SPRINTEX LIMITED — Annual Report 2017

Aug 29, 2017

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SPRINTEX LIMITED ABN: 38 106 337 599

ASX Code: SIX

29 August 2017

2017 PRELIMINARY FINAL REPORT

Sprintex Limited (ASX Code: SIX) (Company) is pleased to present its Preliminary Final Report for the full year ended 30 June 2017.

Tyrone Jones, Chief Executive Officer commented:

“Sales revenues are up 2.7% to $2.27m. Although only showing a slight increase in sales over 2016, these results are a reflection of the efforts made by all employees in the continued development of the Sprintex group in these challenging and uncertain economic environments we face around the world. Our extensive dealership network has grown around the World, and Sprintex[®] supercharger systems are now sold in the USA, Middle East, China, Europe, South Africa, Japan, South Korea, New Zealand, and our home market in Australia.

We continue to focus on restructuring and repositioning our senior team, expanding our global footprint and the continuous development of the patented Sprintex[®] supercharger systems.

I look forward to a further strengthening of the Company’s revenue base in 2018”.

ENDS

For further information please contact the Company Secretary on +61 8 9262 7277.

ROBERT MOLKENTHIN COMPANY SECRETARY

183 Mulgul Road, Malaga WA 6090 PO Box 3348 Malaga DC WA 6945 Phone: +61 8 9262 7277 Fax: +61 8 9262 7288 Email: info@sprintex.com.au URL: www.sprintex.com.au

APPENDIX 4E

PRELIMINARY FINAL REPORT

12 MONTHS ENDED 30 JUNE 2017

Details of the reporting period and the previous corresponding period

Name of entity SPRINTEX LIMITED

Name of entity SPRINTEX LIMITED
ACN	Reporting Period	Previous Corresponding Period
106 337 599	Year ended 30 June 2017	Year ended 30 June 2016
Results for announcement to the market
Revenuefrom ordinary activities Lossfrom ordinary activities after tax attributed to members Basic loss per sharecents per share*		Change Amount Up 2.7% to $2,274,050 Up 33.7% to $4,321,180 Up 6.8% to 4.7 cents

Dividends	Amount per Security	Franked amount per Security
Interim Dividend Nil Nil Final Dividend Nil Nil

Record Dates of determining dividend – N/A

Commentary on results and other significant information

Please refer to the attached 2017 financial report for further information on the Group’s financial position and performance for the year ended 30 June 2017.

Dividend reinvestment plans

The Company does not operate a dividend reinvestment plan.

	2017	2016
Net Tangible Asset Backing	(cents)	(cents)
Net Tangible (Liabilities) / Assets per ordinary share*	0.002	(0.07)
Details of controlled entities acquired or disposed of
n/a

Details of associates and joint ventures

The Company has a manufacturing facility in Malaysia with a joint venture partner (see note 7).

Audit

This report is based on the financial statements which are in the process of being audited.

Robert Molkenthin Company Secretary

Note * - In accordance with AASB 133 the Earnings Per Share and Net Tangible Assets Backing calculations for 2016 were restated for the share consolidation undertaken in December 2015, resulting in the number of shares on issue at that time reducing from 4.6 billion to 85.4m (adjusted by a division of 55, being the conversion of every 55 shares in the Company into 1 ordinary share in the Company).

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Operating and financial review

Group overview

The Company was established in 2003 and listed on the ASX in 2008.

The Group’s focus is the development and commercialisation of the Sprintex® twin screw supercharger and supercharger systems incorporating the Sprintex® twin screw supercharger.

The Group’s HQ facility in Perth, Western Australia is our dedicated research and development base, and is where our creative Design, Engineering and Calibration team work together to provided technical and innovative solutions to support both aftermarket and OEM requirements with the use of the Sprintex® twin screw supercharger. With capability for low volume production, manufacturing and testing at the facility, the team is well equipped to provide engineering concept ideas and solutions at low cost.

The Sprintex production facility in Malaysia in the ‘Glenmarie’ area of Shah Alam, Selangor was commissioned in January 2013 encompassing 1,800 sqm. This is jointly-owned with AutoV Corporation, parent company of Proreka (M) Sdn. Bhd, a Tier-1 automotive component manufacturer and supplier. Certified to ISO9008 and able to provide high volume quality parts and systems, supported by a highly trained production and engineering team, the Malaysian facility and its team have continued to grow and expand their knowledge and performance to provide a solid production platform for the Group. The Group also now has a distribution and final assembly facility in Detroit, Michigan USA, where we can launch our products to the USA and Canadian markets. The shared facility of over 36,000 sqm also provides customer support and sales and marketing for the region.

After market supercharger systems

The focus of the Group’s activities during the year has been:

1. After achieving CARB (California Air Resources Board) approval in June 2016 for the Sprintex Supercharger systems for the 3.6L V6 Pentastar engine for JK, Jeep, Challenger, Charger, Dodge RAM as well as on the 4.0L TJ and 3.8L JK Wrangler, the Group was successful in obtaining CARB certification on the Toyota 86/Subaru BRZ range. All main product lines for the Company have now achieved CARB certification and meet or exceed emission requirements in 50 states in the USA.

2. Continued development of the supercharger and system to provide a Stage 2 option on the V6 Pentastar and Toyota 86/Subaru BRZ.

3. Ongoing expansion and development of the North American market for the Company’s products.

4. Expansion and development in the Asia and Middle East markets for the Company’s products.

5. Introduction and expansion into the OEM Marine sector.

6. Research and development of an OEM twin boosted system.

7. Research and development of an OEM high torque at low RPM system for diesel platforms.

8. Further development and refinement of the supercharger system on additional models within the Chrysler/Jeep Pentastar range, tuning solutions for the 2017/18 ranges of vehicles, as well as looking at potential for other OEM platforms, including Ford and GM.

Business strategies

The Group is focused on developing new superchargers and supercharger systems from its dedicated R&D facility in Perth with manufacturing of products being primarily from the Group’s production facility in Malaysia. The expanded range of products is intended to immediately service the needs of the aftermarket sector, where the key drivers are improved performance, while also enabling the Group to showcase its products to Original Equipment Manufacturers with whom the Group is continuing to build business relationships, with a view to securing future sales orders.

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Operating results for the year

The Company has continued focusing on the development of after-market supercharger systems and establishing world class technical and quality standards for its production facility in Malaysia. The Company has also been required to provide cash support for the operations of the JV in Malaysia.

	2017	2016	Change
	$	$	%
Revenue	2,274,050	2,214,713	2.7%
Net loss for the year	(4,321,180)	(3,230,686)	33.7%

Loss per Share*

Basic loss and diluted loss per share for 2017, 4.7 cents (2016 – 4.4 cents). See Note 4.

Review of financial condition

Liquidity and capital resources

The Group continued to incur operating losses as a result of the focus on development activities and setting up of its Malaysian facility and the requirement to provide increased cash support for the JV operations. These activities were financed by a number of capital raising initiatives, the provision of substantial financial support from entities related to one director, sales of products and the receipt of a Research and Development Incentive grant.

At year end, cash and cash equivalents were $201,636 compared to $1,173,316 at 30 June 2016.

Asset and capital structure Total borrowings Cash and cash equivalents Net debt Total equity Total capital Gearing ratio – net debt over total capital	2017 $ 2016 $ 297,410 2,655,414 (201,636) (1,173,316)
	95,774 1,482,098 230,320 (48,955)
	326,094 1,433,143
	29.4% 103.4%

Gearing ratio, defined as net debt over total capital, as at 30 June 2017 was 29.4% (2016: 103.4%). The Group's policy for the year ended 30 June 2017 allows up to 60% of financing to be provided by net debt at any particular time. The Group is currently operating within its stated policy. Management's policies for determining whether fixed or floating rates of interest are entered into are examined on an annual basis.

Capital raising issues during the year

On 22 July 2016, the Company announced a share placement of 5,000,000 fully paid ordinary shares at an issue price of $0.30 per share to China Automotive Holdings Limited, a company controlled by Mr Siemens (Chairman), to raise approximately $1.5m (Placement) and a Share Purchase Plan (SPP). The issue of shares pursuant to this Placement took place on 22 September 2016. The SPP resulted in 64,998 shares being issued to SPP applicants.

On 30 September 2016, the Company announced that agreement had been reached for the US$1m convertible loan facility (Agreement) with one of our substantial shareholders to be extended for a further 6 months to 27 March 2017. Subsequently, the Company reached agreement with the substantial shareholder for early conversion of all amounts owing under the

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convertible loan facility. On 21 December 2016, the Company announced that it had issued 4,612,390 fully paid ordinary shares in the Company in full satisfaction of all amounts due under the Agreement.

The Company received the 2016 R&D Tax Incentive of $1,858,390 on 21 December 2016.

On 2 November 2016, the Company announced it had secured a short-term funding facility of US$610,000. This amount, together with related interest charges, was repaid in full on 23 December 2016.

On 6 April 2017, the Company announced a share placement of approximately 4.9m fully paid ordinary shares at an issue price of $0.30 per share to China Automotive Holdings Limited, a company controlled by Mr Siemens (Chairman), to raise approximately $1.5m (Placement), and a Share Purchase Plan (SPP). The SPP closed on 8 May 2017 and resulted in 4,999 shares being issued to SPP applicants. The issue of 4,930,003 shares pursuant to the Placement took place on 19 May 2017.

Capital expenditure

Property, plant and equipment of $14,132 (2016: $150,406) were acquired during the year ended 30 June. These acquisitions related to plant and equipment, including tooling, needed to produce the Company’s products. The Company did not have any outstanding capital commitments in respect of acquisition of property plant and equipment contracted for but not provided for in the financial statements.

Profile of borrowings

The profile of the Group’s debt finance is as follows:

Current Insurance premium funding Finance lease liabilities Loans from related parties Unsecured convertible facility Non-current Finance lease liabilities	2017 $ 2016 $ 112,690 87,176 78,727 37,480 - 1,075,024 - 1,380,227
	191,417 2,579,907 105,993 75,507
	297,410 2,655,414

Likely Developments and Expected Results

The directors are confident that the 2018 financial year will see an increase in sales of superchargers and after-market supercharger systems. The marketing campaigns in Australia, the Middle East, Asia and North America are continuing and are showing positive results.

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CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2017

NOTES Sales of goods and services Revenue Cost of goods sold Gross profit Other income 3.1 Research and development incentive grant Distribution and marketing expenses Research and development expenses Joint venture impairment expense Inventory impairment expense Administration expenses Other expenses 3.2 Operating loss Finance income 3.3 Finance costs 3.4 Loss on extinguishment of financial liabilities Loss before income tax expense Income tax benefit Net loss for the year Other comprehensive income, net of tax - Movement in foreign translation reserve Total comprehensive loss for the year Loss per share attributable to the ordinary equity holders of the Company Basic loss per share 4 Diluted loss per share 4	2017 $ 2016 $ 2,274,050 2,214,713
	2,274,050 2,214,713 (1,776,028) (1,650,439)
	498,022 564,274 6,101 1,152 1,858,390 1,636,810 (841,379) (613,986) (1,842,083) (1,830,629) (1,068,147) (593,962) - - (2,478,433) (2,214,255) (159,296) (88,865)
	(4,026,825) (3,139,461) 1,229 2,498 (96,310) (93,723) (199,274) -
	(4,321,180) (3,230,686) - -
	(4,321,180) (3,230,686) 32,473 46,897
	(4,288,707) (3,183,789)
	$0.047 $0.044
	$0.047 $0.044

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CONSOLIDATED STATEMENT OF FINANCIAL AT 30 JUNE 2017 NOTES ASSETS CURRENT ASSETS Cash and cash equivalents Pledged bank deposits Trade and other receivables Inventories 10(b) 5 6 TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, plant and equipment Goodwill and intellectual property TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Interest bearing liabilities Provisions 8 TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Interest bearing liabilities 8 TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves 9 Accumulated losses TOTAL EQUITY	POSITION 2017 $ 2016 $ 201,636 30,000 236,857 937,955 1,173,316 112,000 227,516 1,450,338
	1,406,448 2,963,170 1,011,505 - 1,098,144 -
	1,011,505 1,098,144
	2,417,953 4,061,314
	1,663,918 191,417 226,305 1,225,662 2,579,907 229,193
	2,081,640 4,034,762 105,993 75,507
	2,187,633 4,110,269
	230,320 (48,955)
	56,437,777 117,055 51,869,795 84,582 (56,324,512) (52,003,332)
	230,320 (48,955)

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2017

CONSOLIDATED ENTITY Balance at 30 June 2015 Loss for the year Other comprehensive income Total Comprehensive income for the year Transactions with owners in their capacity as owners Issue of shares Share issue expenses Share based payment Balance at 30 June 2016 Loss for the year Movement in the foreign translation reserve Total Comprehensive income for the year Transactions with owners in their capacity as owners Issue of shares Share issue expenses Balance at 30 June 2017	Reserves Contributed equity Share option reserve Foreign translation reserve Accumulated losses Total Note 9 $ $ $ $ $ 50,444,700 77,215 (39,530) (48,772,646) 1,709,739 - - - (3,230,686) (3,230,686) - - 46,897 - 46,897
	- - 46,897 (3,230,686) (3,183,789) 1,552,753 - - - 1,552,753 (177,658) (177,658) 50,000 - - - 50,000
	51,869,795 77,215 7,367 (52,003,332) (48,955) - - - (4,321,180) (4,321,180) - - 32,473 - 32,473
	51,869,795 77,215 39,840 (56,324,512) (4,337,662) 4,675,241 - - - 4,675,241 (107,259) - - - (107,259)
	56,437,777 77,215 39,840 (56,324,512) 230,320

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CONSOLIDATED STATEMENT OF CASH FLOW FOR THE YEAR ENDED 30 JUNE 2017

NOTES CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest and finance lease charges paid Interest received Research and Development incentive grant received Export Market Development Grant Net cash flows used in operating activities 10(a) CASH FLOWS FROM INVESTING ACTIVITIES Contribution to joint venture entity Repayment of secured deposit Proceeds from sale of property, plant and equipment Payments for property, plant and equipment Net cash flows (used in) generated from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings Repayment of borrowings Proceeds from share capital raised Capital raising costs Net cash flows generated from financing activities Net (decrease) / increase in cash and cash equivalents held Cash and cash equivalents at the beginning of the financial year Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the financial year 10(b)	2017 $ 2016 $ 2,339,642 (5,402,214) (96,310) 1,229 1,858,390 2,173,223 (5,781,938) (93,723) 2,498 1,636,810 - -
	(1,299,263) (2,063,130)
	(1,388,011) (593,962) 82,000 - 7,273 16,229 (14,132) (150,406)
	(1,312,870) (728,139)
	1,720,321 3,676,682 (1,077,928) (1,155,143) 1,144,500 1,552,753 (111,171) (177,657)
	1,675,722 3,896,635
	(936,411) 1,105,366 1,173,316 67,950 (35,269) -
	201,636 1,173,316

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NOTES TO AND FORMING PART OF THE FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017

1. Basis of preparation

This preliminary final report has been prepared in compliance with Australian Accounting Standards (AASBs) (including Australian interpretations) as issued by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001 .

This financial report does not include notes of the type normally included in annual financial statements.

It is recommended that the preliminary final report be read in conjunction with the annual report for the year ended 30 June 2016 and considered together with the continuous disclosure obligations of the ASX listing rules.

The financial report has been prepared on the historical cost basis except for land and buildings which have been measured at fair value.

The accounting policies used in this report are the same as those used in the last audited annual report.

(a)

Going concern

The Company has net assets of $230,320 (2016: net liabilities of $48,955) and net current liabilities of $675,192 (2016: net current liabilities of $1,071,592) as at 30 June 2017 and incurred a loss of $4,321,180 (2016: $3,230,686) and net operating cash outflow of $1,299,263 (2016: $2,063,130) for the year ended 30 June 2017.

The Company’s ability to continue as a going concern and meet its debts and future commitments as and when they fall due is dependent on a number of factors, including:

• delivery of existing and new products through the Company’s distribution network to generate sales revenues and positive cash flows;

• the ability of the Company to raise additional financing; and

• the success of the manufacturing facility in Malaysia.

The financial report has been prepared on a going concern basis. In arriving at this position the directors have had regard to the fact that the Company has, or in the directors’ opinion will have access to, sufficient cash to fund administrative and other committed expenditure for a period of not less than 12 months from the date of this report.

Should the Company not achieve the matters set out above, there is significant uncertainty whether it will be able to continue as a going concern and therefore whether it will be able to pay its debts as and when they fall due and realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial statements.

The financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts, or to the amounts or classification of liabilities that might be necessary should the Company not be able to continue as a going concern.

2. Segment information

The Company identifies its operating segments based on the internal reports that are reviewed and used by the executive management team (chief operating decision makers) in assessing performance and in determining the allocation of resources. Operating segments are identified by management based on the similarity of the products produced and sold.

The Company is operating in one segment, being the manufacture and distribution of the patented range of Sprintex® superchargers.

The accounting policies applied for internal reporting purposes are consistent with those applied in the preparation of the financial statements.

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	NOTES TO AND FORMING PART OF THE FINANCIAL	REPORT
	FOR THE YEAR ENDED 30 JUNE 2017
		2017	2016
3.	Revenue and expenses	$	$
3.1	Other income
	Sundry Income	6,101	1,152
		6,101	1,152
3.2	Other expenses
	Net foreign exchange gain/(loss)	(159,296)	(88,865)
	Total other expenses	(159,296)	(88,865)
3.3	Other revenue
	Interest income	1,229	2,498
3.4	Finance costs
	Interest and finance charges	(96,310)	(93,723)
	Total finance costs	(96,310)	(93,723)
3.5	Employee payments including benefits expense
	Salaries and wages	2,636,852	2,086,452
	Superannuation expense	97,397	93,879
	Annual leave and long service leave	1,558	31,097
	Other employment expense	84,363	51,927
	Share based payments	-	50,000
		2,820,170	2,313,355
3.6	Depreciation and amortisation expenses
	Depreciation of property, plant and equipment	215,133	252,464
	Amortisation of leasehold improvements	5,083	11,973
	Total depreciation and amortisation	220,216	264,437

4. Loss per share

The calculation of basic loss per share is based on the net loss from ordinary activities attributable to equity holders of the Company for the year of $4,321,180 (2016: $3,230,686) and the weighted average of 92,150,683 (2016: 73,809,187) ordinary shares in issue during the year.

The diluted loss per share amount for the year was the same as the basic loss per share, as the Company does not have any share options outstanding and the outstanding performance rights are anti-dilutive at 30 June 2017.

Note - In accordance with AASB 133 the Earnings Per Share and Net Tangible Assets Backing calculations for 2016 were restated for the share consolidation undertaken in December 2015, resulting in the number of shares on issue at that time reducing from 4.6 billion to 85.4m (adjusted by a division of 55, being the conversion of every 55 shares in the Company into 1 ordinary share in the Company).

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NOTES TO AND FORMING PART OF THE FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017

5. Pledged bank deposits

Deposit – fixed term Deposit – at call	2017 $ 2016 $ - 82,000 30,000 30,000
	30,000 112,000

Pledged bank deposits at 30 June 2017 represented fixed deposits as follows:

• a term deposit maturing on 30 December 2017 bearing interest at 2.10% per annum of $30,000 supporting credit card facilities;

Trade and other receivables Trade receivables Other receivables Trade deposits Prepayments	2017 $ 2016 $ 72,648 131,898 586 254 75,732 7,533 87,891 87,831
	236,857 227,516

6. Trade and other receivables

Trade receivables are non- interest bearing and are generally on 0-90 day terms. An allowance for impairment loss is recognised when there is objective evidence that an individual trade receivable is impaired.

Trade deposits represent payments to suppliers with no history of unsatisfactory product quality or delivery default and are considered fully recoverable.

7. Investment in a joint venture

Proreka Sprintex Sdn. Bhd. is a Malaysian company which is 50% owned by the Company and owns and operates a facility in Malaysia which has been licenced by the Company to assemble and manufacture Sprintex products.

In view of the losses being incurred by the joint venture, the carrying value of the balances with the joint venture were assessed for impairment and fully impaired.

8. Interest bearing liabilities Current Insurance premium funding (unsecured) Finance lease liabilities Loans from related parties Unsecured convertible facility Non-current Finance lease liabilities	2017 $ 2016 $ 112,690 87,176 78,727 37,480 - 1,075,024 - 1,380,227
	191,417 2,579,907
	105,993 75,507

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NOTES TO AND FORMING PART OF THE FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017

9.

FOR THE YEAR ENDED 30 JUNE 2017
Contributed equity Paid up capital – ordinary shares Capital raising costs capitalised	2017 $ 2016 $ 57,918,212 53,242,971 (1,480,435) (1,373,176)
	56,437,777 51,869,795

(a) Ordinary shares

Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the Company in proportion to the number of and amounts paid on the shares held. The fully paid shares have no par value.

On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.

Movements in Ordinary Share Capital Issue Price ($) Balance at 1 July 2016 Share Placement 0.30 Share Purchase Plan Shares issued on conversion of related party loan 0.30 0.30 Loss/(gain) on extinguishment of liability(i) Shares issued on convertible loan note conversion Loss/(gain) on extinguishment of liability(ii) 0.05 0.32 0.01 Balance as at 30 June 2017	Number of shares $ 85,387,610 53,242,971 3,745,000 1,123,500 69,997 6,185,003 21,000 1,855,502 - 4,612,390 - 153,150 1,475,965 46,124
	100,000,000 57,918,212

Notes:

(i) Fair value adjustment on extinguishment of liability due to converting loans into shares, pursuant to resolutions passed at General Meetings held on 26 August 2016 and 19 May 2017.

(ii) Fair value adjustment on extinguishment of liability due to converting a loan into shares, pursuant to a convertible loan note agreement dated 22 March 2016.

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NOTES TO AND FORMING PART OF THE FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2017

10. Cash flow statement reconciliation (a) Reconciliation of cash flows from operating activities to operating loss after income tax Operating loss after income tax Add non-cash items: Share based payments Impairment of trade receivables Depreciation and amortisation Joint venture impairment Impairment of inventory Loss on extinguishment of liability Foreign exchange movement Interest costs settled with equity Changes in assets and liabilities Decrease / (increase) in trade and other receivables Decrease / (increase) in inventories Increase / (decrease) in trade and other payables Increase / (decrease) in provisions Net cash flows used in operating activities (b) Reconciliation of cash and cash equivalents to consolidated statement of cash flow For the purpose of the statement of cash flow, cash and cash equivalents comprise the following at 30 June: Cash at bank and on hand		2017 $ 2016 $ (4,321,180) (3,230,686) - 50,000 3,127 - 215,511 264,437 1,068,147 593,962 508,146 - 199,274 - 3,503 46,897 82,911 - (9,341) (42,640) 512,383 (38,161) 438,256 264,010 - 29,051
		(1,299,263) (2,063,130)
		2017 $ 2016 $ 201,636 1,173,316
		201,636 1,173,316

11. Events subsequent to reporting period

On 3 July 2017, Mr Tyrone Jones, formerly Chief Operating Officer, was appointed to the position of Chief Executive Officer.

On 27 July 2017, the Company received US$500,000 pursuant to an unsecured loan facility agreement with Ganado Investment Corporation Ltd, an unrelated third party. This facility is repayable on or before 31 December 2017 and will incur a facility fee of US$55,000, in-lieu of interest and other charges.

On 16 August 2017, the Company received US$400,000 pursuant to an unsecured loan facility agreement with Ganado Investment Corporation Ltd, an unrelated third party. This facility is repayable on or before 31 December 2017 and will incur a facility fee of US$45,000, in-lieu of interest and other charges.

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