DXN LIMITED — Capital/Financing Update 2020

Apr 7, 2020

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8 April 2020

ASX Announcement

$5.9m Fully Underwritten Capital Raising to fund Hobart DC Acquisition

Highlights:

• DXN announces a fully underwritten non-renounceable entitlement issue to raise $5.9m to fund the acquisition of assets of Data Centre 3 Pty Ltd in Hobart, Tasmania and other activities including product manufacturing, working capital and data centre marketing.

• Entitlement Issue will be offered on 13 new Shares for every 10 Shares held, at an Issue Price of $0.01 per Share to raise $5.9 million, with 1 Option for every 1 Share subscribed for and issued (3 year term, $0.02 exercise price).

• Supported by institutional and sophisticated investors, including SG Hiscock & Company who has agreed to priority sub-underwrite approximately $556,000 of the Offer.

• CEO and other executives have agreed to act as priority sub-underwriters for $95,000.

• The commercial appeal of the acquisition of Data Centre 3 Pty Ltd’s assets in Hobart, Tasmania, remains unchanged and the Company is committed to the acquisition - FY19 revenue of approximately $860,000 and EBITDA of approximately $450,000.

• ANZ banking facility renegotiated - principal and interest holiday for 6 months, saving $140k/month. DXN is aiming to refinance to a more favourable facility and release $2.0m restricted cash for additional working capital.

• Board recently reduced to 3 Directors, significantly reducing Board fees.

• DXN is confident data centre tailwinds will result in growth in shareholder value.

Capital Raising Update

Pre-fabricated modular data centre specialist, DXN Limited (ASX:DXN) (the Company or DXN ) advises shareholders that, further to announcements of 12 February 2020, 19 March 2020 and 27 March 2020, due to the continued market volatility, but desire to complete the compelling Data Centre 3 Pty Ltd asset acquisition (refer to details in announcement dated 12 February 2020) ( Hobart DC Acquisition ), DXN will launch a new non-renounceable entitlement issue on the basis of thirteen (13) new shares (New Shares) for every ten (10) shares held by eligible shareholders at an issue price of $0.01 per Share (Issue Price) to raise approximately $5.9 million ( Offer ). The Company is relying on the Class Waiver Decision issued by ASX on 31 March 2020 in order to conduct the Offer as a non-renounceable offer.

Subscribers to the Offer will receive one (1) free-attaching option ( Option ) for every one (1) New Share subscribed for and issued, exercisable at $0.02 per Option on or before the date which is three (3) years from the date of issue. Subject to meeting the requirements of the ASX Listing Rules, the Company intends to apply for quotation of the New Options.

DXN Limited ABN: 46 620 888 548

9 Mumford Place, Balcatta, Perth, Western Australia, 6021 W: dxn.solutions | T: 1300 328 239 | E: info@dxn.solutions

The Issue Price of $0.01 per Share is a:

• 29% discount to the last traded price of $0.014;

• 54% discount 10 day VWAP of $0.0216

• 69% discount to the 30 day VWAP of $0.0322

CEO Mathew Madden said:

“We are focussed on completing the previously announced Hobart DC Acquisition which remains a compelling opportunity for the Company. Throughout the COVID-19 crisis, we are seeing tailwinds for data centre operators due to the increased usage of data for entertainment (streaming, gaming) and commercial (video conferencing) purposes.

In the near term, DXN is focused on filling our DXN-SYD01 data centre to the currently built capacity of 58 racks, continuing our strong momentum in the DXN Modules business and, post completion of the Hobart DC Acquisition and Capital Raising, expanding capacity from ~30 racks to a potential ~100 racks.

The Offer will result in approximately 592,179,622 New Shares and 592,179,622 Options being issued.

The funds raised from the Offer are intended to be applied towards:

Uses	$
Purchase price – DC3 acquisition1	2,430,000
costs associated with DC3 acquisition2	100,000
Product Manufacturing3	2,000,000
Working capital4	885,796
Offer costs5	416,000
Data centre marketing 6	90,000
Total Funds raised in Offer	5,921,796

Notes

1. Balance of purchase price of the DC3 assets and revenues from TasmaNet.

2. Funds to be applied to costs to obtain planning approval to expand the capacity of DC3 and advisory costs associated with the acquisition.

3. Funds to be applied towards DXN Modules product manufacturing.

4. Funds to be applied as working capital for the DXN business.

5. Funds to be applied towards the estimated expenses of the Offer.

6. Funds to be applied to Sydney data centre marketing strategies.

Pinnacle Corporate Finance Pty Ltd ( Pinnacle ) has been engaged as Lead Manager to the Offer and has executed an underwriting agreement with the Company whereby Pinnacle has agreed to fully underwrite the Offer, subject to standard market termination events and conditions precedent to an offer of this nature.

Mathew Madden, DXN’s CEO ($50,000) and other key executives (a further $45,000) have entered into priority sub-underwriting agreements with Pinnacle. Each party will be entitled to a priority subunderwriting fee of 3.0% of the amount priority sub-underwritten, on the same terms and conditions as other priority sub-underwriters of Pinnacle.

DXN Limited ABN: 46 620 888 548

9 Mumford Place, Balcatta, Perth, Western Australia, 6021 W: dxn.solutions | T: 1300 328 239 | E: info@dxn.solutions

Further information with respect to the Offer will be disclosed in a Prospectus, intended to be lodged with the ASIC on or about 8 April 2020 and mailed to eligible shareholders shortly after the record date. Shareholders may view the Company’s ASX announcements, including those relating to the Offer, on the ASX website under the ASX code DXN.

Persons should consider the Prospectus before deciding whether to acquire securities and eligible shareholders will need to complete the personalised entitlement and acceptance form that will accompany the Prospectus in order to apply for New Shares and attaching New Options under the Offer.

Keydates for the Offer Event	Proposed Date
Lodgement of Appendix 3B with ASX	8 April 2020
Lodgement of Prospectus with the ASIC & ASX	8 April 2020
Ex-date	15 April 2020
Record Date for determiningentitlements	16 April 2020
Prospectus sent to Shareholders and Company announces this has been completed	20 April 2020
Last date to extend the ClosingDate	7 May2020
ClosingDate	12 May2020
Shares and Optionsquoted on a deferred settlement basis	13 May2020
Announcement of results of Offer	15 May2020
Issue date / Shares entered into Shareholder’s security holdings / Lodgement of Appendix 2A with ASX	18 May 2020
Quotation of Shares and Options issued under the Offer	19 May2020

Hobart DC Acquisition – Updated Terms

Further to the Company’s announcement detailing the Hobart DC Acquisition and its key terms, dated 12 February 2020, DXN advises that the parties have the following:

• (a) To extend the settlement sunset date under the current binding term sheet to 18 May 2020.

• (b) The Company will no longer retain 20% of the purchase price ($2,700,000 of which a 10% deposit has already been paid) until DXN receives a planning permit from the Glenorchy City Council allowing it to expand the Data Centre 3 Pty Ltd premises in order to house at least 90 racks. The previous retention amount ($540,000) will be paid at settlement along with the balance of the purchase price, meaning that the Company will pay the vendor (Tasmanet Pty Ltd) $2,430,000 at settlement of the Hobart DC Acquisition. DXN still intends on seeking the relevant planning permit from the City Council.

• (c) From 1 April 2020 until settlement or termination of the acquisition agreement, DXN will meet the costs of maintenance of the Data Centre 3 Pty Ltd data centre, capped at $11,275 per month. If the acquisition agreement is terminated or settlement does not occur for any reason, Tasmanet Pty Ltd must repay DXN these maintenance costs.

ANZ Facility - Updated Terms

The Company has a $5 million secured Chattel Finance Facility (revolving) with ANZ Bank which has been drawn to approximately $3.4 million at 31 March 2020. Principal and interest repayments equate to approximately $140,000 per month have been put on hold for a period of 6 months.

The Company will look to renegotiate the ANZ facility to more favourable terms as soon as possible to support working capital and to release the $2.0 million in restricted cash held by ANZ as security.

-ends-

DXN Limited ABN: 46 620 888 548

9 Mumford Place, Balcatta, Perth, Western Australia, 6021 W: dxn.solutions | T: 1300 328 239 | E: info@dxn.solutions

About DXN Limited

DXN Limited designs, builds, owns and operates data centres. Offering integrated, customised and tailored solutions to clients, DXN provides businesses with the option of delivering solutions to site through containerised modules, or space in DXN’s modular colocation facilities to suit technical specifications and operational requirements. From a single rack in the colocation facilities through to fully customised Edge Infrastructure, DXN can deliver a range of solutions to meet modern data centre requirements. DXN has achieved an industry first and become the first modular data centre developer in the world to receive both Uptime Institute Tier-Ready III and Tier-Ready IV design review awards. For more https://dxn.solutions

For more information please contact:

Matthew Madden, CEO T +61 1300 328 239

E: Matthew.Madden@dxn.solutions

ASX Release authorised by the Board of Directors

DXN Limited ABN: 46 620 888 548

9 Mumford Place, Balcatta, Perth, Western Australia, 6021 W: dxn.solutions | T: 1300 328 239 | E: info@dxn.solutions