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1 ASX ANNOUNCEMENT MANALTO LIMITED 23 August 2017 QUARTERLY REPORT FOR PERIOD ENDING 30 JUNE 2017 Highlights: Capital raising completed Soshlr division to be closed globally Cost reductions have continued over the quarter Professional sales team introduced for the franchise sector Substantial improvement with Manalto Enterprise product Manalto Enterprise product relaunched in the franchise space. Bambu s Kendo product launching in US in September Bambu acquisition due diligence and Independent Expert Report nearing finalization Manalto Limited (ASX: MTL) ( Manalto or the Company ) is pleased to report on activities during the June quarter, including the progress of our go to market initiatives. Capital Raising Program Over the three months to 30 June 2017, the Company completed a capital raising. This comprised $2.5m offered to sophisticated and other eligible investors through EverBlu Capital Pty Ltd who was appointed the lead manager. This was undertaken in three stages: a. Tranche 1 utilised the available capacity and raised $610k in shares at $0.02 per share (shareholders ratified the issue at the Company s Extraordinary General Meeting on 5 June 2017); b. Tranche 2 which was repriced due to market conditions at $0.011 per share and raised $1.399m by way of convertible note; and c. Tranche 3 which is a raising of a further $500k from unrelated investors identified by the Chairman which EverBlu have undertaken to raise by September 30 th on a best endeavours basis. All required shareholder approvals were obtained for Tranche 2 and Tranche 3 at the Company s Extraordinary General Meeting on 4 August This funding will allow the Company to undertake the sales and marketing activities scheduled for the balance of this year for the Manalto product in the franchise space and the launch of Kendo (from Bambu Digital Pty Ltd (Bambu)) into that sector.

2 Soshlr Division To Be Closed Around the World In order to focus on the core business of software development and distribution, the decision has been taken to close the global Soshlr division which means subsidiaries companies carrying the Soshlr name in South Africa, Europe, US and Australia will cease operating and in many cases, be wound up. This is part of a global restructure that was in any event necessary to simplify the corporate group and reduce the compliance costs associated with a complex corporate structure around the world. The structure would not have been tax efficient if it did produce revenue and created substantial accounting and auditing complexities. The Intellectual Property of the group is held in Australia and there are no consequences to the future of the business from the group restructure and simplification. Soshlr was the SME focused product developed after the successful Manalto enterprise product was built and launched (particularly for franchises). Soshlr was aimed for sale through cloud platforms and integration was undertaken with partners that included Plesk, Odon, App Direct and Ingram Micro. Substantial sales volumes were anticipated and a 24x7 customer service centre was built in South Africa over 2015 and 2016 to deal with this demand. Whilst commercial agreements and technical integration was reached with these cloud operators, commercial sales levels were not forthcoming and it is now clear there is little prospect of this occurring in the near term. There were three major reasons for this: The cloud operators are only at the early stages of transitioning or building their SaaS sales businesses and are still proving their own business models in this space. SaaS revenue is growing rapidly through these platforms but it is dominated by the Super SaaS products like Office 365 but the smaller software companies have not generally made their mark through this particular channel. The Soshlr social media management tool was not particularly complementary to the core offerings of the cloud operators and as such significant marketing and advertising effort would have been required from the Company to generate sales. The business model that the Company worked on assumed that the cloud partners would market and sell Soshlr. Whilst Soshlr did have a unique position as the only social media management tool in this cloud environment, there are many social media management tools in the market that have good functionality and are market proven. Soshlr was not a unique or market leading solution to small business and whilst in the fullness of time and with very considerable marketing support from the Company it may have reached commercial volumes, the time and risk did not warrant continued investment. The effort put into developing Soshlr has not been a waste however. The technical functionality and integration with Office 365 and IBM s Watson have been transferred to the Manalto product and have been used to substantially increase the functionality of this offering. The knowledge gained and experience in integrating with cloud platforms will be valuable to the Company as the core Manalto product, combined with the Bambu offerings, expand their distribution channels. Unlike Soshlr, Manalto s ability to scale up i.e. manage a very large number of social assets, gives it significant competitiveness. Further detail about Manalto s functional enhancements and how Kendo (from Bambu) has become a market leading product is provided later in this overview. Cost Reductions The Company has been in a product development stage for several years, which is an activity that consumes capital. Now that the Manalto product is substantially developed, and the Soshlr product is to be closed down, cost reductions in the development area have been achieved and there has been a substantial reduction in monthly cash burn. This has been achieved substantially in South Africa where the large development team has been reduced to a core Manalto team, and the customer support and services team built up to deal with the anticipated volume of Soshlr sales has been let go. These cost reductions however have been partly offset by the need for sales people as the Manalto product is re-launched in the franchise space. There has been both an overall reduction in burn rate and

3 a significant change in where the money is being expended i.e. more on sales and less on technical development. Professional Franchise Sales Team Established Over the quarter the Company has substantially changed its approach to sales. The dropping of Soshlr meant a number of marketing support people who were anticipating cloud sales could be let go and a core sales team recruited. The Company now has a very experienced sales director, an industry relationship manager with standing in the franchise sector and the sales support systems needed to drive sales. This has represented a major cultural change to the Company. Product Development The principle focus of the development team over the quarter was to implement various integrations with third party products so that Manalto Enterprise could hold a position as class leader. Whilst the development of these products has been announced earlier in the year they were released during this quarter to the market and clients were using them extensively. The following were the major functional enhancements: Artificial Intelligence via integration with IBM s Watson was achieved in the quarter and the product went live providing invaluable insights to clients. This was the market based proof of concept. Data analysis and reporting from Microsoft Power BI was a new initiative commenced and completed in the quarter. Manalto Enterprise is now capable of accessing data from a large number of sources a business could be using and combining it with social media data to analyse key marketing information and generate meaningful reports from this. Posting and social media management by integrating with Microsoft Outlook Calendar. Manalto Enterprise Product Re-launched The new sales team recruited during the quarter have developed a sales strategy for the substantially upgraded Manalto enterprise product. The primary focus was getting Manalto Enterprise into the franchise sector and building on the Company s beachhead in this space. Our objective is to generate revenue and the sales team is very focussed on conversion, but management recognises the sales cycle for franchisors takes considerable time and that conversions will not come unless a quality pipeline is grown. Our go to market strategy is heavily integrated with the US franchise conference calendar where we have been active in recent months and resume high intensive activity in the US fall. Kendo Launch Kendo is the first of a set of new SaaS products developed by Bambu. It is a people performance management system designed for the current work place environment. Kendo will be launched in the US in September, and the Company will update the market accordingly. Further details will be announced post launch. Bambu (and Solomon) Acquisitions The acquisition of Bambu is proceeding. The Due Diligence period has now concluded, with a draft Notice of Meeting and an Independent Expert s Report ready to be lodged with ASX and ASIC for approval. Shareholders will be advised as soon as possible on the proposed date for the shareholder meeting to approve this transaction. This process was delayed whilst the Company was addressing the capital raising issue that had the stock in voluntary suspension. Bambu is continuing to work cooperatively with the Company and the two technical teams have been sharing skills and assisting the development of each other s product. Significant cost benefits have been identified and in many cases effected where there are economies of scale.

4 A strategy has been developed for the franchise sector of selling Manalto into franchise systems at the franchisor level and sell Kendo and other Bambu products off the back of this. The purchase of the Solomon group, which is a Bambu distributor in the US has the purchase of Bambu as a condition precedent. This transaction has also been put on hold but working arrangements and cooperation with Solomon have been established and the opportunity to go to market through their channel is very much alive. Corporate On 7 April founder and Managing Director Anthony Owen left the Company and relocated to Australia. Megan Owen (Anthony s wife) and a co-founder also resigned her role as head of Marketing, HR and IR and also returned to Australia. Jim McKerlie, who was appointed Executive Chairman on 1 January 2017 on a six-month basis to provide assistance to the Managing Director, stepped in as the senior executive of the Company. His term has recently been extended by another six months, as announced to the market on 5 July It is his intention to, with the board, identify a new CEO for the business. On Friday 4 August 2017, a meeting of shareholders was held and approved under ASX Listing Rule 7.1, for the conversion of outstanding convertible notes to fully paid ordinary shares. On August 22 Gary Cox tendered his resignation as a director, but will play an ongoing role as an advisor to the sales team where his Microsoft experience will be most valuable. Mr Cox felt given his extensive international travel activity that would be a role that he could better play with the Company. Details of the Company s financial activities during the quarter for the period ending 30 June 2017 are set out in the Appendix 4C cash flow report. For more information, please contact: Lucy Rowe Company Secretary Phone: lucy.rowe@manalto.com Cautionary Statements Forward-looking statements This document may contain certain forward-looking statements. Such statements are only predictions, based on certain assumptions and involve known and unknown risks, uncertainties and other factors, many of which are beyond the company s control. Actual events or results may differ materially from the events or results expected or implied in any forward-looking statement. The inclusion of such statements should not be regarded as a representation, warranty or prediction with respect to the accuracy of the underlying assumptions or that any forward-looking statements will be or are likely to be fulfilled. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this document (subject to securities exchange disclosure requirements). The information in this announcement does not take into account the objectives, financial situation or particular needs of any person or organisation. Nothing contained in this announcement constitutes investment, legal, tax or other advice. About Manalto Limited Manalto Limited (MTL.ASX) is a global provider of social media management solutions. Manalto s proprietary software delivers capability for the streamlined management of social media including controls to support organisational brand management, reputational risk management and efficiency in managing users, community engagement and analytics. An enterprise can centrally publish content and update brand assets across hundreds of its organisation s social media pages spanning multiple platforms in just one click. Manalto offers an Enterprise Solution and a SME Business Application sold through cloud partners. Manalto is headquartered in Australia with offices in the United States, Netherlands and South Africa. For further information on Manalto visit manalto.com

5 +Rule 4.7B Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B Introduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16 Name of entity Manalto Limited ABN Quarter ended ( current quarter ) June 30, 2017 Consolidated statement of cash flows 1. Cash flows from operating activities Current quarter Year to date (12 months) 1.1 Receipts from customers Payments for (a) research and development 1 (180) (808) (b) product manufacturing and operating costs (c) advertising and marketing (46) (155) (d) leased assets (e) staff costs (449) (1,426) (f) administration and corporate costs (120) (702) 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives 1.8 Other: (a) GST Refund / (Paid) Net cash from / (used in) operating activities (744) (2,907) 1 The R&D expenditure represents the Technology staff salary allocation directly associated with R&D activities, as well as directly attributable software and web development costs.

6 Consolidated statement of cash flows 2. Cash flows from investing activities 2.1 Payments to acquire: (a) property, plant and equipment (b) businesses (see item 10) (c) investments (d) intellectual property (e) other non-current assets 2.2 Proceeds from disposal of: (a) property, plant and equipment (b) businesses (see item 10) (c) investments (d) intellectual property (e) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities 3. Cash flows from financing activities 3.1 Proceeds from issues of shares 2 Current quarter Year to date (12 months) - (37) - (37) Proceeds from issue of convertible notes , Proceeds from exercise of share options 3.4 Transaction costs related to issues of shares, convertible notes or options 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from / (used in) financing activities 1,068 2,062

7 Consolidated statement of cash flows Current quarter Year to date (12 months) 2 The Company issued a 30,500,000 shares at A$0.02 per share to raise a total of US$460,000 (A$610,000) before costs. 3 The Company placed a total of 802,000 unsecured convertible loan notes (CLN) each with a face value of A$1.00 to raise a total of US$608,000 (A$802,000). 4. Net increase / (decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of quarter/year to date 4.2 Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above) 4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of quarter 103 1,309 (744) (2,907) - (37) 1,068 2, Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts Current quarter Previous quarter 5.1 Bank balances Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)

8 6. Payments to directors of the entity and their associates Current quarter $US' Aggregate amount of payments to these parties included in item Aggregate amount of cash flow from loans to these parties included in item Include below any explanation necessary to understand the transactions included in items 6.1 and Payments to related entities of the entity and their associates Current quarter $US' Aggregate amount of payments to these parties included in item Aggregate amount of cash flow from loans to these parties included in item Include below any explanation necessary to understand the transactions included in items 7.1 and Financing facilities available Add notes as necessary for an understanding of the position Total facility amount at quarter end Amount drawn at quarter end 8.1 Loan facilities Credit standby arrangements Other (please specify) Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.

9 9. Estimated cash outflows for next quarter 9.1 Research and development (127) 9.2 Product manufacturing and operating costs 9.3 Advertising and marketing (19) 9.4 Leased assets 9.5 Staff costs (386) 9.6 Administration and corporate costs (194) 9.7 Other (provide details if material) 9.8 Total estimated cash outflows (726) 10. Acquisitions and disposals of business entities (items 2.1(b) and 2.2(b) above) 10.1 Name of entity 10.2 Place of incorporation or registration 10.3 Consideration for acquisition or disposal 10.4 Total net assets 10.5 Nature of business Acquisitions Disposals Compliance statement 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A. 2 This statement gives a true and fair view of the matters disclosed. Sign here: Date: 23 August 2017 Executive Chairman Print name: Jim McKerlie Notes 1. The quarterly report provides a basis for informing the market how the entity s activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report. 2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report. 3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.