DATADOT TECHNOLOGY LIMITED — Interim / Quarterly Report 2011

Oct 16, 2011

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DataDot Technology Limited ABN 54 091 908 726

Securities Exchange Announcement

October 2011

Quarterly Update

DataDot Technology Limited (ASX: DDT) provides this update of business developments and initiatives undertaken during the first quarter of the 2011/12 financial year (FY11/12).

Business conditions have improved during the quarter for DataDot Technology Limited (DataDot) and sales from existing customers have now returned to the levels recorded before the Japanese tsunami. The volume and quality of new business development activities that have been building during the quarter are in line with management’s expectations. The business development highlights by product and region are outlined below:

1. DataDotDNA[® ]

a. Asia Pacific

Orders from Original Equipment Manufacturer (OEM) customers in Australia and Taiwan have returned to pre-Japanese tsunami levels.

• An enhanced value proposition for all Australian motor vehicle OEMs has been developed. First presentations have already taken place and the initial response has been positive.

• Following the continuing success of the program marking Paslode nail-guns with DataDotDNA[®] , DataDot has partnered with Assa-Abloy and Crime Stoppers to overtly and covertly mark certain items prone to shoplifting, in a program being piloted at a major hardware retailer. In addition, DataDot has launched a new program combining DataDotDNA [®] bicycle theft prevention kits with a new Assa-Abloy Lockwood branded bicycle-lock. This initiative commences in Q2 FY11/12.

• Club Marine Insurance in association with DataDot has completed the Australia-wide rollout of DataDotDNA [®] and Club Marine insurance products offered via Club Marie’s expanded platform of outlets. This program will be expanding into New Zealand in Q2 FY11/12.

• In Q2 FY11/12, DataDot will open a sales and technical support unit in India. This follows the engagement of a former director of Tata & Sons who has introduced DataDot to a

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number of potential clients in the Indian automotive, power and pharmaceutical industries as well as companies requiring high value brand protection. The office will also service AgTechnix and respond to requests for technical assistance in commencing pilot trials, especially for DataTraceDNA [® ] customers.

Distributor Initiatives:

• i. Asset Protection Products International (APPI) DataDot and APPI have developed and launched DataDot Theft Protection Insurance. This is a combined insurance and DataDotDNA [® ] product developed for the Australian and New Zealand auto-aftermarket (retail market) based on the successful warranty product offered in the USA through DataDot Dealer Services and in Canada through Leader Automotive Resources.

The product combines a DataDotDNA [® ] auto kit and an insurance policy, providing customers with a fully-underwritten “inconvenience payment” of $5,000 in the unlikely event that their car is stolen and unrecovered. This combined insurance-DataDotDNA [® ] product will initially be marketed by our distributors to automotive dealers and dealer groups throughout Australia and New Zealand.

DataDot has an agreement with Virginia Surety to underwrite the Theft Protection Insurance product and for the product to be administered by The Warranty Group.

• ii. DataDot Taiwan

In Taiwan, new customers and higher volumes from existing customers have increased the production run-rate to levels almost 50% higher than the same period for the prior year.

• iii. DataDot Thailand DataDot Thailand launched in Bangkok at a media function on 1[st] October. The launch was attended by the Australian Ambassador, His Excellency Mr James Wise and over a hundred journalists, police, insurance companies, and vehicle industry representatives. It was a great media success, generating over 30 newspaper articles and television and radio news items.

• iv. DataDot Micronesia

DataDot Micronesia launched in Guam and Saipan in August. Guam is home to one of the largest US military bases outside mainland USA, with a considerable number of high value assets susceptible to theft. The Chief of Police, insurers, security companies, banks, utilities and auto dealerships have provided support to this initiative.

b. Americas

DataDot has been successful in selling its next generation DataDots (Project Thor) into a large Electrical Utility company in the southern states of America. These 1mm stainless steel DataDots are being used to protect existing electrical transmission infrastructure from theft – the new stainless steel dots being highly resistant to extreme environmental conditions.

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Distributor Initiatives:

• i. DataDot Dealer Services (DDDS) – distributor DDDS report that sales are running ahead of Q1 FY2010/11 at an increasing rate. DDDS has brought on two new Auto Dealer Groups in the past few months and has also obtained a new major auto customer that owns over 80 dealerships throughout the US, of which some sell more than 500 cars per month. DDDS reports that sales would be higher still were it not for the continuing shortage of new car stock on dealers’ car lots due to the effect of the Japanese tsunami.

• ii. DataDot Mexico - distributor

• DataDot Mexico expects further growth in the supply contract signed earlier this year with GNP Insurance Company, one of the largest insurers in Mexico. As part of its new auto policy, GNP is applying DataDots free of charge to its insured vehicles. Initially rolled out in Mexico City and Guadalajara this new program will be extended to Monterrey and Puebla.

• iii. South America - distributors DataDot Chile continues to supply its OEM customer with VIN coded DataDotDNA [® ] and is working with the Chilean government on theft reduction programs. Recently, our distributor received an award in recognition of the spirit of collaboration in safety matters.

DataDot’s distributor in Brazil is migrating its existing impact stencil car marking over to DataDotDNA [®.] In a full year this is likely to amount to several hundred thousand DataDotDNA [®] kits.

In Argentina, DataDot’s distributor CarDot took delivery of a first $50,000 order of DataDotDNA [® ] kits in July and is commencing a program to mark cars with a major insurer. CarDot is also working with government on crime and theft reduction strategies involving DataDot products.

c.

Europe

DataDot Technology (UK) Limited (DDUK) - subsidiary

Following a slower start than expected, DDUK sales have returned to close to budgeted levels in September with good forward orders indicated.

• DDUK’s newest customer, Carole Nash, the UK’s foremost insurance broker, in conjunction with Lumley Jacobs, has arranged for each of its motorcycle policy holders to receive a free motorcycle DataDotDNA [®] kit. Carole Lumley insures approximately 250,000 motorcycles.

• DDUK and its strategic partner Retainagroup are at an advanced stage with a major vehicle manufacturer in negotiating the sale of an anti-counterfeit genuine spare parts marking product jointly developed by both organisations. The product is a uniquely numbered label that creates a permanent UV etch and DataTraceDNA [®] mark onto the

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labelled spare part. The label has passed 12 months accelerated wear and ageing trials and is now awaiting commencement of a pilot trial.

• Eland Cables (www.eland.co.uk)

In August, DDUK entered into a sales agreement with Eland Cables Limited for the sale of DataDot technologies into the electrical cable market. Using a proprietary technique, DataDotDNA [®] and DataTraceDNA [®] will be applied to electrical cables and cable accessories. This will create a strong theft deterrent by enabling both the manufacturer and the owner of the electrical cable to be identified should stolen cable be re-sold.

Eland Cables is a progressive, market leading, UK based company providing exceptional service in the supply of electrical cables and cable accessories. Eland anticipates sales of over £50m in 2011 in its regular cable and accessory sales.

Managing Director of Eland Cables, Mr Philip Brown said “we are excited about developing this break-through, value-added product for the protection against theft of electrical cables and with working with DataDot. We believe this will result in increased sales of both companies’ products through this alliance.” The product will first be utilised in the UK utilities market later this year.

The product developed with Eland is complementary to DataTrace’s AuthentiCable product, as it allows the application of DataDot technologies to new parts of the cable construction. Eland will have access to both products in the cable market.

Distributor Initiatives:

• i. DataDot Italia - distributor

Sales to Fiat Sava in Italy were seasonally slow for most of Q1 FY11/12 due to both the holiday season and a softening in consumer confidence brought on by the European currency crisis. In September sales returned to normal levels.

DataDot Italia is pursuing a number of initiatives with other auto OEMs and fleet customers. As a distributor for DataTraceDNA [®] , DataDot Italia is working on a range of exciting DataTraceDNA [® ] opportunities with a number of clients and expects the first orders associated with the commencement of an industrial scale pilot program to be received in Q3 FY11/12.

• ii. DNA Program Polska (Poland) - distributor

Our distributor in Poland is in final discussions with another vehicle manufacturer, which would expand the number of auto OEM customers in Poland to five, and two major insurance initiatives incorporating DataDotDNA [®] are progressing satisfactorily.

d. South Africa

DataDot’s licensee, DataDot Technology South Africa (DDSA), has secured additional auto OEM customers for Whole of Vehicle Marking utilising DataDotDNA [®] .

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DataDot expects that royalties arising from these sales will be significantly greater in FY11/12. Production capacity has been increased to cope with the increased volume of orders, including the opening of a new dedicated factory to service one major OEM in South Africa and to provide additional backup capacity to existing OEM clients and new customers.

The motor vehicle market in South Africa exceeds 600,000 vehicles per annum, of which DDSA has gained a substantial proportion as vehicle manufacturers and distributors prepare for mandatory whole of vehicle marking. Currently 18 auto OEM brands have chosen DataDotDNA [®] for their vehicle marking solution.

2. AgTechnix Pty Limited

AgTechnix Pty Limited (AgTechnix), the company formed in conjunction with Ipeco Pty Ltd, has achieved initial sales of IntelliSeed[TM] and a diverse range of advanced polymer seed coating and enhancement products into markets including Australia, India and China.

In India, AgTechnix has received commitments for sales from both existing and new clients. Orders will commence in Q2/Q3 FY11/12 in line with the seed coating season. Pilot trials continue with several of the top ten Indian seed companies.

AgTechnix is also working on projects in:

• SE Asia – Taiwan, China, Thailand, Philippines, Malaysia and Indonesia with trials intended to support potential sales in a number of these countries in FY2013.

• Europe – various opportunities exist and headway made with major EU based agribusiness companies. In parallel we continue discussions with prospective distributors who have additional market avenues in their respective non-exclusive regions.

3. DataTrace DNA Pty Limited

In Q1 FY11/12, DataTrace DNA Pty Limited (DataTrace) received increased expressions of interest in our brand and IP protection technology. DataTrace has already achieved nearly 50% of the prior year’s revenue in Q1 FY11/12. It is expected that last year’s total revenues will be exceeded by late Q2 or early Q3 FY11/12. This increase in revenues has been due to the global roll out of anti-counterfeiting and authentication initiatives by major global customers. Further growth is expected as projects progress through pilot programs and commercialisation phases.

A selected list of activities during the last quarter can be found below. Please note, because DataTrace is a high security solution provider it cannot disclose names of its customers and co-operation partners.

1. A major brand of the pharmaceutical industry rolled out DataTraceDNA [®] technology for protection for its drugs against anti-counterfeiting.

2. DataTraceDNA [®] technology has been selected by a large government-owned utility in Asia for the protection and authentication of its electric meter seals.

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1. By end of this calendar year, one of the global technology leaders in the bearing industry will incorporate DataTraceDNA [®] into its products as part of its brand protection and anticounterfeiting initiatives.

2. Next quarter a European leading supplier of construction materials will start a pilot production trial using DataTraceDNA [®] material.

3. DataDot’s Asian subsidiary has signed a DataTrace distribution agreement for an anticounterfeiting solution for the tobacco packaging industry in China.

4. A major manufacturer in the industrial assets industry in South America will introduce DataTraceDNA [®] coatings as a security and warranty feature.

5. TraceCoat[TM] , the metal, glass and plastic coating product announced in January 2011, combining DataTraceDNA [®] and Surface Technology Inc.’s technologies, is under evaluation for proof of concept.

6. Manufacturing capacity for AuthentiCable[TM] , the anti-theft product for copper and aluminium cable, is being enhanced to enable production-scale trials to commence with cable manufacturing companies in South Africa and North America.

7. DataTrace is currently in the development phase to enlarge and diversify its taggants and detection device technology.

8. Laser Induced Breakdown Spectroscopy (LIBS) authentication technology continues to be enhanced in funded R&D projects with large corporate clients. These exciting opportunities are in mining services, for the identification of ore versus waste and in building materials for life-cycle management, quality control and identification.

New Global Sales Director

Ritchie Bloomfield

DataDot Technology Limited has appointed a Global Sales Director, Mr Ritchie Bloomfield. Ritchie has over 15 years experience in senior operations, sales, marketing and business development roles. He was previously Vice-President, Sales and Marketing for Cap-XX, a world-leading provider of high power, high energy supercapacitors.

For more information:

DataDot Technology Limited

Ben Bootle Managing Director DataDot Technology Limited E: bbootle@datadotdna.com P: +61 2 8977 4900

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Novel applications for DataDots (As reported by Australian National University and in Canberra Times)

Microdots spot on for wasp study Thursday 13 October 2011

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New research by scientists at The Australian National University will see wasps being tracked in the same way as stolen cars – using specialist microdot technology.

The Research School of Biology researchers published a paper in the latest edition of Agricultural and Forest Entomology outlining a successful new tracking technique, which allows them to study insects that were previously too small to track individually.

Lead researcher Michael Whitehead was working with the parasitoid thynnine wasp to investigate its role in orchid pollination, but found available tracking methods impractical.

“Bee tags were previously used to keep track of small animals, but they were too big in this case, and the electronic devices we could find weren’t going to work,” he said. “So my brother and I came up with the idea to test out microdots as a tracking system.”

Microdots were developed by the Australian company DataDot Technology, as a way of tracking stolen property. The plastic microdots are half a millimetre in diameter and contain a personalised code which can be read under a magnifier.

To test the method, the research team captured wasps around Black Mountain in Canberra and attached coded microdots to their backs with liquid paper or nail polish before releasing them. After being recaptured, 84 per cent of tagged wasps retained a legible microdot, proving the method to be effective and durable.

“When you’re able to individually mark the wasps you can get data on population size, movement and longevity,” Mr Whitehead said.

“The method also opens the door to a whole range of applications beyond research, ranging from tracing oysters stolen from oyster farms to tracking elephant tusks and rhinoceros horns to combat poaching.”