CODEIFAI LIMITED — Regulatory Filings 2020

Aug 20, 2020

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20 August 2020

Belinda Giles Adviser ASX Listings Compliance (Perth) Level 40, Central Park 152-158 St Georges Terrace Perth WA 6000

By email

Dear Ms Giles,

RE: Response to ASX Aware and Query Letter

BACKGROUND

YPB Group Limited (ASX:YPB) (“YPB” or the “Company”) refers to your letter dated 17 August 2020 (“Letter”). and provides the following information by way of background.

On 29 June 2020, the YPB Technology team (Team) based in Bangkok engaged Palo IT, a local software development company, to develop a 2[nd] generation application (APP) for YPB’s proprietary MotifMicro1 (MM1) technology. The APP was specified to be written in a framework which would allow it to operate on both iOS and Android platforms, but the initial scope of development was the delivery of the ability to read MM1 on the Android operating system, the “Android APP”. The engagement was for a 3 week development timetable for delivery of the APP to YPB.

During July 2020, Palo IT progressed with development work on the 2[nd] generation application. However, the development work on the project took longer than expected due to the complexity of the project tasks and various scheduling delays. A review meeting between the developer and the Team took place on 15 July 2020, but at that stage the Android APP was not operating successfully (including without the ability to read MM1) and was therefore not complete.

On 24 July 2020, The Team received the first delivery of the proposed Android APP from Palo IT for analysis, integration and testing with YPB’s Artificial Intelligence (AI) Machine Learning (ML) system based in Bangkok. The analysis and integration work was to be performed by the Team without which the Android APP would not operate. Following the integration, testing would need to be performed by the Team before YPB could determine whether the key milestone of the Android APP’s capability to read MM1 had been achieved. This further work was performed by the Team between 24 July and 27 July 2020.

By 27 July 2020, the Team finalised the integration of the APP with YPB’s AI and ML systems, then completed further testing and analysis of the Android APP which confirmed that the technical development project milestone was successful in providing for the Android APP’s capability to read YPB’s MM1 technology. There was no certainty that this milestone would be achieved prior to this time and the milestone of “Android capability” was not achieved until 27 July 2020.

On 28 July 2020, YPB released its announcement on the ASX platform advising that the company had successfully reached the milestone of MM1 readability by the Android smartphone operating system.

investors@ypbsystems.com

YPB Group Limited Suite 1, 295 Rokeby Road Subiaco, Western Australia 6008, AUSTRALIA

ypb.io

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RESPONSE TO ASX QUERIES

Set out below are the Company’s responses against each query in the Letter.

1. Does YPB consider the completion of the second generation of the MotifMicro application (‘APP Development Information’), referred to in its announcement dated 28 July 2020 (see paragraph F(ii) above), to be information that a reasonable person would expect to have a material effect on the price or value of its securities?

• 1.1. No. YPB does not consider the completion of the 2[nd] generation MotifMicro APP referred in paragraph F(ii) of the Letter as being information that a reasonable person would expect to have a material effect on the price or value of its securities.

2. If the answer to question 1 is “no”, please advise the basis for that view.

• 2.1. The Company developed the second generation of the MotifMicro application “APP Development” as part of its application development and improvement program to achieve two goals:

  • 2.1.1.firstly, to take the Company’s internal and customer feedback learnings (from the existing “Beta” APP which was only supported on Apple’s iOS operating system) to create a refreshed user interface which simplified the operation of the MotifMicro “APP”. The development was initiated on a different software development platform from the first “Beta” application which only supported iOS; and

2.1.2.secondly, to allow the application to include Android capability.

YPB considers the completion of the first goal (the completion of the 2[nd] generation MotifMicro APP) to be an exercise in process only, rather than a significant technical achievement. Therefore, the completion of the 2[nd] generation MotifMicro APP in itself was not information that the Company regarded as being expected to have a material effect on the price or value of YPB’s shares.

3. When did YPB first become aware of the APP Development Information?

• 3.1. Further to the chronology of events outlined in the Background section above, YPB first became aware of the App Development Information during the afternoon of 27 July 2020.

4. Please provide copies of documents or correspondence which show when the development of the second generation MotifMicro application was completed (not for release to the market).

4.1. See attached correspondence.

5. If the answer to question 1 is “yes” and YPB first became aware of the Information before 28 July 2020, did YPB make any announcement prior to the relevant date which disclosed the APP Development Information?

investors@ypbsystems.com

YPB Group Limited Suite 1, 295 Rokeby Road Subiaco, Western Australia 6008, AUSTRALIA

ypb.io

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Not applicable.

5.1. If so, please provide details.

Not applicable.

• 5.2. If not, please explain why the APP Development Information was not released to the market at an earlier time, commenting specifically on when you believe YPB was obliged to release the APP Development Information under Listing Rules 3.1 and 3.1A and what steps YPB took to ensure that the APP Development Information was released promptly and without delay.

Not applicable.

6. Does YPB consider the achievement of Android smartphone readability of MotifMicro (‘Android Information’), referred to in its announcement dated 28 July 2020 (see paragraph F(i) above), to be information that a reasonable person would expect to have a material effect on the price or value of its securities?

• 6.1. Yes, YPB considers the milestone of Android smartphone readability of the company’s MotifMicro technology to be material information.

7. If the answer to question 6 is “no”, please advise the basis for that view.

• 7.1. Not applicable.

8. When did YPB first become aware of the Android Information?

• 8.1. Further to the chronology of events outlined in the Background section above, YPB first became aware of the Android Information during the afternoon of 27 July 2020.

• 8.2. The Android Information was received by the Chairman of YPB on or around 12.05pm (AEST) on 27 July 2020. Upon the Chairman of YPB became aware of the Android Information received by email, the Chairman considered and discussed the Android Information with YPB’s technology team to confirm the Android APP’s readability of MotifiMicro1. The Chairman advised the Board of the Android Information milestone during the course of the afternoon of 27 July 2020 and the Board approved the announcement which was released on MAP pre-market open on 28 July 2020.

9. Please provide copies of documents or correspondence which show when the achievement of Android smartphone readability of MotifMicro occurred (not for release to the market).

9.1. See attached correspondence.

10. If the answer to question 6 is “yes” and YPB first became aware of the Android Information before 28 July 2020, did YPB make any announcement prior to the relevant date which disclosed the Android Information?

investors@ypbsystems.com

YPB Group Limited Suite 1, 295 Rokeby Road Subiaco, Western Australia 6008, AUSTRALIA

ypb.io

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Not Applicable

10.1. If so, please provide details.

Not Applicable

• 10.2. If not, please explain why the Android Information was not released to the market at an earlier time, commenting specifically on when you believe YPB was obliged to release the Android Information under Listing Rules 3.1 and 3.1A and what steps YPB took to ensure that the Android Information was released promptly and without delay.

Not Applicable

11. The Chairman’s Address states that YPB was ‘on the cusp of commercialising a revolutionary new product’. Please clarify exactly what product this statement was referring to. As part of your answer, please state whether this was referring to: the development of the second generation of the MotifMicro application; the development of Android smartphone readability of the MotifMicro application; or both together?

• 11.1. The Chairman’s address stated “we believe we are on the cusp of commercialising a revolutionary new product” . This statement was a reference to YPB’s MotifMicro1 technology (also known as MM1) and its potential commercialisation which required the ability to read MM1 on both iOS and Android in order for its potential commercial launch. The statement was not a reference to the MotifMicro application development on the iOS or Android platforms.

12. Please confirm that YPB is complying with the Listing Rules and, in particular, Listing Rule 3.1.

• 12.1. YPB confirms that it is in compliance with the Listing Rules, in particular Listing Rule 3.1.

13. Please confirm that YPB’s responses to the questions above have been authorised and approved in accordance with its published continuous disclosure policy or otherwise by its board or an officer of YPB with delegated authority from the board to respond to ASX on disclosure matters.

• 13.1. YPB confirms that the response in this letter has been authorised and approved by officers of YPB that have been delegated authority from the Board to respond to ASX disclosure matters.

Regards,

Sebastian Andre Company Secretary YPB Group Limited

investors@ypbsystems.com

YPB Group Limited Suite 1, 295 Rokeby Road Subiaco, Western Australia 6008, AUSTRALIA

ypb.io

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17 August 2020 Reference: 22503

Mr Sebastian Andre Company Secretary YPB Group Ltd

By email

Dear Mr Andre

YPB Group Ltd (‘YPB’): Aware and query letter

ASX refers to the following:

• A. The change in the price of YPB’s securities from a low of $0.004 to an intra-day high of $0.008 on 21 July 2020 and the significant increase in the volume of YPB’s securities traded on that day.

• B. ASX’s Price and Volume Query letter sent to YPB on 21 July 2020, which asked whether YPB was aware of any information concerning it that had not been announced to the market and which, if known by some in the market, could explain the trading in its securities on that day.

• C. YPB’s response to ASX’s Price and Volume Query letter released on the ASX Market Announcements Platform (‘MAP’) on 22 July 2020, which disclosed that:

“The Company is not aware of any information concerning it that has not been announced which, if known, could be an explanation for recent trading in the securities of the Company.”

• D. YPB’s announcement entitled “AGM Chairman’s Address” lodged on MAP and released on 22 July 2020 (‘Chairman’s Address’) which disclosed, among other things, that:

“Although the past two years of restructuring have been difficult and costly, YPB is now in its best ever position. Today I hope to convey four key ideas:

1. our clean-up is finished – we are operationally lean and focussed;

2. our revenue potential has ballooned – COVID-19 has actually improved the awareness and need for authenticity especially recently for face masks and testing kits – our product suite is proven and more relevant, and we believe that we are on the cusp of commercialising a revolutionary new product, Motif Micro, smartphone readable authentication technology (emphasis added) ;

3. …”

“The jewel in our technology crown is undoubtedly MotifMicro. The first generation, known as MM1, detects the presence of forensic tracer with a smartphone. The next generation will offer the dual protection of physical and digital unique identities (“packaging DNA”) in a single, invisible, indestructible, uncopiable marker readable by smartphone. The revenue potential of such a product is only limited by imagination.” (Emphasis added).

“ The next step toward MM1 generating first revenues is to complete the development of the MM1 smartphone app for Android – to date the focus has been solely on IOS. The Android solution is well advanced and, following its completion, we are optimistic of concluding commercial agreements with Companies who are excited about the prospects of MM1 for high volume customers such as PanPass who produce approximately 15 billion labels per annum.” (Emphasis added).

• E. The significant volume of YPB shares traded on 22 July 2020.

ASX Customer Service Centre 131 279 | asx.com.au

ASX Limited [[Listings]]

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• F. YPB’s announcement entitled “MotifMicro Key Milestone – Android Readability Achieved” lodged on MAP and released on 28 July 2020, disclosing, among other things, that:

• (i) YPB had achieved a critical technical and commercial milestone by achieving Android smartphone readability of its proprietary MotifMicro technology; and

• (ii) the Android capability will be included in the 2nd generation MotifMicro APP which has also just been completed (emphasis added).

• G. Listing Rule 3.1, which requires a listed entity to immediately give ASX any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity’s securities.

• H. The definition of “aware” in Chapter 19 of the Listing Rules, which states that:

“an entity becomes aware of information if, and as soon as, an officer of the entity (or, in the case of a trust, an officer of the responsible entity) has, or ought reasonably to have, come into possession of the information in the course of the performance of their duties as an officer of that entity” and section 4.4 in Guidance Note 8 Continuous Disclosure: Listing Rules 3.1 – 3.1B “When does an entity become aware of information.”

• I. Listing Rule 3.1A, which sets out exceptions from the requirement to make immediate disclosure, provided that each of the following are satisfied.

• “3.1A Listing rule 3.1 does not apply to particular information while each of the following is satisfied in relation to the information:

• 3.1A.1 One or more of the following applies:

  • It would be a breach of a law to disclose the information;

  • The information concerns an incomplete proposal or negotiation;

  • The information comprises matters of supposition or is insufficiently definite to warrant disclosure;

  • The information is generated for the internal management purposes of the entity; or

  • The information is a trade secret; and

• 3.1A.2 The information is confidential and ASX has not formed the view that the information has ceased to be confidential; and

• 3.1A.3 A reasonable person would not expect the information to be disclosed.”

• J. ASX’s policy position on the concept of “confidentiality”, which is detailed in section 5.8 of Guidance Note 8 Continuous Disclosure : Listing Rules 3.1 – 3.1B. In particular, the Guidance Note states that:

“Whether information has the quality of being confidential is a question of fact, not one of the intention or desire of the listed entity. Accordingly, even though an entity may consider information to be confidential and its disclosure to be a breach of confidence, if it is in fact disclosed by those who know it, then it ceases to be confidential information for the purposes of this rule.”

Request for information

Having regard to the above, ASX asks YPB to respond separately to each of the following questions and requests for information:

1. Does YPB consider the completion of the second generation of the MotifMicro application (‘App Development Information’), referred to in its announcement dated 28 July 2020 (see paragraph F(ii) above), to be

2/4 ASX Customer Service Centre 131 279 | asx.com.au

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information that a reasonable person would expect to have a material effect on the price or value of its securities?

1. If the answer to question 1 is “no”, please advise the basis for that view.

2. When did YPB first become aware of the App Development Information?

3. Please provide copies of documents or correspondence which show when the development of the second generation MotifMicro application was completed (not for release to the market).

4. If the answer to question 1 is “yes” and YPB first became aware of the Information before 28 July 2020, did YPB make any announcement prior to the relevant date which disclosed the App Development Information?

5. 5.1 If so, please provide details.

6. 5.2 If not, please explain why the App Development Information was not released to the market at an earlier time, commenting specifically on when you believe YPB was obliged to release the App Development Information under Listing Rules 3.1 and 3.1A and what steps YPB took to ensure that the App Development Information was released promptly and without delay.

7. Does YPB consider the achievement of Android smartphone readability of MotifMicro (‘Android Information’), referred to in its announcement dated 28 July 2020 (see paragraph F(i) above), to be information that a reasonable person would expect to have a material effect on the price or value of its securities?

8. If the answer to question 6 is “no”, please advise the basis for that view.

9. When did YPB first become aware of the Android Information?

10. Please provide copies of documents or correspondence which show when the achievement of Android smartphone readability of MotifMicro occurred (not for release to the market).

11. If the answer to question 6 is “yes” and YPB first became aware of the Android Information before 28 July 2020, did YPB make any announcement prior to the relevant date which disclosed the Android Information?

12. 10.1 If so, please provide details.

13. 10.2 If not, please explain why the Android Information was not released to the market at an earlier time, commenting specifically on when you believe YPB was obliged to release the Android Information under Listing Rules 3.1 and 3.1A and what steps YPB took to ensure that the Android Information was released promptly and without delay.

14. The Chairman’s Address states that YPB was ‘on the cusp of commercialising a revolutionary new product’. Please clarify exactly what product this statement was referring to. As part of your answer, please state whether this was referring to: the development of the second generation of the MotifMicro application; the development of Android smartphone readability of the MotifMicro application; or both together?

15. Please confirm that YPB is complying with the Listing Rules and, in particular, Listing Rule 3.1.

16. Please confirm that YPB’s responses to the questions above have been authorised and approved in accordance with its published continuous disclosure policy or otherwise by its board or an officer of YPB with delegated authority from the board to respond to ASX on disclosure matters.

When and where to send your response

This request is made under Listing Rule 18.7. Your response is required as soon as reasonably possible and, in any event, by no later than 3:00 PM AWST Thursday, 20 August 2020 . You should note that if the information requested by this letter is information required to be given to ASX under Listing Rule 3.1 and it does not fall within the exceptions mentioned in Listing Rule 3.1A, YPB’s obligation is to disclose the information

3/4 ASX Customer Service Centre 131 279 | asx.com.au

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‘immediately’. This may require the information to be disclosed before the deadline set out in the previous paragraph and may require YPB to request a trading halt immediately.

Your response should be sent to me by e-mail at ListingsCompliancePerth@asx.com.au . It should not be sent directly to the ASX Market Announcements Office. This is to allow me to review your response to confirm that it is in a form appropriate for release to the market, before it is published on the ASX Market Announcements Platform.

Trading halt

If you are unable to respond to this letter by the time specified above, you should discuss with us whether it is appropriate to request a trading halt in YPB’s securities under Listing Rule 17.1. If you wish a trading halt, you must tell us:

• the reasons for the trading halt;

• how long you want the trading halt to last;

• the event you expect to happen that will end the trading halt;

• that you are not aware of any reason why the trading halt should not be granted; and

• any other information necessary to inform the market about the trading halt, or that we ask for.

We require the request for a trading halt to be in writing. The trading halt cannot extend past the commencement of normal trading on the second day after the day on which it is granted. You can find further information about trading halts in Guidance Note 16 Trading Halts & Voluntary Suspensions .

Suspension

If you are unable to respond to this letter by the time specified above, ASX will likely suspend trading in YPB’s securities under Listing Rule 17.3.

Listing Rules 3.1 and 3.1A

In responding to this letter, you should have regard to YPB’s obligations under Listing Rules 3.1 and 3.1A and also to Guidance Note 8 Continuous Disclosure : Listing Rules 3.1 – 3.1B. It should be noted that YPB’s obligation to disclose information under Listing Rule 3.1 is not confined to, nor is it necessarily satisfied by, answering the questions set out in this letter.

Release of correspondence between ASX and entity

We reserve the right to release a copy of this letter, your reply and any other related correspondence between us to the market under listing rule 18.7A.

Questions

If you have any questions in relation to the above, please do not hesitate to contact me.

Yours faithfully

Belinda Giles

Adviser, Listings Compliance (Perth)

4/4 ASX Customer Service Centre 131 279 | asx.com.au