DATADOT TECHNOLOGY LIMITED — AGM Information 2008

Nov 25, 2008

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DATADOT TECHNOLOGY LIMITED

ANNUAL GENERAL MEETING

26 NOVEMBER 2008

ADDRESS BY

IAN ALLEN

CHIEF EXECUTIVE OFFICER

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Ladies and Gentlemen,

For a long time I have looked forward to the day when I can stand before our shareholders and report the company’s inaugural profit. Well today is the day and as you might expect I am immensely proud of the achievement and of the people in our team who made it happen.

The challenge now is to build on that inaugural profit and to do so in market conditions that have changed both rapidly and dramatically. What began as an erosion of confidence in the US regional financial market just 12 months ago has developed at lightning speed into a sharp decline across global investment, production, commodity, currency and employment markets.

There is not a business anywhere that will be immune from the effects of these changes or a business that won’t need to re-assess its risks and adjust its strategic settings to accommodate this new phase of the economic cycle.

As shareholders of DataDot Technology you want to know what adjustments we are making in our operations.

Well the first thing I want to say is that now is not the time for pessimism or despair. On the contrary, change brings opportunity and some of the opportunities play to our strengths.

One of these is that the incidence of theft and fraud invariably rises in times of economic hardship, which means that finance companies, lessors, rental companies and insurers are under greater pressure in hard times to protect the assets in which they have an interest. Several large insurance companies are talking to us because they want to provide more effective asset protection across their domestic, motor, marine and commercial markets. They know there will be a surge in property crime as the economy declines, and they recognize that we can meet their need with asset marking technologies of proven benefit.

It’s common sense really, recognizing that all the transaction paperwork establishing insurers’ and lessors’ ownership rights is of little use if their stolen assets are unmarked and so cannot be identified .

So you see what I mean by opportunity arising from the changing economic climate. With insurers we are jointly discussing the very exciting opportunity of establishing strategic alliances through which our product will be marketed to policy holders via their established distribution networks.

No deal has yet been concluded but we are well advanced in discussions. One insurer is considering a co-branded whole-of-vehicle marking product to be offered to motor insurance policy holders. Another is working through the distribution options of selling, or giving away or building into its premium income a DataDot home kit and has offered to introduce DataDot as an asset marking partner to its European head office.

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Similarly, in the automotive industry we are seeing a renewed interest from manufacturers in parts marking, as they re-assess their exposure to fraudulent warranty claims and to overruns by their own suppliers that erode their margins. We have commenced and expect to be in discussions with some very large parts manufacturers in the near future regarding these two points.

Likewise, the recent rapid decline of the Aussie dollar will work for us as an opportunity in 2009 by lifting the value of revenues generated in the US and European markets, which is the opposite of what happened last year when the rise in the Aussie dollar diminished the value of our foreign earnings.

Important too in this volatile market is our ability to respond quickly to changing circumstances, especially on the cost side of the business. Allan has already described the deep cuts that have been made in our employment and overhead costs, and to that I would add to our strengths our capacity to vary production volumes quickly with a minimum of residual cost.

Of course hard times present new risks and expose weaknesses in any business. For us our reliance on the motor vehicle industry as the major channel for sales of dots and our major source of revenue, at a time when vehicle sales are in steep decline, presents a significant strategic risk.

But the answer to this is not to take fright and abandon this market segment in which we have become the acknowledged leaders in our field. We are currently marking 10 per cent of the Australian fleet, but there is still 90 per cent of the market for us to chase!

The answer lies in broadening our revenue base by extending the application of dots into other channels and by generating increased sales of DataTrace and other product, such as DataDot Metallic – and doing both without yielding any of the ground we have already established in the vehicle market. Indeed, we see significant opportunities for increasing our vehicle market share in markets where we can tap into established distribution networks.

It Italy, for example, we are working with one of the largest insurers in a strategic alliance that includes DataDot whole-of-vehicle-marking as a component of the insurer’s bid to win insurance contracts for several vehicle brands. It is as yet too early to announce results, but we are confident that in early 2009 this new approach to partnership marketing will yield very good results.

And while vehicle markets are depressed everywhere, they are not uniformly depressed. Asian vehicle sales are holding up better than those in the US, Europe and Australia, and our market intelligence suggests that this same trend will continue throughout 2009. Taiwan is a key market for us, aided by the fact that whole-of-vehicle-marking in that country is mandatory. Ten Taiwanese vehicle manufacturers have already adopted

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DataDot and the falling insurance claims represented by their brands is becoming widely known among the others. We intend to vigorously pursue them in the months ahead.

South America is still high on the agenda. This year we had 3 days of discussions with one of the largest motor insurers in Argentina who wants to make DataDot application mandatory on all their insured vehicles. Discussions will be elevated in the new year.

Of course mention of mandatory whole-of-vehicle-marking can’t pass without mentioning New Zealand, where the administrative and legal delays have all but exhausted our patience. But while the delay is frustrating we are no less confident of the outcome now than we were at the last general meeting. It’s true that a new Government has recently been elected in New Zealand but they gave bipartisan support to mandatory whole of marking while they were in Opposition and have not indicated any change in their position since the election. In fact they have promised a tougher approach to law and order generally. And on the legal front we have seen and we are not concerned by the evidence that will be called in support of the application to have whole-of-vehiclemarking set aside by the High Court. What does concern us, and no doubt you too, is the seemingly endless delay in bringing the proceedings on so that we can get on with our business. At this stage the hearing date has been set down for February 9.

But as I said earlier, the right strategy for these times also requires a broadening of our dot revenue base across non-auto channels, a broadening of our revenue base beyond dots, and strict control of our cost base.

One sector that fits this specification is plant and machinery, where theft rates and insurance losses are alarmingly high. In recent months we have developed a successful sales strategy by promoting the value of proper identification of all plant and heavy machinery, like construction and earth moving equipment, and by building close working relations with the two industry associations and insurance companies. And because there is no official government database for this equipment, we are able to sell a total solution – both asset identification on the plant and equipment and our own DataDot international database, which over time will become the central register used by all police and insurers in this market segment. In Australia 7 machinery manufacturers and importers are rolling out our program. We anticipate 100 per cent coverage of the Australian market within two years and plan to roll-out the same model in other countries where plant and machinery theft is endemic.

Large retail organizations in Australia and in Canada have contacted us in a bid to identify stock that is “walking” out the door through theft. One retailer in Australia is losing many millions annually. Our new product DataDot Metallic is being considered as a possible solution. A large Canadian/USA retailer is testing this product and it is also being tested in some stores in Australia. There is a good chance that it will be our first retail success.

This metallic product, combined with DataTrace, is also being used in Australia by electricity suppliers and other utilities to mark copper. Police have already had success in

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identifying stolen copper with our technology. In this particular program, we are working very closely with Crime Stoppers Australia and also Crime Stoppers International, with our product being rolled out with their endorsement in both Australia and Canada.

Other countries testing the metallic and trace product are New Zealand, the UK and USA.

In the US we soon expect to conclude a distribution agreement under which a national marketing firm will target large, established customer databases to market dots in nonauto applications. Again, it is premature to go into detail, but it is yet another example that tells us that our distribution model will be considerably improved by creating strategic alliances that tap into existing customer bases owned by trusted brand-name companies.

The USA still represents a significant challenge to the company, and while the US economy is weak fraud and theft are on the increase both commercially and domestically. We believe the new arrangements in the USA will reverse our lack of true success to date and establish us as a well recognized brand in the future.

We have come a significant way forward with the laser X project. This new manufacturing process will enable us to offer different substrates for different applications, and will open new markets for us. Also and at the same time, a new manufacturing process for the converting of the DataDot is being developed. Both these applications will provide savings in our manufacturing process.

My efforts over the next 12 months will be to work with our USA and UK subsidiaries to provide assistance with the sales and marketing side of the business.

May I now turn to DataTrace, which presents the greatest opportunity for revenue diversification among our suite of products?

Our vision for DataTrace has always been to develop a complementary identification technology that would generate additional revenue streams for the company. By complementary I mean a forensic or covert technology, as distinct from the overt, granular dot technology, and one that would provide an identification solution for the bulk material industries where there is a huge commercial need but the use of dots is unsuitable.

It is true that we vastly under-estimated the time to market and the degree of difficulty in bringing that vision to market. But equally, the vision is just as relevant today because the need for such a market solution is just as great.

And we now know a great deal more about what it will take to realize the vision.

When we first started working with the CSIRO we didn’t appreciate the complexity of the DataTrace technology or the many challenges that would confront us in finding ways

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to successfully implement DataTrace in industries such as concrete, paints and explosives. Nor did we appreciate the time and resources we would have to apply to solve those challenges.

But I’m pleased to say that the technical and commercial challenges have been largely overcome.

We have reduced our cost of raw materials for DataTrace production by a factor of 10.

We have increased the sensitivity of our digital reader, that detects and interprets the embedded signal in Trace, by a factor of 10.

We have invented three new high security tracers that will ensure we have the highest possible forensic security.

And we have perfected the incorporation of DataTraceDNA into polymers, paints and inks in a way that ensures our product is commercially attractive.

These have been very significant breakthroughs because we found that without lower raw materials costs and without perfecting greater reader sensitivity, our product was commercially unattractive. In our first year of operation, for example, DataTrace was working with several large companies in the global concrete industry. They were all excited by the potential of our technology but said the costs were too high - in some cases almost 100 times too high. Discussions are now back on track because of our succeses in cost control and product functionality.

Today I remain convinced that DataTrace will be a long term strategic technology that will deliver revenue and profits to DataDot Technology. We have developed a model under which we can licence companies to customise DataTrace for use in specific industries. An example is the Agreement we recently announced with AgResearch in New Zealand for the global textile industry. We have other similar programs in the pipeline in industries as diverse as cable manufacturing, security labels, brand protection, timber, tax stamps and security printing. And we are actively working on securing key partners in concrete, explosives and paints.

Our future plans for DataTrace focus on finding partners in niche product markets who have the capability to take the product and exploit it in their specific industries. In this way we will reduce the need to build a large team of sales and technical staff, while gaining faster access to end customers. We no longer have extensive R&D to complete and any R&D that will be done will be funded by clients. An example of this is a very significant project to be funded by Orica Mining Services, the largest manufacturer of mining explosives, that will commence in January 2009.

I am sure you will appreciate that I am unable to expand on the detail of our DataTrace projects because, as security work it must remain confidential to be of value to our customers and partners.

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During the first half of 2009 our DataTrace activities will be focused in three markets:

The first is bulk materials, where concrete, paints and explosives remain key objectives and where we are already engaged with large companies. In every case the sales process is long and the technical testing processes are exhaustive. In the case of paints the manufacturers’ testing cycles are typically at least 12 months because manufacturers will not include an additive in the products without very detailed testing and analysis.

The second is high security applications in ink, paper and labels. I'm pleased to say that We are well advanced in identifying a suitable global partner with the skills and capital to make the most of our technology.

The third is to develop DataTrace as a leading technology in the detection of illegal manufacturing, in the measuring of quality in bulk materials and as a forensic proof of identity. DataTrace is ideally positioned to gain a share of this market.

The message going forward is that times are tough, we are not alone in this cycle, we know the challenges and I can assure you we have a team of dedicated people willing to roll up their sleeves and put in the long hours on behalf of all shareholders.

I ask that we all combine together and help each other in the coming 12 months. Your support is needed, we are changing to the current economic environment and new markets are opening up for our technologies.

Finally as mentioned by the Chairman in his address I wish to advise I am standing down as CEO of the DataDot Technology and accepting the role of President, Global Sales and Marketing.

I see this as a positive move for the company going forward. Sales are the key to any company’s success and that is where the effort is needed over the next few years. We have set a great foundation for a highly successful company in the near future; we now need to build on these foundations.

From the time we, Brent McLaws, John Richards and I started the company, it has always been my dream of creating this world first, DataDot technology which would become a household name in asset identification. From a start up with zero traction, we have clawed our way around the globe with firstly our own private money and then by way of you, our very patient shareholders. The company was not started on our ability to handle operational issues, it was started on the belief and the passion that we could make this new way of identifying assets work, not only here, but on a global scale. We went out and sold this concept and it is now recognized in many countries around the world. It is extremely gratifying when you see cars go by you in many countries of the world with the DataDot warning label on the windows, quite remarkable really.

That passion for me still exists and is stronger today than ever before.

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I believe the change will be good for me personally and for the company. We have appointed an excellent COO, Mr Ben Bootle, and I will work with him to make sure we go into the future with our best foot forward.

It is a new beginning but as always, I am confident in myself and my work colleagues to be able to deliver the results needed and I do this publicly. We have many high level contacts around the world whom I will be calling on to make arrangements for the sale of our unique systems and I am sure success will come.

I am going to spend a lot of my time in the USA and Europe. We have excellent contacts in these countries that now need to be nurtured along so we can see positive results.

Time are very tough at the moment as you all understand and we are not immune to the ramifications being felt globally. It will create new markets for us and the signs are already there for me to be confident in saying this to you.

OK, I thank all those who have supported me in my role as co founder and CEO of this great little company. I am extremely proud of our achievements to date and commit to displaying the same passion for my role as I have to date in my previous roles.

Thank you.