My Rewards International : Response to ASX Query Letter

For personal use only

G02 - 181 St. Kilda Road St. Kilda VIC 3182 Australia

ABN: 47 095 009 742

1300 362 251 [e-mail]

myrewardsinternational.com

10 June 2022

Ms Vanessa Nevjestic

Adviser, Listings Compliance (Perth)

ASX Compliance Pty Ltd

By email: [e-mail].

Dear Ms Nevjestic

My Rewards International Limited ('MRI'): Response to ASX Query

We refer to your letter dated 1 June 2022 (Letter). Capitalised terms used in this letter have the meaning given in your Letter unless otherwise defined. Set out below is the response of My Rewards International Limited (ABN 47 095 009 742) (MRI or the Company) to each of the questions in the Letter.

1. What is MRI's current unaudited cash balance?
   MRI's unaudited cash balance as at 31 May 2022 was $184,655.15.
   MRI's $3.5 million line of credit with AMRAM Corp Pty Ltd as advised in the Quarterly Report was fully undrawn as at 31 May 2022, with the full $3.5 million being available under that facility.
2. As it appears that MRI does not have sufficient funds for its proposed activities for the next quarter without reliance on the new line of credit facility, does MRI still consider the Working Capital Statement in its Prospectus to be correct?
   The Working Capital Statement in the Prospectus dated 2 November 2021 was accurate at the time of release.
   The Company refers to its amended Quarterly Report. Pursuant to ASX Listing Rule 4.7C.2 MRI confirmed in the Quarterly Report that since listing on the ASX, the Company has incurred expenditure largely in line with the Use of Funds as set out in section 6.11 of its Prospectus.
   A number of the Use of Funds items were always anticipated to be incurred shortly after listing, such as debt reduction, the cash payment to acquire Perx Rewards Pty Ltd and expenses of the IPO, as set out in the following table:

For personal use only

Use of Funds under	Funds allocated	Funds expended	Funds
between admission	expended as a
Prospectus	under Prospectus
and 31 March 2022	percentage
Debt Reduction	$275,000	$287,213	104%
Payment to acquire Perx	$1,000,000	$900,000	90%
Rewards Pty Ltd
Expenses of the IPO	$708,984	$905,315	128%
All other uses	$3,196,016	$1,468,608	61%
Total	$5,180,000	$3,561,136	69%

Excluding "All other uses" above, the actual Use of Funds expenditure is $108,544 or approximately 5.5% greater than that disclosed in the Prospectus.

In relation to "All other uses" MRI has used 61% of the funds allocated under the Prospectus, to the period ended 31 March 2022. The Company notes that there have been 2 main areas of greater than anticipated spending - supplier acquisitions and customer acquisitions. However, both of these areas have and will continue to contribute to top line recurring revenue income for MRI.

Supplier acquisitions were hampered by the lock downs imposed by the State Governments in Australia. Upon listing, with the country emerging from lock down, MRI accelerated the program to roll out the Digital Wallet, using $182,594 or 48% of the budgeted amount in the Prospectus within the first quarter post listing.

In line with accelerating the supplier acquisitions MRI also accelerated the customer acquisitions, using $235,594 or 41% of the budgeted amount in the Prospectus within the first quarter post listing.

3. Please explain in detail the basis for the view expressed in response to question 2.

The March 2022 quarter included once off expenses reported in the March Quarterly Report and described in answer 2 above, including:

∙ Payment to acquire Perx Rewards Pty Ltd	$900,000
∙	Expenses of the IPO	$905,315
∙	Debt reduction	$287,213

In addition, under the 'All other uses' from the funds table in question 2 above, cash payments in the March 2022 quarter of $358,000 for advertising and marketing (from a total reported of $396,000) and $387,000 for administrative and corporate costs (from a total reported of $1,057,000) relate to the provision of services for the calendar year 2022, not just the March 2022 quarter.

These outflows being incorporated into the cashflows of the Quarterly Report resulted in the cash outflows being extrapolated to show a worse situation than the budgeted cashflows per the Prospectus.

MRI's results demonstrate it is in a position to grow recurring revenue whilst containing costs. The $3.5m credit facility as announced will enable MRI to ensure funding of its supplier acquisition and customer acquisition strategy on its path to profitability and positive cash inflows.

4. Please provide details of:

4.1 The due diligence undertaken to confirm the accuracy of the Working Capital Statement; and

For personal use only

4.2 Any material assumptions underlying the Working Capital Statement.

An appropriately convened Due Diligence Committee oversaw the preparation and verification of the Prospectus, including the Working Capital Statement. The directors prepared detailed budgets which formed the basis of the Use of Funds disclosure and Working Capital Statement.

Material assumptions underlying the Working Capital Statement and factors impacting these are as follows:

1. Launch of key client contracts - customer and supplier acquisitions
2. • Delays and additional costs due to hesitancy in new customers / suppliers onboarding the Company's services as a result of delays in the new customers / suppliers staff returning back to the workplace post Covid-19.
   • Interest rate increases and inflationary pressures that caused a delay in customer / supplier processes and roll outs.
3. Prepayments
4. • It was expected by the Company that new income coming in from signed contracts would counter the cash burn from pre-payments. But due to the ongoing issues relating to Covid-19, and logistical concerns exacerbated by the Russia / Ukraine conflict these have been significantly delayed in launch.

To counter the aforementioned hesitancy, MRI accelerated anticipated spending (supplier acquisitions and customer acquisitions), with both of these areas contributing to top line reoccurring revenue income for MRI.

1. 1. Offer expenses based on a 2021 listing
   2. • Increased expenses due to delays in the Company's listing on ASX (including supplementary disclosure required to extend the Official Quotation date).
2. Please confirm that MRI is complying with Listing Rule 3.1 and that there is no information about its financial condition that should be given to ASX in accordance with that rule that has not already been released to the market.
   MRI confirms that it is complying with the Listing Rules and that there is no information about its financial condition that should be given to ASX in accordance with that rule that has not already been released to the market.
3. Please confirm that MRI's responses to the questions above have been authorised and approved under its published continuous disclosure policy or otherwise by its board or an officer of MRI with delegated authority from the board to respond to ASX on disclosure matters.
   MRI confirms that this response has been authorised and approved by the Board.
   Yours sincerely

Phillip Hains

COMPANY SECRETARY

For personal use only

1 June 2022

Mr Phillip Hains Company secretary

My Rewards International Limited Suite G02, 181 St Kilda Road

St Kilda, Victoria 3182

By email: [e-mail]

Dear Mr Hains

My Rewards International Limited ('MRI'): ASX Query

ASX Limited ("ASX") refers to MRI's quarterly activities and cash flow reports for the quarter ended 31 March 2022 entitled "Amended Appendix 4C and Line of Credit Facility" released on the ASX Market Announcements Platform ('MAP') on 5 May 2022 (the 'Quarterly Report').

ASX notes that MRI has reported:

• negative net operating cash flows for the quarter of A$2,073,000;
• cash at the end of the quarter of A$1,121,000; and
• 0.5 estimated quarters of funding available.

The Quarterly Report also notes that MRI has entered into a line of credit facility with AMRAM Corp Pty Ltd for a total amount of A$3,500,000 post-quarter end.

MRI's initial public offering prospectus dated 2 November 2021 ('Prospectus') and released on MAP on 9 February 2022 contained (under the Use of Funds table in paragraph 6.11) the following statements with respect to its proposed use of funds for the two (2) years following its admission to the Official List of ASX:

"It is anticipated that the funds raised under the Offer will fund 2 years of full operations (if the Minimum Subscription is raised)."

"The Directors consider that following completion of the Offer, the Company will have sufficient working capital to carry out its stated objectives." ('Working Capital Statement')

It is possible to conclude, based on the information in the Quarterly Report that if MRI were to continue to expend cash at the rate indicated by the Quarterly Report, MRI may not have sufficient cash to continue funding its operations.

Request for information

In view of that, ASX asks MRI to respond separately to each of the following questions and provide the following confirmations in a format suitable for release to the market under Listing Rule 18.7A:

1. What is MRI's current unaudited cash balance?
2. As it appears that MRI does not have sufficient funds for its proposed activities for the next quarter without reliance on the new line of credit facility, does MRI still consider the Working Capital Statement in its Prospectus to be correct?
3. Please explain in detail the basis for the view expressed in response to question 2.
4. Please provide details of:
   4.1 The due diligence undertaken to confirm the accuracy of the Working Capital Statement; and

ASX Limited [[Listings]]

ASX Customer Service Centre 131 279 | asx.com.au

For personal use only

1. 4.2 Any material assumptions underlying the Working Capital Statement.

2. Please confirm that MRI is complying with Listing Rule 3.1 and that there is no information about its financial condition that should be given to ASX in accordance with that rule that has not already been released to the market.
3. Please confirm that MRI's responses to the questions above have been authorised and approved under its published continuous disclosure policy or otherwise by its board or an officer of MRI with delegated authority from the board to respond to ASX on disclosure matters.

When and where to send your response

This request is made under Listing Rule 18.7. Your response is required as soon as reasonably possible and, in any event, by no later than 9:00 AM AWST Tuesday, 7 June 2022. If we do not have your response by then, ASX will have no choice but to consider suspending trading in MRI's securities under Listing Rule 17.3. You should note that if the information requested by this letter is information required to be given to ASX under Listing Rule

3.1 and it does not fall within the exceptions mentioned in Listing Rule 3.1A, MRI's obligation is to disclose the information "immediately". This may require the information to be disclosed before the deadline set out in the previous paragraph.

ASX reserves the right to release a copy of this letter and your response on the ASX Market Announcements Platform under Listing Rule 18.7A. Accordingly, your response should be in a form suitable for release to the market.

Your response should be sent to me by e-mail at [e-mail]. It should not be sent directly to the ASX Market Announcements Office. This is to allow me to review your response to confirm that it is in a form appropriate for release to the market, before it is published on the ASX Market Announcements Platform.

Listing Rule 3.1 and Listing Rule 3.1A

Listing Rule 3.1 requires a listed entity to give ASX immediately any information concerning it that a reasonable person would expect to have a material effect on the price or value of the entity's securities. Exceptions to this requirement are set out in Listing Rule 3.1A. In responding to this letter, you should have regard to MRI's obligations under Listing Rules 3.1 and 3.1A and also to Guidance Note 8 Continuous Disclosure: Listing Rules 3.1

• 3.1B. It should be noted that MRI's obligation to disclose information under Listing Rule 3.1 is not confined to, nor is it necessarily satisfied by, answering the questions set out in this letter.

Trading halt

If you are unable to respond to this letter by the time specified above, you should discuss with us whether it is appropriate to request a trading halt in MRI's securities under Listing Rule 17.1. If you wish to request a trading halt, you must tell us:

• the reasons for the trading halt;
• how long you want the trading halt to last;
• the event you expect to happen that will end the trading halt;
• that you are not aware of any reason why the trading halt should not be granted; and
• any other information necessary to inform the market about the trading halt, or that we ask for.

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ASX Customer Service Centre 131 279 | asx.com.au