IOT : ASX Announcement - Appendix 3B

Name of entity

IOT Group Limited (IOT)

ABN

66 140 475 921

1

+Class of+securities issued or to be issued

Options over Ordinary Class Shares

2

Number of +securities issued or to be issued (if known) or maximum number which may be issued

84,700,000 Unlisted Options over Ordinary Class Shares comprising:

• 27,500,000 Unlisted Director Options

• 21,000,000 Unlisted Senior Management Options

• 23,000,000 Unlisted Options for Sales and Public Relations Agents

• 13,200,000 Unlisted Staff Options

3

Principal terms of the +securities (e.g. if Options, exercise price and expiry date; if partly paid

+securities, the amount outstanding and due dates for payment; if

+convertible securities, the conversion price and dates for conversion)

84,700,000 Unlisted Options over Ordinary Class Shares comprising:

1. 27,500,000 Unlisted Director Options to be issued to Directors of the company. Options are subject to approval at a shareholders meeting to be held 31 March 2017.

2. 21,000,000 Unlisted Senior Management Options

3. 23,000,000 Unlisted Options for Sales and Public Relations Agents

Price of Options of $0.0001/Option.

The exercise price of 20,000,000 Unlisted Director Options is $0.09/Option.

The exercise price of the residual 7,500,000 Unlisted Director Options is at a premium to market value at the date of issue calculated in accordance with the following formula:

Exercise Price = 7,500,000 x P

Where P is calculated in accordance with the following formula:

P = ISP x 2

ISP is the volume weighted average price of a Company share sold on the ASX during the five trading days immediately prior to the date of issue of the 7,500,000 Options.

This Exercise Price is greater than the market value of the underlying shares at the date of issue as determined by reference to the volume weighted average price of a Company share sold on the ASX during the five trading days immediately prior to the date of issue of the options. These options are the subject of a resolution to be put to

shareholders on 31 March 2017.

Options will vest immediately after their issue and can be exercised at any time prior to 31 December 2022, after which any vested but unexpired Options will lapse.

If employment is terminated, recipients retain all vested Options.

Price of Options of $0.0001/Option. Exercise price = $0.10/Option

Options will vest immediately after their issue and can be exercised at any time prior to 31 December 2022, after which any vested but unexpired Options will lapse.

If employment is terminated, recipients retain all vested Options.

Price of Options is $nil/Option. Exercise price = $0.03505/Option.

Price determined by taking weighted average price of an IOT share sold on the ASX during the 5 days immediately prior to the date of IOT Board approval to issue the Options (12 January 2017).

Vesting conditions

The total value of all orders of any product received by the Company for calendar years 2017 and 2018 is at least AUD100 million OR at the end of the Vesting Period, the Company has a market valuation of at least AUD200 million.

Vesting period

The period beginning at the date of issue of the Options and ending 31 December 2018.

D. 13,200,000 Unlisted Staff Options Price of Options is $nil/Option. Exercise price = $0.3505/Option.

Price determined by taking weighted average price of an IOT share sold on the ASX during the 5 days immediately prior to the date of IOT Board approval to issue the Options (12 January 2017)

Vesting conditions

The total value of all orders of any product received by the Company for calendar years 2017 and 2018 is at least AUD100 million or at the end of the Vesting Period, the Company has a market valuation of at least AUD200 million.

Vesting period

The period beginning at the date of issue of the Options and ending 31 December 2018.

Cessation of employment - Rule 9 ('good' leaver or 'bad' leaver rules of The IOT Group Option Plan) applies.

4

Do the +securities rank equally in all respects from the +issue date with an existing +class of quoted

+securities?

If the additional +securities do not rank equally, please state:

• the date from which they do

• the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment

• the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment

Unlisted Options over Ordinary Class Shares - NO

The Unlisted Options over Ordinary Class Shares if exercised then entitle the beneficiary to ordinary shares that rank equal to an existing class of quoted securities.

5

Issue price or consideration

84,700,000 Unlisted Options over Ordinary Class Shares comprising:

1. 27,500,000 Unlisted Director Options to be issued to Directors of the company. Options are subject to approval at a shareholders meeting to be held 31 march 2017.

2. 21,000,000 Unlisted Senior Management Options

3. 23,000,000 Unlisted Options for Sales and Public Agents

4. 13,200,000 Unlisted Staff Options

Price of Options of $0.0001/Option ($8,470 total consideration).

Price of Options of $0.0001/Option ($2,100 total consideration.

Price of Options is $nil/Option ($nil total consideration).

Price of Options is $nil/Option (4nil total consideration).

6

Purpose of the issue

(If issued as consideration for the acquisition of assets, clearly identify those assets)

The purpose of the above Unlisted Option issue is to assist in the reward, motivation and retention of personnel and to drive Company growth and therefore, shareholder returns.