DATADOT TECHNOLOGY LIMITED — Management Reports 2010

Dec 28, 2010

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Managing Director’s update

2010 has seen significant and positive developments in DataDot's operational performance, strategy, governance and shareholder base, all contributing to a stronger platform on which to build our future revenues.

• We are forming a joint venture company with DataDot Technology Taiwan that will be granted licences by both DataDot and DataTrace DNA to commercialise their IP in nominated markets in China.

Future Direction

The Board and management conducted a thorough review of strategy from which emerged revenue growth and diversification targets for the next five years. The fundamental strategic imperative is to grow the top line and develop diversified revenue streams at an even faster rate than growth in our traditional vehicle market.

• We have established a partnership with Crime Stoppers USA to launch the DataDot copper cable theft prevention program across US utility companies.

• Our overseas core vehicle business has grown with the addition of four OE vehicle accounts:-

• Subaru Chile

The three strategies identified to accomplish these targets are:

• Mercedes Benz South Africa

• Renault South Africa

1. Establish partnerships with other stakeholders, especially insurers, in our key auto, marine, plant and equipment markets in order to enhance the value of the DataDot proposition to manufacturers, distributors, dealers and owners.

2. Establish strategic partnerships where the intellectual property contributed by both parties can be used to provide innovative and profitable solutions to the issues of product identification and authentication in other markets.

• Suzuki South Africa

These collectively account for more than 50,000 vehicles a year.

2011 is shaping up as a very exciting year for our company and shareholders.

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3. Increase investment in strategic growth opportunities.

CONTENTS

Initiatives

• We entered into an agreement with Carsales.com Limited. Carsales.com will promote and sell DataDot marking into the vehicle, motorcycle, bicycle, boat, truck, agricultural and construction machinery and real estate markets on the carsales.com website and through its several thousand affiliated dealerships.

Managing Director's update ..............................................................1 DataDot Update...................................................................................2 DataTrace DNA Update ......................................................................4 OEM Update ........................................................................................6 AgTechnix Update ...............................................................................8 Appendix A - ASX announcements ..............................................10 Appendix B - Why DataDot Technology is ahead of the rest ....11

DATADOT YEAR IN REVIEW 2010

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GREG GOTHARD

Bursting the Paslode theft bubble

General Manager Business Development

Paslode is the leading manufacturer of the cordless pneumatic nail guns preferred by professional trades people. Nail guns are big-ticket items, retailing between $700 to $1000.

E ggothard@datadotdna.com

Waste Tracker to help keep Australia beautiful

Waste tracker is a chain-of-custody solution that identifies waste in the demolition process with DataDotDNA[®] .

Paslode introduced DataDotDNA[® ] to add value to the end customer and to assist retailers in the recovery of product that had been stolen.

Before being delivered to retail outlets, each nail gun has hundreds of DataDots applied in strategic locations by a trained DataDot applicator. Once purchased, the customer registers the DataDot PIN on the Paslode website thereby activating the DataDot in the global database.

How the program works

A demolition or waste site is registered online and allocated a unique DataDot ID. The site is sprayed with 16000+ dots, 50% applied with a visible blue adhesive and 50% with a clear, invisible adhesive.

A win for the environment and councils nationally.

The program not only promotes our product and its benefits but will assist councils in the control of illegal dumping of waste, particularly asbestos.

Waste “dumpers” will be deterred as illegal dumping will be easily tracked to its origin, with DataDotDNA[®] providing evidence that councils can use to secure convictions.

While the individual dwelling cost is negligible, nationally this will save councils millions of dollars in illegally dumped waste remediation.

This program has been running for over 12 months and has been a resounding success for Paslode with a significant increase in product registrations in addition to increased sales for the retailer.

Crime Stoppers and DataDot building a strong relationship

DataDot Technology recently re-signed for a further three years the agreement with Crime Stoppers Australia as crime prevention partners. Together, DataDot and Crime Stoppers Australia develop crime prevention programs that include our copper, bicycle and marine theft prevention programs.

Fighting a copper wire theft epidemic

Our copper theft prevention program has been running in Victoria and New South Wales for the past two-and-a-half years and has produced a 78% reduction in copper wire theft. We are now taking our highly successful program into Queensland.

It’s a win-win result.

We’ve also signed an agreement with Crime Stoppers USA to launch our copper wire theft prevention program - an Australian company leading the way in new technology to help prevent theft.

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New rural property theft prevention program

Australian Customs takes control

Rural property theft is a highly lucrative industry and farmers are losing valuable equipment, vehicles and materials from their properties at an extraordinarily high rate.

In partnership with Crime Stoppers we are currently developing our rural property theft prevention program to be launched in 2011.

Taking our technology to the world

By tagging all their weapons and equipment with assetDNA™, Australian Customs and Border Protection Service can now track and trace all their armaments, protect them from theft, and authenticate ownership across their whole asset lifecycle.

DataDot Technology website gets a

new look and feel

We are also developing programs with Crime Stoppers International through our worldwide distributor network to address theft trends in each region.

In July, DataDot launched a new website incorporating consistent branding across all distribution points and marketing materials and providing online purchasing facilities.

Relegen and DataDot Technology market "assetDNA ™ "

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DataDot Technology in association with Relegen, an asset management solutions company, are working under the combined brand "assetDNA™".

It was a natural fit - combining DataDotDNA[®] with assetDNA™. assetDNA™ uses a unique numbering system underpinned with Relegen’s state-of-the-art software program, baseLINE.

Make sure you visit us, take a look and follow us on facebook and twitter.

www.datadotdna.com www.datadotdna.com/au www.datadotdna.com/us

www.twitter.com/DataDotDNA

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The result is an end-to-end solution that will securely track, trace and monitor individual operational assets through their complete life cycle.

assetDNA™ improves the reliability, safety and performance of each individual operational asset.

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GREG TWEMLOW

General Manager DataTrace DNA

E gtwemlow@datatracedna.com

New easy to use DataTrace DNA Reader

DataTrace DNA security is now available for the FMCG market

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The same size as your TV remote, the new easy to use DataTrace DNA Reader, the C1 is available from December 2010.

DataTrace DNA has developed specially formulated Tracer materials that can be effectively incorporated into inkjet printing inks.

DataTraceDNA[®] can now be applied to the packaging of manufactured products to deliver high level, covert DataTraceDNA[®] security to a brand new market.

Where it all started

A Hong Kong customer, a manufacturer of naturopathic medicines, had a major problem with counterfeiting and unauthorised diversion by distributors.

It’s smaller, lighter and simpler to use than its predecessor. Most importantly it’s also half the price.

Using the customer's existing industrial inkjet printer, we developed our breakthrough Tracer formulation.

It delivers the simplicity that makes it easy to use and removes the need for specialised training. It can be used with confidence by unskilled staff throughout a customer's supply chain and at border control points.

The result

Using transparent ink, the printer seamlessly applies a covert mark which can only be detected with our Reader.

The user simply points the C1 Reader to where the DataTraceDNA[®] is located, presses the button, and gets immediate authentication with a flashing green light. And naturally, the red light flashes when DataTraceDNA[® ] is not present.

Due to initial success with the pilot project in Hong Kong, the opportunities in this market are looking very promising.

We are currently in discussions with distributors of industrial inkjet printers in Turkey, Taiwan, Japan, Italy and the UK.

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New uses for Laser Induced Breakdown Spectroscopy

DataTrace DNA is developing new and innovative applications for Laser Induced Breakdown Spectroscopy (LIBS) which have not been traditionally considered.

New field of expertise for DataTrace DNA

The intellectual property developed by DataTrace DNA will take us into new fields of authentication expertise.

Industries utilising natural or man-made materials can use LIBS to identify the quality, purity and integrity of their product.

We lodged a patent application in the US in March 2010 for our novel planned uses of LIBS.

The first with the new C1 Reader

The European pharmaceutical company will be the first to use our new, smaller, lighter, simpler, low cost C1 Reader.

DataTrace DNA accepted into the prestigious Australian Technology Showcase Program

DataTrace DNA technology has passed the stringent membership criteria of the Australian Technology Showcase (ATS) and is now a member of the ATS program.

ATS, a national networking program managed by state government departments, helps to promote and develop export markets for innovative technology based products.

DataTrace DNA awarded Pharmaceutical contract

The program will provide financial support, access to an export marketing network, assistance with international travel and subsidies for direct marketing.

From a highly competitive field, DataTrace DNA was awarded a prize contract with a well known European pharmaceutical company.

The benefits of membership also include product promotion through the ATS website and newsletter and the support of a dedicated business manager.

The five year contract was signed in July 2010, after a two year process.

This is a great endorsement of the quality of our innovative technology and of the genuine export potential of DataTraceDNA[®] .

DataTraceDNA[®] will be used to authenticate one of their more successful drugs.

Final testing has now been completed and the implementation rollout is underway.

Why DataTrace DNA?

We were chosen because of DataTraceDNA[®] 's high security, proven protection, durability, flexibility of application and future proofing against any sophisticated counterfeit attacks.

The DataTraceDNA[®] forensic Tracers are invisible and can only be detected and identified by the portable digital reader. They cannot be removed, tampered with or duplicated.

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DATADOT YEAR IN REVIEW 2010

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CHRIS STOTT

Head of OEM & Automation

E cstott@datadotdna.com

Taking DataDot Technology to China

In a joint venture with DataDot Technology Taiwan, set to be finalised in January 2011, DataDot Technology Australia is expanding its presence into mainland China.

Our first stop will be Shanghai, China’s most populous city and largest centre of commerce and finance.

We will be promoting and marketing DataDotDNA[®] and DataTraceDNA[®] , including the innovative and groundbreaking Whole-Of-Vehicle-Marking (WOVM) and parts marking system, anti-counterfeit protection and brand authentication.

It is a new and significant development for DataDot Technology to build a presence in the world’s fastest growing major economy.

Already many Taiwanese companies operate in China or work with Chinese companies, making Taiwan a logical gateway to China

Why Taipei?

In 2007, Taiwan was first to introduce compulsory Whole-Of-Vehicle-Marking with DataDotDNA[®] . The results have been impressive, including a police bust of stolen vehicles involving over 1000 stripped cars.

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The best auto theft prevention testimonial you’ll ever get

The conference will bring together law enforcement agencies, insurance companies and transport departments from over 34 countries around the world.

DataDot Technology Taiwan is an independent licensed distributor and has had a long standing and highly successful relationship with DataDot Technology Australia for over nine years.

IAATI and DataDot Technology Australia to co-host the Asian Auto Theft Prevention Symposium in Taipei

They will hear first hand about the success and impressive results of the Taiwan DataDotDNA[®] WOVM initiative. The symposium will provide delegates with an opportunity to network and gain insights into the law enforcement initiatives of Asian law enforcement agencies.

It will be a great opportunity to showcase the latest DataDot technologies for the detection, prevention and investigation of auto crimes.

DataDot Technology Australia in conjunction with the International Association of Auto Theft Investigation, Australasia (IAATI) will be co-branding partners for the Asian Auto Theft Prevention Symposium.

The three day auto theft prevention symposium will be held in Taipei, Taiwan in October 2011.

DATADOT YEAR IN REVIEW 2010

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BRETT NIPPERESS

Business Development Manager OEM

E bnipperess@datadotdna.com

Insurance House Group chooses DataDotDNA[®] security

Insurance House Group (IHG) clients are some of the most recognisable names in Australia.

The new DataDotDNA[®] warning stickers

Below are the new DataDotDNA[®] warning stickers developed by our in house graphic design team.

IHG is committed to innovation and change to benefit their clients and constantly exploring ways to improve products and services.

It is this commitment to innovation and quality which led them to choose DataDotDNA[®] theft prevention products.

Why fit DataDotDNA[®] to bicycles?

Bicycles have been outselling cars for the past five years with more than 1.2 million bicycles purchased in Australia annually.

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Protected by
Sticker side 1 - View from car exterior
Porsche Roadside Assist
1800 659 911
Sticker side 2 - View from car interior
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And as bicycles become more and more a premium purchase they are also becoming a target for theft.

To combat this trend IHG have purchased DataDotDNA[®] kits to be fitted to the frames of bicycles at bicycle outlets. The tangible benefits are threefold - it reduces the possibility of theft, gives the policy holder a reduced premium on their IHG bicycle cover and removes the theft excess from their policy.

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Sticker side 1 - View from car exterior
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www.fpv.com.au
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Sticker side 2 - View from car interior
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Sticker side1 - View from car exterior

DATADOT YEAR IN REVIEW 2010

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NEIL MULCAHY

Managing Director AgTechnix Pty Ltd

E nmulcahy@agtechnix.com

AgTechnix

AgTechnix Pty Limited is the company formed as a joint venture in late 2009 by DataDot Technology Ltd and IPECO Pty Ltd (seed coating & materials specialists).

AgTechnix Launches at APSA 2009

AgTechnix launched IntelliSeed™ at the Asia Pacific Seed Association (APSA) congress in Bangkok on November 8-12th 2009. IntelliSeed™ enables seed to be accurately identified with brand and batch identification numbers. This provides both detection of counterfeit seed and a means of tracking and tracing seed in supply chain management.

APSA was specifically targeted as the most likely forum to gauge industry interest in the Asia Pacific Region and the most likely requiring seed applied IP protection.

Result

We were delighted with the resounding vote of confidence that came from seed companies and genetics owners.

AgTechnix Co-Sponsors Indian Seed Congress February 2010

Following the success of our product launch at APSA and at the invitation of a number of Indian seed companies AgTechnix attended the Indian Seed Congress in Bangalore from the 11th – 13th of February and did so as a silver sponsor.

Outcome

A significant number of industry leaders met with us during and after the congress with several key companies requesting formal trials and assessment of product performance on the seed as well as in the field.

AgTechnix Exhibits at the International Seed Congress (ISF) Calgary June 2010

In June, AgTechnix exhibited at the International Seed Congress in Calgary, Canada. This forum has global significance and the biggest cross section of decision makers in the seed industry.

AgTechnix announces first IntelliSeed ™ customer 23rd June

AgTechnix launched IntelliSeed™ with GlaxoSmithKline (GSK) for use on poppy seed for the highly regulated industry based in Tasmania.

From Tasmania, GSK supplies approximately 25% of the global poppy market with opiate derived products from the cultivation of poppies. The decision by GSK to use IntelliSeed™ will enhance the value of this export product by adding supply chain security, visibility, seed authentication, “in soil” identification and seeding rate validation techniques that have been previously unavailable at this level to the global seed industry.

Mr Rohan Kile, Crop Supply Manager of GSK, said that IntelliSeed™ is a logical next step in extending the company’s already high service levels to its Tasmanian network of contracted growers. It will provide seed authentication at all levels of the supply chain from seed production to final sowing.

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DATADOT YEAR IN REVIEW 2010

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AgTechnix wins NAB – Agricultural Award for Excellence Innovation and technology

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The 2010 NAB Agribusiness Awards for Excellence were held on 28th October 2010. The awards are run by Monash University and National Australia Bank (NAB) Agribusiness and are now in their 15th year.

AgTechnix won the Agribusiness Technology & Innovation Award.

The award sponsored by the Australian Institute of Agricultural Science & Technology was for AgTechnix’s highly innovative authentication and identification system, IntelliSeed™.

AgTechnix’s first International Customer – October 2010

In October 2010 AgTechnix confirmed its first international customer for seed applied polymers, colours and finishing powder. We were delighted that this customer is the first of many anticipated from approaches during numerous congress discussions in 2010.

AgTechnix exhibits at APSA and IRC November 2010

AgTechnix rounded out twelve months of activity by again exhibiting at APSA in Taiwan and also in Vietnam at the International Rice Congress (IRC) which occurs every 4 years. The significance of attending APSA this year was the launch of the new IPECO “Seedworx” seed coating range vastly expanding the global range of AgTechnix cash generating products.

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TM

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DATADOT YEAR IN REVIEW 2010

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Appendix A:

Important Announcements to ASX (Australian Securities Exchange)

• The formation of AgTechnix Pty Limited, with joint venture partner IPECO Pty Limited, to track and trace agricultural and horticultural seeds with both overt and covert authentication technologies.

• Execution in July 2010 of a five year contract with a top three European pharmaceutical company, under which DataTraceDNA[®] will be used to authenticate the entire production of one of its most successful drugs.

• Our partnership with Relegen Pty Limited, owner of a unique asset management software system called baseLINE, to create “assetDNA”, an asset management system that has already been accepted by Customs to track and trace their firearms in Australia.

• The announcement via our European subsidiary and Italian distributor that DataDot has entered into an agreement with Robert Bosch in Italy, increasing by 1,500 the number of service centres that will be equipped to fit DataDots in our planned expansion of vehicle aftermarket sales in that country.

• Joint development through DataTrace DNA Pty Ltd with South African company Holomatrix in producing AuthentiCable, a patent pending cable protection solution combining metallic dots and DataTraceDNA[®] in a linear asset management solution which, when combined with the baseLINE software from Relegen, is a powerful asset management system for utilities globally.

• Successful commercialisation of the Verifi TT technology, incorporating DataTraceDNA[®] , in a textile authentication project for Elders New Zealand and Primary Wool Co-operative.

• AgTechnix Pty Ltd, entered into a commercial arrangement with GlaxoSmithKline Australia Pty Limited (GSK) to use IntelliSeed[TM] on a commercial quantity of poppy seed to be sown by GSK in the 2010 season.

• DataDot Technology Limited offered eligible shareholders the opportunity to participate in a Share Purchase Plan by subscribing for up to A$15,000 of DataDot’s ordinary shares without any brokerage costs or other transaction costs. Total capital raised under the Plan was $3 million, of which $2.098 million was subscribed by shareholders and the balance of $902,000 funded under an underwriting agreement with KTM Capital Pty Limited.

• DataDot Technology Limited placed 23,658,537 ordinary shares with Mr Collin Hwang, owner of DataDot Technology Taiwan Pte Limited (DDTw). DDTw has been the licensed distributor of DataDot Technology IP in Taiwan since 2002.

• Further development funded by an Australian multi-national company of the DataTrace product authentication process announced in May, for which a patent application has been lodged in the US. There will be a commercial pilot from early 2011.

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Appendix B: Why DataDot Technology is ahead of the rest

• We are ISO 9001 accredited

• We are the manufacturer not just a reseller.

• We have our own in-house Research & Development team.

• We are constantly developing and improving our technology.

• We manufacture in five countries – Australia, USA, UK, Taiwan and South Africa.

• Key elements of our technologies are patented.

• We are a publicly listed company.

• DataDotDNA[®] is fitted in 2 million cars worldwide and growing by more than half a million a year.

• DataDotDNA[®] is a multi-layer security system.

• Our VIN microdots are unique.

• A special character chosen by a propriety algorithm is etched onto the micro dot – it can’t be replicated.

• The water based adhesive contains a UV trace only visible under black light.

• The adhesive contains DataTrace DNA – the forensic marking system.

• The identity of the DataDot is registered in a secure database.

• We store a sample of every DataDotDNA[®] manufactured for future reference and security purposes.

• The only micro dot company with certification compliance with the National Motor Vehicle Theft Reduction Council – a joint initiative of all Australian governments and the insurance industry.

DATADOT YEAR IN REVIEW 2010

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