Inventis : Response to ASX Query

13 August 2016

Ms Andia Petropoulos

Adviser, Listings Compliance (Sydney) ASX Compliance Pty Limited

20 Bridge Street

SYDNEY NSW 2000

By Email: [e-mail]

Dear Ms Petropoulos,

Invent is L imit ed ( " t h e Com p any" ) - Financial Condition Query

Reference is made to your letter dated 9 August 2016 with regard to the above.

Responses to the Queries: Query 1. Basis of Key assumptions Response 1.1: The Company's revenue growth of 26.5% for the year ended 30 June 2017 is based on the following:

1. The Budget forecasts as provided by the Executive Team;

2. The "Advance" supply agreement status with a Department of NSW Government which has in their budget large refurbishment plans for next three years;

3. The Sales Team Budgets as agreed to by individual Business Development Managers;

4. The headcount in the Sales Team being comparable to the Sales Team in employment in 2007- 2008, which has doubled;

5. Streamlining, cross training and educating the Sales Team to sell both Furniture and Technology Products nationally;

6. The Confirmed orders in hand; as well as

7. Preliminary responses to the release of a new patented chair technology being launched.

Response 1.2: The Average revenue growth rate per annum 2018-2020 is based on the following:

1. The Company is now poised to concentrate on sales after an extensive restructuring;

2. All legacy issues have been resolved;

3. The motivational incentives extended to the Sales Team; and

4. The market share based on historical facts when a patented product is commercialised.

Query 2. Independent Advice on Impairment model Response: Impairment modelling is developed using judgements and estimates of future events, the Directors reviewed the modelling, conducted further investigations and obtained independent advice on whether the impairment model and inputs used by the Company were reasonable.

The independent advice received on the above was that the Company's impairment model inputs and the one-off effects were "reasonable".

The unaudited results of the Company for the year ended 30 June 2016 show:

Details	Budget	Actual
Revenue	$12.3 m	$11.8 m
EBITDA	$0.3 m	$0.4 m

Query 3. Going Concern Response: The Directors have ensured the Company has Long Term Loan Agreements and Factoring Services in place in addition to Sales Growth, which will provide Cash flow for sustaining the business for next 12 months. In addition to new finance facilities, the following steps were taken in 2016 and were announced to the market in accordance with ASX Listing Rule 3.1:

1. 11 September 2015 - Recent Initiatives and waiver of Director's fees, which highlighted

2. Achievement of ISO14001 accreditation in addition to GECA, AFRDI and C-tick certifications for our products.

3. The Company has been successful in securing "Advance" supply agreement status with a Department of NSW Government which will allow the Company to supply into large Government projects and planned refurbishment initiatives.

4. Demonstration of commitment to the business the Directors have all agreed to forgo their Directors' Fees for the period from 1 July 2015 to 31 December 2015 to assist the Company and further enhance its successful transition to profitability.

5. Decision to commence recruitment of a full time CEO to replace Mr Tony Noun, who has assisted the Company greatly during recent transition, acting as both Chairman and CEO. It was anticipated that the selection process will be finalised early in the next calendar year and the pro-active initiatives of the Directors will assist the Company further in the near future.

6. Acknowledgement of Tony Noun's efforts and contribution in the restructure program was announced to the Market.

7. Expected solid turn-around in performance for the coming 12 months based on the restructuring undertaken by the Company, which included major cost reduction initiatives, along with appropriate Capital restructuring and new developments in product technology and design.

8. The Company has registered an application for a new worldwide patent and local design registration submissions are pending for the Company's unique ergonomic seating products. This was also announced to the Market.

9. 30 October 2015: Year to date results and Clarification of previous announcement, whereby,

10. The Company's performance for the quarter ended 30 September 2015 (unaudited) was advised to the shareholders - the result was revenue of $3.6m which was $0.2m above forecast. Importantly, net profit before tax is $0.35m above budget and $0.6m better than the same period last year.

11. It was confirmed that Tony Noun will continue as a Non-Executive Chairman of the Company in the new Calendar year after appointment of new CEO.

12. 25 January 2016: Appointment of the New General Manager, whereby the following was advised to the market,

13. The appointment of Mr Garry Valenzisi to the position of General Manager of the Company;

14. The key executive appointment marks the next stage of the Inventis Limited strategy towards reinvigorating the Company and enhancing its position as a market leader in creating inspired designs and innovative products in Ergonomic seating, Electronics and Rugged Computer Solutions; and

15. Over the past two years, the Company had consolidated the organisation providing a management structure that allows the Company to respond to market and customer demands in a swift and informed manner.

16. 1 March 2016 - Statutory Reporting of 4D-Half Year ending 31 December 2015, whereby the Company advised its shareholders:

17. The difference of opinion between the Company and its auditors at the time as to the valuation model to be used for the impairment of "non-tangible" assets;

18. The auditors at the time indicated that they will qualify the accounts, as presented, if the Company does not impair non-cash assets and inventory provisions write back;

19. The Company does not agree with the model inputs being used by the auditors at the time and has sought independent advice as to the efficacy of the models used by the Company;

20. In essence, accepting the Company's modelling, no impairment is required and the results to 31 December 2015 may be summarised as follows: Revenue of $6.0m, NPAT of $0.06m and a Net Asset position of $0.66m;

21. Applying the auditor's at the time proposed modelling, the potential total non-cash impairment could be in order of $3.06m. Thus, NPAT would be reduced to a loss of $2.81m and new equity impacted accordingly; and

22. The Company's Board is seeking independent advice in the best interest of shareholders to ascertain information relating to AASB 136 impairment testing and AASB 134 interim financial reporting, to better deal and review matters relating to the adequate treatment of non-cash items relating to the adequacy of the variables used in complex subjective impairment model calculation testing and other non-cash items.

23. 3 March 2016 - Statutory Reporting of 4D - Half year ending 31 December 2015 - Update, whereby the Company advised its shareholders and the market:

24. In line with the independent advice, the Company's Board concluded that the Company's overall model inputs used are reasonable; and

25. As at 2 March 2016, factory work orders for components used in the write back of provisions have been raised. This confirms the Board's position on the adequacy of the relevant stock provision write backs. Information in relation to stock provisions was also provided to the auditors for their consideration.

26. 7 March 2016 - Appendix 4D - despite providing all information and evidence to the auditors at the time, for the basis of the Impairment Model of the Company as well as basis of Independent advice, the former Auditor chose to adopt its own objective view on the impairment model inputs based on previous year revenue achievement and provided a qualified opinion for the review of half year financials.
27. 10 May 2016 - Update - whereby the Company advised that:

28. Subsequent to the completion of the Company's strategic restructure program, which culminated in the appointment of Mr Garry Valenzisi to the position of General Manager, the Company is undertaking a review of Accounting, Audit and Insurance costs;

29. Preliminary indications are that we will be able to reduce our Accounting and Audit services by more than 50% and our insurance premiums substantially; and

30. We are pleased to announce that the first element, accounting services, has concluded with the appointment of Mr Gary Peroy, Managing Director of Peroys Accountants, Sydney, as the Company's new Tax Agent and Advisor.

31. 22 June 2016: Letter to Shareholders, whereby, the Company advised:

32. Receiving notice of intention to remove the auditors under section 329 of the Corporations Act, 2001;

33. Receiving the notice of nomination of an auditor under section 328B of the Corporations Act, 2001;

34. Receipt of request to hold an Extra-Ordinary General Meeting ("EGM") from a shareholder who holds more than 5% of the shares of the Company; and

35. The Board of Directors have resolved under Section 249D of the Corporations Act to hold an EGM.

36. 23 June 2016 - Change is Share Registry, whereby Advice of new Share registry was provided to the market. The share registry review of services was also part of the service cost review.
37. Query 4. Requirements of Listing Rule 12.2 Response: In the opinion of Directors, yes the financial condition of the Company would be sufficient to warrant continued quotation of its securities and listing on ASX. Query 5. If Yes, the basis of forming of opinion in Query 4 above. Response: The Directors have formed the opinion on the following basis:

    1. The Balance Sheet as at 31 December 2015 showed Net Assets of $657,406;