DXN LIMITED - Capital/Financing Update 2019

DXN LIMITED ACN 620 888 548

ENTITLEMENT ISSUE PROSPECTUS

For a non-renounceable entitlement issue of one (1) fully paid ordinary share in the Company ( Share ) for every four (4) Shares held by eligible Shareholders at an issue price of $0.055 per Share to raise up to approximately $4,981,236 (together with one freeattaching listed option ( New Option ) for every one Share subscribed for and issued, exercisable at $0.10 per Option on or before the date which is 12 months from the date of issue)( Offer ).

The Offer is fully underwritten by Pinnacle Corporate Finance Pty Ltd (ABN 46 149 263 543) (AFSL 403684). Pinnacle Corporate Finance Pty Ltd is also acting as Lead Manager to the Offer, with Lucerne Investment Partners Pty Ltd acting as Co-Manager to the Offer. Please refer to section 9.4 for the details of the underwriting and Lead Manager terms.

IMPORTANT NOTICE

This document is important and should be read in its entirety. If after reading this Prospectus you have any questions about the securities being offered under this Prospectus or any other matter, then you should consult your stockbroker, accountant or other professional adviser.

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

1.	CORPORATE DIRECTORY ......................................................................................... 1
2.	TIMETABLE ................................................................................................................ 2
3.	IMPORTANT NOTES .................................................................................................. 3
4.	CHAIRMAN’S LETTER ................................................................................................ 5
5.	DETAILS OF THE OFFER ............................................................................................. 6
6.	PURPOSE AND EFFECT OF THE OFFER .................................................................... 12
7.	RIGHTS AND LIABILITIES ATTACHING TO SECURITIES ............................................ 17
8.	RISK FACTORS ....................................................................................................... 22
9.	ADDITIONAL INFORMATION ................................................................................. 30
10.	DIRECTORS’ AUTHORISATION ............................................................................... 45
11.	GLOSSARY ............................................................................................................. 46

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1. CORPORATE DIRECTORY

Directors

Share Registry*

Douglas Loh Non-Executive Chairman

Timothy Desmond Non-Executive Director

Automic Registry Services Level 2 267 St Georges Terrace PERTH WA 6000

Legal Advisers

John Duffin Non-Executive Director

Richard Carden Non-Executive Director

Steinepreis Paganin Level 4, The Read Buildings 16 Milligan Street PERTH WA 6000

Terry Smart Non-Executive Director

John Baillie Non-Executive Director

Underwriter and Lead Manager

Pinnacle Corporate Finance Pty Ltd AFSL 403684, ABN 46 149 263 543 Level 28 140 St Georges Terrace PERTH WA 6000

Company Secretary

Auditor

George Lazarou

ASX Code

Moore Stephens Level 15 Exchange Tower 2 The Esplanade PERTH WA 6000

DXN, DXNO

Registered Office

Level 28 140 St George Terrace PERTH WA 6000

Telephone: +61 8 9288 1870 Email: [email protected] Website: www.dxn.solutions

*This entity is included for information purposes only. It has not been involved in the preparation of this Prospectus and has not consented to being named in this Prospectus.

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2. TIMETABLE

Company Announced Rights Issue	9 October 2019
Lodgement of Prospectus and Appendix 3B with	11 October 2019
ASX
Notice sent to Option holders	11 October 2019
Notice sent to Shareholders	14 October 2019
Ex date	16 October 2019
Record Date for determining Entitlements	17 October 2019
Prospectus sent out to eligible Shareholders &
Company announces this has been completed &	21 October 2019
Offer Opening Date
Last day to extend the Closing Date of the Offer	30 October 2019
Closing Date	4 November 2019
Shares and Options quoted on a deferred settlement basis	5 November 2019
ASX notified of under subscriptions	6 November 2019
Issue date	11 November 2019
Quotation of Shares and Options issued under the	12 November 2019
Offer

*The Directors may extend the Closing Date by giving at least 3 Business Days’ notice to ASX prior to the Closing Date. As such the date the Securities are expected to commence trading on ASX may vary.

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3. IMPORTANT NOTES

This Prospectus is dated 11 October 2019 and was lodged with the ASIC on that date. The ASIC, the ASX and their respective officers take no responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates.

No Securities may be issued on the basis of this Prospectus later than 13 months after the date of this Prospectus.

No person is authorised to give information or to make any representation in connection with this Prospectus, which is not contained in the Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with this Prospectus.

It is important that investors read this Prospectus in its entirety and seek professional advice where necessary. The Shares the subject of this Prospectus should be considered highly speculative.

Applications for Securities offered pursuant to this Prospectus can only be submitted on an original Entitlement and Acceptance Form or Shortfall Application Form.

This Prospectus is a transaction specific prospectus for an offer of continuously quoted securities (as defined in the Corporations Act) and has been prepared in accordance with Section 713 of the Corporations Act. It does not contain the same level of disclosure as an initial public offering prospectus. In making representations in this Prospectus regard has been had to the fact that the Company is a disclosing entity for the purposes of the Corporations Act and certain matters may reasonably be expected to be known to investors and professional advisers whom potential investors may consult.

3.1 Risk factors

Potential investors should be aware that subscribing for Securities in the Company involves a number of risks. The key risk factors of which investors should be aware are set out in section 8. These risks together with other general risks applicable to all investments in listed securities not specifically referred to, may affect the value of the Shares in the future. Accordingly, an investment in the Company should be considered highly speculative. Investors should consider consulting their professional advisers before deciding whether to apply for Securities pursuant to this Prospectus.

3.2 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 our Company, the Directors and our management.

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We cannot and do 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.

We have 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 8.

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4. CHAIRMAN’S LETTER

Dear Shareholder

On behalf of the Directors of DXN Limited ( Company ), I am pleased to invite you to participate in this Offer.

The Company is seeking to raise up to approximately $4,981,236 by way of a nonrenounceable entitlement issue of one (1) Share for every four (4) Shares held by eligible Shareholders at an issue price of $0.055 per Share (together with one New Option for every one Share subscribed for and issued, exercisable at $0.10 per Option on or before the date which is 12 months from the date of issue). The Offer is fully underwritten by Pinnacle Corporate Finance Pty Ltd.

Funds raised from this Offer will be used for completion of an additional 400kW of “ready for service” rack space to increase the capacity to 800kW of “ready for service” rack space at the Homebush datacentre (DXN-SYD01), as well as a high voltage upgrade to take the power capacity to 2.5MW at DXN-SYD01, working capital for the DXN Modules business and for general working capital requirements, as well as satisfying the costs of the Offer.

The proposed increase in capacity from 400kW to 800kW and a higher power upgrade will enable the Company to fulfil strong customer interests that have been received since the official opening of DXN-SYD01 on 13 September 2019. The Company’s priority is to drive additional rack sales for DXN-SYD01 and to focus on converting the deep sales pipeline for near term contracts for its prefabricated modules division.

Directors, Douglas Loh, Richard Carden and John Baillie currently intend on taking up all or part of their Entitlement. John Baillie is also participating in the Offer for a commitment of up to $250,000, via a sub-underwriting arrangement entered into with the Underwriter.

On behalf of the Board, I recommend the Offer to you and urge all eligible Shareholders to consider taking up your Entitlement.

Yours sincerely

==> picture [94 x 35] intentionally omitted <==

Douglas Loh Chairman

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5. DETAILS OF THE OFFER

5.1 The Offer

The Offer is being made as a non-renounceable entitlement issue one (1) Share for every four (4) Shares held by eligible Shareholders at an issue price of $0.055 per Share (together with one free-attaching New Option for every one Share subscribed for and issued, exercisable at $0.10 per Option on or before the date which is 12 months from the date of issue). Fractional entitlements will be rounded up to the nearest whole number.

Based on the capital structure of the Company as at the date of this Prospectus, (and assuming no existing Options are exercised prior to the Record Date) a maximum of 90,567,933 Shares and 90,567,933 New Options will be issued pursuant to this Offer to raise up to $4,981,236. No funds will be raised from the issue of the New Options.

As at the date of this Prospectus the Company has 122,323,048 Options on issue all of which may be exercised prior to the Record Date in order to participate in the Offer. Please refer to section 6.4 for information on the exercise price and expiry date of the Options on issue.

All of the Shares offered under this Prospectus will rank equally with the Shares on issue at the date of this Prospectus. Please refer to section 7.1 for further information regarding the rights and liabilities attaching to the Shares.

All of the New Options offered under this Prospectus will be issued on the terms and conditions set out in section 7.2.

All Shares issued on conversion of the New Options will rank equally with the Shares on issue at the date of this Prospectus.

The purpose of the Offer and the intended use of funds raised are set out in section 6.1.

5.2 Minimum subscription

As the Offer is fully underwritten, there is no minimum subscription.

5.3 Acceptance

Your acceptance of the Offer must be made on the Entitlement and Acceptance Form accompanying this Prospectus. Other than as set out in paragraph (c) below, your acceptance must not exceed your Entitlement as shown on that form. If it does, your acceptance will be deemed to be for the maximum Entitlement.

You may participate in the Offer as follows:

(a) if you wish to accept your full Entitlement:
(i) complete the Entitlement and Acceptance Form; and
(ii) attach your cheque, drawn on an Australian bank or bank draft made payable in Australian currency or arrange payment by BPAY[®] , for the amount indicated on the Entitlement and Acceptance Form; or

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(b) if you only wish to accept part of your Entitlement:
(i) fill in the number of Shares you wish to accept in the space provided on the Entitlement and Acceptance Form; and
(ii) attach your cheque, drawn on an Australian bank or bank draft made payable in Australian currency or arrange payment by BPAY[®] , for the appropriate application monies (at $0.05 per Share); or
(c) if you wish to apply for your full Entitlement in full and apply for additional Shares (which will be issued at the sole discretion of the Company (in consultation with the Underwriter), scaled back to the extent required and not issued to the extent that any Applicant will increase their holding to an amount in excess of 19.9% of all the Shares on issue on completion of the Offer):
(i) complete the Entitlement and Acceptance Form, filling in the details in the spaces provided;
(ii) fill in the number of Shares you wish to apply for over and above your Entitlement in the space provided on the Entitlement and Acceptance Form; and
(iii) attach your cheque or arrange payment by BPAY® for the appropriate Application monies (at $0.055 per Share); or
(d) if you do not wish to accept all or part of your Entitlement, you are not obliged to do anything.

5.4 Payment by cheque/bank draft

All cheques must be drawn on an Australian bank or bank draft made payable in Australian currency to “DXN Limited” and crossed “Not Negotiable”.

Your completed Entitlement and Acceptance Form and cheque must reach the Company’s share registry no later than 5:00 pm WST on the Closing Date.

5.5 Payment by BPAY[®]

For payment by BPAY[®] , please follow the instructions on the Entitlement and Acceptance Form. You can only make a payment via BPAY® if you are the holder of an account with an Australian financial institution that supports BPAY® transactions. Please note that should you choose to pay by BPAY®:

(a) you do not need to submit the Entitlement and Acceptance Form but are taken to have made the declarations on that Entitlement and Acceptance Form; and
(b) if you do not pay for your Entitlement in full, you are deemed to have taken up your Entitlement in respect of such whole number of Shares which is covered in full by your application monies.

It is your responsibility to ensure that your BPAY® payment is received by the share registry by no later than 5:00 pm (WST) on the Closing Date. You should be aware that your financial institution may implement earlier cut-off times with regards to electronic payment and you should therefore take this into consideration when making payment.

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Any application monies received for more than your final allocation of Shares (only where the amount is $1.00 or greater) will be refunded. No interest will be paid on any application monies received or refunded.

The Offer is non-renounceable. Accordingly, a Shareholder may not sell or transfer all or part of their Entitlement.

One (1) New Option with an exercise price of $0.10 and an expiry date which is 12 months from the date of issue will be issued for every one (1) Share subscribed for and issued under the Offer.

5.6 Underwriting, issue of Convertible Notes and sub-underwriting

The Offer is fully underwritten by the Pinnacle and Pinnacle is also acting as Lead Manager to the Offer. Refer to section 9.4 for details of the terms of the underwriting and Lead Manager mandate.

The Company has also entered into a number of convertible note agreements pursuant to which it has issued 100 Convertible Notes with a combined face value of $1,000,000. The Convertible Notes are convertible at the election of the Convertible Note holders at $0.055 per Share (with the right to receive a one-forone free attaching Option on the same terms as the New Options) or redeemable in cash. If there is any Shortfall, conversion of Convertible Notes into that Shortfall will take priority to the Underwriter’s sub-underwriting agreements and any applications received pursuant to section 5.3(c) and will reduce the Underwriter’s obligations to underwrite the Offer. If there is not sufficient Shortfall and Convertible Note holders elect to convert their Convertible Notes on the Shortfall settlement date and there is not sufficient Shortfall resulting from the Offer, the Company will issue the Shares and New Options the subject of the conversion under its current ASX Listing Rule 7.1 placement capacity.

Refer to section 9.4 for further terms of the Convertible Note Agreements.

The Underwriter has entered into a number of sub-underwriting agreements in respect of the sub-underwritten Securities, including a general sub-underwriting agreement with Director, John Baillie. The maximum potential increase in voting power to John Baillie as a result of this sub-underwriting arrangement is set out below.

Director	Sub-Underwritten Shares1	Sub- Underwritten Value	Current Voting Power	Voting Power Post Offer2
John Baillie	4,545,455	$250,000	0.38%	1.38%

Notes:

John Baillie has entered into a general sub-underwriting agreement with the Underwriter. Pursuant to the terms of the sub-underwriting, the Underwriter shall pay John Baillie a fee of 3% (including GST) of his maximum total commitment amount.
This figure assumes that (i) all Securities are issued pursuant to the Offer; (ii) John Baillie will also take up his Entitlement (as this is his current intention); and (iii) that John Baillie is obliged to subscribe for all of his respective sub-underwritten Shares pursuant to his sub-underwriting agreement.

No sub-underwriter will increase their shareholding to above 19.99% as a result of the Offer.

The Underwriter presently is a shareholder of the Company, with a relevant interest in 600,000 Shares. The extent to which Shares are issued pursuant to the

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underwriting will increase the Underwriters’ voting power in the Company. The Underwriter is not a related party of the Company for the purpose of the Corporations Act. The Underwriter’s present relevant interest and changes under several scenarios are set out in the table below (and assumes that Pinnacle takes up its Entitlement).

Event	Shares held by Underwriter	Voting power of Underwriter
Date of Prospectus	600,000	0.17%
Completion of Entitlement Issue
Fully subscribed	750,000	0.17%
75% subscribed	23,241,983	5.13%
50% subscribed	45,883,967	10.13%
0% subscribed	91,167,933	20.13%

The number of Shares held by the Underwriter and its voting power in the table above show the potential effect of the underwriting of the Offer. However, it is unlikely that no Shareholders will take up Entitlements under the Offer. The underwriting obligation and therefore voting power of the Underwriter will reduce by a corresponding amount for the amount of Entitlements under the Offer taken up by Shareholders. In addition, the Underwriter has entered into sub-underwriting arrangements with various parties and the Company has issued the Convertible Notes referred to above. In the event that there is a Shortfall, these subunderwriting arrangements and any conversion of Convertible Notes into Shortfall will decrease the number of Shares and Options to be subscribed for by the Underwriter .

5.7 Effect on control of the Company

In addition, Shareholders should note that if they do not participate in the Offer, their holdings are likely to be diluted by approximately 20% (as compared to their holdings and number of Shares on issue as at the date of the Prospectus). Examples of how the dilution may impact Shareholders (assuming no New Options have been exercised) is set out in the table below:

Holder	Holding as at Record date	Approximate % at Record Date1	Entitlements under the Offer	Holdings if Offer not taken Up	Approximate % post Offer
Shareholder 1	50,000,000	13.80%	12,500,000	50,000,000	11.07%
Shareholder 2	25,000,000	6.90%	6,250,000	25,000,000	5.52%
Shareholder 3	10,000,000	2.76%	2,500,000	10,000,000	2.21%
Shareholder 4	1,000,000	0.28%	250,000	1,000,000	0.22%
Shareholder 5	100,000	0.028%	25,000	100,000	0.022%

Notes:

This is based on a share capital of 362,271,732 Shares at the date of this Prospectus.
The dilutionary effect shown in the table is the maximum percentage on the assumption that those Entitlements not accepted are placed under the Shortfall Offer. In the event all Entitlements are not accepted and some or all of the resulting Shortfall was not subsequently placed, the dilution effect for each Shareholder not accepting their Entitlement would be a lesser percentage.

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5.8 Shortfall Offer

Any Entitlement not taken up pursuant to the Offer will form the Shortfall Offer.

The Shortfall Offer is a separate offer made pursuant to this Prospectus and will remain open for up to three months following the Closing Date. The issue price for each Share to be issued under the Shortfall Offer shall be $0.055 being the price at which Shares have been offered under the Offer.

The Underwriter, in consultation with the Directors, reserves the right to issue Shortfall Securities at its absolute discretion. The conversion of any Convertible Notes into Shortfall Securities will take precedence in the issue of any Shortfall.

5.9 ASX listing

Application for Official Quotation of the Securities offered pursuant to this Prospectus will be made in accordance with the timetable set out at the commencement of this Prospectus. If ASX does not grant Official Quotation of the Securities offered pursuant to this Prospectus before the expiration of 3 months after the date of issue of the Prospectus, (or such period as varied by the ASIC), the Company will not issue any Securities and will repay all application monies for the Securities within the time prescribed under the Corporations Act, without interest.

The fact that ASX may grant Official Quotation to the Securities is not to be taken in any way as an indication of the merits of the Company or the Securities now offered for subscription.

5.10 Issue

Securities issued pursuant to the Offer will be issued in accordance with the ASX Listing Rules and timetable set out at the commencement of this Prospectus.

Securities issued pursuant to the Shortfall Offer may be issued on a progressive basis. Where the number of Shares issued is less than the number applied for, or where no issue is made, surplus application monies will be refunded without any interest to the Applicant as soon as practicable after the closing date of the Shortfall Offer.

Pending the issue of the Securities or payment of refunds pursuant to this Prospectus, all application monies will be held by the Company in trust for the Applicants in a separate bank account as required by the Corporations Act. The Company, however, will be entitled to retain all interest that accrues on the bank account and each Applicant waives the right to claim interest.

Holding statements for Securities issued under the Offer will be mailed in accordance with the ASX Listing Rules and timetable set out at the commencement of this Prospectus and for Shortfall Securities issued under the Shortfall Offer as soon as practicable after their issue.

5.11 Overseas shareholders

This Offer does not, and is not intended to, constitute an offer in any place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus.

It is not practicable for the Company to comply with the securities laws of overseas jurisdictions having regard to the number of overseas Shareholders, the number

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and value of Shares these Shareholders would be offered and the cost of complying with regulatory requirements in each relevant jurisdiction. Accordingly, the Offer is not being extended and Shares will not be issued to Shareholders with a registered address which is outside Australia, New Zealand or Singapore.

New Zealand

The Securities are not being offered to the public within New Zealand other than to existing shareholders of the Company with registered addresses in New Zealand to whom the offer of these securities is being made in reliance on the transitional provisions of the Financial Markets Conduct Act 2013 (New Zealand) and the Financial Markets Conduct (Incidental Offers) Exemption Notice 2016 (New Zealand).

This Prospectus has been prepared in compliance with Australian law and has not been registered, filed with or approved by any New Zealand regulatory authority. This document is not a product disclosure statement under New Zealand law and is not required to, and may not, contain all the information that a product disclosure statement under New Zealand law is required to contain.

Singapore

This document and any other materials relating to the 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 Shares may not be issued, circulated or distributed, nor may these securities 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 (the "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 an existing holder of the Company's Shares. In the event that you are not such a Shareholder, 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 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 Shares. As such, investors are advised to acquaint themselves with the SFA provisions relating to resale restrictions in Singapore and comply accordingly.

Nominees and custodians

Nominees and custodians may not submit an Entitlement and Acceptance Form on behalf of any Shareholder resident outside Australia, New Zealand and Singapore without the prior consent of the Company, taking into account relevant securities law restrictions. Return of a duly completed Entitlement and Acceptance Form will be taken by the Company to constitute a representation that there has been no breach of those regulations.

5.12 Enquiries

Any questions concerning the Offer should be directed to George Lazarou, Company Secretary, on +61 8 9288 1870.

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6. PURPOSE AND EFFECT OF THE OFFER

6.1 Purpose of the Offer

The purpose of the Offer is to raise up to $4,981,236. No funds will be raised from the issue of the New Options.

The funds raised from the Offer are planned to be used in accordance with the table set out below:

Funds	$	%
Funds to be raised under the Offer1	4,981,236	100
Total	4,981,236	100.00
Items of Expenditure
Sydney Data Centre Expansion2	3,000,000	60.22
DXN Modules3	1,000,000	20.08
Working Capital	631,236	12.67
Expenses of the Offer4	350,000	7.03
Total	4,981,236	100.00

Notes:

The Offer is fully underwritten. Refer to section 9.4 for further details of the Underwriting Agreement.
Funds to be applied for the completion of the next 400kW of “ready for service” rack space (taking the total to 800kW of “ready for service” rack space) as well as a high voltage upgrade to take the power capacity to 2.5MW at the Sydney Data Centre.
Funds to be applied as working capital for the DXN Modules business.
Refer to section 9.8 for further details relating to the estimated expenses of the Offer.

On completion of the Offer, the Board believes the Company will have sufficient working capital to achieve these objectives.

The above table is a statement of current intentions as of the date of this Prospectus. As with any budget, intervening events and new circumstances have the potential to affect the manner in which the funds are ultimately applied. The Board reserves the right to alter the way funds are applied on this basis.

6.2 Effect of the Offer

The principal effect of the Offer, assuming all Entitlements are accepted and no Options are exercised prior to the Record Date, will be to:

(a) increase the cash reserves by $4,631,236 (after deducting the estimated expenses of the Offer) immediately after completion of the Offer;
(b) increase the number of Shares on issue from 362,271,732 as at the date of this Prospectus to 452,839,665 Shares following completion of the Offer; and
(c) increase the number of Options on issue from 122,323,048 as at the date of this Prospectus to 212,890,981 Options following completion of the Offer.

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6.3 Pro-forma balance sheet

The audited balance sheet as at 30 June 2019 and the unaudited pro-forma balance sheet as at 30 June 2019 shown below have been prepared on the basis of the accounting policies normally adopted by the Company and reflect the changes to its financial position.

The pro-forma balance sheet has been prepared assuming all Entitlements are accepted, no Options are exercised prior to the Record Date and including expenses of the Offer.

The pro-forma balance sheet has been prepared to provide investors with information on the assets and liabilities of the Company and pro-forma assets and liabilities of the Company as noted below. The historical and pro-forma financial information is presented in an abbreviated form, insofar as it does not include all of the disclosures required by Australian Accounting Standards applicable to annual financial statements.

	AUDITED 30 JUNE 2019	ADJUSTMENTS	PROFORMA 30 JUNE 2019
CURRENT ASSETS
Cash & cash equivalents1&2	5,362,135	4,631,236	9,993,371
Trade & other receivables	1,046,945		1,046,945
Inventory	988,342		988,342
Other current assets	428,838		428,838
TOTAL CURRENT ASSETS	7,826,260	4,631,236	12,457,496

NON-CURRENT ASSETS
Bank guarantees1	3,071,000		3,071,000
Plant & equipment	11,142,255		11,142,255
Intangibles	290,459		290,459
TOTAL NON-CURRENT ASSETS	14,503,714		14,503,714

TOTAL ASSETS	22,329,964	4,631,236	26,961,210

CURRENT LIABILITIES
Trade & other payables	1,152,021		1,152,021
Income in advance	1,261,112		1,261,112
Borrowings	869,849		869,849
Provisions	84,499		84,499
TOTAL CURRENT LIABILITIES	3,367,481		3,367,481

NON- CURRENT LIABILITIES
Borrowings	2,088,372		2,088,372

TOTAL NON-CURRENT LIABILITIES	2,088,372		2,088,372

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	AUDITED 30 JUNE 2019	ADJUSTMENTS	PROFORMA 30 JUNE 2019
TOTAL LIABILITIES	5,455,853		5,455,853

NET ASSETS (LIABILITIES)	16,874,121	4,631,236	21,505,357

EQUITY
Issued capital1&2	29,662,628	4,631,236	34,293,864
Options reserve	310,302		310,302
Share based payments reserve	11,621		11,621
Accumulated losses	(13,110,430)		(13,110,430)
TOTAL EQUITY	16,874,121	4,631,236	21,505,357

Notes:

Issue of 90,567,933 Shares at $0.055 to raise $4,981,236 together with one (1) Option for every one (1) Share subscribed for and issued, exercisable at $0.10 and expiring 12 months from date of issue.
Estimated expenses of the Offer, please refer to section 9.8.

6.4 Effect on capital structure

The effect of the Offer on the capital structure of the Company, assuming all Entitlements are accepted, and no Options are exercised prior to the Record Date, is set out below.

Shares	Number
Shares currently on issue1	362,271,732
New Shares offered pursuant to the Offer2	90,567,933
Total Shares on issue after completion of the Offer	452,839,665
Notes:

Including:
(a) 280,784,224 Shares listed on the ASX;
(b) 75,487,500 Shares subject to 24 months escrow from the date of quotation; and
(c) 5,000,000 Shares subject to 36 months escrow from the date that Company was admitted to the Official List.
This number may vary due to rounding of Entitlements and may increase as a result of the rounding up of Shares offered under the Offer.

Options

Options	Number
Options currently on issue: Unlisted Options exercisable at $0.30 on or before 30 November 2020 not quoted until 24 months from date of quotation	32,500,000
Unlisted Options exercisable at $0.30 on or before 5 April 2021 not quoted until 24 months from date of quotation	609,375

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Options	Number
Unlisted Options exercisable at $0.30 on or before 5 April 2021 not quoted until 12 months from date of issue	6,218,750
Listed Options exercisable at $0.10 on or before 13 May 2020	82,994,923
Total on issue as at the date of this Prospectus	122,323,048
New Options offered pursuant to the Offer1	90,567,933
Options to be issued to the Underwriter2	15,000,000
Total Options on issue after the completion of the Offer	227,890,981

Note:

This number may vary due to rounding of Entitlements and may increase as a result of the rounding up of Shares offered under the Offer.
The Company has agreed to issue the Underwriter with 15,000,000 Options with the same terms and conditions as the New Options (refer to section 7.2 for full terms and conditions) as part of the consideration for Lead Manager and Underwriter services provided to the Company.

Performance Rights

Performance Rights	Number
Performance Rights currently on issue: Subject to vesting conditions, expiring on various dates from 24 December 2019 to 26 June 2022	8,168,772
Performance Rights offered pursuant to the Offer	Nil
Total Performance Rights on issue after the completion of the Offer	8,168,772

Convertible Notes

Convertible Notes	Number
Convertible Notes currently on issue: Convertible at the election of the Convertible Note holder at $0.055 per Share on the maturity date or redeemable in cash	100
Convertible Notes offered pursuant to the Offer	Nil
Total Convertible Notes on issue after the completion of the Offer	100

The capital structure on a fully diluted basis as at the date of this Prospectus would be 492,763,552 Shares and on completion of the Offer (assuming all Entitlements are accepted and no Options are exercised or Performance Rights vest prior to the Record Date) would be 688,899,418 Shares.

6.5 Details of substantial holders

Based on publicly available information as at the date of this Prospectus, those persons which (together with their associates) have a relevant interest in 5% or more of the Shares on issue are set out below:

Substantial Holder	Shares	Voting Power (%)1	Entitlement	$
Carason Ward Pte Ltd	55,700,000	15.38%	13,925,0002	765,875
Newgate Capital Partners Pty Ltd	55,132,474	15.22%	13,783,119	758,072

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Substantial Holder	Shares	Voting Power (%)1	Entitlement	$
SG Hiscock & Company	35,690,776	9.85%	8,922,694	490,748

Notes

The voting power in the table is prior to settlement of the Offer.
Carason Ward Pte Ltd does not currently intend on taking up its Entitlement.

In the event all Entitlements are accepted there will be no change to the substantial holders on completion of the Offer.

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7. RIGHTS AND LIABILITIES ATTACHING TO SECURITIES

7.1 Shares

The following is a summary of the more significant rights and liabilities attaching to Shares being offered pursuant to this Prospectus. 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 and liabilities attaching to Shares are set out in the 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 any rights or restrictions for the time being attached to any class or classes of shares, at general meetings of shareholders or classes of shareholders:

(i) each Shareholder entitled to vote may vote in person or by proxy, attorney or representative;
(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 in respect of which he is appointed a proxy, attorney or representative, have one vote for each Share held, but in respect of partly paid shares shall have such number of votes as bears the same proportion to the total of such Shares registered in the Shareholder’s name as the amount paid (not credited) bears to the total amounts paid and payable (excluding amounts credited).

(c) Dividend rights

Subject to the rights of any preference Shareholders and to the rights of the holders of any shares created or raised under any special arrangement as to dividend, the Directors may from time to time declare a dividend to be paid to the Shareholders entitled to the dividend which shall be payable on all Shares according to the proportion that the amount paid (not credited) is of the total amounts paid and payable (excluding amounts credited) in respect of such Shares.

The Directors may from time to time pay to the Shareholders any interim dividends as they may determine. No dividend shall carry interest as against the Company. The Directors may set aside out of the profits of

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the Company any amounts that they may determine as reserves, to be applied at the discretion of the Directors, for any purpose for which the profits of the Company may be properly applied.

Subject to the ASX Listing Rules and the Corporations Act, the Company may, by resolution of the Directors, implement a dividend reinvestment plan on such terms and conditions as the Directors think fit and which provides for any dividend which the Directors may declare from time to time payable on Shares which are participating Shares in the dividend reinvestment plan, less any amount which the Company shall either pursuant to the Constitution or any law be entitled or obliged to retain, be applied by the Company to the payment of the subscription price of Shares.

(d) Winding-up

If the Company is wound up, the liquidator may, with the authority of a special resolution, divide among the Shareholders in kind the whole or any part of the property of the Company, and may for that purpose set such value as he considers fair upon any property to be so divided, and may determine how the division is to be carried out as between the Shareholders or different classes of Shareholders.

The liquidator may, with the authority of a special resolution, vest the whole or any part of any such property in trustees upon such trusts for the benefit of the contributories as the liquidator thinks fit, but so that no Shareholder is compelled to accept any shares or other securities in respect of which there is any liability.

(e) Shareholder liability

As the Shares issued will be fully paid shares, they will not be 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 transferable, subject to formal requirements, the registration of the transfer not resulting in a contravention of or failure to observe the provisions of a law of Australia and the transfer not being in breach of the Corporations Act and the ASX Listing Rules.

(g) Future increase in capital

The issue of any new Shares is under the control of the Directors of the Company. Subject to restrictions on the issue or grant of Securities contained in the ASX Listing Rules, the Constitution and the Corporations Act (and without affecting any special right previously conferred on the holder of an existing share or class of shares), the Directors may issue Shares as they shall, in their absolute discretion, determine.

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(h) Variation of rights

Under Section 246B of the Corporations Act, the Company may, with the sanction of a special resolution passed at a meeting of Shareholders vary or abrogate the rights attaching to shares.

If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of 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.

(i) Alteration of constitution

In accordance with the Corporations Act, the Constitution can only be amended by a special resolution passed by at least three quarters of Shareholders present and voting at the general meeting. In addition, at least 28 days written notice specifying the intention to propose the resolution as a special resolution must be given.

7.2 New Options

(a) Entitlement

Each New Option entitles the holder to subscribe for one Share upon exercise of the New Option.

(b) Exercise Price

Subject to paragraph (j), the amount payable upon exercise of each New Option will be $0.10 ( Exercise Price ).

(c) Expiry Date

Each New Option will expire at 5:00 pm (WST) on the date which is 12 months from the date of issue of the Options ( 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 on or prior to the Expiry Date ( Exercise Period ).

(e) Notice of Exercise

The New Options may be exercised during the Exercise Period by notice in writing to the Company in the manner specified on the New Option certificate ( Notice of Exercise ) and payment of the Exercise Price for each Option being exercised in Australian currency by electronic funds transfer or other means of payment acceptable to the Company.

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(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 Shares on exercise

Within 15 Business Days after the Exercise Date, the Company will:

(i) allot and issue the number of Shares required under these terms and conditions in respect of the number of New Options specified in the Notice of Exercise and for which cleared funds have been received by the Company;
(ii) if required, give ASX a notice that complies with Section 708A(5)(e) of the Corporations Act, or, if the Company is unable to issue such a notice, lodge with ASIC a prospectus prepared in accordance with the Corporations Act and do all such things necessary to satisfy Section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors; and
(iii) if admitted to the official list of ASX at the time, apply for official quotation on ASX of Shares issued pursuant to the exercise of the New Options.

If a notice delivered under (g)(ii) for any reason is not effective to ensure that an offer for sale of the Shares does not require disclosure to investors, the Company must, no later than 20 Business Days after becoming aware of such notice being ineffective, lodge with ASIC a prospectus prepared in accordance with the Corporations Act and do all such things necessary to satisfy Section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors.

(h) Shares issued on exercise

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

(i) Quotation of Shares issued on exercise

If admitted to the official list of ASX at the time, application will be made by the Company to ASX for quotation of the 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, all rights of a New Option holder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.

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(k) Participation in new issues

There are no participation rights or entitlements inherent in the New Options and holders 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.

(l) Change in exercise price

An Option does not confer the right to a change in Exercise Price or a change in the number of underlying securities over which the New Option can be exercised.

(m) Transferability

The New Options are transferable subject to any restriction or escrow arrangements imposed by ASX or under applicable Australian securities laws.

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8. RISK FACTORS

8.1 Introduction

The Shares offered under this Prospectus are considered highly speculative. An investment in the Company is high risk 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 Shares and to consult their professional advisers before deciding whether to apply for Shares pursuant to this Prospectus.

There are specific risks which relate directly to the Company and the 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 may have a material impact on the financial performance of the Company and the market price of the Shares.

The following is not intended to be an exhaustive list of the risk factors to which the Company is exposed.

8.2 Company specific

(a) Potential for significant dilution

Upon implementation of the Offer, assuming all Entitlements are accepted, and no Options are exercised prior to the Record Date the number of Shares in the Company will increase from 362,271,732 currently on issue to 452,839,665. This means that each Share will represent a significantly lower proportion of the ownership of the Company.

It is not possible to predict what the value of the Company or a Share will be following the completion of the Offer being implemented and the Directors do not make any representation as to such matters.

The last trading price of Shares on ASX prior to the prospectus being lodged of $0.064 is not a reliable indicator as to the potential trading price of Shares after implementation of the Offer.

(b) Limited History

The Company is a newly established company and has minimal operational track record, relying primarily on the experience of its key management personnel. The Company’s operational business plan requires substantial upfront capital investment, and there can be no assurance that subsequent operational objectives, including achieving sales will be achieved. Failure to achieve these objectives may have a material adverse impact on the financial performance and/or position of the Company. An investment in Shares must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development.

(c) Technical Risk

The Company’s market involves rapidly evolving products and technological change. To succeed, the Company will need to research, develop, design, manufacture, assemble, test, market and support (i) substantial enhancements to its existing products and (ii) new products, on a timely and cost-effective basis. The Company cannot guarantee

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that it will be able to engage in development at the requisite levels. The Company cannot assure investors that it will successfully identify new technological opportunities and continue to have the needed financial resources to develop new products in a timely or cost-effective manner. At the same time, products and technologies developed by others may render the Company’s products and systems obsolete or noncompetitive.

A substantial part of the Company’s commercial success will depend on its ability to maintain, or as the case may be establish, and protect, the Company’s intellectual property, maintain trade secret protection and operate without infringing the proprietary rights of third parties.

(d) Leasing Racks and Sale of Infrastructure to Customers

The Company relies on market demand for rental of colocation rackspace and sales of infrastructure. A lack of demand or a change in the nature of that demand may eliminate demand for the Company’s products and services. A lack of demand or oversupply of colocation space, or a lack of demand for infrastructure, could adversely impact the Company’s ability to achieve the desired rates of return on investment and have a material adverse effect on the growth prospects and financial position of the Company.

(e)

Customer Contract Deliverables Failure

The Company’s key deliverable to customers is the continuous and stable supply of key utilities, including electricity and water for power and cooling in accordance with its customer contracts. Any outage, being a failure to deliver power or cooling to a customer rack or space within the terms of a customer contract for a period of time, could result in service credits being applied to a customer account, reducing the amount payable to the Company under a customer contract, or a requirement to pay compensation. In some rare circumstances (for example force majeure or a breach of contract which the Company is not capable of remedying), an event or outage could result in the cancellation of a customer contract which would have a materially adverse effect on the financial performance of the Company.

(f) Contract Risk

Customer contracts may allow for immediate termination and customers may default due to bankruptcy or other reasons. Customer termination or default would have a materially adverse effect on the financial performance of the Company.

The Company may offer fixed price contracts and should costs increase above anticipated levels during the term of those contracts, then those contracts would have a materially adverse effect on the financial performance of the Company.

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(g) Development Risk

The Company is involved in the development of data centres, including the proposed new sites for Sydney and Melbourne. Generally, development projects have a number of risks including:

(i) the risk that suitable sites or required planning consents and regulatory approvals, including approvals from the local water authority and the local power distribution grid operator, are not obtained or, if obtained, are received later than expected, or are adverse to the Company’s interests, or are not properly adhered to;
(ii) the escalation of development costs (including the costs of construction and fit out and any associated delays) beyond those originally expected;
(iii) unforeseeable project delays beyond the control of the Company; and
(iv) non-performance/breach of contract by a contractor or subcontractor. Increases in supply or falls in demand could influence the acquisition of sites, the timing and value of sales and carrying value of projects.

Other risks include contamination risk, risks relating to the contractual allocation of risk, risks relating to authorisations and permits, future development risks, capital expenditure risk, contractor insolvency risk, financial leverage, technology risk, competition risk, a lack of industry diversification, CPI risk, reliance on management expertise and financial information and forecasts risk.

(h)

Infrastructure and Technology Failure

The Company relies on its infrastructure and technology to provide its customers with a highly reliable service. There may be a failure to deliver this level of service as a result of numerous factors, including human error, power loss, equipment failure, improper maintenance including by landlords and security breaches. Service interruptions, regardless of their cause, may cause contractual and other losses to the Company.

In particular, the Company actively promotes its Uptime and TIER READY certifications. There is a risk that our TIER READY certifications (design) may be exposed if we do not achieve the Constructed TIER READY certification once we complete the build.

If Uptime’s certification reputation is damaged (due to failure and an outage at an Uptime accredited site by way of example) this has the potential to reflect poorly on the Company which, in turn, may have a determinately effect on sales.

(i) Lease risks

The Company holds long term leases over buildings in Melbourne and Sydney. Any breach or termination of these leases could have a material adverse impact on the Company.

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(j) Reputational Risk

Any negative publicity regarding the Company or its Board, officers or employees, or the performance of its products, will adversely affect the Company’s ability to generate revenue.

(k) Competition Risk

The market in which the Company participates is competitive and characterised by rapid technological change. The Company’s potential inability to improve existing product lines and develop new products and technologies could have a material adverse effect on the Company’s business. In addition, the Company’s competitors could introduce new products with greater capabilities or better pricing which could have a material adverse effect on the Company’s business. The Company competes with larger companies with greater resources on the basis of performance, cost, overall value, delivery and reputation.

(l) Approval Risk

The operation of colocation facilities by the Company may require some local, state or federal authority approvals associated with building works and the delivery of utility services to the sites.

There is no guarantee that approvals will be obtained within a timely fashion or on the terms requested or expected. A delay in obtaining the necessary approvals or changes made to a development in order to obtain the necessary approvals may materially adversely affect a development and consequently the returns to be paid to the Company.

(m) Key Personnel Risk

A failure to attract and retain executive, business development, technical and other key personnel could reduce the Company’s revenues and operational effectiveness. There is a continuing demand for relevant qualified personnel, and the Company believes that its future growth and success will depend upon its ability to attract, train and retain such personnel. Competition for personnel in the Company’s industry is intense, and there is a limited number of persons with knowledge of, and experience in, this industry. An inability to attract or maintain a sufficient number of requisite personnel could have a material adverse effect on the Company’s performance or on the Company’s ability to capitalise on market opportunities.

(n) Dilution

Investors may be diluted by future capital raisings by the Company. Shares may be issued to finance future data centre development, acquisitions or pay down debt which may, under certain circumstances, dilute the value of Shareholders’ interests. The Company will only look to raise equity if it believes that the benefit to investors of acquiring the relevant assets or reducing gearing is greater than the impact caused by the dilution associated with a capital raising.

(o) Funding for the Company

Although the Directors believe that, on completion of the Offer, the Company will have sufficient working capital to carry out its stated

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business objectives, there can be no assurance that such objectives can be met without further financing or, if further financing is necessary, that it can be obtained on favourable terms or at all. If additional funds are raised by issuing equity securities, this may result in dilution of some or all of the existing Shareholders of the Company.

The Company’s ability to raise capital from either debt or equity markets on favourable terms for future activities cannot be guaranteed and is dependent on a number of factors, including:

(i) the general economic climate;
(ii) the state of debt and equity capital markets; and
(iii) the performance, reputation and financial strength of the Company.

A lack of or increased cost of capital could impact the funding costs of the Company and therefore impact the Company’s earnings.

(p) Management of future growth

The Company may experience rapid growth and an increase in the number of its employees. This growth will potentially result in new and increased responsibilities for management and place a significant strain on the Company’s management. The Company will be required to continue to implement and improve its systems in a timely manner in order to accommodate the increased number of transactions and customers and the increased size of its operation. A failure to do so may adversely affect the Company’s revenue and profitability.

(q)

Foreign Operation

The Company has operations outside of Australia and investors should be aware of the risks of operating internationally. These risks include but are not limited to regulatory requirements, tariffs, customs, duties and other trade barriers, exchange rates, collecting amount receivable, political instability, expropriation, nationalisation and war.

(r) Litigation, Claims and Disputes

The Company may be subject to litigation and other claims and disputes in the course of its business, including contractual disputes, employment disputes, occupational and personal claims. Such litigation, claims and disputes, including the costs of settling such claims, could materially adversely affect the Company’s business, operations and financial performance.

8.3 Industry Specific

(a) Risks associated with the regulatory environment

The Company’s main operating entity is Australian based and subject to Australian regulation. The Company is required to comply with the Corporations Act and the Competition and Consumer Act 2010. Users, competitors, members of the general public or regulators could allege breaches of this legislation, if they considered an advertisement to be misleading or deceptive. This could result in remedial action or litigation,

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which could potentially lead to the Company being required to pay compensation or a fine.

The Company’s operations may become subject to regulatory requirements, such as licensing and reporting obligations, which would increase the costs and resources associated with its regulatory compliance. Any such increase in the costs and resources associated with regulatory compliance could impact upon the Company’s profitability. In addition, if regulators took the view that the Company had failed to comply with regulatory requirements, this could lead to enforcement action resulting in public warnings, infringement notices or the imposition of a pecuniary penalty. This could lead to significant reputational damage to the Company and consequently impact upon its revenue.

(b)

Supply and pricing of electricity

The Company’s primary input is electricity. The Company will rely on third parties for the reliable and sufficient supply of electrical power to its data centres. It cannot be guaranteed that these third parties will be able to consistently provide sufficient levels of electrical power or will have the necessary infrastructure to deliver any additional power that the Company may require. The Company intends to mitigate this risk by fitting back-up power generation capability at each site to cover temporary power outage. However, this may be unable to provide ongoing service to the extent outages last beyond backup and alternative power arrangements. Inability to satisfy customer obligations by these means may materially adversely impact the financial position, profits and growth prospects of the Company. Further, restriction of supply to its colocation sites can adversely affect the Company’s results by constraining the number of computers that can be housed in a facility which would limit the colocation revenue able to be generated from that facility.

(c)

Environmental Impact

Data centres consume more electricity than many other industries in similar metropolitan locations. Regulatory constraints placed on energy intense industries might increase the cost of operating data centres in some countries and could adversely affect the Company’s results.

(d) Insurance

The Company intends to insure its operations in accordance with industry practice. However, in certain circumstances the Company’s insurance may not be of a nature or level to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the business, financial condition and results of the Company.

Insurance of all risks associated with the Company’s business may not always be available and where available the costs may be prohibitive.

(e) Security Risk

Security risks, including physical threats, loss of power, flooding, fire, explosion, aircraft impact, terrorism, malicious damage and external hacking and/ or the malfunction of response equipment may have sustained and adverse impacts on the Company’s business viability

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through the loss of future revenues or payment of damages (not otherwise insured).

(f)

Future Acquisitions

The Company will evaluate property investments and other opportunities that it believes are consistent with its strategy. There is no guarantee that the Company will be able to successfully complete future acquisitions.

Further, the Company may not be successful in identifying future acquisition opportunities, assessing the value, strengths and weaknesses of these opportunities or finalising acquisitions on acceptable terms or at all. While it is the Company’s policy to conduct a thorough due diligence process in relation to any such acquisition, risks remain that are inherent in such acquisitions. The Company’s past and future acquisitions may subject it to unanticipated risks and liabilities, or disrupt its operations and divert management’s attention and resources from the Company’s dayto-day operations.

8.4 General Risks

(a) Economic

General economic conditions, introduction of tax reform, new legislation, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company’s activities, as well as on its ability to fund those activities.

(b) Market conditions

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) introduction of tax reform or other new legislation;
(iii) interest rates and inflation rates;
(iv) changes in investor sentiment toward particular market sectors;
(v) the demand for, and supply of, capital; and
(vi) terrorism or other hostilities.

The market price of securities can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general and industrial stocks in particular. Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company.

(c) 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 addition to amounts raised under the capital raising. Any additional equity financing

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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 its construction of its proposed colocation facilities. There is, however, no guarantee that the Company will be able to secure any additional funding or be able to secure funding on terms favourable to the Company.

(d) Reliance on key personnel

The responsibility of overseeing the day-to-day operations and the strategic management of the Company depends substantially on its senior management and its key personnel. There can be no assurance given that there will be no detrimental impact on the Company if one or more of these employees cease their employment.

(e)

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 Shares offered under this Prospectus.

Therefore, the Shares 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 Shares.

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 Shares pursuant to this Prospectus.

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9. ADDITIONAL INFORMATION

9.1 Litigation

As at the date of this Prospectus, the Company is not involved in any current legal proceedings and the Directors are not aware of any material legal proceedings pending against the Company.

9.2 Continuous disclosure obligations

The Company is a “disclosing entity” (as defined in Section 111AC of the Corporations Act) for the purposes of Section 713 of the Corporations Act and, as such, is subject to regular reporting and disclosure obligations. Specifically, like all listed companies, the Company is required to continuously disclose any information it has to the market which a reasonable person would expect to have a material effect on the price or the value of the Company’s securities.

This Prospectus is a “transaction specific prospectus”. In general terms a “transaction specific prospectus” is only required to contain information in relation to the effect of the issue of securities on a company and the rights attaching to the securities. It is not necessary to include general information in relation to all of the assets and liabilities, financial position, profits and losses or prospects of the issuing company.

This Prospectus is intended to be read in conjunction with the publicly available information in relation to the Company which has been notified to ASX and does not include all of the information that would be included in a prospectus for an initial public offering of securities in an entity that is not already listed on a stock exchange. Investors should therefore have regard to the other publicly available information in relation to the Company before making a decision whether or not to invest.

Having taken such precautions and having made such enquires as are reasonable, the Company believes that it has complied with the general and specific requirements of ASX as applicable from time to time throughout the 3 months before the issue of this Prospectus which required the Company to notify ASX of information about specified events or matters as they arise for the purpose of ASX making that information available to the stock market conducted by ASX.

Information that is already in the public domain has not been reported in this Prospectus other than that which is considered necessary to make this Prospectus complete.

The Company, as a disclosing entity under the Corporations Act states that:

(a) it is subject to regular reporting and disclosure obligations;
(b) copies of documents lodged with the ASIC in relation to the Company (not being documents referred to in Section 1274(2)(a) of the Corporations Act) may be obtained from, or inspected at, the offices of the ASIC; and
(c) it will provide a copy of each of the following documents, free of charge, to any person on request between the date of issue of this Prospectus and the Closing Date:
(i) the annual financial report most recently lodged by the Company with the ASIC;

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(ii) any half-year financial report lodged by the Company with the ASIC after the lodgement of the annual financial report referred to in (i) and before the lodgement of this Prospectus with the ASIC; and
(iii) any continuous disclosure documents given by the Company to ASX in accordance with the ASX Listing Rules as referred to in Section 674(1) of the Corporations Act after the lodgement of the annual financial report referred to in (i) and before the lodgement of this Prospectus with the ASIC.

Copies of all documents lodged with the ASIC in relation to the Company can be inspected at the registered office of the Company during normal office hours.

Details of documents lodged by the Company with ASX since the date of lodgement of the Company’s latest annual financial report and before the lodgement of this Prospectus with the ASIC are set out in the table below.

Date	Description of Announcement
11/10/19	Appendix 3B
9/10/2019	Company Presentation
9/10/2019	$5 Million Fully Underwritten Entitlement Issue
7//10/2019	Trading Halt
4/10/2019	Cancellation of Performance Rights
4/10/2019	Appendix 3B and Cleansing Notice
1/10/2019	Appendix 4G
1/10//2019	Annual Report to shareholders

ASX maintains files containing publicly available information for all listed companies. The Company’s file is available for inspection at ASX during normal office hours.

The announcements are also available through the Company’s website www.dxn.solutions.

9.3 Market price of shares

The Company is a disclosing entity for the purposes of the Corporations Act and its Shares are enhanced disclosure securities quoted on ASX.

The highest, lowest and last market sale prices of the Shares at the close of business on ASX during the three months immediately preceding the date of lodgement of this Prospectus with the ASIC and the respective dates of those sales were:

were:
Highest	$0.084	3 October 2019
Lowest	$0.043	14 August 2019
Last	$0.064	10 October 2019

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9.4 Material Agreements

Lead Manager Mandate

Pursuant to a mandate dated 8 August 2019, the Company has engaged Pinnacle to act as Lead Manager to the Offer ( Mandate ).

Pursuant to the Mandate, the Company has and will pay Pinnacle a monthly retainer of $10,000 per month for a period of three (3) months from the date of the Mandate.

Pinnacle will also receive those fees set out below in the summary of the Underwriting Agreement for services provided pursuant to the Mandate which, for the avoidance of doubt, will not be duplicated.

The Mandate also contains a number of indemnities, representations and warranties from the Company to the Underwriter that are considered standard for an agreement of this type.

Pinnacle and Lucerne Investment Partners Pty Ltd have agreed that Lucerne Investment Partners Pty Ltd will act as Co-Manager to the Offer. Any fees that Lucerne Investment Partners Pty Ltd are entitled to for acting as Co-Manager to the Offer will be paid out of the management fee and underwriting fee paid to Pinnacle.

Underwriting Agreement

By an agreement between Pinnacle Corporate Finance Pty Ltd and the Company ( Underwriting Agreement ), the Underwriter agreed to underwrite the Offer of 90,567,933 Shares and 90,567,933 New Options ( Underwritten Securities ).

Pursuant to the Underwriting Agreement, the Company has agreed to:

(a) pay the Underwriter a management fee of 1.0% of the underwritten amount (approximately $49,812) and an underwriting fee of 5.0% of the underwritten amount (approximately $249,062); and
(b) Issue the Underwriter with 15,000,000 New Options.

All sub-underwriting fees will be paid by the Underwriter from the underwriting fee.

If there is a Shortfall, and a holder of a Convertible Note elects to convert their Convertible Note into Shortfall Securities, conversion of a Convertible Note into Shortfall Securities will reduce the Underwriter’s obligations to underwrite the underwritten amount.

The obligation of the Underwriter to underwrite the Offer is subject to certain events of termination. The Underwriter may terminate its obligations under the Underwriting Agreement if:

(a) Indices fall

The S&P ASX 200 or S&P ASX 300 Index closes on any 2 Business Days from the date of the Underwriting Agreement at a level that is 10% or more below the level of the Index at the close of trading on the Business Day before the date of the Underwriting Agreement.

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(b) Prospectus

the Company does not lodge this Prospectus with ASIC on the Lodgement Date or this Prospectus or the Offer is withdrawn by the Company.

(c)

Supplementary Prospectus

(i) The Underwriter, having elected not to exercise its right to terminate its obligations under the Underwriting Agreement as a result of an occurrence as described in paragraph (o) below, forms the view on reasonable grounds that a Supplementary Prospectus should be lodged with ASIC for any of the reasons referred to in Section 719 of the Corporations Act and the Company fails to lodge a Supplementary Prospectus (as that term is defined in the Underwriting Agreement) in such form and content and within such time as the Underwriter may reasonably require.
(ii) The Company lodges a Supplementary Prospectus without the prior written agreement of the Underwriter.

(d) Non-compliance with disclosure requirements

It transpires that this Prospectus does not contain all the information that investors and their professional advisers would reasonably require to make an informed assessment of:

(i) the assets and liabilities, financial position and performance, profits and losses and prospects of the Company; and
(ii) the rights and liabilities attaching to the underwritten Securities.
(e)

Misleading Prospectus

It transpires that there is a statement in this Prospectus that is misleading or deceptive or likely to mislead or deceive, or that there is an omission from this Prospectus (having regard to the provisions of Sections 711, 713 and 716 of the Corporations Act) or if any statement in this Prospectus becomes misleading or deceptive or likely to mislead or deceive or if the issue of this Prospectus is or becomes misleading or deceptive or likely to mislead or deceive.

(f) Error in Due Diligence Results

It transpires that any of the Due Diligence Results (as that term is defined in the Underwriting Agreement) or any part of the Verification Material (as that term is defined in the Underwriting Agreement) was materially false, misleading or deceptive or that there was a material omission from them.

(g)

Proceedings

ASIC or any other person conducts any enquiry, investigation or proceedings, or takes any regulatory action or seeks any remedy, in connection with the Offer or the Offer Materials (as that term is defined in the Underwriting Agreement), or publicly foreshadows that it may do so.

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(h) Unable to issue Underwritten Securities

The Company is prevented from allotting and issuing the underwritten Securities within the time required by the timetable, Listing Rules, applicable laws, an order of a court of competent jurisdiction or a Government Authority (as that term is defined in the Underwriting Agreement).

(i) Future matters

Any statement or estimate in the Offer Materials which relates to a future matter is or becomes incapable of being met or, in the reasonable opinion of the Underwriter, unlikely to be met in the projected timeframe.

(j) No Quotation Approval

The Company fails to lodge an Appendix 3B in relation to the underwritten Securities with ASX by the time required by the Corporations Act, the Listing Rules or any other regulation.

(k) ASIC application

An order is made under Section 1324B or any other provision of the Corporations Act in relation to this Prospectus, the Shortfall Notice Deadline Date (as that term is defined in the Underwriting Agreement) has arrived, and that application has not been dismissed or withdrawn.

(l) Takeovers Panel

The Takeovers Panel makes a declaration that circumstances in relation to the affairs of the Company are unacceptable circumstances under Pt 6.10 of the Corporations Act, which in the Underwriter’s reasonable opinion has a Material Adverse Effect (as that term is defined in the Underwriting Agreement).

(m) Authorisation

Any authorisation which is material to anything referred to in this Prospectus is repealed, revoked or terminated or expires, or is modified or amended in a manner unacceptable to the Underwriter acting reasonably.

(n) Indictable offence

A director of the Company is charged with an indictable offence.

(o) Termination Events

Subject to the statement below, any of the following events occurs:

(i) Hostilities

There is an outbreak of hostilities or a material escalation of hostilities (whether or not war has been declared) after the date of the Underwriting Agreement involving one or more of Australia, New Zealand, Japan, the United Kingdom, the United States of America or the Peoples Republic of China, Malaysia, the Philippines, or any member of the European Union ( Specified

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Countries ) other than hostilities involving Libya, Afghanistan, Iraq, Iran, Syria, Lebanon or Israel and the Underwriter believes (on reasonable grounds) that the outbreak or escalation is likely to result in the S&P ASX 300 Index falling by the percentage contemplated by paragraph (a) above.

(ii)

Default

Default or breach by the Company under the Underwriting Agreement of any terms, condition, covenant or undertaking.

(iii) Incorrect or untrue representation

Any representation, warranty or undertaking given by the Company in the Underwriting Agreement is or becomes untrue or incorrect in a material respect.

(iv) Contravention of constitution or Act

A contravention by a Relevant Company of any provision of its constitution, the Corporations Act, the Listing Rules or any other applicable legislation or any policy or requirement of ASIC or ASX.

(v) Adverse change

An event occurs which gives rise to a Material Adverse Effect or any adverse change or any development including a prospective adverse change after the date of the Underwriting Agreement in the assets, liabilities, financial position, trading results, profits, forecasts, losses, prospects, business or operations of any Relevant Company (as that term is defined in the Underwriting Agreement).

(vi)

Error in Due Diligence Results

It transpires that any of the Due Diligence Results or any part of the Verification Material was materially false, misleading or deceptive or that there was a material omission from them.

(vii) Significant change

A "new circumstance" as referred to in Section 719(1) of the Corporations Act arises that is materially adverse from the point of view of an investor.

(viii) Public statements

Without the prior approval of the Underwriter a public statement is made by the Company in relation to the Offer or this Prospectus, other than a statement the Company is required to make in order to ensure its disclosure obligations under the Listing Rules and the Corporations Act.

(ix) Misleading information

Any information supplied at any time by the Company or any person on its behalf to the Underwriter in respect of any aspect

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of the Offer or the affairs of any Relevant Company is or becomes misleading or deceptive or likely to mislead or deceive.

(x) Official Quotation qualified

The official quotation is qualified or conditional other than as set out in the Underwriting Agreement.

(xi) Change in Act or policy

There is introduced, or there is a public announcement of a proposal to introduce, into the Parliament of Australia or any of its States or Territories any Act or prospective Act or budget or the Reserve Bank of Australia or any Commonwealth or State authority adopts or announces a proposal to adopt any new, or any major change in, existing, monetary, taxation, exchange or fiscal policy.

(xii) Prescribed Occurrence

A Prescribed Occurrence (as that term is defined in the Underwriting Agreement) occurs, other than as disclosed in this Prospectus.

(xiii) Suspension of debt payments

The Company suspends payment of its debts generally.

(xiv) Event of Insolvency

An Event of Insolvency (as that term is defined in the Underwriting Agreement) occurs in respect of a Relevant Company.

(xv) Judgment against a Relevant Company

A judgment in an amount exceeding $500,000 is obtained against a Relevant Company and is not set aside or satisfied within 14 days.

(xvi) Litigation

Litigation, arbitration, administrative or industrial proceedings are after the date of the Underwriting Agreement commenced against any Relevant Company, except as disclosed in this Prospectus and to the due diligence committee.

(xvii) Board and senior management composition

There is a change in the composition of the Board or a change in the senior management of the Company before the date of issue of the underwritten Securities without the prior written consent of the Underwriter (such consent not to be unreasonably withheld).

(xviii) Change in shareholdings

There is a material change in the major or controlling shareholdings of a Relevant Company (other than as a result of

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the Offer, a matter disclosed in this Prospectus) or a takeover offer or scheme of arrangement pursuant to Chapter 5 or 6 of the Corporations Act is publicly announced in relation to a Relevant Company.

(xix) Timetable

There is a delay in any specified date in the Timetable which is greater than 2 Business Days.

(xx) Force Majeure

A Force Majeure (as that term is defined in the Underwriting Agreement) affecting the Company's business or any obligation under the Underwriting Agreement lasting in excess of 7 days occurs.

(xxi) Certain resolutions passed

A Relevant Company passes or takes any steps to pass a resolution under Section 254N, Section 257A or Section 260B of the Corporations Act or a resolution to amend its constitution without the prior written consent of the Underwriter.

(xxii) Capital Structure

Any Relevant Company alters its capital structure in any manner not contemplated by this Prospectus.

(xxiii) Breach of Material Contracts

Any of the Contracts (as that term is defined in the Underwriting Agreement) are terminated or substantially modified.

(xxiv) Market Conditions

A suspension or material limitation in trading generally on ASX occurs or any material adverse change or disruption occurs in the existing financial markets, political or economic conditions of Australia, Japan, the United Kingdom, the United States of America or other international financial markets.

The events listed above do not entitle the Underwriter to exercise its rights under clause the Underwriting Agreement unless, in the reasonable opinion of the Underwriter reached in good faith, it has or is likely to have, or those events together have, or could reasonably be expected to have, a Material Adverse Effect or could give rise to a liability of the Underwriter under the Corporations Act.

The Underwriting Agreement also contains a number of indemnities, representations and warranties from the Company to the Underwriter that are considered standard for an agreement of this type.

Convertible Note Agreements

As announced on 9 October 2019, the Company has entered into Convertible Note Agreements with various parties pursuant to which the Company has issued

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100 Convertible Notes with a combined principle amount of $1,000,000. The Convertible Notes are:

(a) unsecured;
(b) have a face value of $10,000 per Convertible Note;
(c) the maturity date of the Convertible Notes is the earlier of the Entitlement Issue Shortfall Settlement Date and 31 December 2019 ( Maturity Date );
(d) the Convertible Notes are either convertible at $0.055 per Share on the Maturity Date or redeemable in cash, at the election of the Convertible Note holder;
(e) the Convertible Notes incur an interest rate of 12% per annum (or part thereof) payable in cash;
(f) each Share that is converted pursuant to the Convertible Notes will receive one (1) New Option for every Share converted;
(g) if there is not sufficient shortfall from the Entitlement Issue and Convertible Note holders elect to convert on the Entitlement Issue shortfall settlement date, the Company will issue the Shares and New Options the subject of the conversion under its available ASX Listing Rule 7.1 capacity;
(h) the Convertible Note Agreements includes standard events of default; and
(i) the Convertible Note Agreements contain such additional and supplementary provisions, including, without limitation, customary representations and warranties.

9.5 Interests of Directors

Other than as set out in this Prospectus, no Director or proposed Director holds, or has held within the 2 years preceding lodgement of this Prospectus with the ASIC, any interest in:

(a) the formation or promotion of the Company;
(b) any property acquired or proposed to be acquired by the Company in connection with:
(i) its formation or promotion; or
(ii) the Offer; or
(c) the Offer, and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to a Director or proposed Director:
(d) as an inducement to become, or to qualify as, a Director; or
(e) for services provided in connection with:
(i) the formation or promotion of the Company; or
(ii) the Offer.

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Security holdings

The relevant interest of each of the Directors in the securities of the Company as at the date of this Prospectus, together with their respective Entitlement, is set out in the table below.

Director	Shares	Voting Power (%)	Entitlement	$
Timothy Desmond	55,700,0001	15.38%	13,925,000	765,875
Douglas Loh	1,387,5002	0.38%	346,875	19,078
John Duffin	Nil	0%	Nil	Nil
Richard Carden	2,650,0003	0.73%	662,500	36,438
Terry Smart	12,012,0974	3.32%	3,003,024	165,166
John Baillie	1,379,1755	0.38%	344,974	18,964

Notes:

Held by Carason Ward Pte Ltd, of which Mr Desmond is a 50% shareholder and a director. Carason Ward Pte Ltd also holds 4,333,333 Options exercisable at $0.30 on or before 30 November 2020.
Mr Loh’s shares are held indirectly in the following amounts:
(a) 935,000 Shares held by Emmanuel Investment Holdings Pty Ltd ; and
(b) 452,500 Shares held by Astro Superannuation Holdings Pty Ltd .

Emmanuel Investment Holdings Pty Ltd also holds 330,000 Listed Options exercisable at $0.10 on or before 13 May 2020 and 1,800,000 performance rights that expire on 30 April 2020.

Astro Superannuation Holdings Pty Ltd also holds 78,125 unquoted Options exercisable at $0.30 on or before 5 April 2021and 70,000 Listed Options exercisable at $0.10 on or before 13 May 2020.

Mr Carden also holds 62,500 unquoted Options exercisable at $0.30 on or before 5 April 2021 and 1,000,000 Listed Options exercisable at $0.10 on or before 13 May 2020.
Held indirectly by Smart Investments Pty Ltd . Smart Investments Pty Ltd also indirectly holds:
(a) 2,673,387 Listed Options exercisable at $0.10 on or before 13 May 2020
(b) 10,000,000 unquoted Options exercisable at $0.30 on or before 30 November 2020; and
(c) 468,750 unquoted Options exercisable at $0.30 on or before 5 April 2021.
Mr Baillie holds 330,000 Shares 76,500 Listed Options exercisable at $0.10 on or before 13 May 2020 and directly the following shares are held indirectly in the following entities:
(a) 208,125 Shares held by Susan Edwina Perry Baillie (Spouse); and
(b) 838,050 Shares held by John Baillie Pty Ltd .

Susan Edwina Perry Baillie (Spouse)also holds 47,813 Listed Options exercisable at $0.10 on or before 13 May 2020.

John Baillie Pty Ltd also holds 192,525 Listed Options exercisable at $0.10 on or before 13 May 2020.

None of the Directors who directly or indirectly hold Options in the Company intend on exercising their Options before the Record Date.

The Board recommends all Shareholders take up their Entitlement. Douglas Loh, Richard Carden and John Baillie currently intend on taking up all or part of their Entitlement. Timothy Desmond (via his shareholding held by a controlled entity) and Terry Smart do not currently intend on taking up their Entitlement.

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Remuneration

The remuneration of an executive Director is decided by the Board, without the affected executive Director participating in that decision-making process. The total maximum remuneration of non-executive Directors is initially set by the Constitution and subsequent variation is by ordinary resolution of Shareholders in general meeting in accordance with the Constitution, the Corporations Act and the ASX Listing Rules, as applicable. The determination of non-executive Directors’ remuneration within that maximum will be made by the Board having regard to the inputs and value to the Company of the respective contributions by each non-executive Director. The current amount has been set at an amount not to exceed $500,000 per annum.

A Director may be paid fees or other amounts (ie non-cash performance incentives such as Options, subject to any necessary Shareholder approval) as the other Directors determine where a Director performs special duties or otherwise performs services outside the scope of the ordinary duties of a Director. In addition, Directors are also entitled to be paid reasonable travelling, hotel and other expenses incurred by them respectively in or about the performance of their duties as Directors.

The following table shows the total (and proposed) annual remuneration paid to both executive and non-executive directors.

Director	Financial year ending 30 June 20201	Financial year ending 30 June 20192
Timothy Desmond	$27,000	$225,000
Douglas Loh	$75,9003	$107,7003
John Duffin	$36,000	$27,000
Richard Carden	$36,000	$119,0004
Terry Smart	$36,000	$36,000
John Baillie5	$36,000	$3,888

Notes:

The remuneration of the directors includes salary and fees as well as superannuation.
These figures do not include the superannuation payments that the directors are also entitled to.
Mr Loh through Emmanuel Investment Holdings Pty Ltd was paid consultancy fees of $47,700 for the year ended 30 June 2019 and will be paid $15,900 for the year ended 30 June 2020.
Mr Carden has and was paid consultancy fees of $83,000 during the year ended 30 June 2019.
Mr Baillie was appointed to the Board on 23 May 2019.

John Baillie will be paid a sub-underwriting fee of 3% of his maximum total subscription amount in accordance with the terms and conditions set out in subunderwriting agreement with the Underwriter. The Board considers that the 3% fee payable on the maximum total subscription amount is on arms' length commercial terms, as this fee is also payable to non-related party entities who have entered into sub-underwriting agreements.

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9.6 Interests of experts and advisers

Other than as set out below or elsewhere in this Prospectus, no:

(a) 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;
(b) promoter of the Company; or
(c) underwriter (but not a sub-underwriter) to the issue or a financial services licensee named in this Prospectus as a financial services licensee involved in the issue,

holds, or has held within the 2 years preceding lodgement of this Prospectus with the ASIC, any interest in:

(d) the formation or promotion of the Company;
(e) any property acquired or proposed to be acquired by the Company in connection with:
(i) its formation or promotion; or
(ii) the Offer; or
(f) the Offer,

and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to any of these persons for services provided in connection with:

(g) the formation or promotion of the Company; or
(h) the Offer.

Pinnacle will be paid an underwriting fee of approximately $249,062 together with a $49,812 management fee in respect of this Offer. During the 24 months preceding lodgement of this Prospectus with the ASIC, the Company has paid Pinnacle $50,000 in corporate advisory fees, $82,995 in management fees and $414,974 in underwriting fees.

Steinepreis Paganin has acted as the solicitors to the Company in relation to the Offer. The Company estimates it will pay Steinepreis Paganin $20,000 (excluding GST and disbursements) for these services. During the 24 months preceding lodgement of this Prospectus with the ASIC, Steinepreis Paganin has been paid fees totalling $205,469 (excluding GST and disbursements) for legal services provided to the Company.

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9.7 Consents

Chapter 6D of the Corporations Act imposes a liability regime on the Company (as the offeror of the Securities), the Directors, the persons named in the Prospectus with their consent as Proposed Directors, any underwriters, persons named in the Prospectus with their consent having made a statement in the Prospectus and persons involved in a contravention in relation to the Prospectus, with regard to misleading and deceptive statements made in the Prospectus, Although the Company bears primary responsibility for the Prospectus, the other parties involved in the preparation of the Prospectus can also be responsible for certain statements made in it.

Each of the parties referred to in this section:

(a) does not make, or purport to make, any statement in this Prospectus other than those referred to in this section;
(b) in light of the above, only to the maximum extent permitted by law, expressly disclaim and take no responsibility for any part of this Prospectus other than a reference to its name and a statement included in this Prospectus with the consent of that party as specified in this section.

Pinnacle has given its written consent to being named as underwriter to the Offer in this Prospectus, in the form and context in which it is named. Pinnacle (including its related entities) is a Shareholder of the Company and currently has a relevant interest in 600,000 Shares.

Steinepreis Paganin has given its written consent to being named as the solicitors to the Company in this Prospectus. Steinepreis Paganin has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

Moore Stephens, the Company’s auditor has given its written consent to the use of the balance sheet set out in section 6.3. Moore Stephens has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

9.8 Expenses of the Offer

In the event that all Entitlements are accepted, the total expenses of the Offer are estimated to be approximately $350,000 (excluding GST) and are expected to be applied towards the items set out in the table below:

	$
ASIC fees	3,206
ASX fees	14,516
Management fees	49,812
Underwriting fees	249,062
Legal fees	20,000
Printing and distribution	7,500
Miscellaneous	5,904
Total	350,000

9.9 Electronic prospectus

If you have received this Prospectus as an electronic Prospectus, please ensure that you have received the entire Prospectus accompanied by the Application

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Forms. If you have not, please phone the Company on +61 8 9288 1870 and the Company will send you, for free, either a hard copy or a further electronic copy of the Prospectus, or both. Alternatively, you may obtain a copy of this Prospectus from the Company’s website at www.dxn.solutions.

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.

9.10 Financial forecasts

The Directors have considered the matters set out in ASIC Regulatory Guide 170 and believe that they do not have a reasonable basis to forecast future earnings on the basis that the operations of the Company are inherently uncertain. Accordingly, any forecast or projection information would contain such a broad range of potential outcomes and possibilities that it is not possible to prepare a reliable best estimate forecast or projection.

9.11 Clearing House Electronic Sub-Register System (CHESS) and Issuer Sponsorship

The Company will not be issuing share or option certificates. The Company is a participant in CHESS, for those investors who have, or wish to have, a sponsoring stockbroker. Investors who do not wish to participate through CHESS will be issuer sponsored by the Company. Because the sub-registers are electronic, ownership of securities can be transferred without having to rely upon paper documentation.

Electronic registers mean that the Company will not be issuing certificates to investors. Instead, investors will be provided with a statement (similar to a bank account statement) that sets out the number of Shares issued to them under this Prospectus. The notice will also advise holders of their Holder Identification Number or Security Holder Reference Number and explain, for future reference, the sale and purchase procedures under CHESS and issuer sponsorship.

Further monthly statements will be provided to holders if there have been any changes in their security holding in the Company during the preceding month.

9.12 Privacy Act

If you complete an application for Securities, you will be providing personal information to the Company (directly or by the Company’s share registry). The Company collects, holds and will use that information to assess your application, service your needs as a holder of equity securities in the Company, facilitate distribution payments and corporate communications to you as a Shareholder and carry out administration.

The information may also be used from time to time and disclosed to persons inspecting the register, bidders for your securities in the context of takeovers, regulatory bodies, including the Australian Taxation Office, authorised securities brokers, print service providers, mail houses and the Company’s share registry.

You can access, correct and update the personal information that we hold about you. Please contact the Company or its share registry if you wish to do so at the relevant contact numbers set out in this Prospectus.

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Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (Cth) (as amended), the Corporations Act and certain rules such as the ASX Settlement Operating Rules. You should note that if you do not provide the information required on the application for Securities, the Company may not be able to accept or process your application.

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10. DIRECTORS’ AUTHORISATION

This Prospectus is issued by the Company and its issue has been authorised by a resolution of the Directors.

In accordance with Section 720 of the Corporations Act, each Director has consented to the lodgement of this Prospectus with the ASIC.

==> picture [121 x 47] intentionally omitted <==

Douglas Loh Chairman For and on behalf of DXN Limited

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11. GLOSSARY

$ means the lawful currency of the Commonwealth of Australia.

Applicant means a Shareholder who applies for Shares pursuant to the Offer or a Shareholder or other party who applies for Shortfall Shares pursuant to the Shortfall Offer.

Application Form means an Entitlement and Acceptance Form or Shortfall Application Form as the context requires.

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited (ACN 008 624 691) or the financial market operated by it as the context requires.

ASX Listing Rules means the listing rules of the ASX.

ASX Settlement Operating Rules means the settlement rules of the securities clearing house which operates CHESS.

Board means the board of Directors unless the context indicates otherwise.

Business Day means Monday to Friday inclusive, except New Year’s Day, Good Friday, Easter Monday, Christmas Day, Boxing Day and any other day that ASX declares is not a business day.

Closing Date means the date specified in the timetable set out at the commencement of this Prospectus (unless extended).

Company means DXN Limited (ACN 620 888 548).

Constitution means the constitution of the Company as at the date of this Prospectus.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the directors of the Company as at the date of this Prospectus.

Entitlement means the entitlement of a Shareholder who is eligible to participate in the Offer.

Entitlement and Acceptance Form means the entitlement and acceptance form either attached to or accompanying this Prospectus.

New Option means a listed Option issued on the terms set out in section 7.2.

Offer means the non-renounceable entitlement issue the subject of this Prospectus.

Official Quotation means official quotation on ASX.

Option means an option to acquire a Share.

Option holder means a holder of an Option.

Pinnacle or Underwriter means Pinnacle Corporate Finance Pty Ltd (ABN 46 149 263 543) (AFSL 403684).

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Prospectus means this prospectus.

Record Date means the date specified in the timetable set out at the commencement of this Prospectus.

Section means a section of this Prospectus.

Securities means Shares and/or New Options offered pursuant to the Offer.

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means a holder of a Share.

Shortfall means the Shares not applied for under the Offer (if any).

Shortfall Application Form means the shortfall application form either attached to or accompanying this Prospectus.

Shortfall Offer means the offer of the Shortfall on the terms and conditions set out in section 5.8.

Shortfall Securities means those Securities issued pursuant to the Shortfall.

WST means Western Standard Time as observed in Perth, Western Australia.

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AI assistant

DXN LIMITED — Capital/Financing Update 2019

64806_rns_2019-10-10_00ef4f18-6119-4e58-a058-8a5b85da4f47.pdf

ENTITLEMENT ISSUE PROSPECTUS

IMPORTANT NOTICE

TABLE OF CONTENTS

1. CORPORATE DIRECTORY

Directors

Share Registry*

Legal Advisers

Underwriter and Lead Manager

Company Secretary

Auditor

ASX Code

Registered Office

2. TIMETABLE

3. IMPORTANT NOTES

3.1

Risk factors

3.2 Forward-looking statements

4. CHAIRMAN’S LETTER

5. DETAILS OF THE OFFER

5.1 The Offer

5.2 Minimum subscription

5.3 Acceptance

5.4

Payment by cheque/bank draft

5.5 Payment by BPAY[®]

5.6 Underwriting, issue of Convertible Notes and sub-underwriting

Notes:

5.7 Effect on control of the Company

5.8 Shortfall Offer

5.9

ASX listing

5.10

Issue

5.11

Overseas shareholders

New Zealand

Singapore

Nominees and custodians

5.12 Enquiries

6. PURPOSE AND EFFECT OF THE OFFER

6.1 Purpose of the Offer

Notes:

6.2 Effect of the Offer

6.3 Pro-forma balance sheet

6.4 Effect on capital structure

Shares

Options

Note:

Performance Rights

Convertible Notes

6.5 Details of substantial holders

Notes

7. RIGHTS AND LIABILITIES ATTACHING TO SECURITIES

7.1 Shares

(a) General meetings

(b) Voting rights

(c) Dividend rights

(d) Winding-up

(e) Shareholder liability

(f) Transfer of shares

(g) Future increase in capital

(h) Variation of rights

(i) Alteration of constitution

7.2 New Options

(a) Entitlement

(b) Exercise Price

(c) Expiry Date

(d) Exercise Period

(e) Notice of Exercise

(f) Exercise Date

(g)

Timing of issue of Shares on exercise

(h) Shares issued on exercise

(i) Quotation of Shares issued on exercise

(j) Reconstruction of capital

(k) Participation in new issues

(l) Change in exercise price

DXN LIMITED Capital/Financing Update 2019