CODEIFAI LIMITED — Regulatory Filings 2021

Sep 12, 2021

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13 September 2021

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 Query Letter

YPB Group Limited ( ASX:YPB ) ( YPB or the Company ) refers to your letter dated 9 September 2021 ( Letter ). Set out below are the Company’s responses against each query in the Letter.

1) Please confirm the revenue that YPB expects to receive for the initial 12-month period of the paid trial.

YPB considers the revenue receivable under the trial agreement to be commercially-sensitive and does not require disclosure under Listing Rule 3.1. ASX has communicated to YPB that it disagrees with its position in this regard. The Company believes that releasing the revenue figure is likely to lead to competitors, customers and suppliers becoming aware of the Company’s unit pricings and volumes to the detriment of the Company and its shareholders.

The Company also notes that:

• the Company has several paid commercial trial proposals in the market at present and it would be detrimental to negotiations with potential partners to disclose revenue; and

• to the best of the Company’s knowledge, this is the world's first large scale, commercial trial for this technology and the Company is endeavoring to negotiate trial conditions that are attractive to customers in the expectation that a successful conclusion to the trial will drive the creation of future opportunities.

As set out in the Announcement, the Company does not consider the revenue resulting from the trial to be material and that, irrespective of the volumes of orders for MotifMicro1 (MM1) product, the opportunities that would follow a successful conclusion are. Refer to response to question 2(ii) for further details.

• 2) Please confirm why YPB considers there to be reasonable grounds saying that for its statement that “the opportunities that would follow a successful conclusion” of the trial are “undoubtedly” material to it. In your answer, please comment specifically on:

investors@ypbsystems.com

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

ypbsystems.com

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• i) what constitutes a “successful conclusion” of the trial, and whether this is provided for expressly under the agreement;

The Licence Agreement does not expressly provide for a “successful conclusion”. Under the Licence Agreement, the paid commercial trial contemplates a minimum order quantity of MM1 product over the first 12 months ( Initial Trial Period ) and may be extended for a period of 3 years following the end of the Initial Trial Period. From the Company’s perspective, a successful conclusion to the trial program would be for end customers of the trial partner contracting further orders of MM1 beyond the Initial Trial Period.

• ii) whether YPB expects that, if the trial is “successful”, a material volume of orders for MM1 will be placed by OpalANZ, and the basis for that expectation; and

Minimum order quantities of MM1 product during the Initial Trial Period are aimed at satisfying trial-scale activities. If customers of the trial partner place more orders of MM1 beyond the initial minimum order quantities, then this will lead to further orders. The Company is hopeful that a successful conclusion of the trial will lead to such orders. At this time, it is not known whether these will be material order volumes of MM1 product.

In any event, the Company believes that a successful conclusion of the trial is likely to lead to material opportunities that are not measured by order volumes of MM1 product alone. The Company considers progressing from the launch of a controlled TestFlight program in April 2021 (refer to announcement dated 28 April 2021) to paid trials with a leading ANZ packaging supplier in just over 4 months to be a significant achievement in and of itself. Irrespective of the volumes of orders for MM1 product, the Company believes that a successful conclusion of the trial would result in, amongst other things:

• further validation of the MM1 product and recognition of this revolutionary technology by virtue of it being adopted by the product partner and their end customers;

• a chance to cross-sell other solutions in YPB’s product suite such as YPB Connect; and

• the opportunity to engage with well-known Australian and international brands.

• iii) whether the trial agreement commits OpalANZ in any way to enter into a material agreement with YPB on completion of a “successful” trial, and what its terms would be.

The Licence Agreement is considered material to the Company. It is for a term of 12 months and may be extended for a period of 3 years following the end of the Initial Trial Period. The Company’s view in respect to what it considers to be a successful conclusion to the trial is set out in response to question 2(i). It is unknown whether a successful conclusion of the Initial Trial Period will lead to the extension period.

investors@ypbsystems.com

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

ypbsystems.com

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• 3) If the trial does not lead to a material agreement with OpalANZ, does YPB intend on updating the market to reflect this? If not, why not?

The Company will continue to update the market on any material developments in respect to the Licence Agreement, including the result of the Initial Trial Period and any extension that may be adopted.

• 4) Is the “3-year renewal option” for a single, three-year period extension of the agreement at the expiry of the initial 12-month period, or is it three consecutive 12-month options?

The Licence Agreement is for a term of 12 months and may be extended for a single period of 3 years following the end of the Initial Trial Period.

• 5) If OpalANZ has been granted exclusivity to distribute MM1 in the recyclable, paper-based packaging market in Australasia:

• i) Is this for the entire trial period, including any extensions?

OpalANZ has been granted exclusivity to distribute MM1 in the recyclable, paper-based packaging market in Australasia only for the duration of the Initial Trial Period ( Exclusivity ).

• ii) Does this prevent YPB entering into comparable trial agreements or contracts for the wholesale supply of its product to other businesses in the same industry and territory?

Exclusivity under the Licence Agreement applies to market segments in Australasia that OpalANZ supplies goods into. During the Initial Trial Period, the Company will not enter into similar arrangement or agreement in respect to products or the territory that are the subject of the Exclusivity.

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

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

• 7) 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.

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

ypbsystems.com

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9 September 2021 Reference: 39482

Mr Sebastian Andre Company Secretary YPB Group Ltd

By email

Dear Mr Andre

YPB Group Ltd (‘YPB’): Query Letter

ASX refers to the following:

• A. YPB’s announcement titled “First paid commercial trial for MotifMicro” lodged on the ASX Market Announcements Platform on 8 September 2021 (the ‘ Announcement ’), disclosing (relevantly, emphasis added):

• i. “[YPB] has secured the first paid commercial trial of MotifMicro1 (MM1) with leading ANZ packaging supplier OpalANZ through its Specialty Packing Group Pty Ltd.”;

• ii. “The Licence Agreement is for a term of 12 months with a 3-year renewal option. It grants Opal exclusivity to distribute MM1 in the Australasian recyclable, paper-based packaging market. The revenue to YPB from the trial will not in itself be material but the opportunities that would follow a successful conclusion undoubtedly are . Initial target customers would be ANZ food exporters.”

• B. 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.

• C. Section 7.10 of Guidance Note 8, which outlines ASX’s view on “ramping” announcements and provides (relevantly):

“Ramping announcements come in many forms, including: (…)

• “an announcement that an entity has entered into what appears to be a material contract or transaction but without disclosing key information that investors and their professional advisers reasonably need to understand the materiality of the contract or transaction and to assess its impact on the price or value of the entity's securities.” …

“Some examples that ASX has observed include an entity:

• projecting very substantial revenues from a customer contract where it is not apparent that the projection Is based on reasonable grounds;” …

“Whenever ASX detects what it suspects to be a ramping announcement, it will give careful consideration to suspending the entity’s securities from trading and issuing a query letter to the entity asking the entity:

• if it marked the announcement as market sensitive when it was lodged on MAP, to identify what information in the announcement the entity considered was market sensitive and why; …

• if the announcement includes a revenue projection or other forward-looking statement, to identify the reasonable grounds on which that statement was made and any material assumptions or qualifications underpinning the statement”

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

ASX Limited [[Listings]]

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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. Please confirm the revenue that YPB expects to receive for the initial 12-month period of the paid trial.

2. Please confirm why YPB considers there to be reasonable grounds saying that for its statement that “the opportunities that would follow a successful conclusion” of the trial are “undoubtedly” material to it. In your answer, please comment specifically on:

3. i. what constitutes a “successful conclusion” of the trial, and whether this is provided for expressly under the agreement;

4. ii. whether YPB expects that, if the trial is “successful”, a material volume of orders for MM1 will be placed by OpalANZ, and the basis for that expectation; and

5. iii. whether the trial agreement commits OpalANZ in any way to enter into a material agreement with YPB on completion of a “successful” trial, and what its terms would be.

6. If the trial does not lead to a material agreement with OpalANZ, does YPB intend on updating the market to reflect this? If not, why not?

7. Is the “3-year renewal option” for a single, three-year period extension of the agreement at the expiry of the initial 12-month period, or is it three consecutive 12-month options?

8. If OpalANZ has been granted exclusivity to distribute MM1 in the recyclable, paper-based packaging market in Australasia:

9. i. Is this for the entire trial period, including any extensions?

10. ii. Does this prevent YPB entering into comparable trial agreements or contracts for the wholesale supply of its product to other businesses in the same industry and territory?

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

12. 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 Friday, 10 September 2021 . 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 ‘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.

2/3 ASX Customer Service Centre 131 279 | asx.com.au

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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)

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