CODEIFAI LIMITED — Management Reports 2019

Nov 20, 2019

ASX:YPB | 20[th] November 2019

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Chairman’s update to EGM 20[th] November 2019

• YPB’s focus of 2019 is starting to show positive results: wins achieved in wine, dairy, pharma and legal cannabis

• MotifMicro successful in high volume “flexo” printing trials at China’s PanPass Inc - high security labels printed in “real world’ production run – believed to be a world first for smartphone readable technology .

• A MotifMicro smartphone readable “shrink-wrap” product created and produced under commercial print conditions – opens significant new market

• YPB’s Connect platform considerably enhanced for focus on China export market

• Sales contract with first dairy export customer to China signed - Nature One Dairy

• Critical developments in growing revenue for YPB in CY2020

Dear Fellow Shareholders,

I am pleased to take the opportunity of today’s EGM to update you on recent developments at YPB.

You will have seen earlier today the announcement of our first customer in the booming export dairy product sector to China for YPB’s Connect consumer engagement platform. Nature One Dairy is an Australian manufacturer of nutritionally enhanced milk powders for the domestic and export markets, particularly China and ASEAN, and also produces white-label product for major brands in China and a number of ASEAN nations.

I am also excited to report today the achievement of two previously unannounced critical technical milestones toward the commercialisation of our revolutionary MotifMicro technology and a major client-led development of our Connect platform.

The first milestone was high volume printing of high security MotifMicro smartphone readable labels at PanPass’ flexo printing line in China.

The second was successful incorporation of MotifMicro particles into shrink wrap plastics at OPP Gravure Printing Co Ltd’s plant in Thailand.

The third development relating to Connect was the successful in-house development of Application Interfaces (APIs) for Connect to interface with third party, high speed inline printing technologies.

To the best of the company’s knowledge, both the label printing and shrink wrap results have never previously been achieved with a high security smartphone readable physical marker under commercial production conditions.

PanPass successful commercial print trial

We recently announced (September 16[th] 2019) the signing of PanPass Inc. as the maiden client for our ground breaking MotifMicro technology. PanPass is reputedly China’s largest security label supplier with annual volumes of 15 billion labels.

The trial with PanPass was a high volume commercial production run where YPB’s MotifMicro forensic physical marker was successfully incorporated into thousands of flexo ink labels – effectively under “real world” conditions for a high volume production line.

The incorporation of the MotifMicro 1 particles into flexo ink was achieved with no change to the production equipment or line, the resultant labels were not distorted by the presence of MotifMicro and the accuracy of the smartphone scan of the labels to detect the presence of MotifMicro was excellent.

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This successful PanPass trial is a highly value-enhancing milestone for YPB as it proves the scalability, simplicity, effectiveness and accuracy of MotifMicro under commercial production conditions. It is a critical step towards revenues from PanPass.

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PanPass Labels on Production run Successful Smartphone reading of Labels

Smartphone Shrink-wrap product created

In early November, we successfully incorporated MotifMicro particles into a shrink-wrap production line with a leading Thailand based printer, OPP Gravure Printing Co., Limited. This was also completed under high volume production line conditions and created the world’s first smartphone readable PVC shrink-wrap product of its kind.

This new product is also clearly value-enhancing by demonstrating the flexibility of the MotifMicro technology, its simplicity of inclusion in existing technologies and production processes, and its wide market potential. PVC shrink-wrap is easily applied on high speed production lines and is a simple and fast way for brands to achieve a “tamper evident” and “authentication” feature on Pharmaceutical, beverages, nutraceuticals etc. This will now be productised for commercial release in CY 2020.

The global shrink and stretch film market is set to grow by US$4.91 billion between 2019 and 2023 according to Bloomberg News*.

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Shrink-wrap labels on products

Successful Smartphone reading of shrik-wrap

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YPB’s Connect platform enhanced

I am also pleased to advise that our Bangkok technical team has now enhanced Connect’s capabilities with the development of API’s specifically designed to interface in-situ with existing high speed, in-line product marking lines used widely in consumer goods packaging plants. This has been client driven and demonstrates YPB’s solutions can significantly upgrade existing packaging to “smart” status, creating a powerful new consumer engagement channel, while complementing existing production technologies.

Connect is a key to revenue growth for the Company and its continued technical development is very pleasing.

MotifMicro 1 certified food safe to FDA standards

The three above achievements follow the successful certification of MotifMicro (announced November 12[th ] 2019) as food safe to FDA and China standards by SGS, the world’s leading certification Company. That certification not only ensured an open door to the vast food packaging industry but also to the large and rapidly growing wellness, health and beauty sector whose products are ingested or applied to the skin.

All four of these technical achievements have been milestones deemed critically important by clients and partners presently engaged with YPB toward the commencement of, or progress toward, new product sales and revenues.

I’m proud of these key advances made by the skill of our technical teams working in close collaboration with our commercial teams and existing and prospective clients and channel partners.

I look forward to reporting further advances to you as appropriate. Thank you sincerely for your ongoing support.

John Houston

CEO and Executive Chairman

Ends.

*Bloomberg Markets 15/05/2019

Disclaimer:

This address contains forward-looking statements that are subject to risks and uncertainties. Such statements involve known and unknown risks that may cause the actual results, performance or achievements of YPB Group Limited to be materially different from the statements in this address. Actual results could differ materially depending on factors such as the availability of resources, regulatory environment, the results of R&D, sales activities and competition.

For further information please contact:

Investor enquiries investors@ypbsystems.com About YPB Group

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YPB Group Limited (ASX:YPB) is an Australia-based product authentication and consumer engagement solutions provider. YPB's proprietary smartphone enabled technology suite allows consumers to confirm product authenticity and, for brands, that triggers consumers’ engagement.

The combination of YPB’s smartphone authentication solutions and its SaaS Connect platform, creates ‘smart’ product packaging, opening cost-effective, digital and direct marketing channels between brands and their consumers. Connect gathers actionable data on consumer preferences. It can then host tailored marketing campaigns directly back to the scanning smartphone.

YPB’s technology is also trusted by the world’s largest passport issuing nation to ensure the authenticity of its passports. YPB is currently focused on the rapidly growing Australian, South East Asian, and Chinese markets. Its focus is dairy, cannabis, alcohol and cosmetics where the viral growth of fake products, particularly in Asia, affects brand value and endangers consumers. To learn more please visit: www.ypbsystems.com

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