MEMPHASYS LIMITED. — Share Issue/Capital Change 2016

Nov 14, 2016

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX's property and may be made public.

Introduced 01/07/96 Origin: Appendix 5 Amended 01/07/98, 01/09/99, 01/07/00, 30/09/01, 11/03/02, 01/01/03, 24/10/05, 01/08/12, 04/03/13

Name of entity

MEMPHASYS LIMITED

ABN

33 120 047 556

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

$\mathbf{1}$ ⁺Class of ⁺securities issued or to be issued

Convertible Securities

Number of ⁺securities issued or $\overline{2}$ to be issued (if known) or maximum number which may be issued

40,000 Convertible Securities with a face value of \$1.00 each

⁺ See chapter 19 for defined terms.

$\overline{3}$ Principal terms of the ⁺securities 1. Interest rate: 10% per annum (payable (e.g. if options, exercise price and monthly in arrears) expiry date; if partly paid 2. Conversion rate: each Convertible +securities, the amount Security is convertible into fully paid outstanding and due dates for ordinary shares at a conversion price payment; if +convertible of \$0.06 per share securities, the conversion price Expiry date: 19 September 2018 3. and dates for conversion) Convertible into fully paid ordinary 4. shares at any time prior to the expiry date 5. Redeemable at any time from the date which is 30 days after 19 September 2016 to the expiry date

⁺ See chapter 19 for defined terms.

$\overline{4}$ Do the ⁺securities rank equally in all respects from the ⁺issue date with an existing ⁺class of quoted +securities?

If the additional ⁺securities do not rank equally, please state:

• the date from which they do
• the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment
• the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment
• Issue price or consideration 5
• Purpose of the issue 6 (If issued as consideration for the acquisition of assets, clearly identify those assets)

On conversion of the Convertible Securities. the fully paid ordinary shares will rank pari passu with existing fully paid ordinary shares

\$1.00 per Convertible Security (total consideration of \$40,000)

No funds were raised by the issue of the Convertible Securities. The Convertible Securities were issued in lieu of consulting fees owing by the Company to Prof. John Aitken.

Is the entity an ⁺eligible entity 6a that has obtained security holder approval under rule 7.1A?

If Yes, complete sections 6b - 6h in relation to the ⁺securities the subject of this Appendix 3B, and comply with section 6i

• 6_b The date the security holder resolution under rule 7.1A was passed
• Number of ⁺securities issued 6с without security holder approval under rule 7.1
• Number of ⁺securities issued 6d with security holder approval under rule 7.1A

30 November 2015

Yes

Nil

37,123,956 fully paid ordinary shares

40,000 Convertible Securities

• See chapter 19 for defined terms.

Appendix 3B
New issue announcement

6e	Number of + securities issued with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting)	Nil
6f	Number of + securities issued under an exception in rule 7.2	284,617,002 fully paid ordinary shares 284,617,002 unlisted options to acquire fully paid ordinary shares exercisable at \$0.016 cents on or before 30 November 2016
6g	If + securities issued under rule 7.1A, was issue price at least 75% of 15 day VWAP as calculated under rule 7.1A.3? Include the + issue date and both values. Include the source of the VWAP calculation.	N/A
6h	If + securities were issued under 7.1A rule for non-cash consideration, state date on which valuation of consideration was released to ASX Market Announcements	N/A
6i	Calculate the entity's remaining issue capacity under rule 7.1 and rule 7.1A - complete Annexure 1 and release to ASX Market Announcements	Rule 7.1 - 36,025,884 Rule 7.1A - 53,211,005
7	+ Issue dates Note: The issue date may be prescribed by ASX (refer to the definition of issue date in rule) 19.12). For example, the issue date for a pro rata entitlement issue must comply with the applicable timetable in Appendix 7A. Cross reference: item 33 of Appendix 3B.	19 September 2016
8	Number and $\tau$ class of all + securities ASX quoted on (including the + securities in section 2 if applicable)	Number 569,234,004	+Class Fully paid ordinary shares

		Number	+Class
9	Number and + class of all *securities not quoted on ASX (including the + securities in section 2 if applicable)	284,617,002	Unlisted options to fully paid acquire ordinary shares exercisable at \$0.016 cents on or before 30 November 2016
		1,500,000	Unlisted options to acquire fully paid ordinary shares exercisable at \$0.112 cents on or before 1 November 2017
		1,200,000	Unlisted options to acquire fully paid ordinary shares exercisable at \$0.1015 cents on or before 5 December 2016
		1,200,000	Unlisted options to acquire fully paid ordinary shares exercisable at \$0.1015 cents on or before 5 December 2017
		40,000	Convertible Securities with a face value of \$1.00 each

Dividend policy (in the case of a $\sqrt{ }$ 10 trust, distribution policy) on the increased capital (interests)

$N/A$

Part 2 - Pro rata issue

• $11\,$ Is security holder approval required?
• 12 Is the issue renounceable or non- $N/A$ renounceable?

$N/A$

⁺ See chapter 19 for defined terms.

Appendix 3B
New issue announcement

13	Ratio in which the + securities will be offered	N/A
14	+ Class of + securities to which the offer relates	N/A
15	determine +Record date to entitlements	N/A
16	different Will holdings on registers (or subregisters) be calculating for aggregated entitlements?	N/A
17	Policy for deciding entitlements in relation to fractions	N/A
18	Names of countries in which the entity has security holders who will not be sent new offer documents	N/A
	Note: Security holders must be told how their entitlements are to be dealt with.
	Cross reference: rule 7.7.
19	of Closing date for receipt acceptances or renunciations	N/A

⁺ See chapter 19 for defined terms.

Appendix 3B New issue announcement

• 04/03/2013
• • See chapter 19 for defined terms.

Amount of any underwriting fee 21 or commission

Names of any underwriters

20

• 22 Names of any brokers to the issue
• 23 Fee or commission payable to the broker to the issue
• 24 Amount of any handling fee payable to brokers who lodge acceptances or renunciations on behalf of security holders
• 25 If the issue is contingent on security holders' approval, the date of the meeting
• 26 Date entitlement and acceptance form and offer documents will be sent to persons entitled
• 27 If the entity has issued options, and the terms entitle option holders to participate on exercise, the date on which notices will be sent to option holders
• 28 Date rights trading will begin (if applicable)
• 29 Date rights trading will end $[if]$ $N/A$ applicable)
• 30 How do security holders sell their entitlements in full through a broker?
• 31 How do security holders sell part of their entitlements through a broker and accept for the balance?

$N/A$ $N/A$

$N/A$

$N/A$

$N/A$

$N/A$

$N/A$

$N/A$

$N/A$

$N/A$

$N/A$

Appendix 3B Page 7

• 32 How do security holders dispose $N/A$ of their entitlements (except by sale through a broker)?
• 33 ⁺Issue date

the contract of the contract of the contract of
$\sqrt{N}$ $\ldots$	_____	__

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

• 34 Type of ⁺securities (tick one)
• ⁺Securities described in Part 1 $(a)$
• $(b)$

All other +securities

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

35	If the 'securities are 'equity securities, the names of the 20 largest holders of the additional securities, and the number and percentage of additional securities held by those holders
36	If the 'securities are 'equity securities, a distribution schedule of the additional *securities setting out the number of holders in the categories $1 - 1.000$ $1,001 - 5,000$ $5,001 - 10,000$ 10,001 - 100,000 100,001 and over
37	A copy of any trust deed for the additional +securities

⁺ See chapter 19 for defined terms.

Entities that have ticked box 34(b)

• 38 Number of ⁺securities for which ⁺quotation is sought
• 39 ⁺Class of ⁺securities for which quotation is sought
• 40 Do the ⁺securities rank equally in all respects from the ⁺issue date with an existing ⁺class of quoted *securities?

If the additional ⁺securities do not rank equally, please state:

• the date from which they do
• · the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment
• the extent to which they do not $\bullet$ rank equally, other than in relation to the next dividend, distribution or interest payment
• 41 Reason for request for quotation now

Example: In the case of restricted securities, end of restriction period

(if issued upon conversion of another ⁺security, clearly identify that other +security)

and ⁺class of 42 Number all *securities quoted on ASX (including the ⁺securities in clause 38)

Number	+Class

⁺ See chapter 19 for defined terms.

Quotation agreement

• ⁺Ouotation of our additional ⁺securities is in ASX's absolute discretion. ASX $\mathbf{1}$ may quote the *securities on any conditions it decides.
• $\overline{2}$ We warrant the following to ASX.
• The issue of the 'securities to be quoted complies with the law and is $\bullet$ not for an illegal purpose.
• There is no reason why those 'securities should not be granted $\ddot{\phantom{a}}$ *quotation.
• An offer of the 'securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to $\bullet$ any applications received by us in relation to any *securities to be quoted and that no-one has any right to return any 'securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the 'securities be quoted.
• If we are a trust, we warrant that no person has the right to return the $\bullet$ *securities to be quoted under section 1019B of the Corporations Act at the time that we request that the 'securities be quoted.
• We will indemnify ASX to the fullest extent permitted by law in respect of any 3 claim, action or expense arising from or connected with any breach of the warranties in this agreement.
• 4 We give ASX the information and documents required by this form. If any information or document is not available now, we will give it to ASX before *quotation of the *securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

== == == == ==

Sign here:

(Director/Company secretary)

Date: $15$ /1/2016

Print name:

JOIN REE , RA

⁺ See chapter 19 for defined terms.

Appendix 3B - Annexure 1

Calculation of placement capacity under rule 7.1 and rule 7.1A for eligible entities

Introduced 01/08/12 Amended 04/03/13

Part 1

ľ

Rule 7.1 – Issues exceeding 15% of capital Step 1: Calculate "A", the base figure from which the placement capacity is calculated
Add the following:
Number of fully paid +ordinary securities ۰ issued in that 12 month period under an exception in rule 7.2	105,914,570 fully paid ordinary shares issued to subscribers of the Company's non- renounceable rights issue on 17 March 2016 (LR 7.2 exception 1)
Number of fully paid +ordinary securities ۰ issued in that 12 month period with shareholder approval	178,702,432 fully paid ordinary shares issued to the underwriter of the Company's non-renounceable rights issue on 4 April
Number of partly paid +ordinary ٠ securities that became fully paid in that 12 month period	2016 (LR 7.2 exception 2)
Note:
Include only ordinary securities here - ۰ other classes of equity securities cannot be added
Include here (if applicable) the securities ۰ the subject of the Appendix 3B to which this form is annexed
It may be useful to set out issues of ٠ securities on different dates as separate line items
Subtract the number of fully paid +ordinary securities cancelled during that 12 month period	$\mathbf{0}$
"A"	532,110,048

⁺ See chapter 19 for defined terms.

Step 2: Calculate 15% of "A"
"B"	0.15
	[Note: this value cannot be changed]
Multiply "A" by 0.15	79,816,507
Step 3: Calculate "C", the amount of placement capacity under rule 7.1 that has already been used
Insert number of + equity securities issued or agreed to be issued in that 12 month period not counting those issued:	37, 123, 956 fully paid ordinary shares to subscribers of a private placement on 14 January 2016 (LR 7.1) 6,666,667 fully paid ordinary shares
Under an exception in rule 7.2 Under rule 7.1A ٠ With security holder approval under rule ۰	assuming conversion of 40,000 Convertible Securities at a conversion price of \$0.06 per share $(LR 7.1)$
Note: This applies to equity securities, unless ٠ specifically excluded - not just ordinary securities Include here (if applicable) the securities ٠ the subject of the Appendix 3B to which this form is annexed It may be useful to set out issues of $\bullet$ securities on different dates as separate line items
"C"	43,790,623
Step 4: Subtract "C" from ["A" x "B"] to calculate remaining placement capacity under rule 7.1
"A" x 0.15	79,816,507
Note: number must be same as shown in Step 2
Subtract "C"	43,790,623
Note: number must be same as shown in Step 3
Total ["A" $\times$ 0.15] - "C"	36,025,884
	[Note: this is the remaining placement capacity under rule 7.1]

⁺ See chapter 19 for defined terms.

Part 2

Rule 7.1A - Additional placement capacity for eligible entities Step 1: Calculate "A", the base figure from which the placement capacity is calculated
Note: number must be same as shown in Step 1 of Part 1
Step 2: Calculate 10% of "A"
"D"	0.10
	Note: this value cannot be changed
Multiply "A" by 0.10	53,211,005
Insert number of +equity securities issued or agreed to be issued in that 12 month period under rule 7.1A Notes: This applies to equity securities - not just ordinary securities Include here $-$ if applicable $-$ the securities the subject of the Appendix 3B to which this form is annexed Do not include equity securities issued ٠ under rule 7.1 (they must be dealt with in Part 1), or for which specific security holder approval has been obtained It may be useful to set out issues of ۰ securities on different dates as separate	0
line items "E"	0

⁺ See chapter 19 for defined terms.

Step 4: Subtract "E" from ["A" x "D"] to calculate remaining placement capacity under rule 7.1A
"A" x 0.10	53,211,005
Note: number must be same as shown in Step 2
Subtract "E"	0
Note: number must be same as shown in Step 3
Total ["A" $\times$ 0.10] – "E"	53,211,005
	Note: this is the remaining placement capacity under rule 7.1A

⁺ See chapter 19 for defined terms.