INFOCUS GROUP HOLDINGS LIMITED — M&A Activity 2015

Oct 28, 2015

S u ite 9, 330 Chur c hill Avenue, S u biaco, Wester n Australia 600 8 PO Box 866, S u biaco, Wester n Australia 690 4 T +61 8 6489 1600 F + 61 8 6489 1601 W www.vtxh o ldings.com.a u

ABN 80 096 870 978

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29 Octob e r 2015

Update on Acquisition of NexGen Networks Limited

Background

On 16 Ju n e 2015, V T X Holding s Limited ( ASX: VTX ) ( VTX or th e Company ) announ c ed that i t had ente r ed into a b inding ter m s sheet t o acquire 100% of the issued sh a re capital in NexGe n Networks L imited (a c ompany r egistered i n New Zealand) ( NexGen ).

Following a restruct u re of the proposed transactio n , the Co m pany ha s entered into a ne w binding t e rms sheet ( Agreement ) (which s upersede s and repl a ces the initial terms s heet) wit h NexGen a nd the sh a reholders o f NexGen ( Vendors ) pursuant t o which:

• (a) t h e Company has agreed to a c quire 100 % of the f u lly paid o rdinary sh a res in th e c a pital of NexGen ( NexGen Shares ) held b y each of the non- N ew Zeala n d Vendor s (t o gether, t h e A Class Vendors ) ( NexGen A Class Shares ), a n d the Ne w Zealan d V e ndors (t o gether, the B Class Vendors ) have ag r eed to c o nvert 10 0 % of thei r N e xGen Sh a res into non-voting B Class shar e s ( NexGen B Class Shares ) ( Acquisition );

• (b) N e xGen ha s agreed t o grant t o the Co m pany (or its nomin e e) an ex c lusive an d ir r evocable option to a cquire 10 0 % of the i n tellectual property o wned by N exGen ( IP Option ); an d

• (c) t h e Compa n y has agr e ed to grant to each of the B C lass Vend o rs the righ t to requir e t h e Compa n y to purc h ase 100% o f the Nex G en B Clas s Shares ( Put Option ),

(all toget h er the Transaction ).

It should be noted that the t otal cons i deration u nder the newly proposed Transaction i s unaltered from the o riginal bin d ing terms s heet.

In additio n , subject to sharehol d er appro v al and completion of the Trans a ction, the Compan y has agre e d to issue u p to 15,000,000 unlis t ed option s and up t o 20,000,00 0 performance share s to certain advisors (i n cluding C am Worth of Simplisit e Business S olutions) f o llowing e x ecution o f the Agre e ment.

Andrew H a ythorpe, C hairman, VTX com m ented:

"We are p leased wit h the resul t s of this re s tructuring. It follows a dvice on h ow best t o structur e the busin e ss for gl o balisation, and ho w best to protect t h e Intellec t ual Prop e rty of th e Compan y . We expe c t to provi d e more d e tails on thi s and the p roduct rol l out soon. ”

The key t e rms of the Agreement are sum m arised in t h e Schedule to this a n nouncement.

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Revised indicative timetable

vised i ndicative timetable
Activit y		Date
Annou ncemento f transact ion		16 Jun e 2015
Satisfa ction of du e diligenc e		15 Ju ly 2015
Dispat appro ch of Notic val e of Meet ing seeking VTX share holder		10 Novembe r 2015
Lodge ment of Pr ospectusb y VTX		30 Novembe r 2015
VTX sh areholder meeting		10 Decembe r 2015
Closin g date ofP rospectus offer		10 Decembe r 2015
Comp letion of A cquisitiono f NexGen		11 Decembe r 2015
Expec on ASX ted date fo r reinstate ment to of ficial quota tion of VTX		17 Decembe r 2015
End da te to satis fy conditio ns precede nt to the t ransaction		31 Decembe r 2015

The above table is an indication o nly and is s ubject to c hange. Shareholders should also n o te that th e Company’s securities w ill be susp e nded from trading on the day o f the VTX general meeting seekin g shareholde r approval f o r the transaction, and i f such appr o val is obtained, will rem a in suspend e d until suc h time as the Company h a s satisfied C hapters 1 a n d 2 of the A S X Listing Rul e s.

Transaction Update

VTX is in the proce s s of acq u iring Nex G en, havi n g execut e d a Bindi n g Terms S heet an d complete d due dili g ence. The Acquisit i on is still subject to various c onditions preceden t including t he receip t of share h older app r ovals and the Com p any expe c ts to lodge a Notic e of Meetin g in this re g ard in the c oming w e eks.

- ENDS –

For further information please contact:

VTX Holdings Limited Media Enquiries Andrew H a ythorpe Asher Moses Chairman Direct o r, Media & Capital P artners p: +61 8 6 4 89 1600 p: +61 438 008 616

ABN 80 096 870 978

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ABOUT NEXGEN NETWORKS

NexGen i s a New Zealand b ased sof t ware tec h nology c o mpany f o unded i n 2013, b y experienced techn o logy entrepreneurs and retail e x ecutives J ason Git m ans and R o bert Pole . NexGen h as develo p ed cuttin g edge so f tware tec h nology, w hich uses intelligent c ustomise d algorithm s to optimise data fl o w betwe e n device s and facilitates fast e r speeds on existin g hardware . The abili t y to deliv e r such o p timal results is due t o NexGe n ’s custom i sed virtua l based te c hnology, w hich re-di r ects data through to its own pr o prietary s e rver, deliv e ring faste r and more efficient data usage to each u s er throug h existing in f rastructur e .

TECHNICAL ADVISOR – MR CAM WORTH

Technical informati o n contai n ed in th e announ c ement h a s been p repared under th e supervisio n of Mr C a m Worth o f Simplisit e Business Solutions - a speciali s t web, so f tware & I T solutions p rovider. A s announced on 2 J u ly 2015, M r Worth h a s been e n gaged a s Technica l and Com m ercial Advisor to th e Board of V TX.

Mr Worth h as led pr o jects acro s s multiple j urisdiction s and successfully la u nched platforms an d deployed large-scale busines s intellige n ce syste m s in multi p le marke t s. He ha s extensiv e experience in the design a n d develo p ment of web-bas e d softwar e solution s and ha s consulted extensivel y in software develo p ment an d cloud sol u tions. Mr W orth also acts as a n Industry r e presentati v e, in Co m municati o n and Cultural Studi e s for Cur t in Universi t y, Wester n Australia. Mr Worth c onsents t o the incl u sion in thi s report of the inform a tion in th e form an d context in which it appears.

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SCHEDULE

Consideration

Subject t o satisfacti o n of the Conditions ( s et out below), in co n sideration for the acquisition o f the NexG e n A Class Shares, a t Settleme n t the Co m pany will issue to th e A Class V endors (o r their nominees):

• (a) 1 8 2,700,000 S hares; an d

• (b) 7 8 ,300,000 Performance Shares c onvertible into Share s on satisf a ction of t h e relevan t m ilestones,

(together the Acquisition Consideration Shares

Conditions Precedent

Settlement of the A c quisition r e mains, at t he date o f this anno u ncement, condition a l upon th e satisfaction (or waiv e r) of the f o llowing conditions pr e cedent ( Conditions ):

• (a) t h e Compa n y prepari n g a full f o rm prosp e ctus to complete a n equity raising of no t l e ss than an y amount r equired b y ASX thro u gh the iss u e of Shar e s at an iss u e price o f n o t less tha n $0.02 ( Equity Raising ), lodging the prosp e ctus with A SIC to co m plete th e E q uity Raisi n g and to r e-comply with Cha p ters 1 an d 2 of the A SX Listing Rules an d r e ceiving v a lid accep t ances un d er the pr o spectus t o the valu e of not le s s than th e a m ount req u ired by A S X;

• (b) t h e Vendor s being sa t isfied, act i ng reasonably, with the profor m a financial positio n a n d capital structure o f VTX afte r completi o n of the A c quisition a nd the Eq u ity Raisin g a n d there b eing no a d ditional V T X securiti e s (including options) issued be y ond thos e a l ready on issue or contemplated by the Acquisition (in c luding o p tions an d P e rformanc e Shares issued or proposed to b e issued t o advisers);

• (c) if requested by either party, th e negotiati o n, execu t ion and delivery of a mutuall y a c ceptable definitive:

• (i ) sha r e purchas e agreem e nt betwe e n the Co m pany and the A Clas s Vendors; (ii) IP O ption agreement be t ween the C ompany a nd NexG e n; and/or (iii) Put Option ag r eement b e tween th e Compan y and the B Class Ve n dors,

• t o give effe c t to the Tr a nsaction ( Definitive Agreements );

• (d) t h e Compa n y obtaini n g at its o w n cost all necessary Sharehold e r approv a ls require d b y the Cor p orations Act (and a n y other a p plicable l a w or reg u lations) a n d the AS X Li s ting Rules in relatio n to the A cquisition including a ny appr o vals requi r ed by th e Company to re-com p ly with t h e admissi o n and quotation r e quireme n ts of ASX , including wi t hout limit a tion:

• (i ) ASX Listing Rul e 7.1 appr o val;

• (ii) ASX Listing Rule 11 appr o val auth o rising a c h ange of a ctivities in relation t o the Acquisiti o n and i f applica b le dispo s al of th e Company’s mai n undertaking where it ent e rs into an a greement to dispos e of its exis t ing assets;

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• (iii) ap p roval for t h e chang e of name o f the Co m pany to “ W angle Technologie s Limi t ed” or su c h other name as agr e ed by the parties;

• (i v ) ele c tion of th e following persons a s directors of the C o mpany o n and fro m Settlement:

• (A) Jason Gitmans as Managing Director; and (B) Keaton Wallace as Corpor a te Director; and

• ( v ) suc h other a p provals as may be identified a s necess a ry as a re s ult of du e dili g ence (e.g. potential for new c onstitution, auditor r e quirements, directo r fee pools and the like);

• (e) t h e Compa n y comply i ng with all condition s that may be impos e d by ASX relating t o t h e underta k ing of the Transacti o n, includin g , if requir e d, recom p liance wit h Chapter s 1 and 2 of t h e ASX Listi n g Rules;

• (f) N e xGen entering into a n agree m ent with t h e Compa n y under w hich it agr e es that, i n t h e period b etween the Compa n y either o w ning 100 % of NexG e n or exer c ising the I P O ption, it s h all be en t itled to 1 0 0% of the revenue a nd profits generate d from th e b u siness an d undertaking of Nex G en;

• (g) t h ere bein g no mat e rial adv e rse chan g e to Ne x Gen pri o r to Settl e ment, a s d e termined by the Co m pany ac t ing reasonably;

• (h) t h ere being no mate r ial advers e change to the C o mpany p r ior to Settlement, a s d e termined by NexGe n acting reasonably;

• (i) r e ceipt of a ll necessa r y regulat o ry and ta x consents or appro v als for th e propose d Tr a nsaction;

• (j) a n y such ot h er condit i ons impos e d by any regulatory authority t hat are n e cessary i n o r der for th e Transacti o n to be pr o perly co m pleted;

• (k) t h e Compa n y receivin g a letter f r om ASX c o nfirming t h at ASX wil l grant co n ditional re - q u otation o f the Com p any’s Shares on the official list of ASX, on terms acceptable t o t h e Compa n y (acting r easonabl y ) and the V endors (acting reas o nably);

• (l) t h e Company entering into a m utually a cceptabl e binding consultan c y service s a g reement w ith Jason Gitmans for a perio d of 3 yea r s and a n o n-executi v e directo r a p pointme n t letter wit h Keaton W allace, e a ch on spe c ified term s and the t erminatio n o f Keaton W allace’s e x isting ap p ointment letter and J ason Git m ans’ existi n g service s a g reement w ith NexG e n effectiv e from Settlement; and

• (m) o t her conditions prec e dent cus t omary fo r transacti o ns of this nature or that aris e f o llowing due diligenc e , in each c ase if and as may b e agreed b y the parti e s.

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Loan

As at the d ate of thi s announc e ment, the Company has adva n ced to N e xGen a lo a n totallin g $510,000 ( Loan ). The Loan is un s ecured a n d interest free.

Upon Exe r cise of th e IP Option, as consid e ration for the acqui s ition of th e intellectu a l propert y of NexGe n by the C o mpany, t h e Loan will be deem e d to hav e been rep a id by VTX.

In the ev e nt that th e Agreeme n t is terminated prior to Settlem e nt of the A cquisition arising ou t of a mat e rial breac h of the A g reement b y the Shareholders, t he Loan w ill be fully repayabl e within 60 days of w ritten notice from t h e Comp a ny, subje c t to Nex G en havin g financia l capacity to repay the Loan and othe r wise at s u ch later d ate as N exGen h a s financia l capacity t o repay t h e Loan.

In the event that Set t lement of the Acqui s ition occu r s, but the C ompany d oes not exercise th e IP Option, the Loan w ill becom e an inter- c ompany l o an due a n d owing b y NexGen.

Settlement

Settlement of the A c quisition ( Settlement ) will occur on that date which i s 5 business days afte r the satisf a ction (or w aiver by the Com p any or th e Vendors, or both, a s applica b le) of th e Condition s .

Board Composition

Upon Set t lement, t h e composition of t h e board of directors of bot h the Co m pany an d NexGen is intended t o compris e :

• (a) J a son Gitm a ns as Man a ging Dire c

• (b) Andrew Ha y thorpe as C hairman;

• (c) K e aton Wall a ce as Co r porate Dir e ctor.

• Upon Sett l ement:

• (a) H a rry Karelis and James Robinson shall resig n as Direct o rs of the C ompany; a nd

• (b) R o bert Pole shall resign as a director of Nex G en.

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Advisor Securities

The Com p any has a greed to issue up t o 15,000,000 unliste d options a nd up to 20,000,00 0 performa n ce shares to its advis o rs followi n g executi o n of the A g reement.

IP Option

Subject t o Settleme n t of the A c quisition, NexGen h a s grante d the Com p any (or it s nominee) an exclusi v e irrevoc a ble optio n to acquir e 100% of t h e intellectual prope rt y owned b y NexGe n ( IP Option ) .

The IP Option shall c ommenc e on the d a te that is 12 month s from the date of e x ecution o f Agreeme n t ( Commencement Date ) and end (unl e ss exercis e d prior) o n the dat e that is 1 2 months fr o m the Co m mencem e nt Date ( Option Period ).

In consid e ration for the IP O p tion, the parties have ackno w ledged a nd agree d that th e Compan y has paid a non-refu n dable IP O ption fee t otalling $100,000 to N exGen.

The Com p any may e xercise the IP Optio n at any ti m e during the Optio n Period b y deliverin g to NexGen a writte n notice s t ating that the Com p any wish e s to exer c ise the IP Option ( IP Option Exercise Notice ). The IP Option will lapse if a n IP Optio n Exercise N otice is n o t provide d to NexGe n prior to t h e expiry o f the Opti o n Period ( or such ot h er date a s agreed b y VTX an d NexGen i n writing).

Settlement of the a c quisition o f the intell e ctual pro p erty will o ccur on t h e date sti p ulated b y the Com p any in the IP Option E xercise N o tice.

Put Option

Subject t o settlement of the A c quisition, t h e B Class Vendors a r e irrevoca b ly entitle d to requir e the Com p any to acquire 100 % of the Ne x Gen B Cl a ss Shares w hich the B Class V e ndors hol d free from e ncumbra n ces ( Put Option ).

Subject t o exercise of the Put Option, i n consider a tion for t h e acquisit i on of the Tranche 2 NexGen Shares, the C ompany w ill issue t o the B Class Vendors:

• (a) 9 7 ,300,000 S h ares; and (b) 4 1 ,700,000 Performanc e Shares,

(together the Put Option Consideration Shares ).

The B Cl a ss Vendor s may ex e rcise the P ut Optio n at any time within 12 month s after th e Commen c ement D a te by deli v ering to t h e Compa n y a writte n notice st a ting that t he B Clas s Vendors w ish to ex e rcise the Put Optio n ( Put Option Notice ). The Put Option m a y only b e exercised in respect of 100% of the NexG e n B Class S hares.

Settlement of the a c quisition o f the Nex G en B Clas s Shares w i ll occur o n the date that is fiv e business d ays after the Com p any recei v es the P u t Option Notice (or such oth e r date a s agreed b e tween th e B Class V e ndors an d the Com p any).

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Performance Share Milestones

Subject t o ASX app r oval of th e terms of t he Perfor m ance Sh a res, the P e rformanc e Shares t o be issue d to the V endors w ill convert into Sha r es upon achievem e nt of th e followin g milestone s :

• (a) Class A : O n e third of the Perfor m ance Sh a res shall c onvert u p on VTX (or an entit y c o ntrolled b y VTX) h a ving a c o nsumer b a sed android app b ased on u se of th e G roup’s Technology p u blicly ava i lable in th e Google P lay store w ithin 3 ye a rs from th e d a te of issu e of the Cl a ss A Performance Sh a res;

• (b) Class B : On e third of t he Perfo r mance Shares shall c onvert u p on VTX ( o r an entit y c o ntrolled b y VTX) ha v ing a co n sumer based iOS app based o n use of t h e Group’ s Technology publicly a v ailable in the Apple App Store within 3 y e ars from the date o f is s ue of the C lass B Per f ormance S hares; an d

• (c) Class C : O n e third of the Perfor m ance Sh a res shall c onvert u p on VTX (or an entit y c o ntrolled b y VTX ) rec e iving $1,0 0 0,000 in cumulative revenue, a s confirm e d by VTX’ s a u ditor or another suit a bly qualif i ed indep e ndent thir d party m u tually agr e ed by VT X a n d NexGe n , pursuan t to an ag r eement t o license t h e Group’ s Technolo g y within 3 y e ars from t h e date of issue of th e Class C P e rformanc e Shares.

Termination

Any party may termi n ate the A g reement:

• (a) if the Cond i tions have not been satisfied o r waived by 31 De c ember 20 1 5, or suc h o t her date a greed in w riting by t h e Compa n y and Ne x Gen; and

• (b) if the other p arty com m its a material brea c h of any o f its terms, and, if th e breach i s c a pable of b eing rem e died, aft e r being no t ified in wri t ing by the aggrieve d party, th e o t her party f ails to rem e dy such b reach wit h in 10 days thereafter .