SKIN ELEMENTS LIMITED — Capital/Financing Update 2018

Jul 12, 2018

IMPORTANT INFORMATION

General

This Prospectus is dated, and was lodged with ASIC on, 13 July 2018. Neither ASIC nor ASX nor their respective officers take any responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates.

No New Securities will be issued on the basis of this Prospectus any later than 13 months after the date of this Prospectus (being the expiry date of this Prospectus).

The Company will apply to ASX within seven days of the date of this Prospectus for Official Quotation by ASX of the New Securities the subject of the Offers.

A copy of this Prospectus is available for inspection at the Australian registered office of the Company at 32 Ord Street, West Perth, Western Australia during normal business hours. The Company will provide a copy of this Prospectus to any person on request. The Company will also provide copies of other documents on request (refer to Sections 7.1 and 7.15). Eligible Shareholders can obtain a copy of this Prospectus during the period of the Entitlement Offer on the Company's website.

No person or entity is authorised to give any information or to make any representation in connection with the Offers which is not contained in this Prospectus. Any information or representation not contained in this Prospectus should not be relied on as having been made or authorised by the Company or the Directors in connection with the Offers.

No updates to Prospectus

The information in this Prospectus may not be complete and may be changed, modified or amended at any time by the Company, and is not intended to, and does not, constitute representations and warranties of the Company. Except as required by law or regulation, neither the Company, nor any other adviser of the Company intends to update this Prospectus or accepts any obligation to provide the recipient with access to information or to correct any additional information or to correct any inaccuracies that may become apparent in the Prospectus or in any other information that may be made available concerning the Company. Potential investors should conduct their own due diligence investigations regarding the Company.

Application Forms

The Application Form accompanying this Prospectus is important. An Application for New Securities under the Offers can only be submitted on an Application Form. If acceptance is by BPAY® there is no need to return an Application Form. The Entitlement and Acceptance Form sets out an Eligible Shareholder's Entitlement. Please refer to the instructions in Section 4 regarding the acceptance of your Entitlement and completion of an Application Form.

By returning an Application Form, you acknowledge that you have received and read this Prospectus and you have acted in accordance with the terms of the Offers detailed in this Prospectus.

Overseas Shareholders

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

The Offers are not being extended, and New Securities will not be issued, to Shareholders with a registered address which is outside Australia, New Zealand, Hong Kong and China. It is not practicable for the Company to comply with the securities laws of overseas jurisdictions (other than Australia, New Zealand, Hong Kong and China) having regard to the number of overseas Shareholders, the number and value of New Securities these Shareholders would be offered and the cost of complying with regulatory requirements in each relevant jurisdiction.

No action has been taken to permit the offer of New Securities to existing Shareholders in any jurisdiction other than Australia, New Zealand, Hong Kong and China. The distribution of this Prospectus in jurisdictions outside Australia, New Zealand, Hong Kong and China is restricted by law and persons outside of Australia, New Zealand, Hong Kong and China should observe such restrictions. Any failure to comply with these restrictions may constitute a violation of applicable securities laws.

Prospectus - Skin Elements Limited | Page 1

New Zealand

The New 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 Financial Markets Conduct Act 2013 and the Financial Markets Conduct (Incidental Offers) Exemption Notice 2016.

This document 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.

Hong Kong

WARNING: The contents of this document have not been reviewed by any Hong Kong regulatory authority. You are advised to exercise caution in relation to the offer. If you are in doubt about any contents of this document, you should obtain independent professional advice.

Peoples Republic of China

The information in this document does not constitute a public offer of the New Securities, whether by way of sale or subscription, in the People's Republic of China (excluding, for purposes of this paragraph, Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan). The New Securities may not be offered or sold directly or indirectly in the PRC to legal or natural persons other than directly to "qualified domestic institutional investors", sovereign wealth funds and quasi-government investment funds.

Notice to nominees and custodians

Nominees and custodians may not distribute this document, and may not permit any beneficial shareholder to participate in the Offers, in any country outside Australia and New Zealand except, with the consent of the Company, to beneficial shareholders resident in certain other countries where the Company may determine it is lawful and practical to make the Offers.

Continuously quoted securities

In preparing this Prospectus, regard has been had to the fact that the Company is a disclosing entity for the purposes of the Corporations Act and that certain matters may reasonably be expected to be known to investors and their professional advisers. This Prospectus is issued pursuant to section 713 of the Corporations Act. 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 information that would be included in a prospectus for an initial public offering.

Exposure period

No exposure period applies to the Offers.

Speculative investment

An investment in the New Securities should be considered highly speculative. Refer to Section 5 for details of the key risks applicable to an investment in the Company.

Persons wishing to apply for New Securities should read this Prospectus in its entirety in order to make an informed assessment of the assets and liabilities, financial position and performance, profits and losses and prospects of the Company and the rights and liabilities attaching to the New Securities.

This Prospectus does not take into account the investment objectives, financial or taxation or particular needs of any Applicant. Before making any investment in the Company, each Applicant should consider whether such an investment is appropriate to his/her particular needs, their individual risk profile for speculative investments, investment objectives and individual financial circumstances. If persons considering applying for the New Securities have any questions, they should consult their stockbroker, solicitor, accountant or other professional adviser.

There is no guarantee that the New Securities will make a return on the capital invested, that dividends will be paid on the New Shares or that there will be an increase in the value of the New Securities in the future.

Forward-looking statements

Page 2

This Prospectus contains forward-looking statements which may be identified by words such as 'believes', 'estimates', 'expects', 'intends', 'may', 'will', 'would', 'could', or 'should' 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 the Company, the Directors and management of the Company. Key risks associated with an investment in the Company are detailed in Section 5. These and other factors could cause actual results to differ materially from those expressed in any forward-looking statements.

The Company has 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.

The Company cannot and does not give assurances that the results, performance or achievements expressed or implied in 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.

Website

No document or information included on the Company's website is incorporated by reference into this Prospectus.

Diagrams

Any diagrams used in this Prospectus are illustrative only and may not be drawn to scale. Unless otherwise stated, all data contained in charts, graphs and tables is based on information available at the date of this Prospectus.

Currency

All financial amounts contained in this Prospectus are expressed as Australian dollars unless otherwise stated.

Rounding

Any discrepancies between totals and sums and components in tables contained in this Prospectus are due to rounding.

Time

All references to time in this Prospectus are references to WST, unless otherwise stated.

Glossary

Defined terms and abbreviations used in this Prospectus are detailed in the glossary of terms in Section 9.

Prospectus - Skin Elements Limited | Page 3

CORPORATE DIRECTORY

*This party is named for informational purposes only and was not involved in the preparation of this Prospectus.

Directors

Peter Malone Executive Chairman Luke Martino Non-Executive Director Phil Giglia Non-Executive Director

Share Registry

Link Market Services Limited Level 4, Central Park 152-158 St Georges Terrace Perth WA 6000

Company Secretary

Mr Craig Piercy

Company Secretary

Registered Office

32 Ord Street West Perth WA 6005 Tel: +61 8 6311 1900 Fax: +61 8 6311 1999 Website: skinelementslimited.com ASX Code: SKN

SKN SKNO

Telephone: 1300 420 094

Lawyers

DLA Piper Australia Level 31 152 - 158 St Georges Terrace Perth WA 6000

Auditor*

BDO Audit (WA) Pty Ltd 38 Station Street Subiaco WA 6008

Lead Manager and Underwriter

Gloucester & Portman Capital Pty Ltd 311-313 Hay Street Subiaco WA 6008

Page 4

INDICATIVE TIMETABLE

Event	Date
Announcement of the Entitlement Offer		29 June 2018
Lodgement of Prospectus with ASIC and provision of a copy to ASX		13 July 2018
Notice of Entitlement Offer sent to Optionholders and Shareholders		13 July 2018
'Ex' Date		18 July 2018
Record Date (at 5.00pm WST)		19 July 2018
Prospectus dispatched to Eligible Shareholders		23 July 2018
Opening Date		23 July 2018
Closing Date (at 5.00pm WST)		6 August 2018
Notification of shortfall		8 August 2018
Anticipated issue date of New Securities (Issue Date)		8 August 2018
Dispatch of holding statements		10 August 2018

The above timetable is indicative only and subject to change. Subject to the Listing Rules, the Directors reserve the right to vary these dates, including the Closing Date, without prior notice. Any extension of the Closing Date will have a consequential effect on the anticipated date for issue of the New Securities. The Directors also reserve the right not to proceed with the whole or part of the Offers at any time prior to allotment. In that event, the relevant Application Monies will be returned without interest in accordance with the Corporations Act.

Prospectus - Skin Elements Limited | Page 5

TABLE OF CONTENTS

IMPORTANT INFORMATION ........................................................................................ 1	IMPORTANT INFORMATION ........................................................................................ 1
CORPORATE DIRECTORY ........................................................................................... 4
INDICATIVE TIMETABLE .............................................................................................. 5
1.	Investment overview ........................................................................................ 7
2.	Details of the Offers ....................................................................................... 11
3.	Effect of the Offers ......................................................................................... 16
4.	Action required by Applicants ...................................................................... 18
5.	Risks ............................................................................................................... 22
6.	Rights attaching to Securities ....................................................................... 30
7.	Additional information ................................................................................... 34
8.	Authorisation .................................................................................................. 41
9.	Glossary .......................................................................................................... 42

Page 6

1. Investment overview

Topic	Summary	Summary	Further information	Further information
What is the	The Company is offering one New Share for every two Shares		Section	2.1
Entitlement Offer?	held by Eligible Shareholders on the Record Date at an issue
	price	of $0.025 per New Share, together with one free
	attaching New Option for every four New Shares issued.
What is the purpose	The purpose of the Entitlement Offer is to raise approximately		Section	2.2
of the Entitlement	$1,075,663 (before costs).
Offer?	The funds raised from the Entitlement Offer will be used for
	the Company's business development program and for
	working capital purposes.
What are the key	•	Development of all natural and organic skincare and	Refer	to	the
investment		suncare products.	Company's
highlights?	•	Scale manufacturing partner appointed.	announcement released to
	•	Acquisition strategy to drive growth.	ASX on 2 July 2018
	•	New product development and expanding product
		range and brand portfolio.
	•	Expanding global market presence.
What are key risks	Some of the key risks that may affect the Company are		Section	5
associated with an	detailed below. This list is not exhaustive, and further details
investment in the	of these risks and other risks associated with an investment in
Company?	the Company are detailed in Section 5.
	In undertaking its business activities, the Company will be
	exposed to risks which include, but are not limited to:
	•	Future capital requirements
		The Company’s capital requirements depend on
		numerous factors. The Company may require further
		financing in addition to amounts raised under the
		Offers. Any additional equity financing will dilute
		shareholdings, and debt financing, if available, may
		involve restrictions on financing and operating
		activities. If adequate funds are not available to satisfy
		either short or long-term capital requirements, the
		Company may be required to limit its operations
		significantly. There is 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.
	•	Sunscreen regulatory requirements and
		Government legislation and policy changes
		Sunscreens are classified as “therapeutic goods” in
		Australia to ensure quality, safety and efficacy and
		have strict controls for independent SPF testing and
		use of GMP. Similar regulations framework exists in
		most countries such as USA. Changes in relevant
		laws, regulations and government policies regarding
		the regulation of sunscreens or skin care products
		could adversely affect the Company’s proposed
		operations, increase costs, or affect the financial
		performance or any future revenue of the Company.

Prospectus - Skin Elements Limited | Page 7

Topic	Summary	Further information
	• Competition and New Market Entrants Risks

The Company participates in a highly competitive skin care market against materially larger, globally focussed competitors with significantly more access to capital and resources. Should any of the Company’s competitors participate more aggressively on price, product, innovation or other means then this could have a material adverse impact on the Company’s financial performance and future prospects of the business.

• Manufacturing Risks and Regulations

The process of manufacturing the Company's products is complex, highly regulated and subject to numerous quality assessments controls and procedures. This process may be subject to several manufacturing risks, including the following:

• deviations from normal manufacturing processes and controls could result in reduced production yields, product defects and other supply disruptions;

• the manufacturing facilities in which the Company's products are made could be adversely affected by equipment failures, labour shortages, natural disasters, power failures and numerous other factors;

• the Company and its contract manufacturers must comply with the TGA regulations and guidelines. The Company and its contract manufacturers may encounter difficulties in achieving quality control and quality assurances to the standard required or, changes to the regulations and guidelines may require the Company to seek an alternative manufacturer, increase in costs or reduce volumes. There may be a shortage of persons qualified to administer the regulations and guidelines or may require additional training or qualifications; and

o any adverse developments affecting manufacturing operations for the Company's products may result in shipment delays, inventory shortages, product withdrawals or recalls, or other interruptions in the supply of the Company's products.

• Distribution

The Company relies on a network of distributors in Australia and internationally. Should the Company fail to secure suitable formal distribution contracts or fail to engage suitable distributors, the distribution of the Company’s products could be limited or restricted which could have a material adverse impact on the Company’s financial performance and future prospects of the business.

Is the Entitlement Offer subject to a

Section 2.3

No.

Page 8

Topic	Summary	Further information
minimum
subscription?
What are the terms of	Subject to satisfying the ASX quotation conditions, the New	Sections 6.2
the New Options?	Options will be quoted on ASX and have an exercise price of	and 2.14
	$0.10 and an expiry date of 31 December 2020. The terms
	and conditions of the New Options are set out in Section 6.2.
	If the conditions for quotation are not satisfied, or ASX
	otherwise does not grant quotation of the New Options, the
	New Options will be issued as unquoted Options in
	accordance with their terms.
Who can participate	Eligible Shareholders, being Shareholders on the Record	Section 2.1
in the Entitlement	Date with a registered address in Australia, New Zealand,
Offer?	Hong Kong or China.
How do I accept my	All Eligible Shareholders are entitled to participate in the	Section 4.1
Entitlement?	Entitlement Offer. If you wish to accept all or part of your
	Entitlement, you must complete your Entitlement and
	Acceptance Form that accompanies this Prospectus and send
	it to the Share Registry together with payment by cheque,
	bank draft or money order or follow the instructions to pay via
	BPAY®.
Is the Entitlement	No. The Entitlement Offer is non-renounceable, which means	Section 2.4
Offer renounceable?	that Eligible Shareholders who do not wish to exercise all or a
	portion of their Entitlements may not sell their Entitlements on
	ASX.
Is the Entitlement	Yes. The Entitlement Offer is fully underwritten by Gloucester	Section 7.7
Offer underwritten?	& Portman Capital Pty Ltd.
How will Shortfall be	Shortfall Securities not applied for under the Entitlement Offer	Section 2.5
allocated?	will form part of the Shortfall Offer and be allocated at the
	absolute discretion of the Directors, as follows:
	(a) Eligible Shareholders may apply for Shortfall
	Securities by completing the relevant section of their
	Entitlement and Acceptance Form.
	(b) If, following the allocation in paragraph (a), there
	remains a Shortfall, those unallocated Shortfall
	Securities will be allocated to other investor who apply
	under the Shortfall Offer.
	(c) If, following the allocation in paragraphs (a) and (b),
	there remains a Shortfall, those unallocated Shortfall
	Securities will be allocated to the Underwriter in
	accordance with the Underwriting Agreement.
	Shortfall Securities will be allocated within three months after
	the Closing Date.
What is the effect of	The maximum number of securities that may be issued under	Section 3.1
the Offers on the	the Offers is approximately 43,026,501 New Shares and
Company?	10,756,625 New Options (assuming that no Options are
	exercised before the Record Date).
Key dates	Ex-Date 18 July 2018	See Indicative
	Record Date (at 5.00pm WST) 19 July 2018	Timetable page 5	on
	Opening Date 23 July 2018

Prospectus - Skin Elements Limited | Page 9

Topic	Summary	Further information
	Closing Date (at 5.00pm WST) 6 August 2018
	Issue date 10 August 2018
Enquiries concerning	If you have any queries concerning your Entitlement please	Section 4.10
the Entitlement Offer	call the Skin Elements Entitlement Offer Information Line on
	1300 420 094 within Australia or +61 1300 420 094 (from
	outside Australia) between 8:30am and 5:30pm (WST)
	Monday to Friday.
Enquiries concerning	Enquiries relating to this Prospectus should be directed to the	Section 2.21
Prospectus	Company Secretary on +61 (08) 6311 1900.

Page 10

2. Details of the Offers

2.1 Entitlement Offer

The Company is making a non-renounceable pro rata entitlement offer of one New Share for every two Shares held by Eligible Shareholders on the Record Date at an issue price of $0.025 per New Share, together with one free-attaching New Option for every four New Shares issued, to raise approximately $1.075 million (before costs) ( Entitlement Offer ).

Under this Prospectus, Eligible Shareholders, being Shareholders on the Record Date with a registered address in Australia, New Zealand, Hong Kong or China are eligible to participate in the Entitlement Offer.

At the date of this Prospectus, the Company has on issue 86,053,001 Shares and 68,113,000 Options. Assuming no Options are exercised before the Record Date, approximately 43,026,501 New Shares and 10,756,625 New Options may be issued under the Entitlement Offer.

All of the New Shares will rank equally with the Shares on issue at the date of this Prospectus. Refer to Section 6.1 for a summary of the rights attaching to New Shares. All of the New Options offered under this Prospectus will be granted on the terms and conditions detailed in Section 6.2. The Shares issued on exercise of the New Options will rank equally with the Company's existing Shares.

2.2

Reasons for the Entitlement Offer and funding allocation

The purpose of the Entitlement Offer is to raise approximately $1,075,663 (before costs).

The Company intends to apply the funds raised from the Offers as follows:

Description	(A$)
Business development, sales, marketing and operations	$650,000
Working capital	$287,366
Costs of the Offers	$138,297
TOTAL	$1,075,663

The above table is a statement of the Board's intentions as at the date of this Prospectus. However, Shareholders should note that, as with any budget, the allocation of funds set out in the above table may change depending on a number of factors, including the outcome of operational and development activities, regulatory developments, market and general economic conditions and environmental factors. In light of this, the Board reserves the right to alter the way the funds are applied.

2.3 Minimum subscription

There is no minimum subscription for the Entitlement Offer. The Entitlement Offer is fully underwritten on the terms detailed in Section 7.7.

As detailed in Section 2.5, if there are remaining Shortfall Securities due to a default under or termination of the Underwriting Agreement, the Company reserves the right to proceed to allocate the New Securities under the Entitlement Offer and to issue the remaining Shortfall Securities within three months after the Closing Date at its absolute discretion.

2.4 Shortfall Offer

Any New Securities under the Entitlement Offer that are not applied for will form the Shortfall Securities. The offer to issue Shortfall Securities is a separate offer under this Prospectus ( Shortfall Offer ).

Under this Prospectus, the Company offers to issue the Shortfall Securities to investors at the same price of $0.025 per New Share as that offered under the Entitlement Offer (together with one free

Prospectus - Skin Elements Limited | Page 11

attaching New Option for every four New Shares subscribed for and issued). The Shortfall Shares will have the same rights as the New Shares as detailed in Section 6.1. The Shortfall Options will have the same rights as the New Options as detailed in Section 6.2.

Eligible Shareholders may apply for Shortfall Securities by completing the relevant section of their Entitlement and Acceptance Form (refer to Section 4.3 for further details). Other investors may also apply for Shortfall Securities by completing the Shortfall Application Form upon invitation from the Company.

Shortfall Securities may be allocated to any Eligible Shareholder or to other investors who applies for Shortfall Securities under the Shortfall Offer, at the absolute discretion of the Directors.

An Application for Shortfall Securities accompanied by payment of the Application Monies does not guarantee the allotment of any Shortfall Securities. The Shortfall Securities will be allocated within three months after the Closing Date.

In relation to the Shortfall Offer, the Company reserves the right to issue to an Applicant a lesser number of Shortfall Securities than the number applied for, reject an Application or not proceed with the issuing of the Shortfall Securities or part thereof. If the number of Shortfall Securities issued is less than the number applied for, surplus Application Monies will be refunded in full. Interest will not be paid on Application Monies refunded.

2.5

Shortfall allocation policy

Unless otherwise agreed between the Company and the Underwriter, if there is a Shortfall, the Company will allocate Shortfall Securities according to the following priority:

• (a) Shortfall Securities may be allocated to any Eligible Shareholders who apply for Shortfall Securities under the Shortfall Offer, at the absolute discretion of the Directors.

• (b) If following the allocation in paragraph (a), there remains a Shortfall, those unallocated Shortfall Securities will then be allocated to other investor who apply under the Shortfall Offer.

• (c) If following the allocation in paragraphs (a) and (b), there remains a Shortfall, those unallocated Shortfall Securities will then be allocated to the Underwriter in accordance with the Underwriting Agreement.

If there are remaining Shortfall Securities due to a default under or termination of the Underwriting Agreement, the Company reserves the right to proceed to allocate New Securities under the Offers and to issue the remaining Shortfall Securities within three months after the Closing Date at its absolute discretion.

Shortfall Shares will not be offered or issued to any Applicant if, in the view of the Directors, to do so would increase that Applicant's voting power in the Company above 19.9% or otherwise result in a breach of the Listing Rules, the Corporations Act or any other applicable law.

2.6 Underwriting

The Entitlement Offer is fully underwritten by Gloucester & Portman Capital Pty Ltd pursuant to the Underwriting Agreement. Refer to Section 7.7 for details of the Underwriting Agreement.

2.7

Entitlements and acceptance

The Entitlement of Eligible Shareholders to participate in the Entitlement Offer is determined on the Record Date. Your Entitlement is shown on the Entitlement and Acceptance Form accompanying this Prospectus.

Acceptance of a completed Entitlement and Acceptance Form and Application Monies by the Company creates a legally binding contract between the Applicant and the Company for the number of New Securities accepted by the Company. The Entitlement and Acceptance Form does not need to be signed to be a binding acceptance of New Securities.

Page 12

If an Entitlement and Acceptance Form is not completed correctly it may still be treated as valid. The Directors' decision as to whether to treat the acceptance as valid and how to construe, amend or complete the Entitlement and Acceptance Form is final.

2.8

No rights trading

The rights to New Securities under the Entitlement Offer are non-renounceable. Accordingly, there will be no trading of rights on the ASX and you may not dispose of your rights to subscribe for New Securities under the Entitlement Offer to any other party. If you do not take up your Entitlement by the Closing Date, your Entitlement will lapse.

2.9

Opening and closing dates

The Company will accept Entitlement and Acceptance Forms in respect of the Entitlement Offer from Eligible Shareholders from the Opening Date until 5.00pm (WST) on the Closing Date or such other date as the Directors shall determine, subject to the Listing Rules.

Payment made by BPAY® must be received no later than 5.00pm (WST time) on the Closing Date. It is the responsibility of all Eligible Shareholders to ensure that their BPAY® payments are received by the Company on or before the Closing Date.

2.10

Risks of the Offers

As with any securities investment, there are risks associated with investing in the Company. However, having regard to the matters detailed in Section 5, Eligible Shareholders, other investors and the Underwriter should be aware that an investment in the New Securities should be considered highly speculative and there exists a risk that you may, in the future, lose some or all of the value of your investment.

Before deciding to invest in the Company, investors should read this Prospectus in its entirety, in particular the specific risks associated with an investment in the Company (detailed in Section 5), and should consider all factors in light of their personal circumstances and seek appropriate professional advice.

2.11

Application Forms and BPAY® payments

Acceptance of a completed Application Form, or alternatively, a BPAY® payment, by the Company creates a legally binding contract between the Applicant and the Company for the number of New Securities accepted by the Company. The Application Form does not need to be signed to be a binding acceptance of New Securities.

If the Application Form is not completed correctly it may still be treated as valid. The Directors' decision whether to treat a completed Application Form as valid and how to construe, amend or complete the Application Form is final.

2.12

Issue and Dispatch

It is the responsibility of Applicants to determine their allocation prior to trading in the New Securities. Applicants who sell the New Securities before they receive their holding statements will do so at their own risk.

The expected dates for issue of New Securities and dispatch of holding statements are expected to occur on the dates specified in the Indicative Timetable.

As detailed in Section 2.5, if there are remaining Shortfall Securities due to a default under or termination of the Underwriting Agreement, the Company reserves the right to proceed to allocate New Securities under the Entitlement Offer and to issue the remaining Shortfall Securities within three months after the Closing Date at its absolute discretion.

2.13

Application Monies held on trust

All Application Monies will be held on trust in a bank account maintained solely for the purpose of depositing Application Monies received pursuant to this Prospectus until the New Securities are issued. All Application Monies will be returned (without interest) in accordance with the Corporations Act if the New Securities are not issued.

Prospectus - Skin Elements Limited | Page 13

2.14 ASX quotation

Application will be made to ASX no later than seven days after the date of this Prospectus for Official Quotation of the New Shares and New Options. If ASX does not grant Official Quotation of the New Shares within three months after the date of this Prospectus (or such period as the ASX allows), no New Shares will be issued or allotted under the Entitlement Offer and the Company will return all Application Monies without interest in accordance with the Corporations Act.

If ASX grants Official Quotation of the New Shares but does not grant Official Quotation of the New Options within three months after the date of this Prospectus (or such period as the ASX allows), the New Options will be issued as unquoted Options in accordance with their terms.

ASX takes no responsibility for the contents of this Prospectus. The fact that ASX may grant Official Quotation is not to be taken in any way as an indication of the merits of the Company or the New Securities.

2.15

Withdrawal

The Directors may at any time decide to withdraw this Prospectus and the Offers, in which case, all Application Monies will be returned without interest in accordance with the Corporations Act.

2.16

CHESS

The Company participates in the Clearing House Electronic Subregister System, known as CHESS. ASX Settlement, a wholly owned subsidiary of ASX, operates CHESS in accordance with the Listing Rules and Securities Clearing House Business Rules.

Under CHESS, Applicants will not receive a certificate but will receive a statement of their holding of New Securities.

If you are broker sponsored, ASX Settlement will send you a CHESS statement.

The CHESS statement will set out the number of New Securities issued under this Prospectus, provide details of your holder identification number, the participant identification number of the sponsor and the terms and conditions applicable to the New Securities.

If you are registered on the Issuer Sponsored subregister, your statement will be dispatched by the Share Registry and will contain the number of New Securities issued to you under this Prospectus and your security holder reference number.

A CHESS statement or Issuer Sponsored statement will routinely be sent to Shareholders at the end of any calendar month during which the balance of their shareholding changes. Shareholders may request a statement at any other time, however, a charge may be made for additional statements.

2.17

Ineligible Shareholders

The Entitlement Offer is not being extended to Shareholders with a registered address outside Australia, New Zealand, Hong Kong or China. The Company is of the view that it is unreasonable to make the Entitlement Offer to Shareholders outside Australia, New Zealand, Hong Kong or China, having regard to:

• (a) the number of those Shareholders;

• (b) the number and value of New Securities to be offered to those persons; and

• (c) the cost of complying with overseas legal requirements.

This Prospectus and the Entitlement and Acceptance Form do not, nor are they intended to, constitute an offer in any place in which, or to any person to whom, it would not be lawful to make such an offer. The Company is not required to extend the Entitlement Offer under this Prospectus to Shareholders other than in Australia, New Zealand, Hong Kong and China. Where this Prospectus has been dispatched to Shareholders domiciled outside Australia, New Zealand, Hong Kong or China, and where the country's securities code or legislation prohibits or restricts in any way the making of the Entitlement Offer, this Prospectus is provided for information purposes only.

Page 14

Shareholders resident in Australia, New Zealand, Hong Kong or China holding Shares on behalf of persons who are resident overseas are responsible for ensuring that taking up Entitlements under the Entitlement Offer does not breach regulations in the relevant overseas jurisdiction. 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.

2.18

Taxation implications

The Directors do not consider it appropriate to give Applicants advice regarding the taxation consequences of subscribing for the New Securities.

The Company, its advisers and its officers do not accept any responsibility or liability for any such taxation consequences to Applicants. Applicants should consult their own professional tax adviser to obtain advice in relation to the taxation laws, regulations and implications applicable to their personal circumstances.

2.19

Major activities and financial information

A summary of the major activities and financial information relating to the Company for the financial year ended 30 June 2017 is contained in the Annual Report which is available on the Company's website at www.skinelementslimited.com.

A summary of the major activities and financial information relating to the Company for the half year ended 31 December 2017 is contained in the Half Yearly Report which is available on the Company's website at www.skinelementslimited.com.

The Company's continuous disclosure notices (i.e. ASX announcements) since the lodgement of its Annual Report for the year ended 30 June 2017 with ASX on 31 October 2017, are detailed in Section 7.1.

Copies of these documents are available free of charge from the Company or the Company's website: www.skinelementslimited.com. The Directors strongly recommend that Applicants review these and all other announcements prior to deciding whether or not to participate in the Offers.

2.20

Privacy

The Company collects information about each Applicant provided on an Application Form for the purposes of processing the Application and, if the Application is successful, to administer the Applicant's security holding in the Company.

By submitting an Application Form, each Applicant agrees that the Company may use the information provided by an Applicant on the Application Form for the purposes detailed in this privacy disclosure statement and may disclose it for those purposes to the Share Registry, the Company's related bodies corporate, agents, contractors and third party service providers, including mailing houses and professional advisers, and to ASX and regulatory authorities.

If you do not provide the information required on Application Form, the Company may not accept or process your Application.

An Applicant has an entitlement to gain access to the information that the Company holds about that person subject to certain exemptions under law. A fee may be charged for access. Access requests must be made in writing to the Company's registered office.

2.21 Enquiries concerning Prospectus

Enquiries relating to this Prospectus should be directed to the Company Secretary on +61 (08) 6311 1900.

Prospectus - Skin Elements Limited | Page 15

3. Effect of the Offers

3.1 Capital structure on completion of the Offers

On the basis that the Company completes the Offers, the Company's capital structure will be as follows:

	Number of Shares	Number of Options
Balance as at the date of this Prospectus	86,053,001	68,113,000(1)
Offers	43,026,501(2)	10,756,625(3)
TOTAL	129,079,502	78,869,625

Notes:

1. Comprising:

2. (i) 38,775,000 quoted options exercisable at $0.20 on or before 31 October 2018;

3. (ii) 21,028,383 unquoted options exercisable at $0.30 on or before 30 November 2019;

4. (iii) 6,471,617 unquoted options exercisable at $0.30 on or before 30 November 2018

5. (iv) 338,000,000 unquoted options exercisable at $0.22 on or before 6 March 2020; and

6. (v) 1,500,000 unquoted options exercisable at $0.10 on or before 31 December 2020.

7. The New Shares issued under the Offers will represent approximately 33.33% of the fully diluted issued share capital of the Company following the Offers.

8. Refer to Section 6.2 for the term and conditions of the New Options.

3.2 Pro-forma statement of financial position

Set out on the following pages are the Company's Consolidated Statement of Financial Position as at 30 April 2018 (unaudited) and the Company's Pro-Forma Consolidated Statement of Financial Position as at 30 April 2018 (unaudited) ( Statements ).

The Statements are presented in abbreviated form insofar as they do not include all the disclosures that are present in annual financial reports as required by Australian Accounting Standards. The significant accounting policies that underpin the Statements are the same policies as those outlined in the Company's Half-Year Report for the half-year ended 31 December 2017.

The Pro-Forma Statement of Financial Position has been prepared on the basis that there are no material movements in the assets and liabilities of the Company between 30 April 2018 and the completion of the Entitlement Offer except for:

• a placement of 6,000,000 fully paid ordinary shares to profession and sophisticated investors at $0.025 per share;

• at full subscription of the Entitlement Offer, the issue of 43,026,501 New Shares at $0.025 each to raise approximately $1,075,663 (together with 10,756,625 free attaching New Options) ; and

• estimated costs of the Offers of $138,297.

No allowance has been made for expenditure incurred in the normal course of business from 30 April 2018 to the Closing Date.

Prospectus - Skin Elements Limited | Page 16

UNAUDITED PRO-FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 APRIL 2018

Current Assets	Unaudited as at 30 April 2018 Adjustments Proforma Unaudited Proforma as at 30 April 2018
	$ $ $
Cash and cash equivalents	161,717 $1,087,366 1,249,083
Trade receivables	42,718 42,718
Other receivables	15,255 15,255
Inventories	354,669 354,669
Research and development receivable	181,391 181,391
Total Current Assets Non Current Assets	755,750 1,087,366 1,843,116
Intangible assets	9,360,258 9,360,258
Total Non Current Assets Total Assets Current Liabilities	9,360,258 0 9,360,258
	10,116,008 1,087,366 11,203,374
Trade and other payables	411,432 411,432
Borrowings-related parties	44,201 44,201
Total Current Liabilities	455,633 0 455,633
Total Liabilities	455,633 0 455,633
Net Assets Shareholders Equity
	9,660,375 1,087,366 10,747,741
Issued Capital	13,266,994 $1,087,366 14,354,360
Reserves	560,593 560,593
Accumulated losses	(4,167,212) (4,167,212)
Total Shareholders Equity	9,660,375 1,087,366 10,747,741

The following adjustments have been made to the unaudited 30 April 2018 financial position:

1. Placement

6,000,000 shares & 1,500,000 options @ $0.025 issued to sophisticated investors	$150,000
2. Entitlement Offer
43,026,501 New shares & 10,756,625 New Options @ $0.025 per New Share	$1,075,663
3 Costs of the Entitlement Offer
ASIC Fee	$3,206
ASX quotation fee	$12,800
Underwriting Fee	$95,296
Legal Expenses	$20,000
Share Registry processing	$4,495
Printing and other expenses	$2,500
	$138,297

Prospectus - Skin Elements Limited | Page 17

4. Action required by Applicants

4.1

Eligible Shareholders

Your entitlement to participate in the Entitlement Offer will be determined on the Record Date. The number of New Securities which Eligible Shareholders are entitled to is shown on the accompanying Entitlement and Acceptance Form.

If you do not take up your Entitlement, then your percentage holding in the Company will be diluted.

If you are an Eligible Shareholder you may:

• (a) take up all or part of your Entitlement in accordance with this Prospectus;

• (b) take up all of your Entitlement and apply for New Securities in excess of your Entitlement by applying for Shortfall Securities in accordance with this Prospectus; or

• (c) decline to exercise all or part of your Entitlement and allow it to lapse.

If you are an Eligible Shareholder and wish to take up all or part of your Entitlement:

• (d) carefully read this Prospectus in its entirety;

• (e) consider the risks associated with the an investment in the Company (refer to Section 5) in light of your personal circumstances;

• (f) complete the personalised Entitlement and Acceptance Form in accordance with the instructions detailed on the form; and

• (g) return the completed Entitlement and Acceptance Form together with the Application Monies (in full) in accordance with Section 4.7, to the following address so that it is received by no later than 5:00pm (WST) on the Closing Date:

Mailing Address Hand Delivery

Skin Elements Limited Skin Elements Limited C/- Link Market Services Limited C/- Link Market Services Limited GPO Box 3560 1A Homebush Bay Drive Sydney NSW 2001 Rhodes NSW 2138

4.2 Acceptance of all of your Entitlement

If you wish to accept all of your Entitlement, then applications for New Securities under this Prospectus must be made on the Entitlement and Acceptance Form in accordance with the instructions referred to in this Prospectus and on the Entitlement and Acceptance Form. Please read the instructions carefully.

Please complete the personalised Entitlement and Acceptance Form in accordance with the instructions detailed on the form and return the completed form, together with the Application Monies (in full), in accordance with Section 4.7 to the Share Registry so that it is received at the following address by no later than 5:00pm (WST) on the Closing Date:

Mailing Address Hand Delivery Skin Elements Limited Skin Elements Limited C/- Link Market Services Limited C/- Link Market Services Limited GPO Box 3560 1A Homebush Bay Drive Sydney NSW 2001 Rhodes NSW 2138

4.3 Acceptance of all of your Entitlement and applying for Shortfall Securities

If you wish to accept all of your Entitlement and apply for New Securities in excess of your Entitlement by applying for Shortfall Securities, then applications for Shortfall Securities must be made by

Prospectus - Skin Elements Limited | Page 18

completing the relevant sections on the Entitlement and Acceptance Form, in accordance with the instructions referred to in this Prospectus and on the Entitlement and Acceptance Form. Please read the instructions carefully.

Please complete the personalised Entitlement and Acceptance Form in accordance with the instructions detailed on the form and return the completed form, together with the Application Monies (in full), in accordance with Section 4.7 to the Share Registry so that it is received at the following address by no later than 5:00pm (WST) on the Closing Date:

Mailing Address	Hand Delivery
Skin Elements Limited	Skin Elements Limited
C/- Link Market Services Limited	C/- Link Market Services Limited
GPO Box 3560	1A Homebush Bay Drive
Sydney NSW 2001	Rhodes NSW 2138

4.4 Taking up part of your Entitlement and allowing the balance to lapse

If you wish to take up part of your Entitlement and allow the balance to lapse, complete the personalised Entitlement and Acceptance Form in accordance with the instructions detailed on the form, including the number of New Securities you wish to accept and the Application Monies and return the completed Entitlement and Acceptance Form together with the Application Monies (in full) in accordance with Section 4.7 to the Share Registry so that it is received at the following address by no later than 5:00pm (WST) on the Closing Date:

Mailing Address	Hand Delivery
Skin Elements Limited	Skin Elements Limited
C/- Link Market Services Limited	C/- Link Market Services Limited
GPO Box 3560	1A Homebush Bay Drive
Sydney NSW 2001	Rhodes NSW 2138

If you take no further action, the balance of your Entitlement will lapse.

4.5 Allow all or part of your Entitlement to lapse

If you do not wish to accept any of your Entitlement, you are not obliged to do anything.

The number of Shares you currently hold and the entitlement attaching to those Shares will not be affected should you choose not to accept any part of your Entitlement.

4.6 Ineligible Shareholders

If you are an Ineligible Shareholder, you may not accept any of, or do anything in relation to, your Entitlement. Refer to Section 2.17 for treatment of Ineligible Shareholders.

4.7 Payment

The offer price of New Shares under the Entitlement Offer and Shortfall Offer is $0.025 per New Share.

Application Monies must be received by the Company by 5.00pm (WST) on the Closing Date.

Completed Entitlement and Acceptance Forms must be accompanied by a cheque, bank draft or money order drawn in Australian dollars, made payable to 'Skin Elements Limited' and crossed 'Not Negotiable'.

Eligible Shareholders participating in the Entitlement Offer, and who wish to pay via BPAY® must follow the instructions on the Entitlement and Acceptance Form. You will be deemed to have accepted all or part of your Entitlement (as applicable) upon receipt of the BPAY® payment by the Company.

If paying via BPAY®, Eligible Shareholders should be aware that their own financial institution may implement earlier cut off times with regards to electronic payment and it is the responsibility of Eligible Shareholders to ensure that funds are submitted through BPAY® by the date and time mentioned

Prospectus - Skin Elements Limited | Page 19

above. If you elect to pay via BPAY®, you must follow the instructions for BPAY® set out in the Entitlement and Acceptance Form and you will not need to return the Entitlement and Acceptance Form.

The Company shall not be responsible for any postal or delivery delays, or delay in the receipt of the BPAY® payment.

4.8 Representations by Applicants

By completing and returning an Entitlement and Acceptance Form or paying any Application Monies by BPAY[®] , in addition to the representations set out elsewhere in this Prospectus and the Entitlement and Acceptance Form, you:

• (a) if participating in the Entitlement Offer, represent to the Company that you are an Eligible Shareholder;

• (b) acknowledge that you have received a copy of this Prospectus and an accompanying Entitlement and Acceptance Form, and read them both in their entirety;

• (c) agree to be bound by the terms of the Offers, the provisions of this Prospectus and the Constitution;

• (d) authorise the Company to register you as the holder(s) of the New Securities allotted to you;

• (e) declare that all details and statements in the Entitlement and Acceptance Form are complete and accurate;

• (f) declare that you are over 18 years of age and have full legal capacity and power to perform all your rights and obligations under the Entitlement and Acceptance Form;

• (g) acknowledge that once the Entitlement and Acceptance Form is returned, or a BPAY[®] payment instruction is given in relation to any Application Monies, the Application may not be varied or withdrawn except as required by law;

• (h) agree to accept and be issued up to the number of New Securities specified in the Entitlement and Acceptance Form at the issue price of $0.025 per New Share;

• (i) authorise the Company and its respective officers or agents to do anything on your behalf necessary for the New Securities to be issued to you, including to act on instructions of the Share Registry upon using the contact details set out in the Entitlement and Acceptance Form;

• (j) declare that you were the registered holder at 5.00pm (WST) on the Record Date of the Shares indicated on your personalised Entitlement and Acceptance Form as being held by you at 5.00pm (WST) on the Record Date;

• (k) acknowledge the statement of risks in Section 5 and that an investment in the Company is subject to risk;

• (l) represent and warrant that the law of any place does not prohibit you from being given this Prospectus and the Entitlement and Acceptance Form, nor does it prohibit you from accepting New Securities and that if you participate in the Offers, that you are eligible to do so;

• (m) if you are in the People's Republic of China, you are a (i) "qualified domestic institutional investor" as approved by the relevant PRC regulatory authorities to invest in overseas capital markets or (ii) sovereign wealth fund or quasi-government investment fund that has the authorisation to make overseas investment; and

• (n) represent and warrant that you are not in the United States and you are not acting for the account or benefit of a person in the United States.

Page 20

4.9 Brokerage

No brokerage or stamp duty is payable by Eligible Shareholders who accept their Entitlement.

4.10 Enquiries concerning your Entitlement

If you have any queries concerning your Entitlement please call the Skin Elements Entitlement Offer Information Line on 1300 420 094 within Australia or +61 1300 420 094 (from outside Australia) between 8:30am and 5:30pm (WST) Monday to Friday.

Prospectus - Skin Elements Limited | Page 21

5. Risks

The proposed future activities of the Company are subject to a number of risks and other factors which may impact the financial performance of the Company and the value of its securities. Some of these risks can be mitigated by the use of safeguards and appropriate controls. However, many of the risks are outside the control of the Company and cannot be mitigated.

The Directors consider that the following summary, which is not exhaustive, represents some of the major risk factors which investors need to be aware of in evaluating the Company’s business and the risks of investing in the Company. Potential investors should carefully consider the following factors in addition to the other information presented in this Prospectus.

5.1 Risks in Respect of the Company's Operations

(a) Sunscreen Regulatory Requirements and Government legislation and policy changes

Sunscreens are classified as “therapeutic goods” in Australia to ensure quality, safety and efficacy and have strict controls for independent SPF testing and use of GMP. Similar regulations framework exists in most countries such as USA (Food and Drug Administration – FDA). Soléo Organics has been approved for sale by key regulatory bodies such as the TGA (Australia and New Zealand), the FDA (USA), Health Canada (Canada). The Company also has approvals to sell into the European Union. Changes in relevant laws, regulations and government policies regarding the regulation of sunscreens or skincare products could adversely affect the Company’s proposed operations, increase costs, or affect the financial performance or any future revenue of the Company.

(b) Competition Risks

The Company participates in a highly competitive skin care market against materially larger, globally focussed competitors with significantly more access to capital and resources. Should any of the Company’s competitors participate more aggressively on price, product, innovation or other means then this could have a material adverse impact on the Company’s financial performance and future prospects of the business.

Existing competitors may take steps to complete or hinder the Company’s plans to market launch, commercialise and distribute its products and make take steps to cause downward price pressure on unit prices, thus potentially reducing margins and revenues available to the Company.

There is also no guarantee that existing competitors will not release further competitor products to the Company’s existing product portfolio which may impact upon demand for the Company’s products.

(c) New market entrants providing organic and natural skin care products

While the research and development of all organic and natural skin care products requires considerable time, expertise, skill and process, competition for the Company’s products may come from global and local skin care companies entering both the Australian market and international markets identified by the Company that currently do not provide all natural and organic skin care products to their customers. This could reduce the addressable market available to the Company, or increase competition or cause margin reductions available to the Company.

(d) Change in Regulations

There is a risk that laws or regulations may be introduced or amended in Australia, or in foreign jurisdictions in which the Company’s sells, or sources its ingredients or products.

• Changes to the regulatory environment could have a material effect in a number of ways. For example, the financial and production effects resulting from changing requirements to: (i) product packaging or labelling requirements as a requirement of regulatory medicine content disclosures; or

Prospectus - Skin Elements Limited | Page 22

(ii)

restrictions that prevent or restrict access to markets by amendments to regulations governing the export or importation of products.

While the Directors are not aware of any current issues, or any impending regulatory change in relevant markets, there is the potential for any such measures to materially reduce the Company’s revenues or increase its costs.

(e) Manufacturing Risks and Regulations

The process of manufacturing the Company's products is complex, highly regulated and subject to numerous quality assessments controls and procedures. This process may be subject to several manufacturing risks, including the following:

• (i) deviations from normal manufacturing processes and controls could result in reduced production yields, product defects and other supply disruptions;

• (ii) the manufacturing facilities in which the Company's products are made could be adversely affected by equipment failures, labour shortages, natural disasters, power failures and numerous other factors;

• (iii) the Company and its contract manufacturers must comply with the TGA regulations and guidelines. The Company and its contract manufacturers may encounter difficulties in achieving quality control and quality assurances to the standard required or, changes to the regulations and guidelines may require the Company to seek an alternative manufacturer, increase in costs or reduce volumes. There may be a shortage of persons qualified to administer the regulations and guidelines or may require additional training or qualifications. The Company and its contract manufacturers are subject to inspections by the TGA and comparable agencies in other jurisdictions to confirm compliance with applicable regulatory requirements. Any failure to follow TGA or other regulatory requirements or any delay, interruption or other issues that arise in the manufacture, packaging, or storage of the Company's products as a result of a failure of the Company's facilities or the facilities or operations of third parties to comply with regulatory requirements or pass any regulatory authority inspection could significantly impair the Company's ability to develop and commercialise the Company's products. Significant non-compliance could also result in the imposition of sanctions, including fines, injunctions, civil penalties, failure of regulatory authorities to grant marketing approvals for the Company's products, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of products, operating restrictions and criminal prosecutions, any of which could damage the Company's reputation. If the Company is not able to maintain regulatory compliance, the Company may not be permitted to market its products or may be subject to product recalls, seizures, injunctions, or criminal prosecution; and

• (iv) any adverse developments affecting manufacturing operations for the Company's products may result in shipment delays, inventory shortages, product withdrawals or recalls, or other interruptions in the supply of the Company's products. The Company may also have to take inventory write-offs and incur other charges and expenses for products that fail to meet specifications, undertake costly remediation efforts or seek more costly manufacturing alternatives.

The Company currently only utilises two TGA approved manufacturer across the product range. Accordingly, there is a concentration of manufacturing with each provider, in relation to each product line. There are no minimum production commitments in place between the Company and its manufacturer, although the parties have worked together for many years. The manufacturer has advised that they currently have sufficient capacity to manufacture the Company’s products in the near future.

There is also a requirement that manufacturers producing the Company’s products must comply with TGA regulations. There is a risk that for some reason outside the Company’s control that its manufacturer(s) could lose their regulatory approvals.

Should there be a disruption with this particular manufacturer or others, or the manufacturer elects not to continue manufacturing the Company’s products, then this could have a material adverse impact on the Company’s ability to meet consumer demand and may

Prospectus - Skin Elements Limited | Page 23

impact the financial performance and future prospects of the business. There are also numerous other TGA approved manufacturing facilities in Australia and overseas.

(f)

Raw Ingredients Supply

The availability of organic and natural materials to meet the growing production plans of the Company’s products is a critical part of supply chain management. Should there be interruptions in the Company’s ingredient supply chain or economic or environment events impacting the availability of these raw materials then this could have a material adverse impact on the Company’s ability to meet consumer demand and impact the financial performance and future prospects of the business.

(g)

Distribution

The Company relies on a network of distributors in Australia and internationally including New Zealand, Japan and Europe. The Company distributes its products both locally in Australia and internationally through distributors in these jurisdictions. Should the Company fail to secure suitable formal distribution contracts or fail to engage the suitable distributors, or should engaged contracts default or fail to deliver, the distribution of the Company’s products could be limited or restricted which could have a material adverse impact on the Company’s financial performance and future prospectus of the business.

(h) Brand and Reputation

The Company's Intellectual Property is a key asset of its business. The reputation and value associated with the Company's brand names and related Intellectual Property could be adversely affected by a number of factors, including failing to provide customers with the quality of product they expect, contamination or recall issues, disputes or litigation with third parties, employees, suppliers or customers, or adverse media coverage (including social media), or other circumstances including those beyond the direct control of the Company.

Significant erosion in the reputation of, or value associated with the Company’s brands, could have an adverse effect on customer loyalty, relationships with key suppliers, employee retention rates, and overall demand for the Company’s products.

(i)

Unable to adequately prevent disclosure of Intellectual Property

The Company relies on trade secrets to protect its Intellectual Property, especially where the Company does not believe patent protection is appropriate or obtainable. However, trade secrets are difficult to protect. The Company relies in part on confidentiality agreements with its employees, consultants, outside scientific collaborators, sponsored researchers and other advisors to protect the Intellectual Property. These agreements may not effectively prevent disclosure of confidential information and the Intellectual Property and may not provide an adequate remedy in the event of unauthorized disclosure of confidential information or the Intellectual Property. In addition, others may independently discover the Intellectual Property. Costly and time-consuming litigation could be necessary to enforce and determine the scope of the Intellectual Property. Failure to obtain or maintain trade secret protection, or failure to adequately protect the Intellectual Property could enable competitors to develop generic products or use the Intellectual Property to develop other products that compete with the Company's products or cause additional, material adverse effects upon the Company’s business, results of operations and financial condition.

(j) Claims by third parties that the Company has infringed their proprietary rights

Because patent applications are maintained in secrecy until the application is published, the Company may be unaware of third party patents that may be infringed by commercialisation of the Company's product. In addition, identification of third party patent rights that may be relevant to the Company's products and technology is difficult because patent searching is imperfect due to differences in terminology among patents, incomplete databases and the difficulty in assessing the meaning of patent claims. Any claims of patent infringement asserted by third parties would be time consuming and could likely:

(i) result in costly litigation;

Page 24

• (ii) divert the time and attention of the Company’s technical personnel and management;

• (iii) cause development delays;

• (iv) prevent the Company from commercialising its products until the asserted patent expires or is held finally invalid or not infringed in a court of law;

• (v) require the Company to develop non-infringing products; or

• (vi) require the Company to enter into royalty or licensing agreements.

Although no third party has asserted a claim of patent infringement against the Company, others may hold proprietary rights that could prevent the Company's products from being marketed. Any patent-related legal action against the Company claiming damages and seeking to enjoin commercial activities relating to the Company’s products could subject the Company to potential liability for damages and require the Company to obtain a license to continue to manufacture or market the Company’s products. The Company cannot predict whether the Company would prevail in any such actions or that any license required under any of these patents would be made available on commercially acceptable terms, if at all. In addition, the Company cannot be sure that the Company could re-design its products to avoid infringement, if necessary. Accordingly, an adverse determination in a judicial or administrative proceeding, or the failure to obtain necessary licenses, could prevent the Company from developing and commercialising its products, which could harm its business, financial condition and operating results.

(k)

Loss of key personnel

In the short term until a suitable team is put in place, the Company’s success depends to a significant extent on its key personnel, in particular Mr Peter Malone and Mr Leo Fung. Peter and Leo have extensive experience in, and knowledge of, the Company’s products and business. The loss of key management personnel, and in particular Peter and Leo, or any delay in their replacement could have a significant adverse effect on the management of the Company, its financial performance and future prospects.

(l)

Product Contamination and Recall

As a producer of natural skin care products, the Company’s is subject to a general risk that any product contamination or product recall issue (however caused) could have a material adverse effect on the Company’s brand and thus its financial performance. The Company and its manufacturer employ a number of measures to minimise the risk in this area (such as requiring manufacturers to have current TGA and GMP accreditation and the Company having in place appropriate insurances).

(m)

Foreign Exchange

The Company distributes its products both in Australian and overseas. As distribution grows and further expands into USA, Canada, Japan and others, it is anticipated that more business will be conducted in foreign currencies. Hence, foreign currency risk may become more relevant over time.

• (n)

Insurance

The Company insures its operations in accordance with industry practice. However, in certain circumstances, the Company’s insurance may not be available or 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. In addition, there is a risk that an insurer defaults in the payment of a legitimate claim by the Company.

(o)

Contractual Disputes

As with any contract, there is a risk that the business could be disrupted in situations where there is a disagreement or dispute in relation to a term of the contract. Should such a disagreement or dispute occur, this may have an adverse impact on the Company's

Prospectus - Skin Elements Limited | Page 25

operations and performance generally. It is not possible for the Company to predict or protect itself against all such risks.

(p)

Third Party Risk

The operations of the Company require the involvement of a number of third parties, including suppliers, contractors and clients.

Financial failure, default or contractual non-compliance on the part of such third parties may have a material impact on the Company's operations and performance. It is not possible for the Company to predict or protect the Company against all such risks.

(q)

Retail Environment

There may be an economic downturn in Australia or the overseas markets that may cause the retail environment to deteriorate as consumers reduce their retail spending on discretionary items. This may result in reduced turnover in the Company’s products in Australia or overseas markets.

5.2 General Risks Relating to the Company

(a) Future capital requirements

The Company’s capital requirements depend on numerous factors. The Company may require further financing in addition to amounts raised under the Offers. Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities. If adequate funds are not available to satisfy either short or long-term capital requirements, the Company may be required to limit its operations significantly. There is 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.

(b) Securities investment risk

The prices at which the securities trade may fluctuate in response to a number of factors.

Furthermore, the stock market has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies. There can be no guarantee that these trading prices will not fluctuate. These factors may materially affect the market price of the New Securities regardless of the Company’s operational performance.

The New Securities issued by the Company carry no guarantee in respect of profitability, dividends, return of capital, or the price at which they may trade on the ASX.

The value of the securities will be determined by the stock market and will be subject to a range of factors beyond the control of the Company, and the directors and officers of the Company. Such factors include, but are not limited to, the demand for and availability of the Shares or Options, movements in domestic interest rates, exchange rates, fluctuations in the Australian and international stock markets and general domestic and economic activity. Returns from an investment in the Shares and Options may also depend on general stock market conditions as well as the performance of the Company. There can be no guarantee that an active market in the Shares or Options will develop or that the market price of the Shares and Options will not decline below the issue price.

(c) Dilution

In certain circumstances, the Directors may issue equity securities without any vote or action by Shareholders. If the Company were to issue any equity securities the percentage ownership Shareholders may be reduced and diluted.

5.3 General investment risks

In addition to the above specific risks associated with the Company’s proposed operations there are also general risks associated with an investment in the Shares. These include:

Page 26

(a) Government legislation and policy changes

Changes in relevant laws, regulations and government policies may adversely affect the Company’s product approvals, ingredient availability, proposed operations, increase costs, or affect the financial performance or any future revenue of the Company. Such changes are beyond the control of the Company.

(b)

Securities investments and share market conditions

There are risks associated with any securities investment. The prices at which the securities trade may fluctuate in response to a number of factors. Furthermore, the stock market may experience extreme price and volume fluctuations that may be unrelated or disproportionate to the operating performance of such companies. These factors may materially adversely affect the market price of the securities of the Company regardless of the Company’s operational performance. Neither the Company nor the Directors warrant the future performance of the Company, or any return of an investment in the Company.

The New Securities should be considered speculative due to the nature of the Company’s business and the early stage of market development. There is no guarantee as to the payment of dividends, return of capital or the market value of the New Securities. The prices at which an investor may be able to trade the New Securities may be above or below the price paid by the investor for the New Securities.

Prospective investors must make their own assessment of the likely risks and determine whether an investment in the Company is appropriate to their own circumstances.

(c)

Economic risk

The future performance and viability of the Company is also dependent on a number of factors which may affect the performance of all industries and not just the natural skin care industry including, but not limited to, the following:

• (i) future demand for natural and organic sunscreen and natural skin care products;

• (ii) general economic conditions;

• (iii) changes in Government policies, taxation and other laws;

• (iv) the strength of the equity and share markets in Australia and throughout the world and, in particular, investment sentiment towards the industrial sector;

• (v) movement in, or outlook on, exchange rates, interest rates and inflation rates;

• (vi) industrial disputes in Australia and overseas;

• (vii) changes in investor sentiment toward particular market sectors;

• (viii) financial failure or default by an entity with which the Company may become involved in a contractual relationship; and

• (ix) natural disasters, social upheaval or war.

(d) Share market

Share market conditions may affect the value of the Company’s quoted securities regardless of the Company’s operating performance. The market price of the Shares and Options may be subject to fluctuation and may be affected by many factors including, but not limited to, the following:

• (i) general economic outlook;

• (ii) interest rates and inflation rates;

• (iii) currency fluctuations;

• (iv) commodity price fluctuations;

Prospectus - Skin Elements Limited | Page 27

• (v) changes in investor sentiment toward particular market sectors;

• (vi) the demand for, and supply of, capital; and

• (vii) terrorism or other hostilities.

(e)

Legal Proceedings

Legal proceedings may arise from time to time in the course of the business of the Company. Legal proceedings brought by third parties including but not limited to customers, partners, suppliers, business partners or employees could negatively impact the business in the case where the impact of such litigation is greater than or outside the scope of the Company’s insurance. As at the date of this Prospectus, there are no material legal proceedings affecting the Company and the Directors are not aware of any legal proceedings pending or threatened against or affecting the Company.

(f)

Unforeseen expenses

While the Company is not aware of any expenses that may need to be incurred that have not been taken into account, if such expenses were subsequently incurred, the expenditure proposals of the Company may be adversely affected.

• (g)

Macro-economic risks

Changes in the general economic outlook in Australia and globally may impact the performance of the Company and its projects. Such changes may include:

• (i) uncertainty in the Australian economy or increases in the rate of inflation resulting from domestic or international conditions (including movements in domestic interest rates and reduced economic activity);

• (ii) increases in expenses (including the cost of goods and services used by the Company);

• (iii) new or increased government taxes, duties or changes in taxation laws; and

• (iv) fluctuations in equity markets in Australia and internationally.

• (h)

Broader general risks

There are also a number of broader general risks which may impact the Company’s performance. These include:

• (i) abnormal stoppages in normal business operations due to factors such as war, political or civil unrest, infrastructure failure or industrial disruption;

• (ii) higher than budgeted costs associated with the provision of service offerings; and (iii) material litigation – the Company is not currently involved in any material litigation and is not aware of any facts or circumstances that may give rise to any material litigation. However, given the scope of the Company’s activities and the wide range of parties with which it is likely to deal, the Company may be exposed to potential litigation from third parties such as clients, regulators, employees and business associates.

• (i)

Acquisitions

As part of its business strategy, the Company may make acquisitions of, or significant investments in, companies, products, technologies and/or products that are complementary to the Company’s business. Any such future transactions are accompanied by the risks commonly encountered in making acquisitions of companies, products and technologies, such as integrating cultures and systems of operation, relocation of operations, short term strain on working capital requirements, achieving the sales and margins anticipated and retaining key staff and customer and supplier relationships.

Page 28

5.4 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 its Securities.

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 New Securities offered under this Prospectus. Therefore, the New Securities 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 New Securities. Potential investors should consider that the investment in the Company is speculative and should consult their professional adviser before deciding whether to apply for New Securities pursuant to this Prospectus.

Prospectus - Skin Elements Limited | Page 29

6. Rights attaching to Securities

6.1 Rights attaching to Shares

A summary of the rights attaching to Shares is detailed below. This summary is qualified by the full terms of the Constitution (a full copy of the Constitution is available from the Company on request free of charge) and does not purport to be exhaustive or to constitute a definitive statement of the rights and liabilities of Shareholders. These rights and liabilities can involve complex questions of law arising from an interaction of the Constitution with statutory and common law requirements. For a Shareholder to obtain a definitive assessment of the rights and liabilities which attach to Shares in any specific circumstances, the Shareholder should seek legal advice.

(a) General Meetings

Each Shareholder is entitled to receive notice of and to attend general meetings of the Company and to receive all notices, financial reports and other documents required to be sent to Shareholders under the Constitution, Corporations Act or Listing Rules. The notice must state the general nature of business and any other matters required by the constitution, Corporations Act or Listing Rules.

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 the Share, but in respect of partly paid shares, shall have a fraction of a vote equivalent to the proportion which the amount paid up bears to the total issue price for the share.

(c) Dividend Rights

The Directors may from time to time declare a dividend to be paid to Shareholders entitled to the dividend. The dividend shall (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 dividends) be payable on all Shares in accordance with the Corporations Act.

Dividends are payable out of the Company's profits and are declared by the Directors. The Directors may from time to time pay to the Shareholders such interim dividends as they may determine. The Directors may direct payment of the dividend to be made wholly or in part by the distribution of specific assets. No dividend shall carry interest as against the Company. The Directors may set aside out of the profits of the Company such amounts as 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.

(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

Page 30

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) 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 or Listing Rules.

The Company may decline to register any transfer where permitted to do so by the Listing Rules and must decline to register a transfer of Shares where required by the Listing Rules.

(f) Variation of Rights

If at any time the share capital of the Company is divided into different classes of shares, the rights attached to a class (unless otherwise provided by 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 75% of the issued shares of that class, or if authorised by a special resolution at a separate meeting of the holders of the shares of that class.

6.2 Terms and Conditions of New Options

A summary of the rights attaching to the New Options is detailed below.

This summary is qualified by the full terms of the Constitution (a full copy of the Constitution is available from the Company on request free of charge) and does not purport to be exhaustive or to constitute a definitive statement of the rights and liabilities of holders of the New Options. These rights and liabilities can involve complex questions of law arising from an interaction of the Constitution with statutory and common law requirements. For a holder of New Options to obtain a definitive assessment of the rights and liabilities which attach to the New Options in any specific circumstances, the holder should seek legal advice.

(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 (m), the amount payable upon exercise of each New Option will be A$0.10 ( Exercise Price ).

(c) Expiry Date

The expiry date of the New Options is 5.00pm WST on 31 December 2020 ( Expiry Date ).

The New Options may be exercised at any time prior to the Expiry Date ( Exercise Period ), in whole or in part, upon payment of the exercise price per New Option. New Options not exercised on or before the Expiry Date will expire and cease to carry any rights or benefits.

Prospectus - Skin Elements Limited | Page 31

(d) Transferable

The New Options are transferable.

(e) Quotation

The Company will apply for the quotation of the New Options on ASX. Subject to spread requirements being met, the New Options will be quoted on ASX.

(f) Notice of Exercise

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

The New Options may be exercised by the holder in whole or in part. The Notice of Exercise must state the number of New Options exercised, the consequent number of Shares to be issued and the identity of the proposed allottee.

(g)

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 ).

(h) Timing and issue of Shares on exercise

Within 15 business days of a Notice of Exercise being given in accordance with these terms and conditions and payment of the Exercise Price for each Option being exercised, the Company will:

• (i) issue the Shares pursuant to the exercise of the New Options; and

• (ii) apply for official quotation on ASX of Shares issued pursuant to the exercise of the New Options.

(i) Shares issued on exercise

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

(j) Participation rights

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.

(k) Adjustment for entitlement issue

If the Company makes an issue of Shares pro rata to existing Shareholders (other than a bonus issue), there will be no adjustment of the Exercise Price of a New Option or the number of Shares over which the New Options are exercisable.

(l) Adjustment for bonus issue of Shares

If the Company makes a bonus issue of Shares or other securities to existing Shareholders (other than an issue in lieu or in satisfaction of dividends or by way of dividend reinvestment):

• (i) the number of Shares which must be issued on the exercise of a New Option will be increased by the number of Shares which the New Option holder would have received if the holder had exercised the New Option before the record date for the bonus issue; and

• (ii) no change will be made to the Exercise Price.

Page 32

(m) Adjustment for reorganisation

If there is any reorganisation of the issued share capital of the Company, the rights of the holder will be varied in accordance with the Listing Rules.

6.3

Dividend policy

The Company does not intend to declare or pay any dividends in the immediately foreseeable future.

Any future determination as to the payment of dividends by the Company will be at the sole discretion of the Directors and will depend on the availability of distributable earnings and operating results and financial condition of the Company, future capital requirements and general business and other factors considered relevant by the Directors. No assurance in relation to the payment of dividends or franking credits attaching to dividends can be given by the Company.

Prospectus - Skin Elements Limited | Page 33

7. Additional information

7.1 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. The New Shares, and Shares issued upon exercise of the New Options are in the same class as Shares that have been quoted on the official list of the ASX during the three months prior to the issue of this Prospectus.

This Prospectus is a 'transaction specific prospectus' to which the special content rules under section 713 of the Corporations Act apply. That provision allows the issue of a more concise prospectus in relation to an offer of securities, or operation to acquire securities, in a class which has been continuously quoted by ASX in the three months prior to the date of the prospectus. In general terms 'transaction specific prospectuses' are only required to contain information in relation to the effect of the issue of the New Securities on the Company and the rights attaching to the New Securities. It is not necessary to include general information in relation to all of the assets and liabilities, the 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 three 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 of the Entitlement Offer:

• (i) the annual financial report of the Company for the financial year ended 30 June 2017 being the most recent annual financial report of the Company lodged with the ASIC before the issue of this Prospectus; and

• (ii) the half year financial report of the Company for the six months ended 31 December 2017 lodged with ASIC after the lodgement of the annual financial report mentioned in paragraph (i) and before the issue of this Prospectus; and

• (iii) any documents used to notify ASX of information relating to the Company in the period from lodgement of the annual financial report referred to in paragraph (i) above until the issue of this Prospectus in accordance with the Listing Rules as referred to in section 674(1) of the Corporations Act.

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.

Page 34

The Company has lodged the following announcements with ASX since the lodgement of its annual report on 31 October 2017:

Date Lodged	Subject of Announcement
12 July 2018	Appendix 3B
12 July 2018	Update to Entitlement Offer
2 July 2018	Market Update
29 June 2018	Appendix 3B
29 June 2018	Placement
27 June 2018	Trading Halt
4 May 2018	Appendix 4C - quarterly
2 May 2018	Reinstatement to Official Quotation
2 May 2018	Unintentional Breach of Listing Rule 10.11
2 May 2018	Retraction of Announcement
2 May 2018	Response to ASX Query
1 May 2018	Appendix 4C – quarterly
20 April 2018	Response to ASX Query
17 April 2018	Suspension from Official Quotation
13 April 2018	Trading Halt
6 March 2018	Appointment of Corporate Advisor to Drive Acquisitions
1 March 2018	Amended Half Year Report and Accounts
1 March 2018	Half Year Report and Accounts
31 January 2018	Appendix 4C – quarterly
29 December 2017	Appendix 3B
21 December 2017	New Company website & broker report
20 December 2017	Restricted securities released from escrow
5 December 2017	Update on MOU with Ageless Products
30 November 2017	Chairman’s Address to Shareholders
30 November 2017	Results of Meeting
30 November 2017	Alteration to Notice of Meeting
30 November 2017	Initial Director’s Interest Notice
23 November 2017	Director Appointment/Resignation
23 November 2017	Director Update - Passing of Mr David Humann
22 November 2017	Trading Halt
3 November 2017	Appendix 3B
2 November 2017	Cleansing Statement
2 November 2017	Appendix 3B
1 November 2017	Appendix 4C - quarterly
31 October 2017	Notice of Annual General Meeting/Proxy Form

7.2 Interests of Directors

On 3 January 2017, the Company was successfully admitted to the Official List of ASX. Mr Peter Malone and Mr Luke Martino, both Directors, were involved in the formation and promotion of the Company in connection with the Company's listing on ASX.

Except as disclosed above, and elsewhere in this Prospectus, no Director (or entity in which they are a partner or director) has, or has had in the two years before the date of this Prospectus, any interests in:

• (a) the formation or promotion of the Company;

Prospectus - Skin Elements Limited | Page 35

• (b) property acquired or proposed to be acquired by the Company in connection with its formation or promotion of the Offers; or

• (c) the Offers,

and no amounts have been paid or agreed to be paid and no value or other benefit has been given or agreed to be given to:

• (a) any Director to induce him or her to become, or to qualify as, a Director; or

• (b) any Director for services which he or she (or entity in which they are a partner or director) has provided in connection with the formation or promotion of the Company or the Offers.

7.3 Control implications

At the date of this Prospectus, GPC has a relevant interest in 93,787 Shares (constituting a voting power of 0.11%) and is not a related party of the Company for the purposes of the Corporations Act.

The Entitlement Offer is fully underwritten by the GPC pursuant to the Underwriting Agreement. Assuming no Shareholders take up their Entitlements (which is unlikely), the theoretical maximum number of Shares that may be held by GPC following completion of the Offers is 43,120,288 (representing a voting power of 33.41%).

Under the terms of the Underwriting Agreement, GPC has the ability to appoint sub-underwriters to the Entitlement Offer. GPC has warranted to the Company that neither GPC nor any sub-underwriter appointed by GPC, will acquire a voting power in the Company of more than 19.9%. Accordingly, if the level of acceptances under the Entitlement Offer is such that GPC is required to subscribe for a number of Shortfall Shares, which, if subscribed for, would give it a voting power in excess of 19.9%, GPC will be required to allocate a number of Shortfall Shares to sub-underwriter(s) to ensure that this threshold is not exceeded.

The following table show the number of Shares held by, and approximate voting power of, the GPC after completion of the Offers, assuming different levels of acceptances by Eligible Shareholders and that no Eligible Shareholders or other investors apply for additional shares under the Shortfall Offer.

	75% acceptance of Entitlements	75% acceptance of Entitlements	50% acceptance of Entitlements	50% acceptance of Entitlements	0% acceptance of Entitlements	0% acceptance of Entitlements
	Number of Shares	Voting Power (%)	Number of Shares	Voting Power (%)	Number of Shares	Voting Power (%)
GPC	10,850,413	8.41%	24,607,038	16.74%	42,120,288	33.41%

7.4 Potential dilution to Shareholders

Eligible Shareholders should note that if they do not participate in the Entitlement Offer, their holdings will be diluted. Examples of how the dilution may impact Eligible Shareholders are detailed in the table below:

Shareholder	Shareholding as at Record Date	% at Record Date	Entitlements under the Entitlement Offer	Shareholding if Shareholder does not participate in the Entitlement Offer	% post Entitlement Offer(1)
Shareholder 1 50,000 0.058% 25,000 50,000 0.039%
Shareholder 2 100,000 0.116% 50,000 100,000 0.077%
Shareholder 3 250,000 0.291% 125,000 250,000 0.193%

Page 36

Shareholder	Shareholding as at Record Date	% at Record Date	Entitlements under the Entitlement Offer	Shareholding if Shareholder does not participate in the Entitlement Offer	% post Entitlement Offer(1)
Shareholder 4 500,000 0.581% 250,000 500,000 0.387%
Shareholder 5 750,000 0.872% 3758,000 750,000 0.581%

Note:

1. This number assumes that no Options are exercised before the Record Date.

7.5 Directors' interests and participation

As at the date of this Prospectus, the relevant interests of the Directors and their related entities in securities in the Company, are detailed in the table below.

Director	Shares	Options	Entitlement
Peter Malone	10,130,781	10,130,780(1)	5,065,391 New Shares 1,226,348 New Options
Luke Martino	1,750,000(1)	1,250,000(2)	875,000 New Shares 218,750 New Options
Phil Giglia	40,000	-	20,000 New Shares 5,000 New Options

Notes:

1. Comprising 5,065,390 quoted options exercisable at $0.20 on or before 31 October and 5,065,390 unquoted options exercisable at $0.30 on or before 30 November 2018.

2. Comprising 625,000 quoted options exercisable at $0.20 on or before 31 October 2018 and 625,000 unquoted options exercisable at $0.30 on or before 30 November 2018.

At the date of this Prospectus, the Directors have advised the Company that they intend to take up their Entitlements in full.

7.6 Directors' Remuneration

The remuneration (including superannuation) of existing Directors for the past two financial years (30 June year-end) are as follows:

Director	Title	Financial Year to 30	Financial Year to 30
		June 2017(1)	June 2016(1)
Peter Malone	Executive Chairman	$169,542	$99,084
Luke Martino	Non- Executive Director	$30,000	Nil
Phil Giglia(2)	Non- Executive Director	Nil	Nil
TOTAL		$199,542	$99,000

Notes:

1. Includes non-monetary remuneration.

2. Mr Giglia was appointed on 23 November 2017.

7.7 Underwriting Agreement

The Company entered into an agreement ( Underwriting Agreement ) with Gloucester & Portman Capital Pty Ltd ( GPC ) on 28 June 2018 to fully underwrite the Entitlement Offer.

Prospectus - Skin Elements Limited | Page 37

GPC is a corporate authorised representative (No: 430273) of Indian Ocean Management Group (AFSL: 336409).

Pursuant to the Underwriting Agreement, the Underwriter has an obligation to subscribe for, or procure subscriptions for, the Shortfall Securities remaining after the Company has determined which New Securities it will issue in accordance with the allocation policy details in Section 2.5, at the issue price of $0.025 each.

The obligations of the Underwriter with respect to the Entitlement Offer are not subject to any conditions precedent, nor is there any ability for the Underwriter or the Company to terminate the Underwriting Agreement.

The Underwriter will be paid an underwriting fee equal to 7% of the Underwritten Amount ( Underwriting Fee ) which will be paid in cash by way of a deduction from the gross proceeds raised under the Entitlement Offer.

The Underwriting Agreement contains other terms and conditions including warranties and representations in favour of the Company.

7.8 Interests of other persons

No promoter or other person named in this Prospectus as having performed a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus (or entity in which they are a partner or director) holds, and has not had in the two years before the date of this Prospectus, any interest in:

• (a) the formation or promotion of the Company;

• (b) property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offers; or

• (c) the Offers,

and no amounts have been paid or agreed to be paid and no value or other benefit has been given or agreed to be given to a promoter or any person named in this Prospectus as having performed a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus (or entity in which they are a partner or director), provided in connection with the formation or promotion of the Company or the Offers, except as disclosed in this Prospectus and as follows:

• (a) DLA Piper Australia has acted as the lawyers to the Company for the Offers. In respect of this work the Company will pay DLA Piper Australia approximately $20,000 (exclusive of GST). During the two years before the date of this Prospectus, DLA Piper Australia has provided the Company with legal services and was (or is entitled to be) paid a total of approximately $190,214 for these services;

• (b) Gloucester & Portman Capital Pty Ltd has been engaged to underwrite and lead manage the Entitlement Offer. In respect of this work the Company will pay Gloucester & Portman Capital Pty Ltd the Underwriting Fee plus $20,000 cash and the issue of 2,500,000 Shares (refer to Section 7.7 for further details); and

• (c) Link Market Services Limited conducts the Company's share registry functions and will provide administrative services in respect to the proposed Applications pursuant to this Prospectus. Link Market Services Limited will be paid for these services on standard industry terms and conditions.

The amounts disclosed above are exclusive of GST.

7.9 Related party transactions

At the date of this Prospectus, no material transactions with related parties and Directors interests exist that the Directors are aware of, other than those disclosed in this Prospectus.

Page 38

7.10 Market price of Shares

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

Highest: $0.09 (2 May 2018) Lowest: $0.031 (9 July 2018)

The latest available market sale price of the Shares on ASX prior to the date of lodgement of this Prospectus with ASIC was $0.034 per Share on 12 July 2018.

7.11

Costs of the Offers

The costs of the Offers payable by the Company (exclusive of GST) are listed below.

	(A$)
ASIC lodgement fee		3,206
ASX quotation fee		12,800
Underwriting Fee		95,296
Legal expenses		20,000
Share Registry expenses		4,495
Printing and other expenses		2,500
TOTAL		138,297

7.12

Taxation implications

The acquisition and disposal of securities in the Company will have taxation consequences, which will differ depending on the individual financial affairs of each investor. All potential investors in Company are urged to take independent financial advice about the taxation and any other consequences of acquiring and selling the securities in the Company.

To the maximum extent permitted by law, the Company, its officers and each of their respective advisers accept no liability or responsibility with respect to the taxation consequences of subscribing for New Securities.

7.13

Litigation and claims

So far as the Directors are aware, other than as disclosed by the Company to ASX, there is no current or threatened civil litigation, arbitration proceedings or administrative appeals, or criminal or governmental prosecutions of a material nature in which the Company (or any other member of the Group) is directly or indirectly concerned which is likely to have a material adverse effect on the business or financial position of the Company or the Group.

7.14

Consents

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

Each of the following parties:

Prospectus - Skin Elements Limited | Page 39

Name	Role
DLA Piper Australia	Lawyers
Gloucester & Portman Capital Pty Ltd	Underwriter and Lead Manager
Link Market Services Limited	Share Registry
BDO Audit (WA) Pty Ltd	Auditor

• (a) has given its consent to be named in this Prospectus as set out above and has not withdrawn its consent at the date of lodgement of this Prospectus with ASIC;

• (b) makes no express or implied representation or warranty in relation to the Company, this Prospectus or the Offers;

• (c) has not made or purported to have made any statement in this Prospectus or statement on which a statement in this Prospectus is based, except as described in this Section; and

• (d) to the maximum extent permitted by law, expressly disclaims and takes no responsibility for this Prospectus other than a reference to its name and any statement or report included in this Prospectus with the consent of that party as described in this Section.

None of the parties referred to in this Section 7.14 has authorised or caused the issue of this Prospectus or the making of the Offers.

Each of the Directors has given their written consent to being named in this Prospectus in the context in which they are named and have not withdrawn their consent prior to lodgement of this Prospectus with ASIC.

7.15 Documents available for inspection

The following documents are available for inspection during normal business hours at the registered office of the Company:

• (a) this Prospectus; and

• (b) the Constitution.

7.16 Information excluded from continuous disclosure notices

There is no information which has been excluded from a continuous disclosure notice in accordance with the Listing Rules, and which is required to be set out in this Prospectus.

7.17 Determination by ASIC

ASIC has not made a determination which would prevent the Company from relying on section 713 of the Corporations Act in issuing the New Shares.

7.18

Electronic Prospectus

Pursuant to Regulatory Guide 107, ASIC has exempted compliance with certain provisions of the Corporations Act to allow distribution of an electronic copy of this Prospectus on the basis of a paper Prospectus lodged with ASIC and the issue of Securities in response to an electronic Application Form, subject to compliance with certain provisions. If you have received an electronic copy of this Prospectus, please ensure that you have received the entire Prospectus accompanied by the Application Form. If you have not, please contact the Company and the Company will send to you, free of charge to you, either a hard copy or a further electronic copy of this Prospectus or both.

The Company reserves the right not to accept an Entitlement and Acceptance Form from an Applicant if it has reason to believe that when that Applicant was given access to the electronic Entitlement and Acceptance Form, it was not provided together with an electronic copy of this Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered. In such a case, the Application Monies shall be held by the Company on trust and returned (without interest) to the Applicant as soon as practicable.

Page 40

8. Authorisation

This Prospectus is authorised by each of the Directors.

This Prospectus is signed for and on behalf of the Company, pursuant to a resolution of the Board, by:

==> picture [68 x 24] intentionally omitted <==

Mr Phil Giglia Non-Executive Director 13 July 2018

Prospectus - Skin Elements Limited | Page 41

9. Glossary

In this Prospectus, unless the context otherwise requires:

A reference to the singular includes the plural and vice-versa.

Annual Report means the financial report lodged by the Company with ASIC in respect to the year ended 30 June 2017 and includes the corporate directory, review of activities, Shareholder information, financial report of the Company and its controlled entities for the year ended 30 June 2017, together with a Directors' report in relation to that financial year and the auditor's report for the period to 30 June 2017.

Applicant means a person who submits an Entitlement and Acceptance Form or Shortfall Application Form (as applicable).

Application means a valid application for New Securities under the Entitlement Offer made pursuant to an Entitlement and Acceptance Form or Shortfall Securities under the Shortfall Offer made pursuant to a Shortfall Application Form (as applicable).

Application Form means an Entitlement and Acceptance Form or Shortfall Application Form (as applicable).

Application Monies means application monies for New Shares received by the Company from an Applicant.

ASIC means the Australian Securities & Investments Commission.

ASX means ASX Limited ABN 98 008 624 691 and where the context permits, the market operated by it.

Board means the board of Directors.

CHESS means ASX Clearing House Electronic Subregistry System.

Closing Date means the date referred to as such in the Indicative Timetable.

Company means Skin Elements Limited ACN 608 047 794.

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

Corporations Act means the Corporations Act 2001 (Cth).

Director means a director of the Company.

Eligible Shareholder means a person who:

• (a) is a Shareholder at 5.00pm (WST) on the Record Date; and

• (b) has a registered address in Australia, New Zealand, Hong Kong or China as at the Record Date.

Entitlement means a Shareholder's entitlement to subscribe for New Securities under the Entitlement Offer.

Entitlement and Acceptance Form means the entitlement and acceptance form attached to, or accompanying this Prospectus, that sets out the entitlement of an Eligible Shareholder to subscribe for New Securities pursuant to the Entitlement Offer and Shortfall Offer.

Entitlement Offer has the meaning given to that term in Section 2.1.

GMP means the Good Manufacturing Practices regulations and General Biologics Products Standards promulgated by FDA, as they may be amended from time to time and includes published standards of FDA (or other standards of the FDA that are generally recognised within the United States pharmaceutical industry)

GPC means Gloucester & Portman Capital Pty Ltd (ABN 38 158 365 989).

Group means the Company and each of its subsidiaries.

Indicative Timetable means the indicative timetable on page 5 of this Prospectus.

Ineligible Shareholder means a Shareholder who is not an Eligible Shareholder.

Issue Date means the date referred to as such in the Indicative Timetable.

Issuer Sponsored means securities issued by an issuer that are held in uncertificated form without the holder entering into a sponsorship agreement with a broker or without the holder being admitted as an institutional participant in CHESS.

Listing Rules means the official listing rules of ASX.

Page 42

New Option means an Options with the terms and conditions set out in Section 6.2 offered pursuant to the Entitlement Offer.

New Securities means a New Share and New Option.

New Share means a Share offered pursuant to the Entitlement Offer.

Offers means the Entitlement Offer and Shortfall Offer.

Offer Price means $0.025.

Official List means the Official List of ASX.

Official Quotation means quotation of Shares on the official list of ASX.

Opening Date means the date referred to as such in the Indicative Timetable.

Option means an option to acquire a Share.

Prospectus means this prospectus dated 13 July 2018.

Record Date means the date referred to as such in the Indicative Timetable.

Section means a section of this Prospectus.

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

Shareholder means a registered holder of Shares.

Share Registry means Link Market Services Limited.

Shortfall means the New Securities not applied for under the Entitlement Offer before the Closing Date .

Shortfall Application Form means the application form attached to, or accompanying this Prospectus, to be used for the purposes of applying for Shortfall Securities.

Shortfall Offer has the meaning given to that term in Section 2.4.

Shortfall Options means the New Options constituting the Shortfall.

Shortfall Securities means the New Shares and New Options constituting the Shortfall.

Shortfall Shares means the New Shares constituting the Shortfall.

Statements has the meaning given to that term in Section 3.2.

TGA means the Therapeutic Goods Administration, a Division of the Department of Health and Ageing.

Underwriter means Gloucester & Portman Capital Pty Ltd.

Underwriting Agreement has the meaning given to that term in Section 7.7.

Underwriting Fee has the meaning given to that term in Section 7.7.

Underwritten Amount means the number of New Shares multiplied by the Offer Price.

WST means Australian Western Standard Time.

Prospectus - Skin Elements Limited | Page 43

Page 44