Sign here: …………………........................................... Date: 12 January 2016 (Company secretary)

Print name: Anna Legg

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• See chapter 19 for defined terms.

Appendix 3B Page 9

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Appendix 3B New issue announcement

Appendix 3B – Annexure 1

Calculation of placement capacity under rule 7.1 and rule 7.1A for eligible entities

Introduced 01/08/12 Amended 04/03/13

Part 1 – NOT APPLICABLE

Rule 7.1 – Issues exceeding 15% of capital

Step 1: Calculate “A”, the base figure from which the placement capacity is calculated

Insert number of fully paid[+] ordinary securities on issue 12 months before the + issue date or date of agreement to issue

Add the following:

• Number of fully paid[+] ordinary securities issued in that 12 month period under an exception in rule 7.2

• Number of fully paid[+] ordinary securities issued in that 12 month period with shareholder approval

• Number of partly paid[+] ordinary securities that became fully paid in that 12 month period

Note:

• Include only ordinary securities here – other classes of equity securities cannot be added

• Include here (if applicable) the securities the subject of the Appendix 3B to which this form is annexed

• It may be useful to set out issues of securities on different dates as separate line items

Subtract the number of fully paid[+] ordinary securities cancelled during that 12 month period

“A”

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

Appendix 3B New issue announcement	Appendix 3B New issue announcement
Step 2: Calculate 15% of “A”
“B”	0.15 [Note: this value cannot be changed]
Multiply“A” by 0.15
Step 3: Calculate “C”, the amount of placement capacity under rule 7.1 that has already been used
Insertnumber of+equity securities issued or agreed to be issued in that 12 month period_not counting_those issued: • Under an exception in rule 7.2 • Under rule 7.1A • With security holder approval under rule 7.1 or rule 7.4 Note: • This applies to equity securities, unless specifically excluded – not just ordinary securities • Include here (if applicable) the securities the subject of the Appendix 3B to which this form is annexed • It may be useful to set out issues of securities on different dates as separate line items
“C”
Step 4: Subtract “C” from [“A” x “B”] to calculate remaining placement capacity under rule 7.1
“A” x 0.15 Note: number must be same as shown in Step 2
Subtract“C” Note: number must be same as shown in Step 3
Total[“A” x 0.15] – “C”	[Note: this is the remaining placement capacity under rule 7.1]

• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

Part 2 – NOT APPLICABLE

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Rule 7.1A – Additional placement capacity for eligible entities
Step 1: Calculate “A”, the base figure from which the placement
capacity is calculated
“A”
Note: number must be same as shown in
Step 1 of Part 1
Step 2: Calculate 10% of “A”
“D” 0.10
Note: this value cannot be changed
Multiply “A” by 0.10
Step 3: Calculate “E”, the amount of placement capacity under rule
7.1A that has already been used
Insert number of [+] equity securities issued
or agreed to be issued in that 12 month
period under rule 7.1A
Notes:
• This applies to equity securities – not
just ordinary securities
• Include here – if applicable – the
securities the subject of the Appendix
3B to which this form is annexed
• Do not include equity securities issued
under rule 7.1 (they must be dealt with
in Part 1), or for which specific security
holder approval has been obtained
• It may be useful to set out issues of
securities on different dates as separate
line items
“E”
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• See chapter 19 for defined terms.

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Appendix 3B New issue announcement

Appendix 3B New issue announcement	Appendix 3B New issue announcement
Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A
“A” x 0.10 Note: number must be same as shown in Step 2
Subtract“E” Note: number must be same as shown in Step 3
Total[“A” x 0.10] – “E”	Note: this is the remaining placement capacity under rule 7.1A

p\asx\3b reconciliation of securities 05 08 15

• See chapter 19 for defined terms.

Appendix 3B Page 13

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