DOTZ NANO LIMITED — Interim / Quarterly Report 2017

Apr 26, 2017

ASX ANNOUNCEMENT

27 April 2017

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DOTZ NANO QUARTERLY ACTIVITIES REPORT

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First sales received and new agreements with distributors signed

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Commercial quantities of GQDs shipped to Japan, China and South Korea

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Proof of Concept research study completed with Kyung Hee University for the use of GQDs in Flash Memory

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Ongoing commercialisation discussions

Dotz Nano Limited (“Dotz Nano” or the “Company”) , a nano-technology company focusing on the development, manufacture, and commercialisation of graphene quantum dots (GQDs), is pleased to provide an update on its activities for the three month period ended 31 March 2017.

Q1 2017 was a period of significant progress for Dotz Nano, with first sales achieved, agreements with distributors signed, and GQDs shipped to Japan, China, and South Korea. In addition, Dotz Nano also met with a number of potential companies and distributors in the USA, Asia, and Europe, to which it has supplied samples of its GQDs.

During the quarter, Dotz Nano signed a distribution agreement with Strem Chemicals Inc. This agreement represents early momentum towards the commercialisation of GQDs, in line with the Company’s growth strategy. Cash receipts recorded to date, only reflect early product sample payments and as samples are relatively minor but are recorded as an accounting requirement.

The Company is comfortable with its cash position of US$1.9 million (A$2.5 million). Subsequent to the quarter, Dotz also received a A$650,000 commercial grant from the BIRD foundation, which will be disbursed over the next 18 months, according to the program’s expense schedule. The grant follows the announcement released to the market on 19 December 2016, and is the first tranche of the A$1.2 million commercial grant awarded by the BIRD foundation. The remaining tranche of the grant will follow as Dotz meets the conditions set up in the agreement.

Commenting on the quarterly, Dotz Nano’s CEO Dr Moti Gross, stated:

“Dotz Nano delivered on key milestones under our growth strategy in the first quarter, including shipping our graphene quantum dots around the world and achieving first sales to Strem Chemicals.”

“Importantly, we also expanded our geographic reach by signing new agreements with distributors who have extensive networks in the USA, Europe, Japan, China and South Korea.”

“The beauty of GQDs is that they can be applied to a multitude of applications, and we are currently in talks with several companies in various industries starting from displays, detergents, anticounterfeiting and monitoring.”

“Dotz Nano is the only company in the world who has a proven ability to commercialise GQDs on a large quantity basis and we are confident that our revenue pipeline will accelerate in coming quarters. We are very pleased with our early progress and look forward to building on this momentum throughout the year to capture significant untapped opportunity for GQDs.”

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Activities occurred during the quarter included:

• Dotz Nano signed a non-exclusive marketing and sales agreement with Strem Chemicals Inc., and achieved first sales from the distributor. Strem Chemicals is a privately-held chemical distribution company that sells through its online and printed catalogues, and will facilitate sales of Dotz’s GQDs.

• In the period, Dotz Nano shipped its first, initial quantities of GQDs to Strem Chemicals (2 litres in solvent and 5 grams in powdered form). Blue, Green and Cyan GQDs were shipped.

• An existing MoU with Mainami Holdings was converted into an exclusive distribution agreement to market and sell Dotz Nano’s GQDs in Japan, as well as market the material to other Pan-Asian territories on a non-exclusive basis. The GQDs will be sold to commercial organisations for use in a variety of applications in the anti-counterfeiting industry, such as currencies, paper, ink, oil and fuel products and more.

• Dotz Nano successfully completed a Proof of Concept research study into the use of GQDs in Flash Memory devices with Kyung Hee University in South Korea. Prior research was conducted in 2014 by Kyung Hee University and Samsung Electronics Co into the application of GQDs in flash memory, and the program was revisited with Dotz Nano. The Company is in advanced negotiations to sign a full licensing agreement with Kyung Hee University.

• Dotz Nano shipped first commercial quantities to China to Changchun Ocean Electro-optics Co., Ltd. who will market the GQDs to the Chinese research and industrial market. Total shipment quantities were 1 litre of Aqua Green GQDs in solvent.

• The Company also dispatched its first shipment to South Korea to Samchun Pure Chemical Co., Ltd. with 1 litre of GQDs in solvent and 6 grams of 100% GQDs powder dispatched. Samchun Pure Chemical Co. Ltd sells directly to first tier display companies such as SK Chemicals, Samsung, LG and Hyundai, among others

During the period, the Company also hosted an Investor Webinar session for the investment community with the CEO Dr Moti Gross. This was an opportunity for the CEO to provide an update on the Company’s progress and address questions from shareholders.

About Dotz Nano

Dotz Nano Limited (ASX: DTZ) is a nano-technology company focusing on the development, manufacture and commercialization of GQDs. Its vision is to be the premier producer of GQDs by producing and supplying high quality GQDs for use in various applications including medical imaging, sensing, consumer electronics, energy storage, solar cells and computer storage.

To learn more about Dotz Nano please view the website and our corporate video via the following link: www.dotznano.com

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For further enquiries, please contact: Company Secretary Mr. Peter Webse

peter.webse@pcscorporate.com.au Telephone: +61 8 6377 8043

Investor Relations

Corporate Advisors Otsana Capital 108 Outram Street West Perth WA 6005 Telephone: +61 8 9486 7244 Email: investors@dotznano.com

FTI Consulting

Level 2, 2 Kings Park Rd West Perth WA 6005 +61 (0)8 9485 8888 Elodie.Castagna@fticonsulting.com www.fticonsulting.com

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

+Rule 4.7B

Appendix 4C

Quarterly report for entities subject to Listing Rule 4.7B

Introduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16

Name of entity

DOTZ NANO LIMITED ABN Quarter ended (“current quarter”) 71 125 264 575 31 March 2017

Consolidated statement of cash flows	Current quarter $US’000	Year to date (3 months) $US’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) research and development (b) product manufacturing and operating costs (c) advertising and marketing (d) leased assets (e) staff costs (f) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives 1.8 Other (provide details if material) 1.9 Net cash from / (used in) operating activities	5 (102) - (130) (57) (337) (218) - - 2 - - -	5 (102) - (130) (57) (337) (218) - - 2 - - -
	(837)	(837)
2. Cash flows from investing activities 2.1 Payments to acquire: (a) property, plant and equipment (b) businesses (see item 10) (c) investments	(80) - (59)	(80) (59)

• See chapter 19 for defined terms 1 September 2016

Page 1

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Current quarter $US’000	Year to date (3 months) $US’000
(d) intellectual property (e) other non-current assets 2.2 Proceeds from disposal of: (a) property, plant and equipment (b) businesses (see item 10) (c) investments (d) intellectual property (e) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities	- - - - - - - - - -	- - - - - - - - - -
	(139)	(139)
3. Cash flows from financing activities 3.1 Proceeds from issues of shares 3.2 Proceeds from issue of convertible notes 3.3 Proceeds from exercise of share options 3.4 Transaction costs related to issues of shares, convertible notes or options 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from / (used in) financing activities	- - - - - - - - -	- - - - - - - - -
	-	-
4. Net increase / (decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of quarter/year to date 4.2 Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above)	2,844 (837) (139) -	2,844 (837) (139) -

• See chapter 19 for defined terms 1 September 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Current quarter $US’000	Year to date (3 months) $US’000
4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of quarter	54	54
	1,922	1,922
5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current quarter $US’000	Previous quarter $US’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)	1,922 - - -	2,844 - - -
	1,922	2,844
6. Payments to directors of the entity and their associates Current quarter $US'000 6.1 Aggregate amount of payments to these parties included in item 1.2 (143) 6.2 Aggregate amount of cash flow from loans to these parties included in item 2.3 - 6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2
		Current quarter $US'000
		(143)
		-
A total amount of US$143,000 was paid to directors as director’s fees.
7. Payments to related entities of the entity and their associates Current quarter $US'000 7.1 Aggregate amount of payments to these parties included in item 1.2 (35) 7.2 Aggregate amount of cash flow from loans to these parties included in item 2.3 - 7.3 Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2
		Current quarter $US'000
		(35)
		-

The amount at 7.1 includes management fee paid to Otsana Capital as per the Mandate to Act as the Corporate Advisor, this totalled to US$23,000. It also includes fees of $12,000 paid to the related party of the Singapore subsidiary.

• See chapter 19 for defined terms

1 September 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

	8. Financing facilities available Add notes as necessary for an understanding of the position Total facility amount at quarter end $US’000 Amount drawn at quarter end $US’000 8.1 Loan facilities - - 8.2 Credit standby arrangements - - 8.3 Other (please specify) - - 8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.	Total facility amount at quarter end $US’000	Amount drawn at quarter end $US’000
		-	-
		-	-
		-	-
None

None

9. Estimated cash outflows for next quarter	$US’000
9.1 Research and development 9.2 Product manufacturing and operating costs 9.3 Advertising and marketing 9.4 Leased assets 9.5 Staff costs 9.6 Administration and corporate costs 9.7 Other (provide details if material) 9.8 Total estimated cash outflows	(304) - (118) (60) (292) (166) -
	(940)

10. Acquisitions and disposals of business entities (items 2.1(b) and 2.2(b) above)	Acquisitions	Disposals
10.1 Name of entity	-	-
10.2 Place of incorporation or registration	-	-
10.3 Consideration for acquisition or disposal	-	-
10.4 Total net assets	-	-
10.5 Nature of business	-	-

• See chapter 19 for defined terms 1 September 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

27 April 2017 Sign here: ............................................................ Date: ............................................. (Company secretary) Peter Webse Print name: .........................................................

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. See chapter 19 for defined terms 1 September 2016

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