VECTUS BIOSYSTEMS LIMITED — Capital/Financing Update 2019

Dec 23, 2019

ABN 54 117 526 137

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24 December 2019

Company Announcements Office Australian Securities Exchange

Issue of Convertible Notes

Vectus Biosystems Limited (ASX:VBS) (Vectus or the Company) advises that it has issued a total of 11,000,000 Convertible Notes. The issue includes 8,800,000 Convertible Notes issued to non-related sophisticated professional investors, 2,000,000 Convertible Notes issued to Non-Executive Director Maurie Stang and 200,000 Convertible Notes issued to Non-Executive Director Ronald Shnier, following shareholder approval at the Company’s 22 November 2019 Annual General Meeting (AGM).

The Appendix 3B and Cleansing Notice are attached.

Vectus Biosystems Limited

Robert J Waring Company Secretary

VECTUS BIOSYSTEMS LIMITED ABN 54 117 526 137

3-11 Primrose Avenue, Rosebery, NSW 2018 Telephone: +61 2 9662 4144 Facsimile: +61 2 9697 0933 Website: www.vectusbiosystems.com.au

Appendix 3B New issue announcement

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

Vectus Biosystems Limited (ASX:VBS)

ABN

54 117 526 137

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).

• 1 +Class of +securities issued or Convertible Notes

• to be issued

• 2 Number of[+] securities issued or to be issued (if known) or 11,000,000

• maximum number which may be issued

• 3 Principal terms of the[+] securities (e.g. if options, exercise price Tranche 2 of a two-tranche Convertible and expiry date; if partly paid +securities, the amount Note issue, at $0.50 to raise $5,500,000, with 36 months until Maturity Date, plus 6%

• outstanding and due dates for payment; if +convertible interest rate per annum capitalised and paid securities, the conversion price on Maturity Date, being 27 September 2022. and dates for conversion)

• See chapter 19 for defined terms.

Appendix 3B Page 1

04/03/2013

Appendix 3B New issue announcement

4 Do the+securities rank equally in all respects from the+issue date with an existing+class of quoted +securities? If the additional+securities do not rank equally, please state:  the date from which they do  the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment  the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 5 Issue price or consideration 6 Purpose of the issue (If issued as consideration for the acquisition of assets, clearly identify those assets) 6a Is the entity an+eligible entity that has obtained security holder approval under rule 7.1A? If Yes, complete sections 6b – 6h_in_ relation to the+securities the subject of this Appendix 3B, and comply with section 6i 6b The date the security holder resolution under rule 7.1A was passed 6c Number of +securities issued without security holder approval under rule 7.1 6d Number of+securities issued with security holder approval under rule 7.1A 6e Number of+securities issued 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	The Convertible Notes, if and when converted into fully paid ordinary shares, will rank equally with existing fully paid ordinary shares.
	Convertible Note issueprice of $0.50
	Funds raised from the issue are to be used to complete the Phase I clinical trials for VB0004 to advance the library of Vectus’ other drugs and for general working capital.
	No
	Not applicable
	Nil
	Nil
	11,000,000 Convertible Notes
	Nil

• See chapter 19 for defined terms.

Appendix 3B Page 2

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Appendix 3B New issue announcement

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 7 +Issue dates Note: The issue date may be prescribed by ASX (refer to the definition of issue date in rule 19.12). For example, the issue date for a pro rata entitlement issue must comply with the applicable timetable in Appendix 7A. Cross reference: item 33 of Appendix 3B. 8 Number and +class of all +securities quoted on ASX (including the +securities in section 2 if applicable) 9 Number and +class of all +securities not quoted on ASX (including the +securities in section 2 if applicable)	Not applicable	Not applicable	Not applicable	Not applicable
	Not applicable
	3,522,599 securities
	20 December		2019
	Number			+Class
	23,483,996			Fully paid ordinary shares
	Number 75,000 14,000,000
				+Class Deferred Share Awards, issued under the EIP. Convertible Notes (Tranches 1 and 2 of a two-tranche Convertible Note issue) at $0.50, with 36 months until Maturity Date, plus 6% interest rate per annum capitalised and paid on Maturity Date, being 27 September 2022.

• See chapter 19 for defined terms.

Appendix 3B Page 3

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Appendix 3B New issue announcement

10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)		Number 667 3,333 12,500		+Class Options with no consideration payable on exercise, with an expiry date of 29 May 2022. These options, issued under the EIP, will vest on 29 May 2020 based on the two staff members’ satisfactory work performance, as assessed in the annual review. Options issued under the EIP, with no consideration payable on exercise and an expiry date of 23 August 2023, with 1,667 of these options to vest on 30 June 2020 and the remaining 1,666 options to vest on 30 June 2021, based on this staff member’s satisfactory work performance, as assessed in the annual review. Options with no consideration payable on exercise, with an expiry date of 3 October 2024. These five- year options, issued under the EIP, will vest as to one third annually over three years (with one third vesting on 1 July 2020, one third vesting on 1 July 2021 and the balance vesting on 1 July 2022), based on the three staff members’ satisfactory work performance, as assessed in the annual review.
	Fully paid ordinary shares issued, including on the conversion of Convertible Notes, will have full participation in any future dividends.

Part 2 - Pro rata issue

Questions 11 to 33 are not applicable

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 (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

• See chapter 19 for defined terms.

Appendix 3B Page 4

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Appendix 3B New issue announcement

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

• 35 If the[+] securities are[+] equity securities, the names of the 20 largest holders of the additional[+] securities, and the number and percentage of additional[+] securities held by those holders

• 36 If the[+] securities are[+] equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories 1 - 1,000

1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over

• 37 A copy of any trust deed for the additional[+] securities

Entities that have ticked box 34(b) Questions 38 to 42 are not applicable

• See chapter 19 for defined terms.

Appendix 3B Page 5

04/03/2013

Appendix 3B New issue announcement

Quotation agreement

• 1 +Quotation of our additional +securities is in ASX’s absolute discretion. ASX may quote the[+] securities on any conditions it decides.

• 2 We warrant the following to ASX.

• 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.

• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.

• 4 We give ASX the information and documents required by this form. If any information or document is not available now, we will give it to ASX before +quotation of the +securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

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Sign here: ............................................................ Date: 24 December 2019 ( ~~Director/~~ Company Secretary)

Print name: Robert J Waring

== == == == ==

• See chapter 19 for defined terms.

Appendix 3B Page 6

04/03/2013

Appendix 3B New issue announcement

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 placement capacity is calculated

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----- Start of picture text -----

Insert number of fully paid [+] ordinary 23,379,996
securities on issue 12 months before the
+ issue date or date of agreement to issue
Add the following:
• Number of fully paid [+] ordinary securities 3 Oct 2019 – 104,000 shares
issued in that 12 month period under an
exception in rule 7.2
• Number of fully paid [+] ordinary securities
issued in that 12 month period with
shareholder approval
• Number of partly paid [+] ordinary
securities that became fully paid in that
12 month period
Note:
• Include only ordinary securities here –
other classes of equity securities cannot
be added
• Include here (if applicable) the securities
the subject of the Appendix 3B to which
this form is annexed
• It may be useful to set out issues of
securities on different dates as separate
line items
Subtract the number of fully paid [+] ordinary Nil
securities cancelled during that 12 month
period
“A” 23,483,996
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• See chapter 19 for defined terms.

Appendix 3B Page 7

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Appendix 3B New issue announcement

Step 2: Calculate 15% of “A”

“B” 0.15 [Note: this value cannot be changed] Multiply “A” by 0.15 3,522,599

Step 3: Calculate “C”, the amount of placement capacity under rule 7.1 that has already been used

Insert number of[+] equity securities issued or agreed to be issued in that 12 month period not counting those issued:

• Under an exception in rule 7.2

• Under rule 7.1A

• With security holder approval under rule 7.1 or rule 7.4

Note:

• This applies to equity securities, unless specifically excluded – not just ordinary securities

• Include here (if applicable) the securities the subject of the Appendix 3B to which this form is annexed

• It may be useful to set out issues of securities on different dates as separate line items

“C” Nil

Step 4: Subtract “C” from [“A” x “B”] to calculate remaining placement capacity under rule 7.1

placement capacity under rule 7.1
“A” x 0.15	3,522,599
Note: number must be same as shown in
Step 2
Subtract“C”	Nil
Note: number must be same as shown in
Step 3
Total[“A” x 0.15] – “C”	3,522,599
	[Note: this is the remaining placement
	capacity under rule 7.1]

• See chapter 19 for defined terms.

Appendix 3B Page 8

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Appendix 3B New issue announcement

Part 2

Rule 7.1A – Additional placement capacity for eligible entities

Step 1: Calculate “A”, the base figure from which the placement capacity is calculated

“A” Not Applicable, as shareholder approval was not obtained under Listing Rule 7.1A Note: number must be same as shown in Step 1 of Part 1 Step 2: Calculate 10% of “A” “D” 0.10 Note: this value cannot be changed Multiply “A” by 0.10

Step 3: Calculate “E”, the amount of placement capacity under rule 7.1A that has already been used

Insert number of[+] equity securities issued Not applicable or agreed to be issued in that 12 month period under rule 7.1A

Notes:

• This applies to equity securities – not just ordinary securities

• • Include here – if applicable – the securities the subject of the Appendix 3B to which this form is annexed

• • Do not include equity securities issued under rule 7.1 (they must be dealt with in Part 1), or for which specific security holder approval has been obtained

• • It may be useful to set out issues of securities on different dates as separate line items

• “E”

• See chapter 19 for defined terms.

Appendix 3B Page 9

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Appendix 3B New issue announcement

Step 4: Subtract “E” from [“A” x “D”] to calculate remaining placement capacity under rule 7.1A

“A” x 0.10 Note: number must be same as shown in Step 2 Subtract “E” Note: number must be same as shown in Step 3 Total [“A” x 0.10] – “E” Note: this is the remaining placement capacity under rule 7.1A

• See chapter 19 for defined terms.

Appendix 3B Page 10

04/03/2013

Vectus Biosystems Limited (ASX:VBS)

ACN 117 526 137

20 December 2019

Cleansing Notice under section 708A(12C)(e) of the Corporations Act 2001 (Cth)

Vectus Biosystems Limited (ASX:VBS) ( Vectus , or the Company ), gives this notice under section 708A(12C)(e) of the Corporations Act 2001 (Cth) (the Corporations Act ), as inserted by ASIC Corporations (Sale Offers: Securities Issued on Conversion of Convertible Notes) Instrument 2016/82 ( ASIC Instrument ).

On 19 September 2019, the Company entered into Convertible Note Purchase Agreements with various sophisticated and professional investors for the issue of 14,000,000 secured, unquoted convertible notes (each with a face value of $AUD0.50 each) ( Convertible Notes ) to raise an aggregate amount of AUD$7,000,000 ( Convertible Note Issue ).

The Convertible Note Issue was completed in two tranches as follows:

1. an initial issue of 3,000,000 Convertible Notes to raise AUD$1,500,000 (Tranche 1 ); and

2. a further issue of 11,000,000 Convertible Notes to raise an additional AUD$5,500,000 – with such issue conditional on shareholder approval ( Tranche 2 ).

A total of 3,000,000 Convertible Notes were issued to Investors (Tranche 1 Noteholders) on 30 September 2019 after the conditions precedent for Tranche 1 were met. This issue of Convertible Note Issue raised AUD$1,500,000 (Tranche 1 Convertible Note Issue).

A total of 11,000,000 Convertible Notes were issued to Investors (Tranche 2 Noteholders) on 20 December 2019 after the conditions precedent for Tranche 2 were met. This Tranche 2 issue of Convertible Note Issue raised AUD$5,500,000 (Tranche 2 Convertible Note Issue ).

The 11,000,000 Tranche 2 Convertible Notes have been issued without disclosure under Part 6D.2 of the Corporations Act. The issue of this Cleansing Notice enables any Shares which may be issued by the Company to Tranche 2 Noteholders or any subsequent holders of Tranche 2 Convertible Notes following a conversion of all or part of Tranche 2 Convertible Notes, to be on-sold to retail investors without further disclosure.

The Company gives notice that:

• (a) the Tranche 2 Convertible Notes were issued without disclosure to investors under Part 6D.2 of the Corporations Act; and

• (b) this Cleansing Notice is being given in accordance with section 708A(12C)(e) of the Corporations Act (as inserted by the ASIC Instrument).

Neither ASIC nor the ASX take responsibility for the contents of this Cleansing Notice. The terms of the Tranche 2 Convertible Notes are summarised under the heading, ‘Rights and liabilities attaching the Tranche 2 Convertible Notes’ below.

1

VBS Cleansing Notice under section 708A(12C)(e) of the Corporations Act 2001 (Cth)

1. The contents of this Cleansing Notice

This Cleansing Notice sets out the following:

• (a) in relation to the Tranche 2 Convertible Notes:

• (i) the effect of the issue of the Tranche 2 Convertible Notes on the Company;

• (ii) a summary of the rights and liabilities attaching to the Tranche 2 Convertible Notes; and

• (iii) a summary of the rights and liabilities attaching to the Shares which may be issued on conversion of the Tranche 2 Convertible Notes;

• (b) information relating to the Company’s status as a disclosing entity; and

• (c) any information that:

• (i) has been excluded from a continuous disclosure notice in accordance with the ASX Listing Rules; and

• (ii) is information that investors and their professional advisors would reasonably require for the purpose of making an informed assessment of:

  • (A) the assets and liabilities, financial position and performance, profits and losses, and prospects of the Company; and

  • (B) the rights and liabilities attaching to the securities being offered.

2. The effect of this issue on the Company

The principal effect of the issue of the Tranche 2 Convertible Notes on the Company will be to:

• (a) increase the cash reserves of the Company by AUD$5,500,000 (before any expenses associated with the issue of the Tranche 2 Convertible Notes);

• (b) increase the indebtedness of the Company by the aggregate face value of the Tranche 2 Convertible Notes AUD$5,500,000 plus all accrued and unpaid interest payable on that amount;

• (c) grant the Tranche 2 Noteholders security over the Company’s assets; and

• (d) increase the number of Shares on issue in the Company, if the Tranche 2 Convertible Notes are converted into Shares, with the maximum number of Shares issued on conversion of face value and interest on the Tranche 2 Convertible Notes being no more than 13,101,176 Shares.

Financial Impact

The pro-forma financial position of the Company, as at 30 June 2019, adjusted to take into account the Tranche 2 Convertible Note Issue, is attached as Annexure ‘A’.

2

VBS Cleansing Notice under section 708A(12C)(e) of the Corporations Act 2001 (Cth)

Capital Structure

The capital structure of the Company will be affected by any conversion of the Tranche 2 Convertible Notes.

Assuming all face value and interest payments under the Tranche 2 Convertible Notes were converted at the conversion price of $AUD0.50 a total of 13,101,176 Shares would be issued. Assuming all face value and interest payments under the Tranche 1 Convertible Notes were converted at the conversion price of $AUD0.50 a total of 3,573,048 Shares would be issued.

The table below sets out the Company’s share capital:

• as at the date of this Cleansing Notice and before the conversion of the Tranche 2 Convertible Notes; and

• after the conversion of the Tranche 2 Convertible Notes if they are converted into the maximum number of Shares possible.

	As at date of this	After maximum	After maximum
	Cleansing Notice but	conversion of the	conversion of the
	before conversion of	Convertible Notes	Convertible Notes
	the Convertible	Tranches 1 and 2	Tranches 1 and 2
	Notes	(Face Value only)	(Face Value and all
			Interest payments if
			issued at $0.50)
Shares	23,483,996	37,483,996	40,158,220
Outstanding	91,500	91,500	91,500
options/Deferred
ShareAwards
TOTAL FULLY	23,575,496	37,575,496	40,249,720
DILUTEDSHARES

Dilution effect of issue of Tranches 1 and 2 Convertible Notes

The table below sets out the maximum dilution effect of the issue of the Tranches 1 and 2 Convertible Notes on the Company at the date of this Cleansing Notice.

Shareholder	Number of Shares at	After maximum	Percentage
	date of Cleansing	conversion of the
	Notice	Convertible Notes
		Tranches 1 and 2
		(Face Value and all
		Interest payments)
Existing	23,483,996	23,483,996	58.5%
shareholders
Tranches 1 and 2	-	16,674,224	41.5%
ConvertibleNotes
TOTALS	23,483,996	40,158,220	100.0%

3

VBS Cleansing Notice under section 708A(12C)(e) of the Corporations Act 2001 (Cth)

3. Rights and liabilities attaching to the Tranche 2 Convertible Notes

The following is a summary of the rights, privileges and restrictions attaching to the Tranche 2 Convertible Notes. The summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of Tranche 2 Noteholders.

**No. **	Key term	Summary
1.	Totalpurchase price	AUD$5,500,000
2.	FaceValue	AUD$0.50facevalue per Tranche2ConvertibleNote
3.	Term and Maturity	3 years from the date of issue of the Tranche 2 Convertible
	Date	Notes (Maturity Date).
4.	Interest	6.0% perannumpayable ontheMaturityDate.
5.	Payment of interest	Interest is payable on the Maturity Date.
		The Company may pay interest due on a Tranche 2
		Convertible Note in cash, Shares or a combination thereof.
		The Company may only satisfy an interest payment in Shares
		with the consent of a Tranche 2 Noteholder. Similarly, a
		Tranche 2 Noteholder’s request for an interest payment to be
		paid in Shares must be agreed to by the Company.
		If interest is paid in Shares, the issue price of the Shares will
		be the greater of 90% of the average VWAP for the 10 trading
		days preceding the date of issue of the Shares, and
		AUD$0.50.
		The Company at this time has not decided whether it intends
		tomakeinterest paymentsincash.
6.	Security	The obligations of the Company under the Tranche 2
		Convertible Notes are secured under a General Security
		Agreement.
		Subject to certain common permitted security interests, the
		Tranche 1 and 2 Noteholders have an equal first ranking
		security interest over all of the Company’s assets. The
		security interest of the Tranche 1 and 2 Noteholders ranks
		equally with the General Security Agreement granted to
		Maurie Stang and announced to the ASX on 20 November
		2019 following finalisation and execution of the loan facility
		agreementwiththelender.

4

VBS Cleansing Notice under section 708A(12C)(e) of the Corporations Act 2001 (Cth)

**No. **	Key term	Summary
7.	Prepayment	Subject to the Tranche 2 Noteholders’ right to convert the
		Tranche 2 Convertible Notes at any time, the Company may,
		at any time, with the consent of the Tranche 1 and 2
		Noteholders who together hold Convertible Notes
		representing a majority of the aggregate unpaid principal
		amount of all Convertible Notes outstanding (Majority
		Holders), elect to redeem some or all of the Convertible
		Notes (Redemption Notes) by payment of the aggregate face
		value of the Redemption Notes plus all accrued but unpaid
		interest on the Redemption Notes.
8.	Conversion terms	A Tranche 2 Noteholder may at any time up to the Maturity
		Date convert some or all of its Tranche 2 Convertible Notes
		into Shares. There are no conditions that have to be met
		before the Tranche 2 Convertible Notes can be converted.
		The number of Shares issuable on conversion of the Tranche
		2 Convertible Notes is determined by the quotient obtained by
		dividing the aggregate Face Value of all Tranche 2
		Convertible Notes being converted by the Conversion Price
		(defined below).
		The maximum number of Shares into which the Convertible
		Notesmay convertis discussedindetailbelow.
9.	Conversion Price	AUD$0.50
10.	Key covenants	While the Tranche 2 Convertible Notes are outstanding, the
		Company must comply with certain covenants including procuring
		that no event of default occurs and performing any action
		necessary tomaintainthe quotationof its Shares ontheASX.
11.	Change of Control	If a change of control of the Company or delisting is likely to
		occur, the Company must, unless otherwise agreed in writing
		by the Majority Holders, redeem all Tranche 2 Convertible
		Notes by paying to each Tranche 2 Noteholder the aggregate
		Face Value of Tranche 2 Convertible Notes plus all accrued
		but unpaidinterest thereon.
12.	Events of Default	If an Event of Default (defined below) occurs at any time prior
		to the Maturity Date and is continuing, the Tranche 2
		Noteholder may require the Company to redeem all of the
		Tranche 2 Convertible Notes it holds.
		Each of the following is an Event of Default:

	if the Company fails to pay any part of the face value
	of the Tranche 2 Convertible Notes and all accrued
	but unpaid interest on the date on which it is due and
	payable and such failure is not remedied within 10
	business days after the due date for payment;
	if the Company fails to comply with any provision of
	the terms of the Tranche 2 Convertible Notes or the
	General Security Agreement and such failure is not
	remediedwithin 10 business days after its occurrence;

5

VBS Cleansing Notice under section 708A(12C)(e) of the Corporations Act 2001 (Cth)

**No. **	Key term	Summary
		and
		 an insolvency event occurs in relation to the
		Company.
13.	Reorganisation of	In a reorganisation of capital of the Company, the Tranche 2
	capital	Convertible Notes must be treated in accordance with the
		ASX ListingRules at the time ofthereorganisation.
14.	Voting	Novotingrights attachto theTranche2ConvertibleNotes.
15.	New issues	The Tranche 2 Convertible Notes do not confer any rights to
		participate in any new issues of securities by the Company.
16.	Quotation	The Tranche 2 Convertible Notes will not be listed on the ASX
		orany otherpublic exchange.
17.	Governinglaw	NewSouth Wales,Australia.

4. Rights and liabilities attaching to the Shares

The Shares to be issued to Tranche 2 Noteholders on conversion of the Tranche 2 Convertible Notes will rank equally in all respects with all of the Company’s existing Shares.

The rights attaching to the Shares are set out in the Constitution. The rights are also subject to the ASX Listing Rules in all respects while the Company maintains its listing on the ASX.

Set out below is a summary of the rights and liabilities under the Constitution, the ASX Listing Rules and the Corporations Act, which attach to the Shares of the Company. This summary does not purport to be exhaustive or to constitute a definitive statement of the rights and liabilities of holders of Shares under the Constitution.

All Shares issued on conversion of Tranche 2 Convertible Notes will, from the time of issue, rank equally with all the Company’s existing Shares.

Meeting and voting

Each shareholder is entitled to receive notice of, and attend and vote at, general meetings of the Company. At a general meeting, every shareholder present in person or by proxy, representative or attorney has one vote on a show of hands and, on a poll, one vote for each Share held.

Notices

Each shareholder is entitled to receive all notices, accounts and other documents required to be given to shareholders under the Constitution of the Company, the Corporations Act and the ASX Listing Rules.

Dividends

The Directors of the Company are authorised to make all decisions, including as to method and time for payment, regarding dividends in respect of Shares which are permitted under the Corporations Act.

6

VBS Cleansing Notice under section 708A(12C)(e) of the Corporations Act 2001 (Cth)

Winding up

Subject to the terms of issue of Shares, on a winding up of the Company, a liquidator may with the sanction of a special resolution of the Company divide the surplus assets of the Company remaining after payment of its debts among shareholders in proportion to the number of Shares held by them (with partly paid Shares counted as fractions of fully paid Shares).

Transfer

Subject to the Constitution of the Company, the Corporations Act, the ASX Listing Rules and the ASX Settlement Operating Rules, the Shares are freely transferable.

Creation and issue of further Shares

The allotment and issue of any additional Shares will be under the control of the Directors of the Company, subject to any restrictions on the allotment of Shares imposed by the Constitution, the Corporations Act and the ASX Listing Rules.

Variation of rights

The rights, privileges and restrictions attaching to ordinary Shares can be altered with the approval of a resolution passed at a separate general meeting of the holders of ordinary Shares, by a 75% majority of those holders who, being entitled to do so, vote at the general meeting or, with the written consent of the holders of at least 75% of the ordinary Shares on issue.

Shares to be issued on conversion of the tranche 2 Convertible Notes will be fully paid ordinary Shares. There is no liability on a holder of Shares to contribute any further amount to the Company. Copies of the Company’s Constitution are available for inspection at the registered office of the Company.

5. Compliance with disclosure obligations

The Company is a ‘disclosing entity’ under the Corporations Act and, as such, is subject to regular reporting and disclosure obligations under both the Corporations Act and the ASX Listing Rules.

These obligations require the Company to notify the ASX of information about specific events and matters as they arise. In particular, the Company is obliged to continuously disclose to the market promptly and without delay any information which a reasonable person would expect to have a material effect on the price or value of the Company’s securities.

The Company is required to prepare and lodge with ASIC yearly financial statements, accompanied by a directors’. Copies of documents lodged with ASIC in relation to the Company may be obtained from, or inspected at, an ASIC office.

The Company will provide a copy of each of the following documents, free of charge, to any person on request:

• (a) the Annual Report most recently lodged by the Company with ASIC, being the Annual Report of the Company for the year ended 30 June 2019 lodged with ASX on 30 September 2019; and

• (b) any continuous disclosure documents given by the Company to ASX after the lodgement of the Annual Report referred to in (a) and before the lodgement of this Cleansing Notice with ASX.

A list of the continuous disclosure documents given by the Company to ASX after the lodgement of the Annual Report referred to in (a) and before the lodgement of this Cleansing Notice with ASX is set out in the table below. All of these documents will be provided, free of charge, to any person on request.

7

VBS Cleansing Notice under section 708A(12C)(e) of the Corporations Act 2001 (Cth)

Date	ASX Announcement
30 Sep2019	Annual Report
30 Sep2019	Corporate Governance Statement &Appendix 4G
3 Oct2019	Appendix3B – Issue ofShares and Options
8 Oct2019	Publicationofpreclinicaldatain modelofcardiacfibrosis
21Oct2019	Notice of AnnualGeneral Meeting/ProxyForm
28 Oct2019	Change of Director’sInterest
31Oct2019	Appendix 4C–QuarterlyReport
18Nov 2019	Response toASX Appendix3YQuery
20Nov 2019	Director LoanSecurity
22 Nov 2019	Chairman’sAddress toAGM
22 Nov 2019	CEOPresentationatAGM
22 Nov 2019	Results of AnnualGeneral Meeting

No excluded information

As at the date of this Cleansing Notice, the Company advises that it has complied with its disclosure obligations under the ASX Listing Rules and the Corporations Act and, in particular, there is no information which the Company has excluded from any of its continuous disclosure notices given in accordance with the ASX Listing Rules and the Corporations Act as at the date of this Cleansing Notice which it would be reasonable for investors and their professional advisors to require for the purpose of making an informed assessment of:

• (a) the assets and liabilities, financial position and performance, profits and losses and prospects of the Company; and

• (b) the rights and liabilities attaching to the Tranche 2 Convertible Notes and the Shares that may be issued on a conversion under the Tranche 2 Convertible Notes.

For more information, please contact:

Vectus Biosystems Limited

Robert J Waring Company Secretary

8

VBS Cleansing Notice under section 708A(12C)(e) of the Corporations Act 2001 (Cth)

About Vectus Biosystems Limited

Vectus Biosystems Limited ( Vectus or the Company ) is developing a treatment for fibrosis and high blood pressure, which includes the treatment for three of the largest diseases in the fibrotic market, namely heart, kidney and liver disease. Vectus successfully completed its initial Public Offering ( IPO ) on the Australian Securities Exchange ( ASX: VBS ) and commenced trading on ASX on 23 February 2016, after raising A$5.1 million. Funds from the IPO were used to develop the Company’s lead compound VB0004, which aims to treat the hardening of functional tissue and high blood pressure. Vectus has conducted a range of successful pre-clinical trials, which have shown that VB0004 slows down the advances of fibrosis, potentially repairs damaged cell tissue and reduces high blood pressure. VB0004 is now progressing through a number of important milestones, including pharmaceutical scale-up and additional toxicity studies. Successful results are providing the Company with a clear path to Human Phase I and IIa Clinical Trials. Vectus’ strategy is to develop and perform early validation of its drug candidates to the point where they may become commercially attractive to potential pharmaceutical partners.

The Company has also developed technology aimed at improving the speed and accuracy of measuring the amount of DNA and RNA in samples tested in laboratories. The technology, called Accugen, is owned by Vectus’ wholly-owned subsidiary Accugen Pty Limited. The technology offers a time, cost and accuracy benefit compared to currently available systems. The Company’s current stage of investment in Accugen is a commercialisation programme, where a combination of direct sales, distribution partnerships and licensing opportunities are being evaluated.

9

Annexure 'A'

VECTUS BIOSYSTEMS LIMITED AND CONTROLLED ENTITIES PRO-FORMA CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2019

CURRENT ASSETS Cash and cash equivalents Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Property, plant and equipment TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Other current liabilities Provisions Borrowings TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Provisions Borrowings Other non-current liabilities TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET LIABILITIES EQUITY Issued Capital Convertible Notes Reserves Retained Earnings/Accumulated Losses TOTAL DEFICIT	2019 Note $ 43,172 1 115,807 158,979 35,129 35,129 194,108 1,136,727 4 527,053 298,146 - 1,961,926 - 1,957,500 2 4,503 1,962,003 3,923,929 (3,729,821) 17,600,420 - 3 516,610 (21,846,851) 4 (3,729,821)	Movements Proforma $ 6,000,000 6,043,172 - 115,807
		6,000,000 6,158,979
		- 35,129
		- 35,129
		6,000,000 6,194,108
		350,000 1,486,727 - 527,053 - 298,146 - -
		350,000 2,311,926
		- - (1,000,000) 957,500 - 4,503
		(1,000,000) 962,003
		(650,000) 3,273,929
		6,650,000 2,920,179
		- 17,600,420 7,000,000 7,000,000 - 516,610 (350,000) (22,196,851)
		6,650,000 2,920,179

Notes

1. Cash subscription for 14,000,000 Convertible Notes at $0.50 per Note amounting to $7,000,000, being $1,500,000 Tranche 1 issue and $5,500,000 Tranche 2 issue.

2. Subscription for 2,000,000 Convertible Notes by M Stang at $0.50 per Note amounting to $1,000,000 used to reduce borrowings, as part of the Tranche 2 issue.

3. A total of 14,000,000 Convertible Notes issued in Tranches 1 and 2 at $0.50 per Note amounting to $7,000,000.

4. Costs of Issue on Tranche 1 and Tranch 2 Convertible Notes amounting to $350,000 .