DataDot Technology Limited
(ACN 091 908 726)
Letter of Offer
NON RENOUNCEABLE RIGHTS ISSUE
TO SHAREHOLDERS
TO RAISE $1,720,141
___________________
1 New Share for every 1 Share held at the Record Date
$0.01 per New Share
CLOSING DATE: 4 May 2009
This offer is underwritten by KTM Capital Pty Limited (ACN 086 281 950)
This Offer is being made in accordance with section 708AA of the Corporations Act and does not
require disclosure under a disclosure document.
This document is important and requires your immediate attention. Carefully read this Letter of Offer
in full and consult your stockbroker, solicitor, accountant, licensed financial adviser or other
professional adviser if you are in any doubt as to what to do.
This document is not a prospectus. It does not contain all information that an investor would find in a
prospectus or which may be required in order to make an informed investment decision regarding, or
about the rights attaching to, the new shares offered by this document.
If you do not lodge an Entitlement and Acceptance Form together with payment by 5.00pm (Sydney
time) on 4 May 2009 you will not be issued New Shares in the Company.
TABLE OF CONTENTS
1. DETAILS OF THIS RIGHTS ISSUE
2. ACTION REQUIRED BY SHAREHOLDERS
3. PURPOSE AND EFFECT OF THIS RIGHTS ISSUE
4. RISK FACTORS
5. DEFINITIONS
6. CORPORATE DIRECTORY
SUMMARY OF KEY DATES
Announcement of Rights Issue 24 March 2009
Lodgement Date – , ASX Appendix 3B and first 24 March 2009
cleansing notice lodged with ASX
Dispatch of Appendix 3B information to 3 April 2009
Shareholders
Ex Date – the date on which the Company’s 6 April 2009
shares commence trading without the right to
participate in the Offer
Record Date to determine entitlements of Eligible 14 April 2009
Shareholders under the Offer
Lodgement of second cleansing notice with ASX 20 April 2009
Offer opens – Letter of Offer and Entitlement and 20 April 2009
Acceptance Forms sent to Shareholders
Closing Date for acceptances 4 May 2009
Deferred Settlement – shares will be quoted on 5 May 2009
a deferred settlement basis
Notify ASX of shortfall 7 May 2009
Allotment Date – Allotment of New Shares under 12 May 2009
the Offer
Anticipated despatch of shareholding statements 12 May 2009
and Deferred Settlement trading ends
Trading of New Shares expected to commence 13 May 2009
These dates, and the dates referred to throughout this Letter of Offer, are indicative only. The Company reserves the right to
amend this timetable, subject to the Corporations Act and the ASX Listing Rules, including to extend the Closing Date, and
accept valid applications either generally or in specific cases after the Closing Date in its absolute discretion.
IMPORTANT NOTICE
Definitions of certain terms used in this Letter of Offer appear in Section 5.
Offer
This Letter of Offer is dated 20 April 2009 and contains an offer to Shareholders of the Company as at
7pm (Sydney time) on 14 April 2009 whose registered addresses are in Australia, New Zealand and
Singapore. The information contained in this Letter of Offer is important and should be read in full.
Entitlement and Acceptance Forms
The Offer of New Shares in this Letter of Offer is only available for acceptance by Eligible
Shareholders. This Letter of Offer does not constitute an offer in any place which, or to any person
whom, it would not be lawful to make such an offer. Eligible Shareholders are responsible for ensuring
that taking up the Rights under the Rights Issue does not breach regulations in the relevant overseas
jurisdiction.
Eligible Shareholders will receive an Entitlement and Acceptance Form with this Letter of Offer.
Return of a duly completed Entitlement and Acceptance Form will constitute a representation that
there has been no breach of such regulations.
Eligible Shareholders should rely upon their own knowledge of the Company, refer to disclosures
made by it to the ASX, and refer to their professional advisers before deciding whether to accept the
Offer.
Foreign Jurisdictions
Where the Letter of Offer has been despatched to a Shareholder domiciled outside Australia, New
Zealand or Singapore and where that country’s securities code or legislation prohibits or restricts in
any way, the making of the Offers contemplated by the Letter of Offer, the Letter of Offer is provided
for information purposes only. Any failure to comply with such prohibitions or restrictions may
constitute a violation of applicable securities laws. This Letter of Offer does not constitute an offer in
any place in which, or to any person to whom, it would not be lawful to make the Offer. No action has
been taken to register this Letter of Offer or the Shares, or to otherwise permit an offering of the
Shares, in any jurisdiction outside of Australia, New Zealand or Singapore.
Representation
No person is authorised to give any information or make any representations in connection with this
Offer other than as contained in this Letter of Offer. Any information or representation in connection
with this Offer not contained in this Letter of Offer is not, and may not be relied on as having been,
authorised by the Company (or any of its officers).
Privacy
The Company collects information about each Applicant provided on an Entitlement and Acceptance
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 Entitlement and Acceptance Form, each Applicant agrees that the Company may
use the information provided by an Applicant on the Entitlement and Acceptance 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 Entitlement and Acceptance Form, the Company
may not be able to accept or process your application.
An Applicant has a right to gain access to the information that the Company holds about that person
subject to certain exemptions under law. Access requests must be made in writing to the Company’s
registered office.
Letter from the Chairman
Date: 20 April 2009
Dear Shareholder
Invitation to Participate in a Non Renounceable Entitlement Offer
On behalf of the Directors of DataDot Technology Limited (ACN 091 908 726) (Company), I
am pleased to announce that the Company is implementing an underwritten, pro rata non
renounceable rights issue (Rights Issue).
The offer is for 1 share for every 1 existing share held at the Record Date at an issue price
$0.01 per share. It is anticipated that up to 172,014,102 new ordinary shares in the
Company may be issued pursuant to the Rights Issue (New Shares), which would raise
$1,720,141.
The Company has entered into an Underwriting Agreement with respect to the Rights Issue
whereby the Underwriter has agreed to fully underwrite the Rights Issue to the extent that it
will subscribe for up to a maximum of 100% of the shares offered under the Rights Issue. If
subscriptions for less than 172,014,102 shares under the Rights Issue are received, the
Underwriter will subscribe for the difference. The minimum amount to be received by the
Company pursuant to the Rights Issue will accordingly be $1,720,141.
The purpose of this Offer is to strengthen the Company’s balance sheet, and to fund general
working capital.
Participation in the Rights Issue is entirely voluntary. If you decide to participate, you will
receive 1 ordinary share in the Company for every Share that you hold at the Record Date.
Alternatively, you may do nothing and thereby retaining your current number of shares
although your shareholding will be diluted by the shares issued pursuant to the Offer.
Under the Rights Issue, shareholders are able to purchase additional fully paid ordinary
shares in the Company (ranking equally with existing fully paid ordinary shares) without
brokerage costs.
The right to participate in the Rights Issue is only available to Australian, New Zealand and
Singaporean shareholders who were registered as shareholders of fully paid ordinary shares
in the Company at 7.00pm (Sydney time) on 14 April 2009.
The offer is non renounceable and will open on 20 April 2009 and will close at 5.00pm
(Sydney time) on 4 May 2009.
The Directors intend to participate in the Rights Issue with respect to their own
shareholdings. Some major shareholders of the Company have notified the board of their
present intention to take up their full entitlement under the Offer.
The terms and conditions of the Rights Issue are contained in the enclosed Letter of Offer.
Please read the Letter of Offer and the Entitlement and Acceptance Form carefully.
Shareholders should be aware that investing in the Company involves certain risks. If you
are in any doubt about whether to participate in the Rights Issue, please consult your
licensed financial adviser. You may also wish to obtain independent professional advice
regarding the possible taxation consequences of your decision.
If you have any queries in relation to this letter, please do not hesitate to contact Registries
Limited on (02) 9290 9600.
On behalf of the Directors, I invite you to consider this opportunity to increase your
investment in the Company.
Yours faithfully
Allan Farrar
Chairman
1. DETAILS OF RIGHTS ISSUE
1.1 This Rights Issue
Datadot Technology Limited (Company) is undertaking a non renounceable Rights Issue
on the basis of 1 New Share for every 1 Share held, at a price of $0.01 per share, to
shareholders who are registered as at the Record Date.
The total number of New Shares which may be issued pursuant to this Rights Issue will be
172,014,102. The amount which may be raised under this Rights Issue will be approximately
$1,720,141. The costs associated with this Rights Issue (excluding underwriting costs in 1.9)
are estimated at approximately $10,000.
Your Entitlement to be issued New Shares under this Offer is non-renounceable, which
means that Eligible Shareholders cannot sell or otherwise transfer all or any part of their
Entitlement.
The number of New Shares to which you are entitled is shown on the accompanying
Entitlement and Acceptance Form.
Shareholders may do any of the following:
• take up their Entitlement in full;
• take up part of their Entitlement, and allow the balance of their Entitlement to lapse
or;
• not take up any of their Entitlement.
The Closing Date and time for acceptance and payment is 5.00pm (Sydney time) on 4 May
2009. The Company reserves the right to extend the Closing Date.
1.2 Allocation
All shareholders will receive their Entitlement, to the extent applied for under the Offer,
The Rights Issue is underwritten. See Sections 1.8 and 3.3 in relation to the Underwriting
Agreement. Pending the allocation of New Shares under the Offer, all Application Moneys
will be deposited into a separate bank account to be held on trust for so long as required
under section 722 of the Corporations Act. Surplus Application Moneys will be returned to the
relevant shareholder as soon as practicable, in accordance with section 722 of the
Corporations Act. No interest will be paid on returned Application Moneys.
1.3 Your Entitlement to Participate in the Rights Issue and the Record Date
The Record Date for the purpose of the Rights Issue is 7pm (Sydney time) on 14 April 2009.
Eligible Shareholders who are registered as the holders of Shares on the Record Date, will
be entitled to participate in the Rights Issue. The number of New Shares to which you are
entitled is shown on the accompanying Entitlement and Acceptance Form. Fractional
entitlements have been rounded down.
1.4 Opening and Closing Dates
The Offer will open for receipt of acceptances on 20 April 2009. The Closing Date and time
for acceptances and payments is 5.00pm (Sydney time) on 4 May 2009 or such other date
as the Company, in its absolute discretion determines subject to the requirements of the ASX
Listing Rules.
1.5 Ranking
The New Shares will, from the time they are issued, rank equally with existing Shares.
1.6 Issue of New Shares
The Company expects to issue the New Shares on or before 12 May 2009. No issue of New
Shares will be made until permission is granted for quotation of the New Shares on the ASX.
If the ASX does not grant permission for the quotation of the New Shares on the ASX, all
Application Money will be returned by the Company to the relevant shareholders, with no
interest, as soon as practicable.
1.7 Excluded Shareholders
The Offer is not being made to any Shareholder whose registered address is outside
Australia, New Zealand or Singapore (“Excluded Shareholders”).
The Company has decided that it is unreasonable to make the Offer to Excluded
Shareholders, having regard to the number of Excluded Shareholders, the number and value
of New Shares they would be offered, and the costs of complying with the relevant legal and
regulatory requirements in those places.
Accordingly, this Offer is not extended to, and no Shares will be issued to, Excluded
Shareholders and no Entitlement and Acceptance Form will be sent to Excluded
Shareholders. However, in compliance with ASX Listing Rule 7.7, the Company will send
each Excluded Shareholder details of this Offer and advise them that the Company will not
offer Shares to them.
1.8 Singaporean Shareholders
This Letter of Offer has not been registered as an offer document with the Monetary Authority
of Singapore. Accordingly, this Letter of Offer and any other document or material in
connection with the offer or sale, or invitation for subscription or purchase, of the New Shares
may not be circulated or distributed, nor may the New Shares be offered or sold, or be made
the subject of an invitation for subscription or purchase, whether directly or indirectly, to
persons in Singapore other than:
(i) to an existing holder of Shares pursuant to Section 273(1)(ce) of the Singapore,
Securities and Futures Act (Chapter 289)(SFA); or
(ii) otherwise pursuant to, and in accordance with, the conditions of an exemption under
any provision of Subdivision (4) of Division 1 of Part XIII of the SFA.
1.9 Underwriting
The Rights Issue is fully underwritten. The Underwriter will subscribe for up to a maximum of
100% of the New Shares offered under the Offer. If subscriptions for less than 172,014,102
Shares under the Offer are received, the Underwriter will subscribe for the remaining New
Shares. The minimum amount to be received by the Company pursuant to the Rights Issue
will accordingly be $1,720,141.
Pursuant to the Underwriting Agreement between the Company and the Underwriter the
Company will pay the Underwriter an underwriting commission and a management fee of
$172,014.
Key terms of the Underwriting Agreement are summarised below:
a. Broadly, the Company has agreed to indemnify the Underwriter and its officers,
employees, advisers and related bodies corporate against any losses they may suffer in
connection with the Offer, other than in connection with fraud, recklessness, wilful
misconduct or gross negligence of the indemnified party.
b. The Company must make this Offer and issue the new Shares in accordance with
and subject to the terms of the Underwriting Agreement, this Letter of Offer and the notice
lodged by the Company under section 708AA(2)(F) of the Corporations Act and any
subsequent notice and it must take all necessary and appropriate steps to allot all of the
New Offer Shares to applicants for those New Shares who lodge valid Entitlement and
Acceptance forms.
c. The Underwriter must lodge or cause to be lodged with the Company on the Shortfall
Payment Date, valid applications for all Shortfall Shares.
d. The Underwriter has the exclusive right to nominate subscribers for all of the Shortfall
Shares and may at any time appoint any sub underwriters of its choice, in its sole discretion,
to sub underwrite up to the total number of the Underwritten Shares and may nominate
allottees of all or any of the Shortfall Shares.
e. The Underwriter has the right to terminate the Underwriting Agreement on the
occurrence of certain events, which are termination events usually found in such
agreements. A brief summary of the material termination events are as follows:
i. a statement contained in this Offer is misleading or deceptive, documents
relating to the Offer are defective (or the issue of this Offer is misleading or
deceptive;
ii. any material adverse change occurs in Company or its prospects; an
outbreak or major escalation of hostilities occurs involving any one or more
of Australia, New Zealand, the United States of America, the Commonwealth
of Independent States or any of its constituent republics, Canada, Japan,
Thailand, Singapore, Malaysia, Hong Kong, North Korea or the Peoples’
Republic of China;
iii. the S&P/ASX All Ordinaries Index decreases to a level that is at least 10%
below the level of that Index as at the close of trading on the date of the
Underwriting Agreement;
iv. there is introduced or there is announced a proposal to introduce into the
Parliament of Australia or any State of Australia a new law or the Reserve
Bank of Australia or any Commonwealth or State authority adopts or
announces a proposal to adopt a new policy, any of which does or is likely to
prohibit or regulate the principal business of the Company, this Offer, capital
issues generally or stock markets generally;
v. there occurs any material adverse change or disruption to the financial
markets of Australia, the United States of America or other major
international financial market, or there occurs any change in national or
international political, financial or economic conditions, in each case the
effect of which is such as to make it, in the reasonable judgment of the
Underwriter, impracticable to market this Offer or to enforce contracts to
subscribe for the New Shares or to purchase Shares or is reasonably likely to
materially and adversely affect the success of this Offer;
vi. there occurs a contravention by the Company or any entity in the Group of
the Corporations Act, its constitution or any of the ASX Listing Rules;
vii. approval to the quotation of all of the New Shares on the ASX is withdrawn,
refused, not granted or granted subject to any condition or is qualified on a
basis which is unacceptable to the Underwriter (acting reasonably) on or
before Completion;
viii. ASIC issues an order or indicates an intention to hold a hearing or
commences an examination or issues a production order arising out of or in
connection with the Offer ;
ix. an application is made by ASIC for an order under Section 1324B of the
Corporations Act in relation to the Offer;
x. at any time after the date of the Underwriting Agreement the Company
effects certain corporate restructuring or an event of insolvency occurs in
relation to the Company;
xi. at any time after the date of the Underwriting Agreement the Company
withdraws the Offer;
xii. a director of the Company is charged with an indictable offence;
xiii. any litigation, arbitration or other legal proceeding is commenced against any
entity in the Group;
xiv. there is a default by the Company in the performance of any of its material
obligations under the Underwriting Agreement;
xv. a representation or warranty made or given or deemed to have been made or
given by the Company under the Underwriting Agreement proving to have
been untrue or incorrect in any material respect and the matters rendering
the representation or warranty untrue in such respect are not remedied to the
satisfaction of the Underwriter prior to the issue of the Shortfall Notice;
xvi. an executive director of the Company dies or becomes a person whose
estate may be dealt with in accordance with Protected Estates Act 1983 at
any time between the date of the Underwriting Agreement and the Allotment
Date (inclusive); and
xvii. the Company fails to provide the Underwriter with a Shortfall Notice.
1.10 Professional Advice
If you are in any doubt as to whether to accept this offer to participate in the Rights Issue,
please contact your stockbroker, licensed financial adviser or other professional adviser.
The Directors do not consider it appropriate to give Shareholders advice regarding the
taxation consequences of subscribing for New Shares under this Letter of Offer.
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 New Shares under this Letter of
Offer.
1.11 Enquiries
For enquiries about this Letter of Offer, please contact Registries Limited on (02) 9290 9600.
2. ACTION REQUIRED BY SHAREHOLDERS
Eligible Shareholders should read this Letter of Offer in its entirety and, if in any doubt, consult with
their professional advisers before deciding whether to apply for Shares. There are risks associated
with an investment in the Company and the Shares offered under this Letter of Offer must be
regarded as a speculative investment. It is important that Eligible Shareholders consider the risk
factors set out in section 4 of this Letter of Offer, as well as any other risks which could adversely
affect the financial performance of the Company or the value of an investment in Shares. The Shares
offered under this Letter of Offer carry no guarantee with respect to return on capital investment or the
future value of the Shares.
2.1 What you may do
This Offer is non-renounceable.
The number of New Shares to which you are entitled is shown on the accompanying
Entitlement and Acceptance Form.
You may:
• apply for all of your Entitlement;
• apply for part of your Entitlement and allow the balance to lapse; or
• apply for none of your Entitlement.
2.2 How to apply for New Shares
Complete the accompanying Entitlement and Acceptance Form in accordance with the
instructions set out on the Form.
Forward your completed Form together with payment in accordance with the Form to reach
the Company’s share registry (Registries Limited) by 5.00pm (Sydney time) on the Closing
Date.
The Closing Date is 4 May 2009. The Company reserves the right to extend the Closing
Date.
Surplus Application Moneys will be returned to the relevant shareholder as soon as
practicable, in accordance with section 722 of the Corporations Act. No interest will be paid
on returned Application Moneys.
If you decide not to accept all or part of your Entitlement pursuant to the Issue you need not
do anything and your Entitlement will automatically lapse.
2.3 Payment
Acceptance of New Shares must be accompanied by payment in full of the total price of
$0.01 per New Share.
Payments will only be accepted in Australian currency and as follows:
(a) Bank cheque drawn on and payable at any Australian bank;
(b) Personal cheque drawn on and payable at any Australian bank; or
(c) By BPAY in accordance with the instructions on your Entitlement and Acceptance
Form.
Cheques or bank cheques should be made payable to DataDot Technology Limited and
crossed “Not Negotiable”. Shareholders must not forward cash. Receipts for payment will
not be issued.
2.4 Enquiries
For further instructions, please refer to the accompanying Entitlement and Acceptance Form.
For information regarding your holding of the Company’s Shares, change of address or other
registry matters, please contact Registries Limited on (02) 9290 9600.
3. PURPOSE AND EFFECT OF THIS RIGHTS ISSUE
3.1 Purpose of Offer and Use of Proceeds
If the Rights Issue proceeds as contemplated, the Company will raise a total of $1,720,141,
which will be used to strengthen the balance sheet and to provide working capital to the
Company.
Set out below are two tables containing estimates of the impact of restructuring and financial
management changes to the business, these are:
i.changes to the staffing levels and remuneration,
ii.changes to business operations with a focus on cost reduction,
iii.changes to the efficiency and cost of manufacturing,
iv. as announced on 11 March 2009, the sale of the South African subsidiary
and increase in Royalty payment from 5% to 7.5% to the other South African
shareholders. This was via a put and call agreement (this allows a staged
reduction in the DDT ownership of DataDot South Africa from 42.5% to 0%
over 18 months with the right to put the balance of the shares to the South
African shareholders in 18 months if the sale is not complete), and
v. two new contracts since 31 December 2008 as previously announced.
It is important to note that these are proforma six month accounts and not forecasts. The
Company is not issuing these as a forecast and they should not be relied upon as
such.
Table 1 shows an interpreted six month proforma profit and loss post the completion of the
restructure. This also is predicated on no further reduction in sales to our automotive and
motorcycle channel other than that experienced in the first half of 2008/09 financial year.
Table 1 – Proforma Performance
Financial Overview & Impacts DNA for your assets
Proforma Performance – Changes Deliver Profitability
DataDot
Adjusted P&L for 6 months July 08 -Dec 08 ($000's)
Consolidated
Impact on Profitability:
Proforma 6 Monthly Financial Performance
$ Through the restructure and the removal
Sales revenue 5,217,670 of excessive costs, DataDot can become
Cost of sales 2,007,779 profitable on its existing revenue base with
reduced international exposure.
Gross margin 3,209,891
Gross margin % 61.5% Increased revenue from DataDot Europe
Overhead will add significant profitability.
Finance and admin 425,328 This should continue to improve in the
Sales and marketing 216,031
Operations/R&D 120,128
medium term with focus on top line
Employment 982,590 revenue growth (domestically and
Facilities 214,412 sustainable international expansion).
Travelling 117,847
Total expenses 2,076,336 There may be short term impacts to
Misc income 168,619
profitability from targeted marketed focus
Royalties income 66,185 on growing and diversifying the business –
Total other revenue 234,804 in vesting in DataDot’s future.
Proforma Adjusted EBITDA 1,368,359
Depn & amortn (191,026)
Income tax (353,200)
Outside equity share (192,718)
Proforma Adjusted NPAT 631,415
Table 2 shows the difference between December 2008 results and the proforma results
shown in Table 1.
Table 2 – Proforma Adjustments
Financial Overview & Impacts DNA for your assets
Proforma Adjustments – Post Restructure
Proforma Adjustments for Changes (6 Monthly) Key Adjustments from Strategy:
$
Adjustment to revenues and cost of sales
Revenue Adjustments 448,801
to include additional contracts and removal
Cost of Sales Adjustments 279,418 of unprofitable revenue streams;
Overhead Adjustments - Restructuring of sales team and associated
Finance and admin (449,422) remuneration structure;
Sales and marketing (131,340)
Operations/R&D (14,312) Restructuring of management, finance and
Employment (1,094,968) administration staffing costs;
Facilities (36,362)
Travelling (111,351) Restructure royalty arrangements and cap
Total Overhead Adjustments (1,837,755) DataDot’s exposure to overseas JV’s and
Other Revenue Adjustments (1,602,787)
South Africa;
Reduction in use of external consultants;
Proforma Adjustments 404,351
Reduction in travel – focus on necessary
Other Adjustments
Impairment Loss 6,946,702
travel only;
Depn & amortn 47,599 Remove ineffective sponsorships;
Interest (net) (20,842)
Income tax 867,246
Impairment losses on R&D are considered
Share of JV Co Profit 195,452 non-recurring;
Outside equity share (63,450) Adjustment for JV and OEI to reflect future
Total Adjustments 8,377,058 reduced exposure; and
Tax recalculated at 30% on proforma profit.
3.2 Capital Structure
The following table shows the number of Existing Shares at the date of the Offer and the
total number of issued Shares at the close of the Offer.
Ordinary Shares
Existing Shares at the date of this Letter of Offer 172,014,102
Total New Shares offered 172,014,102
Total issued Shares on Close of the Offer 344,028,204
The above table assumes that no options over Shares are exercised prior to the Record
Date.
3.3 Underwriting Arrangements – effect on capital structure and control
The Rights Issue is fully underwritten. The Underwriter will subscribe for up to a maximum of
100% of the New Shares offered under the Offer. If subscriptions for less than 172,014,102
Shares under the Offer are received, the Underwriter will subscribe for the Shortfall Shares.
If all Eligible Shareholders in the Company take up their entitlements under the offer, then
the issue of shares pursuant to the Rights Issue will have no effect on the control of the
Company.
If all Eligible Shareholders in the Company do not take up their entitlements under the offer,
then the Underwriter will subscribe for a maximum of 172,014,102 Shortfall Shares in
accordance with the Underwriting Agreement between the Company and the Underwriter.
The Underwriter, under the terms of the Underwriting Agreement, has the exclusive right to
nominate subscribers for all of the Shortfall Shares and may appoint a sub underwriter to sub
underwrite up to the total number of Underwritten Shares. The Company has not been
notified by the Underwriter that it has appointed a sub underwriter.
The potential effect the issue of the shares under the Rights Issue on the control of the
Company is illustrated below:
If the offer is fully subscribed by Eligible No effect on control.
Shareholders
If the rights offer is subscribed to the The Underwriter’s shareholding would
extent of 50% by Eligible Shareholders increase from 0% to 25 %.
and the Underwriter fully subscribes to its
entitlement
If the rights offer is subscribed by no The Underwriter’s shareholding would
Eligible Shareholders other than the increase from 0% to 50 %.
Underwriter
The Underwriter is a professional investment services provider. The Company has been
advised by the Underwriter that, if it controls the Company, it has no present intention to
become actively involved in management of the Company nor has any present intention to
effect any changes to the operation of the Company and it has no present intention to seek
to appoint a director to the board.
4. RISK FACTORS
There are general risks with any investment in the stock market. The value of New Shares may
rise or fall depending upon a range of factors and stock market conditions that are unrelated to
the Company’s financial performance. Therefore, if an investor decides to sell New Shares, the
amount received may be higher or lower than the amount of the original investment.
There are a number of specific risks concerning the Company which potential investors should be
aware. There are a number of factors, both specific to the Company and of a general nature,
which may affect the future operating and financial performance of the Company and the value of
an investment with the Company. If you are unsure about subscribing for new Shares in the
Company, you should first seek advice from your stockbroker, accountant, financial or other
professional adviser.
The new Shares offered under this Offer Document carry no guarantee in respect of profitability,
dividends, return of capital or the price at which they may trade on ASX. The past performance of
the Company should not necessarily be considered a guide to the future performance of the
Company.
The following is not an exhaustive summary but identifies the areas the Directors regard as the
major risks specific to an investment in the Company.
4.1 General Risk Factors
Risks of a general nature include the domestic and international factors affecting market conditions in
equity, financial and commodity markets, economic conditions, interest rates, levels of tax, taxation
law and accounting practice, governmental legislation or intervention, inflation, natural disasters or
war. In addition, the Company is exposed to the motor vehicle industry which is itself exposed to the
global downturn. Some of these factors can be mitigated by appropriate commercial action. However,
many are outside the control of the Company, are dependent on the policies adopted and approaches
taken by regulatory authorities, or cannot otherwise be mitigated.
4.2 Specific Risk Factors
Certain risks that are specific to the Company and/or to its subsidiaries are set out below.
Intellectual Property and Confidential Information
All of the Company’s and its subsidiaries’ businesses and assets are reliant on valid and enforceable
intellectual property rights and the security of confidential information. The Company and its
subsidiaries take great pains to protect these rights and assets. However, there is always the
possibility that some rights or information may fall into a competitor’s hands. Further, several of the
Company’s subsidiaries trade in foreign jurisdictions, where there may be greater difficulty in
protecting intellectual property rights and confidential information.
Research and Development
Technology is constantly developing and the Company’s subsidiaries must continue to develop their
products to maintain their competitiveness. Research and development incurs costs, some of which
may not result in any monetary benefits or may not result in monetary benefits for a substantial period
after incurring those costs. Companies such as the Company and its subsidiaries must apply funds in
this area and any reduction in cash flow or other funds may well hinder research and development
which may, in turn, result in loss of market share and less cash flow.
Foreign Jurisdictions
The Company operates in foreign jurisdictions where enforcing contractual obligations on a customer
or defending an unreasonable claim of a customer may involve special difficulties.
Competition
The industry in which the Company operates is undergoing very much the same transition as other
industries. The Company must constantly be on guard to ensure that it has sufficient funds and
resources to compete in its various market places. The Company is alert to potential new competitors
and will take steps to protect and maintain its market position and the use of its intellectual property.
Litigation
As announced to the ASX on 7 April 2009, the former CEO of the Company has commenced
proceedings against the Company including issuing a statutory demand for the winding up of the
company. The Company is confident of defending the actions however with any litigation there is a
risk of an adverse outcome for the Company.
South Africa
As noted in Section 3 of this Letter of Offer and announced to the ASX on 11 March 2009 the
Company has entered into a staged Put and Call sale agreement with the DataDot South Africa
shareholders in return for repayment of all loan funds and a purchase amount as well as an increase
in the license royalty payable on ex-factory sales from 5% to 7.5%.
There is a risk, as there is with any sale, that the sale may not be completed. To minimise that risk
there is a put option to allow the Company to force sell (put) the balance of the unsold shares in
DataDot South Africa to the South African shareholders. If the buyers are unable to pay upon
demand then the Company can either remain a minority shareholder or sell to a third party for a
renegotiated price.
5. DEFINITIONS
$ Australian dollars (and references to cents are
to Australian cents).
Allotment Date The date of allotment of New Shares under the
Offer.
Applicant An Eligible Shareholder who returns a
completed Entitlement and Acceptance Form
as instructed in this Letter of Offer before the
Closing Date.
Application An application for New Shares under this Letter
of Offer, submitted by duly completing an
Acceptance Form.
Application Money The aggregate amount of money payable for
New Shares applied for in an Acceptance
Form.
ASX Australian Securities Exchange Limited (ABN
98 008 624 691).
ASX Listing Rules The official listing rules of ASX.
Company Datadot Technology Limited (ACN 091 908
726).
Closing Date 5pm on 4 May 2009 (unless extended).
Completion When all of the New Shares have been allotted
in accordance with this Offer.
Corporations Act The Corporations Act (2001) (Cth) as amended
from time to time.
Directors The Directors of the Company.
Eligible Shareholder A shareholder with a registered address in
Australia, New Zealand or Singapore.
Entitlement and Acceptance Form The entitlement and acceptance form attached
to this Letter of Offer.
Entitlement The right of an existing Shareholder to
subscribe for New Shares pursuant to the
Rights Issue.
Excluded Shareholders Shareholders of the Company with their
registered address outside Australia, New
Zealand or Singapore.
Group The Company and each entity which the
Company controls.
Letter of Offer This letter under which the Offer is being made.
New Share or New Shares The Shares to be issued pursuant to this Letter
of Offer.
Offer Offer of New Shares under this Letter of Offer.
Option An option to subscribe for a Share in the
Company.
Public Information Means public and other media statements
made by or on behalf of the Company in
relation to the affairs of the Company or the
Offer.
Record Date 14 April 2009
Rights The rights of existing Shareholders to
subscribe for New Shares pursuant to the
Rights Issue.
Rights Issue or Issue The issue by way of renounceable rights to
New Shares pursuant to this Letter of Offer.
Shareholder or Shareholders Holder/s of Shares as at the Record Date.
Shares Ordinary shares in the capital of the Company.
Shortfall Shares Those New Shares not subscribed for by way
of an Entitlement and Acceptance Form
pursuant to this Letter of Offer by 5.00pm
(Sydney time) on the Closing Date
Underwriter KTM Capital Pty Limited ACN 086 281 950.
Underwriting Agreement Underwriting Agreement between the Company
and the Underwriter dated 25 March 2009.