CODEIFAI LIMITED — Capital/Financing Update 2014

Dec 23, 2014

YPB GROUP LTD ABN 68 108 649 421

Prospectus

In relation to:

• a non-renounceable pro-rata entitlement offer to Eligible Shareholders of New Options on the basis of 1 New Option for every 4 Shares held at the Record Date at an Offer Price of A\$0.01 per New Option
• an offer of Shortfall Options to Eligible Shareholders and others on the terms set out in Section 2.13

The Rights Issue is scheduled to close at 5.00pm (Sydney time) on Friday 16 January 2015

This Prospectus is a transaction-specific prospectus issued in accordance with section 713 of the Corporations Act 2001 (Cth). This document is important. Carefully read this Prospectus in full and consult your licensed financial adviser, accountant, stockbroker, lawyer or other professional adviser if you are in any doubt as to what to do.

The Securities offered by this Prospectus should be considered highly speculative.

Important Information

This Prospectus is an important document and requires your prompt attention. You should read it carefully. It is important that you consider the risk factors (see Sections 1.3 and 4) before deciding on your course of action as these could affect the financial performance of YPB Group Ltd (ABN 68 108 649 421) (YPB or the Company).

Lodgement

This Prospectus is dated 24 December 2014 and a copy of this Prospectus was lodged with ASIC on that date.

Neither ASX nor ASIC takes any responsibility for the contents of this Prospectus. The fact that the Company is admitted to the official list of the ASX and the fact that the New Options may be granted official quotation by the ASX are not to be taken in any way as an indication of the merits of the Company or the New Options offered under this Prospectus.

Expiry date

No New Options will be issued on the basis of this Prospectus later than 13 months after the date of issue of this Prospectus. New Options offered pursuant to this Prospectus will be issued on the Terms of the Offer.

Foreign jurisdictions – restrictions on distribution

The Offer is being made in Australia, New Zealand, People's Republic of China, Hong Kong and Singapore only. This Prospectus does not constitute an offer in any place which, or to any person whom, it would not be lawful to make such an offer. The distribution of this Prospectus in jurisdictions outside Australia, New Zealand, People's Republic of China, Hong Kong and Singapore may be restricted by law and persons who come into possession of this Prospectus in such jurisdictions should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

No action has been taken to register or qualify the New Options or the Offer, or otherwise to permit a public offering of the New Options, in any jurisdiction outside Australia, New Zealand, People's Republic of China, Hong Kong and Singapore. See Section 2.16 for further information.

The Shares and the New Options have not been, and will not be, registered under the US Securities Act 1933 (US Securities Act) and may not be offered or sold in the United States of America, or to, or for the account or benefit of, "US Persons" (as defined in Rule 902 under the US Securities Act) except under an available exemption from registration under the US Securities Act. The Shares and the New Options may only be resold or transferred in the United States of America, or to, or for the account or benefit of, US Persons if registered under the US Securities Act or pursuant to an exemption from registration under the US Securities Act and in compliance with state securities laws. The Company is under no obligation and has no intention to register any of the Shares or the New Options in the United States of America.

Representations

No person is authorised to give any information or make any representations in connection with the Offer other than as contained in this Prospectus. Any information or representation in connection with the Offer not contained in this Prospectus is not, and may not be relied on as having been, authorised by the Company (or any of its officers).

Forward looking statements

This Prospectus contains forward-looking statements which are identified by words such as 'may', 'could', 'believes', 'estimates', 'targets', 'expects', or 'intends' 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 regarding future events and actions that, as at the date of this Prospectus, are expected to take place. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Company, Directors and management.

The Company cannot and does not give any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained in this Prospectus will actually occur and investors are cautioned not to place undue reliance on these forward-looking statements.

The Company has no intention 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 required by law.

These forward looking statements are subject to various risk factors that could cause our actual results to differ materially from the results expressed or anticipated in these statements. These risk factors are set out in Section 4 of this Prospectus.

Disclaimer

This Prospectus contains general information only, and does not take into account the individual investment objectives, financial situation or particular needs of any person. Nothing in this Prospectus should be construed as a recommendation by the Company or any other person concerning an investment in the Company. You should read the entire Prospectus and, in particular, in considering the prospects for the Company, you should consider the risk factors that could affect the financial performance of the Company. You should carefully consider these factors in light of your personal circumstances (including financial and taxation issues), and if you are in any doubt as to what to do in relation to the Offer, you should seek professional advice from a licensed financial adviser, accountant, stockbroker, lawyer or other professional adviser before deciding whether to invest in the Company.

Electronic Prospectus

This Prospectus may be viewed by Eligible Shareholders online at http://www.ypbsystems.com/. The website and its contents do not form part of this Prospectus and are not to be interpreted as part of, nor incorporated into, this Prospectus. Eligible Shareholders who receive the electronic version of this Prospectus should ensure that they download and read the entire Prospectus.

The Offer to which the electronic Prospectus relates is only available to Eligible Shareholders receiving the electronic Prospectus in Australia, New Zealand, People's Republic of China, Hong Kong and Singapore (subject to Section 2.16). Eligible Shareholders having received a copy of this Prospectus in its electronic form may obtain a paper copy of the Prospectus (including any supplementary document and the Application Form) (free of charge) during the period of the Offer by contacting the Company.

The Company reserves the right not to accept an Application Form from a person if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with the electronic Prospectus and any relevant supplementary or replacement prospectus, or any of those documents were incomplete or altered.

Defined terms and Glossary

Certain capitalised words and expressions used in this Prospectus are defined in the Glossary at page 33 of this Prospectus.

Financial amounts

Financial amounts in this Prospectus are expressed in Australian dollars unless otherwise stated. Any discrepancies between totals and sums of components in tables contained in this Prospectus are due to rounding.

Photographs and diagrams

Photographs used in this Prospectus which do not have descriptions are for illustration only and should not be interpreted to mean that any person endorses the 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.

Privacy

The Company collects information about each Applicant provided on an Application for the purposes of processing the Application and, if the Application is successful, to administer the Applicant's security holding in the Company.

By submitting an Application, each Applicant agrees that the Company may use the information provided by that Applicant on that Application for the purposes set out in this privacy disclosure statement and may disclose it for those purposes to the Share Registry, the Company's related bodies corporate, agents, contractors and third party service providers, including mailing houses and professional advisers, and to the ASX, ASIC and other regulatory authorities.

If an Applicant becomes a security holder of the Company, the Corporations Act requires the Company to include information about the security holder (name, address and details of the securities held) in its public register. This information must remain in the register even if that person ceases to be a security holder of the Company. Information contained in the Company's register is also used to facilitate distribution payments and corporate communications (including the Company's financial results, annual reports and other information that the Company may wish to communicate to its security holders) and compliance by the Company with legal and regulatory requirements.

If you do not provide the information required on the Application, the Company may not be able to accept or process your Application.

An Applicant has a right to gain access to the information that the Company and the Share Registry holds about that person subject to certain exemptions under law. Access requests must be made in writing to the Company.

Table of Contents

Important Information	2
Important Dates and Key Offer Statistics	5
Executive Chairman's Letter	6
1. Investment Overview	7
2. Details of the Offer	10
3. Purpose and effect of the Offer on the Company	17
4. Risk Factors	21
5. Additional Information	26
6. Glossary	33
Corporate Directory	35

NOTE: Capitalised terms used in this Prospectus are defined in the Glossary (Section 6).

Important Dates and Key Offer Statistics

IMPORTANT DATES:

Lodgement of Prospectus with ASIC and announcement of Offer	Wednesday 24 December 2014
Existing Shares quoted 'ex' rights	Tuesday 30 December 2014
Record Date	7.00pm (Sydney time) on Friday 2 January 2015
Opening date of the Offer	Wednesday 7 January 2015
Closing date of the Rights Issue	5.00pm (Sydney time) on Friday 16 January 2015
Allotment of New Options pursuant to the Rights Issue	Friday 23 January 2015
New Options allotted pursuant to the Rights Issue expected to commence trading on ASX	Tuesday 27 January 2015
Despatch of holding statements	Friday 30 January 2015
Last day on which Shortfall Options (if any) may be issued	Thursday 23 April 2015

Dates may change

The above dates are subject to change and are indicative only. The Company reserves the right to vary the dates and times of the Offer, including to close the Offer early, extend the Offer or accept late Applications, without notifying any recipient of this Prospectus or any Applicants, subject to the Corporations Act, the ASX Listing Rules and other applicable laws.

KEY OFFER STATISTICS:

Offer Price for each New Option	\$0.01
Eligible Shareholders' Entitlement	1 New Option for every 4 Shares held on the Record Date

Number of Existing Options on issue as at 23 December 20141	750,000
Maximum number of New Options to be issued under the Offer1,2	27,230,420
Total number of options on issue after completion of the Offer1,2	27,980,420

Approximate maximum Offer proceeds	\$272,304 before expenses
Exercise Price for each New Option	\$0.20
Expiry date of New Options	Tuesday 31 October 2017

NOTES:

1. Assumes none of the Existing Options will be exercised between the date of this Prospectus and completion of the Offer. 2. Assuming the Offer is fully subscribed, no Shares are issued pursuant to the Company's Prospectus dated 11 December 2014

and no other Shares are issued between the date of this Prospectus and completion of the Offer.

HOW TO APPLY:

You may apply for New Options only by following the instructions set out in Section 2 and in the Application Form.

QUESTIONS:

Please contact Robert Whitton, Director & Company Secretary from 9.00am to 5.00pm (Sydney time) Monday to Friday on +61 2 8263 4000, if you have any questions about this Prospectus. If you are in any doubt as to what to do in relation to the Offer, you should seek professional advice from a licensed financial adviser, accountant, stockbroker, lawyer or other professional adviser before deciding whether to invest in the Company.

1 Investment Overview

The information in this Section 1 is a summary only. It should be read in conjunction with the information in the remainder of this Prospectus.

1.1 Key features of the Offer

Non renounceable Rights Issue	A non-renounceable pro-rata entitlement offer to Eligible Shareholders of 1 New Option for every 4 Shares held at the Record Date, at an offer price of \$0.01 per New Option.
Shortfall Offer	An offer of Shortfall Options to Eligible Shareholders and others on the terms set out in Section 2.13.
Purpose	to fund general working capital.	The purpose of the Offer is to strengthen the Company's balance sheet, and
Use of funds	The Company's present intention is to use the funds raised under the Offer (from payment of the Offer Price) as follows: Expenses of the Offer \$50,000 Working capital \$222,304 Total \$272,304 At this stage, the Company intends to apply funds raised from payment of the Exercise Price for general working capital purposes. There is no minimum amount sought to be raised by the Offer and the New Options may be issued in respect of Applications irrespective of the total level of subscriptions made. There is no guarantee that the Offer will raise
Closing date of Rights Issue*	its stated objectives. 5.00pm (Sydney time) on Friday 16 January 2015.

Note: The above closing date is subject to change and is indicative only.

1.2 Investment highlights

The Directors of the Company are of the view that an investment in the Company provides the following non-exhaustive list of key highlights:

• (a) YPB offers companies and brands especially in China, South East Asia and USA the ability to detect the incidence of counterfeit and protect their products by using YPB's tracer materials imbedded into their products and or packaging;
• (b) Participation in a company which is now well placed to address the needs of brands and companies as they fight counterfeit of their products especially in China and South East Asia;

• (c) Spend on anti-counterfeit measures is increasing according to published research and YPB is a company with a range of products and services which could form part of a company's spend to implement anti-counterfeit measures;

• (d) YPB is well established and certified in the People's Republic of China and operates directly in that country and also in USA following the acquisition in 2014 of "Brand Reporter";

• (e) YPB has an experienced and capable management team.

1.3 Key risks

The business, assets and operations of the Company will be subject to certain risk factors that have the potential to influence the operating and financial performance of the Company in the future. These risks can impact on the value of an investment in the securities of the Company.

The Board aims to manage these risks by carefully planning its activities and implementing risk control measures. Some of the risks are, however, highly unpredictable and the extent to which they can effectively be managed or mitigated may be limited.

Set out below is a summary, which is not exhaustive, of specific risks that the Company is and will be exposed to. Further risks associated with an investment in the Company are outlined in Section 4.

Specific Risks

(a) Intellectual Property

In any business based on intellectual property or trade secret methodology, there is a risk that other individuals or companies may claim to have an interest in that intellectual property. In addition, third parties that hold patents for technology in the field of product authentication may make claims regarding the validity of the patents or the Company's products. In addition, developing or supporting new technology and intellectual property may require significant capital expenditure by the Company.

(b) Reliance on Key Personnel

The Company relies on the experience and knowledge of its management team, in particular John Houston. The Company is also dependent on its ability to recruit and retain suitably qualified personnel. In the event that such key personnel left the Company and it was unable to recruit suitable replacements, such loss could have a materially adverse effect on the Company.

(c) Increased Competition

The anti-counterfeit and brand protection market is highly competitive. This competition has intensified as a result of improvements in technology. The actions of an existing competitor or the introduction of a new competitor in the anti-counterfeit market may make it difficult for the Company to grow its revenue, which in turn, may have an adverse effect on its profitability.

If the Company's technology proves to be less successful or more costly than its competitors' products, the business of the Company could be adversely affected.

(d) Growth prospects and Company expansion plans

The Company's growth prospects are dependent upon a number of factors, including, customer take up and execution of rollout. If the Company fails to execute any expansion plan and cannot attract buyers for its products, its financial performance is likely to be negatively affected.

(e) Liability risk

Whilst the Company will take precautions both legal and physical, the nature of the Company business of providing products and services to the anti-counterfeit field, may give rise in certain circumstances to potential legal action by either customers or end users in the areas of product or public liability. If legal action was taken against the

Company, it could have a material adverse effect on the financial performance of the business and to its reputation and brand name.

(f) Reliance on key supplier relationships

The Company relies on various key supplier relationships for certain parts of its business. The loss or impairment of any of these relationships could have a material adverse effect on the Company's results of operations, financial condition and prospects, at least until alternative arrangements can be implemented. In some instances, however, alternative arrangements may not be available or may be less financially advantageous than the current arrangements.

In particular, the Company relies on third parties to provide intellectual property development and manufacturing services. Although there are long term contracts in place with stringent non-compete provisions, the Company is vulnerable to any change in output from these suppliers. Should any of these suppliers significantly reduce their supply to the Company, this will have an adverse effect of the growth prospects and financial performance of the Company.

(g) Exchange rates

The Company is exposed to movements in foreign exchange rates. As the Company will report financial earnings in Australian dollars, and because the Company does not plan to hedge against movements in the exchange rate, significant fluctuations in exchange rates may impact on the Company's margins and earnings adversely.

(h) Concentration of shareholding

John Houston (or entities controlled by him) holds approximately 60% of all Shares (prior to this offer) of the Company to the Official List of the ASX. As a result, John Houston has a significant influence over all matters that require approval by Shareholders, including the election and removal of Directors and approval of significant transactions (unless prevented from voting under the Corporations Act or Listing Rules). The ability of other Shareholders to influence corporate decisions of the Company will therefore be reduced.

Refer to Section 4 for further details.

The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company and you should refer to the additional risk factors in Section 4 of this Prospectus before deciding whether to apply for Securities pursuant to this Prospectus.

You should read this Prospectus carefully and in its entirety, including Section 4, before deciding whether to apply for New Options. If you are in doubt as to the course you should follow, you should consult your licensed financial adviser, accountant, stockbroker, lawyer or other professional adviser. The Securities offered by this Prospectus should be considered highly speculative.

2 Details of the Offer

2.1 The Offer

The Company is undertaking a non-renounceable pro-rata entitlement offer to Eligible Shareholders of one New Option for every 4 Shares held at the Record Date, at an offer price of \$0.01 per New Option.

Under the Rights Issue, up to 27,230,420 New Options will be offered. Shortfall Options will also be offered to Eligible Shareholders and others on the terms set out in Section 2.13. If fully subscribed, the Offer will raise up to approximately \$272,300 before Offer costs.

An Eligible Shareholder is a person who, at the Record Date, is recorded on the Register as holding Shares, and who has a registered address in Australia, New Zealand, People's Republic of China, Hong Kong or Singapore.

Fractional entitlements to New Options under the Rights Issue will be rounded down to the nearest whole number.

The Entitlement of each Eligible Shareholder under the Rights Issue is shown on the personalised Application Form accompanying this Prospectus. If you are an Eligible Shareholder and did not receive your personalised Application Form, please call the Share Registry on 1300 737 760 (for callers within Australia) or +61 2 9290 9600 (for callers outside Australia).

2.2 Offer Price and Exercise Price

The Offer Price is \$0.01 per New Option. The Exercise Price for each New Option is \$0.20 per New Share.

2.3 Eligible Shareholders

The Rights Issue is offered only to those Shareholders with registered addresses in Australia, New Zealand, People's Republic of China, Hong Kong or Singapore at the Record Date, and only those Eligible Shareholders are offered an Entitlement.

Shareholders who were not recorded on the Register at the Record Date are not eligible to participate in the Rights Issue.

All Shareholders who were recorded on the Register at the Record Date with an address outside of Australia, New Zealand, People's Republic of China, Hong Kong and Singapore are Non-Participating Foreign Holders. The Company has decided that it is unreasonable to make an offer under the Rights Issue to Non-Participating Foreign Holders, having regard to the number of Non-Participating Foreign Holders, the number and value of the New Options they would be offered and the cost of complying with the legal and regulatory requirements in the places where they are resident.

2.4 ASX quotation

The Company will apply for the quotation of all New Options on ASX within 7 days after the date of this Prospectus. If official quotation of the New Options is not granted by the ASX within 3 months after the date of this Prospectus (or any longer period permitted by law), the Offer will be cancelled and all Application Payments will be returned (without interest) to Applicants as soon as practicable.

2.5 Non-renounceable

The Rights Issue is non-renounceable, which means that Eligible Shareholders cannot sell or otherwise transfer all or any part of their Entitlement.

2.6 How to accept the Offer

If you are an Eligible Shareholder or applying for Shortfall Options, an Application Form accompanies this Prospectus.

The number of New Options to which you are entitled as an Eligible Shareholder is shown on your accompanying Application Form. Acceptance of your Entitlement may be for any number of New Options and you may also apply for Shortfall Options in addition to your Entitlement.

(a) To apply for New Options:

Pay by BPAY®1

If you wish to pay by BPAY, you do not need to return your Application Form. Refer to the section titled "Make your payment" on the Application Form for further details.

Payment must be received via BPAY before the Closing Date, which is currently 5.00pm (Sydney time) on Friday 16 January 2015. By paying by BPAY you will be deemed to have completed an Application Form for the number of New Options that your Application payment equates to.

Please make sure to use the specific Biller Code and unique Customer Reference Number on your Application Form. If you received more than one personalised Application Form, you will need to complete individual BPAY transactions using the Customer Reference Number specific to each individual personalised Application Form that you receive. If you are an Eligible Shareholder and you inadvertently use the same Customer Reference Number for more than one of your Entitlements, you will be deemed to have applied for only your Entitlement to which that Customer Reference Number applies and any excess amount will be treated as an Application for Shortfall Options.

Pay by cheque

If you wish to pay by cheque, complete the accompanying Application Form in accordance with the instructions set out in the form. Cheques must be in Australian currency only, made payable to "YPB Rights Issue Account" and crossed "Not Negotiable". Applicants must not forward cash. Receipts for payment will not be issued.

Application Form, together with Application Payment, should be sent by post using the enclosed reply paid envelope to the Company's Share Registry, to arrive no later than the Closing Date, which is currently 5.00pm (Sydney time) on Friday 16 January 2015.

General

If you wish to make payment using electronic funds transfer or an alternate method please call the Share Registry on 1300 737 760 (for callers within Australia) or +61 2 9290 9600 (for callers outside Australia) for assistance.

By either returning the Application Form with payment or making payment received by BPAY you provide authorisation to be registered as a holder of New Options subscribed for by you and agree to be bound by the Company's constitution.

Application Forms and Application Payments received after the Closing Date may not be accepted, subject to the Directors' absolute discretion.

¹ Registered to BPAY Pty Limited ABN 69 079 137 518 – Eligible Shareholders based outside of Australia cannot apply using BPAY unless they have an Australian bank account.

(b) If you do nothing

If you do not wish to accept all or part of your Entitlement, you do not have to do anything in respect of the Entitlement you are not accepting, and any Entitlement not taken up will automatically lapse. You will receive no payment for your lapsed Entitlement.

2.7 Application is binding

Receipt of Application Payment by BPAY, or of Application Payment by cheque / electronic funds transfer and a completed and lodged Application Form, constitutes a binding acceptance of the Company's Offer of New Options on the Terms of the Offer and an acknowledgement by the Applicant that it has received and read this Prospectus, it has acted in accordance with the Terms of the Offer, and that it agrees to all of the Terms of the Offer.

Each Application, once lodged, cannot be withdrawn.

The Application does not need to be signed to be binding. If an Application Form is not completed correctly, the Company, in its absolute discretion, can reject it or treat it as valid. The Company's decision as to whether to accept or reject an Application or how to interpret an incorrectly completed Application Form is final.

2.8 Application Payment

The Company is entitled to retain any interest paid on any Application Payment, whether or not allotment and issue of the New Options takes place. If quotation of the New Options is not granted by the ASX within the time required by law, no New Options will be allotted and Application Payments will be refunded to Applicants without interest within the time prescribed under the Corporations Act.

2.9 Rights Issue Closing Date

Your completed Application Form and payment must reach the Share Registry no later than the Closing Date, which is currently 5.00pm (Sydney time) on Friday 16 January 2015.

The Company reserves the right, subject to the Corporations Act, the ASX Listing Rules and any requirements of the ASX, to accept late Applications or to extend the Closing Date without prior notice.

If the Closing Date is varied, subsequent dates may also be varied accordingly. Unless the Company decides to accept late Applications or extend the Closing Date, Applications received after 5.00pm (Sydney time) on Friday 16 January 2015 may be rejected and those Application Payments refunded without interest.

2.10 Brokerage, commission and stamp duty

No brokerage, commission or stamp duty is payable by Applicants under the Offer.

2.11 Allocation

The following allocation policy will apply for any Application in excess of an Eligible Shareholder's Entitlement:

• (a) all Eligible Shareholders will receive their Entitlement, to the extent applied for; and
• (b) any amount by which Applications from Eligible Shareholders exceed their Entitlements may be scaled back, at the absolute discretion of the Directors.

Any Shortfall Options will be allocated at the Directors' discretion. The Company does not guarantee that Eligible Shareholders will receive any New Options applied for in excess of their Entitlement.

2.12 No underwriting

The Rights Issue is not underwritten.

2.13 Shortfall Options

Entitlements not taken up will become available as Shortfall Options. If there are any Shortfall Options, the Directors reserve the right to issue at their discretion any such Shortfall Options within 3 months of the Closing Date at an issue price not less than the Offer Price (Shortfall Offer).

The Shortfall Offer is, to the extent it is made in Australia, made under this Prospectus. To the extent the Shortfall Offer is made outside Australia, the Shortfall Offer is made without disclosure, a prospectus, lodgement, filing or registration or other requirements of any applicable securities law, and only in circumstances where it is lawful to do so (such as to institutional or sophisticated investors).

Eligible Shareholders may, in addition to their Entitlement, apply for Shortfall Options by completing the Application Form in accordance with the instructions set out in that form.

Other investors who are not Eligible Shareholders may apply for Shortfall Options by requesting an Application Form from the Share Registry. If such investors are located outside Australia, then in making an Application, such investors represent to the Company that they are applying for Shortfall Options in circumstances which do not require the Shortfall Offer or this Prospectus to be registered in any jurisdiction other than Australia.

It is possible that there may be few or no Shortfall Options available for issue, depending on the level of take up of Entitlements by Eligible Shareholders. The Company will allocate Shortfall Options at the Directors' absolute discretion.

The Directors reserve the right at their absolute discretion to reject any Applications for Shortfall Options and it is an express term of the Shortfall Offer that Applicants for Shortfall Options will be bound to accept a lesser number of Shortfall Options allocated to them than they applied for. If a lesser number is allocated, any excess Application Payment will be refunded without interest as soon as practicable after the Closing Date.

2.14 Allotment of New Options

Allotment and issue of New Options will only be made once the Application Payments have been received and the ASX has granted permission for quotation of the New Options.

If such permission is granted, it is expected the New Options will be allotted pursuant to the Rights Issue on Friday 23 January 2015 and holding statements for such New Options will be despatched on Friday 30 January 2015. Shortfall Options (if any) will be allotted by Thursday 23 April 2015.

It is the responsibility of Applicants to determine their allocation of New Options prior to trading in the New Options. Applicants who sell New Options before they receive their holding statement do so at their own risk.

2.15 CHESS

Under CHESS, Applicants will not receive a certificate but will receive a statement of their holding of New Options. If an Applicant is broker sponsored, a CHESS statement will be issued to that Applicant which sets out the number of New Options issued under this Prospectus, provides details of the Applicant's holder identification number and the participant identification number of the sponsor. If an Applicant is registered in the Company's issuer sponsored sub register, its statement will be despatched by the Share Registry and will contain the number of New Options issued to it under this Prospectus and its security holder reference number.

2.16 Foreign selling restrictions

(a) General

The Offer is being made in Australia, New Zealand, People's Republic of China, Hong Kong and Singapore only. This Prospectus does not constitute an offer in any place which, or to any person whom, it would not be lawful to make such an offer.

The Rights Issue is not being extended to, and no New Options will be issued pursuant to the Rights Issue to, Non-Participating Foreign Holders. This Prospectus is sent to those Non-Participating Foreign Holders for information purposes only.

The distribution of this Prospectus in jurisdictions outside Australia, New Zealand, People's Republic of China, Hong Kong and Singapore may be restricted by law and persons who come into possession of this Prospectus in such jurisdictions should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

No action has been taken to register or qualify the New Options or the Offer, or otherwise to permit a public offering of the New Options, in any jurisdiction outside Australia, New Zealand, People's Republic of China, Hong Kong and Singapore.

(b) Beneficial holders

The foreign selling restrictions under the Offer apply to the underlying beneficial holder. Nominees, trustees and custodians must not apply on behalf of any beneficial holder that would not itself be an Eligible Shareholder. Applicants who are nominees, trustees or custodians are advised to seek independent advice as to how they should proceed. Applicants applying on behalf of persons whose registered address is not in Australia, New Zealand, People's Republic of China, Hong Kong and Singapore are responsible for ensuring that applying for New Options does not breach securities laws in the relevant overseas jurisdictions.

Nominees and custodians that hold Shares should note that the Rights Issue is available only to Eligible Shareholders. The Company is not required to determine whether or not any Registered Shareholder is acting as a nominee or the identity or residence of any beneficial owners of Securities. If any nominee or custodian is acting on behalf of a foreign person, that Shareholder, in dealing with its beneficiary, will need to assess whether indirect participation by the beneficiary in the Offer is compatible with applicable foreign laws.

(c) New Zealand securities law requirements

The Offer of New Options 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 2001 and Regulations. In New Zealand, this is Part 5 of the Securities Act 1978 and the Securities (Mutual Recognition of Securities Offerings - Australia) Regulations 2008.

This Offer and the content of this Prospectus are principally governed by Australian rather than New Zealand law. In the main, the Corporations Act 2001 and Regulations (Australia) set out how the Offer must be made.

There are differences in how securities are regulated under Australian law. For example, the disclosure of fees for collective investment schemes is different under the Australian regime.

The rights, remedies, and compensation arrangements available to New Zealand investors in Australian securities may differ from the rights, remedies, and compensation arrangements for New Zealand securities.

Both the Australian and New Zealand securities regulators have enforcement responsibilities in relation to this Offer. If you need to make a complaint about this Offer, please contact the Financial Markets Authority, Wellington, New Zealand. The Australian and New Zealand regulators will work together to settle your complaint.

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

The Offer may involve a currency exchange risk. The currency for the securities is not New Zealand dollars. The value of the securities will go up or down according to changes in the exchange rate between that currency and New Zealand dollars. These changes may be significant.

If you expect the securities to pay any amounts 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 in New Zealand dollars.

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

(d) People's Republic of China securities law requirements

Under the Securities Law of the People's Republic of China (Securities Law), the New Options may not be offered or sold to the public or more than 200 specified recipients, and no advertisement, public solicitation or other methods that may be deemed by the China Securities Regulatory Commission (CSRC) to constitute public offerings may be issued or undertaken in the People's Republic of China (excluding, for the purposes of this section, Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan; PRC).

The New Options may not be offered or sold to the public in the PRC other than to Eligible Shareholders of the Company with registered addresses in the PRC who acted and are acting in compliance with all applicable PRC laws and regulations relating to securities subscription, the total number of which is not more than 200.

The New Options may not be offered or sold through advertising, publicly soliciting or other methods that may be deemed by CSRC to constitute public offerings in the PRC. This Prospectus may not be sent, distributed or circulated in a way that may possibly make it constitute an offer to the public in the PRC.

The information in this Prospectus may not be delivered in the way that constitutes an offer of the New Options, whether by way of a sale or subscription, in the PRC. This Prospectus has not been, and will not be, registered as a prospectus under the Securities Law, nor has it been authorised by CSRC pursuant to the Securities Law, and is not required to, and may not, contain all the information that an investment statement or prospectus under PRC laws and regulations is required to contain. You are advised to exercise caution in relation to this Prospectus. If you are in any doubt about any of the contents of this Prospectus, you should obtain independent professional advice.

(e) Hong Kong Special Administrative Region securities law requirements

The New Options may not be offered or sold by means of any document other than (i) in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap.32, Laws of Hong Kong) (Companies Ordinance), or (ii) to "professional investors" as defined in the Securities and Futures Ordinance (Cap.571, Laws of Hong Kong) (SFO) and any rules made thereunder, or (iii) in other circumstances which do not result in the document being a "prospectus" as defined in the Companies Ordinance, and no advertisement, invitation or document relating to the New Options may be issued or may be in the possession of any person for the purposes of issue (in each case whether in Hong Kong or elsewhere), which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the laws of Hong Kong) other than with respect to the New Options which 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 thereunder.

This document has not been, and will not be, registered as a prospectus under the Companies Ordinance, nor has it been authorized by the Securities and Futures Commission in Hong Kong pursuant to the 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.

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

(f) Singapore securities law requirements

This document and any other materials relating to the New Options and the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other document or materials in connection with the offer or sale, or invitation for subscription or purchase, of New Options and/or New Shares, may not be issued, circulated or distributed, nor may the New Options and/or the New Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore except pursuant to and in accordance with exemptions in Subdivision (4) Division 1, Part XIII of the Securities and Futures Act, Chapter 289 of Singapore (SFA), or as otherwise pursuant to, and in accordance with the conditions of any other applicable provisions of the SFA.

This document has been given to you on the basis that you are (i) an existing holder of the Company's shares, (ii) an "institutional investor" (as defined in the SFA) or (iii) a "relevant person" (as defined under section 275(2) of the SFA). In the event that you are not an investor falling within any of the categories set out above, please return this document immediately. You may not forward or circulate this document to any other person in Singapore.

Any offer is not made to you with a view to the New Options and/or the New Shares being subsequently offered for sale to any other party. There are on-sale restrictions in Singapore that may be applicable to investors who acquire New Options and/or New Shares. As such, investors are advised to acquaint themselves with the SFA provisions relating to resale restrictions in Singapore and comply accordingly.

2.17 Risks

Investors should carefully read the risk factors in Sections 1.3 and 4 of the Prospectus. An investment in New Options involves various risks, a number of which are specific to the Group and the industry in which it operates.

An investment in New Options should be regarded as speculative.

2.18 Taxation

It is the responsibility of all Applicants to satisfy themselves of the particular tax consequences that apply to them, by consulting their own professional financial and taxation advisers. Neither the Group nor any of its officers, employees or agents, nor its taxation or other advisers accepts any liability or responsibility in respect of taxation consequences connected with the Offer.

2.19 Professional advice

If you are in any doubt as to what to do in relation to the Offer, you should seek professional advice from a licensed financial adviser, accountant, stockbroker, lawyer or other professional adviser before deciding whether to invest in the Company.

3 Purpose and effect of the Offer on the Company

3.1 Purpose of the Offer

The purpose of the Offer is to strengthen the Company's balance sheet, and to fund general working capital.

3.2 Use of funds

If the Offer is fully subscribed, the Company's present intention is to use the funds raised under the Offer (from payment of the Offer Price) as follows:

Expenses of the Offer	\$50,000
Working capital	\$222,304
Total	\$272,304

At this stage, the Company intends to apply funds raised from payment of the Exercise Price for working capital purposes.

This is a statement of present intention only. The Company and the Directors reserve the right to change the way and the proportion in which funds are applied, particularly if the Offer is not fully subscribed or if not all of the New Options are exercised.

There is no minimum subscription under the Offer and no guarantee that the Offer will raise an adequate or sufficient level of funds to enable the Company to achieve its stated objectives.

3.3 Effect on capital structure of the Company

The following table sets out the Company's current capital structure and its fully diluted capital structure immediately following the successful completion of the Offer, assuming that:

• (a) the Offer is fully subscribed;
• (b) no Existing Options are exercised prior to the Record Date;
• (c) no Shares are issued pursuant to the Company's Prospectus dated 11 December 2014; and
• (d) no other Shares are issued between the date of this Prospectus and completion of the Offer.

Shares on issue as at the date of this Prospectus	108,921,678
Existing Options on issue as at the date of this Prospectus (all unlisted)	750,000
PLUS: New Options	27,230,420
Fully diluted Share capital assuming all Existing Options and all New Options are exercised	136,902,098

The Company's actual position on completion of the Offer may differ from the position illustrated in the pro-forma capital structure table above if the Offer is not fully subscribed.

If the Offer is not fully subscribed, fewer New Options will be issued (and, consequently, fewer New Shares which could be issued on exercise of those New Options) than shown in the table above. After the Closing Date, the Company will announce to the ASX the actual number of New Options to be issued under the Offer.

3.4 Effect on Shareholdings

If an Eligible Shareholder takes up its full Entitlement, then it will not be diluted. If an Eligible Shareholder does not take up its full Entitlement, then it will be diluted. Shareholders who are not Eligible Shareholders will have their Shareholdings diluted by the Offer.

The effect of the Offer on the control of the Company will depend upon a number of factors, including:

• (a) the level of Shareholder and Existing Optionholder participation in the Offer;
• (b) which Shareholders and Existing Optionholders participate; and
• (c) the extent to which New Options are traded, exercised and who may decide to exercise them.

As the New Options do no confer any voting rights on their holders, the issue of the New Options under the Offer will, of itself, have no effect on the control of the Company. However, the issue of New Shares on the exercise of New Options could have an effect on the control of the Company.

If every Eligible Shareholder was to take up its full Entitlement and exercised its New Options at the same time, there would be a minimal effect on the control of the Company, as the Rights Issue is made pro-rata.

The potential effect of the Offer on the Shareholdings in the Company assuming the Offer is fully subscribed and no further Securities are issued before the Record Date can be summarised as follows:

Shares (fully diluted)	Number	% Share capital
Shares on issue as at the date of this Prospectus	108,921,678	80%
Existing Options on issue as at the date of this Prospectus (all unlisted)	750,000	0%
New Shares issued assuming all New Options are exercised	27,230,420	20%
Total Shares as at completion of the Offer assuming all Existing Options and all New Options are exercised	136,902,098	100%

ASSUMPTIONS:

1. The Offer is fully subscribed.

2. No Existing Options are exercised prior to the Record Date.

3. No Shares are issued pursuant to the Company's Prospectus dated 11 December 2014.

4. No other Shares are issued between the date of this Prospectus and completion of the Offer.

3.5 Prohibition on exceeding 20% voting power threshold

New Optionholders must have regard to and comply with the takeovers prohibition in section 606 of the Corporations Act (that is, the 20% voting power threshold) (section 606), when exercising New Options granted under this Prospectus.

The Company expressly disclaims any responsibility for ensuring that New Optionholders do not breach section 606 as a result of the exercise of the New Options.

If New Optionholders may be at risk of breaching section 606 as a result of the exercise of New Options, the choices available to them include:

• (a) selling their New Options, either on market (if the New Options are granted official quotation by the ASX) or off market;
• (b) selling some or all of their Shares prior to exercising any New Options held by them; or
• (c) relying on another exemption from the takeovers prohibition in section 611 of the Corporations Act (such as the 3% creep exemption in item 9 of that section).

If a New Optionholder may be at risk of exceeding the 20% voting power threshold in section 606 or increasing their voting power from a position above 20% as a result of the acquisition of Shares following exercise of New Options, New Optionholders should seek professional advice before exercising New Options.

3.6 Effect on financial position of the Company

(a) General

If the Offer is successfully completed and all Eligible Shareholders take up their full Entitlements, the broad effect on the Company's financial position will be to increase Shareholders' funds and net assets by approximately \$272,300 before payment of the expenses of the Offer.

(b) Proforma balance sheet

To illustrate the effect of the Offer on the Company, the following pro-forma consolidated balance sheet of the Company has been prepared based on the unaudited management accounts of the Company as at 30 September 2014 and adjusted to reflect the following pro-forma transactions:

• (i) The position as if the Offer was fully taken up and effected on 30 September 2014 and no Shares were issued pursuant to the exercise of Existing Options on or before the Record Date.
• (ii) The effect of 5,724,998 Shares issued subsequent to 30 September 2014.
• (iii) Receipt of approximately \$272,300 under the Offer from the issue of approximately 27,230,420 New Options, none of which have been exercised.
• (iv) Payment of approximately \$50,000, representing the expenses of the Offer.

If the Offer is not fully subscribed, the amount of all of the impacted items shown in the unaudited proforma balance sheet will be reduced, however, no other items in the Company's balance sheet will be affected.

The actual financial position on completion of the Offer may also differ from the position illustrated in the pro-forma capital structure and pro-forma balance sheet due to movements in profit / (loss) and in the asset and liability levels during the period between 30 September 2014 and the date when the Offer is completed.

	Unaudited Management Consolidated Balance Sheet as at 30 September 2014 (\$'000)	Pro Forma Consolidated Balance Sheet Post Share Issues to 18 November 2014 (\$'000)	Pro Forma Consolidated Balance Sheet Post Option Issue to 31 January 2015 (\$'000)
CURRENT ASSETS
Cash assets Trade and Other Receivables	1,796 59	3,428 59	3,700 59
Inventories	148	148	148
Other current assets	7	7	7
TOTAL CURRENT ASSETS	2,010	3,642	391
NON CURRENT ASSETS
Intangible assets	10,818	10,818	10,818
Property, plant & equipment Research & Development	8 1,509	8 1,509	8 1,509
TOTAL NON CURRENT ASSETS	12,335	12,335	12,335
TOTAL ASSETS	14,345	15,977	16,249
CURRENT LIABILITIES Trade and other payables Borrowings	225 -	225 -	225 -
Financial liabilities	-	-	-
TOTAL CURRENT LIABILITIES	225	225	225
NON-CURRENT LIABILITIES
Borrowings	2,510	2,510	2,510
TOTAL NON-CURRENT LIABILITIES	2,510	2,510	2,510
TOTAL LIABILITIES	2,735	2,735	2,735
NET ASSETS	11,610	13,242	13,514
EQUITY
Issued capital Retained earnings	16,379 4,769	18,094 (4,852)	18,366 (4,852)
Reserves
TOTAL EQUITY	11,610	13,242	13,514

4 Risk Factors

4.1 Introduction

The Securities offered under this Prospectus are considered highly speculative. An investment in the Company is not risk free and the Directors strongly recommend potential investors to consider the risk factors described below, together with information contained elsewhere in this Prospectus, before deciding whether to apply for Securities and to consult their professional advisers before deciding whether to apply for Securities pursuant to this Prospectus.

There are specific risks which relate directly to the Company's business. In addition, there are other general risks, many of which are largely beyond the control of the Company and the Directors. The risks identified in this Section, or other risk factors, may have a material impact on the financial performance of the Company and the market price of the Shares and the New Options.

The following is not intended to be an exhaustive list of the risk factors to which the Company is exposed. The types of risks the Company is exposed to can change over time and vary with changes in economic, technological, environmental and regulatory conditions both generally and within the industry within which the Company operates.

4.2 Key risks

(a) Intellectual Property

Refer to Section 1.3 for details of the key risks the Company is exposed to.

(b) Reliance on Key Personnel

Refer to Section 1.3 for details of the key risks the Company is exposed to.

(c) Increased Competition

Refer to Section 1.3 for details of the key risks the Company is exposed to.

(d) Growth prospects and Company expansion plans

Refer to Section 1.3 for details of the key risks the Company is exposed to.

(e) Liability risk

Refer to Section 1.3 for details of the key risks the Company is exposed to.

(f) Reliance on key supplier relationships

Refer to Section 1.3 for details of the key risks the Company is exposed to.

(g) Exchange rates

Refer to Section 1.3 for details of the key risks the Company is exposed to.

(h) Concentration of shareholding

Refer to Section 1.3 for details of the key risks the Company is exposed to.

(i) Product selection

An important element of the Company's business is an ability to assess and identify products that appeal to the Company's target market. Newer anti-counterfeit and brand protection technologies and products are increasing the number of choices available to customers. This may make the Company's products less attractive and any

misjudgements in demand or changes in customer preferences could result in reduced sales, increase inventory and/or lower gross margins. In addition, existing products or products in the future developed by the Company may experience performance problems rendering them difficult or impossible to sell, or subject to product recall which could have a material adverse impact on the Company's financial performance.

(j) Relationships with suppliers

The company relies on sourcing products from various suppliers and any material adverse change in the Company's relationships with its suppliers, its terms of trade, or the ability of key suppliers to service orders could have an adverse impact on the Company's prospects. Furthermore, the reliance on sourcing products from suppliers exposes the Company to further risks of delivery delays or quality problems that may adversely affect the business.

(k) Delivery risk

Due to the nature of the Company's product being manufactured in the PRC, the potential exists for delays or cancellations in the delivery of products without any practical recourse being available to the Company to recover lost earnings. Any such delay or cancellation would have an adverse impact on the Company's earnings and profits.

(l) Funding

While the Company believes it will have sufficient funds after completion of the Offer to meet all of its growth and capital requirements for the near term, the Company may seek to exploit opportunities of a kind that will require it to raise additional capital from equity or debt sources. There can be no assurance that the Company will be able to raise such capital on favourable terms or at all. If the Company is unable to obtain such additional capital, it may be required to reduce the scope of its anticipated activities, which could adversely affect its business, financial condition and operating results.

(m) Licensing

Currently, the Company is the only entity licensed by the CTAAC that sells invisible anti counterfeit tracers. There is nothing to guarantee that a competitor of the Company from outside of the PRC may be licensed to sell invisible tracers in the future. If this was the case, the Company's competitive advantage in China may be adversely affected.

(n) Data Loss, Theft or Corruption

YPB through Brand Reporter will provide its services online through a range of websites. Hacking or exploitation of some unidentified vulnerability in its websites could lead to loss, theft or corruption of data. This could render the websites unavailable for a period of time while data is restored. It could also lead to unauthorised disclosure of users' data, with associated reputational damage, claims by users and regulatory scrutiny and fines. Although YPB has strategies in place to try to minimise security breaches and to protect data, these strategies might not be successful. In that event, disruption to the websites and unauthorised disclosure of user data could negatively impact upon YPB's revenues and profitability.

(o) Hacker Attacks

YPB relies upon the availability of its websites to provide services to Brands and users and to attract new users. Hackers could render the websites unavailable through a distributed denial of service attack or other disruptive attacks.

Although YPB has strategies in place to minimise such attacks, these strategies may not be successful. Unavailability of the websites could lead to a loss of revenue or could affect YPB's ability to retain existing customers, potentially having a material adverse impact upon YPB's growth.

(p) Domain Name Risk

YPB will increasingly provide online services through several websites, many of which are country and / or language-specific. Each of those websites have different domain names which are registered with a domain name registrar appropriate to that region. Each domain name registrar maintains separate regulatory regimes and enforce different requirements. Domain name registrants may change the requirements for continued registration or renewal at any time. Further, there may be regulatory or legislative changes in the countries where the domain name registrants are based which could affect YPB's ability to maintain control of these domains. Should YPB lose control of any domain, it could lose all website traffic directed to that domain. This could lead to reduction in YPB's revenue, and affect its customers ability to maintain payments for YPB's services.

4.3 Additional risks specific to the Company

(a) Ability to Promote the Company's "YPB Brand"

Brand image is a key factor in promoting and marketing technology companies. The Company is committed to building its brand by creating value in technology companies from start-up phase to more developed companies and therefore being presented with more opportunities in Asia and, if relevant, Australia. The Company believes that the Company has been successful in establishing its brand and attracting investee projects in Asia and that the Company's status as an ASX-listed company will continue to enhance the Company's profile and brand in the Australasia region.

(b) Brand Management and Maintenance

The Company believes that establishing and maintaining its brands in the anti-counterfeit industry is critical to growing its proposed user base and product acceptance. This will depend largely on the Company's ability to provide useful and innovative products. The actions of external industry participants and social media may affect the Company's brands if users do not have a positive experience using the Company's products and services respectively. If the Company fails to successfully establish and maintain its brands its businesses and operating results could be adversely affected.

(c) Contractual Risk

In order for the Company to be able to achieve its objectives, the Company will be reliant on third parties with which it will become involved to comply with their contractual obligations.

Where those third parties fail to comply with the terms and conditions of their agreements with the Company, the Company could lose the rights acquired under the relevant agreement(s). It may then be necessary for the Company to approach a court to seek a legal remedy. Legal action can be costly and there can be no guarantee that a legal remedy will be ultimately granted on the appropriate terms. The Company has no current reason to believe that any third party that the Company has contracted with will not meet and satisfy their obligations under any agreement.

4.4 General Risks

(a) Economic factors

Changes in economic and business conditions in Australia or internationally may affect the fundamentals of the Company's target markets or its costs structure and profitability. Adverse changes in the level of inflation, interest rates, consumer spending, and employment rates, are outside the control of the Company and the management team and may have an adverse effect on the financial performance and/or financial position of the Company.

(b) Government regulation

The Company is exposed to changes in the laws and regulations of the PRC initially, then other countries where the Company will operate. In future, laws may be enacted which

effect greater regulation upon the anti-counterfeit industry which may increase the Company's costs to comply with the relevant government regulations. In addition, taxation legislation may change which could impact the Company's profitability.

(c) Market risk

Share market conditions may affect the value of the Company's quoted Securities regardless of the Company's operating performance. Share market conditions are affected by many factors such as:

• (i) general economic outlook;
• (ii) interest rates and inflation rates;
• (iii) currency fluctuations;
• (iv) commodity price fluctuations;
• (v) changes in investor sentiment toward particular market sectors;
• (vi) the demand for, and supply of, capital; and
• (vii) terrorism and other hostilities.

(d) Potential Acquisitions

As part of its business strategy, the Company intends to make acquisitions of, or significant investments in, complementary companies or projects. Any such future transactions would be accompanied by the risks commonly encountered in making such acquisitions.

(e) New Acquisitions

The Company may make acquisitions in circumstances where the Directors believe that those acquisitions support the Company's growth strategy. However, there can be no assurances that the Company will be able to identify, complete and integrate suitable acquisitions successfully. Acquiring new businesses can place significant strain on management, employees, systems and resources. Acquired businesses may not perform in line with expectations and it may not prove possible to achieve the desired synergies on the integration of news businesses.

(f) Additional Requirements for capital

The Company's capital requirements depend on numerous factors. Depending on the Company's ability to generate income from its operations, the Company may require further financing in the future. Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations and scale back marketing and technological development.

4.5 Risks associated with the Offer

(a) Value of New Options

The New Options that are issued as part of the Offer, are issued for the Offer Price and require the Exercise Price of \$0.20 per New Share to be paid at the time of exercise. If the prevailing trading price of Shares is lower than the Exercise Price, then it is likely that the New Options will not be exercised. In this case, for investors, the unexercised New Options will not have value and will lapse on the expiry date of the New Options.

If the New Options are not exercised, or only some of the New Options are exercised, then the Company may not receive the proceeds that would otherwise be generated if New Optionholders pay the Exercise Price. This possibility may reduce the amount of

capital that the Company would receive if all of the New Options are exercised on or before the expiry date of the New Options.

(b) Liquidity of New Options

Although the New Options are proposed to be listed on ASX, there can be no guarantee that there will be a liquid market for trading of the New Options.

4.6 Investment speculative

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 Securities offered under this Prospectus

Therefore, the Securities to be issued pursuant to this Prospectus carry no guarantee with respect to the payment of dividends, returns of capital or the market value of those Securities.

Potential investors should consider that the investment in the Company is highly speculative and should consult their professional advisers before deciding whether to apply for Securities pursuant to this Prospectus.

5 Additional Information

5.1 Continuous disclosure and inspection of documents

The Company is a disclosing entity for the purpose of the Corporations Act. As such, it is subject to regular reporting and disclosure obligations.

The Company believes that it has complied with the general and specific disclosure requirements of the Corporations Act and Listing Rules, which require the Company to notify the ASX of information about specific events or matters as they arise, for the purpose of the ASX making that information available to the market conducted by the ASX.

This Prospectus is issued under section 713 of the Corporations Act. This section enables disclosing entities to issue a prospectus in relation to options to acquire securities in a class which has been continuously quoted by the ASX at all times during the 3 months before the date of the Prospectus. Apart from prescribed matters, this Prospectus need only contain information relating to the Terms of the Offer, the effect of the Offer on the Company and the rights and liabilities attaching to the New Options and the Shares issued on exercise of the New Options. Accordingly, this Prospectus does not contain the same level of disclosure as an initial public offer prospectus.

Copies of documents lodged with ASIC in relation to the Company may be obtained from, or inspected at, an office of ASIC.

The Company will make available a copy of each of the following documents, free of charge, to any person who asks for it during the Offer period:

• (a) The annual financial report for the year ended 30 June 2014 (being the annual financial report most recently lodged with ASIC in relation to the Company before the issue of this Prospectus), a copy of which is available at the Company's website http://www.ypbsystems.com/; and
• (b) Any continuous disclosure notices given by the Company after the lodgement with ASIC of the annual financial report referred to at 5.1(a) above and before the lodgement with ASIC of a copy of this Prospectus. These include the following announcements:

Date lodged	Announcement
14/10/2014	Appendix 3B
20/10/2014	Notice of Annual General Meeting/Proxy Form
31/10/2014	Business Update & Appendix 4C
31/10/2014	Brand Ambassador Programme Announced
5/11/2014	YPB signs LOI for distribution in Indonesia and India
7/11/2014	CEO Presents at Singapore Capital Expo
18/11/2014	Appendix 3B
18/11/2014	Change of Director's Interest Notice
18/11/2014	Results of Meeting
18/11/2014	Chairman's Presentation at AGM
24/11/2014	YPB expands Distribution into Thailand
2/12/2014	Trading Halt
4/12/2014	YPB Group completes \$1.65m Placement
11/12/2014	Appendix 3B
12/12/2014	Prospectus

This Prospectus contains details specific to the Offer. If Shareholders require any further information in relation to the Company, those Shareholders should take advantage of the ability to inspect or obtain copies of the documents referred to above.

5.2 Existing Optionholders

(a) General

Existing Optionholders will not be entitled to participate in the Rights Issue unless they:

• (i) are entitled to exercise their Existing Options under the terms and conditions of grant; and
• (ii) validly exercise their Existing Options and become an Eligible Shareholder on or before the Record Date.

(b) Quoted Existing Options

As at the date of this Prospectus, the Company does not have any quoted Existing Options on issue.

(c) Unquoted Existing Options

As at the date of this Prospectus, the Company has the following unlisted Existing Options on issue:

Exercise price	Expiry date	Number
\$0.20	31 October 2017	750,000

(d) Effect of exercise of Existing Options

If all Existing Optionholders whose Existing Options have vested elect to exercise their Existing Options prior to the Record Date and participate in the Rights Issue, a further 187,500 New Options may be issued under this Prospectus.

5.3 Market Price of Shares

The highest and lowest market sale price of the Company's Shares on the ASX during the 3 calendar months immediately preceding the date of issue of this Prospectus and the last market price on the last day of trading before lodgement is set out below:

	Price	Date
Highest	\$0.455	2 October 2014
Lowest	\$0.28	28 October 2014
Last	\$0.32	23 December 2014

5.4 Rights attaching to Shares (including the New Shares issued on exercise of the New Options)

The following is a summary of the more significant rights attaching to Shares. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of Shareholders. To obtain such a statement, persons should seek independent legal advice.

Full details of the rights attaching to Shares are set out in the Company's constitution, a copy of which is available for inspection at the Company's registered office during normal business hours.

(a) General meetings

Shareholders are entitled to be present in person, or by proxy, attorney or representative, to attend and vote at general meetings of the Company. Shareholders may requisition meetings in accordance with Section 249D of the Corporations Act and the Constitution of the Company.

(b) Voting rights

Subject to the rights or restrictions for the time being attached to any other class or classes of Shares (at present there are none), at meetings of Shareholders:

• (i) each Shareholder entitled to vote may vote in person or by proxy, attorney or representative (and a partly paid share only has a fractional vote);
• (ii) on a show of hands, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder has one vote; and
• (iii) on a poll, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder shall, in respect of each fully paid Share held by him or her, or in respect of which he or she is appointed a proxy, attorney or representative, has one vote for the Share.

(c) Dividend rights

Subject to the rights of holders of shares issued with special, preferential or qualified rights, the profits of the Company which the Directors determine to distribute by way of dividend are divisible among the holders of Shares in proportion to the number of Shares held by them (and a partly paid Share is counted as a fraction of a fully paid Share, equal to the amount paid on it, divided by the total issue price of the Share for the purposes of payment of a dividend).

(d) Winding-up

Subject to the rights of holders of Shares with special rights in a winding up (at present there are none), on a winding up of the Company all assets that may be legally distributed (by a liquidator with the sanction of a special resolution of the Shareholders) among Shareholders will be distributed in proportion to the number of fully paid Shares held by them.

(e) Shareholder liability

As the New Shares issued on exercise of the New Options issued pursuant to the Prospectus will be fully paid Shares, they are not subject to any calls for money by the Directors and will therefore not become liable for forfeiture.

(f) Transfer of Shares

Generally, Shares in the Company are freely transferrable, subject to formal requirements, the registration of the transfer not resulting in a contravention of or failure to observe the provision of a law of Australia, and the transfer not being in breach of the Corporations Act or the ASX Listing Rules.

(g) Variation of rights

The Constitution provides that, if at any time the share capital of the Company is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of the issue of the shares of that class), whether or not the Company is being wound up, may be varied or abrogated with the consent in writing of the holders of three quarters of the issued shares of that class, or if authorised by a special resolution passed at a separate meeting of the holders of the shares of that class.

5.5 Terms of and rights attaching to New Options

(a) Entitlement

Subject to and conditional upon any adjustment in accordance with these conditions, each New Option entitles the holder to subscribe for one fully paid New Share upon payment of the Exercise Price.

(b) Exercise Price

The Exercise Price of each New Option is \$0.20 per New Share (Exercise Price).

(c) Expiry Date

Each New Option will expire at 5.00pm (Sydney time) on 31 October 2017 (Expiry Date). A New Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

(d) Exercise Period

The New Options are exercisable at any time from the date of their issue until the Expiry Date (Exercise Period).

(e) Notice of Exercise:

The New Options may be exercised during the Exercise Period by forwarding to the Company at its principal office the exercise notice, duly completed, (Notice of Exercise) together with payment of the Exercise Price for each New Option being exercised in Australian currency.

(f) Exercise Date

A Notice of Exercise is only effective on and from the later of the date of receipt of the Notice of Exercise and the date of receipt of the payment of the Exercise Price for each New Option being exercised in cleared funds (Exercise Date).

(g) Timing of issue of New Shares on exercise

Within 14 days after the Exercise Date, the Company will:

• (i) allot and issue the number of New Shares required under these terms and conditions in respect of the number of New Options specified in the Notice of Exercise and for which the Exercise Price has been received by the Company in cleared funds; and
• (ii) if admitted to the official list of ASX at the time, apply for official quotation on the ASX of New Shares issued pursuant to the exercise of the New Options.

(h) New Shares issued on exercise

New Shares issued on exercise of the New Options rank equally with the then issued Shares of the Company.

(i) Quotation of New Shares issued on exercise

If the Company is admitted to the official list of the ASX at the time, application will be made by the Company to the ASX for quotation of the New Shares issued upon the exercise of the New Options.

(j) Reconstruction of capital

If at any time the issued capital of the Company is reconstructed (including consolidation, subdivision, reduction or return), all rights of a holder of New Options are to be changed to the extent necessary in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.

(k) Participation in new issues

There are no participation rights or entitlements inherent in the New Options and holders of New Options will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the New Options without exercising the New Options. Holders of New Options will be afforded the period of at least 9 Business Days prior to and inclusive of the record date (to determine entitlements to the new issue) to exercise their New Options.

(l) Change in Exercise Price / number of New Shares

If there is a bonus issue to Shareholders, the number of New Shares over which a New Option is exercisable may be increased by the number of Shares which the holder of the New Option would have received if the New Option had been exercised before the record date for the bonus issue.

In the event that a pro rata issue (except a bonus issue) is made to Shareholders, the Exercise Price of the New Options may be reduced in accordance with ASX Listing Rule 6.22.

Except as otherwise stated in this Section 5.5, a New Option does not confer the right to a change in the Exercise Price or a change in the number of underlying securities over which the New Option can be exercised.

(m) Quoted

The Company will apply for quotation of the New Options on the ASX.

(n) Transferability:

The New Options are transferable at any time until the Expiry Date by an instrument (duly stamped where necessary) in the form commonly used for transfer of options, subject to any restriction or escrow arrangements imposed by the ASX if the Company is listed on the ASX or under applicable Australian securities laws.

5.6 Directors' Interests

(a) Directors' holdings

Set out in the table below are details of Directors' relevant interests in the Securities of the Company at the date of this Prospectus:

Director	No. of Shares	No. of Existing Options	No. of Performance Rights
John Houston1	60,318,453	Nil	Nil
Dr. Geoffrey Raby	250,000	Nil	Nil
Su (George) Su2	5,496,716	Nil	Nil
Robert Whitton3	175,000	Nil	Nil

NOTES:

1. John Houston's Shares are held by The Bimm Corporation Pty Ltd (ACN 120 009 798) . John Houston holds a relevant interest of approximately 50% in The Bimm Corporation Pty Ltd (ACN 120 009 798) . In addition, 100% of John Houston's Shares are subject to escrow.

2. 100% of Su (George) Su's Shares are subject to escrow.

3. Certain of Robert Whitton's Shares are held directly in his own name and the balance indirectly by Terra Australis Water Company Pty Ltd (ACN 146 140 427) ATF Robert Whitton Family Trust, Six Angels Investments Pty Ltd (ACN 079 120 282), Connor Tomas Whitton and Matthew James Whitton.

4. This table does not take into account any New Options the Directors may acquire under the Offer. Some or all of the Directors may participate to the extent of their Entitlement under the Offer.

(b) Directors' remuneration

No person has paid or agreed to pay any amount or has given any benefit to any Director to induce them to become, or qualify as a Director or for services provided by the Director, in connection with:

• (i) the formation or promotion of the Company; or
• (ii) the Offer under this Prospectus, except as set out below or elsewhere in this Prospectus.

The maximum aggregate amount of fees that can be paid to Non-Executive Directors is subject to approval by Shareholders at a general meeting of a Company. Total Directors' fees paid to all Non-Executive Directors are not to exceed \$500,000 per annum.

Director	Type of Director	Remuneration
Dr. Geoffrey Raby	Non-Executive	US\$50,000
Su (George) Su	Non-Executive	A\$40,000
Robert Whitton	Non-Executive	A\$40,000

(c) Deeds of Access, Indemnity and Insurance

The Company has entered into a Deed of Access, Indemnity and Insurance with each of its Directors. Under the terms of these deeds, the Company indemnifies each Director to the extent permitted by the Corporations Act against any liability as a result of the Director acting as a Director of the Company. The Company is required under the deeds to maintain insurance policies for the benefit of the relevant Director for the term of appointment and for a period of 7 years after retirement, termination or resignation substantially similar to the policies existing at the time of entering into the deeds, except to the extent that such insurance cannot be procured at a reasonable cost or is otherwise unavailable to the Company. The deeds also provide for the Director to have a right of access to Board papers and minutes.

5.7 Interests of named persons

Set out below are the benefits that have been or have been agreed to be given to any person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus (together, Prescribed Persons).

Except as set out below or elsewhere in this Prospectus, no Prescribed Person holds, or during the last 2 years has held, any interests in:

• (a) the formation or promotion of the Company;
• (b) any property acquired or proposed to be acquired by the Company in connection with the Company's formation or the promotion, or the Offer; or
• (c) the Offer.

In addition, except as set out below or elsewhere in this Prospectus, no benefit of any kind, (whether in cash, Shares or otherwise) have been paid or agreed to be paid to a Prescribed Person in connection with the preparation or distribution of the Prospectus for services rendered by that person in connection with the formation or promotion of the Company, or the Offer.

Thomson Geer has acted as the Australian legal advisers to the Company for the purposes of the Offer. For this work, Thomson Geer is to receive fees amounting to approximately \$22,000 including GST but excluding disbursements.

5.8 Consents to be named

Each of the parties named in the table below in this Section 5.8 has consented to being named in this Prospectus in the form and context in which it is named and has not withdrawn such consent prior to the lodgement of this Prospectus with the ASX:

Capacity in relation to the Company	Consenting party
Australian legal adviser	Thomson Geer
Auditor	Hall Chadwick
Share Registry	Boardroom Pty Limited

To the maximum extent permitted by law, each of the parties named in this Section 5.8:

(a) states that it has not authorised or caused the issue of this Prospectus;

• (b) is not taken to have made, or purported to have made, any representation or warranty in relation to the Company either express or implied or any statement in this Prospectus or on which a statement made in the Prospectus is based other than as specified in this Section; and
• (c) expressly disclaims and takes no responsibility for any part of this Prospectus other than as referred to in this Prospectus as having been made by such party.

5.9 Expenses of the Offer

All expenses connected with the Offer are being borne by the Company.

Based on the Offer being fully subscribed, the estimated costs of the Offer, which have been paid or are payable by the Company are as follows:

Expenses of the Offer	Amount including GST
Legal fees	\$22,000
Share Registry fees, printing and postage, ASX and ASIC fees	\$26,000
Other miscellaneous costs	\$2,000
TOTAL	\$50,000

5.10 Governing Law

The Offer is governed by the law in force in New South Wales, Australia. By accepting the Offer, each Applicant submits to the non-exclusive jurisdiction of the courts of New South Wales, Australia.

5.11 Directors' consent to lodgement

This Prospectus is issued by the Company. Each Director has consented to the lodgement of this Prospectus with ASIC as required by section 720 of the Corporations Act.

6 Glossary

In this Prospectus, unless the context or subject matter otherwise requires:

Applicant	A person who returns an Application.
Application	An application for New Options under the Offer.
Application Form	The entitlement and acceptance form attached to this Prospectus.
Application Payment	The payment of the Offer Price under the Offer submitted by an Applicant for the purposes of making an Application.
ASIC	Australian Securities and Investments Commission.
ASX	ASX Limited (ACN 008 624 691) or the stock exchange which it operates, as the context requires.
ASX Listing Rules	The official Listing Rules of the ASX.
Board	The board of Directors.
Business Day	Monday to Friday inclusive in Sydney Australia, except New Year's Day, Good Friday, Easter Monday, Christmas Day, Boxing Day, and any other day that is not a business day for the purposes of the ASX Listing Rules.
Closing Date	5.00pm (Sydney Time) on Friday 16 January 2015.
Company or YPB	YPB Group Limited (ABN 68 108 649 421).
Corporations Act	Corporations Act 2001 (Cth) as amended from time to time.
Directors	The directors of the Company.
Eligible Shareholder	A Shareholder recorded on the Register at the Record Date with an address in Australia, New Zealand, People's Republic of China, Hong Kong or Singapore.
Entitlement	The right of an Eligible Shareholder to subscribe for New Options pursuant to the Rights Issue.
Exercise Price	The price payable on the exercise of a New Option for one New Share under this Prospectus, being \$0.20 per New Share.
Existing Option	An option to subscribe for unissued Shares on issue by the Company before allotment of the New Options, which as at the date of this Prospectus are those set out in Section 5.2(c).
Expiry Date	5.00pm (Sydney time) on Tuesday 31 October 2017.
GST	Has the meaning given to that term in A New Tax System (Goods and Services Tax) Act 1999 (Cth) and includes goods and services tax.
New Option	An option to subscribe for new Shares to be issued pursuant to this Prospectus.
New Share	A Share to be issued on exercise of a New Option.
Non-Participating Foreign Holder	Any Shareholder who is recorded on the Register at the Record Date with an address outside of Australia, New Zealand, People's Republic of China, Hong Kong and Singapore.
Offer	The offer of New Options under this Prospectus (including the Rights Issue and the Shortfall Offer), subject to and on the Terms of the Offer.
Offer Price	The subscription price per New Option under the Offer (ie, \$0.01 per New Option).
Prospectus	This prospectus.
Record Date	7.00pm (Sydney Time) on Friday 2 January 2015.
Register	The Company's register of members or optionholders, as the context requires.

Rights Issue	A non-renounceable pro-rata entitlement offer to Eligible Shareholders of New Options on the basis of 1 New Option for every 4 Shares held at the Record Date at the Offer Price.
Securities	Shares, Existing Options and New Options issued by the Company.
Share Registry	Boardroom Pty Limited (ABN 14 003 209 836).
Shareholder	Registered holder of a Share.
Shares	Ordinary shares in the capital of the Company.
Shortfall Offer	Has the meaning given to that term in Section 2.13.
Shortfall Options	Entitlement for which valid Applications have not been received by the Closing Date.
Terms of the Offer	The terms and conditions set out in this Prospectus, including any modifications made by the Company.

Corporate Directory

Directors

John Houston – Executive Chairman, CEO Dr. Geoffrey Raby – Non-Executive Director Su (George) Su – Non-Executive Director Robert Whitton – Non-Executive Director

Company Secretary

Robert Whitton

Registered Office

Level 29 66 Goulburn Street SYDNEY NSW 2000 T: (02) 8263 4000 F: (02) 8263 4111

Website http://www.ypbsystems.com/

Auditors*

Hall Chadwick Level 40 2 Park Street SYDNEY NSW 2000

Share Registry*

Boardroom Pty Limited Level 7 207 Kent Street SYDNEY NSW 2000

Solicitors

Thomson Geer Level 25, 1 O'Connell Street SYDNEY NSW 2000

*These entities are included for information purposes only. These entities have not been involved in the preparation of this Prospectus.