PEPPERMINT INNOVATION LIMITED ACN 125 931 964 PROSPECTUS For the offer of 250,000,000 Shares at an issue price of $0.02 per Share to raise up to $5,000,000 (before expenses), together with one (1) free-attaching Option for every three (3) Shares subscribed for by eligible participants under the Placement ( Placement Offer ). This Prospectus also contains an offer for up to 30,000,000 Broker Options ( Broker Offer ). The Placement Offer and the Broker Offer are together considered the Offers. IMPORTANT NOTICE This document is important and should be read in its entirety. If after reading this Prospectus you have any questions about the Shares being offered under this Prospectus or any other matter, then you should consult your stockbroker, accountant or other professional adviser. The Shares offered under this Prospectus should be considered speculative. 4114-02/2832496_2 i T A B L E O F C O N T E N T S 1. CORPORATE DIRECTORY ............................................................................................ 1 2. TIMETABLE AND IMPORTANT NOTES ......................................................................... 2 3. DETAILS OF THE OFFER .............................................................................................. 5 4. PURPOSE AND EFFECT OF THE OFFER ......................................................................... 8 5. RIGHTS AND LIABILITIES ATTACHING TO SECURITIES ................................................ 12 6. RISK FACTORS ......................................................................................................... 17 7. ADDITIONAL INFORMATION .................................................................................... 25 8. DIRECTORS’ AUTHORISATION .................................................................................. 32 9. DEFINITIONS ........................................................................................................... 33 4114-02/2832496_2 1 1. CORPORATE DIRECTORY Directors Christopher Kain Managing Director Anthony Kain Executive Director Matthew Cahill Non-executive Director Chief Financial Officer Michael van Uffelen Company Secretary Anthony Kain Share Registry* Computershare Investor Services Pty Ltd Level 11 172 St Georges Terrace PERTH WA 6000 Telephone: +61 8 9323 2000 Facsimile: +61 8 9323 2033 Registered Office Level 2 East The Wentworth Building 300 Murray Street PERTH WA 6000 Telephone: + 61 8 6255 5504 Email: email@example.com Website: www.pepltd.com.au ASX Code PIL Lawyers Steinepreis Paganin Lawyers and Consultants Level 4, The Read Buildings 16 Milligan Street PERTH WA 6000 Auditors* RSM Australia Partners Level 32 2 The Esplanade PERTH WA 6000 * These entities have not been involved in the preparation of this Prospectus and have not consented to being named in this Prospectus. Their names are included for information purposes only. 4114-02/2832496_2 2 2. TIMETABLE AND IMPORTANT NOTES 2.1 Timetable Action Date Lodgement of Prospectus with the ASIC and ASX 22 November 2021 Opening Date 22 November 2021 Closing Date* 5:00pm WST on 24 November 2021 Expected date of Official Quotation of the Shares 26 November 2021 * The Directors reserve the right to bring forward or extend the Closing Date at any time after the Opening Date without notice. As such, the date the Shares are expected to commence trading on ASX may vary with any change in the Closing Date. 2.2 Important Notes This Prospectus is dated 22 November 2021 and was lodged with the ASIC on that date. The ASIC and its officers take no responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates. No Shares may be issued on the basis of this Prospectus later than 13 months after the date of this Prospectus. The Offer is only available to those who are personally invited to accept the Offer. Applications for Shares offered pursuant to this Prospectus can only be submitted on an original Application Form which accompanies this Prospectus. This Prospectus is a transaction specific prospectus for an offer of continuously quoted securities (as defined in the Corporations Act) and has been prepared in accordance with section 713 of the Corporations Act. It does not contain the same level of disclosure as an initial public offering prospectus. In making representations in this Prospectus regard has been had to the fact that the Company is a disclosing entity for the purposes of the Corporations Act and certain matters may reasonably be expected to be known to investors and professional advisers whom potential investors may consult. 2.3 Web Site – Electronic Prospectus A copy of this Prospectus can be downloaded from the website of the Company at www.pepltd.com.au. If you are accessing the electronic version of this Prospectus for the purpose of making an investment in the Company, you must be an Australian resident and must only access this Prospectus from within Australia. The Corporations Act prohibits any person passing onto another person an Application Form unless it is attached to a hard copy of this Prospectus or it accompanies the complete and unaltered version of this Prospectus. Any person may obtain a hard copy of this Prospectus free of charge by contacting the Company. 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 the electronic Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered. 4114-02/2832496_2 3 2.4 Website No document or information included on our website is incorporated by reference into this Prospectus. 2.5 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 6 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. 2.6 Overseas Investors The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and therefore persons into whose possession this document comes should seek advice on and observe any such restrictions. Any failure to comply with these restrictions constitutes a violation of those laws. This Prospectus does not constitute an offer of Shares in any jurisdiction where, or to any person to whom, it would be unlawful to issue in this Prospectus. 2.7 Forward-looking statements This Prospectus contains forward-looking statements which are identified by words such as ‘may’, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’, or ‘intends’ and other similar words that involve risks and uncertainties. These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions regarding future events and actions that, as at the date of this Prospectus, are expected to take place. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of our Company, the Directors and our management. We cannot and do not give any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained in this prospectus will actually occur and investors are cautioned not to place undue reliance on these forward-looking statements. We have no intention to update or revise forward-looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this prospectus, except where required by law. These forward looking statements are subject to various risk factors that could cause our actual results to differ materially from the results expressed or anticipated in these statements. These risk factors are set out in Section 6 of this Prospectus. 4114-02/2832496_2 4 2.8 Disclaimer No person is authorised to give any information or to make any representation in connection with the Offer described in this Prospectus which 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. 2.9 Target Market Determination In accordance with the design and distribution obligations under the Corporations Act, the Company has determined the target market for the offer of New Options and Broker Options issued under this Prospectus. The Company will only distribute this Prospectus to those investors who fall within the target market determination ( TMD ) as set out on the Company’s website ( www.pepltd.com.au ). By making an application under the Options Offer, you warrant that you have read and understood the TMD and that you fall within the target market set out in the TMD. 4114-02/2832496_2 5 3. DETAILS OF THE OFFER 3.1 Background to the Offers As announced on Thursday, 11 November 2021, the Company received firm commitments to raise $4,000,000 (before costs) by a placement of 200,000,000 Shares. The Company has decided to increase the amount to be raised to up to $5,000,000 (before costs) by a placement of up to 250,000,000 Shares ( Placement Shares ) to sophisticated and professional investors at an issue price of $0.02 per Share, together with one (1) free-attaching Option for every three (3) Shares subscribed for by eligible participants under the Placement ( Placement ). The Company has also agreed to offer up to 30,000,000 Options to the holders of an AFSL selected by the Company who assist in the raising of funds under the Placement ( Broker Options ). 3.2 The Placement Offer Pursuant to this Prospectus, the Company invites investors identified by the Directors to apply for up to 250,000,000 Shares at an issue price of $0.02 per Share to raise up to $5,000,000 (before expenses), together with one (1) free-attaching Option for every three (3) Shares subscribed for by eligible participants under the Placement. The Placement Offer will only be extended to specific parties on invitation from the Directors. Application Forms will only be provided by the Company to these parties. All of the Shares offered under this Prospectus will rank equally with Shares on issue at the date of this Prospectus. A summary of the material rights and liabilities attaching to the Shares is set out in Section 5.1. The Options will be issued free-attaching to the Placement Shares for nil cash consideration. There will be 66,666,666 free-attaching Options (exercisable at $0.03 each, on or before 30 June 2023) ( New Options ) issued on the basis of one (1) New Option for every three (3) Shares subscribed for under the Placement. No funds will be raised from the issue of the New Options as they are being issued free attaching with the Placement Shares. The New Options will be issued on the terms and conditions set out in Section 5.2. 3.3 The Broker Offer The Broker Offer is an offer for up to 30,000,000 Broker Options. All Broker Options offered under this Prospectus will be issued on the terms and conditions set out in Section 5.2. No funds will be raised pursuant to the Broker Offer as the Broker Options are being issued at a nil issue price, as part consideration for services provided to the Company in relation to raising funds under the Placement. 4114-02/2832496_2 6 3.4 Applications 3.4.1 Application under the Placement Offer Applications for Shares under the Placement Offer must be made by investors at the direction of the Company and must be made using the Application Form accompanying this Prospectus. Payment for the Shares under the Placement Offer must be made in full at the issue price of $0.02 per Share. Completed Application Forms and accompanying cheques (or if transferring funds electronically, the funds must be transferred to the account details on the Application Form) must be mailed or delivered to the Company as follows: Delivery by hand Delivery by post Level 2 East, The Wentworth Building, 300 Murray Street, PERTH WA 6000 Level 2 East, The Wentworth Building, 300 Murray Street, PERTH WA 6000 Cheques should be made payable to “ Peppermint Innovation Limited – Share Offer Account ” and crossed “ Not Negotiable ”. Completed Application Forms and accompanying cheques must be mailed or delivered to the address set out on the Application Form by no later than the Closing Date of the Placement Offer. The Company will also accept payment on a delivery versus payment ( DvP ) basis. Please contact your broker if you wish to pay for Shares under the Placement Offer on a DvP basis. 3.4.2 Broker Offer An Application Form in relation to the Broker Offer will only be provided by the Company to parties nominated by the Company together with a copy of this Prospectus. A summary of the terms and conditions of the New Options to be issued free attaching to the Placement Shares and the Broker Options the subject of the Broker Offer are set out in Section 5.2. 3.5 Minimum subscription There is no minimum subscription. 3.6 Issue of Securities Securities issued pursuant to the Offers will be issued in accordance with the ASX Listing Rules and timetable set out at the commencement of this Prospectus. Application moneys will be held in a separate subscription account until the Shares are issued. This account will be established and kept by the Company in trust for each Applicant. Any interest earned on the application moneys will be for the benefit of the Company and will be retained by the Company irrespective of whether any Shares are issued and each Applicant waives the right to claim any interest. The Directors will determine the recipients of all the Securities. The Directors reserve the right to reject any application or to allocate any Applicant fewer Securities than the number applied for. 4114-02/2832496_2 7 Where the number of Securities issued is less than the number applied for, the surplus moneys will be returned by cheque as soon as practicable after the Closing Date. Where no issue of Shares is made, the amount tendered on application will be returned in full by cheque as soon as practicable after the Closing Date. Interest will not be paid on moneys refunded. 3.7 ASX listing Application for Official Quotation of the Shares offered pursuant to this Prospectus will be made within 7 days of the date of this Prospectus. If ASX does not grant Official Quotation of the Shares offered pursuant to this Prospectus before the expiration of 3 months after the date of issue of the Prospectus, (or such period as varied by the ASIC), the Company will not issue any Shares and will repay all application monies for the Shares within the time prescribed under the Corporations Act, without interest. The fact that ASX may grant Official Quotation to the Shares is not to be taken in any way as an indication of the merits of the Company or the Shares now offered for subscription. 3.8 Restrictions on the distribution of the Prospectus The distribution of this Prospectus outside the Commonwealth of Australia may be restricted by law. This Offer does not, and is not intended to, constitute an offer in any place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus. Residents of countries outside Australia should consult their professional advisers as to whether any government or other consents are required, or whether any formalities need to be observed should they wish to make an application to take up Shares on the basis of this Prospectus. The return of a duly completed Application Form will be taken to constitute a representation and warranty that there has been no breach of such laws and that all approvals and consents have been obtained. 3.9 Enquiries Any questions concerning the Offers should be directed to Anthony Kain, Company Secretary, on (08) 6255 5504. 4114-02/2832496_2 8 4. PURPOSE AND EFFECT OF THE OFFER 4.1 Purpose of the Offers 4.1.1 Purpose of the Placement Offer The primary purpose of the Placement Offer is to raise $5,000,000 (before costs and assuming full subscription). The Company intends to use funds raised under the Placement Offer as follows: Use $ Electronic money issuer licence capital 3,000,000 Working capital and operating expenses 1,700,000 Expenses of the Placement Offer 300,000 Total 5,000,000 The above table is a statement of current intentions. As with any budget, intervening events 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 on this basis. Actual expenditure may differ significantly from the above estimates due to a change in market conditions, the development of new opportunities and other factors. 4.1.2 Purpose of the Broker Offer The Broker Offer is being made as part of the consideration for services provided by holders of an AFSL nominated by the Company in relation to the Placement. The Offers is being made such that the relief provided under ASIC Corporations (Sale Offers That Do Not Need Disclosure) Instrument 2016/80 with respect to the on-sale provisions of section 707 of the Corporations Act is available. Specifically, if the Broker Options are issued with disclosure under this Prospectus then the Shares issued upon exercise of any of the New Options and Broker Options can be on-sold within 12 months of their issue, without a disclosure document for the on-sale offer. 4.2 Effect of the Offers on capital structure The effect of the Offer on the Company’s capital structure is set out below. Shares 1 Number Shares currently on issue 1,694,718,282 Shares offered pursuant to the Placement Offer 2 250,000,000 Shares offered pursuant to the Broker Offer Nil Total Shares on issue on completion of the Offers 2 1,944,718,282 Notes: 1. The rights and liabilities attaching to the Shares are summarised in 5.1 of this Prospectus. 2. This assumes the Placement offer is fully subscribed and no Options are exercised. 4114-02/2832496_2 9 Options 1 Number Options currently on issue (quoted) Nil Options currently on issue (unquoted): exercisable at $0.01 on or before 31 December 2021 exercisable at $0.015 on or before 18 February 2024 exercisable at $0.025 on or before 18 February 2024 exercisable at $0.02 on or before 30 June 2024 exercisable at $0.025 on or before 30 June 2024 exercisable at $0.03 on or before 30 June 2024 exercisable at $0.04 on or before 30 June 2024 20,000,000 20,000,000 20,000,000 2,500,000 2,500,000 2,500,000 2,500,000 New Options offered pursuant to the Options Offer (as part of the Placement) 83,333,333 Broker Options offered purusant to the Broker Offer 30,000,000 Total Options on issue on completion of the Offers 183,333,333 Bonus Options proposed to be issued 2 194,471,828 Additional Options proposed to be issued 2 194,471,828 Total Options on issue on completion of the proposed issue of Bonus Options and Additional options 572,276,989 Notes: 1. The rights and liabilities attaching to the Options are summarised in Section 5.2 of this Prospectus. 2. As announced on 11 November 2021, the Company intends to issue one option for every ten (10) Shares held on completion of the Offers, exercisable at $0.02 on or before 17 December 2021 ( Bonus Options ). Upon exercising these Bonus Options, eligible shareholders will receive a further Option for every Bonus Option exercised prior to 17 December 2021, exercisable at $0.03 on or before 30 June 2023 ( Additional Options ). Further details will be provided in due course. Convertible notes Number Convertible notes currently on issue 1 438,732 Convertible notes offered pursuant to the Placement Offer Nil Convertible notes offered pursuant to the Options Offer Nil Convertible notes offered pursuant to the Broker Offer Nil Total Convertible Notes on issue after completion of the Offers 438,732 Notes: 1. As at the date of this Prospectus, the Converitible Notes have a face value of $1 per Convertible Note. The Convertible Notes may convert into a maximum of 43,873,200 Shares upon conversion by the noteholder at $0.01 per Share along with interest which has accrued on the Convertible Notes to the date of conversion or as the parties otherwise agree in writing. 4.3 Financial effect of the Offers The principal effect of the Offers, assuming the Placement Offer is fully subscribed, will be to increase the cash reserves by approximately $4,690,000 (after deducting the estimated expenses of the Placement Offer) immediately on completion of the Placement Offer. 4114-02/2832496_2 10 Accordingly, the Offers will have an effect on the Company’s financial position, being the increase in the Company’s existing cash reserves. 4.4 Pro-forma statement of financial position The unaudited consolidated pro-forma balance sheet as 30 June 2021 shown below has been prepared on the basis of the accounting policies normally adopted by the Company and reflect the changes to its financial position. The pro-forma balance sheet has been prepared to provide investors with information on the assets and liabilities of the Company and pro-forma assets and liabilities of the Company as noted below. The historical and pro-forma financial information is presented in an abbreviated form, insofar as it does not include all of the disclosures required by Australian Accounting Standards applicable to annual financial statements. 30 June 2021 ($) ADJUSTMENT PROFORMA 30 June 2021 ($) CURRENT ASSETS Cash and cash equivalents 3,112,411 4,690,000 7,802,411 Restricted cash 336,829 336,829 Trade and other receivables 92,317 92,317 Inventory 55,113 55,113 TOTAL CURRENT ASSETS 3,596,670 8,286,670 NON-CURRENT ASSETS Plant and equipment - TOTAL NON-CURRENT ASSETS - TOTAL ASSETS 3,596,670 8,286,670 CURRENT LIABILITIES Trade and other payables 353,799 353,799 Provisions 188,563 188,563 Financial liabilities 390,701 390,701 TOTAL CURRENT LIABILITIES 933,063 933,063 NON-CURRENT LIABILITIES Financial liabilities - - TOTAL NON-CURRENT LIABILITIES - - TOTAL LIABILITIES 933,063 933,063 4114-02/2832496_2 11 30 June 2021 ($) ADJUSTMENT PROFORMA 30 June 2021 ($) NET ASSETS 2,663,607 7,353,607 EQUITY Issued capital 19,913,784 4,690,000 24,603,784 Accumulated losses (17,702,715) (17,702,715) Reserves 452,538 452,538 TOTAL EQUITY 2,663,607 7,353,607 4114-02/2832496_2 12 5. RIGHTS AND LIABILITIES ATTACHING TO SECURITIES The following is a summary of the more significant rights and liabilities attaching to securities being offered pursuant to this Prospectus. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of securityholders. To obtain such a statement, persons should seek independent legal advice. 5.1 Shares Full details of the rights and liabilities attaching to Shares are set out in the Constitution, a copy of which is available for inspection at the Company’s registered office during normal business hours. (a) General meetings Shareholders are entitled to be present in person, or by proxy, attorney or representative to attend and vote at general meetings of the Company. Shareholders may requisition meetings in accordance with section 249D of the Corporations Act and the Constitution of the Company. (b) Voting rights Subject to any rights or restrictions for the time being attached to any class or classes of shares, at general meetings of shareholders or classes of shareholders: (i) each Shareholder entitled to vote may vote in person or by proxy, attorney or representative; (ii) on a show of hands, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder has one vote; and (iii) on a poll, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder shall, in respect of each fully paid Share held by him, or in respect of which he is appointed a proxy, attorney or representative, have one vote for each Share held, but in respect of partly paid shares shall have such number of votes as bears the same proportion to the total of such Shares registered in the Shareholder’s name as the amount paid (not credited) bears to the total amounts paid and payable (excluding amounts credited). (c) Dividend rights Subject to the rights of any preference Shareholders and to the rights of the holders of any shares created or raised under any special arrangement as to dividend, the Directors may from time to time declare a dividend to be paid to the Shareholders entitled to the dividend which shall be payable on all Shares according to the proportion that the amount paid (not credited) is of the total amounts paid and payable (excluding amounts credited) in respect of such Shares. The Directors may from time to time pay to the Shareholders any interim dividends as they may determine. No dividend shall carry interest as against the Company. The Directors may set aside out of the profits of 4114-02/2832496_2 13 the Company any amounts that they may determine as reserves, to be applied at the discretion of the Directors, for any purpose for which the profits of the Company may be properly applied. Subject to the ASX Listing Rules and the Corporations Act, the Company may, by resolution of the Directors, implement a dividend reinvestment plan on such terms and conditions as the Directors think fit and which provides for any dividend which the Directors may declare from time to time payable on Shares which are participating Shares in the dividend reinvestment plan, less any amount which the Company shall either pursuant to the Constitution or any law be entitled or obliged to retain, be applied by the Company to the payment of the subscription price of Shares. (d) Winding-up If the Company is wound up, the liquidator may, with the authority of a special resolution, divide among the Shareholders in kind the whole or any part of the property of the Company, and may for that purpose set such value as he considers fair upon any property to be so divided, and may determine how the division is to be carried out as between the Shareholders or different classes of Shareholders. The liquidator may, with the authority of a special resolution, vest the whole or any part of any such property in trustees upon such trusts for the benefit of the contributories as the liquidator thinks fit, but so that no Shareholder is compelled to accept any shares or other securities in respect of which there is any liability. (e) Shareholder liability As the Shares issued will be fully paid shares, they will not be subject to any calls for money by the Directors and will therefore not become liable for forfeiture. (f) Transfer of shares Generally, shares in the Company are freely transferable, subject to formal requirements, the registration of the transfer not resulting in a contravention of or failure to observe the provisions of a law of Australia and the transfer not being in breach of the Corporations Act and the ASX Listing Rules. (g) Future increase in capital The issue of any new Shares is under the control of the Directors of the Company. Subject to restrictions on the issue or grant of Securities contained in the ASX Listing Rules, the Constitution and the Corporations Act (and without affecting any special right previously conferred on the holder of an existing share or class of shares), the Directors may issue Shares as they shall, in their absolute discretion, determine. (h) Variation of rights Under section 246B of the Corporations Act, the Company may, with the sanction of a special resolution passed at a meeting of Shareholders vary or abrogate the rights attaching to shares. 4114-02/2832496_2 14 If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class), whether or not the Company is being wound up, may be varied or abrogated with the consent in writing of the holders of three quarters of the issued shares of that class, or if authorised by a special resolution passed at a separate meeting of the holders of the shares of that class. (i) Alteration of constitution In accordance with the Corporations Act, the Constitution can only be amended by a special resolution passed by at least three quarters of Shareholders present and voting at the general meeting. In addition, at least 28 days written notice specifying the intention to propose the resolution as a special resolution must be given. 5.2 Options The terms and conditions of the New Options and the Broker Options are as follows: (a) Entitlement Each Option entitles the holder to subscribe for one Share upon exercise of the Option. (b) Exercise Price Subject to paragraph (i), the amount payable upon exercise of each Option will be $0.03 ( Exercise Price ). (c) Expiry Date Each Option will expire at 5:00 pm (WST) on 30 June 2023 ( Expiry Date ). An Option not exercised before the Expiry Date will automatically lapse on the Expiry Date. (d) Exercise Period The Options are exercisable at any time on or prior to the Expiry Date ( Exercise Period ). (e) Notice of Exercise The Options may be exercised during the Exercise Period by notice in writing to the Company in the manner specified on the Option certificate ( Notice of Exercise ) and payment of the Exercise Price for each Option being exercised in Australian currency by electronic funds transfer or other means of payment acceptable to the Company. (f) Exercise Date 4114-02/2832496_2 15 A Notice of Exercise is only effective on and from the later of the date of receipt of the Notice of Exercise and the date of receipt of the payment of the Exercise Price for each Option being exercised in cleared funds ( Exercise Date ). (g) Timing of issue of Shares on exercise Within 15 Business Days after the Exercise Date, the Company will: (i) issue the number of Shares required under these terms and conditions in respect of the number of Options specified in the Notice of Exercise and for which cleared funds have been received by the Company; (ii) if required, give ASX a notice that complies with section 708A(5)(e) of the Corporations Act, or, if the Company is unable to issue such a notice, lodge with ASIC a prospectus prepared in accordance with the Corporations Act and do all such things necessary to satisfy section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors; and (iii) if admitted to the official list of ASX at the time, apply for official quotation on ASX of Shares issued pursuant to the exercise of the Options. If a notice delivered under (g)(ii) for any reason is not effective to ensure that an offer for sale of the Shares does not require disclosure to investors, the Company must, no later than 20 Business Days after becoming aware of such notice being ineffective, lodge with ASIC a prospectus prepared in accordance with the Corporations Act and do all such things necessary to satisfy section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors. (h) Shares issued on exercise Shares issued on exercise of the Options rank equally with the then issued shares of the Company. (i) Reconstruction of capital If at any time the issued capital of the Company is reconstructed, all rights of an Optionholder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction. (j) Participation in new issues There are no participation rights or entitlements inherent in the Options and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options without exercising the Options. (k) Change in exercise price An Option does not confer the right to a change in Exercise Price or a change in the number of underlying securities over which the Option can be exercised. 4114-02/2832496_2 16 (l) Transferability The Options are transferable subject to any restriction or escrow arrangements imposed by ASX or under applicable Australian securities laws. 4114-02/2832496_2 17 6. RISK FACTORS 6.1 Introduction The Shares offered under this Prospectus are considered highly speculative. An investment in the Company is not risk free and the Directors strongly recommend potential investors to consider the risk factors described below, together with information contained elsewhere in this Prospectus and to consult their professional advisers before deciding whether to apply for Shares pursuant to this Prospectus. There are specific risks which relate directly to the Company’s business. In addition, there are other general risks, many of which are largely beyond the control of the Company and the Directors. The risks identified in this Section, or other risk factors, may have a material impact on the financial performance of the Company and the market price of the Shares. The following is not intended to be an exhaustive list of the risk factors to which the Company is exposed. 6.2 Coronavirus (COVID-19) The outbreak of the coronavirus disease (COVID-19) is impacting global economic markets. The nature and extent of the effect of the outbreak on the performance of the Company remains unknown. The Company’s Share price may be adversely affected in the short to medium term by the economic uncertainty caused by COVID-19. Further, any governmental or industry measures taken in response to COVID-19 may adversely impact the Company’s operations and are likely to be beyond the control of the Company. The Directors are monitoring the situation closely and have considered the impact of COVID-19 on the Company’s business and financial performance. However, the situation is continually evolving, and the consequences are therefore inevitably uncertain. In compliance with its continuous disclosure obligations, the Company will continue to update the market in regard to the impact of COVID- 19 on its revenue channels and any adverse impact on the Company. If any of these impacts appear material prior to close of the Offer, the Company will notify investors under a supplementary prospectus. 6.3 Company specific (a) Acquisitions and Partnerships The Company plans to investigate and consider potential acquisitions and opportunities to enter into new partnerships that are consistent with its stated growth strategy. The successful implementation of acquisitions will depend on a range of factors including funding arrangements and technical integration. The Company may also enter into partnerships in the future. Subject to the relevant partnerships, the Company cannot control the actions of joint venture partners and therefore cannot guarantee that partnerships will be operated or managed in accordance with the Company’s preferred direction, strategy or risk management parameters. To the extent that acquisitions or partnership arrangements are not successfully integrated with the Company’s existing business lines, the growth and financial performance of the Company could be affected and, despite the terms of the relevant agreements, it may be 4114-02/2832496_2 18 impractical to enforce all of the Company’s rights (particularly if the partnerships operate overseas). (b) Contracts The Company may enter agreements with counterparties. In such cases, there is the risk that counterparties default on their obligations, which may in turn necessitate legal action. This could result in significant financial loss for the Company. In some cases, the contracts that the Company has entered into may be governed in jurisdictions outside Australia. It may be more difficult to resolve disputes in such jurisdictions than it would be under Australian law. As such, the Company cannot ensure that an appropriate legal resolution will be achieved. (c) Intellectual Property Rights The Company owns the intellectual property now being used by agents and commercial banks in the Philippines. While the Company has systems and procedures in place to protect its content and information, unauthorised use of its intellectual property could have a negative impact on its operations and brand. The Company also operates in a market where claims of infringement of intellectual property are common. There is a risk of third parties making claims of infringement of intellectual property against the Company. This could result in significant legal costs and negatively impact operations. (d) Operations and Management of Potential Growth The Company believes that it has attracted a highly skilled and experienced management team. However, the Company is a complex and dynamic business. The Company is working in a fast moving environment, engaged in business with multiple partners and operating in numerous geographies around the world. Navigating these issues while effectively dealing with prioritisation, timing, execution, cost control, and other business decisions is likely to provide real challenges for its small management team. There can be no guarantee that successful execution of the Company’s strategy will make it profitable or commercially viable. Current product development and marketing strategies may not have the intended effect of increasing customers. Similarly, strategies to create value from customers of the application may not yield the expected revenue. (e) Product Development The Company believes that it provides a meaningful and engaging offering. Moreover, in addition to its current products and services, the Company is planning to develop new products to suit the mobile banking, payments ad remittance business it is building. There is also the risk that delays in product development, cost overruns, or difficulties in delivering new features will negatively impact the Company and its business. (f) Consistency of Supply Product shortages and prolonged delays in delivery may jeopardise the Company’s ability to supply tangible products and therefore fulfil contractual obligations to customers and distributors. The Company will 4114-02/2832496_2 19 continually adapt its inventory control processes as necessary to mitigate the effect of any supply shortages that may be encounter. (g) Maintenance of Reputation and Brand Usage and engagement with the Company products and services have the potential to be significantly affected by popular consumer sentiment. As such, the Company’s exposure to public relations issues and threats to its reputation and brand name may be greater than for other businesses. (h) Dependence on other technological providers As a mobile banking and payment application business, the Company will maintain and rely extensively on information technology systems and network infrastructures for the effective operation of its business. As with any product that is dependent on technological systems if the integrity of Peppermint’s products fails to meet its clients’ expectations (whether or not through any fault of the Company), the Company’s reputation could suffer. PEP is heavily reliant on the operations of telecommunications networks for the provision of PEP’s services to the marketplace concerned. Should any of these relationships or agreements terminate or become strained for any reason that would have a negative impact on our operations and business development plans. (i) Insurance While the Company has sought to be insured in a way that is in keeping with industry practices, there is the risk of an event occurring that is not fully covered by insurance. This may cause significant financial and material loss to the Company. Furthermore, there is the risk that the Company’s insurer fails to respect a legitimate claim made by the Company. (j) Reliance on Core Information Technology, Other Systems and Security As a mobile banking and payment application business, the Company will maintain and rely extensively on information technology systems and network infrastructures for the effective operation of its business. It is also dependent on reliable telecommunication and information technology provision by third parties. As with any product that is dependent on technological systems if the integrity of the Company’s products fails to meet its clients’ expectations (whether or not through any fault of the Company), the Company’s reputation could suffer. Techniques used to gain unauthorised access to private networks are constantly evolving and the Company may be unable to anticipate or prevent unauthorised access to data pertaining to its customers, which could include credit card and debit card information, bank account details or other personally identifiable information. The Company’s service is vulnerable to computer viruses, phishing attacks or other attacks and similar disruptions from unauthorized use of its systems, any of which could lead to system interruptions, delays or shutdowns, causing loss of critical data or the unauthorized access to personally identifiable information. If an actual or perceived breach of security occurs of the Company’s systems, it may face civil liability and public perception of our security measures could be diminished, either of which would negatively 4114-02/2832496_2 20 affect the Company’s ability to attract or maintain customers. The Company also would be required to expend significant resources to mitigate any such breach of security and to address related matters. (k) International Expansion The Company’s products and services are used in the Philippines but in the future intends to expand into other countries. It may therefore likely be subject to multiple overseas jurisdictions. In each different jurisdiction there may be increased compliance and operating costs. If and when it becomes necessary to have a local presence in overseas markets there will be increased overheads as well as development and marketing costs. There is no guarantee such expansions will be successful and increased costs may adversely impact the profitability and working capital of the Company. (l) Unforeseen Expenditure If the Company’s expenses are greater than anticipated due to fluctuation in market prices or any factors which have not been taken into account during the development of this Prospectus, then it will have fewer funds with which to pursue its plan of operations and financing requirements will be greater than anticipated. (m) Ability to attract and retain skilled personnel The Company’s success depends, to a large extent, on its ability to attract and retain appropriately skilled personnel. The Company is currently operated and managed by a small group of select team members. The departure, either temporary or permanent, of those key staff, or any delay in their replacement, could adversely affect The Company’s performance. Similarly, as a company seeking to grow and expand, the Company’s success in securing new talent will be critical going forward and may be constrained for a number of reasons. The attraction and retention of key staff is determined by a broad range of internal and external factors, some more or less within the Company’s control, including, but not limited to, issues concerning: personal or health issues, company performance, public relations and branding, logistics and timing, the availability of IT staff in the market and macro-economic factors. Additionally, the Company relies on offshore team members. In the event that offshore employees cease to continue working with the Company, this could cause significant disruption to the operations of the business and would require the Company to find alternative employees. Finding alternative employees would take time in recruiting and training them on the product and getting them to a professional level where they could assist in running the operations of the Company business and help to execute the Company business plan. This would have a significant impact on the costs of running the Company business and would likely delay the Company from achieving its objectives and business plan. (n) Going concern risk The Company’s ability to continue as a going concern is dependent upon obtaining financing for planned operations. There can be no assurance that those funds will be raised, or if the Company is able to 4114-02/2832496_2 21 raise funds that such funds will be in the amounts required or on terms favourable to the Company. 6.4 Industry specific (a) Competition from Existing Market Players The Company may face competition from existing market players who may, for example, undertake aggressive marketing campaigns, product innovation or price discounting. 6.5 General risks (a) Limited Operating History The business has had limited operations and revenues to date in which potential investors can evaluate the business. Investors must consider all risks associated with and frequently encountered by companies operating in the same space, particularly companies involved in generally new, rapidly evolving markets. (b) Loss of key clients The business currently operates with a few key client relationships. The Company is expected to maintain current and establish new relationships through the continued enhancement of its products and solutions. In the event that these established relationships diminish or fail (including through a termination event arising under an agreement) the resulting effect may negatively impact the operating results of the Company. (c) Shareholder Dilution In the future, the Company may elect to issue Shares or engage in fundraisings and also to fund, or raise proceeds, for acquisitions. While the Company will be subject to the constraints of the ASX Listing Rules regarding the percentage of capital that it is able to issue within a 12 month period (other than where exceptions apply), Shareholders may be diluted as a result of such Shares and fundraisings. (d) Economic General economic conditions, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company’s exploration, development and production activities, as well as on its ability to fund those activities. (e) Market conditions Share market conditions may affect the value of the Company’s quoted securities regardless of the Company’s operating performance. Share market conditions are affected by many factors such as: (i) general economic outlook; (ii) introduction of tax reform or other new legislation; (iii) interest rates and inflation rates; 4114-02/2832496_2 22 (iv) changes in investor sentiment toward particular market sectors; (v) the demand for, and supply of, capital; and (vi) terrorism or other hostilities. The market price of securities can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general and resource exploration stocks in particular. Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company. (f) Competition risk The industry in which the Company will be involved is subject to domestic and global competition. Although the Company will undertake all reasonable due diligence in its business decisions and operations, the Company will have no influence or control over the activities or actions of its competitors, which activities or actions may, positively or negatively, affect the operating and financial performance of the Company’s projects and business. (g) Additional requirements for capital The Company’s capital requirements depend on numerous factors. Depending on the Company’s ability to generate income from its operations, the Company may require further financing in addition to amounts raised under the Offer. Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations and scale back its exploration programmes as the case may be. There is however no guarantee that the Company will be able to secure any additional funding or be able to secure funding on terms favourable to the Company. (h) Market Acceptance The global marketplace for most products is ever changing due to new technologies, new products, changes in preferences, changes in regulation and other factors influencing market acceptance or market rejection. This market volatility and risk exists despite the best endeavours of market research, promotion and sales and licensing campaigns. Accordingly, there is a risk that the Company may not be able to commercialise its products, which could adversely impact the Company’s operations (i) Reliance on key personnel The responsibility of overseeing the day-to-day operations and the strategic management of the Company depends substantially on its senior management and its key personnel. There can be no assurance given that there will be no detrimental impact on the Company if one or more of these employees cease their employment. 4114-02/2832496_2 23 (j) Foreign Exchange Rate Risks The Company expects to derive a majority of its revenue and incur a major part of its expenses from its operations in the Philippines, in Philippine Pesos. Accordingly, changes in the exchange rate between the Philippine Peso and the Australian dollar would be expected to have a direct effect on the performance of the Company. (k) Legal Environment and Sovereign Risk The Company currently conducts its operations in the Philippines with intentions to develop its business through Asia, Europe and through other parts of the world in future. While Australia is a stable and developed legal environment, there are still a range of sovereign risks that may adversely affect the performance of the Company. These include, but are not limited to changes to privacy, taxation, accounting, employment, licensing, exchange control or other legislation. Particularly, over recent years, there has been an increased regulatory and public focus on the use of private information, especially how private information is collected and used for commercial purposes. Any further changes to laws and regulations governing the use of this information could result in an adverse impact on the markets in which the Company operates and, in its business, including its forecast revenues, profit margins, and compliance costs. The Company’s products and services are also used in numerous other countries and will be subject to the local laws and regulations where they apply. Some of the countries in which the Company’s products and services are used represent emerging markets and/or less stable legal environments. This may involve risks related to the regularity, speed, transparency and expectations surrounding Government action, ease of gaining fair representation in court and clarity and consistency of the legal framework. Working in changing, complex and multiple regulatory environments involves a set of risks. These include the risk that the Company may fail to comply with laws or regulations or that laws or regulations may have unintended consequences or are open to interpretations that increase the risk of non-compliance. In addition, there is a risk that the Merged Group may fail to implement procedures within the statutory timeframes to ensure that it can provide services which comply with the introduction of these new laws and regulations. Any substantial failure by the Company to comply with applicable laws and regulations could result in cessation of part or all of its operations, restriction on its ability to carry out operations, fines, penalties or other liabilities to customers, suppliers or third parties. Compliance failure could also damage the Company’s reputation and reduce the attractiveness of its products and services. (l) Changes to Government Policies and Legislative Changes Government policy and legislative changes which are outside the control of the Company may have a negative impact on the financial 4114-02/2832496_2 24 performance of the Company. This risk factor applies to government policy and legislative changes in the Philippine and in Australia. (m) Additional requirements for capital The Company’s capital requirements depend on numerous factors. Depending on the Company’s ability to generate income from its operations, the Company may require further financing in addition to amounts raised under the Offer. Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations and scale back its exploration programmes as the case may be. There is however no guarantee that the Company will be able to secure any additional funding or be able to secure funding on terms favourable to the Company. 6.6 Speculative investment The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the Shares offered under this Prospectus Therefore, the Shares to be issued pursuant to this Prospectus carry no guarantee with respect to the payment of dividends, returns of capital or the market value of those Shares. Potential investors should consider that the investment in the Company is speculative and should consult their professional advisers before deciding whether to apply for Shares pursuant to this Prospectus. 4114-02/2832496_2 25 7. ADDITIONAL INFORMATION 7.1 Litigation As at the date of this Prospectus, the Company is not involved in any material legal proceedings and the Directors are not aware of any legal proceedings pending or threatened against the Company. 7.2 Continuous disclosure obligations The Company is a “disclosing entity” (as defined in section 111AC of the Corporations Act) for the purposes of section 713 of the Corporations Act and, as such, is subject to regular reporting and disclosure obligations. Specifically, like all listed companies, the Company is required to continuously disclose any information it has to the market which a reasonable person would expect to have a material effect on the price or the value of the Company’s securities. This Prospectus is a “transaction specific prospectus”. In general terms a “transaction specific prospectus” is only required to contain information in relation to the effect of the issue of securities on the Company and the rights attaching to the securities. It is not necessary to include general information in relation to all of the assets and liabilities, financial position, profits and losses or prospects of the issuing company. This Prospectus is intended to be read in conjunction with the publicly available information in relation to the Company which has been notified to ASX and does not include all of the information that would be included in a prospectus for an initial public offering of securities in an entity that is not already listed on a stock exchange. Investors should therefore have regard to the other publicly available information in relation to the Company before making a decision whether or not to invest. Having taken such precautions and having made such enquires as are reasonable, the Company believes that it has complied with the general and specific requirements of ASX as applicable from time to time throughout the 3 months before the issue of this Prospectus which required the Company to notify ASX of information about specified events or matters as they arise for the purpose of ASX making that information available to the stock market conducted by ASX. Information that is already in the public domain has not been reported in this Prospectus other than that which is considered necessary to make this Prospectus complete. The Company, as a disclosing entity under the Corporations Act states that: (a) it is subject to regular reporting and disclosure obligations; (b) copies of documents lodged with the ASIC in relation to the Company (not being documents referred to in section 1274(2)(a) of the Corporations Act) may be obtained from, or inspected at, the offices of the ASIC; and (c) it will provide a copy of each of the following documents, free of charge, to any person on request between the date of issue of this Prospectus and the Closing Date: (i) the annual financial report most recently lodged by the Company with the ASIC; 4114-02/2832496_2 26 (ii) any half-year financial report lodged by the Company with the ASIC after the lodgement of the annual financial report referred to in (i) and before the lodgement of this Prospectus with the ASIC; and (iii) any continuous disclosure documents given by the Company to ASX in accordance with the ASX Listing Rules as referred to in section 674(1) of the Corporations Act after the lodgement of the annual financial report referred to in (i) and before the lodgement of this Prospectus with the ASIC. Copies of all documents lodged with the ASIC in relation to the Company can be inspected at the registered office of the Company or an ASIC office during normal office hours. Details of documents lodged with ASX since the date of lodgement of the Company’s latest annual financial report and before the lodgement of this Prospectus with the ASIC are set out in the table below : Date Description of Announcement 19/11/21 Placement Update 11/11/2021 Proposed issue of securities - PIL 11/11/2021 Proposed issue of securities - PIL 11/11/2021 Proposed issue of securities - PIL 11/11/2021 EMI progress and $4 million placement 9/11/2021 Trading Halt 4/11/2021 Clarification 4/11/2021 Peppermint launches bizmoPay commercial roll out 2/11/2021 Letter to shareholders re AGM NOM 2/11/2021 Notice of Annual General Meeting/Proxy Form 1/11/2021 Proposed issue of securities - PIL 28/10/2021 Peppermint signs with large payment gateway Dragonpay 26/10/2021 Becoming a substantial holder 26/10/2021 Quarterly Activities/Appendix 4C Cash Flow Report 31/08/2021 Appendix 4G and Corporate Governance Statement ASX maintains files containing publicly available information for all listed companies. The Company’s file is available for inspection at ASX during normal office hours. The announcements are also available through the Company’s website https://pepltd.com.au/ . 7.3 Market price of Shares The Company is a disclosing entity for the purposes of the Corporations Act and its Shares are enhanced disclosure securities quoted on ASX. The highest, lowest and last market sale prices of the Shares on ASX during the three months immediately preceding the date of lodgement of this Prospectus 4114-02/2832496_2 27 with the ASIC and the most recent dates of those sales were: Price Date Highest $0.025 19/11/2021 Lowest $0.010 06/10/2021 Last $0.024 22/11/2021 7.4 Details of substantial holders Based on publicly available information as at 18 November 2021, those persons which (together with their associates) have a relevant interest in 5% or more of the Shares on issue are set out below: Shareholder Shares % Ohka Pty Ltd 107,250,214 6.33% Cadada Holdings Pty Ltd
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