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QANDA TECHNOLOGY LTD

ABN 60 066 153 982

N O T I C E O F E X T R A O R D I N A R Y G E N E R A L M E E T I N G E X P L A N AT O R Y M E M O R A N D U M

P R O X Y F O R M

Date of Meeting

Friday, 10 January 2014

Time of Meeting

11.00 am (EDST)

Place of Meeting

Level 5, 181 Miller Street North Sydney, NSW 2060

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NOTICE OF EXTRAORDINARY GENERAL MEETING

The Extraordinary General Meeting of Qanda Technology Ltd ( Company or Qanda Technology ) is to be held on Friday, 10 January 2014, at Level 5, 181 Miller Street, North Sydney, NSW 2060, commencing at 11.00 am (EDST).

The Explanatory Memorandum that accompanies and forms part of this Notice describes the matters to be considered at this meeting.

BUSINESS

Resolution 1 – Approval of Acquisition of interest in DMCR from the DMCR Vendors

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of Item 7 of Section 611 of the Corporations Act, Listing Rule 11.1.2 of the Listing Rules of ASX and for all other purposes, approval is given for the Company to:
(a) make a significant change in the scale of its activities; and
(b) to issue to the DMCR Vendors 780,000,000 Shares and 260,000,000 Deferred Shares in the capital of the Company

on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice”.

Short Explanation: Under Chapter 6 of the Corporations Act, a person must not acquire a relevant interest in issued voting shares of 20% or more of the total issued voting shares of a public company unless an exception applies, including obtaining prior shareholder approval. ASX Listing Rule 11.1.2 requires a company to seek shareholder approval for a significant change in the nature of activity of the company.

Expert’s Report: Shareholders should carefully consider the Independent Expert’s Report prepared by BDO Corporate Finance (WA) Pty Ltd for the purposes of Shareholder approval for Resolution 1 under Item 7 of Section 611 of the Corporations Act. The Independent Expert’s Report comments on the fairness and reasonableness of the transaction to the non‐associated Shareholders in the Company. The Independent Expert has determined that the proposed issue of Consideration Shares to the DMCR Vendors is fair and reasonable to the non‐associated Shareholders in the Company.

Voting Exclusions: The Company will disregard any votes cast on this Resolution by any party to the transaction, any person who may participate in the proposed issue, any person to whom the proposed issue is to be made and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the Resolution is passed and any associates of any of them. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Resolution 2 – Election of Mr Adrian Bunter as a Director

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, subject to the passing of Resolution 1 and settlement of the Acquisition, for the purposes of Clause 13.3 of the Company’s Constitution and for all other purposes, Mr Adrian Bunter, having been recommended by the Directors of the Company and consented to act, be elected as a Director of the Company effective from the date of settlement of the Acquisition”.

Short Explanation: Under Clause 13.3 of the Company’s Constitution, a person recommended by the directors of the Company for election is eligible for election to the office of director by resolution passed at any general meeting.

Resolution 3 – Ratification of the issue of 115,000,000 Shares

To consider, and if thought fit, to pass the following resolution as an ordinary resolution :

“That, for the purposes of Listing Rule 7.4 and for all other purposes, Shareholders ratify the issue of 115,000,000 Shares made on 28 August 2013 on the terms and conditions set out in the Explanatory Memorandum that forms part of this Notice.”

Short Explanation : Under the Listing Rules, the Company may seek shareholder approval to ratify an issue of securities following a placement to allow it the flexibility to make future issues of securities up to the threshold of 15% of its total ordinary securities in any one 12 month period.

Voting Exclusion : The Company will disregard any votes cast on Resolution 3 by any person who participated in the issue and any associates of those persons. However, the Company need not disregard a vote if:

(a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
(b) it is cast by a person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

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Resolution 4 ‐ Approval of Issue of up to 225,000,000 Shares

To consider and, if thought fit, to pass the following resolution as an ordinary resolution :

"That, for the purposes of Listing Rule 7.1 of the Listing Rules of ASX and for all other purposes, shareholders approve the issue of up to 225,000,000 Shares on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice."

Short Explanation : Under the Listing Rules, a company may seek shareholder approval prior to a placement to allow it the flexibility to make future issues of securities up to the threshold of 15% of its total ordinary securities in any one 12 month period. Please refer to the Explanatory Memorandum for further details.

Voting Exclusion Statement: The Company will in accordance with the Listing Rules, disregard any votes cast on Resolution 4 by any person who may participate in the proposed issue and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the resolution is passed, and any associates of those persons. However, the Company need not disregard a vote if:

(a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
(b) it is cast by a person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Resolution 5 – Approval of Issue of up to 250,000,000 Shares

To consider and, if thought fit, to pass the following resolution as an ordinary resolution :

“That, for the purposes of Listing Rule 7.1 and for all other purposes, Shareholders approve the issue of up to 250,000,000 Shares on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice."

Voting Exclusion: The Company will in accordance with the Listing Rules, disregard any votes cast on Resolution 5 by any person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if Resolution 5 is passed and any associate of those persons. However, the Company need not disregard a vote if:

(a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
(b) it is cast by a person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

EXPLANATORY MEMORANDUM

The Explanatory Memorandum is incorporated in and comprises part of this Notice. Shareholders are referred to the Glossary in the Explanatory Memorandum which contains definitions of capitalised terms used both in this Notice and the Explanatory Memorandum.

PROXIES

Please note that:

A member entitled to attend and vote is entitled to appoint not more than two proxies to attend and vote on behalf of the member.
A proxy need not be a member of the Company. A proxy may be appointed by reference to an office held by the proxy (e.g. “the Company Secretary”).
Where more than one proxy is appointed, each proxy may be appointed to represent a specified proportion of the member’s voting rights. If no such proportion is specified, each proxy may exercise half of the member’s votes.

Shareholders and their proxies should be aware that changes to the Corporations Act made in 2011 mean that:

if proxy holders vote, they must cast all directed proxies as directed; and
any directed proxies which are not voted will automatically default to the Chair, who must vote the proxies as directed.

Further details on these changes are set out below.

Proxy vote if appointment specifies way to vote

Section 250BB(1) of the Corporations Act provides that an appointment of a proxy may specify the way the proxy is to vote on a particular resolution and, if it does :

the proxy need not vote on a show of hands, but if the proxy does so, the proxy must vote that way (ie as directed); and
if the proxy has 2 or more appointments that specify different ways to vote on the resolution, the proxy must not vote on a show of hands; and
if the proxy is the chair of the meeting at which the resolution is voted on, the proxy must vote on a poll, and must vote that way (ie as directed); and

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if the proxy is not the chair, the proxy need not vote on the poll, but if the proxy does so, the proxy must vote that way (ie as directed).

Transfer of non‐chair proxy to chair in certain circumstances

Section 250BC of the Corporations Act provides that, if:

an appointment of a proxy specifies the way the proxy is to vote on a particular resolution at a meeting of the Company's members; and
the appointed proxy is not the chair of the meeting; and
at the meeting, a poll is duly demanded on the resolution; and
either of the following applies:
the proxy is not recorded as attending the meeting; or
the proxy does not vote on the resolution,

the chair of the meeting is taken, before voting on the resolution closes, to have been appointed as the proxy for the purposes of voting on the resolution at the meeting.

The enclosed proxy form provides further details on appointing proxies and lodging proxy forms.

VOTING ENTITLEMENTS

For the purposes of section 1074E(2) of the Corporations Act 2001 and regulation 7.11.37 of the Corporations Regulations 2001, the Company has determined that members holding ordinary shares as set out in the Company’s share register at 7:00 p.m. (EDST) on Wednesday, 8 January 2014 will be entitled to attend and vote at the Meeting.

CORPORATE REPRESENTATIVE

Any corporate Shareholder who has appointed a person to act as its corporate representative at the meeting should provide that person with a certificate or letter executed in accordance with the Corporations Act authorising him or her to act as that company’s representative. The authority may be sent to the Company in advance of the meeting or handed in at the meeting when registering as a corporate representative.

DATED THIS 12[TH] OF DECEMBER 2013 BY ORDER OF THE BOARD

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Karen Logan Company Secretary

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EXPLANATORY MEMORANDUM

This Explanatory Memorandum has been prepared to provide Shareholders with material information to enable them to make an informed decision on the business to be conducted at the Extraordinary General Meeting of Qanda Technology Ltd ( Company or Qanda Technology ).

The Directors recommend Shareholders read this Explanatory Memorandum in full before making any decision in relation to the resolutions.

1. General information relating to Resolutions 1

1.1 Background

On 6 November 2013, the Company announced that it had completed negotiations and was in the process of completing execution of an implementation agreement ( Implementation Agreement ) to acquire 100% of the company which owns the ‘Drive My Car Rental’ business, Drive My Car Rentals Pty Ltd ( DMCR ), from the respective shareholders of DMCR (together, the DMCR Vendors ) ( Acquisition ). Completion of the Implementation Agreement is subject to, amongst other things, the Company obtaining Shareholder approval pursuant to Item 7 of Section 611 of the Corporations Act for the issue of 780,000,000 Shares and 260,000,000 Deferred Shares (defined below) (together, the Consideration Shares ) to the DMCR Vendors (if required). A summary of the Implementation Agreement is set out in section 1.2 of this Explanatory Memorandum. A list of entities comprising the DMCR Vendors is set out at Annexure A.

The Board of the Company regards the Acquisition as a key part of its strategy for growth within the web‐based technology sector. The Directors believe that the Acquisition will be a positive step towards generating higher levels of earnings and cash flow for Qanda in the future and improve the Group’s ability to secure capital to fund future expansion.

The Independent Expert’s Report accompanying this Notice of Meeting (Annexure B) contains a detailed examination of the Acquisition to assist Shareholders to assess the merits of the Acquisition and decide whether to approve the issue of Consideration Shares and the change in scale of the Company’s activities. The Independent Expert has concluded that the proposed issue of Consideration Shares to the DMCR Vendors is fair and reasonable to the non‐associated Shareholders in the Company (refer to section 2.5 of this Explanatory Memorandum for additional information).

The Independent Expert’s Report contains comprehensive information on DMCR and the Acquisition, including:

The Independent Expert’s	Report contains comprehensive information on DMCR and the
Section 4	Outline of the Transaction
Section 6	Profile of Drive MyCar Rentals PtyLtd
Section 7	Economic Analysis
Section 8	IndustryAnalysis
Section 13.1	Advantages of Approvingthe Transaction
Section 13.2	Disadvantages of Approvingthe Transaction

1.2 Summary of the key terms of the Implementation Agreement

Offers :

The Company proposes to acquire all of the issued capital of DMCR by making separate offers to all of the DMCR Shareholders to acquire 100% of the DMCR shares ( Offer ).

Conditions Precedent :

On or before 15 February 2014 the following Conditions Precedent must be satisfied:

(a) the consent and approval of the Qanda Shareholders being obtained at a general meeting in accordance with the requirements of the Corporations Act and the ASX Listing Rules (including, but not limited to, where necessary, shareholder approval pursuant to section 611 (item 7) of the Corporations Act);
(b) the Company becoming entitled to acquire 100% of the issued capital of DMCR as a result of the Company delivering an executed Offer of DMCR shares to each DMCR shareholder and each DMCR shareholder accepting the Offer by duly executing it;
(c) all Class A Preference Shares being converted into DMCR shares;
(d) receipt of all necessary regulatory and third party consents, waivers and approvals pursuant to the Implementation Agreement within 75 days of the date of execution of the Implementation Agreement;

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(e) DMCR and the Company being satisfied on the date which is not later than 10 days after the satisfaction of the Conditions Precedent to the Implementation Agreement that there has been no Material Adverse Effect to the business, operations or assets of each other since the date of this Agreement, with such satisfaction being evidenced in writing; and;
(f) entry into all necessary deeds of assignment of intellectual property between those parties who are identified in the Implementation Agreement as key DMCR shareholders and all staff who are to be identified during the due diligence period and the Company, whereby all intellectual property rights outlined in Schedule 6 to the Implementation Agreement will be assigned to DMCR.

Consideration :

In consideration for the Acquisition of DMCR, the Company shall issue to the DMCR Vendors:

(a) up to 780,000,000 fully paid ordinary Shares; and
(b) 260,000,000 deferred Shares subject to DMCR achieving an audited annual net profit before tax of at least $500,000 in any consecutive 12 month period in the 36 months ( Deferred Shares ) following Settlement.

Settlement :

Settlement shall take place not later than 10 days after the satisfaction of all of the Conditions Precedent.

Voluntary Escrow :

The terms of the Offer to DMCR Shareholders is set out in the share sale agreement annexed as Annexure B to the Implementation Agreement ( Share Sale Agreement ) which provides that the seller agrees for a period of 12 months from the date of the Share Sale Agreement, that it will not dispose of Shares without the prior consent of the Company.

1.3 Overview of the DMCR business

DMCR operates Australia’s leading online marketplace for private car rentals. The DMCR marketplace is a web‐based portal providing owners of vehicles the ability to rent their vehicle out to people who wish to rent a vehicle for either short term or long term periods.

The DMCR business was founded on the principle of facilitating the sharing and utilisation of other people’s assets. This concept of sharing has been coined “collaborative consumption”. DMCR was an early entrant into the collaborative consumption space, and DMCR has invested heavily in the past three years to capitalise on DMCR’s first‐mover advantage in the private car rental space.

The DMCR marketplace launched in early 2010, after completion of early proof of concept testing in late 2008, and was one of the first peer‐to‐peer car rental businesses in the world.

Currently, DMCR has focussed its collaborative consumption platform in operating a peer‐to‐peer private car rental business. However, the DMCR marketplace platform can be applied to any idle or underutilised assets and DMCR will be pursuing strategic and complementary opportunities for its application in other industry sectors in the future.

Further details on DMCR and the industry it operates in are set out in the Independent Expert’s Report (Annexure B) and the announcement to ASX released on 6 November 2013.

1.4 Impact of the Acquisition on the Company

Completion of the Acquisition of DMCR will result in the Company acquiring and taking control of the DMCR business which is owned and operated by DMCR. The Acquisition will result in various advantages and disadvantages to the Company which Shareholders should consider prior to exercising their vote.

The Independent Expert’s Report (Annexure B) contains the key advantages and disadvantages to the Company and non‐ associated Shareholders of completing the Acquisition of the DMCR business.

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1.5 Impact on capital structure

The effect that the passing of Resolution 1 and the completion of the Implementation Agreement will have on the capital structure of the Company is as follows:

structure of the Company is as follows:
Shares currently on issue	1,081,599,600 225,000,000
Shares issuedpursuant to Resolution 4
	1,306,599,600 780,000,000

Shares issuedpursuant to Resolution 1
	2,086,599,600 260,000,000

Deferred Shares issued pursuant to Resolution 11
Total Shares on issue
	2,346,599,600

Notes:

In accordance with the terms of the Implementation Agreement, the Deferred Shares will only be issued upon DMCR achieving an audited annual net profit before tax of at least $500,000 in any consecutive 12 month period in the 36 months following completion of the Implementation Agreement.

1.6 Impact on level of control by DMCR Vendors

The effect on the voting power held by the DMCR Vendors in the Company if Resolution 1 is passed and the Consideration Shares are subsequently issued is set out in the following table.

Security Holder	Number of Shares Currently Held1	Percentage of issued capital	Number of Shares held upon issue of Resolution 1 Shares	Percentage of issued capital upon issue of Resolution 1 Shares	Number of Shares held upon issue of Resolution1 Deferred Shares2	Percentage of issued capital upon issue of Resolution 1 Deferred Shares
DMCR Vendors	‐	‐	780,000,000	37.38%	1,040,000,000	44.32%
Non associated	1,306,599,600	100.00%	1,306,599,600	62.62%	1,306,599,600	55.68%
Total	1,306,599,600	100.00%	2,086,599,600	100.00%	2,346,599,600	100.00%

Notes:

Assumes the Shares are issued pursuant to Resolution 4.
Assumes the Implementation Agreement is completed in accordance with the terms.

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1.7 Pro Forma Statement of Financial Position

The audited statement of financial position as at 30 June 2013 has been included to provide information on the assets and liabilities of Qanda.

The pro forma statement of financial position incorporates the effect of:

material post‐balance date adjustments as described in Note 1 below;
completion of the Acquisition of DMCR pursuant to Resolution 1; and
the issue of Shares pursuant to Resolution 3.

CURRENT ASSETS Cash and cash equivalents Trade and other receivables Other current assets Total Current Assets NON‐CURRENT ASSETS Other receivables Property, plant & equipment Intangible assets Deferred tax assets Total Non‐Current Assets TOTAL ASSETS LIABILITIES CURRENT LIABILITIES Trade and other payables Other current liabilities Borrowings Redeemable convertible notes Short‐term provisions Income tax payable Total Current Liabilities NON‐CURRENT LIABILITIES Borrowings Other non‐current liabilities Redeemable convertible notes Long‐term provisions Deferred tax liabilities Total Non‐Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Accumulated losses Parent interests Non‐controlling interests TOTAL EQUITY	Qanda Consolidated Group 30 June 2013 (audited) $ Material post balance date adjustments1 and effect of Resolutions 1 and 3 (unaudited) $ Pro forma 30 June 2013 (unaudited) $ 559,179 169,490 728,669 1,029,441 (29,546) 999,895 7,971 15,550 23,521
	1,596,591 155,494 1,752,085
	85,308 ‐ 85,308 28,836 19,844 48,680 2,417,214 2,000,672 4,417,886 ‐ 5,567 5,567
	2,531,358 2,026,083 4,557,441
	4,127,949 2,181,577 6,309,526
	382,640 98,253 480,893 437,092 ‐ 437,092 127,955 26,069 154,024 451,810 (276,810) 175,000 333,670 14,320 347,990 ‐ ‐ ‐
	1,733,167 (138,168) 1,594,999
	1,018,973 103,935 1,122,907 39,272 ‐ 39,272 ‐ ‐ ‐ 41,677 ‐ 41,677 ‐
	1,099,922 103,935 1,203,856
	2,833,089 (34,233) 2,798,856
	1,294,860 2,215,810 3,510,670
	21,298,285 2,471,810 23,770,095 (306,431) ‐ (306,431) (19,730,833) (256,000) (19,986,833)
	1,261,051 2,215,810 3,396,831 33,839 ‐ 33,839
	1,294,860 2,215,810 3,510,670

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Note 1: The following material post‐balance date adjustments have been made to the pro forma balance sheet of Qanda:

Cash received from receipt of research and development tax offset amount of $272,747 in October 2013 (and corresponding reduction in the balance of trade and other receivables as a result of receipt of this amount);
Cash spent on general operational activities between the periods July 2013 and September 2013 of approximately $256,000.

1.8 Risk Factors

Investment Risks associated with the Acquisition

The Directors have identified the following risks the Company may be exposed to following settlement of the Acquisition that are in addition to those currently applying:

(a) ( different industry ) Qanda’s existing business unit, Marketboomer operates its marketplace in a different industry, being hospitality, to DMCR, being private car rentals. Shareholders of Qanda may not wish to diversify from Qanda’s core business and/or participate in the DMCR business;
(b) ( customer base ): the customers of the Company’s existing business are predominantly wholesalers whereas DMCR has a predominantly retail customer base;
(c) ( revenue sources ): the Company’s existing business generates revenue from both licensing software and content as well as processing transactions whereas the DMCR generates revenue solely from transaction fees related to car rentals and membership fees. Accordingly DMCR revenue is more ad hoc and may be subject to greater fluctuation dependent on market conditions compared to the stability of Marketboomer’s licence revenue.
(d) ( share market conditions ) Qanda, being a company listed on ASX, will continue to be subject to market forces that influence broad share market trends and the price of securities of individual companies. Accordingly, the price of the Shares will be subject to varied and often unpredictable influences on the market for equities in general;
(e) ( no guarantee of future earnings risk ) there is no guarantee of profitability, dividends, return of capital, or the price at which Shares will trade on ASX; and
(f) ( uncontrollable factors ) the Group will be exposed to the general risk factors that are associated with conducting a business including loss of service of key management personnel, economic factors, laws and regulations and non‐insurable risks.

Specific risks associated with the Acquisition and the issue of the Consideration Shares are:

(a) ( Settlement risk ) the Acquisition is subject to the risk that it may not complete as Settlement is subject to the passing of Resolutions 1 and 2 and satisfaction of all of the Conditions Precedent. If Resolutions 1 and 2 are not passed and if all Conditions Precedent are not satisfied, the Acquisition will not proceed;
(b) ( liquidity ) the liquidity of Shares may be affected given the increase in the DMCR Vendors interest in the Company. After the issue of the Consideration Shares, the DMCR Vendors will hold in aggregate approximately 44.32% of the Company’s Shares (however, please note section 2.1 below) indicating that the DMCR Vendors do not believe they are “associates”); and
(c) ( Resolutions ) the Acquisition is conditional on Shareholders approving Resolutions 1 and 2.

2. Resolution 1 – Approval of Acquisition of interest in DMCR from the DMCR Vendors

Resolution 1 seeks Shareholder approval for the issue of the Consideration Shares to the DMCR Vendors pursuant to the terms of the Implementation Agreement.

2.1 Section 611 of the Corporations Act

Section 606(1) of the Corporations Act provides that, a person must not acquire a relevant interest in issued voting shares in a listed company if the person acquiring the interest does so through a transaction in relation to securities entered into by or on behalf of the person and because of the transaction, that person’s or someone else’s voting power in the company increases:

(a) from 20% or below to more than 20%; or
(b) from a starting point above 20% and below 90%.

The voting power of a person in a body corporate is determined in accordance with Section 610 of the Corporations Act. The calculation of a person's voting power in a company involves determining the voting shares in the company in which the person and the person’s associates have a relevant interest.

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A person (second person) will be an “associate” of the other person (first person) if:

(a) the first person is a body corporate and the second person is:
(i) a body corporate the first person controls;
(ii) a body corporate that controls the first person; or
(iii) a body corporate that is controlled by an entity that controls the first person;
(b) the second person has entered or proposed to enter in a relevant agreement with the first person for the purpose of controlling or influencing the composition of the company’s board or the conduct of the company’s affairs; and
(c) the second person is a person with whom the first person is acting or proposed to act, in concert in relation to the company’s affairs.

A person has a relevant interest in securities if they:

(a) are the holder of the securities;
(b) have the power to exercise, or control the exercise of, a right to vote attached to securities; or
(c) have power to dispose of, or control the exercise of a power to dispose of, the securities.

It does not matter how remote the relevant interest is or how it arises. If two or more people can jointly exercise one of these powers, each of them is taken to have that power.

In the event Resolution 1 is passed and the Consideration Shares are issued, the potential voting power of the DMCR Vendors is set out in the table in Section 1.6 of the Explanatory Memorandum.

Completion of the Acquisition requires the approval of Shareholders. Shareholder approval pursuant to Section 611 Item 7 of the Corporations Act is required for a person (including their associates) to acquire voting power in a company of greater than 20%. Although no individual DMCR Vendor is acquiring a relevant interest in the Company of greater than 20% as a result of the Acquisition in the event the DMCR Vendors are considered associates of each other then each DMCR Vendor would acquire voting power in the Company of greater than 20% at completion of the Acquisition. The Company is seeking Shareholder approval for the Acquisition in any event so for the avoidance of doubt the board of directors considers it prudent to seek Shareholder approval pursuant to Section 611 Item 7 of the Corporations Act in the event the DMCR Vendors are considered to be associates of one another for the purposes of the completion of the Transaction. This does not mean that DMCR Vendors would continue to be associates following completion of the Acquisition.

6.1.1 Item 7 of Section 611 of the Corporations Act

Item 7 of Section 611 of the Corporations Act provides an exception to the general prohibition in Section 606(1), whereby a person may acquire a relevant interest in a company’s voting shares in excess of the prescribed limit with shareholder approval.

Resolution 1 seeks Shareholder approval under Item 7 of Section 611 of the Corporations Act in order for the voting power of the DMCR Vendors to increase to greater than 20% in Qanda.

Information is required to be provided to Shareholders under ASIC Regulatory Guide 74 and the Corporations Act. Shareholders are also referred to the Independent Expert’s Report set out in Annexure B of this Notice of Meeting.

We are instructed that the DMCR Vendors do not believe that the provisions of the Implementation Agreement give rise to any association between them such that shareholder approval is required pursuant to Section 611 Item 7. There is no other agreement, arrangement or understanding in relation to the Company or its affairs and the DMCR Vendors do not believe they are associates in relation to the Company. Accordingly, notwithstanding any other terms or descriptions set out in the Independent Expert’s Report or this Explanatory Memorandum, including but not limited to the aggregate interest, voting shares or ownership of the DMCR Vendors in Qanda's share capital or the intention of the DMCR Vendors, the Independent Expert’s Report and Explanatory Memorandum are not intended to imply in any way that the DMCR Vendors are associates.

2.2 Prescribed information

(i) The identity of the person proposing to make the Acquisition and their associates:

The DMCR Vendors, and each of its associates will hold a relevant interest in Shares on completion of the issue of Consideration Shares pursuant to the Agreements. The list of members of the DMCR Vendors is set out in

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Annexure A.

(ii) The maximum extent of the increase in the person’s voting power in the Company that would result from the Acquisition:

As set out in the table in Section 1.6 of the Explanatory Memorandum, the maximum extent of the increase in the DMCR Vendors’ voting power that would result from the issue of Consideration Shares is:

(A) upon issue of the Shares at completion of the Implementation Agreement, 37.38%; and
(B) if the Deferred Shares are issued upon DMCR achieving an audited annual net profit before tax of at least $500,000 in any consecutive 12 month period in the 36 months following completion of the Implementation Agreement, 44.32%.
(iii) The voting power that person would have as a result of the Acquisition:

As set out in paragraph (ii) above.

(iv) The maximum extent of the increase in the voting power of each of that person’s associates that would result from the Acquisition:

The maximum extent of the increase in the voting power of any associate of the DMCR Vendors as a result of the issue of Consideration Shares is:

(A) upon issue of the Shares at completion of the Implementation Agreement, 37.38%; and
(B) if the Deferred Shares are issued upon DMCR achieving an audited annual net profit before tax of at least $500,000 in any consecutive 12 month period in the 36 months following completion of the Implementation Agreement, 44.32%.
(v) The voting power that each of that person’s associates would have as a result of the Acquisition:

As set out in paragraph (iv) above.

(vi) Terms of the Acquisition:

As set out in section 1.2 above.

(vii) Timing of the Acquisition:

The Shares pursuant to Resolution 1 will be issued on Settlement which shall take place not later than 10 days after the satisfaction of all of the Conditions Precedent.

(viii) Reasons for the Acquisition:

As set out in section 1.1 above.

(ix) Interest of the Directors in the Acquisition:

None of the current Directors of the Company have any interest in the Acquisition or outcome of Resolutions 1 or 2. Mr Adrian Bunter who will be appointed as a Director of the Company if Resolution 2 is passed has an interest in the Acquisition by virtue of him being a DMCR Vendor. Mr Bunter’s interest is set out in Annexure A.

(x) Impact on the Company if Shareholders do not approve the issue of Shares:

The issue of Consideration Shares the subject of Resolution 1 comprise the consideration for the Acquisition. If Shareholders do not approve Resolution 1, this Acquisition will not proceed. If Resolutions 1 and 2 are not passed and the Acquisition is not completed, the Company will continue to focus on its existing business unit and pursue its strategy for growth within the web‐based technology sector.

The figures in this Section 2.2 assume that:

(a) all of the Consideration Shares have been issued and no additional securities in the capital of the Company are issued; and
(b) the DMCR Vendors do not acquire any securities in the capital of the Company other than the Consideration Shares.

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2.3 The DMCR Vendors’ intentions

The DMCR Vendors have informed the Company of the following information to assist the Company to meet its responsibilities under ASIC Regulatory Guide 74. The information is based on the DMCR Vendors’ awareness of the financial and strategic position of the Company as at the date of this Notice of Meeting. The Company and its directors take no responsibility for any omission from, or any error or false or misleading statement in this section.

If Shareholders approve the issue of the Consideration Shares pursuant to the Implementation Agreement:

(a) Business of Company

The DMCR Vendors do not presently intend to change the business of the Company.

(b) Injection of capital

The DMCR Vendors do not presently intend to inject further capital into the Company. However, if the Company wishes to raise further capital in the future, the DMCR Vendors would, subject to the terms of the capital raising, consider supporting the Company’s future capital raising initiatives.

(c) Present employees

The DMCR Vendors do not presently intend to change the Company’s current employment arrangements, subject to normal operational changes that occur from time to time.

(d) Transfer of property

The DMCR Vendors are not presently party to any proposal whereby property will be transferred between the DMCR Vendors and the Company or any of their associates.

(e) Redeploy fixed assets

The DMCR Vendors do not presently intend to redeploy any of the Company’s fixed assets.

(f) Financial and dividend policies

The DMCR Vendors do not presently intend the change the Company’s financial or dividend policies.

(g) Directors

In accordance with the terms of the Implementation Agreement, the following nominee of DMCR will be appointed a director of the Company upon completion of the Implementation Agreement:

Name	Qualifications	Association with DMCR and associates of DMCR
Mr Adrian Bunter	Refer Section 2 of the Explanatory Memorandum	Mr Bunter is a non‐executive director of DMCR and is a shareholder of DMCR (see Annexure A).

2.4 Directors’ recommendations

Each of the Directors approved the proposal to put Resolution 1 to Shareholders and recommended that Shareholders approve Resolution 1 for the following reasons:

(i) DMCR comprises a business which was one of the first peer‐to‐peer car rental businesses in the world and as a result has invested heavily in the past three years to capitalise on DMCR’s first‐mover advantage in the private car rental space.
(ii) The Acquisition under the Implementation Agreement has the potential to generate sustainable earnings and cash flow for Qanda in the future and improve the Group’s ability to generate working capital from its operations and secure capital to fund future expansion.
(iii) The Acquisition is strategically sound and is consistent with the Company’s current focus on investment in the web‐based technology sector.
(iv) Mr Adrian Bunter and the senior and operational staff of DMCR will contribute considerable expertise, experience and skills to the management team of the Company.

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(v) The Independent Expert has concluded that the issue of the Consideration Shares to the DMCR Vendors is fair and reasonable to the non‐associated Shareholders in the Company.

The Directors encourage Shareholders to read this Explanatory Memorandum in full, including the Independent Expert’s Report referred to below, to form an opinion on the merits of the proposal.

2.5 Independent Expert’s Report

The Independent Expert’s Report contained in Annexure B sets out a detailed examination of the proposed transaction to enable Shareholders to assess its merits and decide whether to approve the proposal. The Independent Expert’s Report also contains an assessment of the advantages and disadvantages of the Acquisition. This assessment is designed to assist all Shareholders in reaching their voting decision in relation to Resolution 1.

The Company commissioned the Independent Expert to prepare the Independent Expert’s Report for the purposes of Item 7 of Section 611 of the Corporations Act. The Independent Expert’s Report contains information required to be provided to Shareholders under ASIC Regulatory Guide 74, and the Corporations Act.

The Independent Expert’s Report concludes that the issue of the Consideration Shares to the DMCR Vendors is fair and reasonable to the non‐associated Shareholders of the Company.

Shareholders are urged to carefully read the Independent Expert’s Report to understand the scope of the report, the methodology of the valuation and the sources of information and assumptions made.

2.6 Listing Rule 11.1.2 of ASX Listing Rules

ASX Listing Rule 11.1.2 requires that a listed company obtains shareholder approval of a transaction that would result in a significant change to the scale of its activities. The notice of meeting in relation to that shareholder approval must comply with any requirements of ASX. The notice of meeting must also include a voting exclusion statement.

The Directors have determined, in consultation with ASX, that the proposed Acquisition will result in a significant change to the scale of the Company’s activities. Accordingly, the Company seeks Shareholder approval for the Acquisition pursuant to ASX Listing Rule 11.1.2.

2.7 Voting Intention

The Chairman of the meeting intends to vote undirected proxies in favour of the Resolution.

3. Resolution 2 – Election of Mr Adrian Bunter as a Director

In accordance with the terms of the Implementation Agreement, upon completion of the Implementation Agreement, the Company will appoint one nominee of the DMCR Vendors to the Board. The DMCR Vendors have nominated Mr Adrian Bunter to be appointed to the Board as a non‐executive director.

Mr Bunter is an executive director of Venture Advisory, a specialist telecommunications, media and technology (TMT) financial advisory firm operating out of Australia and Asia. He has 18 years’ experience in accounting, finance and a broad range of corporate advisory roles ranging from debt/equity raisings, mergers and acquisitions, divestments of businesses and strategy development and execution. Mr Bunter is a Chartered Accountant and a Senior Associate of Finsia and has completed a Bachelor of Business and a Graduate Diploma in Applied Finance.

Clause 13.3 of the Constitution states no person other than a Director seeking re‐election shall be eligible for election to the office of Director at any general meeting unless the person or some Shareholder intending to propose his or her nomination has, at least 30 Business Days before the meeting, left at the registered office of the Company a notice in writing duly signed by the nominee giving his or her consent to the nomination and signifying his or her candidature for the office or the intention of the Shareholder to propose the person.

A copy of the notice of nomination to be a director of the Company for Mr Bunter is enclosed at Annexure C.

3.1 Board Recommendation

Subject to completion of the Implementation Agreement, the Directors support the election of Mr Adrian Bunter to the Board and believe it is in the best interests of Shareholders that he be appointed as a director.

3.2 Voting Intention

The Chairman of the meeting intends to vote undirected proxies in favour of the Resolution.

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4. Resolution 3 – Ratification of the issue of 115,000,000 Shares

On 28 August 2013, the Company entered into a subscription agreement with a sophisticated investor and issued a total of 115,000,000 Shares at an issue price of $0.01 per Share to raise $115,000 before costs.

The Company seeks that Shareholders ratify the issue of Shares pursuant to Listing Rule 7.4. Listing Rule 7.4 enables shareholders of a company to ratify an issue of securities that was made without shareholder approval under Listing Rule 7.1 or under an exception to Listing Rule 7.1 and which otherwise did not breach Listing Rule 7.1.

ASX Listing Rule 7.1 provides that a company must not, subject to specified exceptions, issue or agree to issue more equity securities during any 12 month period than that amount which represents 15% of the number of fully paid ordinary securities on issue at the commencement of that 12 month period.

If the issue of Shares is ratified by this resolution then the issue of these securities will not count towards the Company’s placement capacity for the purposes of Listing Rule 7.1.

For the purposes of Listing Rule 7.5, the following information is provided:

(a) A total of 115,000,000 Shares were issued;
(b) The Shares were issued at an issue price of $0.01 each;
(c) The Shares issued were ordinary fully paid shares and rank equally in all respects with the existing ordinary fully paid shares issued in the capital of the Company;
(d) The Shares were issued to a sophisticated investor, who is not a related party of the Company; and
(e) Funds raised from the issue of the above Shares will be used to supplement the Company’s working capital.

3.1 Board Recommendation

The Board believes that refreshing the Company’s ability to issue Shares within the 15% limit is in the best interests of the Company, thereby maintaining its flexibility to make placements of securities without seeking shareholder approval if the opportunity arises. Accordingly, the Board recommends Shareholders vote in favour of the Resolution.

3.2 Voting Intention

The Chairman of the meeting intends to vote undirected proxies in favour of the Resolution.

5. Resolution 4 – Approval of Issue of up to 225,000,000 Shares

In March 2012, the Company entered into subscription agreements with sophisticated investors for a total of 75,000,000 Shares at an issue price of $0.004 per Share ( Subscription Price ) to raise $300,000, before costs of the issue ( Subscription Agreements ). The application monies of $300,000 were received in March 2012 and the Shares and free attaching Options issued on 9 and 13 March 2012.

The Subscription Agreements provide that should the Company complete a capital raising of any nature at any time prior to 2 years from the subscription date, where the issue price for Shares is less than the Subscription Price, the Subscription Agreements will be automatically varied to the issue price of the subsequent capital raising and additional securities issued in accordance with the Subscription Agreements ( Adjustment Clause ). Where more than one subsequent capital raising is conducted, then the lowest price will be used for the purposes of calculating the additional securities to be issued pursuant to the Adjustment Clause.

As noted above, the Company completed a placement in August 2013 raising $115,000 at an issue price of $0.001 per Share ( New Subscription Price ). This New Subscription Price triggers the Subscription Agreements to be automatically varied to the New Subscription Price of $0.001 per Share in accordance with the Adjustment Clause. Consequently, this resolution seeks approval to issue the up to 225,000,000 additional Shares required to be issued pursuant to the Adjustment Clause contained in the Subscription Agreements.

A summary of ASX Listing Rule 7.1 is set out under the Explanatory Memorandum for Resolution 3 above.

ASX Listing Rule 7.3 requires that the following information be provided to shareholders for the purpose of obtaining shareholder approval pursuant to ASX Listing Rule 7.1:

(a) The maximum number of securities to be issued by the Company is 225,000,000 Shares.

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(b) The recipients of the Shares will be:
a. Colada Investments Limited (Company Number 7385673) – up to 187,500,000 Shares; and
b. Peter George Vickers – 37,500,000 Shares,
neither party is a related party of the Company.
(c) The deemed issue price of the Shares will be $0.001 per Share.
(d) The Shares will be issued no later than 3 months after the date of this Meeting (or such later date as is permitted by any ASX waiver or modification of the ASX Listing Rules) and it is anticipated that issue will occur on the same date.
(e) The Shares will be fully paid ordinary shares in the capital of the Company and will be issued on the same terms as, and rank equally in all respects with the existing Shares.
(f) No funds raised will be raised from the issue of the Shares as the Shares will be issued in accordance with the terms of the Adjustment Clause in the Subscription Agreements.

5.1 Board Recommendation

The Board recommends Shareholders vote in favour of the Resolution.

5.2 Voting Intention

The Chairman of the meeting intends to vote undirected proxies in favour of the Resolution.

6. Resolution 5 – Approval of Issue of up to 250,000,000 Shares

Resolution 5 seeks Shareholder approval for the issue of up to 250,000,000 Shares at an issue price of $0.002 per Share to raise up to $500,000.

A summary of ASX Listing Rule 7.1 is set out under the Explanatory Memorandum for Resolution 3 above.

The proposed issue of the Shares is placed before Shareholders to allow this number of securities to be excluded from the Company’s 15% placement capacity limit under Listing Rule 7.1.

ASX Listing Rule 7.3 requires that the following information be provided to Shareholders for the purpose of obtaining shareholder approval pursuant to ASX Listing Rule 7.1:

(a) The maximum number of securities to be issued by the Company is 250,000,000 Shares.
(b) As at the date of this Notice the identity of the investors was not known. However, all the investors of the Shares will be international and domestic institutional and sophisticated investors, none of whom will be related parties of the Company.
(c) The Shares will be issued at $0.002 per share.
(d) The Shares will be issued no later than 3 months after the date of this Meeting (or such later date as is permitted by any ASX waiver or modification of the ASX Listing Rules) and it is anticipated that issue will occur on the same date.
(e) The Shares will be issued on the same terms as, and rank equally in all respects with the existing Shares issued in the capital of the Company.
(f) The funds raised from the issue of the Shares will be applied towards the development and marketing of the DMCR business as well as the ongoing research and development and technical costs associated with the Marketboomer business unit and to assist the Company in meeting its repayment obligations in relation to the convertible note facilities maturing in March 2014.

6.1 Board Recommendation

The Board recommends Shareholders vote in favour of the Resolution.

6.2 Voting Intention

The Chairman of the meeting intends to vote undirected proxies in favour of the Resolution.

7. Enquiries

Shareholders are invited to telephone the Company Secretary on (61‐8) 6389 2688 if they have any queries in respect of the matters set out in these documents.

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DEFINITIONS

$ means an Australian dollar.

ASX means ASX Limited (ACN 008 624 691) and where the context permits the Australian Securities Exchange operated by ASX Limited.

ASX Listing Rules and Listing Rules mean the official listing rules of ASX.

Board means the board of directors of the Company.

Company or Qanda Technology means Qanda Technology Ltd (ACN 066 153 982).

Consideration Shares means the Shares and the Deferred Shares to be issued to the DMCR Vendors in accordance with the terms of the Implementation Agreement.

Constitution means the Company’s constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Deferred Share means a Share which may be issued to the DMCR Vendors in accordance with the terms of the Implementation Agreement.

Director means a Director of the Company and Directors means the directors of the Company.

DMCR means Drive My Car Rentals Pty Ltd (ACN 075 505 494).

DMCR Group means DMCR and DMF.

DMCR Vendors means the shareholders of DMCR, as set out in Annexure A.

EDST means Eastern Daylight Savings Time.

Explanatory Memorandum means this explanatory memorandum accompanying the Notice of Meeting .

General Meeting means the extraordinary general meeting the subject of this Notice.

Independent Expert means BDO Corporate Finance (WA) Pty Ltd.

Independent Expert’s Report means the independent expert’s report prepared by the Independent Expert which is set out in Annexure B to this Notice of Meeting.

Group means the Company and its subsidiaries.

Implementation Agreement means the implementation agreement between the Company and DMCR, as summarised in Section 1.2 of the Explanatory Memorandum.

Material Adverse Effect means:

(a) when used in a warranty in relation to a member of the DMCR Group a material adverse effect on the financial position or performance, prospects, or operations of a member of the DMCR Group when compared to what the financial position or performance, prospects, or operations of a member of the DMCR Group would be if the warranty were true which is material;
(b) when used in all other cases in relation to a member of the DMCR Group a material adverse effect on the financial position or performance, prospects, or operations of the member of the DMCR Group which is material; and
(c) when used in relation to the Company an adverse effect on the financial position or performance, prospects, or operations of the Company which is material.

Meeting means the meeting of Shareholders convened by the Notice of Meeting.

Notice or Notice of Meeting means the notice of extraordinary general meeting accompanying this Explanatory Memorandum.

Option means an option to acquire a Share.

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means a shareholder of the Company.

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ANNEXURE A

DMCR and the DMCR Vendors

DMCR Vendor	Number of Shares	Number of Deferred Shares	Total
Noble & Noble Pty Ltd (ACN 139 252 350) as trustee for the Noble & Noble Investment Trust	107,387,396	35,795,799	143,183,195
Michael Gethen	596,597	198,866	795,463
Ganesha Family Holdings Pty Ltd	596,597	198,866	795,463
Vorpal Pty Ltd	5,369,370	1,789,790	7,159,160
Corporate Negotiations Pty Ltd	10,557,374	3,519,125	14,076,499
Bellite Pty Ltd (ACN 056 441 386) ATF Meyer Family Trust	121,446,793	40,482,264	161,929,057
Artesian Capital Management (Australia) Pty Ltd	7,890,587	2,630,196	10,520,783
Rho Investments Pty Ltd ATF Kopp Family Trust	8,153,090	2,717,697	10,870,787
Rent Co Investments Pty Ltd ACN 080 183 982 as trustee for J & A Unit Trust	3,196,565	1,065,522	4,262,087
Anthony Peter Aboud	2,347,011	782,337	3,129,348
Vazoff Pty Ltd (ACN 120 262 115) ATF The Vazon Trust	9,635,036	3,211,679	12,846,715
Adrian Maxwell Bunter	14,681,050	4,893,683	19,574,733
J. Colless and J Whitford as trustee for Anam Cara Superannuation Fund	14,480,594	4,826,865	19,307,459
RG Allen & CJ Allen	5,948,069	1,982,690	7,930,759
Ohana Holdings ATF Rob Anthulov Family Trust	3,768,104	1,256,035	5,024,139
Future Capital Development Fund Ltd	292,524,461	97,508,153	390,032,614
Pankaj Khanna and Aparna Khanna as trustee for Professional Endeavours Super Fund	2,420,989	806,996	3,227,985
Radiata Investments Pty Ltd	66,539,617	22,179,872	88,719,489
Merewether Enterprises Pty Ltd ATF The Jackson Family Trust	5,188,004	1,729,334	6,917,338
Philip Argy	5,188,004	1,729,334	6,917,338
Donald Bunnell	12,970,011	4,323,337	17,293,348
Pamela Rogaris	2,594,002	864,667	3,458,669
Jammic Holdings Pty Ltd ATF Jammic Holdings Trust	5,188,005	1,729,335	6,917,340
Tiger Domains Pty Ltd ATF Tiger Domains Unit Trust	3,891,003	1,297,001	5,188,004
Proto Investment Partners Pty Ltd (ABN 87 143 267 270)	67,441,671	22,480,557	89,922,228
Total Consideration Shares	780,000,000	260,000,000	1,040,000,000

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ANNEXURE B

Independent Expert’s Report

QANDA TECHNOLOGY LTD Independent Expert’s Report

2 December 2013

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Financial Services Guide

2 December 2013

BDO Corporate Finance (WA) Pty Ltd ABN 27 124 031 045 (‘ we ’ or ‘ us ’ or ‘ ours ’ as appropriate) has been engaged by Qanda Technology Limited ( ‘Qanda ’) to provide an independent expert’s report on the proposal to acquire a 100% interest in Drive My Car Rentals Pty Ltd ( ‘DMCR’ ). You will be provided with a copy of our report as a retail client because you are a shareholder of Qanda.

Financial Services Guide

In the above circumstances we are required to issue to you, as a retail client, a Financial Services Guide (“ FSG ”). This FSG is designed to help retail clients make a decision as to their use of the general financial product advice and to ensure that we comply with our obligations as financial services licensees.

This FSG includes information about:

Who we are and how we can be contacted;
The services we are authorised to provide under our Australian Financial Services Licence, Licence No. 316158;
Remuneration that we and/or our staff and any associates receive in connection with the general financial product advice;
Any relevant associations or relationships we have; and
Our internal and external complaints handling procedures and how you may access them.

Information about us

BDO Corporate Finance (WA) Pty Ltd is a member firm of the BDO network in Australia, a national association of separate entities (each of which has appointed BDO (Australia) Limited ACN 050 110 275 to represent it in BDO International). The financial product advice in our report is provided by BDO Corporate Finance (WA) Pty Ltd and not by BDO or its related entities. BDO and its related entities provide services primarily in the areas of audit, tax, consulting and financial advisory services.

We do not have any formal associations or relationships with any entities that are issuers of financial products. However, you should note that we and BDO (and its related entities) might from time to time provide professional services to financial product issuers in the ordinary course of business.

Financial services we are licensed to provide

We hold an Australian Financial Services Licence that authorises us to provide general financial product advice for securities to retail and wholesale clients.

When we provide the authorised financial services we are engaged to provide expert reports in connection with the financial product of another person. Our reports indicate who has engaged us and the nature of the report we have been engaged to provide. When we provide the authorised services we are not acting for you.

General Financial Product Advice

We only provide general financial product advice, not personal financial product advice. Our report does not take into account your personal objectives, financial situation or needs. You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice.

BDO CORPORATE FINANCE (WA) PTY LTD

Financial Services Guide

Page 2

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Fees, commissions and other benefits that we may receive

We charge fees for providing reports, including this report. These fees are negotiated and agreed with the person who engages us to provide the report. Fees are agreed on an hourly basis or as a fixed amount depending on the terms of the agreement. The fee payable to BDO Corporate Finance (WA) Pty Ltd for this engagement is approximately $23,000.

Except for the fees referred to above, neither BDO, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the report.

Remuneration or other benefits received by our employees

All our employees receive a salary. Our employees are eligible for bonuses based on overall productivity but not directly in connection with any engagement for the provision of a report. We have received a fee from Qanda for our professional services in providing this report. That fee is not linked in any way with our opinion as expressed in this report.

Referrals

We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we are licensed to provide.

Complaints resolution

Internal complaints resolution process

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing addressed to The Complaints Officer, BDO Corporate Finance (WA) Pty Ltd, PO Box 700 West Perth WA 6872.

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaint within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination.

Referral to External Dispute Resolution Scheme

A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Ombudsman Service (“ FOS ”). FOS is an independent organisation that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial service industry. FOS will be able to advise you as to whether or not they can be of assistance in this matter.

Our FOS Membership Number is 12561. Further details about FOS are available at the FOS website www.fos.org.au or by contacting them directly via the details set out below.

Financial Ombudsman Service GPO Box 3 Melbourne VIC 3001 Toll free: 1300 78 08 08 Facsimile: (03) 9613 6399 Email: [email protected]

Contact details

You may contact us using the details set out on page 1 of the accompanying report.

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1.	Introduction	1
2.	Summary and Opinion	2
3.	Scope of the Report	4
4.	Outline of the Transaction	6
5.	Profile of Qanda Technology Limited	8
6.	Profile of Drive My Car Rentals Pty Ltd	14
7.	Economic analysis	17
8.	Industry analysis	18
9.	Valuation approach adopted	20
10.	Valuation of Qanda prior to the Transaction	22
11.	Valuation of Qanda following the Transaction	29
12.	Is the Transaction fair?	35
13.	Is the Transaction reasonable?	36
14.	Conclusion	39
15.	Sources of information	39
16.	Independence	39
17.	Qualifications	40
18.	Disclaimers and consents	40
Appendix	1 – Glossary
Appendix	2 – Valuation Methodologies
Appendix	3 – Discount rate assessment

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2 December 2013

The Directors Qanda Technology Limited 79 Broadway NEDLANDS WA 6009

Dear Sirs

INDEPENDENT EXPERT’S REPORT

1. Introduction

On 6 November 2013, Qanda Technology Limited ( ‘Qanda’ or ‘ the Company ’) announced that it had completed negotiations and was in the process of completing execution of an implementation agreement ( ‘Implementation Agreement’ ), under which it will acquire a 100% interest in Drive My Car Rentals Pty Ltd ( ‘DMCR’ ) which owns the DMCR business and assets (the ‘Transaction’ ).

The consideration for the Transaction is to be satisfied by the issue of 780 million fully paid ordinary shares in Qanda ( ‘Share Consideration’ ) and deferred consideration of 260 million fully paid ordinary shares in Qanda ( ‘Deferred Share Consideration’ ) to the respective shareholders of DMCR (together, the ‘DMCR Vendors’ ). The issue of the Deferred Share Consideration is subject to DMCR achieving an audited annual net profit before tax of at least $500,000 in any consecutive 12 month period in the 36 months following settlement of the Transaction.

Completion of the Transaction requires the approval of Qanda’s shareholders. Shareholder approval pursuant to Section 611 Item 7 of the Corporations Act 2001 (Cth) (the ‘Act’ ) is required for a person (including their associates) to acquire voting power in a company of greater than 20%. Although no individual DMCR Vendor is acquiring a relevant interest in the Company of greater than 20% as a result of the Transaction, in the event the DMCR Vendors are considered associates of each other then each DMCR Vendor would acquire voting power in the Company of greater than 20% at completion of the Transaction. The Company is seeking shareholder approval for the Transaction in any event so for the avoidance of doubt the board of directors considers it prudent to seek shareholder approval pursuant to Section 611 Item 7 of the Act in the event the DMCR Vendors are considered to be associates of one another for the purposes of the completion of the Transaction. This does not mean that the DMCR Vendors would continue to be associates following completion of the Transaction.

We are instructed by Qanda that the DMCR Vendors do not believe that the provisions of the Implementation Agreement give rise to any association between them such that shareholder approval is required pursuant to Section 611 Item 7 of the Act. There is no other agreement, arrangement or understanding in relation to the Company or its affairs and the DMCR Vendors do not believe they are associates in relation to the Company. Accordingly, notwithstanding any other terms or descriptions set in

BDO Corporate Finance (WA) Pty Ltd ABN 27 124 031 045 AFS Licence No 316158 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Corporate Finance (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

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this Report, including but not limited to the aggregate interest, voting shares or ownership of the DMCR Vendors in Qanda's share capital, this Report is not intended to imply in any way that the DMCR Vendors are associates.

2. Summary and Opinion

2.1 Purpose of the report

The directors of Qanda have requested that BDO Corporate Finance (WA) Pty Ltd (‘ BDO ’) prepare an independent expert’s report (‘ our Report ’) to express an opinion as to whether or not the Transaction is fair and reasonable to the non associated shareholders of Qanda (‘ Shareholders ’).

Our Report is prepared pursuant to Section 611 Item 7 of the Act and is to be included in the Explanatory Memorandum for Qanda in order to assist the Shareholders in their decision whether to approve the Transaction.

Although no individual DMCR Vendor is acquiring a relevant interest in the Company of greater than 20% as a result of the Transaction, in the event the DMCR Vendors are considered associates of each other then each DMCR Vendor would acquire voting power in the Company of greater than 20% at completion of the Transaction. The Company is seeking shareholder approval for the Transaction in any event therefore our Report has been prepared pursuant to Section 611 Item 7 of the Act in the event the DMCR Vendors are considered to be associates of one another for the purposes of the completion of the Transaction.

2.2 Approach

Our Report has been prepared having regard to Australian Securities and Investments Commission (‘ ASIC ’) Regulatory Guide 74 ‘Acquisitions Approved by Members’ ( ‘RG 74’ ), Regulatory Guide 111 ‘Content of Expert’s Reports’ (‘ RG 111 ’) and Regulatory Guide 112 ‘Independence of Experts’ (‘ RG 112 ’).

In arriving at our opinion, we have assessed the terms of the Transaction as outlined in the body of this report. We have considered:

How the value of a Qanda share prior to the Transaction on a control basis compares to the value of a Qanda share following the Transaction on a minority basis;
Other factors which we consider to be relevant to the Shareholders in their assessment of the Transaction; and
The position of Shareholders should the Transaction not proceed.

2.3 Opinion

We have considered the terms of the Transaction as outlined in the body of our Report and have concluded that the Transaction is fair and reasonable to Shareholders .

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2.4 Fairness

In section 12 we have determined that the value of a Qanda share prior to the Transaction on a control basis compares to the value of a Qanda share following the Transaction on a minority basis, as detailed below.

		Low	Preferred	High
	Ref
		cents	cents	cents
Value of a Qanda share prior to the Transaction on a control basis	10.3	0.109	0.109	0.109
Value of a Qanda share following the Transaction on a minority basis	11.4	0.051	0.113	0.140

The above valuation ranges are graphically presented below:

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----- Start of picture text -----

Valuation Summary
Value of a Qanda share prior to the Transaction on
a control basis
Value of a Qanda share following the Transaction
on a minority basis
0.000 0.050 0.100 0.150 0.200 0.250 0.300
Value (cents)
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The above pricing indicates that the preferred value of a Qanda share following the Transaction on a minority basis is greater than the preferred value of a Qanda share prior to the Transaction on a control basis. Therefore, the Transaction is fair for Shareholders.

2.5 Reasonableness

We have considered the analysis in section 13 of this report, in terms of both

advantages and disadvantages of the Transaction; and
other considerations, including the position of Shareholders if the Transaction does not proceed and the consequences of not approving the Transaction.

In our opinion, the position of Shareholders if the Transaction is approved is more advantageous than the position if the Transaction is not approved. Accordingly, in the absence of any other relevant information and we believe that the Transaction is reasonable for Shareholders.

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The respective advantages and disadvantages considered are summarised below:

ADVANTAGES AND DISADVANTAGES	ADVANTAGES AND DISADVANTAGES
Section	Advantages	Section	Disadvantages
13.1.2	Creation of a combined group with a more diversified business	13.2.1	Dilution of existing Shareholders’ interest
13.1.3	Creation of a complementary business model	13.2.2	Decreases the likelihood of a takeover offer
13.1.4	Opportunity for further growth of the combined businesses	13.2.3	Potential lower liquidity of shares
13.1.5	Integration of the businesses may provide synergies	13.2.4	Potential competing demands on limited cash resources
13.1.6	Commitment for underwriting of Entitlement Issue
13.1.7	Deferred Share Consideration contingent on DMCR performance

Other key matters we have considered include:

Section	Description
13.3.1	No alternative proposals
13.3.2	Practical level of control
13.3.3	Change in risk profile of the investment
13.3.4	Consequences of not approving the Transaction

3. Scope of the Report

3.1 Purpose of the Report

Section 606 of the Act expressly prohibits the acquisition of shares by a party if that acquisition will result in that person (or someone else) holding an interest in 20% or more of the issued shares of a public company, unless a full takeover offer is made to all shareholders.

As at the date of this report the DMCR Vendors do not own any shares in Qanda. However, if the Transaction is approved and the DMCR Vendors receive both the Share Consideration and Deferred Share Consideration, the DMCR Vendors will receive a maximum of 1.04 billion shares giving them a maximum

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interest of 44.32% in Qanda (this assumes the Company completes the issue of shares pursuant to resolution 4 of the attached Notice of Meeting).

Although no individual DMCR Vendor is acquiring a relevant interest in the Company of greater than 20% as a result of the Transaction in the event the DMCR Vendors are considered associates of each other then each DMCR Vendor would acquire voting power in the Company of greater than 20% at completion of the Transaction. The Company is seeking shareholder approval for the Transaction in any event so for the avoidance of doubt the board of directors considers it prudent to seek shareholder approval pursuant to Section 611 Item 7 of the Act in the event the DMCR Vendors are considered to be associates of one another for the purposes of the completion of the Transaction.

Section 611 permits such an acquisition if the shareholders of that entity have agreed to the issue of such shares. This agreement must be by resolution passed at a general meeting at which no votes are cast in favour of the resolution by any party who is associated with the party acquiring the shares, or by the party acquiring the shares. Section 611 states that shareholders of the company must be given all information that is material to the decision on how to vote at the meeting.

RG 74 states that the obligation to supply shareholders with all information that is material can be satisfied by the non-associated directors of Qanda, by either:

undertaking a detailed examination of the Transaction themselves, if they consider that they have sufficient expertise; or
by commissioning an Independent Expert's Report.

The directors of Qanda have commissioned this Independent Expert's Report to satisfy this obligation.

3.2 Regulatory guidance

Neither the Listing Rules nor the Act defines the meaning of “fair and reasonable”. In determining whether the Transaction is fair and reasonable, we have had regard to the views expressed by ASIC in RG 111. This regulatory guide provides guidance as to what matters an independent expert should consider to assist security holders to make informed decisions about transactions. This regulatory guide suggests that where the transaction is a control transaction, the expert should focus on the substance of the control transaction rather than the legal mechanism to affect it. RG 111 suggests that where a transaction is a control transaction, it should be analysed on a basis consistent with a takeover bid.

In our opinion, the Transaction is a control transaction as defined by RG 111 and we have therefore assessed the Transaction as a control transaction to consider whether, in our opinion, it is fair and reasonable to Shareholders.

3.3 Adopted basis of evaluation

RG 111 states that a transaction is fair if the value of the offer price or consideration is greater than the value of the securities subject of the offer. This comparison should be made assuming a knowledgeable and willing, but not anxious, buyer and a knowledgeable and willing, but not anxious, seller acting at arm’s length. When considering the value of the securities subject of the offer in a control transaction the expert should consider this value inclusive of a control premium. Further to this, RG 111 states that a transaction is reasonable if it is fair. It might also be reasonable if despite being ‘not fair’ the expert

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believes that there are sufficient reasons for security holders to accept the offer in the absence of any higher bid.

Having regard to the above, BDO has completed this comparison in two parts:

A comparison between the value of a Qanda share prior to the Transaction on a control basis and the value of a Qanda share following the Transaction on a minority basis (fairness – see section 12 ‘Is the Transaction fair?’); and
An investigation into other significant factors to which Shareholders might give consideration, prior to approving the Transaction, after reference to the value derived above (reasonableness – see section 13 ‘Is the Transaction reasonable?’).

RG 111.31 stipulates that in a control transaction a comparison should be made between the value of the target entity’s securities prior to the Transaction on a control basis and the value of the target entity’s securities following the Transaction allowing for a minority discount. This comparison reflects the fact that the acquirer is obtaining or increasing control of the target entity and the security holders in the target entity will no longer hold a controlling interest. As such we have valued a share in Qanda prior to the Transaction on a control basis and compared this to the value of a share in Qanda following the Transaction on a minority basis.

This assignment is a Valuation Engagement as defined by Accounting Professional & Ethical Standards Board professional standard APES 225 ‘Valuation Services’ (‘ APES 225 ’).

A Valuation Engagement is defined by APES 225 as follows:

“an Engagement or Assignment to perform a Valuation and provide a Valuation Report where the Valuer is free to employ the Valuation Approaches, Valuation Methods, and Valuation Procedures that a reasonable and informed third party would perform taking into consideration all the specific facts and circumstances of the Engagement or Assignment available to the Valuer at that time.”

This Valuation Engagement has been undertaken in accordance with the requirements set out in APES 225.

4. Outline of the Transaction

On 6 November 2013, Qanda announced that it had completed negotiations and was in the process of completing execution of an Implementation Agreement, under which it will acquire a 100% interest in DMCR which owns the DMCR business and assets. The consideration for the Transaction is to be satisfied by the issue of the following to the DMCR Vendors:

Share Consideration consisting of 780 million fully paid ordinary shares in Qanda; and
Deferred Share Consideration consisting of 260 million fully paid ordinary shares in Qanda. The issue of the Deferred Share Consideration is subject to DMCR achieving an audited annual net profit before tax of at least $500,000 in any consecutive 12 month period in the 36 months following settlement of the Transaction.

The announcement also stated that the Share Consideration could reduce as a result of the valuation of DMCR as derived from the Independent Expert’s Report. This statement is incorrect. The term sheet signed regarding the Transaction did allow for any changes to the Share Consideration as a result of the Independent Expert’s valuation of DMCR. However, Qanda and DMCR entered into the Implementation Agreement which fixed the consideration for the Transaction, as defined above.

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Subject to settlement of the Transaction, the Company has agreed to appoint Mr Adrian Bunter as a nonexecutive director of the Company. He is currently a non-executive director and shareholder of DMCR.

Completion of the Transaction is subject to and conditional on, amongst other things, the following occurring before 15 February 2014:

i. The consent and approval of the Shareholders being obtained at a general meeting in accordance with the requirements of the Act and the Australian Securities Exchange ( ‘ASX’ ) Listing Rules (including, but not limited to, where necessary, shareholder approval pursuant to Section 611 Item 7 of the Act);
ii. The Company becoming entitled to acquire 100% of the issued capital of DMCR as a result of the Company delivering an executed offer of DMCR shares to the DMCR Vendors and each DMCR Vendor accepting the offer by duly executing it;
iii. All Class A Preference Shares held in DMCR being converted into DMCR shares;
iv. Receipt of all necessary regulatory and third party consents, waivers and approvals pursuant to the Implementation Agreement within 75 days of the date of execution of the Implementation Agreement;
v. DMCR and the Company being satisfied on the date which is not later than 10 days after the satisfaction of the conditions precedent to the Implementation Agreement that there has been no material adverse effect to the business, operations or assets of each other since the date of this Agreement, with such satisfaction being evidenced in writing; and
vi. Entry into all necessary deeds of assignment of intellectual property between those parties who are identified in the Implementation Agreement as key DMCR shareholders and all staff who are to be identified during the due diligence period and the Company, whereby all intellectual property rights outlined in Schedule 6 to the Implementation Agreement will be assigned to DMCR.

As at the date of this Report, the Company has 1,081,599,600 shares on issue. This followed the Company completing a placement in August 2013 to a sophisticated investor for the issue of 115 million fully paid ordinary shares at $0.001 per share to raise $115,000 (before costs) ( ‘Capital Raising’ ). The Capital Raising triggered an adjustment clause contained in subscription agreements entered into with sophisticated investors in relation to placements completed in March 2012, which will require the issue of an additional 225 million shares at a deemed issue price of $0.001 per share ( ‘Additional Placement’ ). No funds will be raised from the issue of the Additional Placement. The Company is seeking shareholder approval for the Additional Placement pursuant to resolution 4 of the attached Notice of Meeting.

The Company is also seeking shareholder approval for the issue of up to 250 million fully paid ordinary shares at $0.002 per share to raise $500,000 (before costs) ( ‘General Raising’ ) pursuant to resolution 5 of the attached Notice of Meeting. The funds raised from the issue of these shares will be applied towards the development and marketing of the DMCR business as well as the ongoing research and development and technical costs associated with the Marketboomer business unit and to assist the Company in meeting its repayment obligations in relation to the convertible note facilities maturing in March 2014.

Following completion of the Transaction, it is also proposed that Qanda will undertake an entitlement issue to existing shareholders. The entitlement issue will be on the basis of two new shares for every eleven shares held at the record date at an issue price of $0.002 per share to raise approximately $750,000 before costs ( ‘Entitlement Issue’ ). The Entitlement Issue will result in 379,381,745 new shares being issued.

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The Company has secured an underwriting commitment of $250,000, which represents 125 million shares, in relation to the Entitlement Issue from Dominet Digital Corporation Pty Ltd ( ‘Dominet’ ). In the event that the Entitlement Issue is not completed, Qanda and Dominet agree that Dominet will subscribe for $250,000 of new shares by way of a placement on the same terms as the proposed Entitlement Issue. Any placement will be subject to and in compliance with the requirements of the Act and the ASX Listing Rules, as applicable.

As at the date of this report the DMCR Vendors do not own any shares in Qanda. If Shareholders approve the Transaction and the Additional Placement, existing Shareholders’ collective interests will be diluted from 100% to 55.68% of the issued capital of Qanda, assuming both the Share Consideration and Deferred Share Consideration are issued to the DMCR Vendors. These potential changes in shareholding are summarised in the table below.

	The Other DMCR Vendors Shareholders Total
Issued Shares as at the date of this Report	- 1,081,599,600 1,081,599,600
Shares to be issued as part of Additional Placement*	- 225,000,000 225,000,000
Issued shares after Additional Placement % holdings after issue of Additional Placement	- 1,306,599,600 1,306,599,600
	0.00% 100.00% 100.00%
Shares to be issued upon payment of Share Consideration	780,000,000 - 780,000,000
Shares to be issued upon payment of Deferred Share Consideration** 260,000,000 - 260,000,000
Issued Shares after payment of consideration % holdings after payment of consideration	1,040,000,000 1,306,599,600 2,346,599,600
	44.32% 55.68% 100.00%

*Shareholder approval is being sought for the Additional Placement pursuant to Resolution 4 of the attached Notice of Meeting.

**The Deferred Share Consideration will only be issued upon DMCR achieving an audited annual net profit before tax of $500,000 in any consecutive 12 month period in the 36 months following settlement of the Transaction.

We note that if Shareholders approve the Transaction but DMCR do not achieve the condition in which the Deferred Share Consideration is issued, Shareholders’ collective interests will only be diluted to 62.62% and the DMCR Vendors will only obtain a 37.38% interest in the issued capital of Qanda.

5. Profile of Qanda Technology Limited

5.1 History

Qanda was incorporated in September 1994 as Livingstone Group Limited and listed on the ASX in September 1996. At that time the Company focussed its attention on the resources sector. In May 2000, the Company changed its name to WebSpy Limited to reflect its change in focus from the resources industry to the development of software products. At this time the Company had two business units:

Inspection Manager business unit: an inspection management solution designed for the management, scheduling and recording of equipment requiring maintenance or other periodic inspection; and
WebSpy business unit: a software tool which reports on Internet usage and access.

In 2008, the Company received an offer from Wood Group Holdings (International) Limited to acquire the Company’s Inspection Manager business unit and in May 2008 the transaction was completed.

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In November 2009, the Company completed the acquisition of a 100% interest in Marketboomer Pty Ltd ( ‘Marketboomer’ ) through the issue of 476.56 million of the Company’s shares. At the time, Marketboomer was an Internet-based procurement and materials management solution with a specific focus on the hospitality industry. The primary reason for the Company’s acquisition of Marketboomer was that it would complement the existing WebSpy business unit and would add to the size and scale of the Company’s activities.

In November 2010, the Company changed its name to Qanda Technology Ltd as the directors considered this name more accurately reflected the nature of the Company’s activities.

In November 2012, Qanda sold the WebSpy business unit to US-based Fastvue Inc for cash consideration of $800,000 up front and $250,000 deferred consideration that is contingent upon WebSpy meeting sixmonthly revenue hurdles. Qanda’s directors believed the sale of the WebSpy business unit would allow the Company to put all of its resources towards the expansion of the Marketboomer business unit.

Marketboomer business unit

The Marketboomer business unit offers an Internet-based procurement and materials management solution, specifically focussed on the hospitality industry. This solution aims to improve the purchasing process and optimise costs for the user.

The Marketboomer solution is currently used by a number of hotel groups such as the InterContinental Hotels Group, Mirvac Hotels, Hyatt Hotels and Starwood Hotels and Resorts. In addition, Marketboomer has entered into a reciprocal marketing arrangement with Alibaba China’s hotel suppliers division which provides Marketboomer with access to Alibaba’s registered hotel suppliers.

Marketboomer’s revenue is derived through a combination of the licensing of its software and content, as well as fees generated from processing transactions through its software platform.

Capital raisings

In March 2010, the Company raised $700,000 through a convertible note facility with CVC Private Equity Limited ( ‘CVC’ ). This facility had been fully drawn down and CVC was issued with 35 million notes with a face value of $0.02 per note. The funds from this facility were used to finance the expansion of the Marketboomer business unit.

In October 2010, the Company raised $300,000 through the issue of 15 million ordinary shares at $0.02 per share with free attaching options exercisable at $0.02 with a three year term. These funds were also used to finance the expansion of the Marketboomer business unit, as well as ongoing research and development and working capital requirements.

In March 2012, Qanda raised $300,000 through the issue of 75 million ordinary shares issued at $0.004 per share. An additional $425,000 was raised through the issue of 106.25 million notes with a face value of $0.004 per note. These funds were used to repay the $700,000 amount owing to CVC.

In August 2013, Qanda raised $115,000 through the issue of 115 million ordinary shares at $0.001 per share. Funds from this raising will be used to supplement the Company’s working capital requirements.

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5.2 Historical Statement of Financial Position

Consolidated Statement of Financial Position	Audited as at Audited as at Audited as at 30-Jun-13 30-Jun-12 30-Jun-11 $ $ $
CURRENT ASSETS Cash and cash equivalents Trade and other receivables Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Other receivables Property, plant and equipment Intangible assets Deferred tax assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Other current liabilities Borrowings Redeemable convertible notes Short-term provisions Income tax payable TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Borrowings Other non-current liabilities Redeemable convertible notes Long-term provisions Deferred tax liabilities TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES	559,179 386,375 519,969 1,029,441 1,045,197 1,324,074 7,971 - 2,620
	1,596,591 1,431,572 1,846,663 85,308 310 33,669 28,836 71,727 75,643 2,417,214 3,632,498 4,144,405 - 99,791 251,893
	2,531,358 3,804,326 4,505,610
	4,127,949 5,235,898 6,352,273
	382,640 746,777 889,158 639,902 734,420 729,106 127,955 81,898 475,580 451,810 - 700,000 130,860 348,894 461,930 - 63,445 52,420
	1,733,167 1,975,434 3,308,194 1,018,973 1,133,551 793,375 39,272 167,822 209,426 - 432,303 - 41,677 187,874 63,635 - 99,791 251,893
	1,099,922 2,021,341 1,318,329
	2,833,089 3,996,775 4,626,523
NET ASSETS	1,294,860 1,239,123 1,725,750
EQUITY Issued capital Reserves Accumulated losses Non-controlling interests	21,298,285 21,276,712 20,876,712 (306,431) 192,814 342,307 (19,730,833) (20,264,007) (19,526,516) 33,839 33,604 33,247
TOTAL EQUITY	1,294,860 1,239,123 1,725,750

Source: Annual Financial Statements for Qanda for the years ended 30 June 2013, 30 June 2012 and 30 June 2011

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Commentary on Historical Statement of Financial Position

The audit report included in the financial statements for the year ended 30 June 2013 included an emphasis of matter regarding the Company’s ability to continue as a going concern. The auditor noted that the Company had incurred a net loss from continuing operations of $1.71 million and had an excess of current liabilities over current assets of $136,576 as at 30 June 2013. These factors indicated that there is a material uncertainty that may cast significant doubt about the Company’s ability to continue as a going concern and therefore the Company may be unable to realise its assets and discharge its liabilities in the normal course of business.
The current trade and other receivables have remained consistent over the period 30 June 2012 and 30 June 2013. Of the $1.03 million balance as at 30 June 2013 approximately $0.27 million related to a research and development tax offset compared to an amount of $0.20 million as at 30 June 2012. The $0.27 million research and development tax offset amount as at 30 June 2013 was received in October 2013.
The non-current other receivables amount of $85,308 relates to amounts receivable from the sale of the WebSpy business unit.
The intangible assets balance of $2.42 million as at 30 June 2013 consists of capitalised development costs, patents and goodwill. As at 30 June 2013, the Company recorded an impairment of the carrying value of goodwill of $1.27 million. This impairment was recorded against the Marketboomer business unit.
Other current liabilities of $0.64 million as at 30 June 2013 relates to employee termination payments payable of $0.20 million and deferred income which consists of licence fees paid in advance totalling $0.44 million.
Current borrowings totalling $0.13 million is made up of the current portion of an unsecured loan with Finecross Security Limited and Marketboomer International Limited which totals $50,000 and a $77,955 unsecured bank loan.
The redeemable convertible notes totalling $0.45 million as at 30 June 2013 relates to 106.25 million convertible notes which have a face value of $0.004 and maturity dates in March 2014. These notes are convertible into fully paid ordinary shares at a conversion price which is a 30% discount to the current 30 day VWAP, but at a minimum price of $0.004 and a maximum of $0.009. During November 2013, 187.5 million shares were issued upon the conversion of notes in accordance with the terms of the secured redeemable convertible note facility deed.
The majority of the non-current borrowings as at 30 June 2013 totalling $1.02 million is made up of the non-current portion of the unsecured loan with Finecross Security Limited and Marketboomer International Limited which totals $0.95 million.
Issued capital has increased from $20.88 million as at 30 June 2011 to $21.30 million as at 30 June 2013. This increase has resulted from the issue of shares for services rendered over the period as well as share placements undertaken over the period. The Company issued a further 115 million shares as part of the Capital Raising in August 2013 and a further 187.5 million shares upon conversion of notes in accordance with the terms of the secured redeemable convertible note facility deed in November 2013.

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5.3 Historical Statement of Comprehensive Income

Consolidated Statement of Comprehensive Income	Audited for the year Audited for the year Audited for the year ended 30-Jun-13 ended 30-Jun-12 ended 30-Jun-11 $ $ $
Revenue from continuing operations Cost of sales Gross profit Other income Corporate and administrative expenses Technical expenses Marketing and selling expenses Research and development expenses Other expenses Impairment losses Results from continuing operations Finance income Finance costs Loss before income tax Income tax benefit Loss from continuing operations Profit from discontinued operations Profit/(loss) for the period Other comprehensive loss Foreign currency translation differences Exchange differences reclassified on disposal of foreign operations	3,313,125 3,226,651 4,782,771 (375,950) (478,024) (924,926)
	2,937,175 2,748,627 3,857,845 17,867 100,778 70,817 (2,897,477) (2,697,708) (3,570,448) (392,239) (423,840) (974,747) - (346) (500,639) (302,403) (361,576) (531,034) (2,405) (3,889) (133,156) (1,275,080) (370,727) -
	(1,914,562) (1,008,681) (1,781,362) 19,958 9,101 5,656 (96,120) (132,251) (237,320)
	(1,990,724) (1,131,831) (2,013,026) 279,761 131,296 193,602
	(1,710,963) (1,000,535) (1,819,424) 2,244,372 263,401 -
	533,409 (737,134) (1,819,424) 35,981 (149,493) 142,887 (535,226) - -
Total comprehensive result for the period	34,164 (886,627) (1,676,537)

Source: Annual Financial Statements for Qanda for the years ended 30 June 2013, 30 June 2012 and 30 June 2011

Commentary on Historical Statement of Comprehensive Income

For the years ended 30 June 2011, 30 June 2012 and 30 June 2013, the Company has made losses from continuing operations of $1.82 million, $1.00 million and $1.71 million respectively.
The Company recorded an impairment of the carrying value of goodwill of $1.27 million for the year ended 30 June 2013. This impairment was recorded against the Marketboomer business unit as a result of the current carrying value of goodwill exceeding the value-in-use calculation.
During the year ended 30 June 2013, the Company entered into a share sale agreement with USbased Fastvue Inc, to divest its 100% interest in the WebSpy business unit. This was settled in November 2012, with the Company receiving the cash consideration of $800,000 from Fastvue Inc and the divestment contributing a net profit of $2.24 million to the overall results of the Group.

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This amount was recorded as a profit from discontinued operations for the year ended 30 June 2013.

With the sale of the WebSpy business unit in November 2012, the Company has focussed its efforts on its Marketboomer business unit ramping up both capability and capacity in China and South East Asia. The Company introduced a new Marketboomer product, Purchase Plus, in April 2012 and although the revenue contribution has been slower than envisaged it is anticipating that further costs will be eliminated and market presence will grow as all customers are transferred from the legacy platform to Purchase Plus.

5.4 Capital Structure

The share structure of Qanda as at the date of our Report is outlined below:

	Number
Total ordinary shares on issue	1,081,599,600
Top 20 shareholders	976,022,332
Top 20 shareholders - % of shares on issue	90.24%

Source: Qanda management

The range of shares held in Qanda as at the date of our Report is as follows:

Range of Shares Held	Percentage of Issued Shares (%) Number of Ordinary Shareholders Number of Ordinary Shares
1 - 1,000	39 29,729 0.00%
1,001 - 5,000	102 328,922 0.03%
5,001 - 10,000	81 691,447 0.06%
10,001 - 100,000	286 11,028,589 1.02%
100,001 - and over	151 1,069,520,913 98.88%
TOTAL	659 1,081,599,600 100.00%

Source: Qanda management

The ordinary shares held by the most significant shareholders as at the date of our Report are detailed below:

Name	Number of Ordinary Shares Held Percentage of Issued Shares (%)
Simon Philip Wallace atf Wallace Family Trust	176,156,150 16.29%
Nobium Investments Limited	136,358,722 12.61%
Mr Garrott Geoffrey & Mrs Margaret Garrott	115,000,000 10.63%
Colada Investment Limited	112,500,000 10.40%
Subtotal	540,014,872 49.93%
Others	541,584,728 50.07%
Total ordinary shares on Issue	1,081,599,600 100.00%

Source: Qanda management

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As at the date of our Report, the Company has the following Convertible Notes on issue:

Current Convertible Notes on Issue	Number
Notes convertible at $0.004 each on or before 12 March 2014	18,750,000
Notes convertible at $0.004 each on or before 15 March 2014	25,000,000
Total convertible notes on issue	43,750,000

Source: Qanda management

6. Profile of Drive My Car Rentals Pty Ltd

6.1 History

DMCR is an internet based business aimed at providing a marketplace for online private car rentals and is understood to be one of the first of its kind in the world. DMCR provides an avenue for owners of vehicles to rent out those vehicles and provides people wishing to rent a vehicle with an alternative to traditional car rental companies. DMCR commenced operations in 2010 after completing concept testing in 2008 and engaging in significant capital raising activities in 2009 to 2012.

Currently, DMCR has over 350 vehicles available for rental and over 12,000 registered users. While DMCR’s initial focus has been on the Sydney market, it has expanded into Melbourne, Brisbane, Adelaide, Canberra and Perth. Since DMCR does not rent out any vehicles in its own right, the usual capital constraints of owning and holding a fleet of vehicles do not apply to it.

DMCR has also been able to secure a tailored insurance policy which ensures the rental vehicle transactions conducted via the DMCR marketplace, are covered by insurance; ordinarily Australian car insurance policies have a specific exclusion which excludes cover for vehicles that are hired out.

DMCR earns its revenue through transaction fees and membership fees, as well as on-charging the fees relating to insurance and roadside assistance. Additionally, DMCR may earn fees through the provision of its ‘ManageMyCar’ service. DMCR’s ManageMyCar service sees DMCR offer full rental management services including organising servicing, maintenance and registration management to vehicle owners who may not be able to manage all of the activities necessary to execute a rental transaction. Through its MangeMyCar service, DMCR earns a fee based on a percentage of the daily rental fee earned by the vehicle owner in rental transactions.

During June 2013, DMCR underwent a capital raising in which it raised approximately $260,000.

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6.2 Historical Financial Statements

Consolidated Statement of Financial Position	Unaudited as at Unaudited as at 30-Jun-13 30-Jun-12 $ $
CURRENT ASSETS Cash and cash equivalents Trade debtors Deposit paid Tax receivable (R&D Tax refund) TOTAL CURRENT ASSETS NON-CURRENT ASSETS Leasehold improvements Drive My Car website Other intangibles Office equipment TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade creditors GST Payroll liabilities Other liabilities Loans TOTAL CURRENT LIABILITIES TOTAL LIABILITIES	37,743 447,195 81,689 316,381 15,550 15,550 161,512 360,066
	296,494 1,139,192 12,273 12,986 10,891 61,075 5,567 21,071 7,571 11,819
	36,302 106,951
	332,796 1,246,143
	161,567 183,001 11,943 10,449 35,715 57,440 16,952 16,393 26,069 121,718
	252,246 389,001
	252,246 389,001
NET ASSETS	80,550 857,142
EQUITY Issued capital Accumulated losses	4,705,202 4,445,212 (4,624,652) (3,588,070)
TOTAL EQUITY	80,550 857,142

Source: Audited financial statements for DMCR (as a standalone entity) for the years ended 30 June 2012 and 30 June 2013 and unaudited management accounts for Drive My Fleet Pty Ltd for the years ended 30 June 2012 and 30 June 2013

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Consolidated Statement of Comprehensive Income	Unaudited for the Unaudited for the year ended 30-Jun-13 year ended 30-Jun-12 $ $
Revenue Cost of sales Gross profit Other income Expenses General & administrative expenses Advertising and promotion expenses Operating expenses Employment expenses Finace costs Other expenses Operating loss Income tax expense	677,773 2,290,657 (500,578) (1,691,414)
	177,195 599,243 182,978 370,470 (182,706) (383,249) (108,964) (240,638) (132,772) (260,385) (873,980) (1,445,195) (45,054) (97,018) (53,280) (573,410)
	(1,036,583) (2,030,182) - -
Net loss	(1,036,583) (2,030,182)

Commentary on Historical Financial Statements

We have not undertaken a review of Drive My Fleet Pty Ltd’s ( ‘DMF’ ) unaudited accounts as at 30 June 2013 in accordance with Australian Auditing and Assurance Standard 2405 “Review of Historical Financial Information” and do not express an opinion on this financial information. However nothing has come to our attention as a result of our procedures that would suggest the financial information within the management accounts has not been prepared on a reasonable basis.

The consolidated entity, DMCR, consists of two businesses being DMCR and DMF. For the years ended 30 June 2012 and 30 June 2013 we have been provided audited financial statements for DMCR (as a standalone entity) but the DMF numbers and the consolidation of both entities has not been audited. For the year ended 30 June 2013 the majority of operations has occurred in DMCR, the standalone entity, while there have been minimal operations in DMF.
Net asset balance of DMCR has decreased from $857,142 as at 30 June 2012 to $80,550 as at 30 June 2013. The majority of this decrease is a result of the loss of $1.04 million incurred which was partially offset by new equity raised.
The trade debtor’s balance of $81,689 as at 30 June 2013 is net of the provision for doubtful debts. Total trade receivables as at 30 June 2013 are $390,218 with a provision for doubtful debts of $308,529.
As at 30 June 2013 an amount of $161,512 was receivable from the ATO. This amount was received in August 2013.
During June 2013 DMCR undertook a capital raising in which 17.29% of DMCR was acquired by approximately 12 investors. These investors were both existing and new shareholders of DMCR. An

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amount of $260,000 was raised prior to June and this has resulted in the increase in issued capital from $4.45 million as at 30 June 2012 to $4.71 million as at 30 June 2013.

As at 30 June 2013 there is a loan amount of $26,069. This loan is payable to Thorn Australia Pty Ltd.
For the years ended 30 June 2012 and 30 June 2013, DMCR has made losses of $2.03 million and $1.04 million respectively.
There was a significant decrease in revenue levels between the years ended 30 June 2012 and the year ended 30 June 2013. The reason for this decrease is due to the DMF segment of the business being closed and the ceasing of the vehicle supply business arrangement with fleet partners. This segment was not profitable and hence the supply arrangements were ended in 2012.
The majority of other income balances for the years ended 30 June 2012 and 30 June 2013 relate to ATO refunds.

7. Economic analysis

Recent information is consistent with global growth running a bit below average this year, with reasonable prospects of a pick-up next year. Commodity prices have declined from their peaks, but generally remain at high levels by historical standards. Inflation in most countries is well contained.

Overall, global financial conditions remain very accommodative. Volatility in financial markets has abated recently. Long-term interest rates remain very low and there is ample funding available for creditworthy borrowers.

In Australia, the economy has been growing a bit below trend over the past year and the unemployment rate has edged higher. This is likely to persist in the near term, as the economy adjusts to lower levels of mining investment. Further ahead, private demand outside the mining sector is expected to increase at a faster pace, though considerable uncertainty surrounds this outlook. There has been an improvement in indicators of household and business sentiment recently, but it is still too soon to judge how persistent this will be. Public spending is forecast to be quite weak.

Recent data on prices show inflation consistent with the medium-term target. The Reserve Bank of Australia’s assessment is that this is likely to remain the case over the next one to two years.

The easing in monetary policy that has already occurred since late 2011 has supported interest-sensitive spending and asset values. The full effects of these decisions are still coming through, and will be for a while yet. The pace of borrowing has remained relatively subdued overall to date, though recently there have been signs of increased demand for finance by households. There is also continuing evidence of a shift in savers' behaviour in response to declining returns on low-risk assets. Housing and equity markets have strengthened further, trends which should in time be supportive of investment.

The Australian dollar, while below its level earlier in the year, is still uncomfortably high. A lower level of the exchange rate is likely to be needed to achieve balanced growth in the economy.

Source: www.rba.gov.au Statement by Glenn Stevens, Governor: Monetary Policy Decision 5 November 2013.

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8. Industry analysis

In 2013, the Australian car rental and hiring industry comprised approximately 1,600 businesses that collectively generated approximately $2.7 billion of revenue. Analysts have estimated that industry revenue will grow by approximately 2% to $2.8 billion in 2014. Cumulative average revenue growth over the period 2009 – 2013 was approximately 2.7%. As shown in the chart below, the majority (77.6%) of these businesses are located in New South Wales, Victoria and Queensland.

Business Locations

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----- Start of picture text -----

WA TAS
VIC 11.5% 2.6%
SA
23.7%
6.1%
NT
1.2%
ACT
1.0%
QLD NSW
25.6% 28.3%
----- End of picture text -----

Source: Ibisworld.com.au

The primary drivers for the industry are business confidence, consumer sentiment, motor vehicle prices, passenger movements through capital city airports and international travel to Australia.

Businesses are some of the largest users of hire cars; therefore the level of business confidence has a direct impact on the demand for hire cars. Over the past five years, events such as the global financial crisis, the Eurozone debt crisis, the progressively slowing growth in China, the softening of the mining boom and, more recently, the issues surrounding the United States’ debt have all having a dampening effect on the level of business confidence. This decline in business confidence has seen demand for the industry’s services fall and as such growth over the five year period to 2013 has been slow.

Similarly, consumer sentiment has been affected by the aforementioned events. Since households are saving a greater percentage of their income, this has translated into a decrease in the demand for hire cars as people opt for cheaper travel alternatives.

With the decrease in business and consumer sentiment, both business and consumers have put off spending on big-ticket items such as motor vehicles and as such the price of motor vehicles has decreased. Lower motor vehicle prices have further decreased demand in the car hire industry as they prompt consumers to take advantage of the low prices and purchase a vehicle, thereby bypassing the need to hire a car. Record low interest rates have also made it easier to invest in vehicles via a finance lease which has further depressed demand in the car hire industry.

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We note that since DMCR relies on the rental of privately owned vehicles to generate its revenue, an increase in the number of car purchases may have a positive impact for DMCR as it will further increase the number of private cars that may be able to be hired out.

A large percentage of the revenue derived in the car hire industry is associated with international and domestic travel. As travel levels increase, the demand for hire cars also increases. Over the past five years, low consumer sentiment has decreased the level of domestic travel. International travel into Australia has also been lower as the high Australian dollar has made it increasingly expensive for international travellers to visit Australia. The combined impact of these two factors has contributed to the decreasing levels of demand in the car hire industry.

The outlook for the car hire industry is for a return to consistent growth over the next five years with analysts estimating that industry revenue will grow by 2% per year over the five years to 2019. This growth is expected to be driven by a number of factors including; an increase in the number of international travellers coming to Australia amid expectations that the Australian dollar will fall, thereby making it more affordable for travellers to visit Australia; and increasing levels of business confidence and consumer sentiment. Competition within the industry is also expected to increase over the next five years which will dampen profitability.

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9. Valuation approach adopted

There are a number of methodologies which can be used to value a business or the shares in a company. The principal methodologies which can be used are as follows:

Capitalisation of future maintainable earnings (“ FME ”)
Discounted cash flow (“ DCF ”)
Quoted market price basis (“ QMP ”)
Net asset value (“ NAV ”)
Market based assessment.
A summary of each of these methodologies is outlined in Appendix 2.

Different methodologies are appropriate in valuing particular companies, based on the individual circumstances of that company and available information.

9.1. Value of a Qanda share prior to the Transaction

In our assessment of the value of Qanda shares prior to the Transaction we have chosen to employ the following methodologies:

NAV as our primary methodology
QMP as a secondary methodology.

We have chosen these methodologies for the following reasons:

The FME approach is not appropriate as the Company has been operating at a loss from continuing operations in the last three financial years, meaning that we do not have reasonable grounds on which to base a forecast future maintainable earnings figure.
Qanda sold a significant business unit in November 2012, WebSpy, and has since been evaluating several opportunities to recapitalise the Company or increase the activities of the Company through acquisitions such as the current Transaction.
In accordance with Qanda’s financial report for the year ended 30 June 2013, there may be material uncertainty whether Qanda will continue as going concern. The Directors are of the opinion that there are reasonable grounds that the Company will continue as a going concern after considering the following factors:
the current business development prospects show an increase in activity and should lead to increasing ongoing revenue
the release of the Purchase Plus procurement platform continues to have a positive impact on the Company
the receipt of the $272,747 research and development tax rebate, which was received during October 2013.
On this basis, we consider the NAV methodology to be an appropriate valuation approach to undertake.
However, it should be noted that asset based methods ignore the possibility that the entity’s value could exceed the realisable value of its assets as they do not recognise the value of intangible assets such as management, intellectual property and goodwill. This is particularly significant if the growth potential of a company is substantial.

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Alternatively, if the company is making losses and earnings are deteriorating, asset based methods ignore the deteriorating financial performance of a company, which may result in the entity’s value trading below the realisable value of its assets.
The QMP basis is a relevant methodology to consider as Qanda’s shares are listed on the ASX. This means there is a regulated and observable market where Qanda’s shares can be traded. However, in order for the QMP methodology to be considered appropriate, the company’s shares should be liquid and the market should be fully informed as to Qanda’s activities. We have considered these factors in section 10.2 of our Report.

9.2. Value of a Qanda share following the Transaction

In our assessment of the value of Qanda shares following the Transaction we have chosen to employ the following methodology:

Sum-of-parts as our primary methodology.

The value of Qanda shares following the Transaction involves the sum of the following items:

The value of Qanda prior to the Transaction.
The value of DMCR determined using both the DCF and NAV approaches as a result of the following:
We have been provided with long term forecast for the DMCR business which will allow a DCF approach to be undertaken;
The FME approach is not appropriate as the Company is currently loss making, meaning that we do not have reasonable grounds on which to base a forecast future maintainable earnings figure; and
DMCR is a private company which means there is no regulated and observable market where DMCR’s shares can be traded.
The number of shares on issue following the Transaction will include the issue of an additional 780 million Qanda shares as part of the Share Consideration and the additional 260 million shares as part of the Deferred Share Consideration (in the valuation scenario where the annual audited net profit target is likely to be achieved).

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10. Valuation of Qanda prior to the Transaction

10.1 Net Asset Valuation of Qanda prior to the Transaction

In arriving at our net asset values, we made the following adjustments to Qanda’s balance sheet as at 30 June 2013.

Notes	30-Jun-13 Adjustments Net asset value $ $ $
CURRENT ASSETS Cash and cash equivalents a Trade and other receivables b Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Other receivables Property, plant and equipment Intangible assets c TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Other current liabilities Borrowings Redeemable convertible notes d Short-term provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Borrowings Other non-current liabilities Long-term provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES	559,179 131,747 690,926 1,029,441 (272,747) 756,694 7,971 - 7,971
	1,596,591 (141,000) 1,455,591 85,308 - 85,308 28,836 - 28,836 2,417,214 - 2,417,214
	2,531,358 - 2,531,358
	4,127,949 (141,000) 3,986,949
	382,640 - 382,640 639,902 - 639,902 127,955 - 127,955 451,810 (276,810) 175,000 130,860 - 130,860
	1,733,167 (276,810) 1,456,357
	1,018,973 - 1,018,973 39,272 - 39,272 41,677 - 41,677
	1,099,922 - 1,099,922
	2,833,089 (276,810) 2,556,279
NET ASSETS Shares on issue (number) e Value per share ($)	1,294,860 135,810 1,430,670
	1,081,599,600 225,000,000 1,306,599,600 0.00109

We have been advised that there has not been a significant change in the net assets of Qanda since 30 June 2013 apart from those adjustments discussed below. The table above indicates the net asset value of a Qanda share is 0.109 cents.

The following adjustments were made to the net assets of Qanda as at 30 June 2013 in arriving at our valuation. No other material changes have occurred between 30 June 2013 and 30 September 2013.

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Note a: Cash and cash equivalents

The cash held by Qanda is used for working capital purposes. The adjustments made to cash and cash equivalents include:

Cash received from the Capital Raising undertaken in August 2013 totalling $115,000;
Cash received from receipt of research and development tax offset amount of $272,747 in October 2013;
Cash spent on general operational activities between the periods July 2013 and September 2013 of approximately $256,000.

Note b: Trade and other receivables

The trade and other receivables balance has reduced by $272,747 as a result of the receipt of a research and development tax offset amount in October 2013.

Note c: Intangible assets

The intangible assets as at 30 June 2013 consist of the following:

Development costs – these are carried at cost less accumulated amortisation and accumulated impairment losses. This intangible asset has been assessed as having a finite life and is amortised using the straight line method over a 4 year period. The recoverability of development costs, totalling $392,842 as at 30 June 2013, has been assessed by management and Qanda’s auditors and is believed to be reasonable.

Patents – these were acquired through business combinations and are carried at cost less accumulated impairment losses. This intangible asset has been assessed as having a finite life and is amortised using the straight line method over a 10 year period. The current patents have been granted for 20 years by the relevant government agency. The recoverability of patents, totalling $2,859 as at 30 June 2013, has been assessed by management and Qanda’s auditors and is believed to be reasonable.

Goodwill – this is measured at cost less any accumulated impairment losses. Goodwill is not amortised but is subject to impairment testing on an annual basis or whenever there is an indication of impairment. At 30 June 2013, goodwill was assessed for impairment by Qanda’s auditors. A value-in-use calculation was performed by the auditors in which it was found that the carrying value of goodwill exceeded its value-inuse by $1.27 million. Hence goodwill was written down to $2.02 million. We have reviewed the value-inuse calculations and are satisfied that the current carrying value of goodwill of $2.02 million represents its fair value.

As a result of the above we consider that the current carrying value of intangible assets of $2.42 million is representative of the market value that could be received from its sale to a third party.

Note d: Redeemable convertible notes

On 5 November 2013, the Company announced that 187,500,000 shares had been issued upon the conversion of notes in accordance with the terms of the secured redeemable convertible note facility deed. The issue of these shares has been included in the total shares on issue of 1,081,599,600.

Note e: Shares on issue

The current number of shares on issue already reflects the Capital Raising undertaken in August 2013 and the conversion of the redeemable convertible notes in November 2013. However, it does not include the shares to be issued under the Additional Placement which requires the Company to issue an additional 225 million shares. The Company has a legal obligation to issue the Additional Placement even if the

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Transaction is not approved by Shareholders. Therefore we have adjusted the current number of shares on issue to incorporate the issue of the Additional Placement.

As the General Placement is still subject to Shareholder approval and the Entitlement Issue is subject to the success of the Transaction we have not incorporated the issue of these shares.

10.2 Quoted Market Prices for Qanda securities

To provide a comparison to the NAV of Qanda in section 10.1, we have also assessed the quoted market price for a Qanda share as traded on the ASX.

The quoted market value of a company’s shares is reflective of a minority interest. A minority interest is an interest in a company that is not significant enough for the holder to have an individual influence in the operations and value of that company.

RG 111.11 suggests that when considering the value of a company’s shares for the purposes of approval under Section 611 Item 7 of the Act the expert should consider a premium for control. An acquirer could be expected to pay a premium for control due to the advantages they will receive should they obtain 100% control of another company. These advantages include the following:

control over decision making and strategic direction;
access to underlying cash flows;
control over dividend policies; and
access to potential tax losses.

While DMCR will not be obtaining 100% of Qanda, RG 111 states that the expert should calculate the value of a target’s shares as if 100% control were being obtained. RG 111.13 states that the expert can then consider an acquirer’s practical level of control when considering reasonableness. Reasonableness has been considered in section 13.

Therefore, our calculation of the quoted market price of a Qanda share including a premium for control has been prepared in two parts. The first part is to calculate the quoted market price on a minority interest basis. The second part is to add a premium for control to the minority interest value to arrive at a quoted market price value that includes a premium for control.

Minority interest value

Our analysis of the quoted market price of a Qanda share is based on the pricing prior to the announcement of the Transaction. This is because the value of a Qanda share after the announcement may include the affects of any change in value as a result of the Transaction.

Information on the Transaction was announced to the market on 6 November 2013. We note that Qanda was in a trading halt from 28 October 2013 as a result of the impending announcement of the Transaction. Therefore, the following chart provides a summary of the share price movement over the 12 months to 25 October 2013 which was the last full trading day prior to Qanda shares going into a trading halt on 28 October 2013.

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QNA share price and trading volume history

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----- Start of picture text -----

0.006 1.2
0.005 1.0
0.004 0.8
0.003 0.6
0.002 0.4
0.001 0.2
0.000 -
Volume Closing share price
($)
Share Price Volume (millions)
----- End of picture text -----

Source: Bloomberg, BDO analysis

The daily price of Qanda shares from 26 October 2012 to 25 October 2013 has ranged from a low of $0.001 on 20 February 2013 to a high of $0.005 on 25 October 2013. As noted in the graph above there have been minimal volumes traded over the review period which has led to long periods of limited variation in the price of a Qanda share.

During this period a number of announcements were made to the market. The key announcements are set out below:

Date	Announcement	Closing Share Price Following Announcement	Closing Share Price Three Days After Announcement	Closing Share Price Three Days After Announcement	Closing Share Price Three Days After Announcement
		$ (movement)	$ (movement)
28/08/2013	Fundraising and corporate update	0.002 � 0.0%	0.002	�	0.0%

30/07/2013	Appendix 4C - June 2013 Quarterly Report	0.004 � 0.0%	0.002	�	50.0%

26/04/2013	Appendix 4C - March 2013 Quarterly Report	0.002 � 0.0%	0.004	�	100.0%

1/03/2013	Half Year Report and Appendix 4D	0.002 � 0.0%	0.002	�	0.0%

31/01/2013	Appendix 4C - December 2012 Quarterly Report	0.005 � 0.0%	0.005	�	0.0%

9/11/2012	Sale of WebSpy Business Unit	0.005 � 0.0%	0.005	�	0.0%

30/10/2012	Appendix 4C - September 2012 Quarterly Report	0.005 � 0.0%	0.005	�	0.0%

Source: Bloomberg, BDO analysis

Over the 12 month period from 26 October 2012 to 25 October 2013 we noted the following in relation to significant movements in Qanda’s share price on or around the dates when market sensitive announcements were made:

On 26 April 2013, Qanda released its March 2013 Quarterly Report which disclosed a net cash outflow from operating activities for the quarter of $0.23 million. Three days after this announcement, Qanda’s share price had increased by 100% to $0.004.

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On 30 July 2013, Qanda released its June 2013 Quarterly Report which disclosed a net cash outflow from operating activities for the quarter of $0.18 million. Three days after this announcement, Qanda’s share price had fallen by 50% to $0.002.

To provide further analysis of the market prices for a Qanda share, we have also considered the weighted average market price for 10, 30, 60 and 90 day periods to 25 October 2013.

	25 October 2013	10 Days	30 Days	60 Days	90 Days
Closing Price	$0.005
Weighted Average		$0.004	$0.004	$0.004	$0.004

Source: Bloomberg, BDO analysis

The above weighted average prices are up until the Company went into a traded halt regarding the announcement of the Transaction, to avoid the influence of any increase in the price of Qanda shares that has occurred since the Transaction was announced.

An analysis of the volume of trading in Qanda shares for the 12 months to 25 October 2013 is set out below:

	Share price low	Share price high	Cumulative Volume traded	As a % of Issued capital
1 day	$0.005	$0.005	580,450	0.06%
10 days	$0.002	$0.005	2,865,436	0.32%
30 days	$0.002	$0.005	3,385,436	0.38%
60 days	$0.002	$0.005	4,085,436	0.46%
90 days	$0.002	$0.005	4,232,747	0.47%
180 days	$0.001	$0.005	6,466,080	0.72%
1 year	$0.001	$0.005	7,041,080	0.79%

Source: Bloomberg, BDO analysis

This table indicates that Qanda’s shares display a very low level of liquidity, with only 0.79% of the Company’s current issued capital being traded in a twelve month period. For the quoted market price methodology to be reliable there needs to be a ‘deep’ market in the shares. RG 111.69 indicates that a ‘deep’ market should reflect a liquid and active market. We consider the following characteristics to be representative of a deep market:

Regular trading in a company’s securities;
Approximately 1% of a company’s securities are traded on a weekly basis;
The spread of a company’s shares must not be so great that a single minority trade can significantly affect the market capitalisation of a company; and

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There are no significant but unexplained movements in share price.

A company’s shares should meet all of the above criteria to be considered ‘deep’, however, failure of a company’s securities to exhibit all of the above characteristics does not necessarily mean that the value of its shares cannot be considered relevant. Over the 12 month period up until 25 October 2013 only 0.79% of the Company’s issued capital has been traded. The trading has been very irregular over the period and the closing price has ranged from a low of $0.001 to a high of $0.005. Therefore, in the case of Qanda, we do not consider the market to be ‘deep’.

Our assessment is that a range of values for Qanda shares based on market pricing, after disregarding post announcement pricing, is between 0.20 cents and 0.40 cents with a midpoint value of 0.30 cents.

Control Premium

We have reviewed the control premiums paid by acquirers of companies listed on the ASX. We have summarised our findings below:

			Average
	Number of Control	Average Deal	Control
Year	Transactions	Value (AU$m)	Premium (%)
2013	4	47.38	19.74
2012	50	340.87	42.62
2011	72	684.16	44.60
2010	87	745.14	37.18
2009	87	354.48	43.49
2008	63	663.83	39.47
2007	100	1078.32	21.79
2006	107	850.51	22.95
		Median	38.33
		Mean	33.98

Source: Bloomberg & BDO analysis

In arriving at an appropriate control premium to apply we note that observed control premiums can vary due to the:

Nature and magnitude of non-operating assets;
Nature and magnitude of discretionary expenses;
Perceived quality of existing management;
Nature and magnitude of business opportunities not currently being exploited;
Ability to integrate the acquiree into the acquirer’s business;
Level of pre-announcement speculation of the transaction; and
Level of liquidity in the trade of the acquiree’s securities.

Based on the analysis above, we consider the long term control premium paid for ASX-listed companies is in the order of 25% to 35%.

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Quoted market price including control premium

Applying a control premium to Qanda’s quoted market share price results in the following quoted market price value including a premium for control:

	Low	Midpoint	High
	cents	cents	cents
QMP value	0.200	0.300	0.400
Control premium	25%	30%	35%
QMP valuation (including a premium for control)	0.250	0.390	0.540

Therefore, our valuation of a Qanda share based on the quoted market price method and including a premium for control is between 0.250 cents and 0.540 cents, with a midpoint value of 0.390 cents.

10.3 Assessment of Qanda value prior to Transaction

The results of the valuations performed are summarised in the table below:

	Low	Preferred	High
	cents	cents	cents
NAV methodology (section 10.1)	0.109	0.109	0.109
QMP methodology including a premium for control (section 10.2)	0.250	0.390	0.540

We note that the value obtained under the NAV methodology is lower than the values obtained under the QMP methodology. The difference between the valuation obtained under the NAV and QMP approaches can be explained by the following:

The NAV value is lower than the QMP value range, which is not uncommon for technology companies, which often trade at a premium to its net asset value. This is because investors anticipate some potential upside or ‘bluesky’ prospects for the company which are factored into the share price in advance of any such value being warranted.
The QMP value reflects investors’ perception of the future prospects of Qanda and may have taken into account the fact that Qanda has been actively progressing options to add scale to the Company since the sale of the WebSpy business unit.
Our share price analysis in section 10.2 indicates that there is not a deep market for the Company’s shares with only 0.79% of the Company’s share capital traded in the 12 months prior to the announcement of the Transaction. The trading has also been very irregular over the period and the closing price of a Qanda share has ranged from a low of $0.001 to a high of $0.005 over the 12 month period.
The Company recently performed a placement to a sophisticated investor in which $115,000 was raised through the issue of 115 million shares at an issue price of $0.001. This issue price is well below the QMP value determined in section 10.2 and is considered consistent with our NAV value.

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For the reasons described above, we conclude that the value obtained under the NAV approach is more reflective of the value of a Qanda share. Therefore, we consider the value of a Qanda share to be 0.109 cents per share.

11. Valuation of Qanda following the Transaction

As discussed in section 9.2, in determining the value of a Qanda share following the Transaction, the sumof-parts methodology has been used which includes the following:

The value of Qanda prior to the Transaction using the NAV approach as determined in section 10.1;
The value of DMCR determined using the DCF and NAV approaches; and
The number of shares on issue following the Transaction will include the issue of an additional 780 million Qanda shares as part of the Share Consideration and the issue of the Deferred Share Consideration of 260 million Qanda shares in the valuation scenario where the annual audited net profit target is likely to be achieved.

11.1 Valuation of DMCR

11.1.1 Discounted cash flow valuation of DMCR

Future cash flows

We elected to use the discounted cash flow method to value DMCR. The DCF approach estimates the fair market value by discounting the future cash flows arising from the business to their net present value. Performing a DCF valuation requires the determination of the following:

The expected future cash flows that the business is expected to generate; and
An appropriate discount rate to apply to the cash flows of the business to convert them to present value equivalent.

The management of DMCR has prepared a detailed cash flow model for DMCR (‘ the Model ’). The Model depicts forecasts of nominal, post-tax cash flows on a monthly basis. The model extends to 30 June 2018. We have reviewed the Model and the material assumptions that underpin it.

We undertook the following analysis on the Model:

A review of the mathematical structure and internal consistency;
Held discussions with DMCR’s management regarding the preparation of the forecast cash flows in the Model and its views;
Reviewing the reasonableness of the assumptions adopted by DMCR;
Adjusted the Model to reflect any changes to the assumptions as a result of our review and any changes to the economic and other input assumptions from our research; and
Performed a sensitivity analysis on the value of the business as a result of flexing selected assumptions and inputs.

Limitations

Since forecasts relate to the future, they may be affected by unforeseen events and they depend, in part, on the effectiveness of management’s actions in implementing the plans on which the forecasts are based.

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Accordingly, actual results may vary materially from the forecasts, as it is often the case that some events and circumstances frequently do not occur as expected, or are not anticipated, and those differences may be material.

Assumptions

As the DMCR business is in the early growth phase with a unique business model, a number of the detailed assumptions included in the Model are of a commercially sensitive nature and the detailed disclosure of these in this Report has therefore been limited. We have set out the key assumptions used in the Model below.

Revenue and Cost of sales

Revenue in the Model is derived through a number of sources, the main sources being:

Vehicle sourcing fees;
Insurance and roadside assistance fees;
Administration fees; and
Manage My Car fees.

The insurance and roadside assistance fees and the administration fees are the largest revenue sources for DMCR. These fees are charged on a per rental day basis and therefore the level of monthly revenue derived from these sources is directly driven by the number of rental days booked per month. This in turn is driven by both the demand and supply of vehicles. Unlike other vehicle rental businesses, DMCR does not own any vehicles. Therefore the level of revenue generated by the business can be constrained by both the availability of vehicles and the demand for vehicles. From discussions with DMCR management and review of historical statistics regarding current demand, the supply of vehicles is currently the inhibiting factor. In order to meet the current demand, DMCR’s plans involve increasing the current marketing spend, a focus on corporate and government bodies, building referral relationships and increasing the number of vehicles supplied by utilising vehicle investors.

Manage My Car ( ‘MMC’ ) fees are generated when an owner is not able to undertake the handover of their vehicle to a driver. DMCR provides a service which delivers full rental management, including organising servicing, maintenance and registration management and a number of other benefits. The Model assumes a monthly fee for MMC and this has not been increased over the period of the Model.

In Australia, car insurance has a standard exclusion which excludes cover for vehicles that are used for reward or hire rental purposes. DMCR has secured a tailored insurance policy to overcome this major barrier and to ensure rental vehicle transactions are covered by appropriate insurance.

We have reviewed the revenue assumptions applied in the Model and consider them to be reasonable based on historical information and forecast growth plans.

Cost of sales in the Model includes the following items;

Insurance of vehicles;
Motor vehicle storage;
Motor vehicle servicing fees; and
Roadside assistance fees.

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The Model assumes a consistent gross profit margin over the forecast period.

Administrative overhead expenses

Within the Model, the major administrative overhead expenses are as follows;

Staff cost in regards to customer support, business development and administration;
Promotional and marketing costs such as online and print marketing; and
Administration related costs including rent, insurance and legal fees.

Capital raising

The Model assumes a $250,000 capital raising is undertaken towards the end of 2013. Costs of the proposed capital raising are approximately $50,000, hence net funds of $200,000 will be received which are to be used for working capital purposes.

Tax rate

The Model makes assumptions on corporate tax rate of 30% over the period of the forecasts.

Discount rate

We have selected a nominal after tax discount rate of 25% to discount the future cash flows of DMCR to their present value.

In selecting this range of discount rates we considered the following:

The specific business and financing risks of DMCR;
The rates of return for comparable listed Australian companies;
The debt to equity ratios of comparable listed Australian companies;
An appropriate cost of debt; and
An appropriate target debt to equity ratio.

Details on our discount rate determination are provided in Appendix 3.

Terminal value

The Model assumes a 2% growth rate in determining the terminal value of DMCR. We believe that this is reasonable as it is in line with the Reserve Bank of Australia’s target inflation rate.

Summary of cash flows

A summary of the forecast cash flows used in deriving our valuation opinion are provided in the table below:

						Terminal
	FY2014	FY2015	FY2016	FY2017	FY2018	value*
	$’000	$’000	$’000	$’000	$’000	$’000
Forecast net cash
flows after tax	(338)	202	487	845	1,309	1,903

*This figure is the Present Value of the terminal cash flows

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DCF Valuation – sensitivities

The estimated value of DMCR is derived under the DCF approach. Our valuation is most sensitive to changes in the rental days and the discount rate used. We have therefore included an analysis to consider the value of DMCR under various scenarios and in applying:

A change of +/- 25% to rental days
A change of +/- 25% to administrative overhead expenses
A change of +/- 25% to cost of goods sold ( ‘COGS’ )
A change of +/- 25% to total cars utilised
A discount rate in the range of 15% to 35%.

The following table sets out the valuation outcomes from our DCF analysis.

Flex NPV($m) NPV($m) NPV($m) NPV($m)	Flex NPV($m) NPV($m) NPV($m) NPV($m)	Flex NPV($m) NPV($m) NPV($m) NPV($m)	Flex NPV($m) NPV($m) NPV($m) NPV($m)	Flex NPV($m) NPV($m) NPV($m) NPV($m)
	Rental Days	Expenses	COGS	Cars utilised
25%	5.21	1.20	1.86	2.23
20%	4.75	1.54	2.06	2.37
15%	4.29	1.89	2.27	2.50
10%	3.82	2.22	2.48	2.63
5%	3.36	2.56	2.68	2.76
0%	2.89	2.89	2.89	2.89
-5%	2.42	3.22	3.10	3.02
-10%	1.95	3.55	3.30	3.15
-15%	1.48	3.88	3.51	3.28
-20%	1.01	4.21	3.71	3.41
-25%	0.63	4.54	3.92	3.54

Discount Rate
Discount Rate 15% 20% 25% 30% 35%
NPV($m) 6.52 4.16 2.89 2.12 1.61

Terminal Growth Rate
Terminal Growth Rate 1% 2% 3% 4% 5%
NPV ($m) 2.79 2.89 3.00 3.11 3.24

Considering the valuation outcomes above, we estimate the fair market value of DMCR determined under the DCF methodology to be in the range of $2.2 million to $3.8 million, with a preferred value of $2.9 million.

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11.1.2 Net asset valuation of DMCR

In arriving at our net asset values, we made the following adjustments to DMCR’s balance sheet as at 30 June 2013.

Notes	30-Jun-13 Adjustments Net asset value $ $ $
CURRENT ASSETS Cash and cash equivalents a Trade debtors Deposit paid Tax receivable (R&D Tax refund) b TOTAL CURRENT ASSETS NON-CURRENT ASSETS Leasehold improvements Drive My Car website Other intangibles Office equipment TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade creditors GST Payroll liabilities Other liabilities Loans c TOTAL CURRENT LIABILITIES TOTAL LIABILITIES	37,743 49,891 87,634 81,689 - 81,689 15,550 - 15,550 161,512 (161,512) -
	296,494 (111,621) 184,873 12,273 - 12,273 10,891 - 10,891 5,567 - 5,567 7,571 - 7,571
	36,302 - 36,302
	332,796 (111,621) 221,175
	161,567 - 161,567 11,943 - 11,943 35,715 - 35,715 16,952 - 16,952 26,069 (15,000) 11,069
	252,246 (15,000) 237,246
	252,246 (15,000) 237,246
NET ASSETS	80,550 (96,621) (16,071)

Note a: Cash and cash equivalents

The cash held by DMCR is used for working capital purposes. The adjustments made to cash and cash equivalents include:

Cash received from the ATO tax refund received in August 2013 totalling $161,512; and
Cash spent on general operational activities during the three months ended 30 September 2013. This has seen the cash balance decrease to $87,634 as at 30 September 2013.

Note b: Tax receivable

The ATO tax refund of $161,512 was received by the DMCR in August 2013.

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Note c: Loans

Between 1 July 2013 and 30 September 2013 an amount of $15,000 was repaid by DMCR to Thorn Australia Pty Ltd.

No other material changes have occurred between 1 July 2013 and 30 September 2013. The table above indicates that DMCR is currently in a net liability position. Therefore, the net asset value of DMCR is nil.

11.1.3 Value of DMCR

In determining a value for DMCR we have relied on both the DCF and NAV methodologies. DMCR is an early stage growth company yet to generate a profit however the cash flow model for DMCR forecasts profits to be generated by 30 June 2015. We have performed a sensitivity analysis around some of the key assumptions in the cash flow model to obtain a range of values for DMCR based on the DCF methodology. However, the ability to achieve these results holds some risk; therefore we consider that it is important to incorporate the value of DMCR determined under the NAV methodology into our valuation range. We have included this as our low value. Therefore, we have determined that the value of DMCR is as follows:

	Low value	Preferred value	High value
	$	$	$
Value of DMCR	-	2,200,000	2,900,000

11.2 Number of shares on issue following the Transaction

The number of shares on issue following the Transaction represents the current shares on issue and the shares to be issued under the Additional Placement totalling 1,306,599,600 plus the following:

Share Consideration of 780,000,000 issued to the DMCR Vendors;
Deferred Share Consideration of 260,000,000 issued to the DMCR Vendors. We have only included the issue of the Deferred Share Consideration in our scenario when our valuation of DMCR is based on the DCF methodology, which is our preferred and high value ranges;
As noted in section 11.1.1, in order to achieve the values determined for DMCR under the DCF methodology a capital injection of approximately $250,000 will be required. As announced on 6 November 2013 it is proposed that Qanda will undertake an Entitlement Issue to raise up to $750,000 with funds to be partially used to underpin the development and marketing of the DMCR business. Qanda has secured an underwriting commitment of $250,000 at an issue price of $0.002 per share in relation to the Entitlement Issue from Dominet. The shares on issue in our preferred and high value range have been further diluted by 125,000,000 shares to represent the additional $250,000 of funding required.

11.3 Minority interest discount

The value of a Qanda share following the Transaction derived from the sum-of-parts method is reflective of a controlling interest. This suggests that the acquirer obtains an interest in the company which allows them to have an individual influence in the operations and value of that company. Therefore, if the Transaction is approved Shareholders will become minority interest shareholders in Qanda as the DMCR Vendors will hold a controlling interest, meaning that their individual holding will not be considered significant enough to have an individual influence in the operations and value of that company.

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Therefore, we have adjusted our valuation of a Qanda share following the Transaction, to reflect a minority interest holding. A minority interest discount is the inverse of a premium for control. As discussed in section 10.2, we determined that an appropriate premium for control, based on our analysis, is within the range of 25% - 35%. We therefore consider that a reasonable range for a minority interest discount to be between 20% - 26%.

11.4 Valuation of a Qanda share following the Transaction

Our sum-of-parts value of a Qanda share following the Transaction is shown in the table below:

Section	Low value Preferred value High value $ $ $
Value of Qanda prior to the Transaction 10.1	1,430,670 1,430,670 1,430,670
Adjustments post acquisition:
Value of DMCR 11.1.3	- 2,200,000 2,900,000
Value of Qanda following the Transaction	1,430,670 3,630,670 4,330,670
Number of shares on issue following the Transaction 11.2	2,086,599,600 2,471,599,600 2,471,599,600
Value per share ($)	0.00069 0.00147 0.00175
Minority interest discount 11.3	26% 23% 20%
Value of a Qanda share following the Transaction ($)	0.00051 0.00113 0.00140

Based on results above we consider the value of a Qanda share following the Transaction on a minority interest basis to be between 0.051 cents and 0.140 cents, with a preferred value of 0.113 cents.

12. Is the Transaction fair?

We have determined that the value of a Qanda share prior to the Transaction on a control basis compares to the value of a Qanda share following the Transaction on a minority basis, as detailed below.

		Low	Preferred	High
	Ref
		cents	cents	cents
Value of a Qanda share prior to the Transaction on a control basis	10.3	0.109	0.109	0.109
Value of a Qanda share following the Transaction on a minority basis	11.4	0.051	0.113	0.140

The above valuation ranges are graphically presented below:

Valuation Summary

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Value of a Qanda share prior to the Transaction on
a control basis
Value of a Qanda share following the Transaction
on a minority basis
0.000 0.050 0.100 0.150 0.200 0.250 0.300
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Value (cents)
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13. Is the Transaction reasonable?

13.1. Advantages of approving the Transaction

13.1.1. The Transaction is fair

As set out in section 12, the Transaction is fair. RG 111 states that an offer is reasonable if it is fair.

13.1.2. Creation of a combined group with a more diversified business

Qanda’s Marketboomer business is an Internet-based procurement and materials management solution provider, specifically focussed on the hospitality industry. The business platform enables purchasers and suppliers to trade more effectively by improving the purchasing process and helping to optimise costs in the supply chain.

DMCR is an online private peer-to-peer car rentals business with a similar aim to improving the purchase process and helping to optimise costs by the facilitation of pairing owners and potential drivers. DMCR operates an internet based platform that connects drivers with car owners with underutilised private vehicles by providing a collaborative consumption network.

The customers of Qanda’s Marketboomer business tend to be larger buying groups with a purchasing profile that is more wholesale in nature. The customers of DMCR are private car owners with a purchasing profile that is more retail in nature.

The Transaction, if approved, will create a group that is more diversified both in industry and in its customer base.

13.1.3. Creation of a complementary business model

Qanda’s Marketboomer business earns its revenue from licensing software and content as well as fees from processing transactions. Accordingly, there is some stability in revenue streams from its licensing activity. It is anticipated that customers in the hospitality business purchase regularly, thereby improving the regularity of Marketboomer’s fee revenue from processing transactions.

DMCR earns its revenue from rental facilitation fees, insurance and roadside assistance fees and membership fees that entitle vehicle owners and vehicle drivers to access benefits of the DMCR platform and insurance. These fees are charged as either a percentage of the daily rental fee earned by a vehicle owner or as a daily dollar amount fee charged as part of the vehicle rental transaction. Accordingly, its revenue streams are more ad-hoc depending on the number of vehicle rental days.

The different fee profiles create a complementary business model that provides a more diversified revenue profile.

13.1.4. Opportunity for further growth of the combined businesses

Qanda expects that the Marketboomer’s customer base represents a strategic and complementary market opportunity for the application of DMCR’s collaborative consumption platform for underutilised assets in the hotel industry. If Marketboomer is able to leverage DMCR’s platform to extend its product offering to

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its existing customers, this would create new business opportunities for Marketboomer and open up a new channel of revenue streams.

There may also be potential for DMCR’s product offering to be extended to hotel patrons of Marketboomer’s domestic hospitality customers, who may benefit from the use of vehicle rentals during their stay at those hotels.

13.1.5. Integration of the businesses may provide synergies

Qanda intends to integrate both management and technical development resources, which may offer opportunities for improvements to intellectual property, sales and marketing and administration functions, thereby reducing overhead costs.

Whilst the magnitude of synergies is not determinable at this point, it is anticipated that, given the complementary nature of DMCR’s business to Qanda’s Marketboomer business, there may be significant synergy benefits in combining the two businesses.

13.1.6. Commitment for underwriting of Entitlement Issue

The Company has secured an underwriting commitment with Dominet in regard to the Entitlement Issue to be undertaken by Qanda following Shareholder approval and completion of the Transaction. Therefore, if Shareholders’ do not approve the Transaction the Entitlement Issue and underwriting agreement may not proceed.

13.1.7. Deferred Consideration Shares contingent on DMCR performance

The issue of the Deferred Share Consideration, consisting of 260 million fully paid ordinary shares in the Company, is subject to DMCR achieving an audited annual net profit before tax of at least $500,000 in any consecutive 12 month period in the 36 months following settlement of the Transaction.

13.2. Disadvantages of approving the Transaction

13.2.1. Dilution of existing Shareholders’ interest

Shareholders will have their collective shareholding diluted to 55.68% if the Transaction is approved and the Share Consideration and Deferred Share Consideration is issued. Shareholders will be passing a substantial amount of control to the DMCR Vendors as a result of an increase in the DMCR Vendors shareholding of up to 44.32%.

13.2.2. Decreases the likelihood of a takeover offer

If the Transaction is approved, the DMCR Vendors will hold up to 44.32% of the issued capital of Qanda assuming the Deferred Share Consideration is issued. This may discourage any other potential bidder from making a takeover bid in the future as the DMCR Vendors will have a significant control over the Company. This may have an adverse effect on the share price of Qanda and may reduce the opportunity for Shareholders to receive a takeover premium in the future.

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However, we note that there are a number of DMCR Vendors and that they do not consider that they are associates in relation to the Company. If the DMCR Vendors are not considered to be associates following completion of the Transaction we do not believe there would be a significant effect on the likelihood of Qanda receiving a takeover offer in the future.

13.2.3. Potential lower liquidity of shares

If Shareholders approve the Transaction, trading in Qanda shares may be negatively affected by the presence of the DMCR Vendors holding a potential 44.32% ownership interest. The existing shares will therefore have a materially lower free float on a proportional basis which may reduce liquidity.

13.2.4. Potential competing demands on limited cash resources

The business of DMCR is still in an early stage of development and growth and is not yet profitable. Qanda’s Marketboomer’s business has also not reached profitability and still requires cash for its research and development activities. The acquisition of DMCR does not provide immediate cash flow to Qanda but to the contrary, places competing demands on the limited cash available in the Company for two businesses instead of one.

13.3. Other considerations

13.3.1. Alternative Proposal

We are not aware of any alternative proposals that might offer the Shareholders a premium over the values ascribed to that resulting from the Transaction.

13.3.2. Practical Level of Control

If the Transaction is approved, the DMCR Vendors will hold an interest of approximately 44.32% in Qanda (if both the Share Consideration and Deferred Share Consideration are received) and the DMCR Vendors will appoint Mr Adrian Bunter as a director of the Company.

When shareholders are required to approve an issue that relates to a company there are two types of approval levels. These are general resolutions and special resolutions. A general resolution requires 50% of shares to be voted in favour to approve a matter and a special resolution required 75% of shares on issue to be voted in favour to approve a matter. If the Transaction is approved, the DMCR Vendors will obtain a maximum interest of 44.32% in Qanda, which will enable them to block special resolutions.

However, we note that there are a number of DMCR Vendors and that they do not consider that they are associates in relation to the Company. If the DMCR Vendors are not considered to be associates following completion of the Transaction we do not have reason to believe that they would all vote in unison, in which case no individual DMCR Vendor will be able to block special resolutions on their own.

13.3.3. Change in risk profile of the investment

Qanda’s Marketboomer business operates in a different software and services sector to DMCR. DMCR operates in a different industry, has a different client profile and a different business model. The integration of DMCR into Qanda’s business means that Shareholders will be exposed to the market sector and business risk profile that DMCR operates in.

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The change in Shareholders’ investment profile may include differences in business profile, operational profile, capital structure, size, share liquidity and geographic exposure between Qanda’s existing business and the proposed integrated business with DMCR.

13.3.4. Consequences of not approving the Transaction

If Shareholders do not approve the Transaction the Company will continue to focus on its existing business unit and pursue its strategy for growth within the web-based technology sector. The Company will still be required to issue the Additional Placement pursuant to resolution 4 of the attached Notice of Meeting.

14. Conclusion

We have considered the terms of the Transaction as outlined in the body of this report and have concluded that the Transaction is fair and reasonable to the Shareholders of Qanda .

15. Sources of information

This report has been based on the following information:

Draft Notice of General Meeting and Explanatory Statement on or about the date of this report;
Audited financial statements of Qanda for the years ended 30 June 2012 and 30 June 2013
Audited financial statements for DMCR (as a standalone entity) for the year ended 30 June 2013
Unaudited management accounts of DMCR and DMF for the years ended 30 June 2012 and 30 June 2013;
Unaudited forecast cash flows for DMCR until 30 June 2018
Signed Term Sheet dated 28 August 2013 which sets out the key commercial terms for the proposed acquisition of 100% of the issued capital of DMCR by Qanda;
Signed Variation Deed dated 9 September 2013;
Signed Entitlement Issue and Underwriting and/or placement agreement between Qanda and Dominet
Share registry information of both Qanda and DMCR;
Information in the public domain;
Discussions with Directors and Management of Qanda; and
Discussions with Directors and Management of DMCR.

16. Independence

BDO Corporate Finance (WA) Pty Ltd is entitled to receive a fee of $23,000 (excluding GST and reimbursement of out of pocket expenses). The fee is not contingent on the conclusion, content or future use of this Report. Except for this fee, BDO Corporate Finance (WA) Pty Ltd has not received and will not receive any pecuniary or other benefit whether direct or indirect in connection with the preparation of this report.

BDO Corporate Finance (WA) Pty Ltd has been indemnified by Qanda in respect of any claim arising from BDO Corporate Finance (WA) Pty Ltd's reliance on information provided by the Qanda, including the non provision of material information, in relation to the preparation of this report.

Prior to accepting this engagement BDO Corporate Finance (WA) Pty Ltd has considered its independence with respect to Qanda and DMCR and any of their respective associates with reference to ASIC Regulatory

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Guide 112 “Independence of Experts”. In BDO Corporate Finance (WA) Pty Ltd’s opinion it is independent of Qanda and DMCR and their respective associates.

Neither the two signatories to this report nor BDO Corporate Finance (WA) Pty Ltd have had within the past two years any professional relationship with Qanda, or their associates, other than in connection with the preparation of this report.

A draft of this report was provided to Qanda and its advisors for confirmation of the factual accuracy of its contents. No significant changes were made to this report as a result of this review.

BDO is the brand name for the BDO International network and for each of the BDO Member firms.

BDO (Australia) Ltd, an Australian company limited by guarantee, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of Independent Member Firms. BDO in Australia, is a national association of separate entities (each of which has appointed BDO (Australia) Limited ACN 050 110 275 to represent it in BDO International).

17. Qualifications

BDO Corporate Finance (WA) Pty Ltd has extensive experience in the provision of corporate finance advice, particularly in respect of takeovers, mergers and acquisitions.

BDO Corporate Finance (WA) Pty Ltd holds an Australian Financial Services Licence issued by the Australian Securities and Investment Commission for giving expert reports pursuant to the Listing rules of the ASX and the Corporations Act.

The persons specifically involved in preparing and reviewing this report were Adam Myers and Sherif Andrawes of BDO Corporate Finance (WA) Pty Ltd. They have significant experience in the preparation of independent expert reports, valuations and mergers and acquisitions advice across a wide range of industries in Australia and were supported by other BDO staff.

Adam Myers is a member of the Australian Institute of Chartered Accountants. Adam’s career spans 15 years in the Audit and Assurance and Corporate Finance areas. Adam has considerable experience in the preparation of independent expert reports and valuations in general for companies in a wide number of industry sectors.

Sherif Andrawes is a Fellow of the Institute of Chartered Accountants in England & Wales and a Member of the Institute of Chartered Accountants in Australia. He has over twenty five years experience working in the audit and corporate finance fields with BDO and its predecessor firms in London and Perth. He has been responsible for over 200 public company independent expert’s reports under the Corporations Act or ASX Listing Rules. These experts’ reports cover a wide range of industries in Australia with a focus on companies in the natural resources sector. Sherif Andrawes is the Chairman of BDO in Western Australia, Corporate Finance Practice Group Leader of BDO in Western Australia and the Natural Resources Leader for BDO in Australia.

18. Disclaimers and consents

This report has been prepared at the request of Qanda for inclusion in the Explanatory Memorandum which will be sent to all Qanda Shareholders. Qanda engaged BDO Corporate Finance (WA) Pty Ltd to prepare an independent expert's report to consider the proposal to acquire a 100% interest in DMCR.

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BDO Corporate Finance (WA) Pty Ltd hereby consents to this report accompanying the above Explanatory Memorandum. Apart from such use, neither the whole nor any part of this report, nor any reference thereto may be included in or with, or attached to any document, circular resolution, statement or letter without the prior written consent of BDO Corporate Finance (WA) Pty Ltd.

BDO Corporate Finance (WA) Pty Ltd takes no responsibility for the contents of the Explanatory Memorandum other than this report.

We have no reason to believe that any of the information or explanations supplied to us are false or that material information has been withheld. It is not the role of BDO Corporate Finance (WA) Pty Ltd acting as an independent expert to perform any due diligence procedures on behalf of the Company. The Directors of the Company are responsible for conducting appropriate due diligence in relation to DMCR. BDO Corporate Finance (WA) Pty Ltd provides no warranty as to the adequacy, effectiveness or completeness of the due diligence process.

The opinion of BDO Corporate Finance (WA) Pty Ltd is based on the market, economic and other conditions prevailing at the date of this report. Such conditions can change significantly over short periods of time.

With respect to taxation implications it is recommended that individual Shareholders obtain their own taxation advice, in respect of the Transaction, tailored to their own particular circumstances. Furthermore, the advice provided in this report does not constitute legal or taxation advice to the Shareholders of Qanda, or any other party.

The statements and opinions included in this report are given in good faith and in the belief that they are not false, misleading or incomplete.

The terms of this engagement are such that BDO Corporate Finance (WA) Pty Ltd has no obligation to update this report for events occurring subsequent to the date of this report.

Yours faithfully

BDO CORPORATE FINANCE (WA) PTY LTD

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Adam Myers Director

Sherif Andrawes Director

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A endix 1 – Glossar of Terms pp y

Reference	Definition
The Act	The Corporations Act 2001 (Cth)
Additional Raising	Subject to shareholder approval the Company will issue 225 million fully paid ordinary
	shares at a deemed issue price of $0.001 per share. The Additional Raising was a
	result of the Capital Raising undertaken in August 2013 which triggered an adjustment
	clause contained in subscription agreements entered into with sophisticated investors
	in relation to placements completed in March 2012.
APES 225	Accounting Professional & Ethical Standards Board professional standard APES 225
	‘Valuation Services’
ASIC	Australian Securities and Investments Commission
ASX	Australian Securities Exchange
ATO	Australian Taxation Office
BDO	BDO Corporate Finance (WA) Pty Ltd
Capital Raising	The placement completed by the Company in August 2013 to a sophisticated investor
	for the issue of 115 million fully paid ordinary shares at an issue price $0.001 per
	share to raise $115,000 (before costs)
COGS	Cost of goods sold
The Company	Qanda Technology Limited
CVC	CVC Private Equity Limited
DCF	Discounted Future Cash Flows
Deferred Share Consideration	The issue of 260 million fully paid ordinary shares in the Company, which will be
	issued subject to DMCR achieving an audited annual net profit before tax of $500,000
	in any consecutive 12 month period in the 36 months following settlement of the
	Transaction
DMCR	Drive My Car Rentals Pty Ltd
The DMCR Vendors	The vendors of Drive My Car Rentals Pty Ltd
DMF	Drive My Fleet Pty Ltd

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Dominet	Dominet Digital Corporation Pty Ltd
EBIT	Earnings before interest and tax
EBITDA	Earnings before interest, tax, depreciation and amortisation
Entitlement Issue	Following completion of the Transaction, it is also proposed that Qanda will undertake
	an entitlement issue to existing shareholders. The entitlement issue will be on the
	basis of two new shares for every eleven shares held at the record date at an issue
	price of $0.002 per share to raise approximately $750,000 before costs
FME	Future Maintainable Earnings
General Raising	Subject to shareholder approval the Company will issue up to 250 million fully paid
	ordinary shares at a deemed issue price of $0.002 per share to raise $500,000 before
	costs
Implementation Agreement	The implementation agreement between Qanda and DMCR under which Qanda will
	acquire a 100% interest in DMCR which owns the DMCR business and assets
Marketboomer	Marketboomer Pty Ltd
NAV	Net Asset Value
Our Report	This Independent Expert’s Report prepared by BDO
Qanda	Qanda Technology Limited
RG 74	Acquisitions approved by Members (December 2011)
RG 111	Content of expert reports (March 2011)
RG 112	Independence of experts (March 2011)
Share Consideration	The issue of 780 million fully paid ordinary shares in the Company
Shareholders	Shareholders of Qanda not associated with DMCR
The Transaction	The proposal to acquire a 100% interest in Drive My Car Rentals Pty Ltd
VWAP	Volume Weighted Average Price
Valuation Engagement	An Engagement or Assignment to perform a Valuation and provide a Valuation Report
	where the Valuer is free to employ the Valuation Approaches, Valuation Methods, and
	Valuation Procedures that a reasonable and informed third party would perform taking
	into consideration all the specific facts and circumstances of the Engagement or
	Assignment available to the Valuer at that time.

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A endix 2 – Valuation Methodolo ies pp g

Methodologies commonly used for valuing assets and businesses are as follows:

1 Net asset value (“NAV”) Asset based methods estimate the market value of an entity’s securities based on the realisable value of its identifiable net assets. Asset based methods include:

Orderly realisation of assets method
Liquidation of assets method
Net assets on a going concern method

The orderly realisation of assets method estimates fair market value by determining the amount that would be distributed to entity holders, after payment of all liabilities including realisation costs and taxation charges that arise, assuming the entity is wound up in an orderly manner.

The liquidation method is similar to the orderly realisation of assets method except the liquidation method assumes the assets are sold in a shorter time frame. Since wind up or liquidation of the entity may not be contemplated, these methods in their strictest form may not be appropriate. The net assets on a going concern method estimates the market values of the net assets of an entity but does not take into account any realisation costs.

Net assets on a going concern basis are usually appropriate where the majority of assets consist of cash, passive investments or projects with a limited life. All assets and liabilities of the entity are valued at market value under this alternative and this combined market value forms the basis for the entity’s valuation.

Often the FME and DCF methodologies are used in valuing assets forming part of the overall Net assets on a going concern basis. This is particularly so for exploration and mining companies where investments are in finite life producing assets or prospective exploration areas.

These asset based methods ignore the possibility that the entity’s value could exceed the realisable value of its assets as they do not recognise the value of intangible assets such as management, intellectual property and goodwill. Asset based methods are appropriate when an entity is not making an adequate return on its assets, a significant proportion of the entity’s assets are liquid or for asset holding companies.

2 Quoted Market Price Basis (“QMP”)

A valuation approach that can be used in conjunction with (or as a replacement for) other valuation methods is the quoted market price of listed securities. Where there is a ready market for securities such as the ASX, through which shares are traded, recent prices at which shares are bought and sold can be taken as the market value per share. Such market value includes all factors and influences that impact upon the ASX. The use of ASX pricing is more relevant where a security displays regular high volume trading, creating a “deep” market in that security.

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3 Capitalisation of future maintainable earnings (“FME”)

This method places a value on the business by estimating the likely FME, capitalised at an appropriate rate which reflects business outlook, business risk, investor expectations, future growth prospects and other entity specific factors. This approach relies on the availability and analysis of comparable market data.

The FME approach is the most commonly applied valuation technique and is particularly applicable to profitable businesses with relatively steady growth histories and forecasts, regular capital expenditure requirements and non-finite lives.

The FME used in the valuation can be based on net profit after tax or alternatives to this such as earnings before interest and tax (“ EBIT ”) or earnings before interest, tax, depreciation and amortisation (“ EBITDA ”). The capitalisation rate or "earnings multiple" is adjusted to reflect which base is being used for FME.

4 Discounted future cash flows (“DCF”) The DCF methodology is based on the generally accepted theory that the value of an asset or business depends on its future net cash flows, discounted to their present value at an appropriate discount rate (often called the weighted average cost of capital). This discount rate represents an opportunity cost of capital reflecting the expected rate of return which investors can obtain from investments having equivalent risks.

Considerable judgement is required to estimate the future cash flows which must be able to be reliably estimated for a sufficiently long period to make this valuation methodology appropriate.

A terminal value for the asset or business is calculated at the end of the future cash flow period and this is also discounted to its present value using the appropriate discount rate.

DCF valuations are particularly applicable to businesses with limited lives, experiencing growth, that are in a start up phase, or experience irregular cash flows.

5 Market Based Assessment

The market based approach seeks to arrive at a value for a business by reference to comparable transactions involving the sale of similar businesses. This is based on the premise that companies with similar characteristics, such as operating in similar industries, command similar values. In performing this analysis it is important to acknowledge the differences between the comparable companies being analysed and the company that is being valued and then to reflect these differences in the valuation.

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A endix 3 – Discount rate assessment pp

Determining the correct discount rate, or cost of capital, for a business requires the identification and consideration of a number of factors that affect the returns and risks of a business, as well as the application of widely accepted methodologies for determining the returns of a business.

The discount rate applied to the forecast cash flows from a business represents the financial return that will be before an investor would be prepared to acquire (or invest in) the business.

The capital asset pricing model (“ CAPM ”) is commonly used in determining the market rates of return for equity type investments and project evaluations. In determining a business’ weighted average cost of capital (“ WACC ”) the CAPM results are combined with the cost of debt funding. WACC represents the return required on the business, whilst CAPM provides the required return on an equity investment.

Cost of Equity and Capital Asset Pricing Model

CAPM is based on the theory that a rational investor would price an investment so that the expected return is equal to the risk free rate of return plus an appropriate premium for risk. CAPM assumes that there is a positive relationship between risk and return, that is, investors are risk averse and demand a higher return for accepting a higher level of risk.

CAPM calculates the cost of equity and is calculated as follows:

CAPM
Ke	= Rf+�x (Rm– Rf)
Where:
Ke	= expected equity investment return or cost of equity in nominal terms
Rf	= risk free rate of return
Rm	= expected market return
Rm– Rf	= market risk premium
�	= equity beta

The individual components of CAPM are discussed below.

Risk Free Rate (Rf)

The risk free rate is normally approximated by reference to a long term government bond with a maturity equivalent to the timeframe over which the returns from the assets are expected to be received. Having regard to the period of the operations we have used the current yield to maturity on the 5 year Commonwealth Government Bond which was 3.11% per annum as at 30 June 2013.

Market Risk Premium (Rm – Rf)

The market risk premium represents the additional return that investors expect from an investment in a well-diversified portfolio of assets. It is common to use a historical risk premium, as expectations are not observable in practice.

The market risk premium is derived on the basis of capital weighted average return of all members of the S&P 200 Index minus the risk free rate is dependent on the ten year government bond rates. For the purpose of our report we have adopted a market risk premium of eight percent.

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Equity Beta

Beta is a measure of the expected correlation of an investment’s return over and above the risk free rate, relative to the return over and above the risk free rate of the market as a whole. A beta greater than one implies that an investment’s return will outperform the market’s average return in a rising market and underperform the market’s average return in a falling market. On the other hand, a beta less than one implies that the business’ performance compared to that of a business whose beta is greater than one will provide an inverse relationship in terms of the market’s average return.

Equity betas are normally either an historical beta or an adjusted beta. The historical beta is obtained from the linear regression of a stock’s historical data and is based on the observed relationship between the security’s return and the returns on an index. An adjusted beta is calculated based on the assumption that the relative risk of the past will continue into the future, and hence derived from the historical data. It is then modified by the assumption that a stock will move towards the market over time, taking into consideration the industry risk factors which make the operating risk of the investment project greater or less risky than comparable listed companies when assessing the equity beta for an investment project.

It is important to note that it is not possible to compare the equity betas of different companies without having regard to their gearing levels. Thus, a more valid analysis of betas can be achieved by “ungearing” the equity beta ( � a) by applying the following formula:

� a = � / (1+(D/E x (1-t))

In order to assess the appropriate equity beta for DMCR we have also had regard to the equity betas of listed companies involved in similar activities in similar industry sectors. The geared betas below have been calculated using weekly data over a two-year period.

Company	Market Capitalisation ($m)	Beta	Gross Debt/Equity (%)	Ungeared Beta (�a)
Facilitate Digital Holdings Limited	4.5	0.92	1%	0.92
Praemium Limited	22.4	0.75	0%	0.75
iProperty Group Limited	135.9	1.05	0%	1.05
carsales.com Limited	2,227.2	0.86	36%	0.69
Mean	597.49	0.89	9%	0.85
Median	79.14	0.89	1%	0.83

Source: Capital IQ & BDO Analysis

Selected Beta ( � )

Our determination of an appropriate beta for DMCR considers the following:

the comparable companies are listed on the ASX whereas DMCR is a private business;
the comparable companies, as inferred from their market capitalisations, are larger compared to DMCR;
there are no strictly comparable companies listed on the ASX with regards to the nature of DMCR’s operations;

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the comparable companies which have a lower ungeared beta, in particular iProperty Group Limited and Praemium Limited, are distinguishable from DMCR in that they are have a proven track record of profitability and a more diversified earnings base; and
undiversifiable risk as well as the risk that projections provided by management of DMCR will not be achieved.

Having regard to the above we consider that an appropriate ungeared beta for DMCR is between 2.25 and 2.75. Given that the DMCR’s capital structure consists entirely of equity there is no need for regearing the ungeared beta.

Cost of Equity

On this basis we have assessed the cost of equity to be:

Input	Value	Adopted
	Low	High
Risk free rate of return	3.11%	3.11%
Equity market risk premium	8.00%	8.00%
Beta	2.25	2.75
Cost of Equity	21.11%	25.11%

Weighted Average Cost of Capital

The WACC represents the market return required on the total assets of the undertaking by debt and equity providers. WACC is used to assess the appropriate commercial rate of return on the capital invested in the business, acknowledging that normally funds invested consist of a mixture of debt and equity funds. Accordingly, the discount rate should reflect the proportionate levels of debt and equity relative to the level of security and risk attributable to the investment.

In calculating WACC there are a number of different formulae which are based on the definition of cash flows (i.e., pre-tax or post-tax), the treatment of the tax benefit arising through the deductibility of interest expenses (included in either the cash flow or discount rate), and the manner and extent to which they adjust for the effects of dividend imputation. The commonly used WACC formula is the post-tax WACC, without adjustment for dividend imputation, which is detailed in the below table.

CAPM
WACC	=E Ke+D	Kd(1– t)
	E+D D+E
Where:
Ke	= expected return	or discount rate on equity
Kd	= interest rate on	debt (pre-tax)
T	= corporate tax rate
E	= market value of	equity
D	= market value of	debt
(1- t)	= tax adjustment

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Gearing

Before WACC can be determined, the proportion of funding provided by debt and equity (i.e., gearing ratio) must be determined. The gearing ratio adopted should represent the level of debt that the asset can reasonably sustain (i.e., the higher the expected volatility of cash flows, the lower the debt levels which can be supported). The optimum level of gearing will differentiate between assets and will include:

the variability in earnings streams;
working capital requirements;
the level of investment in tangible assets; and
the nature and risk profile of the tangible assets.

As described earlier, DMCR’s capital structure consists entirely of equity. As such, there is no element of debt that needs to be reflected in the WACC. The appropriate discount rate for DMCR therefore consists entirely of the cost of equity.

Calculation of WACC

Based on the above inputs we have calculated the WACC to be 25%.

Input	Value Adopted
	Low High
Cost of equity	21.11% 25.11%
WACC (rounded)	21.0% 25.0%
Company Name	Description
Facilitate Digital Holdings	Facilitate Digital Holdings Limited provides digital marketing technology and
Limited	services to the digital media sector. It is engaged in publishing, tracking, reporting,
	and optimizing various forms of digital marketing, such as online display advertising, search marketing, affiliate and performance advertising, rich media, and video
	advertising; providing data and analytical products that enable the marketer to
	correlate results across various types of digital and online advertising activity; and
	offering media agencies with workflow and trading automation technology and
	related services. The company serves media agencies and advertisers worldwide.
	Facilitate Digital Holdings Limited has a strategic alliance with MASS Exchange to
	design, build, and operate a user interface to the exchange. The company was
	founded in 2001 and is headquartered in Surry Hills, Australia.
Praemium Limited	Praemium Limited, together with its subsidiaries, provides investment
	administration and portfolio management services to financial institutions in Australia and the United Kingdom. The company offers V-Wrap, a virtual investment
	wrap platform and online portfolio administration service that provides multi-asset
	administration, corporate action processing, and tax and investment reporting
	solutions; V-Wrap Adviser, which offers live market data services, real time client
	reporting services, and portfolio review tools for financial advisers and brokers; V-
	Wrap Investor that provides portfolio reporting and investment information; and V-
	Wrap Mobile, which enables a V-Wrap user to access portfolio information and
	market data services through hand-held mobile phone. It also offers Separately
	Managed Accounts technology, which enables online access for model providers,
	advisers, and clients; online account set up and maintenance; daily rebalancing of
	models; netting of buy/sell transactions across models; transfer of assets;
	customizations, including stock substitutions and holding locks; capital gain scenario
	modelling and optimization; various options for fee payments; badging; and others.
	Praemium Limited offers its solutions for accountants, financial planners,
	stockbrokers, and self managed super fund administrators. The company was
	founded in 2001 and is headquartered in Melbourne, Australia.

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iProperty Group Limited	iProperty Group Limited develops and operates Internet-based real estate property portals under the iProperty.com umbrella brands. The company owns and operates online property portals for consumer and business needs in the markets of Malaysia, Hong Kong, Macau, Indonesia, Singapore, India, and the Philippines. In addition, it is involved in a regional property exhibition business; and monthly property magazines in Malaysia and Indonesia. The company was formerly known as IPGA Limited. iProperty Group Limited was founded in 2003 and is headquartered in Kuala Lumpur, Malaysia.

carsales.com Limited	carsales.com Limited engages in online automotive, motorcycle, and marine classifieds business primarily in Australia. It operates in two segments, Online Advertising Services, and Data and Research Services. The Online Advertising Services segment provides online advertising services, including classified advertising services to private sellers and dealer customers; and display advertising services that enable to place advertisements on a carsales.com Ltd's Website for corporate customers, such as automotive manufacturers/importers, finance and insurance companies, etc. The Data and Research Services segment offers software, analysis, research and reporting, valuation, and Website development and hosting services, as well as photography services to manufacturers/importers, dealers, industry bodies, and finance and insurance companies. The company also offers information relating to the used and new cars for sale; advertisements relating to special offers on new cars, used cars, and other services; private advertising services for cars; car valuation services; information on motoring news, new model releases, future models, car reviews, road tests, and motoring events; and car finance and insurance services. It operates various automotive Websites comprising carsales.com.au, CarPoint.com.au, bikesales.com.au, and RedBook.com.au, as well as boat, caravan, and truck and machinery classified Websites. carsales.com Limited is based in Richmond, Australia.

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ANNEXURE C

Notice of nomination – Adrian Bunter

12 December 2013

The Board of Directors Qanda Technology Ltd 79 Broadway Nedlands WA 6009

Dear Sirs,

Notice of nomination

In accordance with clause 13.3 of the constitution of Qanda Technology Ltd (ACN 066 153 982) ( Company ), I, Adrian Bunter, signify my intention to become a director of the Company and consent to my nomination at the upcoming meeting of shareholders to be held on or around 10 January 2014.

Yours faithfully

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Adrian Bunter

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P R O X Y F O R M

MR SAM SAMPLE UNIT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE WA 6060

1. Appointment of Proxy

I/We being a member/s of Qanda Technology Ltd hereby appoint

the Chairman of PLEASE NOTE : Leave this box blank if you have OR selected the Chairman of the Meeting. Do not the Meeting insert your own name(s).

or, failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, or the Chairman’s nominee, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, and subject to relevant laws, as the proxy sees fit) at the Extraordinary General Meeting of Qanda Technology Ltd to be held at Level 5, 181 Miller Street, North Sydney, NSW 2060 at 11.00 am (EDST) on Friday, 10 January 2014 and at any adjournment of that meeting.

The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business in which the Chairman is entitled to vote.

2. Items of Business

Please mark to indicate your voting directions.

		FOR	AGAINST	ABSTAIN
1.	Approval of Acquisition of interest in DMCR from the DMCR Vendors			
2.	Election of Mr Adrian Bunter as a Director			
3.	Ratification of the issue of 115,000,000 Shares			
4.	Approval of Issue of up to 225,000,000 Shares			
5.	Approval of Issue of up to 250,000,000 Shares			

PLEASE NOTE : If you mark the Abstain box for an item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority.

3. Signature of Securityholder(s)

This section must be signed in accordance with the instructions overleaf to enable your directions to be implemented.

Individual or Securityholder 1 Securityholder 2 Securityholder 3 Individual/ Sole Director and Director Director/ Company Secretary Sole Company Secretary

Contact Name

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----- Start of picture text -----

Date
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Contact Daytime Telephone

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H O W T O C O M P L E T E T H E P R O X Y F O R M

1. Appointment of Proxy

Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item.

Voting a portion of your holding: Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.

Appointing a second proxy: You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. The appointment of a second proxy must be done on a separate copy of the Proxy Form. If a member appoints two proxies and the appointments do not specify the proportion or number of the member’s votes each proxy is appointed to exercise, each proxy may exercise one‐half of the votes. Any fractions of votes resulting from the application of these principles will be disregarded. .

A duly appointed proxy need not be a securityholder of the company.

2. Items of Business

You may direct your proxy how to vote by placing a mark in one of the three boxes opposite each item of business. All your securities will be voted in accordance with your directions. If you do not mark any of the boxes on a given item, your proxy may vote as he or she chooses. If you mark more than one box on an item your vote on that item will be invalid.

3. Signing Instructions

You must sign this form as follows in the spaces provided:

Individual: Where the holding is in one name, the securityholder must sign.

Joint Holding: Where the holding is in more than one name, all of the securityholders must sign.

Power of Attorney: If you have not previously lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: Where the company has a sole director who is also the sole company secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001 ) does not have a company secretary, a sole director can also sign alone. Otherwise this form must be signed by a director jointly with either another director or a company secretary. Please sign in the appropriate place to indicate the office held. Delete titles as applicable.

Lodgement of a Proxy

This Proxy Form (and any Power of Attorney under which it is signed) must be received at the address given below no later than 48 hours before the commencement of the meeting. Any Proxy Form received after that time will not be valid for the scheduled meeting.

Documents may be lodged by posting, delivery or facsimile to Qanda Technology Ltd:‐

PO Box 3438 Nedlands, WA 6909 Fax: (61 8) 6389 2588

Attending the Meeting

Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate "Certificate of Appointment of Corporate Representative" prior to admission. A form of the certificate may be obtained from the Company Secretary.

AI assistant

CL8 HOLDINGS LIMITED — Proxy Solicitation & Information Statement 2013

64658_rns_2013-12-11_fec8c3ed-b268-45c3-90e3-fce8fa381a2a.pdf

QANDA TECHNOLOGY LTD

N O T I C E O F E X T R A O R D I N A R Y G E N E R A L M E E T I N G E X P L A N AT O R Y M E M O R A N D U M

P R O X Y F O R M

Date of Meeting

Place of Meeting

NOTICE OF EXTRAORDINARY GENERAL MEETING

BUSINESS

Resolution 2 – Election of Mr Adrian Bunter as a Director

Resolution 3 – Ratification of the issue of 115,000,000 Shares

Resolution 4 ‐ Approval of Issue of up to 225,000,000 Shares

Resolution 5 – Approval of Issue of up to 250,000,000 Shares

EXPLANATORY MEMORANDUM

PROXIES

Proxy vote if appointment specifies way to vote

Transfer of non‐chair proxy to chair in certain circumstances

VOTING ENTITLEMENTS

CORPORATE REPRESENTATIVE

EXPLANATORY MEMORANDUM

1.1 Background

1.2 Summary of the key terms of the Implementation Agreement

Offers :

Conditions Precedent :

Consideration :

Settlement :

Voluntary Escrow :

1.3 Overview of the DMCR business

1.4 Impact of the Acquisition on the Company

1.5 Impact on capital structure

1.6 Impact on level of control by DMCR Vendors

1.7 Pro Forma Statement of Financial Position

1.8 Risk Factors

Investment Risks associated with the Acquisition

2. Resolution 1 – Approval of Acquisition of interest in DMCR from the DMCR Vendors

2.1 Section 611 of the Corporations Act

6.1.1 Item 7 of Section 611 of the Corporations Act

2.2 Prescribed information

(vii) Timing of the Acquisition:

(viii) Reasons for the Acquisition:

(ix) Interest of the Directors in the Acquisition:

(x) Impact on the Company if Shareholders do not approve the issue of Shares:

2.3 The DMCR Vendors’ intentions

(a) Business of Company

(b) Injection of capital

(c) Present employees

(d) Transfer of property

(e) Redeploy fixed assets

(f) Financial and dividend policies

(g) Directors

2.4 Directors’ recommendations

2.5 Independent Expert’s Report

2.6 Listing Rule 11.1.2 of ASX Listing Rules

2.7 Voting Intention

3. Resolution 2 – Election of Mr Adrian Bunter as a Director

3.1 Board Recommendation

3.2 Voting Intention

4. Resolution 3 – Ratification of the issue of 115,000,000 Shares

3.1 Board Recommendation

3.2 Voting Intention

5. Resolution 4 – Approval of Issue of up to 225,000,000 Shares

5.1 Board Recommendation

5.2 Voting Intention

6. Resolution 5 – Approval of Issue of up to 250,000,000 Shares

6.1 Board Recommendation

6.2 Voting Intention

7. Enquiries

DEFINITIONS

$ means an Australian dollar.

ANNEXURE A

DMCR and the DMCR Vendors

ANNEXURE B

Financial Services Guide

Financial Services Guide

Information about us

Financial services we are licensed to provide

General Financial Product Advice

Fees, commissions and other benefits that we may receive

Remuneration or other benefits received by our employees

CL8 HOLDINGS LIMITED Proxy Solicitation & Information Statement 2013