SKS TECHNOLOGIES GROUP LIMITED — Capital/Financing Update 2016

Oct 27, 2016

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

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

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

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

Name of entity

Stokes Limited

ABN

004 554 929

We (the entity) give ASX the following information.

Part 1 - All issues

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

• $\mathbf{1}$ +Class of +securities issued or to be issued
• 1. Fully paid ordinary shares
• 1. Unsecured Convertible Notes ("Convertible Notes")
• Number of *securities issued or $\overline{2}$ to be issued (if known) or maximum number which may be issued
• 1,621,622 Fully paid ordinary shares $1.$
• 1. 1,081,079 Unsecured Convertible Notes ("Convertible Notes") not quoted on ASX

+ See chapter 19 for defined terms.

• Principal terms of the $\overline{\mathbf{3}}$ (e.g. if options, +securities exercise price and expiry date; if +securities, partly paid the amount outstanding and due for if dates payment; +convertible securities. the conversion price and dates for conversion)
• The terms of the fully paid ordinary $\mathbf{1}$ . shares will be the same as the terms of the existing fully ordinary shares.
• 1. The terms of Unsecured Convertible notes are as follows

Convertible Notes to be issued at a price of $0.37 each with a Maturity Date of 31 October 2018. Each Convertible Note is convertible into one ordinary fully paid share (subject to adjustment in accordance with the terms of the Convertible Notes).

Interest (to accrue daily and be payable quarterly in arrears) will be payable on the Convertible Notes at 10% p.a. The Notes are redeemable at Maturity or in the event of default (subject to certain conditions). Early payment of the Convertible Notes is not permitted.

Unsecured Convertible notes will not be quoted or listed on ASX

+ See chapter 19 for defined terms.

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

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

• the date from which they do $\bullet$
• the extent to which they $\bullet$ participate for the next dividend, (in the case of a trust. distribution) $\alpha$ r interest payment
• the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment
• Issue price or consideration 5

1. Fully paid ordinary shares - Yes

2. Unsecured Convertible Notes - No

Unsecured Convertible Notes will be unlisted and not quoted on ASX

The Notes do not confer any dividend rights

• 1. Fully paid ordinary shares -$0.37 per share
• 1. Unsecured Convertible Notes ("Convertible Notes") $0.37 per Convertible Note

+ See chapter 19 for defined terms.

6	Purpose of the issue(If issued as consideration forthe acquisition of assets, clearlyidentify those assets)	337,838 Fully paid ordinary shares areissued to Artcraft Proprietary Limited
		513,514 Fully paid ordinary shares areissued to DSEL Pty Ltd
		513,514 Fully paid ordinary shares areissued to ACN 136 188 424 Pty Ltd
		256,756 Fully paid ordinary shares areissued to Murray Saint Enterprises PtyLtd
		as part of consideration to Vendor of"Artcraft Urban" a business acquired bythe Company.
		1,081,079 Unsecured Convertible Notesare issued to raise funds, primarily tofund the acquisition of business"Artcraft Urban" and cost associatedwith the issue of notes
6a	Is the entity an +eligible entitythat has obtained securityholder approval under rule 7.1A?	No
	If Yes, complete sections 6b - 6hin relation to the + securities thesubject of this Appendix 3B, andcomply with section 6i
6b	The date the security holderresolution under rule 7.1A waspassed	23 October 2015
бс	Number of + securities issuedwithout security holder approvalunder rule 7.1	N/A
6d	Number of + securities issuedwith security holder approvalunder rule 7.1A	N/A

المواضح والمحاوية والمحاوية

Appendix 3B Page 4

04/03/2013

and a state and

+ See chapter 19 for defined terms.

with security holder approval under rule 7.3, or another specific security holder approval (specify date of meeting) $6f$ Number of +securities issued under an exception in rule 7.2

6e

Number of +securities issued

• $6g$ If *securities issued under rule 7.1A, was issue price at least 75% of 15 day VWAP as calculated under rule 7.1A.3? Include the +issue date and both values. Include the source of the VWAP calculation.
• 6h If +securities were issued under rule 7.1A for non-cash consideration, state date on which valuation of consideration was released to ASX Market Announcements
• 6i Calculate the entity's remaining issue capacity under rule 7.1 and rule 7.1A - complete Annexure 1 and release to ASX Market Announcements
• +Issue dates $\overline{7}$

Note: The issue date may be prescribed by ASX (refer to the definition of issue date in rule 19.12). For example, the issue date for a pro rata entitlement issue must comply with the applicable timetable in Appendix 7A.

Cross reference: item 33 of Appendix 3B.

8 Number and +class of all *securities quoted on ASX (including the +securities in section 2 if applicable)

$N/A$

$N/A$

$N/A$

28 October 2016

Listing Rule 7.1 - 4,372,692 Listing Rule 7.1A - 2,915,128

+Class Number Ordinary Fully Paid Shares 30,772,903 $0.35 - Listed Unsecured 7,287,820 Convertible Notes (SKSG)

+ See chapter 19 for defined terms.

• Number and +class of all $\overline{9}$ +securities not quoted on ASX (including the +securities in section 2 if applicable)
• $10o$ increased capital (interests)

Number	ass
1,081,079	$0.37-UnsecuredConvertible Notes

Dividend policy (in the case of a $\sqrt{\phantom{a}}$ As for the existing ordinary shares on issue trust, distribution policy) on the

Part 2 - Pro rata issue

11	Is security holder approvalrequired?	N/A
12	Is the issue renounceable or non-renounceable?	N/A
13	Ratio in which the + securitieswill be offered	N/A
14	+ Class of + securities to which theoffer relates	N/A
15	+ Record date to determineentitlements	N/A
16	Will holdings on differentregisters (or subregisters) beaggregated for calculatingentitlements?	N/A
17	Policy for deciding entitlementsin relation to fractions	N/A
18	Names of countries in which theentity has security holders whowill not be sent new offerdocumentsNote: Security holders must be told how theirentitlements are to be dealt with.Cross reference: rule 7.7.	N/A
19	date$-$ forofClosingreceiptacceptances or renunciations	N/A

Appendix 3B Page 6

04/03/2013

$\div$ See chapter 19 for defined terms.

• Names of any underwriters $N/A$ $20$ Amount of any underwriting fee $N/A$ $21$ or commission Names of any brokers to the $N/A$ 22 issue Fee or commission payable to the $N/A$ 23 broker to the issue Amount of any handling fee $N/A$ $24$ payable to brokers who lodge acceptances or renunciations on behalf of security holders If the issue is contingent on $N/A$ 25 security holders' approval, the date of the meeting $26$ Date entitlement and acceptance $N/A$ form and offer documents will be sent to persons entitled If the entity has issued options, $N/A$ $27$ and the terms entitle option holders to participate on exercise, the date on which notices will be sent to option holders Date rights trading will begin (if $N/A$ $28$ applicable) Date rights trading will end (if $N/A$ 29 applicable) How do security holders sell 30 $N/A$ their entitlements in full through a broker? How do security holders sell part $31$ of their entitlements through a broker and accept for the balance?

• See chapter 19 for defined terms.

Appendix 3B Page 7

32	How do security holders disposeof their entitlements (except bysale through a broker)?	N/A
-33	+ Issue date	N/A
	Part 3 - Quotation of securities.

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

-34	Type of + securities
	(tick one)

$(a)$ *Securities described in Part 1 (1,621,622 Fully Paid Ordinary Shares) $\overline{\mathsf{M}}$

$(b)$

All other *securities

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

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

• If the *securities are *equity securities, the names of the 20 largest holders of the 35 additional *securities, and the number and percentage of additional *securities held by those holders
• 36 If the *securities are *equity securities, a distribution schedule of the additional *securities setting out the number of holders in the categories $1 - 1,000$ $1,001 - 5,000$ 5,001 - 10,000 10,001 - 100,000 100,001 and over

A copy of any trust deed for the additional +securities

Appendix 3B Page 8

37

+ See chapter 19 for defined terms.

Entities that have ticked box $34(b)$

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

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

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

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

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

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

Number	+ Class

• See chapter 19 for defined terms.

04/03/2013

Appendix 3B Page 9

Ouotation agreement

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

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

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

$28/10/2016$ Date: ...........................

Sign here:

(Director/Company secretary)

Print name:

Hemant Amin....................................

Appendix 3B Page 10

04/03/2013

+ See chapter 19 for defined terms.

Appendix 3B - Annexure 1

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

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

Part 1

Rule 7.1 – Issues exceeding 15% of capital
Step 1: Calculate "A", the base figure from which the placementcapacity is calculated
Insert number of fully paid +ordinarysecurities on issue 12 months before the*issue date or date of agreement to issue
Add the following:
Number of fully paid *ordinary securitiesissued in that 12 month period under anexception in rule 7.2
Number of fully paid *ordinary securitiesissued in that 12 month period withshareholder approval
Number of partly paid +ordinarysecurities that became fully paid in that12 month period
Note:Include only ordinary securities here -other classes of equity securities cannotbe added$\bullet$Include here (if applicable) the securitiesthe subject of the Appendix 3B to whichthis form is annexedIt may be useful to set out issues ofsecurities on different dates as separateline items
Subtract the number of fully paid +ordinarysecurities cancelled during that 12 monthperiod
"A"

04/03/2013

+ See chapter 19 for defined terms.

Step 2: Calculate 15% of "A"
"B"	0.15
	[Note: this value cannot be changed]
Multiply "A" by 0.15
Step 3: Calculate "C", the amount of placement capacity under rule7.1 that has already been used
Insert number of + equity securities issuedor agreed to be issued in that 12 monthperiod not counting those issued:
Under an exception in rule 7.2
Under rule 7.1A٠
With security holder approval under rule7.1 or rule 7.4
Note:This applies to equity securities, unlessspecifically excluded - not just ordinarysecuritiesInclude here (if applicable) the securities٠the subject of the Appendix 3B to whichthis form is annexedIt may be useful to set out issues of٠securities on different dates as separateline items
"C"
Step 4: Subtract "C" from ["A" x "B"] to calculate remainingplacement capacity under rule 7.1
"A" x 0.15
Note: number must be same as shown inStep 2
Subtract "C"
Note: number must be same as shown inStep 3
Total ["A" $\times$ 0.15] – "C"
	[Note: this is the remaining placementcapacity under rule 7.1]

Appendix $\mathfrak{z}\mathsf{B}$ Page 12

+ See chapter 19 for defined terms.

Part 2

Rule 7.1A – Additional placement capacity for eligible entities
Step 1: Calculate "A", the base figure from which the placementcapacity is calculated
``A"
Note: number must be same as shown inStep 1 of Part 1
Step 2: Calculate 10% of "A"
"ט"	0.10
	Note: this value cannot be changed
Multiply "A" by 0.10
Step 3: Calculate "E", the amount of placement capacity under rule7.1A that has already been used
Insert number of + equity securities issuedor agreed to be issued in that 12 monthperiod under rule 7.1A
Notes:This applies to equity securities - notjust ordinary securitiesInclude here $-$ if applicable $-$ thesecurities the subject of the Appendix3B to which this form is annexedDo not include equity securities issuedunder rule 7.1 (they must be dealt within Part 1), or for which specific securityholder approval has been obtainedIt may be useful to set out issues of٠securities on different dates as separateline items$n_{\rm E}$

+ See chapter 19 for defined terms.

Step 4: Subtract "E" from ["A" x "D"] to calculate remainingplacement capacity under rule 7.1A
"A" x 0.10
Note: number must be same as shown inStep 2
Subtract "E"
Note: number must be same as shown inStep 3
Total ["A" $\times$ 0.10] – "E"
	Note: this is the remaining placementcapacity under rule 7.1A

+ See chapter 19 for defined terms.