Announcement PDF Linius Technologies Limited ACN 149 796 332 PROSPECTUS For the offer of up to 10,000 Shares each at an issue price of $0.002. THIS PROSPECTUS IS BEING ISSUED UNDER SECTION 708A(11) OF THE CORPORATIONS ACT 2001 FOR THE PURPOSE OF FACILITATING SECONDARY TRADING OF THE PLACEMENT SHARES THIS OFFER CLOSES AT 5.00PM AEDT ON 31 OCTOBER 2024. VALID APPLICATIONS MUST BE RECEIVED BEFORE THAT TIME. Please read the instructions in this Prospectus and on the accompanying Application Form prior to applying for Shares under the Offer. THIS IS AN IMPORTANT DOCUMENT AND REQUIRES YOUR IMMEDIATE ATTENTION. IT SHOULD BE READ IN ITS ENTIRETY. IF YOU ARE IN DOUBT ABOUT WHAT TO DO, YOU SHOULD CONSULT YOUR PROFESSIONAL ADVISER WITHOUT DELAY. THE SHARES OFFERED BY THIS PROSPECTUS ARE OF A SPECULATIVE NATURE. 1. Important Information This Prospectus is dated 23 September 2024. A copy of this Prospectus was lodged with ASIC on that date. ASIC and ASX take no responsibility for the contents of this Prospectus. No Shares will be issued on the basis of this Prospectus any later than 13 months after the date of this Prospectus (being the expiry date of this Prospectus). A copy of this Prospectus is available for inspection at the registered office of the Company at Level 2, 431 St Kilda Road, Melbourne Vic. 3004, during normal business hours. The Company will also provide copies of other documents on request (see Section 6.3). The Company will apply to ASX within seven days of the date of this Prospectus for Official Quotation by ASX of the Shares offered by this Prospectus. Applications for Shares will only be accepted on an Application Form which is attached to, or provided by the Company with a copy of this Prospectus. The Corporations Act prohibits any person from passing on to another person an Application Form unless it is accompanied by a complete and unaltered copy of this Prospectus. The Company is a disclosing entity listed on the ASX and this Prospectus is issued under section 713 of the Corporations Act 2001 (Cth) in reliance on information previously disclosed to the ASX by the Company. It does not contain, by itself, all information that would be contained in a prospectus for an initial public offering or all information relevant to a decision to invest in the Company. No person is authorised to give any information or to make any representation in connection with the Offer which is not contained in this Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with the Offer. No action has been taken to permit the offer of Shares under this Prospectus in any jurisdiction other than Australia. 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 may constitute 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 this Prospectus. This document is important and should be read in its entirety before deciding to participate in the Offer. This does not take into account the investment objectives, financial or taxation or particular needs of any Applicant. Before making any investment in the Company, each Applicant should consider whether such an investment is appropriate to his/her particular needs, and considering their individual risk profile for speculative investments, investment objectives and individual financial circumstances. Each Applicant should consult his/her stockbroker, solicitor, accountant or other professional adviser without delay. The Shares offered by this Prospectus should be considered speculative. Please refer to Section 4 for details relating to investment risks. By returning an Application Form, you acknowledge that you have received and read this Prospectus and you have acted in accordance with the terms of the Offer detailed in this Prospectus. Definitions of certain terms used in this Prospectus are contained in Section 8. All references to currency are to Australian dollars and all references to time are to Melbourne time, unless otherwise indicated. Page 1 2. Corporate Directory Directors Share Registry* Gerard Bongiorno (Chairman) James Brennan (Executive Director and CEO) John Wallace (Non-Executive Director) Barry McNeil (Non-Executive Director) Automic Registry Services Level 5, 126 Phillip Street Sydney NSW 2000 Company Secretary Telephone: 1300 288 664 (in Australia) +61 2 9698 5414 (outside Australia) Giuseppe Rinarelli Registered Office Level 2, 431 St Kilda Road Melbourne Vic. 3004 Telephone: +61 (0)3 8672 7186 ASX Code: LNU Website: www.linius.com *This entity has not been involved in the preparation of this Prospectus and has not consented to being named in this Prospectus. Its name is included for information purposes only. Page 2 3. Details of the Offer 3.1 The Offer The Company is offering pursuant to this Prospectus 10,000 Shares each at an issue price of $0.002 per Share (Offer). There is no minimum amount sought to be raised by the Offer. There is no provision for oversubscriptions. The Offer is not underwritten. Refer to Section 6.1 for a summary of the rights attaching to the Shares. 3.2 Purpose of the Offer On 12 June 2024, the Company announced a capital raising for a placement of 37,500,000 Shares to "Sophisticated Investors" and "Professional Investors" within the meaning of sections 708(8) and 708(11) of the Corporations Act, without Shareholder approval in accordance with the Company’s 10% issue capacity under Listing Rule 7.1A. On 10 September 2024, the Company announced a capital raising initiative of up to $3 million through: (a) a convertible note facility for which the Company has received binding commitments of $800,000 as at the date of this Prospectus, (b) a standby equity facility with Eli Capital Pty Ltd with up to $1.5 million worth of standby equity capital available to the Company at its discretion over the next 18 months; and (c) a placement of 350,000,000 Shares each at an issue price of $0.002 each to raise approximately $700,000 (before costs) for issue to "Sophisticated Investors" and "Professional Investors", with 182,500,000 Shares without Shareholder approval pursuant to the Company’s current Share issue capacities under Listing Rules 7.1 and 7.1A and the balance subject to Shareholder approval. Each of the June 2024 and September 2024 placements also included binding commitments to subscribe for Shares from Directors (and/or nominees), subject to Shareholder approval under Listing Rule 10.11. The Company also conducted placements of new Shares in December 2023, February 2024 and April 2024 that included binding commitments to subscribe for Shares from Directors (and/or nominees), again subject to Shareholder approval under Listing Rule 10.11. Details of the number of Shares subscribed for by Directors (and/or nominees) are set out in Section 5.1. Shareholder approval for the issue of the balance of the Shares to "Sophisticated Investors" and "Professional Investors" under the September 2024 placement and for the issue of Shares to Directors (and/or nominees) under all of the above-mentioned placements will be sought by the Company at a general meeting to be convened for mid to late October. All these Shares are referred to in this Prospectus as the “Placement Shares”. This Prospectus has been issued to facilitate secondary trading of the Placement Shares as they will be issued without disclosure to investors under Part 6D.2 of the Corporations Act. A prospectus is required under the Corporations Act to enable persons who are issued these Shares to on-sell them within 12 months of their issue. The Company is not issuing these Shares with the purpose of the persons to whom they are being issued selling or transferring their Shares or granting, issuing or Page 3 transferring interests in them within 12 months of the issue, however this Prospectus provides them with the ability to do so should they so wish. The Company is not currently able to issue a cleansing notice under section 708A(5) of the Corporations Act due to its Shares having been suspended from trading on ASX for more than 5 trading days within the last 12 months. Accordingly, the purpose of this Prospectus is to: (a) make the Offer; and (b) ensure that the on-sale of the Placement Shares does not breach Section 707(3) of the Corporations Act by relying on the exemption to the secondary trading provisions in Section 708A(11) of the Corporations Act. 3.3 Opening and Closing Dates The Company will accept Application Forms from the date of this Prospectus until 5.00pm AEDT on the Closing Date, being 31 October 2024, or such other date as the Directors in their absolute discretion shall determine, subject to the requirements of the Listing Rules. 3.4 Application for Shares If you wish to subscribe for Shares pursuant to the Offer, you should complete and return the Application Form, which will be provided with a copy of this Prospectus by the Company at the Board's discretion, in accordance with the instructions in the Application Form. Completed Application Forms and Application Monies must be received by the Company prior to 5.00pm AEDT on the Closing Date. Cheques must be made payable to “Linius Technologies Limited” and crossed “Not Negotiable”. All cheques must be in Australian currency. Application Forms should be mailed or delivered to Linius Technologies Limited, Level 2, 431 St Kilda Road, Melbourne Vic. 3004. If you are in doubt as to the course of action, you should consult your professional advisor. Acceptance of a completed Application Form by the Company creates a legally binding contract between the Applicant and the Company for the number of Shares accepted by the Company. The Application Form does not need to be signed to be a binding Application for Shares. If the Application Form is not completed correctly it may still be treated as valid. The Directors’ decision as to whether to treat the Application as valid and how to construe, amend or complete the Application Form is final. 3.5 Application Monies All Application Monies received for the Shares will be held in trust in a bank account maintained solely for the purpose of depositing Application Monies received pursuant to this Prospectus until the Shares are issued. All Application Monies will be returned (without interest) if the Shares are not issued. 3.6 Issue of Shares The Company may issue the Shares progressively as Applications are received and in any event, will issue all Shares as soon as possible after the Closing Date. Shareholder statements will be dispatched, as soon as possible after the issue of the Shares. It is the responsibility of Applicants to determine their allocation prior to trading in the Shares. Applicants who sell Shares before they receive their holding statements will do so at their own risk. Page 4 3.7 ASX quotation Application will be made to ASX no later than seven days after the date of this Prospectus for the Official Quotation of the Shares offered under the Offer. If permission is not granted by ASX for the Official Quotation of the Shares offered by this Prospectus within three months after the date of this Prospectus (or such period as ASX allows), the Company will repay, as soon as practicable, without interest, all Application Monies received pursuant to this Prospectus. 3.8 CHESS The Company participates in the Clearing House Electronic Subregister System, known as CHESS. ASTC, a wholly owned subsidiary of ASX, operates CHESS in accordance with the Listing Rules and Securities Clearing House Business Rules. Under CHESS, Applicants will not receive a certificate but will receive a statement of their holding of Shares. If you are broker sponsored, ASTC will send you a CHESS statement. The CHESS statement will set out the number of Shares issued under this Prospectus, provide details of your holder identification number, the participant identification number of the sponsor and the terms and conditions applicable to the Shares. If you are registered on the Issuer Sponsored subregister, your statement will be dispatched by Computershare Investor Services and will contain the number of Shares issued to you under this Prospectus and your security holder reference number. 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 Shareholding changes. Shareholders may request a statement at any other time, however, a charge may be made for additional statements. 3.9 Residents outside Australia This Prospectus, and the accompanying Application Form, do not, and is not intended to, constitute an offer of Shares 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 or the Shares. 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. 3.10 Risk factors An investment in Shares should be regarded as speculative. In addition to the general risks applicable to all investments in listed securities, there are specific risks associated with an investment in the Company which are set out in Section 4. 3.11 Taxation implications The Directors do not consider it appropriate to give Shareholders advice regarding the taxation consequences of subscribing for Shares under this Prospectus. The Company, its advisers and its officers do not accept any responsibility or liability for any such taxation consequences to Shareholders. As a result, Shareholders should consult their professional tax adviser in connection with subscribing for Shares under this Prospectus. Page 5 3.12 Major activities and financial information A summary of the major activities and financial information relating to the Company for the financial year ended 30 June 2023 is in the Company’s Annual Report which was lodged with ASX on 15 September 2023 and is available at www.asx.com.au. The Company's continuous disclosure notices (i.e. ASX announcements) since 15 September 2023 are listed in Section 6.3. Copies of these documents are available free of charge from the Company. Directors strongly recommend that Shareholders review these and all other announcements prior to deciding whether or not to participate in the Offer. 3.13 Enquiries concerning Prospectus Enquiries relating to this Prospectus should be directed to the Company Secretary by telephone on +61 (0)3 8672 7186. 3.14 Privacy The Company collects information about each Applicant provided on an Application Form for the purposes of processing the Application and, if the Application is successful, to administer the Applicant’s security holding in the Company. By submitting an Application Form, each Applicant agrees that the Company may use the information provided by an Applicant on the Application Form for the purposes set out in this privacy disclosure statement and may disclose it for those purposes to the share registry, the Company’s related bodies corporate, agents, contractors and third party service providers, including mailing houses and professional advisers, and to ASX and regulatory authorities. If you do not provide the information required on the Application Form, the Company may not be able to accept or process your Application. An Applicant has an entitlement to gain access to the information that the Company holds about that person subject to certain exemptions under law. A fee may be charged for access. Access requests must be made in writing to the Company’s registered office. Page 6 4. Risk Factors An investment in the Shares offered under this Prospectus should be considered speculative because of the nature of the Company's business. This Section identifies the major areas of risk associated with an investment in the Company, but should not be taken as an exhaustive list of the risk factors to which the Company and holders of its securities are exposed. Some of these risks can be mitigated by the use of safeguards and appropriate systems and controls, but some are outside the control of the Company and cannot be mitigated. Accordingly, an investment in the Company carries no guarantee with respect to the payment of dividends, return of capital or price at which securities will trade. There can be no guarantee that the Company will achieve its stated objectives or that any forward-looking statement will eventuate. The selection of risks contained in this Section has been based on an assessment of a combination of the probability of the risk occurring and the impact of the risk if it did occur. The assessment is based on the knowledge of the Directors as at the date of this Prospectus, but there is no guarantee or assurance that the importance of risks will not change or other risks will not emerge. Additional risks not presently known to the Company, or if known, not considered material, may also have an adverse impact. Potential investors should read the entire Prospectus and consult their professional advisers before deciding whether to apply for Shares. 4.1 Specific risks associated with the Company (a) 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 to develop its business. 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 programs, 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. (b) Going Concern The Company’s Half Yearly Report and Accounts for the half-year ended 31 December 2023 (Financial Report) includes a note on the financial condition of the Company and the possible existence of a material uncertainty about the Company’s ability to continue as a going concern. Notwithstanding the ‘going concern’ qualification included in Financial Report, the Directors believe that the Company will have sufficient funds to adequately meet the Company’s current commitments and short term working capital requirements. (c) Development The Company’s products and services are the subject of continuous development and need to be substantially developed further in order to gain and maintain competitive and technological advantage, and to improve the products’ and services’ usability, scalability and accuracy. There are no guarantees that the Company will be able to undertake such development successfully. Failure to successfully undertake such research and development, Page 7 anticipate technical problems, or estimate research and development costs or timeframes accurately will adversely affect the Company’s results and viability. (d) Technology The Company’s market involves rapidly evolving products and technological change. The Company cannot guarantee that it will be able to engage in research and development at the requisite levels. The Company cannot assure investors that it will successfully identify new technological opportunities and continue to have the needed financial resources to develop new products in a timely or cost-effective manner. At the same time, products, services and technologies developed by others may render the Company’s products and services obsolete or non-competitive. (e) 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. (f) Privacy and Data Protection The Company’s services may involve the storage, transmission, and processing of data from clients in order to provide services to clients. Personal privacy, information security, and data protection are significant issues. The regulatory framework governing the collection, processing, storage, and use of business information, particularly information that includes personal data, is rapidly evolving and any failure or perceived failure to comply with applicable privacy, security, or data protection laws, regulations or contractual obligations may adversely affect the Company’s business. (g) Competition The industry in which the Company will be involved is subject to domestic and global competition. While 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, whose activities or actions may, positively or negatively, affect the operating and financial performance of the Company’s projects and business. 4.2 Industry Specific Risks (a) Disputes The activities of the Company may result in disputes with third parties, including, without limitation, the Company’s investors, competitors, regulators, partners, distributors, customers, directors, officers and employees, and service providers. The Company may incur substantial costs in connection with such disputes. Further, a change in strategy may involve material and as yet unanticipated risks, as well as a high degree of risk, including a higher degree of risk than the Company’s strategy in place as of the date of this Prospectus. (b) Information Technology With any technical project there are risks with the chosen technology, vendors and employees and in execution. Whilst the Company has employed and engaged subject-matter Page 8 experts, employs experienced persons, standard security technologies and approaches there are risks that delivery will fail to meet expectations or deadlines, that technologies become obsolete, natural disasters occur, the Company is the subject of a fraud or malicious attack or platforms are compromised resulting in a negative impact on the Company’s performance. (c) User Experience The Company’s business model is primarily based on recurring service revenue arising from technology users and customers. Notwithstanding efforts placed on the user interface and experience, a poor user experience may occur and may affect growth of customer numbers and repeat purchases. (d) Reputational Any negative publicity regarding the Company, or its Board, officers or employees, or the performance of its products, will adversely affect the Company’s ability to generate revenue. (e) Loss of customers The Company has established important relationships through development of its business to date. The loss of one or more customers through termination or expiry of contracts may adversely affect the operating results of the Company. (f) Data loss, theft or corruption Exploitation or hacking of any of the Company’s systems or networks could lead to corruption, theft or loss of the data which could have a material adverse effect on the Company’s business, financial condition and results. Further, if the Company’s systems, networks or technology are subject to any type of ‘cyber’ crime, its technology may be perceived as unsecure which may lead to a decrease in the number of customers. The Company has not been hacked, but it is possible that the Company may experience negative publicity if their systems are able to be hacked at some point in the future. 4.3 General Risks (a) General economic climate General economic conditions, laws relating to taxation, new legislation, trade barriers, movements in interest and inflation rates, currency exchange controls and rates, national and international political circumstances (including wars, terrorist acts, sabotage, subversive activities, security operations, labour unrest, civil disorder, and states of emergency), natural disasters (including fires, earthquakes and floods), and quarantine restrictions, epidemics and pandemics, may have an adverse effect on the Company’s operations. General economic conditions may also affect the value of the Company and its market valuation regardless of its actual performance. Specifically, it should be noted that the current evolving conflict between Ukraine and Russia and unrest in the Middle East is impacting global macroeconomics and markets generally. The nature and extent of the effect of this conflict on the performance of the Company and the value of the Company’s Shares remains unknown. The Company’s Share price may be adversely affected in the short to medium term by the economic uncertainty caused by these conflicts and overall impacts on global macroeconomics. Given the situation is continually evolving, the outcomes and consequences are inevitably uncertain. Page 9 (b) Changes in legislation and government regulation Government legislation in Australia or any other relevant jurisdiction, including changes to the taxation system, may affect future earnings and relative attractiveness of investing in the Company. Changes in government policy or statutory changes may affect the Company and the attractiveness of an investment in it. (c) Global credit and investment market Global credit, commodity and investment markets can and do experience a high degree of uncertainty and volatility. The factors which lead to this situation are outside the control of the Company and may continue for some time resulting in continued volatility and uncertainty in world stock markets (including the ASX). This may impact the price at which the Company’s securities trade regardless of operating performance, and affect the Company’s ability to raise additional equity and/or debt to achieve its objectives, if required. (d) Unforeseen risk There may be other risks which the Directors are unaware of at the time of issuing this Prospectus which may impact on the Company, its operation and/or the valuation and performance of its securities. (e) Combination of risks The Company may not be subject to a single risk. A combination of risks, including any of the risks outlines in this Section could affect the performance valuation, financial performance and prospects of the Company. (f) Unforeseen expenditure risk Expenditure may need to be incurred that has not been taken into account in the preparation of this Prospectus. Although the Company is not aware of any additional expenditure requirements, if such expenditure is subsequently incurred, this may adversely affect the expenditure proposals of the Company. (g) Sharemarket conditions The market price of securities may be subject to varied and unpredictable influences on the market for equities. 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. 4.4 Investment speculative An investment in the Shares to be issued pursuant to this Prospectus should be considered speculative. They carry no guarantee as to payment of dividends, return of capital or the market value of the Shares. The prices at which an investor may be able to trade the Shares may be above or below the price paid for the Shares. Prospective investors must make their own assessment of the likely risks and determine whether an investment in the Company is appropriate to their own circumstances. Page 10 5. Effect of the Offer 5.1 Effect on capital structure The effect of the Offer on the capital structure of the Company is set out below. Number of Shares Number of Options 5,865,240,714 221,799,9921 380,0002 Placement (Directors – December 2023) 25,000,0003 - - Placement (Directors – February 2024) 25,000,0004 - - Placement (Directors – April 2024) 30,000,0005 - - Placement (Directors – June 2024) 25,000,0006 - - Placement and Tranche 2 Convertible Notes ("Sophisticated Investors" and "Professional Investors" – September 2024) 52,500,0007 - 420,0008 Placement (Directors – September 2024) 115,000,0009 - - 22,500,000 25,000,000 - 10,000 - - 6,160,250,714 246,799,992 800,000 Balance at the date of this Prospectus (including securities to be issued on the date of this Prospectus) Equity Standby Facility (Fees)10 To be issued under the Offer Total Number of Convertible Notes Notes: 1. 2. 3. 4. 5. 6. Comprises Options as follows: a. 500,000 unlisted Options exercisable at $0.0289 on or before 23 November 2024 b. 3,000,000 unlisted Options exercisable at $0.015 on or before 9 May 2025 c. 2,200,000 unlisted Options exercisable at $0.0293 on or before 4 October 2025 d. 6,000,000 unlisted Options exercisable at $0.004 on or before 30 June 2026 e. 17,000,000 unlisted Options exercisable at $0.007 on or before 30 June 2026 f. 166,599,992 unlisted Options exercisable at $0.0293 on or before 31 July 2026 g. 26,000,000 unlisted Options exercisable at $0.004 on or before 30 June 2027 Convertible notes issued under tranche 1 of the convertible note facility (see ASX announcement of 10 September 2024 for terms and conditions). New Shares to be issued to Directors (and/or nominees) pursuant