bod australia replacement limited prospectus for personal ... · this is a replacement prospectus...

1

Bod Australia Limited

Replacement Prospectus

For the offer of 20,000,000 ordinary Shares at an offer price of 20 cents each to raise $4,000,000.

Oversubscriptions of up to a further 10,000,000 ordinary Shares at an offer price of 20 cents each to raise up to a further $2,000,000 may be accepted.

Important Information

This document provides important information to assist prospective investors in deciding whether or not to invest in the Company.

It should be read in its entirety. If you do not understand it, you should consult your professional advisers.

The shares offered under this prospectus are of a speculative nature.

This is a Replacement Prospectus dated 27 September 2016. It replaces a Prospectus dated 12 September 2016 relating to shares of Bod Australia Limited.

ProsPectus


ACN 601 225 441

For

per

sona

l use

onl

y

For

per

sona

l use

onl

y



01

Table of ConTenTs

Important Notices 02

Corporate Directory 04

Key Offer Information 05

Letter from The Chairman 06

Key Issues Summary 07-15

Section 1: Investment Overview 16-32

Section 2: Details of The Offer 33-36

Section 3: Overview of The Company, The Business and The Industry 37-50

Section 4: Risks 51-56

Section 5: Financial Information 57-67

Section 6: Independent Limited Assurance Report 68-72

Section 7: Material Contracts 73-85

Section 8: Additional Information 86-95

Section 9: Directors’ Consents 98-99

Section 10: Definitions 100-101

Application Form and Instructions to Applicants 102-104

coNteNts

For

per

sona

l use

onl

y



02

This is a replacement prospectus for Bod Australia Limited (Company or Bod Australia) dated 27 September 2016 (Prospectus) and a copy of this Prospectus was lodged with the Australian Securities and Investments Commission (ASIC) on that date. It replaces a prospectus dated 12 September 2016 (Original Prospectus) and lodged with ASIC on that date. Neither ASIC nor ASX Ltd (ASX) takes any responsibility for the contents of this Prospectus.

The Original Prospectus was subject to an exposure period of 7 days from the date of lodgment of the Original Prospectus with ASIC. This Prospectus is not subject to an exposure period due to ASIC Instrument 2016/74. No Shares will be issued on the basis of this Prospectus later than 13 months after the date of this Prospectus. The Directors of and advisers to the Company do not guarantee the success of the Company, repayment of capital, payment of dividends or the price at which Shares will trade on ASX.

The principal differences between the Original Prospectus and this Prospectus may be summarised as follows. This Prospectus now includes:

• enhanced disclosure of the Company’s income generation, new product opportunities and development plans in the Key Issues Summary, Section 1.6, Section 3.4 and Section 3.8 of this Prospectus, and further details of its supply and customer arrangements in Section 3.5;

• enhanced disclosure of the Company’s limited trading history, having not yet made a profit and associated key risks in the Chairman’s Letter, Key Issues Summary, Section 1.7 and Section 4.2, together with Key Risks associated with the Company’s reliance on exclusive brand distribution and on key customer contracts in the Chairman’s Letter, Key Issues Summary, and Section 1.7, Section 3.4 and Section 4.2;

• additional financial information in Section 1.4;

• additional source referencing for key industry information in Sections 3.5 and 3.8; and

• streamlining of information in the Key Issues Summary, Section 1 Investment Overview and subsequent sections of the Prospectus.

electronic Prospectus

This Prospectus will be issued in paper form and as an electronic Prospectus which may be accessed on the internet at www.bodaustralia.com. The Offer of Shares pursuant to the paper form or electronic Prospectus is only available to persons receiving this Prospectus in Australia. The Corporations Act prohibits any person passing onto another person the Application Form unless it is attached to, or accompanied by, the complete and unaltered version of this Prospectus. During the Offer Period, any person may obtain a hard copy of this Prospectus by contacting the Company by email at [email protected].

Financial Forecasts

The Directors have considered the matters set out in ASIC Regulatory Guide 170 and believe that they do not have a reasonable basis to forecast future earnings on the basis that the operations of the Company are inherently uncertain. Accordingly, any forecast or projection information would contain such a broad range of potential outcomes and possibilities that it is not possible to prepare a reliable best estimate forecast or projection.

Foreign Jurisdictions

This Prospectus does not constitute an offer or invitation in any place in which, or to persons to whom, it would not be lawful to make an offer. Distribution of this Prospectus in jurisdictions outside Australia may be restricted by law, and persons who come into possession of this Prospectus should seek advice and observe any such restrictions. Failure to comply with such restrictions may constitute a violation of applicable securities laws.

IMPortANt NotIces

Important Notices

For

per

sona

l use

onl

y



03

risk Factors

Potential investors should be aware that subscribing for Shares in the Company involves a number of risks. The key risk factors of which investors should be aware are set out in Section 1.7 and Section 4 of this Prospectus. These risks together with other general risks applicable to all investments in listed securities not specifically referred to, may affect the value of the Shares in the future. Accordingly, an investment in the Company should be considered highly speculative. Investors should consider consulting their professional advisers before deciding whether to apply for Shares pursuant to this Prospectus.

Forward Looking statements

This Prospectus may contain forward looking statements or information. Forward-looking statements can be identified by the use of words such as ‘may’, ‘should’, ‘will’, ‘expect’, ‘anticipate’, ‘believe’, ‘estimate’, ‘intend’, ‘scheduled’ or ‘continue’ or similar expressions. Such statements and information are subject to risks and uncertainties and a number of assumptions, which may cause the actual results or events to differ materially from the expectations described in such forward looking statements or information. Whilst the Company considers the expectations reflected in any perceived forward looking statements or information in this Prospectus are reasonable, no assurance can be given that such expectations will prove to be correct. The risk factors outlined in Section 4 of this Prospectus, as well as other matters as not yet known to the Company or not currently considered material by the Company, may cause actual events to be materially different from those expressed, implied or projected in any perceived forward looking statements or information. Any forward looking statements or information contained in this Prospectus is qualified by this cautionary statement.

Website Address

The Prospectus can be downloaded from www.bodaustralia.com

Photographs and Diagrams

Items and undertakings depicted in photographs and diagrams in this Prospectus are not assets of the Company, unless otherwise stated. Diagrams appearing in this Prospectus are illustrative only and may not be drawn to scale.

Definitions

Throughout this Prospectus abbreviations and defined terms are used. Abbreviations and legal and technical terms are contained in the Definitions in Section 10 of this Prospectus. Defined terms are generally identified by the uppercase first letter.

Disclaimer

No person is authorised to give any information or to make any representation in connection with the Offer described in this Prospectus that is not contained in this Prospectus. Any information not so contained may not be relied upon as having been authorised by the Company or any other person in connection with the Offer. You should rely only on information in this Prospectus.

Important Notices

For

per

sona

l use

onl

y



04

corPorAte DIrectorY

Directors

Joanne Patterson - Chief Executive Officer Simon O’Loughlin - Non-Executive Chairman Simon Taylor - Non-Executive Director

company secretary

Andrew Bursill

registered office

C/- Edney Ryan Chartered Accountants Level 2, 357 Military Road, Mosman NSW 2088

Principal office

Level 1, 377 New South Head Road Double Bay NSW 2028

share registrar

Link Market Services Limited Level 12, 680 George Street Sydney NSW 2000

Bod Australia Limited offer Information Line

1300 551 242

solicitors to the company

O’Loughlins Lawyers

Level 2, 99 Frome Street Adelaide SA 5000

Investigating Accountant

and Auditor

HLB Mann Judd Audit (SA) Pty Ltd

169 Fullarton Road Dulwich SA 5065

Lead Manager

Taylor Collison Limited

Level 16, 211 Victoria Square Adelaide SA 5000

co-Advisor

Indian Ocean Corporate Pty Ltd

Authorised Rep. AFSL 336409 Level 5, 56 Pitt Street Sydney NSW 2000

For

per

sona

l use

onl

y



05

KeY oFFer INForMAtIoN

Key DaTes

Replacement Prospectus Date 27 September 2016

Opening Date For Applications (9.00am) 27 September 2016

Closing Date For Applications (5.00pm) 7 October 2016

Issue and allotment of Offer Securities 14 October 2016

Expected despatch of holding statements 19 October 2016

Expected date of quotation of Shares on the ASX 21 October 2016

Note: This timetable is indicative only. Unless otherwise indicated, all times are in AEST. The Company and the Lead Manager reserve the right to vary the dates and times of the Offer, including to close the Offer early or to accept late Applications, either generally or in particular cases without notification. Investors are encouraged to submit their Applications as soon as possible.

Key offer sTaTIsTICs

Company Name Bod Australia Limited (ACN: 601 225 441)

Proposed ASX Code BDA

Securities Offered Fully paid ordinary shares

Issue Price per Share $0.20 per Share

Minimum number of Shares available under the Offer 20,000,000 Shares

Gross proceeds from the Offer based on the Minimum Subscription being raised (and before exercise of any Options)

$4,000,000

Total number of Shares on issue at Completion of the Offer based on Minimum Subscription

36,032,000 Shares

Total number of Offer Securities available under the Offer based on the Maximum Subscription being raised

46,032,000 Shares

Gross proceeds from the Offer based on the Maximum Subscription being raised

$6,000,000

Total number of Shares and Options on issue at Completion of the Offer based on the Maximum Subscription

46,032,000 Shares and 7,351,600 Options

How to Invest

Applications for Offer Securities can only be made by completing and lodging the Application Form included in or accompanying this Prospectus.

Instructions on how to apply for Offer Securities are set out in Section 2.5 of this Prospectus.

For

per

sona

l use

onl

y



06

Letter FroM tHe cHAIrMAN

On behalf of the Directors of Bod Australia Limited (Bod Australia or the Company), it is my pleasure to introduce this Prospectus to you and invite you to become a shareholder of the Company.

This Prospectus has been issued by Bod Australia for the purpose of the offer of 20,000,000 new Shares at $0.20 per Share to raise $4,000,000 (up to a further 10,000,000 Shares at $0.20 per Share may be accepted as oversubscriptions to raise up to a further $2,000,000) (Offer).

Bod Australia was incorporated on 13 August 2014 as Bespoke Beauty Australia and New Zealand Pty Ltd, before changing its name to Bod Australia Pty Ltd on 11 February 2016 and to Bod Australia Limited on 5 August 2016.

Bod Australia operates a skin care and health products business focused on all natural, evidenced based products.

The Company’s business will be well capitalised following the minimum $4 million equity raising comprising this Offer. Existing and new funds will be directed to accelerate growth by funding investment in existing exclusive brand distributions, to acquire new brands and to develop proprietary brands within the beauty and personal care, nutritional supplement and natural medicines industries.

The Board believes some of the highlights of an investment in the Company include:

• focus on delivering natural, evidenced-based solutions for the body inside and out;

• distribution of brands in the skin care segment and intention to develop products across baby skin care and natural remedies for the enhancement of memory and recall;

• an experienced sales team which includes ex-Bellamy’s sales representatives; and

• exclusive rights to distribute Dr Roebuck’s in Australia, New Zealand and the export market to China, and BIOEFFECT in Australia.

As with any investment, there are risks associated with investing in the Company. The key risks are identified in Section 1.7 and Section 4 of this Prospectus.

The key risks include:

• Bod Australia participates in the highly competitive skin care and health products sector, and there is a risk that its materially larger, globally focused competitors with greater access to capital and resources may strongly compete against the Company, which may adversely affect Bod Australia’s financial performance and future prospects.

• The Company has a relatively limited operating history and has not made a profit, and there is a risk that the implementation of the Company’s business plans will not result in profitability. The early phase of Bod Australia’s corporate development may lead to uncertainty surrounding its future financial performance and prospects, and given the nature of the Company’s business it is likely to experience continuing losses for the time being.

• The Company will rely on various key customer and supplier relationships in its business, the loss or impairment of which (for example termination of key customer contracts) could have a material adverse effect on the Company’s financial condition and prospects.

• As with any cosmetic related products, there is a risk that a consumer may suffer harm or an adverse reaction to a component of a product distributed by Bod Australia. If this occurs, it could have a material adverse effect on the financial performance and reputation of the business.

The Bod Australia Board has the necessary background to ensure there is focus on sound development of the Company’s business targets whilst seeking to build shareholder wealth in the process. Further details on each of the Company’s directors are contained in Section 1.15 of this Prospectus.

This Prospectus contains detailed information about Bod Australia and its business, and includes an Independent Limited Assurance Report. Please read this Prospectus carefully before you make a decision to invest and, where necessary, consult with your professional advisers.

Yours sincerely

Simon O’Loughlin

27 September 2016

Dear Investor,

For

per

sona

l use

onl

y

7



Key Issues Summary

For

per

sona

l use

onl

y



08

INtroDuctIoN AND oVerVIeW

The information set out in this section is intended to be a summary only and should be read in conjunction with the more detailed information elsewhere in this Prospectus. In deciding whether to apply for Shares under the Offer, you should read this Prospectus carefully and in its entirety and consult your professional advisers.

Introduction and overview of the company’s business

Question answerfor more information

What is the business of the Company?

Upon completion of the Offer, the Company will continue to operate in the skin care and health product industry. Bod Australia is currently a marketer and distributor of brands in the beauty and personal care industry. Bod Australia operates under exclusive distribution agreements for the following brands:

• Dr Roebuck’s

• BIOEFFECT

The Company intends to develop its own branded products across baby skin care, super foods, antioxidants and immune support segments.

Section 3.2

How does Bod Australia generate its income and what are the Company’s key costs?

Bod Australia distributes skin care and health products throughout Australia. Historically, the Company has been an importer and distributor of beauty and personal care products for the Australian market place.

At present all of Bod Australia’s income is generated from sales to Bod Australia’s wholesale customers, as outlined below.

Bod Australia’s key operational costs are wholesale acquisitions of product under its distribution agreements and staff costs.

The Company has a limited trading history and has not yet made a profit.

Section 3

Section 5

Who are Bod Australia’s customers?

Bod Australia sells its products to its wholesale customers in Australia direct to store via Department Stores and Pharmacies.

The majority of Bod Australia’s are currently conducted through the Australian Department Store and Pharmacy channels, and it is anticipated that future sales will extend to international markets.

Section 3.5

Where are Bod Australia’s operations located?

Bod Australia’s principal operations and headquarters are located at Level 1, 377 New South Head Road, Double Bay, New South Wales.

Section 1.3

Key Issues Summary

For

per

sona

l use

onl

y



09

Question answerfor more information

Who are Bod Australia’s competitors?

Bod Australia’s brands compete in the beauty and personal care market against a number of industry participants particularly in the ‘natural’ segment of the beauty and personal care market. Direct competitors in the distribution of the Dr Roebuck’s brand for example include Sukin, A’kin and Trilogy.

Section 3.8

What is Bod Australia’s strategy?

Bod Australia markets and distributes brands under exclusive agreements through multiple distribution channels whilst developing its own brand offering within the beauty and personal care industry, the nutritional supplements and the natural medicines industry.

Bod Australia’s business strategy centers on the following key elements:

• leveraging existing relationships within the domestic distributions channels with assistance of ex-Bellamy’s sales representatives;

• increasing distribution of exclusive brands under management, through multiple channels;

• expanding distribution of exclusive brands under management to export markets with a focus on Asia;

• developing own brand solutions for the beauty and personal care industry, the nutritional supplements and the natural medicines industry, utilising existing distribution channels;

• ensuring the majority of brands deliver on being evidence based, natural and Australian made; and

• working with suitable brands and businesses which present the potential for acquisition.

Section 3.4

Key Issues Summary

For

per

sona

l use

onl

y


10


Directors and key management

Topic summaryfor more information

Who are the directors of Bod Australia and what is their experience?

The Board is comprised of three directors, including two independent directors. The independent directors are highly experienced ASX listed directors, holding many years of ASX listed board experience.

The Directors are as follows:

1. Joanne Patterson – Chief Executive Officer and Director

2. Simon O’Loughlin– Independent Chairman

3. Simon Taylor – Independent Director

See Section 1.15 for more information on the Company’s Directors and their experience.

The Company has appointed Andrew Bursill as the Company Secretary.

Section 1.15

Who are the leadership team of the Company and what is their expertise?

Joanne Patterson, Chief executive officer

Jo is a strategic marketer with over 20 years’ exposure both here in Australia and overseas. Jo has held multiple CEO and Managing Director roles over her career, in the technology, advertising and beauty sectors, developing a number of businesses from start-up as well as driving established organisations towards growth and merger trajectories.

John Gilder, Head of sales

John has over 30 years’ experience in fast-moving consumer goods sales, and has a wide experience in all aspects of retail trade across Australia, most recently with Bellamy’s Organic.

Craig Weller, Chief operating officer

Craig has been in the healthcare industry for over 25 years. He trained as a Dietitian and has wide experience in the registration and launching of natural medicines, pharmaceuticals and nutritional products in Australia and Asia where he has worked across a broad range of products and territories.

See Section 1.15 for more information on the Company’s leadership team.

Section 1.15

DIrectors AND KeY MANAGeMeNt

Key Issues Summary

For

per

sona

l use

onl

y

11



overview of the offer

Topic summaryfor more

information

Who is the issuer of this Prospectus?

Bod Australia Limited ACN 601 225 441. Section 3.1

What is the Offer?

An offer of new Shares at an Offer Price of $0.20 per Share to raise a minimum of $4 million, with the ability to receive oversubscriptions of up to a further $2 million to raise a maximum of $6 million.

For details relating to the rights and liabilities of the Shares, refer to Section 8.4.

Section 2.2

What happens if the Minimum Subscription is not received?

The Minimum Subscription for the Offer to proceed is $4 million. If the Minimum Subscription is not obtained within four months after the date of this Prospectus (or any longer period permitted by law), the Company will repay all Application Monies in full without interest as soon as practicable or issue a supplementary or replacement prospectus and allow Applicants one month to withdraw their Applications and be repaid their Application Monies in full without interest.

Section 2.2

What is the Company’s Share Capital Structure on Completion of the Offer?

The Company’s indicative share capital structure at the various levels of subscriptions will be:

Minimum subscription Maximum subscription

$4 million $6 million

Existing shares on issue 10,000,000 10,000,000

Conversion of convertible notes 6,032,000 6,032,000

Shares issued under this Prospectus 20,000,000 30,000,000

Total shares on issue at the Completion of the offer 36,032,000 46,032,000

Section 1.11

What is the proposed use of proceeds received in connection of with the Offer?

The Company’s primary use of funds will be to pay for marketing and distribution costs in relation to the Company’s operations, to fund any potential acquisition of brands complementary to the Company’s existing portfolio and for the development of proprietary brands within the beauty and personal care, nutritional supplement and natural medicines industries.

Section 1.13

How is the Offer structured?

The Offer presented in this Prospectus is open to investors who have a registered address in Australia.

Section 2.12

Is the Offer underwritten?

The Offer is not underwritten. Section 2.14

Who is the Lead Manager?

Taylor Collison Limited has been appointed as the Lead Manager. Section 2.7

oVerVIeW oF tHe oFFer

Key Issues Summary

For

per

sona

l use

onl

y


12



information

What fees and costs are payable to the Lead Manager?

The Company will pay the Lead Manager a fee equal to 2% of the total proceeds raised under the Offer for its role in managing the Offer and a placement fee of 4% of the total funds raised from institutional and retail investors.

In addition, the Company will pay the Lead Manager a success fee of $100,000 and will issue it that number of Options equating to 5% of the issued capital of the Company (calculated post completion of the Issue) on the terms set out in Section 8.5(e) of this Prospectus.

Section 7.7

When will the Shares be quoted?

The Company will apply to ASX within seven days of the date of the Prospectus, for its admission to the Official List and quotation of the Shares on the ASX. The Shares are expected to be quoted under the code BDA. Quotation of the Offer Securities is expected to occur on 21 October 2016.

Completion of the Issue is conditional on ASX approving the Company’s listing application and the Shares being admitted to quotation by ASX. If the Shares are not admitted to quotation within three months after the date of this Prospectus (or any longer period permitted by law), the Company will repay all Application Monies in full without interest as soon as practicable or issue a supplementary or replacement prospectus and allow Applicants one month to withdraw their Applications and be repaid their Application Monies in full without interest.

Section 2.10

Are there any restrictions on the disposal of Shares?

Upon Completion of the Offer and subject to the ASX Listing Rules, the Shares issued under the Prospectus will not be subject to any restrictions on disposal.

It is expected that the Shares held by the Company’s existing Shareholders and some of the Shares to be issued to the Convertible Noteholders and the Options to be issued to the Directors, Craig Weller, Taylor Collison and NWR Communications will be subject to escrow.

Section 1.21

What is the allocation policy?

The allocation of Shares will be determined by the Lead Manager and the Company.

Section 2.6 Section 2.7

Is there any brokerage, commission or stamp duty payable by Applicants?

No brokerage, commission or stamp duty is payable by Applicants on acquisition of Shares under the Offer.

Section 2.9

What are the tax implications of investing in the Offer Securities?

The taxation consequences of an investment in the Shares will depend on your particular circumstances. It is your responsibility to make your own enquiries concerning the taxation consequences of an investment in the Company.

Section 1.19

Key Issues Summary

For

per

sona

l use

onl

y

13




information

How can I apply? Applications for Shares can only be made by completing the Application Form attached to this Prospectus and must be for a minimum of 10,000 Shares ($2,000) and thereafter in multiples of 1,000 Shares ($200).

To the extent permitted by law, an Application by an Applicant under the Offer is irrevocable.

See Section 2.5 for further information on how to apply.

Section 2.5

When will I receive confirmation that my Application is successful?

The Company expects that holding statements confirming Applicants’ allocations under the Offer will be sent to successful Applicants by regular post on or around 19 October 2016.

Section 2.6

When are the Shares expected to commence trading?

It is expected that shares will commence trading on the ASX on a normal settlement basis on or about 21 October 2016.

After quotation, Shareholders and other investors may buy or sell Shares at the prevailing market price. There may or may not be a liquid market for Shares, and the Shares may trade above or below the Offer Price.

It is the responsibility of each Applicant to confirm their holding before trading Shares. Applicants who sell Shares before they receive an initial holding statement do so at their own risk.


Can the Offer be withdrawn?

Yes. The Company reserves the right not to proceed with the Offer at any time before the issue of Shares to successful Applicants.

If the Offer does not proceed, Application Monies will be refunded.

No interest will be paid on any Application Monies refunded as a result of the withdrawal of the Offer.

Section 2.6

Is there a cooling off period?

No. Section 2.5

Where can I find more information about this Prospectus or the Offer?

If you would like more information or have any questions relating to the Offer, please call the Bod Australia Limited Offer Information Line on 1300 551 242 or the Company Secretary, Mr Andrew Bursill, on (02) 9299 9690 (within Australia) or +61 3 9299 9690 (outside Australia).

An electronic copy of the Prospectus can be downloaded at www.bodaustralia.com.

If you are uncertain as to whether an investment in the Company is suitable for you, please contact your stockbroker, financial advisor, accountant, lawyer or other professional advisor.

Section 2.15

Key Issues Summary

For

per

sona

l use

onl

y


14


Key strengths and Key risks


information

What are the key strengths of the Company?

• Exclusive brand distribution

• New product development

• Experienced sales team

• Brand acquisition opportunities

• Experienced management team

• Brand development

• Natural, evidence-based solutions

Section 1.6

What are the key risks?:

The key risks are:

• Operating Experience and Reliance on Key Personnel Risk

• Competition Risk

• Early Stage Risk

• Reliance on Exclusive Brand Distribution

• Business Strategy Execution

• Reliance on Key Customer and Supplier Risk

• Liability Risk

Section 1.7

KeY streNGtHs AND KeY rIsKs

Key Issues Summary

For

per

sona

l use

onl

y

15



Key Issues Summary

significant interests of key people


information

Who are the key shareholders of the Company and what is their interest in the Company upon completion of the Offer?

The key Shareholders in Bod Australia Limited are:

• Health and Beauty Enterprise Pty Ltd (an entity beneficially owned by Ms Joanne Patterson); and

• Noir Ted Pty Ltd (a related entity of Mr Craig Weller).

The key Shareholders prior to the completion of the Offer and upon completion at the various levels of subscription is noted below:

entity shares Held% ownership

Pre-listing

% ownership at Minimum subscription

% ownership at Maximum subscription

Health and Beauty Enterprises Pty Ltd

5,000,000 50% 13.88% 10.86%

Noir Ted Pty Ltd 5,000,000 50% 13.88% 10.86%

Total 10,000,000 100% 27.76% 21.72%

Section 1.12

What significant benefits are payable to Directors and the other persons connected with the Company or the Offer and what significant interests do they hold?

Company Directors Messrs Simon O’Loughlin and Simon Taylor will be paid a director’s fee of $40,000 and $35,000 per annum respectively (exclusive of statutory superannuation entitlements). Each of Simon O’Loughlin and Simon Taylor will be paid a success fee of $25,000 upon listing of the Company on the ASX and will be issued 750,000 Options on the terms detailed in Section 8.5(a).

The Company’s Chief Executive Officer Ms Joanne Patterson has entered into an Executive Service Agreement with the Company. She is to be paid an annual salary (exclusive of statutory superannuation) of $250,000. Ms Patterson will also be issue 1,500,000 Options on the terms detailed in Section 8.5(b) and may become entitled to a cash bonus of $50,000 for the 2016/2017 financial year (subject to meeting certain KPIs determined by the Board).

The interests that the Directors will hold in the Company upon completion of the Offer is noted below:

Interest in shares (direct and indirect)

% ownership on Completion

(Minimum subscription)

% ownership on Completion

(Maximum subscription)

options beneficially

held

Simon O’Loughlin 510,0001 1.42% 1.11% 750,000

Simon Taylor 770,0002 2.14% 1.67% 750,000

Joanne Patterson 5,000,000 13.88% 10.86% 1,500,000

Total 6,280,000 17.44% 13.64% 3,000,000

Notes1. 510,000 Shares, made up of a maximum of 250,000 Shares to be subscribed for under the

Offer and 260,000 Shares to be issued on conversion of Convertible Notes held by a related entity of Simon O’Loughlin.

2. 770,000 Shares, made up of a maximum of 250,000 Shares to be subscribed for under the Offer and 520,000 Shares to be issued on conversion of Convertible Notes held by a related entity of Simon Taylor.


sIGNIFIcANt INterests oF KeY PeoPLe

For

per

sona

l use

onl

y


16


Section 1: Investment Overview

For

per

sona

l use

onl

y

17



tHe coMPANY

1.1 Important

The Shares offered by this Prospectus are of a speculative nature. Prospective investors should carefully consider the risk factors outlined in Section 4 of this Prospectus.

The information in this Section is a key points summary only and is not intended to provide comprehensive details of the Offer. Prospective investors should read the full text of this Prospectus and, if in any doubt, consult with their professional advisers before deciding whether to apply for Shares. The Shares offered under this Prospectus carry no guarantee in respect of return of capital, return on investment, payment of dividends or the future value of the Shares.

1.2 the company

The Company was incorporated on 13 August 2014 as Bespoke Beauty Australia and New Zealand Pty Ltd. On 11 February 2016 the Company changed its name to Bod Australia Pty Ltd, and on 5 August 2016 it changed its name to Bod Australia Limited.

1.3 the company’s Business

Bod Australia is a marketer and distributor of brands in the beauty and personal care industry and distributes skin care and health products throughout Australia. Historically, the Company has been an importer and distributor of beauty and personal care products for the Australian market place.

The Company sells its products to its wholesale customers in Australia direct to store via Department Stores, Professional Spa Markets and Pharmacies.

Bod Australia operates under exclusive distribution agreement for the following brands:

• Dr Roebuck’s

• BIOEFFECT

Bod Australia’s principal operations and headquarters are located at Level 1, 377 New South Head Road, Double Bay, New South Wales.

1.4 summary Financial Information

HIsTorICal Pro forMa ProfIT anD loss sTaTeMenT

audited audited

Year ended 30 June 2016 Year ended 30 June 2015

Sales Revenue 138,020 105,971

Pro forma net loss after tax (428,535) (235,652)

Pro forMa sTaTeMenT of fInanCIal PosITIon

audited statement of financial position

as at 30 June 2016

Pro forma statement of financial Position

Minimum Maximum

Cash assets 383,264 3,720,774 5,590,774

Total assets 416,491 3,754,001 5,624,001

Total liabilities (791,207) (100,522) (100,522)

Net assets (374,716) 3,653,479 5,523,479


For

per

sona

l use

onl

y


18


1.5 the company’s objectives

Upon completion of the Offer, the Company will continue to operate in the skin care and health product industry, whilst its business strategy centres on the following key elements:







Bod Australia anticipates the majority of its sales, in the near term, will be conducted through the Australian Department Store and Pharmacy channels.

Further details are set out in Section 3 of this Prospectus.

1.6 Investment Highlights

The main highlights of the Company’s business are as follows:

• exclusive brand distribution

Bod Australia markets and distributes the Dr Roebuck’s and BIOEFFECT brands under exclusive agreements, and has a focus on delivering natural, evidenced-based solutions for the body inside and out. The Dr Roebuck’s distribution agreement covers Australia, New Zealand and the export market to China (with the first right of refusal on any countries in Asia, subject to Dr Roebucks’ due diligence and board approval) and the BIOEFFECT agreement covers Australia. These agreements provide Bod Australia with a portfolio of products to distribute both in Australia and to export markets, specifically New Zealand and China and potentially other parts of Asia.

• new product development

Bod Australia’s management believes that it has the knowledge, expertise, experience and resources at its disposal to design, formulate and distribute proprietary brands within the beauty and personal care, nutritional supplement and natural medicines industries, with a particular focus on baby skin care and natural remedies for the enhancement of memory and recall.

Bod Australia’s major objective is to develop a portfolio of proprietary health products over the near term. Research centering on opportunities for new products is largely conducted in-house. It is the combination of Bod Australia’s management expertise and insights from market research papers which feeds the Company’s new product pipeline.

Bod’s management is focused on commercialising two key products during 2017. These products are the Natural Remedy for the Enhancement of Memory and Concentration and baby skincare range. Bod expects the natural remedy for the enhancement of memory and concentration product to be released to the market for sale in the first half of 2017. Bod’s intention is to commercialise the baby skincare range during 2017.

Further details are set out in Section 3.8 of this Prospectus.


tHe coMPANY

For

per

sona

l use

onl

y

19



• experienced sales Team

Bod Australia has accumulated an experienced sales team which includes ex-Bellamy’s sales representatives who will leverage their existing relationships within the pharmacy channel via the direct to store distribution strategy. The Company is confident that its sales team, together with its management team, have the capabilities to allow Bod Australia to meet its business objectives outlined in this Prospectus.

• brand acquisition opportunities

One of Bod Australia’s long term strategic objectives is to build a product pipeline through brand acquisition opportunities. Bod Australia, following completion of the Offer, will be able to offer brands cost effective growth opportunities given its expertise in brand building, channel relationships, sales resources and logistical support.

• experienced management team

Bod Australia’s management team has significant beauty and personal care market and natural remedies experience and expertise.

• brand development

Bod Australia currently distributes brands in the skin care segment and intends to develop products across baby skin care, super foods, antioxidants and immune support segments.

• natural, evidence based solutions

Bod Australia is focused on delivering natural, evidence-based solutions for the body inside and out. The Company seeks to become a trusted provider offering whole health solutions to its customers, whilst consistently delivering on health solutions that are natural, Australian made and most importantly, evidence based.

1.7 Key risks

The business, assets and operations of the Company are subject to certain risk factors that have the potential to influence the operating and financial performance of the Company in the future. These risks can impact on the value of an investment in the securities of the Company.

The Board aims to manage these risks by carefully planning its activities and implementing risk control measures. Some of the risks are, however, highly unpredictable and the extent to which they can be effectively managed is limited.

Set out below are the key risks which the Directors consider are associated with an investment in the Company. Further risks associated with an investment in the Company are outlined in Section 4 of this Prospectus:

• operating experience and reliance on Key Personnel risk

The Company has a relatively limited operating history, and there is a risk that the successful implementation of the Company’s business plans will not result in profitability.

The Company’s CEO has significant experience in the skin care and health product industry, and its Non-Executive Directors have extensive experience in management of ASX listed entities. If growth objectives are to be met, this will depend on the ability of the Directors and management to implement the current development strategies and to adapt, where necessary, to accommodate and manage any unforeseen difficulties. Initially, the Company will rely heavily on the experience of its existing management team and Directors. The loss of the services of certain personnel could have an adverse effect on the Company and its activities.

• Competition risk

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

KeY rIsKs


For

per

sona

l use

onl

y


20


• early stage risk

As the Company has a limited operating history and has not made a profit, there is uncertainty surrounding the rate of growth and prospects of the Company. The Company’s products are in early stages and the Company is not yet cash flow positive. Given the nature of the Company’s business, it is likely to experience continuing losses for the time being. The Directors cannot provide forecasts or projections of potential earnings that could be relied upon. An investment in the Company is therefore speculative. Risks associated with investments in early stage companies are generally considered high.

• reliance on exclusive brand Distribution

Bod Australia’s historical financial performance has been solely reliant on its Dr Roebuck’s and BIOEFFECT brands. Currently the only revenue generated by the Company is dependent on these two brands. One or both of those suppliers could terminate the underlying contract in certain circumstances, which would have a significant financial impact on Bod Australia if it was not able to fulfil its supply agreements as a result. Bod Australia intends to mitigate this risk by implementing its strategy to acquire other related brands and develop its own proprietary products. However, there is no assurance that these plans will be successful in the future.

• business strategy execution

Bod Australia’s success will depend on its ability to successfully execute its business strategy.

The Company’s future growth, profitability and cash flows depend on the ability of its management to successfully execute its business strategy, which is dependent on a number of factors which are outlined in more detail in Sections 3 and 4.

There can be no assurance that Bod Australia can successfully achieve any or all of the above initiatives. The failure by Bod Australia to successfully execute its business strategy could have a material adverse effect on the Company’s business, financial condition and results of operations.

• reliance on on Key Customer and supplier risk

The Company will rely on various key customer and supplier relationships in its business. The loss or impairment of any of these relationships could have a material adverse effect on the Company’s results of operations, financial condition and prospects, at least until alternative arrangements can be implemented. In some circumstances, however, alternative arrangements may not be available or may be less financially advantageous than the current arrangements. The Company’s business is currently reliant on its ability to retain its key customers. The Company may fail to retain existing customers for a number of reasons, such as failure of the products to meet customer expectations, pricing or competition. In particular, the customer agreements with David Jones Limited allow termination in a broad range of circumstances (further details of which are set out in Sections 7.3 and 7.5 of this Prospectus). If the Company fails to retain key existing customers, the Company’s future operating and financial performance may be adversely impacted. Further details are set out in Section 3.4 of this Prospectus.

• liability risk

Bod Australia provides products which, in certain circumstances, may give rise to potential legal action by customers in the areas of product or public liability. As with any cosmetic related products, there is a risk that a consumer may suffer harm or an adverse reaction to a component of a product distributed by Bod Australia. If legal action was taken against Bod Australia, it could have a material adverse effect on the financial performance and reputation of the business.

KeY rIsKs


For

per

sona

l use

onl

y

21



1.8 the offer

The Company is offering 20,000,000 Shares for subscription at an Offer Price of 20 cents per Share to raise $4,000,000. Oversubscriptions of up to a further 10,000,000 Shares may be accepted to raise up to a further $2,000,000. The minimum subscription is 20,000,000 Shares to raise $4,000,000. The key information relating to the Offer and references to further details are set out below.

1.9 Indicative timetable For the offer

event Date

Lodgement of this Replacement Prospectus with ASIC and ASX 27 September 2016

Opening Date of the Offer 27 September 2016

Expected Closing Date of the Offer 7 October 2016

Issue of Shares under this Prospectus 14 October 2016

Expected Despatch of Holding Statements 19 October 2016

Expected Date for listing of Shares on ASX 21 October 2016

The above dates are indicative only and may vary, subject to the requirements of the ASX Listing Rules and the Corporations Act.

1.10 Purpose of the offer

The purpose of the Offer is to facilitate an application by the Company for admission of the Company to the official list of ASX and position the Company to seek to achieve the objectives set out above, including the development of the skin care and health product business as described in this Prospectus.

tHe oFFer


For

per

sona

l use

onl

y


22


1.11 capital structure

Following completion of the Issue, the proposed issued capital structure of the Company will be as set out in the table below:

sHares Minimum subscription Maximum subscription

number % number %

Existing Shares 10,000,000 27.75 10,000,000 21.72

Convertible Note Shares* 6,032,000 16.74 6,032,000 13.10

Shares issued pursuant to this Prospectus 20,000,000 55.51 30,000,000 65.17

Total 36,032,000 100 46,032,000 100

UnlIsTeD oPTIons

Issued to Directors 3,000,000 43.79 3,000,000 40.81

Issued to Lead Manager 1,801,600 26.29 2,301,600 31.31

Issued to Key Management Personnel 1,800,000 26.27 1,800,000 24.48

Issued to NWR Communications 250,000 3.65 250,000 3.40

Total 6,851,600 100 7,351,600 100

*Assumes conversion at the face value of the Convertible Notes and four months’ interest.

Rights attaching to the Shares are summarised in Section 8.4 of this Prospectus. Terms and conditions of the Options are summarised in Section 8.5 of this Prospectus.

cAPItAL structure


For

per

sona

l use

onl

y

23



1.12 substantial shareholders

Those Shareholders holding 5% or more of the Shares on issue at the date of this Prospectus are:

sHareHolDer shares %

Health and Beauty Enterprise Pty Ltd 5,000,000 50.0

Noir Ted Pty Ltd 5,000,000 50.0

On completion of the Offer (assuming Minimum Subscription and no existing substantial Shareholder subscribes for and receives additional Shares pursuant to the Offer), those Shareholders holding 5% or more of the Shares on completion of the Offer will be:




On completion of the Offer (assuming Maximum Subscription and no existing substantial Shareholder subscribes for and receives additional Shares pursuant to the Offer), those Shareholders holding 5% or more of the Shares on completion of the Offer will be:




The Company will announce to the ASX details of its top-20 Shareholders (following completion of the Offer) prior to the Shares commencing trading on ASX.

suBstANtIAL sHAreHoLDers


For

per

sona

l use

onl

y


24


1.13 use of Funds

The proposed application of funds over two calendar years from the date on which the Shares allotted under this Prospectus are quoted on the ASX is as follows:

1. MInIMUM sUbsCrIPTIon

Use of funds (a$) year 1 spend year 2 spend Total spend

Total Funds Raised Under The Offer $4,000,000

Expenses of the Offer 521,805 - 521,805

Promotion and marketing 350,000 350,000 700,000

Investment in stock 300,000 300,000 600,000

New product development 200,000 200,000 400,000

Working capital (including staff costs) 793,756 793,754 1,587,510

Repayment of related party loans 190,685 190,685

Total funds applied 2,356,246 1,643,754 4,000,000

2. MaxIMUM sUbsCrIPTIon

Use of funds (a$) year 1 spend year 2 spend Total spend

Total Funds Raised Under The Offer $6,000,000

Expenses of the Offer 651,805 - 651,805

Promotion and marketing 750,000 750,000 1,500,000

Investment in stock 500,000 500,000 1,000,000

New product development 200,000 200,000 400,000

Working capital (including staff costs) 1,128,756 1,128,754 2,257,510

Repayment of related party loans 190,685 190,685

Total funds applied 3,421,246 2,578,754 6,000,000

use oF FuNDs


For

per

sona

l use

onl

y

25



1.14 expenses of the offer

The estimated cash expenses (exclusive of GST) connected with the Offer which are payable by the Company, based on the Minimum Subscription and Maximum Subscription amounts of $4,000,000 and $6,000,000 respectively, are as follows:

exPense ITeM Minimum subscription %

Independent Limited Assurance Report $15,000 $15,000

Legal Expenses $60,000 $60,000

Lead Manager fees $340,000 $460,000

ASX and ASIC fees $37,860 $47,860

Listing success fee $50,000 $50,000

Printing, marketing and distribution $18,945 $18,945

Total $521,805 $651,805

The above tables together with the business strategy outlined in Section 3 of this Prospectus are statements of current intentions at the date of the lodgement of this Prospectus with ASIC. As with any budget, intervening events (including market success or failure) and new circumstances have the potential to affect the ultimate way funds will be applied. The Board reserves the right to alter the way funds are applied in these circumstances.

The Directors are satisfied that, upon completion of the Issue, the Company will have sufficient funds to meet its stated objectives for a period of at least two years.

exPeNses oF tHe oFFer


For

per

sona

l use

onl

y


26

Prospectus

1.15 Directors And Key Personnel

The Company is currently managed by an energetic Board and management team possessing a broad range of technical, commercial and financial skills and its CEO has significant experience in the skin care and health products industry. Profiles of the current directors are as follows:

Joanne Patterson MBus. Marketing Chief Executive Officer

Jo is a strategic marketer with over 20 years’ exposure both in Australia and overseas. She has developed a number of businesses from start-up as well as driving established organisations towards growth and merger trajectories. She has been officially recognised as a successful business executive by winning a number of key business awards and her acumen is evidenced in the success of previous companies in the technology, advertising and beauty sectors.

Jo has held multiple CEO and Managing Director roles over her career, and in addition, she contributes philanthropic time to organisations such as The Cerebral Palsy Alliance and Fighting Chance.

These wide and diverse experiences led her to found Bod Australia in 2014. With her beauty and cosmetic experience, Jo brings the “Out” to “Inside and Out”.

simon o’loughlin BA (Acc), Law Society Certificate in Law Non-Executive Chairman

Simon O’Loughlin is the founder of O’Loughlins Lawyers, an Adelaide based, specialist commercial law firm. He has extensive experience in the corporate and commercial law fields while practising in Sydney and Adelaide, and also holds accounting qualifications.

Mr O’Loughlin is a non-executive director of Lawson Gold Ltd, Chesser Resources Limited, Petratherm Limited and Gooroo Ventures Limited.

Mr O’Loughlin has extensive experience and involvement with companies in the small industrial and resources sectors. He has also been involved in the listing and back-door listing of numerous companies on the ASX, most recently the back-door listings of The Food Revolution Group Limited (formerly Crest Minerals Limited) and Xref Limited (formerly King Solomon Mines Limited). He is a former Chairman of the Taxation Institute of Australia (SA Division) and Save the Children Fund (SA Division).

simon Taylor B.Sc, M.A.I.G. Non-Executive Director

Simon Taylor is a resource executive with over 25 years’ experience in geology, management at CEO and Board levels and in the finance sector. He has had a diversified career as a resources professional providing services to resource companies and financial corporations. This has been at both a technical and corporate level. He has also been involved in the listing and back-door listing of numerous companies on the ASX, most recently the back-door listing of Xref Limited (formerly King Solomon Mines Limited). Whilst having experience in Australia, a majority of his projects have also been in countries such as Brazil, Turkey, Uganda, Tanzania, Mali, China, the United Kingdom and North America.

Mr Taylor is currently an executive director of Oklo Resources Limited and a non-executive director of Chesser Resources Limited and TW Holdings Limited.

DIrectors AND KeY PersoNNeL


For

per

sona

l use

onl

y

27



Key Personnel

Craig Weller BSc. Grad. Dip. Dietetics, MBus. Marketing Chief Operating Officer

Craig has been in the healthcare industry for over 25 years. He trained as a Dietitian and worked privately and publicly before joining Abbott Laboratories in sales. He worked up through the organisation to the level of Commercial Manager (during this time he also gained a Master’s Degree in marketing). He launched numerous nutritional and pharmaceuticals products into the Australian market with the most successful being Humira®.

After 10 years, he moved into the biotechnology sector (Actelion Pharmaceuticals) as Sales Director and then Regional Sales and Marketing Director Asia Pacific. This role involved expanding the business across Australia and New Zealand and into South East Asia. Building on this Asian experience, he moved into natural medicines and joined Flordis (SFI) as Managing Director for Australia in 2010. This business grew extremely rapidly and with the growth, the role evolved to General Manager - Asia. During his time at Flordis (SFI), Craig gained extensive experience in the registration and launching of natural medicines into Asia (in particular, China, India and Indonesia).

In partnership with Jo, Craig brings the “Inside” to “Inside + Out”.

John Gilder B. Comm Head of Sales

As in all businesses, the critical factor in any strategy is the ability to implement. John Gilder joined Bod Australia as its key implementer. He has over 30 years’ experience in FMCG (fast moving consumer goods) Sales with Cadbury-Schweppes, Pepsi-Seven Up Bottlers, Arnott’s Snack Foods, Butterfields (distribution arm of King Island Dairy) and most recently with Bellamy’s Organic.

John joined Bellamy’s Organic in 2008 where he was National Sales Manager, and at that time, Bellamy’s Organic’s only customers were Coles and Woolworths with a combined revenue of $3 million. He was instrumental in building the business to over 2,000 direct to store customers nationally including all major pharmacy banner groups, health food stores and grocery accounts, helping to grow the business to $200 million annual revenue.

He has a wide experience in all aspects of retail trade across Australia and intends to leverage this vast experience to drive sales of the Bod brands.

John has a Bachelor of Commerce degree from UNSW.


For

per

sona

l use

onl

y


28


1.16 Disclosure of Interests

The Company currently pays Joanne Patterson an annual salary of $250,000 (excluding statutory superannuation contributions) pursuant to the Executive Services Agreement referred to in Section 1.17.

Each Director is entitled to such remuneration from the Company as the Directors decide, but the total amount provided to all non-executive directors must not exceed in aggregate the amount fixed by the Company in a general meeting, which is currently fixed at $300,000.

The proposed annual remuneration for the financial year following the Company being admitted to the Official List is set out in the table below.

Directorremuneration (per annum)1,2

Joanne Patterson $250,000

Simon O’Loughlin $40,000

Simon Taylor $35,000

Notes:1. Remuneration is exclusive of superannuation, but in addition to the $25,000 success fee payable to each of Simon O’Loughlin and Simon Taylor

on successful completion of the IPO.2. The aggregate maximum director’s fees payable to non-executive directors is set at $300,000 per annum.

All Directors are entitled to be paid all travelling and other expenses properly incurred by them in attending, participating in and returning from meetings of the Directors or any committee of the Directors or general meetings of the Company or otherwise in connection with the business of the Company.

The remuneration of the directors of Bod Australia as outlined above is current as at the date of this Prospectus, but is subject to adjustment in the ordinary course of business.

The Company maintains Directors’ and Officers’ Liability Insurance on behalf of the Directors and officers of the Company.


DIscLosure oF INterests

For

per

sona

l use

onl

y

29



The direct and indirect interests of the current Bod Australia Directors in the securities of the Company as at the date of this Prospectus are as follows:

shares options

bod australia Director Direct Indirect% Total shares Direct Indirect

Joanne Patterson Nil 5,000,000 50.0 Nil Nil

Simon O’Loughlin Nil Nil Nil Nil Nil

Simon Taylor Nil Nil Nil Nil Nil

Total nil 5,000,000 50.0 nil nil

On completion of the Offer (assuming the maximum subscription), the direct and indirect interests of the current Bod Australia Directors in the securities of the Company will be as follows:

shares options

bod australia Director Direct Indirect% Total shares Direct Indirect

Joanne Patterson Nil 5,000,000 10.86 Nil 1,500,000

Simon O’Loughlin Nil 510,0001 1.11 Nil 750,000

Simon Taylor Nil 770,0002 1.67 Nil 750,000

Total nil 6,280,000 13.74 nil 3,000,000

*Assumes that the maximum number of 30,000,000 Shares are issued under this Offer.

Notes:1. 510,000 Shares, made up of a maximum of 250,000 Shares to be subscribed for under the Offer and 260,000 Shares to be issued on conversion

of Convertible Notes held by a related entity of Simon O’Loughlin (assuming conversion at the face value of the Convertible Notes and four months’ interest).

2. 770,000 Shares, made up of a maximum of 250,000 Shares to be subscribed for under the Offer and 520,000 Shares to be issued on conversion of Convertible Notes held by a related entity of Simon Taylor (assuming conversion at the face value of the Convertible Notes and four months’ interest).


*

For

per

sona

l use

onl

y


30


1.17 Agreements with Directors

or related Parties

The Company’s policy in respect of related party arrangements is:

(a) a Director with a material personal interest in a matter is required to give notice to the other Directors before such a matter is considered by the Board; and

(b) for the Board to consider such a matter, the Director who has a material personal interest is not present while the matter is being considered at the meeting and does not vote on the matter.

executive service agreement – Joanne Patterson

The Company and Joanne Patterson entered into an Executive Service Agreement (Agreement) on 5 September 2016.

By the Agreement, the Company agrees to employ Joanne Patterson as Chief Executive Officer of the Company for a period of three years commencing on the date on which the Company is admitted to the Official List (Term).

The Company will pay Ms Patterson an annual salary (exclusive of statutory superannuation payments) of $250,000. Ms Patterson’s total remuneration package will be reviewed annually by the Board, with any changes to be effective from 1 July each year. Ms Patterson may become entitled to an annual cash bonus and issue of Options, subject to satisfying key performance indicators (KPIs) set by the Board annually. The amount and terms of any such cash bonus and issue of Options will be determined by the Board with reference to the extent, if any, that the Board is of the view that the applicable KPIs have been exceeded and the degree to which Ms Patterson is responsible for that outcome. The cash bonus that Ms Patterson may become entitled to for the 2016/2017 financial year has been fixed at $50,000.

The Company will reimburse travel and other expenses properly incurred by Ms Patterson in or about its business.

Ms Patterson is entitled to 10 days paid sick leave, and four weeks paid holiday leave, annually.

The Company may terminate Ms Patterson’s employment summarily because of, among other things, misconduct or failure to perform duties specified in the Agreement and involvement in any illegal business practices. The Company can also terminate Ms Patterson’s employment by giving three months’ notice in writing (or payment in lieu of notice).

All property (whether tangible or intangible) which is created, developed, expanded, added to and/or modified in any manner by Ms Patterson during her employment under the Agreement is, and will remain, the sole and exclusive property of the Company.

legal Costs agreement – simon o’loughlin

Simon O’Loughlin is a Partner of O’Loughlins Lawyers which has acted as the solicitors to the Company in relation to the Offer. The Company and O’Loughlins Lawyers have entered into a costs agreement under which the Company has agreed to pay fees calculated on a time costing basis at O’Loughlins Lawyers’ usual hourly rates. Details of the amounts paid to O’Loughlins Lawyers are set out in Section 8.8 of this Prospectus.


AGreeMeNts

For

per

sona

l use

onl

y

31



Indemnity, Insurance and access Deeds

The Company has entered into an Indemnity, Insurance and Access Deed (Indemnity Deed) with each Director, on the same terms. Pursuant to the Indemnity Deed the Director is indemnified by the Company against any liability incurred in their capacity as an officer of the Company to the maximum extent permitted by law, subject to certain exclusions.

The Company must keep a complete set of company documents until the later of the date which is seven years after the Director ceases to be an officer of the Company and the date after a final judgment or order has been made in relation to any hearing, conference, dispute, enquiry or investigation in which the Director is involved as a party, witness or otherwise because the Director is or was an officer of the Company (relevant Proceedings).

The Director has the right to inspect and/or copy a company document in connection with Relevant Proceedings during the period referred to above.

The Company must maintain an insurance policy insuring the Director against liability as a director and officer of the Company while the Director is an officer of the Company and until the later of the date which is seven years after the Director ceases to be an officer of the Company and the date any Relevant Proceedings commenced before the date referred to above have been finally resolved.

The Company may cease to maintain the insurance policy if the Company reasonably determines that the type of coverage is no longer available or cost effective.

Convertible note Deed – simon o’loughlin

Yoix Pty Ltd, an entity controlled by Simon O’Loughlin, agreed to purchase one Bod Australia Convertible Note for $25,000, on the terms detailed in Section 7.1. Yoix Pty Ltd will be issued 260,000 Shares upon conversion of the Bod Australia Convertible Note held by it (assuming conversion at the face value of the Bod Australia Convertible Note and four months’ interest).

Convertible note Deed – simon Taylor

Jimbzal Pty Ltd, an entity controlled by Simon Taylor, agreed to purchase two Bod Australia Convertible Notes for $25,000 each, on the terms detailed in Section 7.1. Jimbzal Pty Ltd will be issued 520,000 Shares upon conversion of the Bod Australia Convertible Note held by it (assuming conversion at the face value of the Bod Australia Convertible Note and four months’ interest).


For

per

sona

l use

onl

y


32


1.18 corporate Governance

To the extent applicable, in light of the Company’s size and nature, the Company has adopted The Corporate Governance Principles and Recommendations (3rd Edition) as published by ASX Corporate Governance Council (recommendations).

The Company’s main corporate governance policies and practices as at the date of this Prospectus and the Company’s compliance and departures from the Recommendations are set out in Section 8.2(a) of this Prospectus.

In addition, the Company’s full Corporate Governance Plan is available from the Company’s website www.bodaustralia.com.

1.19 taxation

The Australian taxation consequences of any investment in Shares will depend upon an investor’s particular circumstances. It is an obligation of investors to make their own enquiries concerning the taxation consequences of an investment in the Company. If you are in doubt as to the course of action you should take, you should consult your professional advisers.

1.20 Dividend Policy

The Company does not yet have a dividend policy. The Company has no immediate intention to declare or distribute dividends. Payment of future dividends will depend upon the future profitability and financial position of the Company.

1.21 restricted securities

Subject to the Company being admitted to the Official List, certain of the Shares and Options on issue prior to the Offer and certain of the Shares issued on the exercise of the Options on issue prior to the Offer (escrowed securities), are likely to be classified by ASX as restricted securities and will be required to be held in escrow for the period imposed by ASX under the ASX Listing Rules (escrow Period).

Further details are set out in Section 8.2(b) of this Prospectus.


corPorAte GoVerNANce

For

per

sona

l use

onl

y

33



Section 2: Details of the Offer

For

per

sona

l use

onl

y


34


2.1 Introduction

The information set out in this Section is not comprehensive and should be read together with the other information in this Prospectus.

2.2 The offer and subscription

The Company is offering 20,000,000 Shares for subscription at an Offer Price of 20 cents per Share to raise $4,000,000. Oversubscriptions of up to a further 10,000,000 Shares may be accepted to raise up to a further $2,000,000. The Minimum Subscription is 20,000,000 Shares.

All Shares issued pursuant to this Prospectus will be issued as fully paid ordinary shares and will rank equally in all respects with the Shares already on issue. The rights attaching to the Shares are summarised in Section 8.4 of this Prospectus.

If the Minimum Subscription for the Offer is not achieved within four months after the date of this Prospectus, the Company will repay all money received from Applicants without interest, as soon as practicable, or issue a supplementary or replacement prospectus and allow Applicants one month to withdraw their Applications and be repaid their Application Monies in full without interest.

2.3 offer Period

The Offer will open on the Opening Date and will remain open until 5.00 pm (AEST) on the Closing Date. The Company reserves the right to either open or close the Offer at an earlier time or date or to extend the time or date without prior notice. Applicants are encouraged to submit their Applications as early as possible.

2.4 no exposure Period

In accordance with Chapter 6D of the Corporations Act, the Original Prospectus is subject to an exposure period of seven days from the date of lodgement with ASIC. The purpose of the exposure period is to enable the Original Prospectus to be examined by market participants prior to the raising of funds. If the Original Prospectus is found to be deficient, Applications received during the exposure period will be dealt with in accordance with section 724 of the Corporations Act. Applications received prior to the expiration of the exposure period will not be processed until after the exposure period. In accordance with ASIC Instrument 2016/74 this Replacement Prospectus is not subject to an additional exposure period.

2.5 How to apply

Applications must be for a minimum of 10,000 Shares ($2,000) and thereafter in multiples of 1,000 Shares ($200) and can only be made by completing the Application Form attached to this Prospectus. The Company reserves the right to reject any Application or to allocate any investor fewer Shares than the number for which the Applicant has applied.

Applications under the Offer may be made, and will only be accepted, in one of the following forms:

• on the relevant Application Form accompanying this Prospectus; or

• on a paper copy of the relevant electronic Application Form which accompanies the electronic version of this Prospectus, both of which can be found at and can be downloaded from www.bodaustralia.com.

Application Forms must be accompanied by a personal cheque or a bank draft, payable in Australian dollars, for an amount equal to the number of Shares for which you wish to apply multiplied by the Application Price of 20 cents per Share. Cheques or bank drafts should be made payable to ‘Bod Australia Limited Application Account’ and crossed ‘Not Negotiable’. No brokerage or stamp duty is payable by Applicants. The amount payable on Application will not vary during the period of the Offer.

Applicants should ensure that cleared funds are available at the time the Application is lodged, as dishonoured cheques will result in the Application being rejected. Application monies will be held in trust in a subscription account established and controlled by the Company until allotment has taken place.

Completed Application Forms should be mailed or delivered to:

Mailing address Bod Australia Limited C/- Link Market Services Limited Locked Bag A14, Sydney South NSW 1235

Hand delivery Bod Australia Limited C/- Link Market Services Limited 1A Homebush Bay Drive Rhodes NSW 2138 (do not use this address for mailing purposes)

sectIoN 2: DetAILs oF tHe oFFer


For

per

sona

l use

onl

y

35



Application Forms must be received by the Share Registrar no later than 5.00 pm (AEST) on the Closing Date.

Detailed instructions on how to complete paper Application Forms are set out on the reverse of those forms. You are not required to sign the Application Form.

An Application may not be withdrawn after lodgement unless the Applicant is permitted to withdraw the Application in accordance with the Corporations Act.

2.6 allocation and allotment of shares

Subject to ASX granting approval for quotation of the Shares, the allotment of Shares will occur as soon as practicable after the Offer closes. All Shares issued pursuant to the Offer will rank pari passu in all respects with the existing Shares of the Company. Holding statements will be dispatched as required by ASX. It is the responsibility of Applicants to determine their allocation prior to trading in Shares.

The Company reserves the right to reject any Application (including where an Application Form has not been correctly completed) or allocate any person fewer Shares than that person applied for, or vary the dates and times of the Offer without prior notice and independently of other parts of the Offer. Where Applications are rejected or fewer Shares are allotted than applied for, surplus Application Money will be refunded. No interest will be paid on any Application Money refunded.

2.7 lead Manager

Taylor Collison Limited has agreed to act as Lead Manager to the Offer. Details of the terms of appointment of the Lead Manager, including fees payable, are set out in Section 7.7 of this Prospectus.

2.8 Co-advisor

Indian Ocean Corporate Pty Ltd has agreed to act as Co-Advisor to the Offer. Details of the terms of appointment of the Co-Advisor, including fees payable, are set out in Section 7.7 of this Prospectus.

2.9 brokerage and Handling fees

No brokerage, commission or stamp duty is payable by Applicants on acquisition of Shares under the Offer.

2.10 stock exchange listing

Application was made to ASX on 16 September 2016 for Quotation of the Shares issued pursuant to this Prospectus. If approval for Quotation of the Shares is not granted within three months after the date of this Prospectus (or any longer period permitted by law), the Company will repay all Application Monies in full without interest as soon as practicable or issue a supplementary or replacement prospectus and allow Applicants one month to withdraw their Applications and be repaid their Application Monies in full without interest.

2.11 Clearing House sub-register systems CHess and Issuer sponsorship

The Company participates in the Clearing House Electronic Subregister System (CHESS), operated by ASX Settlement Pty Limited, a wholly owned subsidiary of ASX, in accordance with the Listing Rules and ASX Settlement Operating Rules.

Under this system, the Company will not issue certificates to investors in relation to their Shares. Instead, Shareholders will receive a statement of their shareholdings in the Company.

If an investor is broker sponsored, ASX Settlement Pty Limited will send them CHESS statements. The CHESS statements will set out the number of Shares allotted to each investor under this Prospectus, give details of the Shareholder’s holder identification number (HIN) and give the participant identification number of the sponsor.

Alternatively, if an investor is registered on the issuer sponsored sub register, the statements will be dispatched by the Share Registrar and will contain the number of Shares allotted under this Prospectus and the Shareholder’s security holder reference number (SRN).

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 holding changes. A Shareholder may request a statement at any other time, however a charge may be made for additional statements.


For

per

sona

l use

onl

y


36


2.12 overseas Investors

This Prospectus does not constitute an offer or invitation in any place in which, or to any person to whom, it would not be lawful to make such an offer or invitation. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. Lodgement of a duly completed Application Form will be taken by the Company as to constitute a representation that there has been no breach of such laws.

No action has been taken to register or qualify the Shares, or the Offer, or otherwise to permit a public offering of the Shares, in any jurisdiction outside Australia.

The Offer pursuant to the paper form or electronic Prospectus is only available to persons receiving this Prospectus within Australia.

2.13 Privacy act

The Company collects information about each Applicant from the Application Form for the purposes of processing the Application and, if the Application is successful, to administer the Applicant’s shareholding in the Company.

By submitting an Application Form, each Applicant agrees that the Company may use the information in the Application Form for the purposes set out in this Prospectus and may disclose it for those purposes to the Share Registrar, the Company’s related bodies corporate, agents, contractors and third party service providers (including mailing houses), ASX, ASIC and other regulatory authorities.

If an Applicant becomes a Shareholder of the Company, the Corporations Act requires the Company to include information about the Shareholder (name, address and details of the Shares held) in its public registers. This information must remain in the registers even if that person ceases to be a Shareholder of the Company. Information contained in the Company’s registers is also used to facilitate distribution payments and corporate communications (including the Company’s financial results, annual reports and other information that the Company may wish to communicate to its Shareholders) and compliance by the Company with legal and regulatory requirements. Successful Applicants may request access to their personal information held by (or on behalf of) the Company by telephoning or writing to the Company Secretary.

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

2.14 no Underwriting

The Offer is not underwritten.

2.15 Investor enquiries

This document is important and should be read in its entirety. Persons in doubt as to the course of action to be followed should consult their stockbroker, solicitor, accountant or other professional adviser without delay.

Additional copies of this Prospectus can be obtained from the Bod Australia Limited Offer Information Line on 1300 551 242.

Questions relating to the Offer or further advice on how to complete the Application Form can be directed to the Bod Australia Limited Offer Information Line on 1300 551 242, or the Company Secretary, Mr Andrew Bursill, on (02) 9299 9690 (within Australia) or +61 3 9299 9690 (outside Australia).


For

per

sona

l use

onl

y

37



Section 3: Overview of the Company,

the Business and the Industry

For

per

sona

l use

onl

y


38


3.1 Introduction

Originally incorporated on 13 August 2014, Bespoke Beauty Australia and New Zealand Pty Ltd, operated in the skin care and health product industry. On 11 February 2016 the Company changed its name to Bod Australia Pty Ltd, and on 5 August 2016 it changed its name to Bod Australia Limited (Bod).

3.2 Company overview

Bod is a marketer and distributor of brands in the beauty and personal care industry. Bod operates under exclusive distribution agreement for the following brands:

• Dr Roebuck’s; and

• BIOEFFECT.

Bod’s agreement with Dr Roebuck’s covers Australia, New Zealand and the export market to China, with the first right of refusal on any countries in Asia (subject to Dr Roebucks’ due diligence and board approval). Bod’s agreement with BIOEFFECT covers Australia.

In addition, Bod has a development pipeline of own branded products that include:

• Baby skincare range; and

• Natural remedy for the enhancement of memory and recall.

Bod’s major objective is to develop a portfolio of proprietary health products.

Bod will own the relevant formulations and intellectual property of any of its own branded products which it develops. The Company intends to outsource manufacturing of any of its own branded products it develops to Australian contract manufacturers, allowing Bod to focus resources on the marketing and distribution of its brands.

Bod’s business strategy has three primary objectives:

1. Brand Development: supporting the ongoing growth and development of the brands it represents under current and future agreements;

2. Distribution: distribution of the brands under management through its diversified distribution channels;

3. Own Brand Development: development, production and commercialisation of proprietary brands within the beauty and personal care, nutritional supplement and natural medicines industries.

Brand development involves supporting the ongoing growth and development of the brands Bod represents through the implementation of market activation strategies including instore activities, and participation in channel marketing activities. In addition, Bod works to ensure the opportunities are maximised in each current channel through ongoing sales training to ensure a high level of engagement with the floor staff on represented brands.

Bod considers that distribution is key to the growth for all brands it represents. With Bod’s existing relationships and current participation in multiple channels in the Australian market place, it aims to ensure the brands it represent grow and benefit from a diversified distribution strategy.

Bod’s own brand development in key growth categories it has identified will be an important medium and long term play for its business. Bod anticipates that developing its own brands will provide the Company with better control of the supply chain and enable Bod to leverage the existing relationships and distribution channels it operates in.

Section 3: Overview of the Company, the Business and the Industry

coMPANY oVerVIeW

For

per

sona

l use

onl

y

39



3.3 Company History

Following Bod’s commencement as an importer and distributor of beauty and personal care products for the Australian market place, the Company’s direction shifted towards evidence based, natural, Australian products in 2015. This strategic change opened up a broader portfolio of solutions around the brand promise of “Inside and Out”.

“Inside and Out” is the strategic platform for Bod’s future direction. The Company seeks to become a trusted provider offering whole health solutions to its customers, whilst consistently delivering on health solutions that are natural, Australian made and most importantly, evidence based. This is supported by a market opportunity for a trusted brand that offers evidenced based research demonstrating health benefits behind its products.

3.4 business strategy

Bod markets and distributes brands under exclusive agreement through multiple distribution channels whilst developing its own brand offerings. Bod’s business strategy centres on the following key elements:







At present all of Bod Australia’s income is generated from sales to Bod Australia’s wholesale customers (as outlined in Section 5 Financial Information). These include David Jones, Sephora, Online customers, and individual pharmacies. Other than David Jones and Sephora (which have fixed distribution agreements, as noted below) orders are placed directly with the Company on an as needs basis from time to time, without locking pharmacies and other customers into long term contracts at this time. Payment terms of wholesale customers vary from 60 days to 7 days, whilst some are also on cash on delivery (COD) terms. Details of Bod Australia’s distribution agreements with David Jones Ltd and Sephora Australia Pty Ltd are set out in Section 7 of this Prospectus. The average margin Bod Australia receives across all channels is 39%.

The following table illustrates the proportion of income earned by the Company between various customers and product categories for the period commencing 1 July 2016 to date, noting that the products have only been in stores since August 2016:

bod Channel and Product Income split yTD fy17

Channel bIoeffeCT Dr roebucks Channel share

Aus Department Store 53% 47% 58%

Australian Pharmacy 100% 10%

Beauty Clinics 100% 1%

On Line 73% 27% 8%

Specialty Retailer 100% 23%

Product share 62% 38% 100%


For

per

sona

l use

onl

y


40


3.5 Distribution strategy

Bod currently operates within the skin care sector of the Australian beauty and personal care market. This market generated sales of approximately A$6.8 billion in 2015, of which skin care products accounted for approximately 25% or $1.8 billion1.

The competitive channels for the Australian Skin Care market are: Department Stores, Grocery (Supermarkets), Pharmacy, Health and Beauty Stores, Direct Selling (Avon, Nutrimetics) and internet sales. Brands are considered as either Premium (41%) or Mass (59%) and the sales and distribution methods to store vary from direct to store, third party brokerage and distributors, multi-level marketing as well as branded retail outlets.

Growth in the premium segment has been supported by the expansion of specialist beauty retailers such as Sephora and Mecca Cosmetica.

1 Euromonitor International Passport – Skincare in Australia June 2016

Source: Internally generated depiction of data sourced from Euromonitor International Passport – Skincare in Australia June 2016

Source: Internally generated depiction of data sourced from Euromonitor International Passport – Skincare in Australia June 2016


Oral Care 13%Hair Care 9%Men’s Grooming 8%Skin Care 24%Colour/Cosmetics 14%Other 32%

Figure 3.1

Global and Domestic Beauty

and PersonalCare Market

Grocery 22%Pharmacy 26%Department Stores 19%Mass Merchandise 5%Direct Selling 14%Internet 6%Health & Beauty 8%

Figure 3.2

Australian distribution of Beauty and

Personal Careby Format

DIstrIButIoN strAteGY

For

per

sona

l use

onl

y

41



In the Australian Domestic Market, Bod’s strategy is to sell its range of products direct to store via Department Stores and Pharmacies in order to gain market credibility and penetration which Bod anticipates will allow it to leverage into other markets such as on-line and the export market. The Company currently supplies its products directly to pharmacies and department stores and not via third party distribution arrangements. Key contracts entered into with David Jones and Sephora are set out in Section 7 of this Prospectus. This is facilitated by a team of sales representatives that cover the Eastern seaboard of Australia. All representatives are experienced in the direct to store distribution philosophy having worked with a similar distribution model.

Each distribution strategy developed for brands Bod manages is based on a number of elements including brand positioning, pricing and the range offering. Providing different ranges through varying channels gives Bod greater control on pricing and margin and the ability to offer exclusivity.

Bod is currently operating its direct to store distribution through a third party logistics provider who is able to build to scale when required. The ‘Direct to Store’ model gives Bod control on delivery to all channels of distribution.

The sales team operate with tablet technology to activate and process orders that can be uploaded to the financial systems in real time, allowing delivery in 48 hours.

Invoice value is expected to grow as new products come on stream, and Bod’s direct to store distribution ensures greater compliance and control of range on the shelf in pharmacy. The direct to store model enables a quicker time to market as new lines become available. This also minimises delays often experienced due to category reviews of major distributors.

Bod’s current brands are priced in the ‘premium’ segment of the total skin care market, which segment accounts for approximately 41% of the $1.8 billion of current sales in the Australian skin care market2. Although Bod Australia does not currently hold an identifiable market share within that 41% ‘premium’ segment, this is the segment in which Bod Australia is positioning itself to develop a strong market presence in the future.2 Euromonitor International Passport – Skincare in Australia June 2016

3.6 employees

Bod Australia recognises and understands the integral part that employees play in business success. Bod Australia has implemented an employee share scheme to ensure all employees are aligned with the company’s objectives and are duly rewarded as the business succeeds. Further details of the Company’s employee share scheme are set out in Section 8.6 of this Prospectus.

As a business focusing on whole health, Bod aims to provide a healthy and successful workplace, and encourages its employees to set personal health goals alongside sales, business and operational KPI’s.


For

per

sona

l use

onl

y


42


3.7 overview of brands: Dr roebuck’s

brand History

Developed over 30 years ago in Australia, by two physicians, originally to treat problematic skin of their baby twin daughters. By combining an old English Dermatological formula with their clinical and practical knowledge, the formula for Dr Roebuck’s PURE was born. Dr Roebuck’s approach was to develop a product that only contains natural and quality ingredients.

Today this same philosophy is applied to the products that the brand offers and develops. It simply means that all products are only rich in ingredients your skin needs for its health. Nothing less, nothing more.

The brand’s promise is minimal ingredients, maximum results.

brand Pillars

Family Heritage: All Dr Roebuck’s products are inspired by the authentic formula developed by the current owners’ father, Dr Roebucks, when the original product ‘Pure’ was developed in 1978.

Australian and All Natural: Dr Roebuck’s products are Australian formulated and manufactured. The skincare range is centred on taking care of your skin in a natural way with an overarching attitude of health and wellness.

Clean Ingredients: The philosophy remains true to the original formulations that less is more when it comes to skin care. There are no harmful compounds such as Bisphenol A (an organic synthetic compound thought to have hormone like effects on human), Parabens (a class of widely used preservatives in cosmetic and pharmaceutical products believed by some to have links to cancer in humans), or harmful fillers present in Dr Roebuck’s products and in addition, a number of the products are clinically tested to demonstrate their efficacy.


oVerVIeW oF BrAND: Dr roeBucK’s

For

per

sona

l use

onl

y

43



brand Promise

The Dr Roebuck’s formulae include active ingredients that soften, repair, hydrate and moisturise to give you healthy, and naturally beautiful skin.

Each of the formulae are multi-functional to ensure every time you use the products you are adding to your overall skin health.

Competitive Positioning and Pricing

Dr Roebuck’s are priced in the ‘premium’ segment of the total skin care market which accounts for approximately 41% of the $1.8 billion of the total skin care market in Australia3. As noted in Section 3.5 above, although Bod Australia does not currently hold an identifiable market share within that 41% ‘premium’ segment, this is the segment in which Bod Australia is positioning itself to develop a strong market presence in the future.

The Dr Roebuck’s product range currently includes:

• Pure Body

• Bub & Bits

• Pure

• Face

• Lips

• Polish

• Tone

• Body & Handwash

• Everyday Face

• Everyday Rash

• Everyday After Wax

• Everyday Body

Dr Roebuck’s main competitors include Sukin, A’kin and Trilogy, where pricing is above Sukin and 15-20% below Trilogy and A’kin within the pharmacy channel. Bod currently distributes the Dr Roebuck’s Everyday range, which includes some product varieties that its competitors do not offer, exclusively to the pharmacy channel and online.3 Euromonitor International Passport – Skincare in Australia June 2016

Channels of Distribution and Growth opportunities:

To date Dr Roebuck’s distribution has been limited to pharmacy and online channels.

Bod Australia has entered into an exclusive agreement to distribute these products throughout Australia, New Zealand and the export market to China (with first right of refusal on any countries in Asia, subject to Dr Roebuck’s due diligence and board approval).

The brand will be rolled out with two distinct ranges. The ‘Pure’ range will be premium priced and is intended to be offered through department stores, professional spa market and online. A second ‘less premium’ range, ‘Everyday’, is intended to be distributed through pharmacy and health food stores, with a direct to store method targeting 700 doors across the country being driven by Bod’s pharmacy sales team.

Bod plans to direct considerable resources towards the marketing and roll out of the brand.

The current strategy for the ‘Pure’ range has seen Bod secure distribution in some of the top performing stores of a major department store (on shelf since 4 August 2016) and through two major online beauty retailers.

Other channels for potential growth and expansion include Specialty Retailers and the Professional Spa Market.


For

per

sona

l use

onl

y


44


3.7 overview of brands: bIoeffeCT

brand History

BIOEFFECT began in 2001 with three scientists from a biotechnology company with the aim of producing purer human-like proteins (Cellular activators) for medical research and medicine. The scientists soon learnt of the interest among the large cosmetic firms to use their cellular activator, in skin care products. They discovered a new way of producing pure, endotoxin and animal-free human-like growth factors from barley seeds. Bioeffect ehf (formerly known as Sif Cosmetics ehf) was then established to develop and market skin care products containing cellular activators using the barley-production method.

BIOEFFECT SERUM, which was launched in Iceland in 2010, was the first skin care product to contain cellular activators made in plants. Within a year, it was used by 25% of Icelandic women.

Since BIOEFFECT’s launch, over seven products have been added to the line. Highlighting is continued growth, BIOEFFECT has recently launched its BIOEFFECT PRO range, which is intended for professional use only and includes professional facial cleansing products, a massage serum and an innovative hydra intensive facial mask.

BIOEFFECT has won numerous prestigious beauty awards since its launch, including Best Biotechnology Product at the European Biotechnology Congress in Bratislava, the GALA Spa Award for Innovation in Baden, Germany and the Danish Beauty Awards for luxury beauty product.

BIOEFFECT has also gained recognition and acknowledgement by independent research conducted by world-renowned dermatologists including Ronald Moy, former president of the two largest dermatology organisations in the world, and Dr Martina Kerscher, Professor of Cosmetic Science at the University of Hamburg, Germany.

In 2008, BIOEFFECT became the first skin care brand with its own 2,000m2 state-of-the-art greenhouse.


oVerVIeW oF BrAND: BIoeFFect

For

per

sona

l use

onl

y

45



brand Promise

• Ten years of biotechnology research

• Cellular activators, natural to human skin

• Green high-tech product from barley

• Made in Iceland

• Clinically proven results

• Great user reviews

BIOEFFECT is targeted at women aged 30 and up who are well off and educated, likely to follow the latest trends in fashion and technology, and who seek a skincare product which gives real results.

Competitive Pricing and Positioning

BIOEFFECT is priced in the ‘premium’ segment of the total skin care market, which as noted in Section 3.5 above (together with Bod Australia’s positioning within that ‘premium’ segment) accounts for approximately 41% of the $1.8 billion of the total skin care market in Australia4. It is priced and positioned as a premium anti-aging skincare brand that competes with brands such as SK-2, Lancome, and La Prairie.

BIOEFFECT currently offers seven products within its range for the Australian Market:

• BIOEFFECT Serum

• BIOEFFECT Day Serum

• Daytime Normal/Combination Skin

• Daytime RICH

• 30 Day Treatment

• Body Intensive

• Volcanic Exfoliator

Channels of Distribution and Growth opportunities

Bod holds the exclusive distribution rights for BIOEFFECT for the Australian market across various major distribution channels. The brand is currently being rolled out through Department Stores and online through some of the largest online beauty retailers. There are also current plans to distribute the brand through Duty Free and the Professional Spa market.

The multiple channel opportunities provide growth potential, as new stores and doors are opened within the existing channel relationships. Bod is currently operating its direct to store distribution through a third party logistics provider who is able to build to scale when required.

4 Euromonitor International Passport – Skincare in Australia June 2016

acquisition opportunities

Bod’s longer term strategy is to build a product pipeline through exclusive licence agreements, own brand manufacturing and acquisition.

Bod is able to offer brands cost effective growth opportunities given its expertise in brand building, channel relationships, sales resources and logistical support. In addition, without the distraction of operating manufacturing plant, all of Bod’s resources are focused on building brands in each marketplace.

Bod Australia intends to pursue acquisition opportunities of brands that align with its business positioning and expansion strategy, particularly where it is considered that value and growth can quickly be realised.

oWN BrAND DeVeLoPMeNtbaby skin care

• Bod Australia is currently developing an all-natural, baby skincare solution using olive extract as one of the key ingredients.

• Bod Australia intends to allocate significant resources for research and development of this new range.

• Bod Australia is aiming to release its own branded product in 2017, and plans to utilise its existing distribution channels in Australia, with intentions to expand into Asia.

natural remedies

• Bod Australia is currently developing a natural remedy for memory and improved concentration based on the extract called Bacopa Monnieri.

• Bod Australia intends to source the extract from India, but formulate and manufacture the product in Australia.

• Other natural remedies currently in development include treatments for menopause.

The addition of these own branded products to Bod Australia’s portfolio will leverage the existing channels of distribution and infrastructure of the current business, and build on the promise of a whole health business, Inside and Out.


For

per

sona

l use

onl

y


46


3.8 Industry overview

background

Bod’s business is focused on natural benefits for the body, ‘Inside and Out’. The major category segments where the brands will be positioned include Skin Care, Baby Skin Care, Brain Health, Superfoods, Antioxidants and Immune Support.

International Vitamins and supplements environment

Globally, in the last decade, across all types of utilization patterns, there has been a significant increase in self-health care as consumers choose to be more proactive about their own health.

Such is the importance of Traditional Medicine and Complementary Medicine that the World Health Organisation has developed ‘WHO Traditional Medicine (TM) Strategy 2014–2023’.

Sales of traditional medicines in China grew 20% to US$83.1billion in 2012 whilst in South Korea similar trends were evident, with growth from US$4.4 billion in 2004, rising to US$7.4 billion in 2009. Comparatively, sales in the US were US$14.8 billion in 20085.

In Australia, vitamins and supplements are categorised under Complementary Medicines and Natural Health. The total revenue for this sector was $3.5 billion in 2014, and is expected to grow to $4.6 billion in 2017-2018. The top 5 countries for export of complementary medicines were New Zealand, Singapore, Hong Kong, Malaysia and China6.

The Over the Counter (OTC) market for four countries alone (Table 1) accounts for over US$11 billion annually. The Australian sector’s growth of 14% over 12 months (2015) has been driven by high demand from Chinese consumers.5 World Health Organisation ‘Traditional Medicine Strategy 2014-2023’6 CMA – In Good Health 2014 Complementary Medicines Industry Survey


Table 1 - oTC VITaMIns, MInerals anD sUPPleMenTs MarKeTs 2015

(Us$Millions) Japan China sth. Korea australia Total

Multivitamins 225.8 740.7 100.9 208.9 1,276.3

Eye Health Supplements 16.7 N/A 17.6 5.9 40.2

Single Vitamins 402.4 676.9 223.5 41.7 1,444.5

Minerals 49.5 1,703.1 42.0 66.2 1,860.8

Hair & beauty supps 52.7 137.0 10.1 3.8 203.6

Herbal & Natural supps 807.3 1,105.5 96.7 549.7 2,559.2

Probiotics & Pre biotics 146.2 375.9 58.7 95.5 676.3

Tonics & Cure alls 230.0 1,581.8 269.9 7.8 2,089.5

Tonic drinks 1,309.4 N/A N/A N/A 1,309.4

ToTal (Us$m) 3,240.0 6,320.9 819.4 1,079.5 11,459.8

Population (million) 126.9 1,371.9 50.7 23.9 1,573.4

Per Capita Spend (US$) 25.53 4.61 16.16 45.17 7.28

Source: Nicholas Hall’s OTC Insight Asia-Pacific April 2016/Volume 23/Issue 4

INDustrY oVerVIeW

For

per

sona

l use

onl

y

47



australian skin Care Market

The Australian Skin Care market is valued at approximately $1.8 Billion, growing at between 2.5%- 3% per annum since 2010. This growth is consistent with compound annual growth rate of 1% in 2015. The smaller ‘premium’ brands are the fastest growing within the Skin Care categories7. The fastest growing category within the pharmacy channel is skincare self-select products, which is growing at 16%, making skincare self-select products the third fastest growing product range behind Baby Food and Natural Health8.

The skin care segment in Australia is skewed toward the Facial Care sector, which accounts for more than 80% of the market, as shown above.

Manufacturers are increasingly launching skin care products with “active” ingredients, with cosmeceutical brands continuing to gain traction in Australia. Cosmeceuticals combine cosmetic and pharmaceutical ingredients and their popularity comes as consumers demand functional and advanced products that include clinically proven ingredients9.7 Euromonitor International Passport – Skincare in Australia June 2016 8 IRI-Aztec Smartview 9 - The Big Picture – Pharmacy AU MAT 27/3/169 Euromonitor International Passport – Skincare in Australia June 2016


Year

Figure 1Australian Skin Care Market Total Sales (AU$Million)

$1,450

$1,500

$1,550

$1,600

$1,650

$1,700

$1,750

$1,800

$1,850

$1,900

2010 2011 2012 2013 2014 2015

$A

UD

Mill

ion

Hand Care 2%Skin Care Kits 7%Body Care 9%Facial Care 82%

Figure 2

Skin CareCategory Market

Shares

fIGUre 1 - aUsTralIan sKIn Care MarKeT ToTal sales (aU$MIllIon)

Source: Based on data sourced from Euromonitor International Passport – Skincare in Australia June 2016


For

per

sona

l use

onl

y


48


leading brands in skin Care Market

The skin care market is contested by a variety of multi-national companies as well as emerging Australian companies. Some of these companies are listed below in Table 2, and their relevant market share is listed in Figure 3.

Table 2 - sKIn Care CoMPanIes anD branDs In aUsTralIa

Company brands

L’Oréal L’Oréal, Lancôme, Garnier, Biotherm, Kiehl’s and La Roche-Posay

Proctor & Gamble Olay, SK-II

Beiersdorf Australia Nivea

Johnson & Johnson Aveeno, Neutrogena

Estée Lauder Estée Lauder, Clinique

BWX Sukin



Bod positions its brands in the premium segment, commanding a higher price where consumers aspire to the benefits the brands offer with either breakthrough technologies or key “actives”.


The Body Shop Pty. Ltd.Jurlique International Pty. Ltd.

Unilever Australia Pty. Ltd.Nutrimetics Australia Pty. Ltd.

Clarins Australia Pty. Ltd.Johnson & Johnson Pacific Pty. Ltd.

Esté Lauder Pty. Ltd.Beiersdorf Australia Ltd.

Procter & Gamble Australia Pty. Ltd.L’Oréal Australia Pty. Ltd.

Pharmacy Market Share %

Figure 3 - Skin Care Corporate Brand Share % 2015

0.0 2.0 4.0 6.0 8.0 10.0 12.0

Cor

pora

te B

rand

fIGUre 3 - sKIn Care CorPoraTe branD sHare % 2015

For

per

sona

l use

onl

y

49




skin Care Market outlook

Small and niche brands are expected to continue to gain momentum as consumers become more particular about the beauty and personal care products they consume and thus seek personalised and targeted offerings. Consumers have become more willing to pay a premium on products if they are seen as effective, and these consumers actively follow social media, being strongly influenced by celebrities and reviews.

The demand for natural skin care will continue as consumers take greater notice of the chemicals in the products they consume and are more likely to read product labels. This trend is expected to benefit manufacturers with a natural/organic positioning10.

skin Care regulatory environment

Nearly all cosmetic ingredients are regulated as industrial chemicals under the Industrial Chemicals (Notification and Assessment) Act 1989 (Cth). This includes ingredients described as ‘natural’, such as oils, extracts and essences of plants.

The End Cruel Cosmetics Bill 2014 (Cth), which aimed to prohibit the developing, manufacturing, selling, advertising or importing into Australia of cosmetics, or ingredients in cosmetics, which have been tested on live animals, was proposed by the Australian Greens Party through the Senate in March 2014, but the Bill has since lapsed with the double dissolution in May 2016. Most major international markets have banned all animal testing on cosmetics.

other Categories - Pharmacy

Total Pharmacy sales outside of those regulated under the Pharmaceutical Benefits Scheme (PBS) have grown 13.3% over the 12 month period ending 27 March 201611. The product categories of baby care and natural health are two of the areas that Bod will be targeting for new product development in early 2017, as outlined further below.

baby skin Care

The baby care segment includes creams, lotions, washes and shampoo. This segment is valued at over $280 million in 2016, and grew at 41.6% over the 12 month period ending on 27 March 2016. The fastest growing manufacturers are currently Gaia and Ego Pharmaceuticals, which are promoted as offering a natural and healthy sensitive skin solution for babies. Gaia and Ego Pharmaceuticals accounted for over 42% of the baby needs sub-category of the Baby Care segment growth in the 12 month period ending on 27 March 2016. Johnson & Johnson are losing market share to competitors including Gaia and Ego Pharmaceuticals12.

10 Euromonitor International Passport – Skincare in Australia June 2016 11 IRI-Aztec Smartview 9 -The Big Picture – Pharmacy AU MAT 27/3/1612 IRI-Aztec Smartview 9 – The Big Picture – Pharmacy AU MAT 27/3/16

Australian Pharmacy Categories

Figure 4Fastest Growing Pharmacy Categories 2016

Alle

rgy0

5

10

15

20

25

30

35

40

45

Bab

y C

are

Nat

ural

Hea

lth

Skin

care

Sunc

are

Foot

care

Ora

l Car

e

Dig

estiv

e C

are

Eye

& E

ar C

are

Cou

gh &

Col

d

% G

row

th 1

2 m

onth

s to

27

Mar

ch 1

6

41.6

32.0

16.0 13.411.5 10.4 8.6 8.2

7.6 7.2

fIGUre 4 - fasTesT GroWInG PHarMaCy CaTeGorIes 2016

Source: Based on data sourced from IRI-Aztec Smartview 9 - The Big Picture – Pharmacy AU MAT 27/3/16

For

per

sona

l use

onl

y


50


natural Health

In the Natural Health Category, many of the segments have displayed double digit growth for the past two years. The largest segment is Nutritional Oils followed by Multi-vitamins. Bod has identified two areas of opportunity as Brain Health and Menopause (see Figure 5)13. Bod intends to launch brands fitting these segments in 2017 and 2018.

brain Health

This Brain Health segment is currently valued at over $12 million and has a combined annual growth rate of 68% in the period March 2014 to March 201614.

In what is a crowded market, Bod believe that there is great opportunity to leverage this high demand and interest, and launch a brain and mind product based on an ancient Ayurvedic herb.

Womens Health - Menopause

The Womens Health – Menopause segment is valued at just under $12m, and grew 20.2% in 2016 (12 month period ending 27 March 2016). The segment recovered in 2016 from -6% in 2015 to a growth of 20.2% in 2016, following a number of manufacturers having Black Cohosh Root Extract as an ingredient, which had potential to cause liver damage15. Many women want an alternative to hormone replacement therapy (HRT)

when dealing with the biological effects of menopause (e.g. hot flushes).

The growth of this segment has been driven by alternative therapies that have minimum scientific evidence. Bod believes there is a significant opportunity for a natural medicine with good clinical evidence to gain market share in this segment.

new Product Development

As outlined above, Bod’s management is focused on commercialising two key products during 2017. These products are the Natural Remedy for the Enhancement of Memory and Concentration and baby skincare range. Lead time for the commercialization of own branded products varies depending on complexity of product. The natural remedy for the enhancement of memory and concentration is currently underway, with a fairly simple manufacturing process already tested. Bod expects this product to be released to the market for sale in the first half of 2017. The baby skincare range and the actives Bod intends to use in the range is currently underway, and Bod’s intention is to commercialise this brand during 2017.

Funds allocated to research and development will support the development of both these own branded products outlined above with the surplus of funds being used to explore other growth segments.

Research centering on opportunities for new products is largely conducted in-house. It is the combination of Bod’s management expertise and insights from market research papers which feeds Bod’s new product pipeline.

Development of own branded products will be done through contract manufacturing. A number of contract manufacturers will be engaged on the basis of their area of expertise. For example, Bod’s first natural health remedy, being a supplement for the Enhancement of Memory and Concentration is being manufactured through contract manaufacturer Sphere, which company’s expertise is in the manufacturing of pill based products.

As noted in Section 1.13 of this Prospectus (Use of Funds) the Company has budgeted to spend $400,000 on product development over the next two years. The Company believes that amount is sufficient to achieve the objectives outlined above.13 IRI-Aztec Smartview 9 – The Big Picture – Pharmacy AU MAT 27/3/1614 IRI-Aztec Smartview 9 – The Big Picture – Pharmacy AU MAT 27/3/1615 IRI-Aztec Smartview 9 – The Big Picture – Pharmacy AU MAT 27/3/16


Total Menopause

Total Brain Health

Total Cystitis Relief

Total Natural Health

% Growth in the 12 month period to 27 March

Figure 5 - Natural Health Segment Growth

-20 0 20 40 60 80 100

Cat

egor

y Ti

tle

20162015

20.2

61.9

92.9

32.012.8

34.4

6.1

-6.0

fIGUre 5 - naTUral HealTH seGMenT GroWTH

Source: Based on data sourced from IRI-Aztec Smartview 9 – The Big Picture – Pharmacy AU MAT 27/3/16

For

per

sona

l use

onl

y

51




Section 4: Risks

For

per

sona

l use

onl

y


52


Section 4: Risks

rIsKs

4.1 Introduction

The risks contained both in Section 1.7 and this Section 4 should be considered carefully by potential investors.

The Shares offered under this Prospectus should be considered speculative because of the nature of the commercial activities of the Company. Whilst the Directors commend the Offer, potential investors should be aware that an investment in the Company involves risks, which may be higher than the risks associated with an investment in other companies.

There are numerous widespread risks associated with investing in any form of business and with investing in the share market generally. There is also a range of specific risks associated with the Company’s activities and its proposed involvement in the skin care and health product industry. These risk factors are largely beyond the control of the Company and its Directors because of the nature of the proposed activities of the Company.

Persons considering whether or not to invest in the Company should read the whole of this Prospectus in order to fully appreciate such matters and the manner in which the Company intends to operate, before any decision is made to apply for Shares. Prospective investors should consider whether the Shares offered are a suitable investment for them having regard to their own personal investment objectives and financial circumstances and the risk factors set out below. If in any doubt, they should consult with their professional advisers before deciding whether to apply for Shares.

The following, which is not exhaustive, identifies some of the major risks associated with an investment in the Company, of which potential investors need to be aware before making a decision on whether or not to invest in the Company’s Shares.

4.2 risks

The future performance of the Company and the future investment performance of the Shares may be influenced by a range of factors. Some of these factors can be mitigated. However, many are outside the control of the Board and the Company. Prior to making any decision to accept the Offer, investors should carefully consider the following specific and general risk factors applicable to the Company:

(a) specific risk factors

There are a range of specific risks associated with the Company’s business and its involvement in the skin care and health product industry. The following list of specific risk factors ought not to be taken as exhaustive. The risk factors referred to in this Section 4, and others not specifically referred to, may in the future materially affect the financial performance of the Company and the value of the Shares to be offered under this Prospectus.

• Competition risk

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

• operating experience and reliance on Key Personnel risk

The Company has a relatively limited operating history, and there is a risk that the successful implementation of the Company’s business plans will not result in profitability.

The Company’s CEO has significant experience in the skin care and health product industry, and its Non-Executive Directors have extensive experience in management of ASX listed entities. If growth objectives are to be met, this will depend on the ability of the Directors and management to implement the current development strategies and to adapt, where necessary, to accommodate and manage any unforeseen difficulties.

For

per

sona

l use

onl

y

53



Section 4: Risks

• early stage risk

As the Company has a limited operating history and has not made a profit, there is uncertainty surrounding the rate of growth and prospects of the Company. The Company’s products are in early stages and the Company is not yet cash flow positive. Given the nature of the Company’s business, it is likely to experience continuing losses for the time being. The Directors cannot provide forecasts or projections of potential earnings that could be relied upon. An investment in the Company is therefore speculative. Risks associated with investments in early stage companies are generally considered high.

• reliance on Key Customer and supplier risk

The Company will rely on various key customer and supplier relationships in its business. The loss or impairment of any of these relationships could have a material adverse effect on the Company’s results of operations, financial condition and prospects, at least until alternative arrangements can be implemented. In some circumstances, however, alternative arrangements may not be available or may be less financially advantageous than the current arrangements. The Company’s business is currently reliant on its ability to retain its key customers. The Company may fail to retain existing customers for a number of reasons, such as failure of the products to meet customer expectations, pricing or competition. In particular, the customer agreements with David Jones Limited allow termination in a broad range of circumstances (further details of which are set out in Sections 7.3 and 7.5 of this Prospectus). If the Company fails to retain key existing customers, the Company’s future operating and financial performance may be adversely impacted. Further details are set out in Section 3.4 of this Prospectus.

• liability risk

Bod Australia provides products which, in certain circumstances, may give rise to potential legal action by customers in the areas of product or public liability. As with any cosmetic related products, there is a risk that a consumer may suffer harm or an adverse reaction to a component of a product distributed by Bod Australia. If legal action was taken against Bod Australia, it could have a material adverse effect on the financial performance and reputation of the business.

• business strategy execution

Bod Australia’s success will depend on its ability to successfully execute its business strategy.

Bod Australia’s future growth, profitability and cash flows depend on the ability of its management to successfully execute its business strategy, which is dependent on a number of factors which are outlined in more detail in Section 3.

There can be no assurance that Bod Australia can successfully achieve any or all of the above initiatives. The failure by Bod Australia to successfully execute its business strategy could have a material adverse effect on the Company’s business, financial condition and results of operations.

• reliance on exclusive brand Distribution

Bod Australia’s historical financial performance has been solely reliant on its Dr Roebuck’s and BIOEFFECT brands. Currently the only revenue generated by the Company is dependent on these two brands. One or both of those suppliers could terminate the underlying contract in certain circumstances, which would have a significant financial impact on Bod Australia if it was not able to fulfil its supply agreements as a result. Bod Australia intends to mitigate this risk by implementing its strategy to acquire other related brands and develop its own proprietary products. However, there is no assurance that these plans will be successful in the future.

For

per

sona

l use

onl

y


54


Section 4: Risks

• Intellectual Property risk

Holders of patents in similar fields to those of Bod Australia may make claims regarding Bod Australia’s products. Other parties may breach the intellectual property rights held by Bod Australia in relation to their products. There is also a risk that other parties may claim to have an interest in intellectual property or trade secrets of Bod Australia. Any of these actions would require an action by Bod Australia and may impact Bod Australia’s earnings adversely.

• shortage of funding

Whilst Bod Australia believes it will have sufficient funds after completion of the Offer to meet all of its growth and capital requirements for the near term, the Company may seek to exploit opportunities of a kind that will require it to raise additional capital from equity or debt sources. There can be no assurances that Bod Australia will be able to raise such capital on favourable terms or at all. If the Company is unable to obtain such additional capital, it may be required to reduce the scope of its anticipated activities, which could adversely effect its business, financial condition and operating results. In addition , the Company’s operating results may vary significantly from period to period, and it may not be able to sustain operating profitability.

If the Company incurs unexpected costs or is unable to generate sufficient operating income, further funding may be required. The Company may require additional funding to carry out further product development or product improvement. Any additional financing through share issues may dilute shareholdings acquired under this Prospectus. Debt financing may not be available to support the scope and extent of proposed developments. If available, it may impose restrictions on operating activities or anticipated expansion of the Company’s operations.

• reputation

The success of the Company is dependent on maintaining a positive reputation. Unforeseen issues, accidents or events involving the Company could place the reputation of the Company at risk and may impact on future earnings and growth prospects.

• regulatory risk

All products from the Company are subject to regulatory approvals in the markets in which it operates and as such the Company makes no assurances that it can gain, or maintain, regulatory approval on any given product. With ever changing legislation and regulation, there is no guarantee that a product Bod Australia distributes, or intends to produce or distribute in the future, will maintain or gain the necessary regulatory approvals for distribution to consumers in Australia or a foreign jurisdiction. Any regulatory restriction or prohibition placed on the sale of Bod Australia’s products may have an adverse impact on the Company’s financial performance and ability to grow in accordance with its business strategy.

• Product risk

Any changes in demands for the Company’s products could result in reduced sales, increased inventory and/or lower gross margins. In addition, products may experience performance problems rendering them difficult or impossible to sell, or subject to product recall which could have a material adverse impact on the Company’s financial performance.

• release of escrow

A significant sale of Shares after the end of the escrow period referred to in Section 8.2(b) of this Prospectus, or the perception that such a sale has occurred or might occur, could adversely affect the price of the Shares.F

or p

erso

nal u

se o

nly

55



Section 4: Risks

(b) General risk factors

• share Market Conditions

Share market conditions may affect listed securities regardless of operating performance. Share market conditions are affected by many factors such as general economic outlook, movements in, or outlook on interest rates and inflation rates, currency fluctuations, commodity prices, changes in investor sentiment towards particular market sectors, press newspaper and other media reports and the demand for, and supply of, capital. Investors should recognise that once the Shares are listed on ASX, the price of the Shares may fall as well as rise. Many factors will affect the price of the Shares including those listed above.

• foreign exchange risk

Bod Australia operates globally, and its products are denominated in a variety of currencies depending upon the country in which they are available for sale. The risk exists that fluctuations in the exchange rate to the US dollar may adversely affect Bod Australia’s financial position.

Doing business internationally creates operational and financial risks for the Company and exposes it to risks related to taxation in multiple jurisdictions.

• accounting standards

Changes in accounting standards and subjective assumptions, estimates, and judgements by management related to complex accounting matters could significantly affect the Company’s financial results or financial conditions.

• Taxation risks

Bod Australia operates globally, and the risk exists that tax policies in the countries where Bod Australia operates may change so as to adversely affect the profitability of Bod Australia’s operations.

• operational risks

The Company is exposed to a number of risks beyond its control, such as industrial actions and disputes or unusual or unexpected events such as fires or other accidents. There may be difficulties with obtaining government and/or third party approvals, unexpected shortages or increase in the price of consumables, plant and equipment.

The Company’s operations may be adversely affected by higher than anticipated costs or worse than anticipated fluctuations in prices and currencies.

No assurance can be given that the Company will achieve commercial viability through development of any of its products.

• Government Policy

The Company may be affected by changes to government policies and legislation, and taxation. Changes in Government policies, taxation and other laws can have a significant influence on the outlook for companies and the return to investors. The Company’s products could be subject to government regulation, and the regulatory approval and maintenance process for such products may be expensive, time-consuming, and uncertain both in timing and in outcome.

For

per

sona

l use

onl

y


56


Section 4: Risks

• Insurance risks

The Company does, wherever practicable and economically advisable, utilise insurance to mitigate business risks. Such insurance may not always be available or may fall outside the scope of insurances cover. In addition, there remains the risk that an insurer defaults in the payment of a legitimate claim by the Company.

• litigation

Litigation 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.

• economic risks

The performance of Bod Australia is likely to be affected by changes in economic conditions. Profitability of the business may be affected by some of the matters listed below:

1. future demand for skin care and health products;

2. general financial issues which may affect policies, exchange rates, inflation and interest rates;

3. deterioration in economic conditions, possibly leading to reductions in spending and other potential revenues which could be expected to have a corresponding adverse impact on Bod Australia’s operating and financial performance;

4. the strength of the equity and share markets in Australia and throughout the world;

5. financial failure or default by any entity with which Bod Australia may become involved in a contractual relationship;

6. industrial disputes in Australia and overseas;

7. changes in investor sentiment towards particular market sectors;

8. the demand for, and supply of, capital; and

9. terrorism or other hostilities.

• other General risks

Other general risks associated with investment in the Company may include:

• fluctuation of the price at which the Company’s shares trade due to market factors; and

• price volatility of the Company’s shares in response to factors such as:

- additions or departures of key personnel;

- litigation and legislative change;

- press, newspaper or other media reports; and

- actual or anticipated variations in the Company’s operating results.

summary

This investment is regarded as highly speculative. Neither the Company nor its Directors nor any other party to be associated with the preparation of the Prospectus warrants that any specific objective of the Company will be achieved or that any particular targets of the Company will be achieved.

For

per

sona

l use

onl

y

57



Section 3: Risks

Section 5: Financial Information

For

per

sona

l use

onl

y


58



FINANcIAL INForMAtIoN

Introduction

This Section sets out the Historical Financial Information and Pro-forma Financial Information. The basis for preparation and presentation is set out below.

The Directors are responsible for the inclusion of all Financial Information in the Prospectus. HLB Mann Judd Audit (SA) Pty Ltd (‘Hlb Mann Judd’) has prepared an Independent Limited Assurance Report in respect of the Historical and Pro-forma Financial Information. A copy of this report is set out in Section 6 of the Prospectus.

The Financial Information has been prepared by management and adopted by the Directors of the Company. The Financial Information comprises of Bod Australia Ltd (‘bod australia’, the ‘Company’) on the basis as set out below.

basis of Preparation

The Historical Financial Information and Pro-forma Financial Information has been prepared for illustrative purposes and in accordance with the measurement and recognition criteria of Australian Accounting Standards and the significant accounting policies of the Company on the assumption that the completion of the Offer occurred on 30 June 2016.

The accounting policies comply with Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board. They also comply with International Financial Reporting Standards. The Historical and Pro-forma Financial Information is presented in an abbreviated form insofar as it does not include all the disclosures, statements, comparative information and notes required in an annual financial report prepared in accordance with Australian Accounting Standards and the Corporations Act 2001.

The Company’s financial statements for the years ended 30 June 2016 and 30 June 2015 have been audited by HLB Mann Judd.

In respect of the year ended 30 June 2016, HLB Mann Judd issued an unqualified auditor’s opinion thereon with an emphasis of matter in relation to Bod Australia’s ability to continue as a going concern citing the Company’s net loss of $283,802 and net cash outflows from operations of $214,914.

In respect of the year ended 30 June 2015, HLB Mann Judd issued a qualified auditor’s opinion with respect to inventory, due to being appointed after 30 June 2015 and being unable to attend the physical stocktake. In addition an emphasis an emphasis of matter was issued in relation to Bod Australia’s ability to continue as a going concern citing the Company’s net loss of $90,918 and net cash outflows from operations of $88,294.

The Historical Financial Information of the Company provided in this Prospectus comprises pro forma income statements for the years ended 30 June 2015 and 30 June 2016, pro forma historical cash flow statements for the years ended 30 June 2015 and 30 June 2016 and a Pro-forma statement of financial position as at 30 June 2016, which is based upon:

(a) the Company’s audited financial statements for the years ended 30 June 2016 and 30 June 2015 (the Historical Financial Information); and

(b) relevant Pro-forma adjustments required to present the Company as at completion of the Offer (together with the Historical Financial Information, the Pro-forma Financial Information).

The information in this Section is presented on a Pro-forma basis only, and as a result it is likely that this information will differ from the actual financial information for the Company as at completion of the Offer.F

or p

erso

nal u

se o

nly

59




Pro Forma Historical Income statements

Detailed below is a summary of the pro forma historical income statements for the years ended 30 June 2015 and 30 June 2016 for the Company.

year ended 30 June 2016

$


$

Sales revenue 138,020 105,971

Changes in inventories of finished goods (79,686) (97,699)

Employee benefits expense (302,231) (121,753)

Depreciation expense (2,979) (1,238)

Other expenses (180,798) (120,637)

Finance costs (861) (296)

Loss before income tax (428,535) (235,652)

Income tax expense - -

net profit after tax (428,535) (235,652)

Pro forma adjustments to the statutory historical results of the Company

The table below sets out the pro forma adjustments to the historical statutory net profit after tax of the Company. The pro forma adjustments have been reconciled to the Company’s historical statutory results and have been made to reflect the full period impact of the operating and capital structure that will be in place following completion of the Offer as if it was in place as at 13 August 2014 (being the incorporation date of the Company). These adjustments are summarised below:

noteyear ended

30 June 2016year ended

30 June 2015

statutory nPaT (283,802) (90,919)

Public company costs 1 (144,733) (144,733)

Pro forma nPaT (428,535) (235,652)

1. Public company costs – an adjustment has been made to include an estimate of the incremental annual costs that the Company will incur as a public company. These incremental costs include share registry fees, Non-executive Director remuneration, Directors’ and Officers insurance premiums, listing fees, and annual general meeting and annual report costs.

INcoMe stAteMeNts

For

per

sona

l use

onl

y


60



Pro- Forma Historical cash Flow statements

Detailed below is a summary of the pro forma historical cash flow statements for the years ended 30 June 2016 and 30 June 2015 for Company.



operating cash flows

Receipts from customers 140,442 98,816

Payments to creditors and employees (499,228) (331,547)

Finance costs (861) (296)

net operating cash flows (359,647) (233,027)

Capital expenditure (2,979) (1,238)

Net operating cash flows including capital expenditure (362,626) (234,265)

Pro forma adjustments to the statutory Historical Cash flow statements

The tables below set out the adjustments to the statutory historical cash flow statements for the Company to reflect the full year impact of the operating and financing structure that will be in place following the completion of the Offer as at 13 August 2014 (being the incorporation date of the Company). These adjustments are summarised below:

noteyear ended

30 June 2016year ended

30 June 2015

statutory net operating free cash flow (including capital expenditure) (217,893) (89,532)

Public company costs (1) 1 (144,733) (144,733)

Pro forma net free cash flow (362,626) (234,265)

1. Public company costs – an adjustment has been made to include an estimate of the incremental annual costs that the Company will incur as a public company. These incremental costs include share registry fees, Non-executive Director remuneration, Directors’ and Officers insurance premiums, listing fees, and annual general meeting and annual report costs

cAsH FLoW stAteMeNts

For

per

sona

l use

onl

y

61




Historical And Pro- Forma statements of Financial Position

Set out in the table below is a summarised historical statement of financial position for Bod Australia Limited as at 30 June 2016, and a summarised pro forma statement of financial position assuming completion of the Offer occurred on 30 June 2016 adjusted for other material events that have occurred subsequent to 30 June 2016 as detailed in the notes below.

audited Pro-forma Pro-forma

statement of financial position

30 June 2016


Minimum subscription


Maximum subscription

Current assets

Cash assets (3) 383,264 3,720,774 5,590,774

Trade and other receivables 12,333 12,333 12,333

Inventories 7,787 7,787 7,787

Other current assets 13,107 13,107 13,107

416,491 3,754,001 5,624,001

Total assets 416,491 3,754,001 5,624,001

Current liabilities

Trade and other payables 86,443 86,443 86,443

Provisions 14,079 14,079 14,079

Related party loans 190,685 - -

Convertible notes (2(a)) 500,000 - -

791,207 100,522 100,522

Total liabilities 791,207 100,522 100,522

Net Assets/(Liabilities) (374,716) 3,653,479 5,523,479

equity

Issued capital (4) 4 4,169,465 6,010,075

Reserves - 267,848 298,448

Accumulated losses (374,720) (783,834) (785,044)

Total equity (374,716) 3,653,479 5,523,479

stAteMeNts oF FINANcIAL PosItIoN

For

per

sona

l use

onl

y


62



notes:

1. Column 1 represents the audited historical statement of financial position of Bod Australia Limited as at 30 June 2016.

2. Column 2 and 3 represent the pro forma statement of financial position of Bod Australia Limited adjusted for the following events:

(a) Pre offer capital raisings –

On 3 June 2016 and 7 July 2016, the Company issued a total of $580,000 unsecured convertible notes (with $50,000 having been received by the Company post 30 June 2016 and $30,000 of this amount being issued to the Lead Manager in respect of capital raising costs). The note instrument is convertible into Shares at a 50% discount to the issue price prescribed by this Prospectus and accrues interest on a straight line basis at 1% per month until conversion. For the purposes of these pro forma statements of financial position, it has been assumed $23,200 will be accrued on the notes as interest until conversion.

(b) Issue of options to Directors, consultants and the Company’s Lead Manager to the Offer –

Based on the maximum level of subscription, the following options are to be issued in accordance with the Offer:

allotteenumber of

optionsexercise

periodexercise

priceVesting criteria

Non-Executive Directors 1,500,0003 years from

initial quotation $0.20 Not applicable

Joanne Patterson 500,0003 years from


500,0003 years from

vesting $0.30Following completion

of 1 years’ service

500,0003 years from



Craig Weller 500,0003 years from


500,0003 years from



500,0003 years from



John Gilder 100,0003 years from


100,0003 years from



100,0003 years from



Lead Manager* 2,301,6003 years from


Consultants 250,0003 years from


* At the minimum subscription, a total of 1,801,600 options will be issued to the lead manager.

Notes

For

per

sona

l use

onl

y

63




The options have been valued using a binomial options valuation method, using the following assumptions:

Fair value of shares at grant date: $0.20

Strike price: $0.20 - $0.35

Expiry date: Various per the above schedule

Volatility rate: 43.04%

Risk free rate: 1.42%

The fair value of the various class of options is as detailed follows:

exercise period

exercise price

Vesting criteria

fair value

3 years from initial quotation $0.20 Not applicable $0.0612

3 years from initial quotation $0.25 Not applicable $0.0459

3 years from vesting $0.30 Following completion of 1 years’ service $0.0449

3 years from vesting $0.35 Following completion of 2 years’ service $0.0453

(c) Impact of the Offer and associated issue costs

The Minimum Subscription of $4 million (column 2) and the Maximum Subscription of $6 million (column 3) respectively less estimated associated costs to be satisfied in cash of $521,805 and $651,805 respectively. Cash costs of the Offer have been allocated as $293,922 and $422,676 respectively to contributed equity relating to the issue of Shares and $227,883 and $229,129 respectively to accumulated losses. Cash costs of the Offer do not include the fair value of the options to be issued to the lead manager as noted above in 2 (b) of $140,858 at the maximum subscription ($110,258 at the minimum subscription).

(d) Repayment of related party loans

For the purposes of this pro forma it is assumed that all related party loans have been repaid from the proceeds of the offer.

For

per

sona

l use

onl

y


64



3. Cash assets comprise the following:

Minimum subscription

Maximum subscription

Cash assets as at 30 June 2016 383,264 383,264

Proceeds from additional convertible notes issued (2(a)) 50,000 50,000

Offer proceeds 4,000,000 6,000,000

Offer costs (521,805) (651,805)

Repayment of related party loans (190,685) (190,685)

Cash as per pro forma statements of financial position 3,720,774 5,590,774

4. Issued capital is calculated as follows:

Minimum subscription Maximum subscription

no. of shares $

no. of shares $

Number of shares currently on issue 4 4 4 4

Share split on 2,500,000 is for 1 basis 9,999,996 - 9,999,996 -

Conversion of Convertible Notes 6,032,000 603,200 6,032,000 603,200

Fundraising:

Capital Raising 20,000,000 4,000,000 30,000,000 6,000,000

Offer costs to equity - (433,739) (593,129)

Total shares issued post transaction and offer 36,032,000 4,169,465 46,032,000 6,010,075

For

per

sona

l use

onl

y

65




(a) Income Tax

The tax expense recognised in the statement of profit or loss comprises of current income tax expense plus deferred tax expense.

Current tax is the amount of income taxes payable (recoverable) in respect of the taxable profit (loss) for the year and is measured at the amount expected to be paid to (recovered from) the taxation authorities, using the tax rates and laws that have been enacted or substantively enacted by the end of the reporting period. Current tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Deferred tax is not provided for the following:

• The initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).

• Taxable temporary differences arising on the initial recognition of goodwill.

• Temporary differences related to investment in subsidiaries, associates and jointly controlled entities to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets are recognised for all deductible temporary differences and unused tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and losses can be utilised.

Current and deferred tax is recognised as income or an expense and included in profit or loss for the period except where the tax arises from a transaction which is recognised in other comprehensive income or equity, in which case the tax is recognised in other comprehensive income or equity respectively.

(b) revenue and other income

Revenue is recognised when the amount of the revenue can be measured reliably, it is probable that economic benefits associated with the transaction will flow to the Company and specific criteria relating to the type of revenue as noted below, has been satisfied.

Revenue is measured at the fair value of the consideration received or receivable and is presented net of returns, discounts and rebates.

All revenue is stated net of the amount of goods and services tax (GST).

sale of goods

Revenue is recognised on transfer of goods to the customer as this is deemed to be the point in time when risks and rewards are transferred and there is no longer any ownership or effective control over the goods.

other income

Other income is recognised on an accruals basis when the Company is entitled to it.

(c) finance costs

Finance cost includes all interest related expenses, other than those arising from financial assets at fair value through profit or loss.

(d) Goods and services tax (GsT)

Revenue, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO).

Receivables and payable are stated inclusive of GST.

The net amount of GST recoverable from, or payable to, the ATO is included as part of receivables or payables in the statement of financial position.

Cash flows in the statement of cash flows are included on a gross basis and the GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as operating cash flows.

stAteMeNt oF sIGNIFIcANt AccouNtING PoLIcIes

For

per

sona

l use

onl

y


66



(e) Inventories

Inventories are measured at the lower of cost and net realisable value. Cost of inventory is determined using the first in first out basis and is net of any rebates and discounts received.

(f) financial instruments

Financial instruments are recognised initially using trade date accounting, i.e. on the date that the Company becomes party to the contractual provisions of the instrument.

On initial recognition, all financial instruments are measured at fair value plus transaction costs (except for instruments measured at fair value through profit or loss where transaction costs are expensed as incurred).

financial assets

Financial assets are divided into the following categories which are described in detail below:

• loans and receivables;

• financial assets at fair value through profit or loss;

• available for sale financial assets; and

• held to maturity investments.

Financial assets are assigned to the different categories on initial recognition, depending on the characteristics of the instrument and its purpose. A financial instrument’s category is relevant to the way it is measured and whether any resulting income and expenses are recognised in profit or loss or in other comprehensive income.

All income and expenses relating to financial assets are recognised in the statement of profit or loss in the ‘finance income’ or ‘finance costs’ line item respectively.

All of the company’s financial assets are loans and receivables.

loans and receivables

Loans and receivables are non derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers but also incorporate other types of contractual monetary assets.

After initial recognition these are measured at amortised cost using the effective interest method, less provision for impairment. Any change in their value is recognised in profit or loss.

The Company’s trade and other receivables fall into this category of financial instruments.

Significant receivables are considered for impairment on an individual asset basis when they are past due at the reporting date or when objective evidence is received that a specific counterparty will default.

The amount of the impairment is the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable.

In some circumstances, the Company renegotiates repayment terms with customers which may lead to changes in the timing of the payments, the Company does not necessarily consider the balance to be impaired, however assessment is made on a case by case basis.

financial liabilities

The Company‘s financial liabilities include borrowings, trade and other payables, which are measured at amortised cost using the effective interest rate method.

Impairment of financial assets

At the end of the reporting period the Company assesses whether there is any objective evidence that a financial asset or group of financial assets is impaired.

For

per

sona

l use

onl

y

67




financial assets at amortised cost

If there is objective evidence that an impairment loss on financial assets carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of the estimated future cash flows discounted at the financial assets original effective interest rate.

Impairment on loans and receivables is reduced through the use of an allowance accounts, all other impairment losses on financial assets at amortised cost are taken directly to the asset.

Subsequent recoveries of amounts previously written off are credited against other expenses in profit or loss.

(g) Cash and cash equivalents

Cash and cash equivalents comprises cash on hand, demand deposits and short term investments which are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

(h) employee benefits

Provision is made for the Company’s liability for employee benefits arising from services rendered by employees to the end of the reporting period. Employee benefits that are expected to be wholly settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on costs.

Employee benefits expected to be settled more than one year after the end of the reporting period have been measured at the present value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration is given to employee wage increases and the probability that the employee may satisfy vesting requirements. Changes in the measurement of the liability are recognised in profit or loss.

(i) Provisions

Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

Provisions are measured at the present value of management’s best estimate of the outflow required to settle the obligation at the end of the reporting period. The discount rate used is a pre tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the unwinding of the discount is taken to finance costs in the statement of profit or loss.

For

per

sona

l use

onl

y


68


Section 6: Independent Limited

Assurance Report

For

per

sona

l use

onl

y

69



26 September 2016 The Directors Bod Australia Limited C/- Taylor Collison GPO Box 2046 ADELAIDE SA 5001 Dear Directors INDEPENDENT LIMITED ASSURANCE REPORT ON BOD AUSTRALIA LIMITED’S HISTORICAL AND PRO FORMA HISTORICAL FINANCIAL INFORMATION Introduction We have been engaged by Bod Australia Limited (“Bod” or the “Company”) to report on the historical financial information and pro forma historical financial information of the Company for inclusion in the replacement prospectus (the “Prospectus”) to be dated on or about 26 September 2016 and to be issued by Bod, in respect of the issue of new shares in Bod (the “Offer”). Expressions and terms defined in the Prospectus have the same meaning in this report, unless otherwise specified. Scope Historical Financial Information You have requested HLB Mann Judd Audit (SA) Pty Ltd to review the following historical financial information of Bod included in the Prospectus:

The Statement of Financial Performance for the years ended 30 June 2015 and 30 June 2016

The Statement of Financial Position as at 30 June 2016 The Statement of Cash Flows for the years ended 30 June 2015 and 30 June 2016

The historical financial information has been prepared in accordance with the stated basis of preparation, being the recognition and measurement principles contained in Australian Accounting Standards and the company’s adopted accounting policies. The historical financial information has been extracted from the financial report of Bod for the years ended 30 June 2015 and 30 June 2016, which were audited by HLB Mann Judd Audit (SA) Pty Ltd in accordance with the Australian Auditing Standards.

Section 6: Independent Limited Assurance Report

For

per

sona

l use

onl

y


70



In respect of the year ended 30 June 2016, HLB Mann Judd Audit (SA) Pty Ltd issued an unqualified auditor’s opinion thereon with an emphasis of matter in relation to Bod Australia Limited’s ability to continue as a going concern. In respect of the year ended 30 June 2015, HLB Mann Judd Audit (SA) Pty Ltd issued a qualified auditor’s opinion with respect to inventory, due to being appointed after 30 June 2015 and being unable to attend the physical stocktake. In addition, an emphasis of matter was issued in relation to Bod Australia Limited’s ability to continue as a going concern. The historical financial information is presented in an abbreviated form, insofar as it does not include all of the presentation and disclosures required by Australian Accounting Standards and other mandatory professional reporting requirements applicable to general purpose financial reports prepared in accordance with the Corporations Act 2001. Pro Forma Historical Financial Information You have requested HLB Mann Judd Audit (SA) Pty Ltd to review the pro forma historical Statement of Financial Position as at 30 June 2016 referred to as “the pro forma historical financial information”. The pro forma historical financial information has been derived from the historical financial information of Bod, after adjusting for the effects of pro forma adjustments described in section 5 of the Prospectus. The stated basis of preparation is the recognition and measurement principles contained in Australian Accounting Standards applied to the historical financial information and the events or transactions to which the pro forma adjustments relate, as described in section 5 of the Prospectus, as if those events or transaction had occurred as at the date of the historical financial information. Due to its nature, the pro forma historical financial information does not represent the company’s actual or prospective financial position. Directors’ Responsibility The directors of Bod are responsible for the preparation of the historical financial information and pro forma historical financial information, including the selection and determination of pro forma adjustments made to the historical financial information and included in the pro forma historical financial information. This includes responsibility for such internal controls as the directors determine are necessary to enable the preparation of historical financial information and pro forma historical financial information that are free from material misstatement, whether due to fraud or error. F

or p

erso

nal u

se o

nly

71



Our Responsibilities Our responsibility is to express a limited assurance conclusion on the financial information based on the procedures performed and the evidence we have obtained. We have conducted our engagement in accordance with the Standard on Assurance Engagement ASAE 3450 Assurance Engagements involving Corporate Fundraisings and/or Prospective Financial Information. A review consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain reasonable assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Our engagement did not involve updating or re-issuing any previously issued audit or review report on any financial information used as a source of the financial information. Conclusions Historical financial information Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the historical financial information, as described in section 5 of the Prospectus, and comprising:

The Statement of Financial Performance for the years ended 30 June 2015 and 30 June 2016

The Statement of Financial Position as at 30 June 2016 The Statement of Cash Flows for the years ended 30 June 2015 and 30 June 2016

are not presented fairly, in all material respects, in accordance with the stated basis of preparation, as described in section 5 of the document. Pro Forma historical financial information Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the pro forma historical financial information being the pro forma Statement of Financial Position as at 30 June 2016 is not presented fairly in all material respects, in accordance with the stated basis of preparation as described in section 5 of the document. Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe that the pro-forma financial information of Bod as set out in Section 5 of this Prospectus is not compiled, in all material respects, by the directors of Bod on the basis of the applicable criteria as described in Section 5 of the Prospectus.


For

per

sona

l use

onl

y


72



Restriction on Use Without modifying our conclusions, we draw attention to section 5 of the Prospectus, which describes the purpose of the financial information, being for inclusion in the Prospectus. As a result, the financial information may not be suitable for use for another purpose. HLB Mann Judd Audit (SA) Pty Ltd has consented to the inclusion of this report in the Prospectus in the form and context in which it is included. Liability The liability of HLB Mann Judd Audit (SA) Pty Ltd is limited to the inclusion of this report in the Prospectus. HLB Mann Judd Audit (SA) Pty Ltd makes no representation regarding, and has no liability, for any other statements or other material in, or omissions from the Prospectus. Independence HLB Mann Judd Audit (SA) Pty Ltd does not have any pecuniary interests that could reasonably be regarded as being capable of affecting its ability to give an unbiased conclusion in the matter. HLB Mann Judd Audit (SA) Pty Ltd will receive a professional fee for the preparation of this Independent Limited Assurance Report. Yours faithfully

Corey McGowan Partner

For

per

sona

l use

onl

y

73




Section 7: Material Contracts

For

per

sona

l use

onl

y


74



MAterIAL coNtrActs

Set out below are summaries of the more important provisions of contracts to which the Company is a party and which are or may be material in terms of the Offer or the operations of the Company or otherwise are or may be relevant to an investor who is contemplating the Offer.

7.1 Convertible note Deeds

Bod Australia agreed to complete an interim funding to raise gross proceeds of $550,000 from new investors (Interim raising).

The material terms of the Convertible Note Deeds, by which Bod Australia has agreed to issue the Bod Australia Convertible Notes to each Convertible Noteholder, include the following:

• Bod Australia has issued 22 Bod Australia Convertible Notes at an issue price of $25,000 per note (Issue Price), to raise $550,000;

• in addition, Taylor Collison has elected to receive one Bod Australia Convertible Note at an issue price of $30,000, in lieu of partial payment of the fees it was entitled to for acting as lead manager in respect of the capital raising undertaken by way of issue of the Bod Australia Convertible Notes;

• the Bod Australia Convertible Notes will accrue interest at 1% per calendar month during the period of the notes;

• immediately after the Company obtains conditional approval (subject only to the imposition of conditions usual to such approvals) from ASX for the Shares to be quoted on the official list of the ASX, the total of the amount outstanding on each Bod Australia Convertible Note (being the Issue Price plus all accrued interest) will be converted into the number of Shares (as rounded up to the nearest whole Share in the event of a fractional entitlement) that results from dividing the total amount outstanding on all of the Bod Australia Convertible Notes by $0.10;

• if the conversion does not take place as set out above (and no substitute eligible IPO or reverse takeover transaction is completed) then the notes will mature (at the election of the Convertible Noteholders) and the total amount outstanding on the notes will be either repaid to the Convertible Noteholders or convert into ordinary shares in the capital of Bod Australia.

Information regarding the use of the funds raised by the issue of the Convertible Notes can be found in Section 5 of this Prospectus.

Upon conversion of the Convertible Notes, the total amount outstanding on the Convertible Notes (expected to be $603,200, being the $580,000 issue price plus four months’ interest at 1% per month) will be converted into Shares at an issue price of $0.10 per Share, being a total issue of 6,032,000 Shares.

Assuming that the minimum number of 20,000,000 Shares are issued under the Capital Raising, the Shares issued upon conversion of the Convertible Notes will comprise 16.74% of the total issued capital of the Company on listing (as outlined in the table in Section 1.11 of this Prospectus).

Assuming that the maximum number of 30,000,000 Shares are issued under the Capital Raising, the Shares issued upon conversion of the Convertible Notes will comprise 13.10% of the total issued capital of the Company on listing (as outlined in the table in Section 1.11 of this Prospectus).

The interests of the Directors (and their associates) in the Convertible Notes and their respective interests in the securities of the Company upon completion of the Capital Raising, including Shares issued upon conversion of the Convertible Notes, are as set out in Section 1.16 of this Prospectus.

It is expected that some of the Shares issued on conversion of the Convertible Notes will be subject to ASX imposed escrow, as discussed in Section 8.2(b) of this Prospectus.

No Convertible Noteholder will hold 5% or more of the Shares in the Company upon completion of the Capital Raising.

For

per

sona

l use

onl

y

75



7.2 Distribution and exporting agreement – Dr roebuck’s australia Pty ltd

Bod Australia entered into a Distribution and Exporting Agreement (Distribution agreement) with Dr Roebuck’s Australia Pty Ltd ACN 611 946 073 (Dr Roebuck’s), effective from 9 February 2016.

Under the Distribution Agreement, Bod Australia was appointed the exclusive authorised distributor and exporter of certain Dr Roebuck’s natural skincare products (Products) in Australia and New Zealand (Territory). The Territory also extends to the export market in China, and the Company was granted a first right of refusal on other Asian markets (subject to Dr Roebucks’ customary due diligence procedure and board approval).

Dr Roebuck’s has the right to amend the Products or the Territory from time to time at its sole discretion and without liability to the Company.

The Company is required to use its best endeavours to promote the distribution of the Products in the Territory, through the targeted channels and retailers identified by Dr Roebuck’s from time to time, which as at the date of the Distribution Agreement included David Jones, specialty retailers, pharmacy and duty free.

The parties are required to agree to enforceable targets and retail target lists annually. The Company is required to maintain sufficient inventory to fill at least four weeks’ anticipated orders, and also agreed to hold additional inventory on behalf of Dr Roebuck’s.

The initial term of the Distribution Agreement will expire on 9 February 2021, and will automatically be renewed for a further five year term unless either party terminates the Distribution Agreement by giving 180 days’ prior notice.

Dr Roebuck’s has the right to terminate the Distribution Agreement where the Company fails to pay monies owing or otherwise breaches the Distribution Agreement.

7.3 exclusive supply agreement – David Jones (Dr roebuck’s)

The Company entered into an agreement with David Jones Limited (David Jones) with effect from 1 August 2016 (Agreement), pursuant to which David Jones agreed to purchase the Company’s “Dr Roebuck’s” branded products (Products) for sale in David Jones stores. It is a condition of the Agreement that the Company cannot sell the Products (or any similar product) to any person for sale (including through resupply) in any department store or discount department store operating in Australia.

David Jones will determine the range and volume of Products it will purchase, and agrees to place the Products in an advantaged position within its Body & Soul department.

The Agreement will continue until 31 July 2019 (end Date), and David Jones and the Company will negotiate in good faith a renewal of the Agreement at least six months prior to the End Date. The Company is prohibited from entering into any arrangement similar to the Agreement with another department store during the term of the Agreement and in the 12 months after the End Date, unless it has first negotiated in good faith the renewal of the Agreement and offered David Jones a reasonable opportunity to consider and match the terms offered to the Company by the other department store.

David Jones can terminate the Agreement by six months’ notice to the Company if David Jones is not satisfied with the performance of the Products in David Jones stores.

The Agreement applies in addition to the David Jones Standard Supply Terms, EDI Trading Partner Agreement, Automated Stock Replenishment Performance Agreement and Vendor Trading Terms, but prevails to the extent of any inconsistency.


For

per

sona

l use

onl

y


76


7.4 sales representation and Distribution agreement – bioeffect ehf

Shortly before the incorporation of the Company in August 2014, Ms Joanne Patterson, then trading as Bespoke Beauty, entered into a Sales Representation and Distribution Agreement (agreement) with Bioeffect ehf (formerly known as Sif Cosmetics ehf) (bioeffect), a corporation incorporated under the laws of Iceland, on 1 June 2014 (effective Date), with a view to transferring the Agreement and the business then known as Bespoke Beauty, to the Company upon its incorporation as Bespoke Beauty Australia and New Zealand Pty Ltd (now Bod Australia Limited).

Under the Agreement, Bioeffect appointed the Company as its exclusive sales representative and distributor for Bioeffect in Australia, in respect of the sale of Bioeffect’s Bioeffect branded products products (Products) used for cosmetic skin care application and through the channels detailed in the Agreement. The Company is required to provide an annual plan to Bioeffect that includes a sales forecast, target number of outlets, marketing and promotional activities, PR activities, product launches and price strategies.

Bioeffect’s invoices are payable within 30 days from dispatch of goods. Bioeffect maintains the sole right of online promotion and online sales of the Products on a global level via www.bioeffect.com, but the Company is entitled to 70% of sales made from Australia and is required to fill those orders from its stock.

The Company committed to purchasing all of its Products (and similar products) from Bioeffect, and not to market other products which would include growth factors or other bioactive products that would be in direct competition with the Products (without Bioeffect’s prior written consent).

The initial term of the Agreement was for two years, which expired on 31 May 2016. Bioeffect and the Company agreed to extend the term of the Agreement for a further two years expiring on 31 May 2018.

Either party can terminate the Agreement by giving 30 days’ notice in certain circumstances, including where the Company breaches its obligations under the Agreement (and does not remedy the breach within 30 days of notice of the breach) and where either party becomes insolvent.

7.5 exclusive supply agreement – David Jones (bioeffect)

The Company entered into an agreement with David Jones Limited (David Jones) with effect from 1 August 2016 (agreement), pursuant to which David Jones agreed to purchase the Company’s “Bioeffect” branded products (Products) for sale in David Jones stores. It is a condition of the Agreement that the Company cannot sell the Products (or any similar product) to any person for sale (including through resupply) in any other department store or discount department store operating in Australia.

David Jones will determine the range and volume of Products it will purchase, and agreed to place the Products in an advantaged position within its Body & Soul department.

The Agreement will continue until 31 July 2019 (end Date), and David Jones and the Company will negotiate in good faith a renewal of the Agreement at least six months prior to the End Date. The Company is prohibited from entering into any arrangement similar to the Agreement with another department store during the term of the Agreement and in the 12 months after the End Date, unless it has first negotiated in good faith the renewal of the Agreement and offered David Jones a reasonable opportunity to consider and match the terms offered to the Company by the other department store.

David Jones can terminate the Agreement by six months’ notice to the Company if David Jones is not satisfied with the performance of the Products in David Jones stores.

The Agreement applies in addition to the David Jones Standard Supply Terms, EDI Trading Partner Agreement, Automated Stock Replenishment Performance Agreement and Vendor Trading Terms, but prevails to the extent of any inconsistency.


For

per

sona

l use

onl

y

77



7.6 supply agreement – sephora

On 13 August 2014, the Company entered into an agreement to supply Bioeffect branded products (Products) to Sephora Australia Pty Ltd’s “Sephora” stores (agreement).

Under the Agreement, the Company’s invoices are payable within 60 days after the end of the month during which the invoice is dated, and a trade margin of 65% applies.

The Company is required to provide product training to Sephora employees.

7.7 Taylor Collison Corporate and financial services Mandate

By Engagement Letter dated 24 February 2016, Taylor Collison Limited (Taylor Collison) agreed to act as the lead manager for the Initial Public Offering of Bod Australia (Mandate). Taylor Collison agreed to provide suitably qualified corporate and financial services (services) to Bod Australia which include seed capital raising, transaction negotiations, liaising with regulatory bodies and professional advisers and deal structuring and financing.

The Mandate is for a period of 12 months from 24 February 2016.

Bod Australia agreed to pay Taylor Collison the following fees in respect of the Services provided to Bod Australia:

• in the event that the IPO is completed successfully:

- a placement fee of 4% of funds raised and a management fee of 2% on all funds raised;

- a success fee of $100,000;

- Options equating to 5% of the issued capital of the Company (calculated post completion of the Issue), on the terms set out in Section 8.5(e) of this Prospectus;

• a commission of 5% and a management fee of 1% on all funds raised by the Company under any capital raising undertaken within 12 months of 24 February 2016 (and Bod Australia agreed to appoint Taylor Collison as the sole lead manager for all such capital raisings).

Indian Ocean Corporate Pty Ltd (Indian Ocean) was appointed as a co-adviser under the Mandate. Indian Ocean is responsible for introducing strategic capital with online / offline distribution channels in China and managing the relationships with those strategic parties.

Indian Ocean will be paid a placement fee of 4% on funds it raises under the Mandate.


For

per

sona

l use

onl

y


78


In the event that Indian Ocean introduces a strategic party or parties who enter into supply agreements with Bod Australia to stock in stores sufficient product that will generate Bod Australia at least $1 million of revenue each month for a period of three consecutive months, Indian Ocean will be issued:

• Shares equal to $500,000 at the Offer Price; and

• Options equating to 5% of the issued capital of the Company (calculated post completion of the Issue), and on the terms set out in Section 8 .5(e) of this Prospectus..

Bod Australia also agreed to reimburse Taylor Collison for all disbursements and out of pocket expenses incurred by Taylor Collison under the Mandate, provided that Taylor Collison must not incur any expense exceeding $2,000 in aggregate without Bod Australia’s prior written consent.

Subject to certain limitations detailed in the Mandate, Bod Australia agreed to indemnify Taylor Collison and its related bodies corporate and respective directors, officers, employees and consultants in connection with their work under the Mandate.

7.8 letter of appointment – John Gilder, Head of sales

The Company and John Gilder entered into a Letter of Appointment dated 30 May 2016 (agreement).

By the Agreement, the Company agrees to employ John Gilder on a full time basis, as Head of Sales for Bod Australia.

The Company will pay Mr Gilder an annual salary (exclusive of statutory superannuation payments) of $140,000. In addition to his base salary, Mr Gilder will be paid a car allowance of $22,500 per annum and will be provided relevant tools of trade (such as an i-Pad and mobile phone). Mr Gilder may also become entitled to an annual sales bonus / incentive of $20,000 based on achievement of annual sales targets, which bonus / incentive will be reviewed annually.

Mr Gilder’s remuneration will be reviewed annually, and in his first year of employment only, after six months of service.

Mr Gilder is entitled to annual, personal and other leave in accordance with the National Employment Standards.

The Company or Mr Gilder can terminate the Agreement by giving notice in writing to the other party, the period of notice required ranging from one to five weeks, depending on the duration of Mr Gilder’s service and his age at the time of termination (the Company may elect to provide payment in lieu of notice). In addition, the Company may terminate Mr Gilder’s employment immediately in certain circumstances, including where Mr Gilder commits fraud, dishonesty or willful or serious misconduct, is negligent or incompetent in the performance of his duties, or has consistently failed to meet the requirements of his position.


For

per

sona

l use

onl

y

79



7.9 executive service agreement – Craig Weller

The Company and Craig Weller entered into an Executive Service Agreement (agreement) on 5 September 2016.

By the Agreement, the Company agrees to employ Craig Weller as Chief Operating Officer of the Company for a period of three years commencing on the date on which the Company is admitted to the Official List (Term).

The Company will pay Mr Weller an annual salary (exclusive of statutory superannuation payments) of $250,000. Mr Weller’s total remuneration package will be reviewed annually by the Board, with any changes to be effective from 1 July each year. Mr Weller may become entitled to an annual cash bonus and issue of Options, subject to satisfying key performance indicators (KPIs) set by the Board annually. The amount and terms of any such cash bonus and issue of Options will be determined by the Board with reference to the extent, if any, that the Board is of the view that the applicable KPIs have been exceeded and the degree to which Mr Weller is responsible for that outcome. The cash bonus that Mr Weller may become entitled to for the 2016/2017 financial year has been fixed at $50,000.

The Company will reimburse travel and other expenses properly incurred by Mr Weller in or about its business.

Mr Weller is entitled to 10 days paid sick leave, and four weeks paid holiday leave, annually.

The Company may terminate Mr Weller’s employment summarily because of, among other things, misconduct or failure to perform duties specified in the Agreement and involvement in any illegal business practices. The Company can also terminate Mr Weller’s employment by giving three months’ notice in writing (or payment in lieu of notice).

All property (whether tangible or intangible) which is created, developed, expanded, added to and/or modified in any manner by Mr Weller during his employment under the Agreement is, and will remain, the sole and exclusive property of the Company.

7.10 Investor & Media relations Proposal – nWr Communications

On 30 August 2016, Bod Australia entered into an Investor and Media Relations Proposal (Proposal) with NWR Communications Pty Ltd (NWR Communications), pursuant to which NWR Communications agreed to provide a broad range of marketing, promotional and investor and media relations and related services.

The Proposal commenced on 1 September 2016, and is for an initial term of 12 months. The Agreement can be terminated by either party by one month’s notice.

In consideration for the services being provided by NWR Communications, Bod Australia agreed to:

• pay a monthly retainer of $5,000 (plus GST);

• issue 250,000 Options on the terms described in Section 8.5(d);

• reimburse travel costs and out-of-pocket expenses incurred,

to NWR Communications.


For

per

sona

l use

onl

y


80


Section 8: Additional Information

For

per

sona

l use

onl

y

81




8.1 tax status and Financial Year

The Company is taxed in Australia as a public company. The financial year of the Company ends on 30 June annually.

8.2 corporate Governance and

restricted securities

8.2(a) Corporate Governance

The Board of Directors is responsible for the corporate governance of the Company including its strategic development.

As at the date of this Prospectus, the Company’s corporate governance practices are compliant with the Corporate Governance Principles and Recommendations (3rd Edition) set by the Australian Securities Exchange Corporate Governance Council (asx Principles).

Further, copies of the following corporate governance policies and charters adopted by the Board, are available on the Company’s website: “www.bodaustralia.com”:

• Board Charter

• Code of Conduct for Company Directors and Senior Executives

• Continuous Disclosure Policy

• Share Trading Policy

• Shareholder Communication Policy

A summary of the corporate governance practices as currently adopted by the Board is as follows:

Corporate Governance statement

The Company has adopted systems of control and accountability as the basis for the administration of corporate governance. The Board is committed to administering the Company’s policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company’s needs.

To the extent applicable, the Company has adopted the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (recommendations).

In light of the Company’s size and nature, the Board considers that the current Board is a cost effective and practical method of directing and managing the Company. As the Company’s activities develop in size, nature and scope, the size of the Board and the implementation of additional corporate governance policies and structures will be reviewed.

This statement has been approved by the Board, and the information provided remains current as at the date of this Prospectus. The Company’s full Corporate Governance Plan is available in a dedicated corporate governance information section of the Company’s website at www.bodaustralia.com.

tAx & corPorAte GoVerNANce

For

per

sona

l use

onl

y


82


board of Directors

The Board is responsible for the corporate governance of the Company. The Board develops strategies for the Company, reviews strategic objectives and monitors performance against those objectives. Clearly articulating the division of responsibilities between the Board and management will help manage expectations and avoid misunderstandings about their respective roles and accountabilities.

In general, the Board assumes (amongst others) the following responsibilities:

(i) setting objectives, goals and strategic direction with a view to maximising investor value;

(ii) oversight of control and accounting systems;

(iii) monitoring investment policies;

(iv) approving and monitoring progress of major capital expenditure, capital management, acquisitions and divestments;

(v) preparing annual operating and capital expenditure budgets for Bod Australia;

(vi) considering financial statements and reports for publication;

(vii) monitoring financial performance;

(viii) reviewing, ratifying and monitoring systems of risk management, internal compliance and control, codes of conduct, and external compliance;

(ix) monitoring financial and other reporting;

(x) monitoring the implementation of business standards and codes of ethical behaviour;

(xi) monitoring and approving financial benefits to related parties;

(xii) determining the independence of non-executive Directors;

(xiii) determining the process of evaluation of the performance of the Board, its committees and Directors;

(xiv) monitoring and evaluating the desirable competencies of the Directors, including the range and experience of the Directors;

(xv) considering Board succession planning issues; and

(xvi) appointing, reviewing and monitoring the independence of the external auditors.

The Company is committed to ensuring that appropriate checks are undertaken before the appointment of a Director and has in place written agreements with each Director which detail the terms of their appointment.

Composition of the board

The Board consists of the following members:

• Simon O’Loughlin, independent non-executive chairman (appointed 5 August 2016);

• Jo Patterson, Chief Executive Officer (co-founder);

• Simon Taylor, independent non-executive director (appointed 5 August 2016)

The Chairman’s responsibilities include leadership of the Board and the efficient organisation and conduct of the functioning of the Board.

There is a clear division of responsibilities between the Chairman and the CEO. The Board has delegated to the CEO the authority to manage the day-to-day affairs of the Company. The Board ensures that the CEO is appropriately qualified and experienced to discharge her responsibilities.

Election of Board members is substantially the province of the Shareholders in general meeting. The Board currently consists of one executive and two non-executive directors (each of whom is independent).

The Company has in place an external supplier to undertake appropriate checks on any potential director appointments (if required by the board in addition to their internal checking).

All directors, whether appointed throughout the year as an additional director or to fill a casual vacancy or who are due for election under the Listing Rules, are disclosed in the Notice of AGM, with all material information in its possession relevant to a decision on whether or not to elect or re-elect a director. All directors have written contracts with the Company setting out the terms of their appointment. Details of the Directors’ skills, experience, expertise, special responsibilities and attendance at Board meetings are set out in the Directors’ Report.


BoArD oF DIrectors

For

per

sona

l use

onl

y

83



Diversity policy

The Board values diversity and recognises the benefits it can bring to the organisation’s ability to achieve its goals. Accordingly, the Company is in the process of developing a diversity policy. This policy will outline the Company’s diversity objectives in relation to gender, age, cultural background and ethnicity. It will include requirements for the Board to establish measurable objectives for achieving diversity, and for the Board to assess annually both the objectives, and the Company’s progress in achieving them.

Performance assessment

Due to the size of the Company and the Board, a continual self-assessment is undertaken in relation to its collective performance and the performance of the CEO.

Given the size and the nature of the Company’s operations, the performance of the CEO is monitored on an ongoing basis by the non-executive Directors. Formal performance reviews are not proposed to take place but a self-assessment of performance will be undertaken at least on an annual basis.

nomination Committee

Recommendation 2.1 is that the Board should establish a nomination committee. The Board considers that the Group is not currently of a size, nor are its affairs of such complexity to justify the formation of a nomination committee at this time. The Board as a whole considers the following factors when selecting new directors and when recommending directors to shareholders for appointment or re-election:

• the aim of having a majority of independent directors on the Board and of having an independent non-executive chairman;

• that between them, the directors have the appropriate skill base and range of expertise, experience and diversity to discharge the Board’s mandate;

• that each individual director has sufficient time to meet his/her commitments as a director of the Company;

• the duration of each existing director’s tenure, noting the retirement provisions of the Constitution as set out below; and

• whether the size of the Board is appropriate to facilitate effective discussions and efficient decision-making.

New candidates to join the Board are expected to be sought through referrals or, where appropriate, through the engagement of independent consultants to identify possible new candidates for the Board.

board skills matrix

In line with recommendation 2.2, the Board has developed a Board skills matrix, to simplify the process for identifying any ‘gaps’ in the Board’s skills, expertise and experience. The Board monitors the skills, expertise and experience that are relevant to the Company and assess those requirements against the collective attributes of the Directors. The Board skills matrix will be reviewed by the Directors on annual basis.


For

per

sona

l use

onl

y


84


Independence

The Board will assess the independence of each Director on an annual basis. For this purpose an independent Director is a Non-executive Director whom the Board considers to be independent of management and free of any business or other relationship that could materially interfere with – or could reasonably be perceived to materially interfere with - the exercise of unfettered and independent judgment. In making this assessment, the Board considers the following factors that may cause doubts about the independence of a director:

1. is a substantial shareholder of the Company, is an officer of, or is otherwise associated with a substantial shareholder;

2. within the last three years, has been employed in an executive capacity by the Company;

3. within the last three years, is, or has been a principal of a material professional adviser or a material consultant to the Company or another Group member, or an employee materially associated with the service provided;

4. is a material supplier to, or customer of, the Company or another Group member, or an officer of or otherwise associated directly or indirectly with a material supplier or customer; and

5. has a material contractual relationship with the Company or another Group member, other than as a Director.

Each of Simon O’Loughlin and Simon Taylor have been assessed as independent Directors. In reaching that determination, the Board has taken into account (in addition to the matters set out above):

1. the specific disclosures made by each independent Director as referred to above;

2. that no independent Director has ever been employed by the Company;

3. Simon O’Loughlin is a partner of O’Loughlins Lawyers, who have provided corporate advice to the Company as part of the application for the Company to list its securities on the Australian Securities Exchange. Mr O’Loughlin has no involvement in the provision of the corporate services to the Company by O’Loughlins Lawyers and as such the Board consider to him to be independent. Simon Taylor is not, nor has been associated with a supplier, professional adviser, consultant to or customer of the Company which is material under accounting standards; and

4. that no independent Director personally carries on any role for the Company otherwise than as a Director of the Company.

In accordance with Recommendation 2.4, that suggests a majority of the Board should be independent, the Company currently has two independent Directors and one non-independent Director.

When a new director joins the Board they are provided with information about the Company including the Constitution, Board and Committee Charter’s, policies and director duties information.

Code of conduct

The Board recognises the need to observe the highest standards of corporate practice and business conduct. Accordingly, the Board has adopted a formal Code of Conduct (Code) to be followed by all employees (including temporary employees and contractors) and officers.

The key aspects of this Code are to:

(i) act with honesty, integrity and fairness in the best interests of the Company;

(ii) act in accordance with all applicable laws, regulations, policies and procedures;

(iii) have responsibility and accountability for individuals for report and investigating reports of unethical practices; and

(iv) other matters including but not limited to ethical conduct, business conduct, confidentiality, privacy, security of information, and conflicts of interest.


For

per

sona

l use

onl

y

85



audit and risk Committee

Recommendation 4.1 is that the Board should establish an audit committee of at least three members. As the Board of consists of three directors in total, the Board considers that the Company is not currently of a size, nor are its affairs of such complexity to justify the formation of an audit committee at this time. The Board, in adopting the responsibilities ordinarily assigned to the audit committee, will have responsibility for monitoring and reviewing any matters of significance affecting financial reporting and compliance, the integrity of the financial reporting of the Company, the Company’s internal financial control system and the Company’s risk management systems, the identification and management of business, economic, environmental and social sustainability risk and the external audit function.

While considering external reporting, the Board:

• assesses whether financial statements are consistent with Directors’ knowledge and adequate for shareholders’ needs;

• assesses the management processes supporting external reporting; and

• reviews risk management and internal control systems.

The Board’s policy is to appoint external auditors who clearly demonstrate quality and independence. The performance of the external auditor is reviewed annually and applications for tender for external audit services are requested as deemed appropriate, taking into consideration assessment of performance, existing value and tender costs.

An analysis of fees paid to the external auditors, including a break-down of fees for non-audit services, is provided in the Directors’ Report and the notes to the financial statements. The external auditors provide an annual declaration of their independence to the Board.

Integrity in Corporate reporting

The Company has appointed the Company Secretary as the person responsible for communication with the Australian Securities Exchange (ASX) and is also responsible for overseeing and co-ordinating information disclosure to the ASX. The Company Secretary is accountable directly to the board, through the chair, on all matters to do with the proper functioning of the board.

The CEO and CFO are required to provide a written declaration to the Board in relation to the release of any financial statements by the Company that, in their view:

• the Company’s financial reports are founded on a sound system of risk management and internal compliance and control which implements the financial policies adopted by the Board;

• the Company’s risk management and internal compliance and control system is operating effectively in all material respects;

• the Company’s financial statements and notes thereto comply with the accounting standards; and

• the Company’s financial statements and notes thereto give a true and fair view of the consolidated entity’s financial position as at the appropriate reporting date and of its performance for the financial year ended on that date.

In accordance with recommendation 4.3, the external auditor will be requested to attend the annual general meeting and to be available to answer shareholder questions about the conduct of the audit and the preparation and content of the audit report.

Continuous Disclosure Policy

The Board has established a Disclosure and Communication Policy, which is available on the Company’s website. Amongst other items it details: the Company’s continuous disclosure obligations, disclosure roles, responsibilities and internal procedures, as well as market and shareholder communications.


For

per

sona

l use

onl

y


86


Website Information

The Company discloses information about itself including its: Corporate Governance Statement, Corporate Governance Policies, past announcements, investor updates and other relevant information on the Company website. Shareholders and other interested parties may also subscribe for email alerts using the Company’s website.

Investor relations

The Board aims to keep shareholders informed of all major developments affecting the Company’s activities and its state of affairs through announcements to the ASX and releases to the media. The Company’s commitment to respect the rights of shareholders is set out in the Communications Policy, which is available on the Company’s website.

shareholder Meetings

Shareholders may elect to receive electronic notifications when the Annual Report is available on the Company’s website, and may electronically lodge proxy instructions for items of business to be considered at general meetings.

The Board encourages full participation of shareholders at the annual general meeting. Shareholders who are unable to attend general meetings are encouraged to lodge proxy appointments in advance of the meeting.

risk assessment and Management

Recommendation 7.1 is that the Board should establish a Committee to oversee risk. Due to the size and scale of the Company’s current operations, the Board concluded that it was more efficient for risk management to be managed by the full Board.

Therefore the Board will be responsible for identifying material business risks and implementing procedures to manage those risks. The Board has formalised its processes for documenting the Group’s risk profile in a risk management matrix which will be reviewed by the Board at least annually. The risk management matrix identifies areas of risk for the Group and records any remedial action the Group has taken in the management of those risks.

The Company recognises the importance of a comprehensive yet commercially workable risk management framework.

The Risk Management Policy adopted by the Board is designed to assist the Company in managing the level of risk within acceptable parameters for the Company, rather than eliminating risk as such.

The Risk Management Policy assists the Board to achieve the Company’s objectives through thorough and competent strategic decision making and the conduct of efficient, effective and robust business processes that allow the Company to take opportunities when they arise while meeting required standards on accountability, compliance and transparency.

Internal audit

The Company does not have an internal audit function. The Board considers the policies and procedures currently implemented are sufficient for a Company of its size and complexity.

Material exposure to risk

Recommendation 7.4 is that the Board should disclose whether it has any material exposure to economic, environmental and social sustainability risks and if so, how it manages those risks. The Company believes that the following operational risks are inherent in the industry in which the Company operates, having regard to the Company’s circumstances (including financial resources, prospects and size):

• Competition risk;

• Operating experience and reliance on key personnel;

• Intellectual property risk;

• Shortage of funding risk;

• Reputation risk;

• Liability risk;

• Regulatory risk;

• Product risk;

• Early stage risk; and

• Release of escrow.

These risk areas are discussed in Section 4 and provided here to assist investors to understand better the nature of the risks faced by the Company, and are not necessarily an exhaustive list.


For

per

sona

l use

onl

y

87



remuneration Committee

Due to the size and nature of the Company’s activities, the Company has decided that a remuneration committee is not required at this time with the remuneration of any Executive Director being decided by the Board, without the affected Executive Director participating in that decision-making process.

The Constitution of the Company provides that the Non-Executive Directors will be paid by way of remuneration for their services as Directors a sum not exceeding such fixed sum per annum as may be determined by the Directors prior to the first annual general meeting of the Company or pursuant to a resolution passed at a general meeting of the Company (subject to complying with the Listing Rules).

In addition, subject to any necessary Shareholder approval, a Director may be paid fees or other amounts as the Directors determine where a Director performs special duties or otherwise performs services outside the scope of the ordinary duties of a Director. Directors are also entitled to be paid reasonable travel and other expenses incurred by them in the course of the performance of their duties as Directors.

The Board reviews and approves the Company’s remuneration policy in order to ensure that the Company is able to attract and retain executives and Directors who will create value for Shareholders, having regard to the amount considered to be commensurate for an entity of the Company’s size and level of activity as well as the relevant Directors’ time, commitment and responsibility.

The Board is also responsible for reviewing any employee incentive and equity-based plans including the appropriateness of performance hurdles and total payments proposed.

8.2(b) restricted securities

Subject to the Company being admitted to the Official List, certain of the Shares and Options on issue prior to the Offer and certain of the Shares issued on the exercise of the Options on issue prior to the Offer (Escrowed Securities), are likely to be classified by ASX as restricted securities and will be required to be held in escrow for the period imposed by ASX under the ASX Listing Rules (Escrow Period.

It is expected that the Shares held by the Company’s existing Shareholders and some of the shares to be issued to the Convertible Noteholders upon conversion of their Convertible Notes, and the Options to be issued to the Directors, Craig Weller, Taylor Collison and NWR Communications, will be subject to escrow.

The escrow deeds to be entered into by the holders of Escrowed Securities which are subject to escrow (Escrowed Shareholders) will be in the form as required by ASX, and will include standard terms prohibiting the Escrowed Shareholders during the Escrow Period from:

• disposing of, or agreeing to offer to dispose of, the Escrowed Securities;

• creating, or agreeing to offer to create, any security interest in the Escrowed Securities;

• doing, or omitting to do, any act if the act or omission would have the effect of transferring effective ownership or control of the Escrowed Securities; and

• participating in a return of capital made by the Company.

The imposition of the Escrow Period will:

• help to create a stable market for the Company’s Shares (by reducing the number of Shares that can be traded immediately after Quotation of the Shares on ASX);

• prevent the Escrowed Shareholders from selling out of the Company on a large scale within the Escrow Period (which could diminish the value of the Company’s Shares); and

• keep the Escrowed Shareholders interested in the operations and success of the Company.

The Company will announce to the ASX full details (quantity and duration) for the Shares required to be held in escrow prior to the Shares commencing trading on ASX.


For

per

sona

l use

onl

y


88


8.3 Litigation

As at the date of this Prospectus, the Company is not involved in any legal proceedings and the Directors are not aware of any legal proceedings pending or threatened against the Company.

8.4 rights Attaching to shares

The Shares to be issued under this Prospectus will rank equally with the issued fully paid ordinary shares in the Company. The rights attaching to Shares are set out in the Company’s Constitution and, in certain circumstances, are regulated by the Corporations Act, the Listing Rules and general law.

The following is a summary of the more significant rights of the holders of Shares of the Company. This summary is not exhaustive nor does it constitute a definitive statement of the rights and liabilities of the Company’s members.

(a) General Meeting

Each member is entitled to receive notice of, and to attend and vote at, general meetings of the Company and to receive all notices, accounts and other documents required to be sent to members under the Company’s Constitution, the Corporations Act or the Listing Rules.

(b) Voting

Subject to any rights or restrictions for the time being attached to any class or classes of shares whether by the terms of their issue, the Constitution, the Corporations Act or the Listing Rules, at a general meeting of the Company every holder of fully paid ordinary shares present in person or by a representative has one vote on a show of hands and every such holder present in person or by a representative, proxy or attorney has one vote per share on a poll. A person who holds an ordinary share which is not fully paid is entitled, on a poll, to a fraction of a vote equal to the proportion which the amount paid bears to the total issue price of the share. A member is not entitled to vote unless all calls and other sums presently payable by the member in respect of shares in the Company have been paid. Where there are two or more joint holders of the share and more than one of them is present at a meeting and tenders a vote in respect of the share (whether in person or by proxy or attorney), the Company will count only the vote cast by the member whose name appears before the other(s) in the Company’s register of members.

(c) Issues of further shares

The Directors may, on behalf of the Company, issue, grant options over or otherwise dispose of unissued shares to any person on the terms, with the rights, and at the times that the Directors decide. However, the Directors must act in accordance with the restrictions imposed by the Company’s Constitution, the Listing Rules, the Corporations Act and any rights for the time being attached to the shares in special classes of shares.

(d) Variation of rights

At present, the Company has on issue one class of shares only, namely ordinary shares. The rights attached to the shares in any class may be altered only if authorised by a special resolution passed at a separate meeting of the holders of the issued shares of the affected class, or with the written consent of the holders of at least three quarters of the issued shares of the affected class.

(e) Transfer of shares

Subject to the Company’s Constitution, the Corporations Act, the ASX Settlement Operating Rules and the Listing Rules, ordinary shares are freely transferable.

Shares may be transferred by a proper transfer effected in accordance with ASX Settlement Operating Rules, by any other method of transferring or dealing introduced by ASX and as otherwise permitted by the Corporations Act or by a written instrument of transfer in any usual form or in any other form approved by the Directors that is permitted by the Corporations Act. The Company may decline to register a transfer of Shares in the circumstances described in the Company’s Constitution and where permitted to do so under the Listing Rules. If the Company declines to register a transfer, the Company must, within five business days after the transfer is lodged with the Company, give the lodging party written notice of the refusal and the reasons for refusal. The Directors must decline to register a transfer of Shares when required by law, by the Listing Rules or by the ASX Settlement Operating Rules.


LItIGAtIoN & rIGHts

For

per

sona

l use

onl

y

89



(f) Partly Paid shares

The Directors may, subject to compliance with the Company’s Constitution, the Corporations Act and the Listing Rules, issue partly paid shares upon which amounts are or may become payable at a future time(s) in satisfaction of all or part of the unpaid issue price.

(g) Dividends

The Directors may from time to time declare a dividend, and may also authorise the payment to the members of such interim dividends as appear to the Directors to be justified by the Company’s profits and for that purpose may declare such interim dividends.

Subject to the rights of members entitled to shares with special rights as to dividend (if any), all dividends in respect of shares (including ordinary shares) are to be declared and paid proportionally to the amount paid up (not credited as paid up) on the shares.

(h) Winding Up

If the Company is wound up, the liquidator may, with the sanction of a special resolution of the Company, 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 the liquidator considers fair on any property to be so divided and may determine how the division is to be carried out as between the shareholders or different classes of shareholders.

Subject to the rights of holders of shares with special rights in a winding up, if the Company is wound up, members (including holders of ordinary shares) will be entitled to participate in any surplus assets of the Company in proportion to the shares held by them respectively irrespective of the amount paid up or credited as paid up on the shares.

(i) Dividend Plans

The members of the Company, in general meeting, may authorise the Directors to implement a dividend plan under which (among other things) a member may elect that dividends payable by the Company be reinvested by way of subscription for shares in the Company.

(j) Directors

The Company’s Constitution states that the minimum number of directors is three.

(k) Powers of the board

The Directors have power to manage the business of the Company and may exercise that power to the exclusion of the members, except as otherwise required by the Corporations Act, any other law, the Listing Rules or the Company’s Constitution.

(l) listing rules

If the Listing Rules require the Constitution to contain a provision or not to contain a provision the Constitution is deemed to contain that provision or not to contain that provision (as the case may be). If any provision of the Constitution is or becomes inconsistent with the Listing Rules, the Constitution is deemed not to contain that provision to the extent of the inconsistency.


For

per

sona

l use

onl

y


90


8.5 terms and conditions of options

8.5(a) options to simon o’loughlin and simon Taylor

As at the date of this Prospectus, the Company has granted 750,000 Options to each of Simon O’Loughlin and Simon Taylor on the following terms and conditions:

1. Each Option entitles the holder to one ordinary share in the Company.

2. Each of the Options will be exercisable at $0.20.

3. Each Option is exercisable in whole or in part at any time during the period commencing on the date of issue and expiring on the third anniversary of their date of issue (exercise Period). Options not exercised before the expiry of the Exercise Period will lapse.

4. Options are exercisable by notice in writing to the Board delivered to the registered office of the Company and payment of the exercise price per option in cleared funds.

5. The Company will not apply to ASX for official quotation of the Options.

6. The Company will make application for official quotation on ASX of new shares allotted on exercise of the Options. Those shares will participate equally in all respects with existing issued ordinary shares, and in particular new shares allotted on exercise of the Options will qualify for dividends declared after the date of their allotment.

7. Options can only be transferred with Board approval, except that if at any time before expiry of the Exercise Period the Optionholder dies, the legal personal representative of the deceased Optionholder may:

• elect to be registered as the new holder of the Options;

• whether or not he becomes so registered, exercise those Options in accordance with the terms and conditions on which they were granted; and

• if the deceased has already exercised Options, pay the exercise price in respect of those Options.

8. An optionholder may only participate in new issues of securities to holders of ordinary shares in the Company if the Option has been exercised and shares allotted in respect of the Option before the record date for determining entitlements to the issue. The Company must give prior notice to the Optionholder of any new issue before the record date for determining entitlements to the issue in accordance with the ASX Listing Rules.

9. If there is a bonus issue to the holders of ordinary shares in the capital of the Company, the number of ordinary shares over which the Option is exercisable will be increased by the number of ordinary shares which the holder of the Option would have received if the Option had been exercised before the record date for the bonus issue.

10.If the Company makes a rights issue (other than a bonus issue), the exercise price of Options on issue will be reduced according to the following formula:

A = O – E [P – (S + D)] (N + 1)

Where:

A= the new exercise price of the Option;

O= the old exercise price of the Option;

E= the number of underlying ordinary shares into which one Option is exercisable;

P= the average closing sale price per ordinary share (weighted by reference to volume) recorded on the stock market of ASX during the five trading days immediately preceding the ex rights date or ex entitlements date (excluding special crossings and overnight sales and exchange traded option exercises);

S= the subscription price for a security under the pro rata issue;

D= the dividend due but not yet paid on existing underlying securities (except those to be issued under the pro rata issue); and

N= the number of securities with rights or entitlements that must be held to receive a right to one new security.

11.If, during the currency of the Options the issued capital of the Company is reorganised, those Options will be reorganised to the extent necessary to comply with ASX Listing Rules.


terMs & coNDItIoNs oF oPtIoNs

For

per

sona

l use

onl

y

91



8.5(b) options to Joanne Patterson and Craig Weller

As at the date of this Prospectus, the Company has granted 1,500,000 Options to each of Joanne Patterson and Craig Weller on the same terms as set out in Section 8.5(a) save and except that:

1. 500,000 Options will vest immediately upon their issue, and be exercisable at $0.25.

2. 500,000 Options will vest 12 months after their issue, and be exercisable at $0.30.


4. Each Option is exercisable in whole or in part at any time during the period commencing on the date they vest in accordance with clauses 1, 2 or 3 of these terms and expiring on the third anniversary of their date of issue (exercise Period). Options not exercised before the expiry of the Exercise Period will lapse.

8.5(c) options to John Gilder

As at the date of this Prospectus, the Company has granted 300,000 Options to John Gilder on the same terms as set out in Section 8 .5(a) save and except that:

1. 100,000 Options will vest immediately upon their issue, and be exercisable at $0.25.



4. Each Option is exercisable in whole or in part at any time during the period commencing on the date they vest in accordance with clauses 1, 2 or 3 of these terms and expiring on the third anniversary of their date of issue (exercise Period). Options not exercised before the expiry of the Exercise Period will lapse.

8.5(d) options to nWr Communications

As at the date of this Prospectus, the Company has granted 250,000 Options to NWR Communications Pty Ltd, on the same terms as set out in Section 8.5(a).

8.5(e) options to Taylor Collison

As at the date of this Prospectus, the Company has agreed to grant that number of Options equating to 5% of the issued capital of the Company (calculated post completion of the Issue) to Taylor Collison on the same terms as set out in Section 8.5(a).


For

per

sona

l use

onl

y


92


8.6 employee share option Plan

The Company has established an Employee Share Option Plan (Plan) to assist in the attraction, retention and motivation of employees of the Company.

The summary of the Plan is set out below for the information of potential investors in the Company. The detailed terms and conditions of the Plan may be obtained free of charge by contacting the Company.

All employees (full and part-time), and certain casual employees and contractors, will be eligible to participate in the Plan.

The allocation of Options to each employee is in the discretion of the Board.

If permitted by the Board, Options may be issued to an employee’s nominee.

Each Option is to subscribe for one fully paid ordinary share in the Company and will expire three years from its date of issue. Subject to vesting under applicable vesting condition (if any) or satisfaction of applicable performance condition (if any) an Option is exercisable at any time from its date of issue.

Options will be issued free (unless otherwise determined by the Directors). The exercise price of Options will be the amount determined by the Board. The total number of shares the subject of Options issued under the Plan, when aggregated with issues during the previous three years pursuant to the Plan and any other employee share plan, must not exceed 5% of the Company’s issued share capital.

If, prior to the expiry date of Options, an employee’s employment is terminated where such termination has either been voluntary on the employee’s part or otherwise has occurred without cause the Options held by that person (or that person’s nominee) must be exercised within 30 days after the termination (but prior to the expiry date of options) otherwise they will automatically lapse.

Except with the consent of the Board, Options may not be transferred and will not be quoted on or by ASX.

Shares issued as a result of the exercise of Options will rank equally with the Company’s previously issued shares.

Optionholders may only participate in new issues of securities by first exercising their Options.

If there is a bonus share issue to the holders of shares, the number of shares over which an Option is exercisable will be increased by the number of shares which the Optionholder would have received if the Option had been exercised before the record date for the bonus issue.

If there is a pro rata issue (other than a bonus share issue) to the holders of shares, the exercise price of an Option will be reduced to take account of the effect of the pro rata issue in accordance with the formula in Section 8.5(a) of this Prospectus.

If there is a reorganisation of the issued capital of the Company, unexercised Options will be reorganised in accordance with the Listing Rules.

The Board may amend the Plan Rules subject to the requirements of the Listing Rules.


eMPLoYee sHAre oPtIoN PLAN

For

per

sona

l use

onl

y

93



8.7 Directors’ Interests

Except as disclosed in this Prospectus, no Director (whether individually or in consequence of a Director’s association with any company or firm or in any material contract entered into by the Company) has now, or has had, in the two year period ending on the date of this Prospectus, any interest in:

• the formation or promotion of the Company; or

• property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offer of the Shares; or

• the Offer of the Shares.

Except as disclosed in this Prospectus, no amounts of any kind (whether in cash, Shares, Options or otherwise) have been paid or given or agreed to be paid or given to any Director or to any company or firm with which a Director is associated to induce him or her to become, or to qualify as, a Director, or otherwise for services rendered by him or her or any company or firm with which the Director is associated in connection with:



Mr Simon O’Loughlin is a Partner of O’Loughlins Lawyers which has acted as solicitors to the Company in relation to the Offer.


DIrectors’ INterests

For

per

sona

l use

onl

y


94


8.8 Interests of Named Persons

Except as disclosed in this Prospectus, no promoter, underwriter, expert or any other person named in this Prospectus as performing a function in a professional advisory or other capacity in connection with the preparation or distribution of this Prospectus, nor any firm in which any of those persons is or was a partner nor any company in which any of those persons is or was associated with, has now, or has had, in the two year period ending on the date of this Prospectus, any interest in:


• property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offer of the Shares; or


Except as disclosed in this Prospectus, no amounts of any kind (whether in cash, Shares, Options or otherwise) have been paid or given or agreed to be paid or given to any promoter, underwriter, expert or any other person named in this Prospectus as performing a function in a professional advisory or other capacity in connection with the preparation or distribution of this Prospectus, or to any firm in which any of those persons is or was a partner or to any company in which any of those persons is or was associated with, for services rendered by that person in connection with the formation or promotion of the Company or the Offer under this Prospectus.

HLB Mann Judd Audit (SA) Pty Ltd has acted as the investigating accountant in relation to the Offer. As investigating accountant, HLB Mann Judd Audit (SA) Pty Ltd has prepared the Independent Limited Assurance Report which has been included in this Prospectus. In respect of this work the Company has agreed to pay HLB Mann Judd Audit (SA) Pty Ltd a total of $15,000 (exclusive of GST) for these services. The Company has incurred professional fees in the sum of $6,000 (exclusive of GST) in respect of audit services provided by HLB Mann Judd Audit (SA) Pty Ltd during 2016.

INterests oF NAMeD PersoNs


For

per

sona

l use

onl

y

95



O’Loughlins Lawyers have acted as the solicitors to the Company in relation to the Offer, and in that capacity and otherwise assisting the Company with the preparation of this Prospectus, O’Loughlins Lawyers have been involved in undertaking certain due diligence enquiries in relation to legal matters and providing legal advice to the Company in relation to the Offer. In respect of this work, the Company has agreed to pay O’Loughlins Lawyers $60,000 (exclusive of GST) for these services up to the date of this Prospectus. O’Loughlins Lawyers have been paid $3,784 (exclusive of GST) for professional fees from the Company during the last 24 months.

Link Market Services Limited has agreed to provide share registry services to the Company in accordance with a detailed schedule of fees listed in its proposal to Bod Australia for share registry services for the Offer, dated 5 August 2016.

Taylor Collison Limited will receive the remuneration outlined in Section 7.7 of this Prospectus in respect of its services as Lead Manager to the Offer.

Indian Ocean Corporate Pty Ltd will receive the remuneration outlined in Section 7.7 of this Prospectus in respect of its services as Co-Advisor to the Offer.


For

per

sona

l use

onl

y


96


8.9 consents

Chapter 6D of the Corporations Act imposes a liability regime on the Company (as offeror of the Shares), the directors of the Company, persons named in the 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.

In light of the above, each of the parties referred to below, to the maximum extent permitted by law, expressly disclaims all liabilities in respect of, makes no representations regarding and takes no responsibility for any statements in or omissions from this Prospectus, other than the reference to its name in the form and context in which it is named and a statement or report included in this Prospectus with its consent as specified below.

HLB Mann Judd Audit (SA) Pty Ltd has given its written consent to the inclusion in Section 6 of this Prospectus of its Independent Limited Assurance Report and to all statements referring to that report in the form and context in which they appear, and to being named as Investigating Accountant and as Auditor, and has not withdrawn such consent before lodgement of this Prospectus with ASIC.

O’Loughlins Lawyers have given their written consent to being named as Solicitors to the Company and have not withdrawn such consent before lodgement of this Prospectus with ASIC.

Taylor Collison Limited has given its written consent to being named as Lead Manager to the Offer and has not withdrawn such consent before lodgement of this Prospectus with ASIC.

Indian Ocean Corporate Pty Ltd has given its written consent to being named as Co-Advisor to the Offer and has not withdrawn such consent before lodgement of this Prospectus with ASIC.

Link Market Services Limited has given and, as at the date hereof, has not withdrawn its written consent to be named as Share Registrar in the form and context in which it is named. Link Market Services Limited has had no involvement in the preparation of any part of this Prospectus other than being named as Share Registrar to the Company. Link Market Services Limited has not authorised or caused the issue of any part of this Prospectus.

There are a number of other persons referred to in this Prospectus who are not experts and who have not made statements included in this Prospectus nor are there any statements made in this Prospectus on the basis of any statements made by those persons. These persons did not consent to being named in this Prospectus and did not authorise or cause this issue of the Prospectus.

coNseNts


For

per

sona

l use

onl

y

97



8.10 electronic Prospectus

If you have received this Prospectus as an electronic prospectus or in paper form please ensure that you have received the entire Prospectus accompanied by the Application Form. If you have not, please email the Company at [email protected] and the Company will send to you, for free, either a hard copy or a further electronic copy of this Prospectus or both.

The Company reserves the right not to accept an Application Form from a person if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with this Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered. In such case, the Application Monies received will be dealt with in accordance with section 722 of the Corporations Act.

8.11 Documents Available for Inspection

Copies of the following documents may be inspected free of charge at the registered office of the Company during normal business hours:

• the Constitution of the Company; and

• the consents referred to in Section 8.9 of this Prospectus.

eLectroNIc ProsPectus & DocuMeNts AVAILABLe For INsPectIoN


For

per

sona

l use

onl

y


98


Section 9: Directors’ Consents

For

per

sona

l use

onl

y

99



Each of the Directors has consented in writing to the lodgement of this Prospectus with ASIC and has not withdrawn that consent.

Dated: 27 September 2016

Signed for and on behalf of the Company

Joanne Patterson

Chief Executive Officer

Section 9: Directors’ Consents

DIrectors’ coNseNts

For

per

sona

l use

onl

y


100


Section 10: Definitions

For

per

sona

l use

onl

y

101



In this Prospectus unless the context otherwise requires:$ or a$ means the lawful currency of Australia. aesT means Australian Eastern Standard Time as observed in Sydney, New South Wales.applicant means a person who submits an Application Form under this Prospectus.application form means the application form contained in this Prospectus or a copy of the application form contained in this Prospectus or a direct derivative of the application form which is contained in this Prospectus.application Money means 20 cents being the amount payable in respect of each Share under the Offer.application means a valid application to subscribe for Shares.asIC means the Australian Securities and Investments Commission.asx means ASX Limited (ACN 008 624 691) or, as the context requires, the financial market conducted by it. asx listing rules or listing rules means the official listing rules of ASX. asx settlement means ASX Settlement Pty Ltd (ACN 008 504 532).asx settlement operating rules mean the operating rules of ASX Settlement.board of Directors and board means the Board of Directors of the Company as constituted from time to time.bod or bod australia means Bod Australia Limited (ACN 601 225 441). bod australia Convertible notes or Convertible notes means the convertible notes issued by Bod Australia to the Convertible Noteholders in accordance with and subject to the terms and conditions set out in the Convertible Note Deeds.business Day means a business day as defined in the ASX Listing Rules.Capital raising means the capital raising to be completed by Bod Australia of at least $4,000,000 (minimum subscription) and up to an additional $2,000,000 (maximum subscription) at an issue price of $0.20 per Share.CHess means the Clearing House Electronic Subregister System operated by ASX Settlement.Closing Date means the date on which the Offer closes.Company means Bod Australia.

Completion of the offer means the allotment of at least 20,000,000 Shares offered under this Prospectus.Constitution means the constitution of the Company. Convertible note Deeds means the deeds entered into between Bod Australia and the Convertible Noteholders in respect of the issue of the Bod Australia Convertible Notes.Convertible noteholders means the holders of the Bod Australia Convertible Notes.Corporations act means the Corporations Act 2001 (Cth).Corporations regulations means Corporations Regulations 2001 (Cth).Directors means the directors of the Company.HIn means holder identification number.Holding lock means holding lock as defined in Section 2 of the ASX Settlement Operating Rules.Issue means the issue of Shares pursuant to this Prospectus.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.Maximum subscription means $6,000,000 or 30,000,000 Shares.Minimum subscription means $4,000,000 or 20,000,000 Shares.offer means the invitation to apply for Shares pursuant to this Prospectus.offer Period means the period commencing on the Opening Date and ending on the Closing Date.offer Price means 20 cents being the amount payable in respect of each Share under the Offer. official list means the Official List of ASX.opening Date means 27 September 2016.option means a right to subscribe for a Share.optionholder means a holder of an Option.Plan means the Bod Australia Employee Option Plan.Prospectus means this replacement prospectus dated 27 September 2016.Quotation means quotation of the Shares on the Official List.share registrar means Link Market Services Limited. share means a fully paid ordinary share in the capital of the Company.shareholder means a holder of a Share.

Section 10: Definitions

DeFINItIoNs

For

per

sona

l use

onl

y


102


Application Form and Instructions to Applicants

For

per

sona

l use

onl

y

103



APPLIcAtIoN ForMPublic Offer Application Form

*BDA IPO001*

Broker Code

BDA IPO001

Adviser Code

G ( )Telephone Number where you can be contacted during Business Hours Contact Name (PRINT)

+FCHESS HIN (if you want to add this holding to a specific CHESS holder, write the number here)

X

E

C

+

D

A(minimum 10,000, thereafter in multiples of 1,000)

Cheques or bank drafts should be made payable to “Bod Australia Limited Application Account” in Australian currency and crossed “Not Negotiable”.

HCheque or Bank Draft Number BSB Account Number

-

Shares applied for Price per Share Application Monies

at B A$0.20, , A$ , , .

This is an Application Form for Shares in Bod Australia Limited under the Public Offer on the terms set out in the Replacement Prospectus dated 27 September 2016. You may apply for a minimum of 10,000 Shares and multiples of 1,000 thereafter. This Application Form and your cheque or bank draft must be received by 5:00pm (AEST) on 7 October 2016.If you are in doubt as to how to deal with this Application Form, please contact your accountant, lawyer, stockbroker or other professional adviser. The Prospectus contains information relevant to a decision to invest in Shares and you should read the entire Prospectus carefully before applying for Shares.

Title First Name Middle Name

PLEASE COMPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names)Applicant #1Surname/Company Name

Designated account e.g. <Super Fund> (or Joint Applicant #3)

Title First Name Middle Name

Joint Applicant #2Surname

PLEASE COMPLETE ADDRESS DETAILSPO Box/RMB/Locked Bag/Care of (c/-)/Property name/Building name (if applicable)

Suburb/City or Town State Postcode

Unit Number/Level Street Number Street Name

Email address (only for purpose of electronic communication of shareholder information)

TFN/ABN type – if NOT an individual, please mark the appropriate box Company Partnership Trust Super Fund

TFN/ABN/Exemption Code First Applicant Joint Applicant #2 Joint Applicant #3

ACN 601 225 441

LODGEMENT INSTRUCTIONS You must return your application so it is received before 5:00pm (AEST) on 7 October 2016 to: Link Market Services Limited, Locked Bag A14, Sydney South NSW 1235.

Please note: that if you supply a CHESS HIN but the name and address details on your Application Form do not correspond exactly with the registration details held at CHESS, your Application will be deemed to be made without the CHESS HIN and any Shares issued as a result of the Offer will be held on the issuer sponsored sub-register.

Total Amount A$ , , .

For

per

sona

l use

onl

y


104



INstructIoNs to APPLIcANts

Your Guide to the Application Form

CORRECT FORMS OF REGISTRABLE NAMESNote that ONLY legal entities are allowed to hold Shares. Applications must be in the name(s) of natural persons or companies. At least one full given name and the surname is required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as described in the examples of correct forms below.

Put the name(s) of any joint Applicant(s) and/or account description using < > as indicated above in designated spaces at section C on the Application Form.

Please complete all relevant white sections of the Application Form in BLOCK LETTERS, using black or blue ink. These instructions are cross-referenced to each section of the form.The Shares to which this Application Form relates are Bod Australia Limited (“Bod”) Shares. Further details about the shares are contained in the Replacement Prospectus dated 27 September 2016 issued by Bod. The Replacement Prospectus will expire on 27 October 2017. While the Replacement Prospectus is current, Bod will send paper copies of the Replacement Prospectus, any supplementary document and the Application Form, free of charge on request.The Australian Securities and Investments Commission requires that a person who provides access to an electronic application form must provide access, by the same means and at the same time, to the relevant Replacement Prospectus. This Application Form is included in the Replacement Prospectus. The Replacement Prospectus contains important information about investing in the Shares. You should read the Replacement Prospectus before applying for Shares.

A Insert the number of Shares you wish to apply for. The Application must be for a minimum of 10,000 Shares and thereafter in multiples of 1,000. You may be issued all of the Shares applied for or a lesser number.

B Insert the relevant amount of Application Monies. To calculate your Application Monies, multiply the number of Shares applied for by the issue price. Amounts should be in Australian dollars. Please make sure the amount of your cheque or bank draft equals this amount.

C Write the full name you wish to appear on the register of Shares. This must be either your own name or the name of a company. Up to three joint Applicants may register. You should refer to the table below for the correct registrable title.

D Enter your Tax File Number (TFN) or exemption category. Business enterprises may alternatively quote their Australian Business Number (ABN). Where applicable, please enter the TFN or ABN for each joint Applicant. Collection of TFN(s) and ABN(s) is authorised by taxation laws. Quotation of TFN(s) and ABN(s) is not compulsory and will not affect your Application. However, if these are not provided, Bod will be required to deduct tax at the highest marginal rate of tax (including the Medicare Levy) from payments.

E Please enter your postal address for all correspondence. All communications to you from Bod and the Share Registry will be mailed to the person(s) and address as shown. For joint Applicants, only one address can be entered.

F If you are already a CHESS participant or sponsored by a CHESS participant, write your Holder Identification Number (HIN) here. If the name or address recorded on CHESS for this HIN is different to the details given on this form, your Shares will be issued to Bod’s issuer sponsored subregister.

G Please enter your telephone number(s), area code and contact name in case we need to contact you in relation to your Application.

H Please complete the details of your cheque or bank draft in this section. The total amount of your cheque or bank draft should agree with the amount shown in section B.

Make your cheque or bank draft payable to “Bod Australia Limited Application Account” in Australian currency and cross it “Not Negotiable”. Your cheque or bank draft must be drawn on an Australian bank. Sufficient cleared funds should be held in your account, as cheques returned unpaid are likely to result in your Application being rejected.

If you receive a firm allocation of Shares from your Broker make your cheque payable to your Broker in accordance with their instructions.

LODGEMENT INSTRUCTIONSThis Application Form and your cheque or bank draft must be mailed or delivered so that it is received before 5:00pm (AEST) on 7 October 2016 at: Mailing Address Hand DeliveryBod Australia Limited Bod Australia LimitedC/- Link Market Services Limited C/- Link Market Services LimitedLocked Bag A14 1A Homebush Bay DriveSydney South NSW 1235 Rhodes NSW 2138 (do not use this address for mailing purposes)

Type of Investor Correct Form of Registration Incorrect Form of Registration

IndividualUse given names in full, not initials Mrs Katherine Clare Edwards K C EdwardsCompanyUse Company’s full title, not abbreviations Liz Biz Pty Ltd Liz Biz P/L or Liz Biz Co.Joint HoldingsUse full and complete names

Mr Peter Paul Tranche &Ms Mary Orlando Tranche

Peter Paul & Mary Tranche

TrustsUse the trustee(s) personal name(s)

Mrs Alessandra Herbert Smith<Alessandra Smith A/C>

Alessandra SmithFamily Trust

Deceased EstatesUse the executor(s) personal name(s)

Ms Sophia Garnet Post &Mr Alexander Traverse Post<Est Harold Post A/C>

Estate of late Harold PostorHarold Post Deceased

Minor (a person under the age of 18 years)Use the name of a responsible adult with an appropriate designation

Mrs Sally Hamilton<Henry Hamilton>

Master Henry Hamilton

PartnershipsUse the partners’ personal names

Mr Frederick Samuel Smith &Mr Samuel Lawrence Smith<Fred Smith & Son A/C>

Fred Smith & Son

Long Names Mr Hugh Adrian John Smith-Jones Mr Hugh A J Smith Jones

Clubs/Unincorporated Bodies/Business NamesUse office bearer(s) personal name(s)

Mr Alistair Edward Lilley<Vintage Wine Club A/C>

Vintage Wine Club

Superannuation FundsUse the name of the trustee of the fund

XYZ Pty Ltd<Super Fund A/C>

XYZ Pty LtdSuperannuation Fund

PERSONAL INFORMATION COLLECTION NOTIFICATION STATEMENTPersonal information about you is held on the public register in accordance with Chapter 2C of the Corporations Act 2001. For details about Link Group’s personal information handling practices including collection, use and disclosure, how you may access and correct your personal information and raise privacy concerns, visit our website at www.linkmarketservices.com.au for a copy of the Link Group condensed privacy statement, or contact us by phone on +61 1800 502 355 (free call within Australia) 9am–5pm (Sydney time) Monday to Friday (excluding public holidays) to request a copy of our complete privacy policy.

For

per

sona

l use

onl

y

105




For

per

sona

l use

onl

y

www.bodaustralia.com

For

per

sona

l use

onl

y