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THE DATA EXCHANGE NETWORK LIMITED ACN 620 888 548

PROSPECTUS 2018

For an offer of 80,000,000 Shares at an issue price of $0.20 per Share to raise a minimum of $16,000,000 (Offer).

Joint Lead Managers: Cadmon Advisory Pty Ltd (Corporate Authorised Representative of Newport Private Wealth Pty Ltd AFSL 451820)

Bell Potter Securities Limited (AFSL 243480)

IMPORTANT INFORMATION

This is an important document that should be read in its entirety. If you do not understand it you should consult your professional advisers without delay. The Shares offered by this Prospectus should be considered highly speculative.

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CORPORATE DIRECTORY .............................................................................................................................4 IMPORTANT NOTICE .....................................................................................................................................5 CORPORATE DIRECTORY .............................................................................................................................8 KEY OFFER INFORMATION .......................................................................................................................10 INVESTMENT OVERVIEW ..........................................................................................................................12 DETAILS OF THE OFFER ...........................................................................................................................20 COMPANY AND BUSINESS OVERVIEW ..................................................................................................26 INDUSTRY OVERVIEW ................................................................................................................................42 RISK FACTORS .............................................................................................................................................46 INTELLECTUAL PROPERTY REPORT .....................................................................................................52 FINANCIAL INFORMATION AND INDEPENDENT LIMITED ASSURANCE REPORT .....................63 BOARD, MANAGEMENT AND INTERESTS ...........................................................................................88 CORPORATE GOVERNANCE ....................................................................................................................92 MATERIAL CONTRACTS ............................................................................................................................96 ADDITIONAL INFORMATION .................................................................................................................. 104 DIRECTORS’ AUTHORISATION .............................................................................................................. 114 GLOSSARY .................................................................................................................................................. 116 APPLICATION FORM ................................................................................................................................ 118

DATA EXCHANGE | PROSPECTUS 2018 <3>

CORPORATE DIRECTORY

Directors

Richard Carden Independent Non-executive Chairman

Terry Smart Non-executive Director

Peter Christie Managing Director

Company Secretary

George Lazarou

Proposed ASX Code

Patent Attorney

Patenteur Pty Ltd

IBM Building, Level 3, 1060 Hay Street, West Perth WA 6005

Registered Office

Level 28, AMP Tower 140 St Georges Terrace Perth WA 6000

Telephone: + 61 8 9288 1870

Email: [email protected] Website: www.dataexchange.io

Investigating Accountant

Moore Stephens Perth Corporate Services Pty Ltd

Level 15 Exchange Tower 2 The Esplanade Perth WA 6000

Solicitors

Steinepreis Paganin

Level 4, The Read Buildings 16 Milligan Street Perth WA 6000

DXN

Joint Lead Managers

Share Registry*

Automic

Level 2 267 St Georges Terrace Perth WA 6000

Cadmon Advisory Pty Ltd

Suite 22, 24 and 25, Level 31 120 Collins Street Melbourne Victoria 3000

Bell Potter Securities Limited

Auditor*

Moore Stephens Level 15 Exchange Tower 2 The Esplanade Perth WA 6000

Level 38, Aurora Place 88 Phillip Street Sydney NSW 2000

* This entity is included for information purposes only. It has not been involved in the preparation of this Prospectus.

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Important notice

This Prospectus is dated 16 February 2018 and was lodged with the ASIC on that date. The ASIC, the ASX and their respective officers take no responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates.

No Shares may be issued on the basis of this Prospectus later than 13 months after the date of this Prospectus.

No person is authorised to give information or to make any representation in connection with this Prospectus, which is not contained in the Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with this Prospectus.

It is important that you read this Prospectus in its entirety and seek professional advice where necessary. The Shares the subject of this Prospectus should be considered highly speculative.

a. Exposure Period

This Prospectus will be circulated during the Exposure Period. The purpose of the Exposure Period is to enable this Prospectus to be examined by market participants prior to the raising of funds. You should be aware that this examination may result in the identification of deficiencies in this Prospectus and, in those circumstances, any application that has been received may need to be dealt with in accordance with section 724 of the Corporations Act. Applications for Shares under this Prospectus will not be processed by the Company until after the expiry of the Exposure Period. No preference will be conferred on applications lodged prior to the expiry of the Exposure Period.

b. Applicants outside Australia

The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any of these restrictions. Failure to comply with these restrictions may violate securities laws. Applicants who are resident in countries other than Australia should consult their professional advisers as to whether any governmental or other consents are required or whether any other formalities need to be considered and followed.

This Prospectus does not constitute an offer in any place in which, or to any person to whom, it would not be lawful to make such an offer. It is important that investors read this Prospectus in its entirety and seek professional advice where necessary.

No action has been taken to register or qualify the Shares or the Offer, or to otherwise permit a public offering of the Shares in any jurisdiction outside Australia. This Prospectus has been prepared for publication in Australia and may not be released or distributed in the United States of America.

Hong Kong

WARNING: This Prospectus has not been, and will not be, registered as a Prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of (CWUMP) Hong Kong, nor has it been authorised by the Securities and Futures Commission in Hong Kong pursuant to the Securities and Futures Ordinance (Cap. 571) of the Laws of Hong Kong (the SFO). No action has been taken in Hong Kong to authorise or register this Prospectus or to permit the distribution of this Prospectus or any documents issued in connection with it. Accordingly, the Securities have not been and will not be offered or sold in Hong Kong by means of any document other than (a) to “professional investors” (as defined in the SFO) or (b) in other circumstances which do not result in the document being a “Prospectus” as defined in the CWUMP or which do not constitute an offer to the public within the meaning of the CWUMP.

DATA EXCHANGE | PROSPECTUS 2018 <5>

a. No advertisement, invitation or document relating to the Securities has been or will be issued, or has been or will be in the possession of any person for the purpose of issue, in Hong Kong or elsewhere that is directed at, or the contents of which are likely to be accessed or read by, the public of Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to Securities that are or are intended to be disposed of only to persons outside Hong Kong or only to professional investors (as defined in the SFO and any rules made under that ordinance). No person issued Securities may sell, or offer to sell, such securities in circumstances that amount to an offer to the public in Hong Kong within six months following the date of issue of such Securities.

The contents of this Prospectus have not been reviewed by any Hong Kong regulatory authority. You are advised to exercise caution in relation to the Offers. If you are in doubt about any contents of this Prospectus, you should obtain independent professional advice.

Switzerland

The Securities may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (SIX) or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering or marketing material relating to the Securities may be publicly distributed or otherwise made publicly available in Switzerland. The Securities will only be offered to regulated financial intermediaries such as banks, securities dealers, insurance institutions and fund management companies as well as institutional investors with professional treasury operations.

United Arab Emirates

Neither this document nor the Shares have been approved, disapproved or passed on in any way by the Central Bank of the United Arab Emirates, the Emirates Securities and Commodities Authority or any other governmental authority in the United Arab Emirates, nor has the Company received authorization or licensing from the Central Bank of the United Araba Emirates, the Emirates Securities and Commodities Authority or any other governmental authority in the United Arab Emirates to market or sell the Shells within the United Arab Emirates. No marketing of any financial products or services may be made from within the United Arab Emirates and no subscription to any financial products or services may be consummates within the United Arab Emirates. This document does not constitute and may not be used for the purpose of an offer or invitation. No services relating to the Shares, including the receipt of applications and/or the allotment or redemption of Shares, may be rendered within the United Arab Emirates by the Company.

No offer or invitation to subscribe for Shares is valid in, or permitted from any person in, the Dubai International Financial Centre.

c. Web Site – Electronic Prospectus

A copy of this Prospectus can be downloaded from the website of the Company at

www.dataexchange.io. If you are accessing the electronic version of this Prospectus for the purpose of making an investment in the Company, you must be an Australian resident and must only access this Prospectus from within Australia.

The Corporations Act prohibits any person passing onto another person an Application Form unless it is attached to a hard copy of this Prospectus or it accompanies the complete and unaltered version of this Prospectus. You may obtain a hard copy of this Prospectus free of charge by contacting the Company by phone on (08) 08 9288 1870 during office hours or by emailing the Company at [email protected].

The Company reserves the right not to accept an Application Form from a person if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with the electronic Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered.

d. Investment Advice

This Prospectus does not provide investment advice and has been prepared without taking account of your financial objectives, financial situation or particular needs (including financial or taxation issues). You should seek professional investment advice before subscribing for Shares under this Prospectus.

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e. Risks

You should read this document in its entirety and, if in any doubt, consult your professional advisers before deciding whether to apply for Shares. There are risks associated with an investment in the Company. The Shares offered under this Prospectus carry no guarantee with respect to return on capital investment, payment of dividends or the future value of the Shares. Refer to Section D of Section 1 as well as Section 5 for details relating to some of the key risk factors that should be considered by prospective investors. There may be risk factors in addition to these that should be considered in light of your personal circumstances.

f. Website

No document or information included on the Company’s website is incorporated by reference into this Prospectus.

g. Forward-looking statements

This Prospectus contains forward-looking statements which are identified by words such as ‘may’,

‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’, or ‘intends’ and other similar words that involve risks and uncertainties.

These statements are based on an assessment of present economic and operating conditions, and on a number of assumptions regarding future events and actions that, as at the date of this Prospectus, are expected to take place.

Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of our Company, the Directors and our management.

We cannot and do not give any assurance that the results, performance or achievements expressed or implied by the forward-looking statements contained in this prospectus will actually occur and investors are cautioned not to place undue reliance on these forward-looking statements.

We have no intention to update or revise forward-looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this prospectus, except where required by law.

These forward-looking statements are subject to various risk factors that could cause our actual results to differ materially from the results expressed or anticipated in these statements. These risk factors are set out in Section 5.

h. Photographs and Diagrams

Photographs used in this Prospectus which do not have descriptions are for illustration only and should not be interpreted to mean that any person shown endorses the Prospectus or its contents or that the assets shown in them are owned by the Company. Diagrams used in this prospectus are illustrative only and may not be drawn to scale.

i. Enquiries

If you are in any doubt as to how to deal with any of the matters raised in this Prospectus, you should consult with your broker or legal, financial or other professional adviser without delay. Should you have any questions about the Offer or how to accept the Offer please call the Company Secretary on (08) 9288 1890.

j. Definitions

Terms used in this Prospectus are defined in the Glossary in Section 13.

DATA EXCHANGE | PROSPECTUS 2018 <7>

Chairman’s Letter

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Dear Investor

On behalf of the directors of The Data Exchange Network Limited (Company or Data Exchange), it gives me great pleasure to invite you to become a shareholder of the Company.

The advent of cloud computing and its rapid growth is driving the trend in data being held in dedicated facilities called data centres. Data Exchange was founded with the intention of becoming a global provider of data centres, data centre infrastructure and associated services. Data Exchange provides unique modular data centre solutions that can be quickly deployed in diverse locations to meet changing market demands for both construction agility and facility scale.

demand by expanding colocation operations beyond Australia into South East Asia leveraging experiences of the management team and Board. The Company has already established sales teams in Singapore and the Philippines and intends to establish teams on new sales-fronts as the market demands.

Refer to Section 3 for details of the proposed activities of the Company following completion of the Offer. Also refer to Section 1C as well as Section 5 for details relating to some of the key risk factors that should be considered by prospective investors. There may also be risk factors in addition to these that should be considered in the context of your personal circumstances.

Data centres are rapidly becoming the world’s next utility. Data Exchange plans to become a major developer and operator in this new market sector and I hope you will share this journey with us.

Data Exchange intends to use its in-house technology and innovative concepts to provide infrastructure for its first large scale colocation data centre for a third-party operator in Perth, Western Australia. The team has also delivered several stand-alone data centre modules to customers with in-house computer hosting requirements in Australia and Asia. The next phase of our business development will see us create two new Company-owned colocation facilities in Sydney and Melbourne while we continue to sell our solutions to other facility managers, in Singapore and the Philippines.

Data Exchange is unique amongst colocation data centre operators in that it designs, engineers and intends to construct its own data centre technology from the ground up. Data Exchange believes that this in-house capability will allow it to construct data centres at a much lower capital cost than many traditional data centre developers. To meet anticipated demand, the Company established a new manufacturing facility in Perth, Western Australia, to scale-up production capacity from 2018.

The growth of demand for data centres is a global trend and Data Exchange intends meeting that

This Prospectus is seeking to raise $16,000,000 through the issue of Shares at an issue price of $0.20 per Share under the Offer. The primary purpose of the Offer is to provide funds to implement the Company’s business strategies (explained in Sections 2.6 and 3.1).

This Prospectus contains detailed information about the Offer, the Company, the industry in which the Company operates, material risks of investing in the Company and financial information relating to Data Exchange. I urge you to read this Prospectus carefully and in its entirety before making your investment decision and seek professional advice if required. The Shares offered by this Prospectus should be considered highly speculative.

I look forward to you joining us as a Shareholder and sharing in what we believe are exciting and prospective times ahead for the Company.

Yours sincerely

Richard Carden Chairman of the Board

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Section name Data centres are rapidly becoming the world’s next utility

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DATA EXCHANGE | PROSPECTUS 2018 <9>

Key OFFER INFORMATION

KEY DATES - INDICATIVE TIMETABLE[1]

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Lodgement of Prospectus with the ASIC 16 February 2018
Exposure Period begins 16 February 2018
Opening Date 26 February 2018
Closing Date 9 April 2018
Settlement of the Offer 11 April 2018
Issue of Shares under the Offer 13 April 2018
Expected despatch of holding statements 16 April 2018
Expected date for quotation on ASX 30 April 2018
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1 The above dates are indicative only and may change without notice. The Exposure Period may be extended by the ASIC by not more than 7 days pursuant to section 727(3) of the Corporations Act. The Company reserves the right to extend the Closing Date or close the Offer early without prior notice. The Company also reserves the right not to proceed with the Offer at any time before the issue of Shares to Applicants.

KEY OFFER DETAILS

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The Offer
($16,000,000)
Current Shares on issue 75,000,000
Current Options on issue 32,500,000
Issue price per Share $0.20
Gross Proceeds of the Offer $16,000,000
Shares to be issued under the Offers 80,000,001
Shares to be issued on conversion of Convertible Notes 27,312,500
Options to be issued on conversion of the Convertible Notes 6,828,125
Total number of Shares on issue following the Offers 182,312,501
Total Options on issue following the Offer 39,328,125
Market capitalisation at the Offer Price (undiluted) $36,462,500
Estimated net cash on Completion of the Offer $17,000,000
Enterprise value (undiluted) $19,462,500
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Section name

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DATA EXCHANGE | PROSPECTUS 2018 <11>

INVESTMENT 1 OVERVIEW

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FURTHER
ITEM SUMMARY INFORMATION
A. Company
Who is the issuer of The Data Exchange Network Limited (ACN 620 888 548) (Company). Section 2.1
this Prospectus?
Who is the The Company is an Australian unlisted public company, Sections 3.1, 3.10
Company? incorporated on 4 August 2017 for the construction and sales of and 6
data centre modules and associated infrastructure to third-party
data centre owners and other operators of data centre space.
The Company also intends to develop and operate its own
colocation data centres, with the initial two proposed colocation
facilities to be in Sydney and Melbourne.
Data Exchange’s module designs enable construction of data
centres of any size at diverse locations to suit a broad range
of commercial requirements. The Company has established an
engineering and manufacturing facility in Perth, Western Australia
to deliver data centre infrastructure to projects where manufacture
is planned to commence in the first quarter of 2018. Typical
customers are corporations that require facilities to house their
on-premise computers and data including mining companies, port
operators, manufacturers and utilities.
The Company’s product offerings are protected by a registered
trademark and unregistered trade secret laws. Additionally, the
Company holds two patent applications as detailed in Section 3.10
and the Intellectual Property Report at Section 6.
B. Business Model
How will the On completion of the Offer, the Company’s business model consists Section 3.4
Company generate of two intended revenue streams as follows:
income?
(a) Colocation rack revenue: Data Exchange intends to develop
and operate modular colocation data centres. As such, revenue
will be derived from customers paying a monthly fee to rent
racks that house their computers in Data Exchange’s proposed
colocation facilities; and
(b) Manufacture of infrastructure: Data Exchange will generate
revenue from the construction and sales of data centre modules
and associated infrastructure that is sold to other operators
of data centre space, as well as the continued provision of
consultancy services for the management of a data facility
owned by Data Centre Limited (DCL).
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INVESTMENT OVERVIEW

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FURTHER
ITEM SUMMARY INFORMATION
What are the key The main objectives of the Company on completion of the Offer Sections 3.4, 3.5
business objectives are to: and 3.6
of the Company?
(a) design, engineer and operate modular colocation data centres,
with the initial two facilities anticipated to be opened in Sydney
and Melbourne;
(b) derive revenue from the rental of racks within its colocation
data centres;
(c) derive revenue from the design, engineering, manufacture and
maintenance of modular data centre solutions for other third
party colocation facility operators;
(d) continue further development of its modular designs to
reduce the cost of its core data centre technology and improve
assembly efficiency at its Perth facility;
(e) expand the Company’s management, industrial design,
engineering, technical support and administration teams;
(f) provide general working capital;
(g) pay the expenses of the Offers; and
(h) enable admission to the official list of the ASX (Official List) to
provide the Company with improved access to capital markets.
What is the The Company intends to execute the following growth strategy: Section 3.7
Company’s
(a) develop its in-house manufacturing facility in Perth to increase
growth strategy?
production speed, output and economies of scale;
(b) construct data centre modules and infrastructure for its
intended colocation facilities in Sydney and Melbourne;
(c) establish additional colocation facilities in Australia;
(d) target customers in select geographies including Australia,
Singapore and the Philippines for the sale of data centre
infrastructure and modules, and the potential establishment of
colocation facilities in these territories; and
(e) the Company intends to, where appropriate, establish local
representative offices in key target markets in order to build a
strong sales network for new colocation data centres.
This growth strategy is underpinned by the Company’s
commitment to ongoing technology and product development,
which aims to maintain the Company’s technical position in the
data centre space and continuously improve the performance of
the Company’s data centre modules and infrastructure.
The Directors consider that the Offer will provide the Company with
the capital to execute its growth strategy.
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DATA EXCHANGE | PROSPECTUS 2018 <13>

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FURTHER
ITEM SUMMARY INFORMATION
C. Key Advantages and Key Risks
What are the key The Directors are of the view that an investment in the Company
advantages of an provides the following non-exhaustive list of advantages:
investment in
(a) the Company has developed technology for the construction of
the Company?
infrastructure for data centre modules that ensures it meets
various customer requirements and specifications;
(b) the Company’s data centre modules deliver high rack density
and high operational efficiencies and are protected by
trademark and trade secret laws;
(c) the Company’s anticipated control over construction of data
centre modules provides for long term design consistency and
quality, and product supply, and as such offers a comparative
advantage against competitors through the reduction of
supply risk;
(d) Data Exchange develops its own monitoring and control
software, offering customers a total data centre solution;
(e) subject to raising the minimum subscription, the Company
will have sufficient funds to implement the delivery of two
colocation data centres located in Sydney and Melbourne;
(f) the Company’s design, engineering and development of core
technology is anticipated to significantly reduce the capital cost
of a colocation data centre operated by Data Exchange;
(g) offering individual modules in its proposed colocation facilities
will allow a facility to be initially established with a smaller
capital output, and then scaled up in line with customer demand
by the construction of further modules;
(h) establishing colocation facilities using existing industrial sites
will allow the Company to deliver data centre modules for
potential customers more quickly than traditional operators
which purchase and construct facilities;
(i) the Company intends to undertake further development to
continue to refine its modular designs to reduce the cost of its
core data centre technology and improve assembly efficiency at
its Perth facility;
(j) the size of the global Cloud services market is estimated to be
approximately US$277 billion in 2017 [1] , evidencing a strong
demand for data centres; and
(k) the Company has a highly experienced team to progress the
operation of colocation facilities in Sydney and Melbourne, and
continue the development of technology for the manufacture of
data centre modules.
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1 Frost & Sullivan (Data Centres: The Infrastructure That Underpins the Cloud May 2017). Frost & Sullivan has not consented to the use of the information in the form or context in which it is included in this Prospectus.

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INVESTMENT OVERVIEW

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FURTHER
ITEM SUMMARY INFORMATION
What are the Risks associated with an investment in the Company under this Section 5
key risks of an Prospectus are detailed in Section 5.
investment in
In addition to the risks detailed in Section 5, key risk
the Company?
factors include:
(a) Limited History: The Company is a newly established company
and has minimal operational track record, relying primarily
on the experience of its key management personnel. The
Company’s operational business plan requires substantial
upfront capital investment, and there can be no assurance that
subsequent operational objectives, including achieving sales
will be achieved. Failure to achieve these objectives may have
a material adverse impact on the financial performance and/
or position of the Company. An investment in Shares must
be considered in light of the risks, expenses and difficulties
frequently encountered by companies in their early stage of
development.
(b) Technology Risk: The Company’s products are the subject of
continuous development and will likely need to be substantially
developed further in order to enable the Company to remain
competitive, increase sales and improve the products’
scalability. There are no guarantees that the Company will
be able to undertake such development successfully. Failure
to successfully undertake such research and development,
anticipate technical problems, or estimate research and
development costs or timeframes accurately will adversely
affect the Company’s results and viability.
(c) Leasing Racks to Customers: The Company relies on market
demand for rental of colocation rack-space. A lack of demand or
a change in the nature of that demand may eliminate demand
for the Company’s products and services. A lack of demand
or oversupply of colocation space could adversely impact the
Company’s ability to achieve the desired rates of return on
investment and have a material adverse effect on the growth
prospects and financial position of the company.
(d) Customer Contract Deliverables Failure: The Company’s key
deliverable to customers is the continuous and stable supply
of key utilities, including electricity and water for power and
cooling in accordance with its customer contracts. Any outage,
being a failure to deliver power or cooling to a customer rack
or space within the terms of a customer contract for a period of
time, could result in service credits being applied to a customer
account, reducing the amount payable to the Company under a
customer contract, or a requirement to pay compensation.
(e) Contract Risk: Customer contracts may allow for immediate
termination and customers may default due to bankruptcy or
other reasons. Customer termination or default would have a
materially adverse effect on the financial performance of
the Company.
(f) Development Risk: The Company is involved in the development
of data centres, including the proposed new sites for Sydney and
Melbourne. Generally, development projects have a number of
risks including:
(i) the risk that suitable sites or required planning consents and
regulatory approvals, including approvals from the local water
authority and the local power distribution grid operator, are
not obtained or, if obtained, are received later than expected;
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DATA EXCHANGE | PROSPECTUS 2018 <15>

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FURTHER
ITEM SUMMARY INFORMATION
(ii) the escalation of development costs (including the costs of
construction and fit out and any associated delays) beyond
those originally expected; and
(iii) unforeseeable project delays beyond the control of the
Company
(g) Infrastructure and Technology Failure: The Company relies
on its infrastructure and technology to provide its customers
with a highly reliable service. There may be a failure to
deliver this level of service as a result of numerous factors,
including human error, power loss, equipment failure, improper
maintenance including by landlords and security breaches.
Service interruptions, regardless of their cause, may cause
contractual and other losses to the Company
(h) Lease risks: The Company holds long term leases over
Melbourne and Sydney. Any breach or termination of these
leases will have a material adverse impact on the Company.
A summary of the lease agreements, and termination events
under these agreements, are set out in Sections 10.2 and 10.3.
(i) Reputational Risk: Any negative publicity regarding the Company
or its Board, officers or employees, or the performance of its
products, will adversely affect the Company’s ability to
generate revenue.
(j) Competition Risk: The market in which the Company participates
is competitive and characterised by rapid technological change.
The Company’s potential inability to improve existing product
lines and develop new products and technologies could have a
material adverse effect on the Company’s business.
(k) Approval Risk: The operation of colocation facilities by the
Company may require some local, state or federal authority
approvals associated with building works and the delivery of
utility services to the sites.
There is no guarantee that approvals will be obtained within a
timely fashion or on the terms requested or expected. A delay
in obtaining the necessary approvals or changes made to a
development in order to obtain the necessary approvals may
materially adversely affect a development and consequently the
returns to be paid to the Company.
(l) Key Personnel Risk: The responsibility of overseeing the
day-to-day operations and the strategic management of the
Company depends substantially on its senior management and
its key personnel. There can be no assurance that there will be
no detrimental impact on the Company if one or more of these
employees cease their employment.
(m) Supply and pricing of electricity: The Company will rely on
third parties for the reliable and sufficient supply of electrical
power to its data centres. It cannot be guaranteed that these
third parties will be able to consistently provide sufficient levels
of electrical power or will have the necessary infrastructure
to deliver any additional power that the Company may require.
Inability to satisfy customer obligations by these means may
have a materially adversely impact the financial position,
profits and growth prospects of the Company.
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INVESTMENT OVERVIEW

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FURTHER
ITEM SUMMARY INFORMATION
D. Directors and Key Management Personnel
Who are The Board consists of: Section 3.11 and 8.1
the Directors?
(a) Richard Carden – Independent Non-executive Chairman;
(b) Terry Smart – Independent Non-executive Director; and
(c) Peter Christie – Managing Director.
The profiles of each of the Directors are set out in Section 3.11. The
Board intends to appoint an additional independent director within
six months after the Company’s admission to the Official List.
What are the Each Director’s interest in the Company is set out at Section 8.2. Section 8.2
significant interests
of Directors in the
Company?
What related party The Company has entered into the following related party Section 10
agreements are transactions:
the Company a
• Executive Services Agreement with Peter Christie;
party to?
• Non-executive Letters of Appointment with Messrs Richard
Carden and Terry Smart;
• Consultancy Agreement with Dean Coetzee; and
• Deeds of Indemnity, Insurance and Access with the Directors on
standard terms.
E. Financial Information
How has the The Company was incorporated on 4 August 2017 and audited Section 7
Company been historical financial information and pro-forma financial information
performing? is provided in Section 7.
What is the Given the current status of the Company and the speculative nature Section 7
financial outlook of its business, the Directors do not consider it appropriate to
for the Company? forecast future earnings.
Any forecast or projection information would contain such a broad
range of potential outcomes and possibilities that it is not possible
to prepare a reliable best estimate forecast or projection on a
reasonable basis.
F. Offer
What is the Offer? The Offer is for a minimum of 80,000,000 Shares at an issue price of $0.20 Section 2
per Share to raise $16,000,000 (before costs).
The Offer is open to institutional and retail investors in Australia and
sophisticated investors in Hong Kong, Switzerland and the United Arab
Emirates.
The purpose of the Offer is to:
(a) implement the business model and objectives of the Company as stated in
Section C above; and
(a) meet the requirements of the ASX and satisfy Chapters 1 and 2 of the ASX
Listing Rules.
The satisfaction of Chapters 1 and 2 of the ASX Listing Rules is sought for
the purpose of seeking ASX’s approval for the Company’s admission to the
Official List of ASX.
The Board believes that on completion of the Offer, the Company will have
sufficient working capital to achieve its objectives.
The Prospectus also includes an offer of one Share, which shall remain open
(unless closed earlier at the discretion of the Directors) until the date of the
Company’s admission to the Official List (Cleansing Offer). The purpose of the
Cleansing Offer is to facilitate secondary trading of Shares previously issued
by the Company and Shares to be issued by the Company before the Closing
Date by complying with section 708A(11) of the Corporations Act so that the
Shares are able to be offered for sale within 12 months of their issue and to
comply with the requirements of admission to the ASX.
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DATA EXCHANGE | PROSPECTUS 2018 <17>

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FURTHER
ITEM SUMMARY INFORMATION
Is the The Offer is not underwritten.
Offer underwritten?
Who are the lead The Company has appointed Cadmon and Bell Potter Securities Sections 2.4 and
managers to Limited ( Joint Lead Managers ) as joint lead managers to the Offer. 10.4
the Offer? In respect of the Offer, the Joint Lead Managers will receive a
management fee of 4% and a selling fee of 2% of the total amount
raised under the Offer.
Additionally, Cadmon will receive a monthly corporate advisory
fee of $10,000 for a period of six months after the date that the
Company is admitted to the Official List of ASX.
What will the Refer to Section 3.13 for a pro forma capital structure following Section 3.13
Company’s capital completion of the Offer.
structure look like
after completion of
the Offer?
What are the terms A summary of the material rights and liabilities attaching to the Section 11.2
of the Shares Shares offered under the Offer is set out in Section 11.2.
offered under
the Offers?
Will any Securities Chapters 1 and 2 of the ASX Listing Rules and completing the Section 2.8
be subject Offer, certain Securities on issue may be classified by ASX as
to escrow? restricted securities and will be required to be held in escrow for
up to 24 months from the date of Official Quotation. It is estimated
that 75,000,000 Shares and 32,500,000 Options will be subject to
escrow for 24 months from the date of Official Quotation.
In addition to escrow restrictions imposed by ASX, IWG Holdings
Pty Ltd, an entity associated with Cadmon has agreed that the
5,000,000 Shares it holds will be subject to an additional voluntary
escrow period of 12 months, making the total escrow period 36
months commencing on the date the Company is admitted to the
Official List.
During the period in which these Securities are prohibited from
being transferred, trading in Shares may be less liquid which may
impact on the ability of a Shareholder to dispose of his or her
Shares in a timely manner.
Will the Shares be Application for quotation of all Shares to be issued under the Offer Section 2.8
quoted? will be made to ASX no later than 7 days after the date of this
Prospectus under the code “DXN”.
What are the key The key dates of the Offer are set out in the indicative timetable in Key Offer
dates of the Offer? the Key Offer Information Section of this Prospectus. Information Section
What is the Applications under the Offer must be for a minimum of $2,000 Section 2.7
minimum worth of Shares (10,000 Shares) and thereafter, in multiples of
investment size $500 worth of Shares (2,500 Shares).
under the Offer?
Are there any No, other than raising the Minimum Subscription and ASX approval Sections 2.2 and 2.8
conditions to for quotation of the Shares, the Offer is unconditional.
the Offer?
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INVESTMENT OVERVIEW

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FURTHER
ITEM SUMMARY INFORMATION
G. Use of funds
How will the The Offer proceeds and the Company’s existing cash reserves will Section 2.6
proceeds of the be used for:
Offer be used?
(a) Establishment of two colocation data centre facilities in Sydney
and Melbourne;
(b) implementing the Company’s business objectives as set out in
Part B of this Section 1;
(c) expenses of the Offer;
(d) administration costs; and
(e) working capital,
further details of which are set out in Section 2.6.
Will the Company The Directors are satisfied that on completion of the Offer, the Section 2.6
be adequately Company will have sufficient working capital to carry out its
funded after objectives as stated in this Prospectus.
completion of
the Offer?
H. Additional information
Is there any No brokerage, commission or duty is payable by Applicants on the
brokerage, acquisition of Shares under the Offer.
commission or
duty payable
by applicants?
What are the tax Holders of Shares may be subject to Australian tax on dividends
implications of and possibly capital gains tax on a future disposal of Shares
investing in Shares? subscribed for under this Prospectus.
The tax consequences of any investment in Shares will depend
upon an investor’s particular circumstances. Applicants should
obtain their own tax advice prior to deciding whether to subscribe
for Shares offered under this Prospectus.
What are the To the extent applicable, in light of the Company’s size and nature,
corporate the Company has adopted The Corporate Governance Principles
governance and Recommendations (3rd Edition) as published by the ASX
principles and Corporate Governance Council (Recommendations).
policies of
The Company’s main corporate governance policies and practices
the Company?
and the Company’s compliance and departures from the
Recommendations as at the date of this Prospectus are outlined in
Section 9.
In addition, the Company’s full Corporate Governance Plan is
available from the Company’s website (www.dataexchange.io).
Where can I find (a) By speaking to your sharebroker, solicitor, accountant or other
more information? independent professional adviser;
(b) By contacting the Company Secretary, on 08 9288 1870; or
(c) By contacting the Share Registry on + 61 1800 288 664
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This section is a summary only and not intended to provide full information for investors intending to apply for Shares offered pursuant to this Prospectus. This Prospectus should be read and considered in its entirety.

DATA EXCHANGE | PROSPECTUS 2018 <19>

Details of 2 the offer

2.1 The Offer

Pursuant to this Prospectus, the Company invites applications for up to 80,000,000 Shares at an issue price of $0.20 per Share to raise $16,000,000. The Shares offered under this Prospectus will rank equally with the existing Shares on issue.

2.2 Minimum subscription

The minimum amount which must be raised under this Prospectus is $16,000,000 ( Minimum Subscription ). If the Minimum Subscription has not been raised within 4 months after the date of this Prospectus, the Company will not issue any Shares and will repay all application monies for the Shares within the time prescribed under the Corporations Act, without interest.

2.3 Oversubscriptions

No oversubscriptions will be accepted by the Company.

2.4 Joint Lead Managers

The Company has appointed Cadmon and Bell Potter Securities Limited as joint lead managers to the Offer. The Joint Lead Managers will receive a management fee of 4% and a selling fee of 2% of the total amount raised under the Offer.

Cadmon will be paid a monthly corporate advisory fee of $10,000 per month for six months from the date of the Company being admitted to the Official List of ASX.

<20>

DETAILS OF THE OFFER

2.5 Cleansing Offer

This Prospectus also includes an offer of one Share, which shall remain open (unless closed earlier at the discretion of the Directors) until the date of the Company’s admission to the Official List ( Cleansing Offer ).

The purpose of the Cleansing Offer is to facilitate secondary trading of Shares previously issued by the Company and Shares to be issued by the Company before its admission to the Official List by complying with section 708A(11) of the Corporations Act so that the Shares are able to be offered for sale within 12 months of their issue and to comply with the requirements of admission to the ASX.

Generally, section 707(3) of the Corporations Act requires that a prospectus is issued in order for a person to whom securities were issued without disclosure under Part 6D of the Corporations Act to offer those securities for sale within 12 months of their issue. Section 708A(11) of the Corporations Act provides that a sale offer does not need disclosure to investors where:

a. the relevant securities are in a class of securities that are quoted securities of the body; and
b. either:
i. a prospectus is lodged with ASIC on or after the day on which the relevant securities were issued but before the day on which the sale offer is made; or
ii. a prospectus is lodged with ASIC before the day on which the relevant securities are issued and offers of securities that have been made under the prospectus are still open for acceptance on the day on which the relevant securities were issued; and
c. the prospectus is for an offer of securities issued by the body that are in the same class of securities as the relevant securities.

The purpose of the Cleansing Offer is to comply with section 708A(11) of the Corporations Act so that the Shares are able to be offered for sale within 12 months of their issue.

DATA EXCHANGE | PROSPECTUS 2018 <21>

2.6 Use of Funds

The Company intends to apply funds raised from the Offer, together with existing cash reserves, over the first two years following admission of the Company to the official list of ASX as follows:

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FUNDS AVAILABLE MINIMUM
SUBSCRIPTION ($)
Existing cash reserves [1] 2,973,000
Funds raised from the Offer 16,000,000
Total 18,973,000
Allocation of funds
Homebush Data Centre [2] 4,340,000
Port Melbourne Data Centre [3] 4,340,000
Administration and Head Office [4] 1,330,000
Property and Infrastructure [5] 5,800,000
Expenses of the Offer [6] 1,190,650
Working capital 1,972,350
Total 18,973,000
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Notes :

Existing cash reserves includes the cash available to the Company as at 10th January 2018 of approx. $1,573,000, together with the Ellerston Capital Convertible Note of $1,400,000 that is currently held in escrow, and will be available to the company on admission of the Company to the ASX.
Development of Homebush Data Centre includes, development capital such as power, mechanical, security and telecommunications infrastructure required for initial operations.
Development of the Port Melbourne Data Centre includes, development capital such as power, mechanical, security and telecommunications infrastructure required for initial operations.
Includes all head office staff and administration expenses. Administration costs may include wages and payments to contractors, insurance, accounting, audit, listing fees and other items of a general administrative nature or in connection with any other item in the above table, as determined by the Board at the relevant time.
Includes bonds, rent, agent fees and outgoings for data centres in Sydney and Melbourne and the head office and manufacturing facility in Perth.
Refer to Section 11.8 for further details

It should be noted that the Company’s budgets will be subject to modification on an ongoing basis depending on the results obtained from the Company’s initial operations following listing on ASX. This will involve an ongoing assessment of the Company’s activities.

The above table is a statement of current intentions as at the date of this Prospectus. As with any budget, intervening events and new circumstances have the potential to affect the manner in which the funds are ultimately applied. The Board reserves the right to alter the way funds are applied on this basis.

The Directors consider that following completion of the Offer, the Company will have sufficient working capital to carry out its stated objectives. It should however be noted that an investment in the Company is speculative and investors are encouraged to read the risk factors outlined in Section 5.

<22>

DETAILS OF THE OFFER

2.7 Applications

Applications for Shares under the Offer must be made using the Application Form or as instructed by the Joint Lead Managers.

By completing an Application Form, each Applicant under the Offer will be taken to have declared that all details and statements made by you are complete and accurate and that you have personally received the Application Form together with a complete and unaltered copy of the Prospectus.

Applications for Shares must be for a minimum of 10,000 Shares and thereafter in multiples of 2,500 Shares and payment for the Shares must be made in full at the issue price of $0.20 per Share.

Completed Application Forms and accompanying cheques, made payable to “ The Data Exchange Network Limited – Share Offer Account ” and crossed “ Not Negotiable ”, must be mailed or delivered to the address set out on the Application Form by no later than 5:00pm (WST) on the Closing Date.

If an Application Form is not completed correctly or if the accompanying payment is the wrong amount, the Company may, in its discretion, still treat the Application Form to be valid. The Company’s decision to treat an application as valid, or how to construe, amend or complete it, will be final.

The Company reserves the right to close the Offer early.

2.8 ASX listing

Application for Official Quotation by the ASX of the Shares offered pursuant to this Prospectus will be made within 7 days after the date of this Prospectus, under the code “DXN”.

If the Shares are not admitted to Official Quotation by the ASX before the expiration of 3 months after the date of issue of this Prospectus, or such period as varied by the ASIC, the Company will not issue any Shares and will repay all application monies for the Shares within the time prescribed under the Corporations Act, without interest.

The fact that the ASX may grant Official Quotation to the Shares is not to be taken in any way as an indication of the merits of the Company or the Shares now offered for subscription.

2.9 Issue

Subject to the Minimum Subscription to the Offer being reached and ASX granting conditional approval for the Company to be admitted to the Official List, issue of Shares offered by this Prospectus will take place as soon as practicable after the Closing Date.

Pending the issue of the Shares or payment of refunds pursuant to this Prospectus, all application monies will be held by the Company in trust for the Applicants in a separate bank account as required by the Corporations Act. The Company, however, will be entitled to retain all interest that accrues on the bank account and each Applicant waives the right to claim interest.

The Directors will determine the recipients of the issued Shares in their sole discretion in consultation with the Joint Lead Managers. There is no guaranteed allocation of Shares under the Offer. The Directors reserve the right to reject any application or to allocate any applicant fewer Shares than the number applied for. Where the number of Shares issued is less than the number applied for, or where no issue is made, surplus application monies will be refunded without any interest to the Applicant as soon as practicable after the Closing Date.

The Company’s decision on the number of Shares to be allocated to an Applicant will be final.

Holding statements for Shares issued to the issuer sponsored subregister and confirmation of issue for Clearing House Electronic Subregister System ( CHESS ) holders will be mailed to Applicants being issued Shares pursuant to the Offer as soon as practicable after their issue.

DATA EXCHANGE | PROSPECTUS 2018 <23>

2.10 Clearing House Electronic Sub-Register System (CHESS) and Issuer Sponsorship

The Company will apply to participate in CHESS, for those investors who have, or wish to have, a sponsoring stockbroker. Investors who do not wish to participate through CHESS will be issuer sponsored by the Company.

Electronic sub-registers mean that the Company will not be issuing certificates to investors. Instead, investors will be provided with statements (similar to a bank account statement) that set out the number of Shares issued to them under this Prospectus. The notice will also advise holders of their Holder Identification Number or Security Holder Reference Number and explain, for future reference, the sale and purchase procedures under CHESS and issuer sponsorship.

Electronic sub-registers also mean ownership of securities can be transferred without having to rely upon paper documentation. Further monthly statements will be provided to holders if there have been any changes in their security holding in the Company during the preceding month.

2.11 Commissions payable

The Company reserves the right to pay a commission of up to 6% (exclusive of goods and services tax) of amounts subscribed through any licensed securities dealers or Australian financial services licensee in respect of any valid applications lodged and accepted by the Company and bearing the stamp of the licensed securities dealer or Australian financial services licensee. Payments will be subject to the receipt of a proper tax invoice from the licensed securities dealer or Australian financial services licensee. The Joint Lead Managers will be responsible for paying all commissions that they and the Company agree with any other licensed securities dealers or Australian financial services licensee out of the fees paid by the Company to the Joint Lead Managers under the Joint Lead Managers Mandate.

2.12 Taxation

The acquisition and disposal of Shares will have tax consequences, which will differ depending on the individual financial affairs of each investor.

It is not possible to provide a comprehensive summary of the possible taxation positions of all potential applicants. As such, all potential investors in the Company are urged to obtain independent financial advice about the consequences of acquiring Shares from a taxation viewpoint and generally.

To the maximum extent permitted by law, the Company, its officers and each of their respective advisors accept no liability and responsibility with respect to the taxation consequences of subscribing for Shares under this Prospectus.

No brokerage, commission or duty is payable by Applicants on the acquisition of Shares under the Offers.

2.13 Withdrawal of Offer

The Offer may be withdrawn at any time. In this event, the Company will return all application monies (without interest) in accordance with applicable laws.

<24>

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Section name
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SERVE THE FUTURE

DATA EXCHANGE | PROSPECTUS 2018 <25>

COMPANY AND 3 BUSINESS OVERVIEW

3.1 Data Exchange’s Business

Data Exchange is an Australian company incorporated on 4 August 2017 for the construction of data centre modules and sale to third-party data centre owners.

Data Exchange’s module designs enable construction of modules of any size at diverse locations to suit a broad range of commercial requirements. The Company has established an engineering and manufacturing facility in Perth, Western Australia to deliver data centre infrastructure to projects, with manufacture planned to commence in the first quarter of 2018. The Company intends to continually refine its modular designs to reduce the cost of its core data centre technology and improve assembly efficiency at its Perth facility.

The Company intends to use the funds raised from the Offer to expand its business model to operate modular data centre facilities in Sydney and Melbourne. Data Exchange colocation facility design will employ a combination of shared power and cooling infrastructure with modular white space to deliver low capex, fast-start, large scale colocation solutions. The Company has entered into long term lease agreements for the lease of facilities at these locations. Subject to the success of the Offer, the Melbourne and Sydney facilities are planned to officially open for business in the last quarter of 2018.

Data Exchange therefore intends to have two core revenue streams from the sales of separate data centre modules to third party colocation owners and the recurring revenue from operating its own colocation facilities.

In addition to the Sydney and Melbourne facilities, Data Exchange intends to explore the lease of further facilities in Australia in 2019 and to assess a number of opportunities to operate facilities in South East Asia. The Company intends new data centre facilities to be either operated solely by Data Exchange, developed in joint-venture with local partners or delivered as a technical solution to third party operators and global cloud providers.

3.2 General information - Data Centre

A data centre is a facility that houses computers used to deliver information and applications ( Apps ) to the Cloud.

Data centres can be dedicated to one organisation or they can be shared facilities where many companies house their computers. Shared facilities are known as colocation datacentres.

Colocation data centres built by Data Exchange offer four primary services being security, power, cooling and communications. Most customers typically rent standard computer racks from the data centre operator and nominate a level of power required to run the computers they plan to install in each rack. The data centre operator charges a monthly fee for the rack and power and the customer in most instances, provides its own computers and networking equipment. The data centre operator generally provides security control for access to the facility, power distribution to the rack, circulation and cooling of the hot air produced by the computers and access to telecommunication service providers for data transmission.

Modern data centres provide at least a primary and secondary power and cooling system to ensure the facility is online all the time. These are known as Tier-III facilities in reference to a definition owned by the Uptime Institute that classifies the operational resilience of a data centre.

<26>

Company and Business Overview

Colocation data centres provide economies of scale that reduce the cost of hosting and operating computer systems which were traditionally housed in office buildings. The migration of computer systems from offices as well as the establishment of new Cloud services is driving significant growth in demand for colocation data centres.

3.3 Tier Certification

The Uptime Institute is an unbiased advisory organization focused on improving the performance, efficiency, and reliability of business-critical infrastructure through innovation, collaboration, and independent certifications. Uptime Institute’s tier certifications are recognized by many data centre customers as a reliable indicator of the resilience of a data centre’s design and engineering.

The past decade has seen Uptime Institute Tier-III certification become a common standard for retail colocation data centre engineering. As described above, Tier-III certification broadly means the data centre has a secondary source and distribution path for power and cooling infrastructure. Tier-IV design is more resilient but less common due primarily to the cost of construction and maintenance when compared to the benefit over Tier-III engineering. Tier-IV is essentially three power and cooling feeds and offers the added advantage of maintaining redundancy of two feeds when one feed is offline for maintenance.

Data Exchange’s modular engineering approach allows it to design colocation facilities that meet Uptime Institute Tier-II, Tier-III and Tier-IV certifiable standards. Data Exchange’s modular solution to colocation data centre construction allows it to deliver a blend of Tier-III and Tier-IV space within the one facility and even offers Tier-II space for customers that require very little resilience at all. This blended approach provides Data Exchange customers with more flexibility to match their data centre infrastructure to the specific requirements of the function their computers perform and the data they store. Higher tiered engineering is more expensive and so providing customers with choice can significantly reduce the average cost of using a Data Exchange facility when compared to more rigid data centres.

3.4 Data Exchange Business Model

Data Exchange business model consists of two primary revenue streams as follows:

a . Colocation rack revenue : Data Exchange intends to develop and operate modular colocation data centres. As such, revenue will be derived from customers paying a monthly fee to rent racks that house their computers in Data Exchange’s proposed colocation facilities. Typical customers will be network operators, enterprise, content and digital media and cloud service providers that require a safe, stable and readily accessible facility to house their computers and data.
b . Manufacture of infrastructure : Data Exchange will generate revenue from the construction and sales of data centre modules and associated infrastructure that is sold to other operators of data centre space as well as the continued provision of consultancy services for the management of a data centre facility owned by Data Centre Limited (DCL). Data Exchange will approach prospective customers that require places to house their on-premise computers and data including mining companies, port operators, manufacturers and utilities. Further details of the Company’s current manufacturing operations are set out in Section 3.5.

The overarching driver of demand for Data Exchange’s technology is the world’s ever-increasing dependency on computers to deliver new services and improve productivity. As the internet and mobile technology reaches more and more people, the global demand for data centres is expected to continue to grow.

DATA EXCHANGE | PROSPECTUS 2018 <27>

3.5 Manufacture of data centre modules

Data Exchange designs, engineers and will manufacture its own core infrastructure in Australia. Data Exchange has developed its technical solution to optimise the density of racks and power it can deliver in a standard containerised unit. By sourcing components direct from manufacturers and optimising subsystem design to improve assembly efficiency, Data Exchange intends to reduce the overall cost of delivering modular data centres at scale. The Company does not currently have any written, on-going supply agreements for components in place. As such, no relationship with an individual supplier is considered to be material to the business of the Company at this time.

When working with partners to deliver customised stand-alone data centre solutions, Data Exchange begins with a foundation of its core white-space data modules and builds power, cooling and data distribution support infrastructure to suit the installations specific requirements. The Company intends that modules will come capable of connecting data centre operating software, providing a total data solution which can be quickly deployed.

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Figure 1: Standard 40’ white-space data centre module with 17 racks

The Company believes that it can deliver facilities for a comparatively low cost per megawatt of colocation space deployed. This, coupled with its ability to engineer and manufacture customerspecific solutions makes it a competitive developer of data centre facilities.

Data Exchange considers that its module designs offer high rack density at a low cost per module, making them a perfect solution for large-scale colocation applications all the way down to smaller single-module deployments.

The Company has entered into an agreement with DCL under which it currently provides DCL with data centre management services, and will provide infrastructure for data centre modules, and associated data centre operating software on an exclusive basis. A summary of this agreement is set out in Section 10.1. Additionally, the Company is in negotiation for entry into an additional supply agreement with a third party, however does not consider that this agreement will be material to the operation of its business.

The Perth manufacturing facility is located in Balcatta and consists of a warehouse, hard-stand, manufacturing area, training facility, engineering department and head office. Construction of data centre modules is anticipated to commence in the first quarter of 2018 with an order from a Perthbased company for modules that will be deployed in Australia. The Company does not consider this order to be material to the business. Data Exchange also intends to manufacture modules for use in its own colocation data centres from this facility.

<28>

Company and Business Overview

3.6 Data Exchange’s Proposed Colocation Data Centres

Data Exchange intends to offer a colocation solution with more technical flexibility at a more competitive price than other traditional operators of large-scale data centres. The modular design of facilities engineered by Data Exchange, using small containerised units of construction, allows Data Exchange to vary its technical solution to suit specific customer requirements on a rackby-rack basis within the one facility. Additionally, it is anticipated that the design, engineering and development of core technology will significantly reduce the capital cost of a Data Exchange colocation data centre.

The Company has entered into agreements for the lease of colocation facilities in Sydney and Melbourne, as summarised in Sections 10.2 and 10.3.

The key features of the Company’s proposed colocation data centres are set out below.

a. Colocation Site Selection

Data Exchange intends to use existing industrial buildings in key retail colocation precincts to establish and fit out its data centres. A retail colocation site is typically close to commercial centres and near other colocation facilities where communications services tend to aggregate for easy cross-connection.

Where traditional operators seeking green-field development sites may struggle to find suitable locations to build new data centres in these premium locations, Data Exchange’s modular, agile approach may offer more options from which it can identify suitable buildings and deliver data centres into production quickly. Additionally, the operation of colocation data centres using existing industrial sites is expected to allow Data Exchange to deliver more data centres faster than traditional operators which purchase and construct facilities.

The following diagram shows a theoretical layout for a Data Exchange data centre.

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Figure 2: A Typical Data Exchange Colocation Facility Layout

DATA EXCHANGE | PROSPECTUS 2018 <29>

b. Self-contained modules

Because customers can occupy their own dedicated modules and restrict access to only their staff, Data Exchange colocation facilities offer an added level of security over and above traditional facilities where space is shared. The data centre modules are also environmentally isolated from each other, providing complete control of operating temperature on a tenant-bytenant basis and ensuring any adverse event in any module is contained and isolated from the rest of the site.

c. Reduced upfront capital expenditure

The concept of self-contained modules allows a data centre to be initially established with a smaller capital input than under the traditional model, as the Company will be leasing existing facilities and constructing using self-contained modules. The data centre can then be scaled up to the size of a larger traditional data centre by adding further modules. This allows for the provision of additional rack space to be matched to customer demand.

By building out the modular infrastructure in small increments, Data Exchange intends to have the ability to provide a solution of the highest quality with a minimal initial capital output removes the need to secure key tenants ahead of committing to an otherwise larger scale construction and fit out.

<30>

Company and Business Overview

3.7 Initial Development

Data Exchange’s capital light model for deploying data centres is expected to see the first two facilities in Homebush and Port Melbourne delivered using the proceeds from the Offer and existing cash reserves. Each facility will have an average initial capacity of 945 racks.

The two new facility locations chosen by Data Exchange are close to the commercial centres of Melbourne and Sydney. Data Exchange prefers sites close to a central business district for the convenience it offers to customers sending their technicians to site.

The intended capacity and design of the two facilities are:

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LOCATION CAPACITY TIER RATING OPEN DATE
Homebush (Sydney) 960 racks Mixed: Tier-IV, First Quarter
Tier-III and Tier II of 2019
Port Melbourne 920 racks Mixed: Tier-IV, First Quarter
Tier-III and Tier II of 2019
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The technical flexibility offered by Data Exchange’s technical solution and its capacity to compete on price should improve the Company’s ability to compete successfully in the Sydney and Melbourne retail colocation markets.

Because Data Exchange will manufacture data centre modules for third-party operators, it has the potential to generate additional revenue in the short term from sales of modular infrastructure to other in-house data centre operators and cloud service providers.

DATA EXCHANGE | PROSPECTUS 2018 <31>

Strategic Priorities for Growth

The Company’s founders have made significant progress in establishing a team of staff and contractors who are experts in the field of data centre design and development. Key management personnel and employees have been engaged in 2017 to lead delivery of results in these six strategic focus areas for the Company’s expansion:

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Identify Expansion Sites in Asia

Data Exchange intends to target customers in Singapore and the Philippines for the sale of data centre infrastructure and modules, and the potential establishment of colocation facilities in these territories. This team, supported by the Company’s Chairman has extensive experience in the Asian market and will continue to seek out new opportunities.

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Consolidate manufacturing

Establishment of an in-house manufacturing facility to increase production speed and output capacity has begun. The effort to streamline engineering-tomanufacturing systems is ongoing.

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Expand Technology Sales Capacity

Data Exchange will continue to employ experienced modular data centre sales experts to further build on the pipeline of new data centre construction opportunities.

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Construct New Data Centres

A team of highly experienced data centre engineers and infrastructure delivery experts has been assembled in order to expedite construction of new data centres, starting in Melbourne and Sydney.

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Deliver Front-of-house Services

The Company’s infrastructure monitoring system and online customer portal are an essential customer-facing service and substantial asset to the business.

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Build a Colocation Sales Team

A new team will be recruited to lead the effort to build out a strong sales pipeline for the new colocation data centres planned in Australia.

<32>

Company and Business Overview

3.8 Competitive Advantages

Data Exchange’s core competitive advantages can be summarised as follows:

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Capital Efficient

Offering individual modules in its proposed colocation facilities will allow a facility to be initially established with a smaller capital output, and then scaled up in line with customer demand by the construction of further modules. Incremental growth in-line with customer demand delivers a higher return sooner on capital invested in colocation data centres.

Proposed colocation facilities

Subject to raising the Minimum Subscription, the Company will have sufficient funds to implement the delivery of two colocation data centres located in Sydney and Melbourne.

Speed to Market

Data Exchange will use existing buildings to establish colocation facilities, which will allow the Company to deliver data centre modules for potential customers more quickly than traditional operators which purchase and construct facilities.

In-House Manufacturing

Data Exchange can build solutions that meet various customer requirements and specifications. Control over engineering and construction guarantees long term design consistency and product supply and as such offers a comparative advantage against competitors through the reduction of supply risk for customers.

Experience team

The Company has a highly experienced team to progress the operation of colocation facilities in Sydney and Melbourne, and continue the development of technology for the manufacture of data centre modules.

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Original Technology

The Company has developed technology for the construction of infrastructure for data centre modules that ensures it meets various customer requirements and specifications. Data Exchange has its own in-house engineering team developing solutions to suit customer requirements. The Company’s data centre modules deliver high rack density and high operational efficiencies and are protected by trademark and trade secret laws. The Company intends to undertake further development to continue to refine its modular designs to reduce the cost of its core data centre technology and improve assembly efficiency at its Perth facility.

Vertical Integration

Data Exchange will build its own data centre modules and continue to engineer the infrastructure that powers and cools these units in its colocation facilities. The Company’s anticipated control over construction of data centre modules provides for long term design consistency and quality, and product supply, and as such offers a comparative advantage against competitors through the reduction of supply risk.

IoT Platform

Data Exchange develops its own monitoring and control software to deliver. This IoT platform provides independence and flexibility to Data Exchange while delivering online services to its customers, and provide customers with a total data centre portal solution.

DATA EXCHANGE | PROSPECTUS 2018 <33>

3.9 Significant Dependencies

The key factors the Company will depend on to meet its objectives are:

(a) successful completion of the Offer, and continued access to capital to further develop the Company’s technology and execute the Company’s business model and growth strategy;
(b) the uninterrupted use of the two proposed colocation data centre facilities in Sydney and Melbourne;
(c) continued availability of adequate electrical supply at chosen colocation facilities;
(d) continued regulatory support (for example, council approvals and public utility regulatory policies) allowing operation of data centres at the chosen colocation facilities;
(e) brand reputation and management, to ensure ongoing demand for the Company’s data centre modules;
(f) sufficient demand for the Company’s data centre modules and the Company’s ability to sell; and
(g) retaining key personnel of the Company and recruiting additional personnel skilled in the data centre sector.

Further details of these dependencies are set out in Section 5.

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Company and Business Overview

3.10 Intellectual Property

Data Exchange will continue to develop its library of designs and technical solutions which the aim of ensuring continual improvement in cost optimisation in its construction of infrastructure for modular data centres. These designs and technologies are protected by a registered trademark and unregistered trade secret laws.

Full details of the intellectual property interests of the Company are set out in the Intellectual Property Report in Section 6. A summary of the key details of the Company’s registered trademark and patent applications are in the tables below.

a. Trademark

Details of the trademark is set out below:

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TITLE COUNTRY REGISTRATION RENEWAL DUE
DATE
Autofloor [1] Australia 16 July 2016 16 July 2026
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Note : This trademark was originally filed by Tim Desmond and subsequently transferred to the Company.

b. Patent Applications

Data Exchange also holds the patent applications as set out in the table below which cover the key aspects of the high-density modular data centres. The patent applications relate to technology currently used by Data Exchange in the construction of high-density modular data centres which have already been deployed.

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TITLE COUNTRY APPLICATION NO. INTERNATIONAL
FILLING DATE
An equipment displacement International 05061 30 July 2016 [2]
system for a containerised
data centre (Application) [1]
High-density modular data International 0050023 16 January 2018 [3]
centre (Application)
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Notes :

This application was originally filed by Tim Desmond and subsequently transferred to the Company.
The International Preliminary Examining Authority of WIPO issued a Written Opinion on 19 October 2017 confirming the novelty of all the claims of this application. The National Phase of this application is due before 29 March 2018.
This application is due for publication by the World Intellectual Property Office (WIPO) around 17 July 2018. The International Searching Authority of WIPO is expected to issue an International Search Report and Written Opinion around 17 May 2018. The National Phase of this application is due before 17 July 2019.

While the grant of the patent applications will afford the Company additional protection of its intellectual property, the Company does not consider the grant of the patents material to the operation of its business.

DATA EXCHANGE | PROSPECTUS 2018 <35>

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RICHARD CARDEN Independent Non-executive Chairman

Mr Carden is the Chairman of the Board. Based in Singapore, Mr Carden has over 25 years of experience in the telecoms, data centre and IT industry and is an accomplished business leader with a solid track record in driving sales productivity and revenue growth.

Mr Carden currently holds the role of Senior Vice President of Integration for Speedcast International Limited (ASX:SDA) where he has been instrumental in the integration of Speedcast’s acquisitions including the recent $425m merger with Harris Caprock. Mr Carden joined Speedcast in 2013 pre-IPO when company had revenues of less than $50M and has helped grow the company to circa $750M of revenues and a $1B market capitalisation.

Previously, Mr Carden served as Global SVP of Sales at Pacnet Ltd, and was responsible for management of over 400 sales and marketing staff and revenues close to $600M USD. Prior to joining Pacnet Ltd, Mr Carden served as the President and Chief Executive Officer of Verizon Business Japan. Before Verizon, Mr Carden served as the Chief Operating Officer of Asia Netcom Japan, where he was instrumental in the development of its local sales organization since its transition from Asia Global Crossing in 2001. Earlier, Mr Carden served in sales leadership positions at MCI Worldcom Japan and British Telecom in London. Mr Carden is a director of four Speedcast subsidiaries within South East Asia.

The Board considers that Mr Carden is an independent Director.

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TERRY DAVID SMART

PETER CHRISTIE

Independent Non-executive Director

Managing Director

Mr Smart has been Managing Director of The Good Guys at JB Hi-Fi Limited (ASX:JBH) since April 18, 2017. Mr Smart served as the Chief Executive Officer of JB Hi-Fi Limited from May 2010 to June 30, 2014. Mr Smart was a founding Director of JB H-Fi and served as the Chief Operating Officer from 2000. During his tenure at JB Hi-fi, Mr Smart was instrumental in developing the company from initial public offering to a dominant Australian retailer with a A$3B market cap. Prior to JB Hi-Fi, Mr Smart was General Manager of Operations of Kodak’s retail store network in Australia. Mr Smart was a major founding shareholder in Datacentre Limited.

Mr Christie is co-founder and Managing Director of Data Exchange. Prior to this Mr Christie was the founder and Executive Director of Datacentre Limited, the first company to build a containerised data centre in Australia. Prior to Data Exchange and Datacenter Limited, Mr Christie held the role of Global Account Director for Orange Business Services Pty Ltd where he was responsible for a team delivering the global voice and data network for one of Australia’s largest international mining companies. Previously Mr Christie held business development leadership positions at TIBCO, Mincom and Logica, working on projects across Australia, Asia and the Middle East. Mr Christie has 25 years of experience in technology development having started as a software engineer then moving into senior business development roles for major public technology companies including Eastman Kodak, Unisys and Informix. Mr Christie was instrumental in developing a number of start-ups in the software industry prior to establishing Datacentre Limited and cofounding Data Exchange with Mr Desmond and Mr Coetzee.

The Board considers that Mr Smart is an independent Director.

The Board considers that Mr Christie is not an independent Director.

3.11 DIRECTORS AND KEY PERSONNEL

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Company and Business Overview

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TIM DESMOND Chief Technology Officer

Mr Desmond is a co-founder and Chief Technology Officer of Data Exchange. Mr Desmond is the technical architect responsible for product development and design of Data Exchange’s modular data centre systems. Prior to Data Exchange, Mr Desmond co-founded DX Platforms where he designed, engineered and managed the manufacture of modular data centres for its clients including the 1,088-rack capacity Datacenter Limited colocation facility in Perth, Western Australia.

Mr Desmond created patented solutions for high density modular data centres technology and multi-level data centre racking. Mr Desmond has created a number of unique power-led designs that significantly reduce the construction costs of highdensity modular colocation data centres. Mr Desmond has developed a unique IoT system for remote monitoring and measurement of datacentre infrastructure. Mr Desmond has a multi-industry background within military, mining, police, information technology and banking data centres. Mr Desmond is a Certified Data Centre Expert (CDCE).

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DEAN COETZEE Chief Sales Officer

Mr Coetzee is a co-founder and Chief Sales Officer of Data Exchange. Prior to this, Mr Coetzee co-founded DX Platforms where he served as CEO and led the business development effort that saw DX Platforms become one of the most successful Australian developers of modular data centre technology.

Mr Coetzee co-founded the Company and was the Company’s Director of Business Development, managing its front-line sales and marketing operations in Australia, Africa, Singapore and the Philippines. Mr Coetzee has extensive experience in IT infrastructure delivery and services with 15 years of front-line business development for Naspers Limited (South Africa), Johnnic Media, TRT and DX Platforms. Mr Coetzee is responsible for business development and expansion including all sales, marketing and front-ofhouse services.

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GEORGE LAZAROU

Company Secretary and Chief Financial Officer

Mr Lazarou is a qualified Chartered Accountant with over 25 years’ experience, including five years as a partner of a mid-tier accounting firm, specialising in the areas of audit, advisory and corporate services. Mr Lazarou has extensive skills in the areas of corporate services, due diligence, independent expert reports, mergers & acquisitions and valuations.

Mr Lazarou also brings with him a high level of commercial skills having worked closely with publicly listed companies in the mining, building, engineering, environmental, information technology and construction industries.

Mr Lazarou is currently a director, company secretary and Chief Financial Officer of ASX Listed, eSports Mogul Asia Pacific Limited, and has previously been a director and company secretary of a number of ASX listed companies.

DATA EXCHANGE | PROSPECTUS 2018 <37>

3.12 Dividend Policy

The Board anticipates that significant expenditure will be incurred in the development of the business. These activities are expected to dominate at least, the first two year periods following the date of this Prospectus. Accordingly, the Company does not expect to declare any dividends during that period.

Any future determination as to the payment of dividends by the Company will be at the discretion of the Directors and will depend on the availability of distributable earnings and operating results and financial condition of the Company, future capital requirements and general business and other factors considered relevant by the Directors. No assurance in relation to the payment of dividends or franking credits attaching to dividends can be given by the Company.

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Company and Business Overview

3.13 Capital Structure

The capital structure of the Company following completion of the Offer is summarised below:

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MINIMUM SUBSCRIPTION
Shares currently on issue as at the date of this Prospectus 75,000,000
Shares issued pursuant to the Offers 80,000,001
Shares to be issued on conversion of Convertible Notes 27,312,500
Total Shares on issue after completion of the Offers 182,312,501
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Options

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MINIMUM SUBSCRIPTION
Options on issue as at the date of this Prospectus 32,500,000
Options to be issued on conversion of the Convertible Notes 6,828,125
Options to be issued pursuant to this Prospectus Nil
Total Options on issue after completion of the Offers 39,328,125
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Note 1 : Unquoted Options exercisable at $0.30 on or before 30 November 2020.

Convertible Notes

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MINIMUM SUBSCRIPTION
Convertible Notes on issue as at the date of this Prospectus 4,370,000 [1]
Convertible Notes to be issued under this Prospectus Nil
Total Shares on issue after completion of the Offers Nil
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Note 1 : Comprised of 1,400,000 Ellerston Convertible Notes on the terms and conditions set out in Section 10.9 and 2,970,000 Investor Convertible Notes on the terms and conditions set out in Section 10.10. All Convertible Notes on issue as at the date of this Prospectus will have converted into Shares and Conversion Options prior to the Company’s admission to the Official List.

Subject to the Company being admitted to the Official List, certain Securities on issue prior to the Offer will be classified by ASX as restricted securities and will be required to be held in escrow for up to 24 months from the date of Official Quotation. No Shares issued under the Offer will be subject to escrow under the ASX Listing Rules.

During the period in which these Securities are prohibited from being transferred, trading in Securities may be less liquid which may impact on the ability of a Shareholder to dispose of his or her Securities in a timely manner.

It is estimated that 75,000,000 Shares and 32,500,000 Options will be subject to escrow for 24 months from the date of Official Quotation (held by Directors and Promoters).

The Company will announce to the ASX full details (quantity and duration) of the Shares and Options required to be held in escrow prior to the Shares commencing trading on ASX.

In addition to escrow restrictions imposed by ASX, IWG Holdings Pty Ltd, an entity associated with Cadmon has agreed that the 5,000,000 Shares it holds will be subject to an additional voluntary escrow period of 12 months, making the total escrow period 36 months commencing on the date the Company is admitted to the Official List.

DATA EXCHANGE | PROSPECTUS 2018 <39>

3.14 Substantial Shareholders

Those Shareholders holding 5% or more of the Shares on issue both as at the date of this Prospectus and on completion of the Offer are set out in the respective tables below.

As at the date of the Prospectus

Shareholder Shares Options % (undiluted)

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SHAREHOLDER SHARES OPTIONS % (UNDILUTED)
Carason Ward Pte Ltd [1] 55,700,000 4,333,333 74.27%
Herdsman Lake Capital 13,925,000 2,166,677 18.57%
Asia Pte Ltd [2]
IWG Holdings Pty Ltd [3] 5,000,000 7,500,000 6.66%
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Notes

1 An entity controlled by Mr Dean Coetzee and Mr Tim Desmond.
2 An entity controlled by Mr Peter Christie.
3 An entity controlled by Mr Cameron Low.

On completion of the Offer with Minimum Subscription (assuming no existing substantial Shareholder subscribes and receives additional Shares pursuant to the Offer)

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SHAREHOLDER SHARES OPTIONS % (UNDILUTED)
Carason Ward Pte Ltd [1] 55,700,000 5,000,000 30.55%
Herdsman Lake Capital 13,925,000 2,500,000 7.64%
Asia Pte Ltd [2]
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Notes

1 An entity controlled by Mr Dean Coetzee and Mr Tim Desmond
2 An entity controlled by Mr Peter Christie

3.15 Top 20 Shareholders

The Company will announce to the ASX details of its top-20 Shareholders (following completion of the Offer) prior to the Shares commencing trading on ASX.

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Section name
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DATA EXCHANGE | PROSPECTUS 2018 <41>

Industry 4 Overview

Market Overview

Almost every individual, small business, corporation and government agency interacts with a server hosted in a data centre on a daily basis. The rise of Cloud computing, video on demand as well as new applications including crypto-currency mining, smart home devices, wearable technology, gambling and gaming has increased the demand for Cloud services.

The size of the global Cloud services market is estimated to be approximately US$277 billion[2] . The size of the Cloud services market in:

the Asia-Pacific region is estimated to be approximately US$11.3 billion[3] ; and
Australia is estimated to be approximately US$4.2 billion[4] .

The data storage market is a subset of the Cloud services market. The size of the Australian data storage market is estimated to be approximately A$2.1 billion in FY2017[5] . Figure 3 below indicates that data storage revenue in Australia has increased between FY2009 and FY2017 at a CAGR of 18.3% per annum.

Figure 3: Australian data storage services revenue

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2,500
2,000
1,500
1,000
500
0
FY2009 FY2010 FY2011 FY2012 FY2013 FY2014 FY2015 FY2016 FY2017
Source: IBISWorld (IBISWorld Industry Report J5922 – Data Storage Services in Australia – October 2017). IBISWorld has not
consented to the use of the information in the form or context in which it is included in this Prospectus.
A$m
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2 Frost & Sullivan (Data Centres: The Infrastructure That Underpins the Cloud May 2017). Frost & Sullivan has not consented to the use of the information in the form or context in which it is included in this Prospectus
3 Frost & Sullivan (Data Centres: The Infrastructure That Underpins the Cloud May 2017). Frost & Sullivan has not consented to the use of the information in the form or context in which it is included in this Prospectus
4 Frost & Sullivan (Data Centres: The Infrastructure That Underpins the Cloud May 2017). Frost & Sullivan has not consented to the use of the information in the form or context in which it is included in this Prospectus
5 IBISWorld (IBISWorld Industry Report J5922 – Data Storage Services in Australia – October 2017). IBISWorld has not consented to the use of the information in the form or context in which it is included in this Prospectus

<42>

Industry overview

The recent general acceptance of Cloud computing has prompted a number of organisations to migrate their computers to colocation data centres or move to public Cloud-hosted applications. As shown in Figure 4 below, colocation as a percentage of global data centre space has increased from approximately 8% in 2007 to approximately 24% in 2014. In Australia, it is estimated that colocation storage revenue represents approximately 29.2% of Australian data storage revenue[6] .

Figure 4: Global data centre space by type

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40
35
8.8
30 6.8 7.4
4.2
25 3.5 25,9 26,6 27,2
2.8 24,8
20 2.3 23,5
1,4 21,2
15 18,7
16,6
10
5
In-house
0 Colocation
2007 2008 2009 2010 2011 2012 2013 2014
Source: Frost & Sullivan (Data Centres: The Infrastructure That Underpins the Cloud May 2017). Frost & Sullivan has not consented
to the use of the information in the form or context in which it is included in this Prospectus.
Sqyare meters (in millions)
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Demand for Data Exchange services is expected to benefit from this trend as companies migrate out of existing in-house facilities and Cloud application service providers seek hosting space.

Data Exchange’s technical solution is particularly suited to remote and regional construction. The Company believes that the opportunity for growth by filling out access to the Internet in emerging markets may be more significant than traditional large-scale data centre operators.

The advent of artificial intelligence driven applications including autonomous vehicles, voice controlled devices and the Internet of things has accelerated growth in demand for colocation space and the Directors believe this may compel colocation providers to become more agile in the way they develop and deploy facilities. Demand for agile construction of regional data centres is also anticipated to be driven by the need for content providers such as Netflix, Microsoft, Alibaba, Apple and Amazon to place media caches closer to the consumer.

Edge computing in the context of data centre infrastructure is the provision facilities to host computers at the extremes of a network rather than the central core. Edge facilities may be used by companies collecting data from sensors at the source of information or by content providers that need to host their data closer to the end consumer. In both cases, the demand for Edge facilities is driven predominantly by a need to improve performance and responsiveness by reducing the distance data has travel over a network. Data Exchange’s modular technology and build-to-order capability makes it an ideal partner for content providers seeking Edge facilities that can be quickly constructed in medium density population zones.

6IBISWorld (IBISWorld Industry Report J5922 – Data Storage Services in Australia – October 2017). IBISWorld has not consented to the use of the information in the form or context in which it is included in this Prospectus

DATA EXCHANGE | PROSPECTUS 2018 <43>

Market Supply

Strong growth in data centre demand over the past decade has encouraged more data centre capacity to be built. Where demand may have exceeded supply by 2010, supply has been trending up to meet this increase and re-balance the market in developed economies. In some underdeveloped markets, supply still may outstrip demand and potentially deliver opportunities for agile developers like Data Exchange.

In a maturing market, competitive pressures tend to squeeze out older, inefficient operators. Data Exchange aims to compete in these markets by choosing locations close to central business districts and delivering Tier-III and Tier-IV data centres at a low cost per megawatt.

In some emerging markets where local power and fibre infrastructure may not be able to sustain large scale construction of data centres in the near-term, Data Exchange may be able to use its modular, agile approach to establish a presence and grow into the market as the surrounding infrastructure expands.

As shown in Figure 6 below, constructing a new traditional data centre can cost anywhere from $60 million to $170 million and this may have historically contributed to barriers to entry for new entrants.

Figure 6: Equinix Q4 2016 Earnings Presentation and NextDC Annual Reports 2012/13/14 (USD/AUD 1/1.31)

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FACILITY OWNER FIRST PHASE LIVE
CAPEX (A$ MILLION)
Sao Paulo SP3 Equinix 90 2017
Amsterdam AM7 Equinix 145 2017
Ashburn DC12 Equinix 129 2017
Sydney SY4 Equinix 127 2016
San Jose SV10 Equinix 164 2017
Frankfurt FR6 Equinix 120 2017
Melbourne M1 Next DC 67 2012
Sydney S1 Next DC 62 2013
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Source: Equinix Q4 2016 Earnings Presentation and NextDC Annual Reports 2012/13/14 (USD/AUD 1/1.31)

Traditional methods see developers create large scale facilities in 1,000 rack modules that require significant up-front capital investment.

Data Exchange takes a capital light approach, deploying capacity in smaller 200-rack sections and adding on to the modular infrastructure in-line with customer take-up. This approach allows more facilities to be established faster in strategic precincts.

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Section name

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DATA EXCHANGE | PROSPECTUS 2018 <45>

Risk 5 Factors

5.1 Introduction

The Shares offered under this Prospectus are considered highly speculative. An investment in the Company is high risk and the Directors strongly recommend potential investors to consider the risk factors described below and in the Investment Overview, together with information contained elsewhere in this Prospectus, before deciding whether to apply for Shares and to consult their professional advisers before deciding whether to apply for Shares pursuant to this Prospectus.

There are specific risks which relate directly to the Company and the business. In addition, there are other general risks, many of which are largely beyond the control of the Company and the Directors. The risks identified in this section and in the Investment Overview, or other risk factors, may have a material impact on the financial performance of the Company and the market price of the Shares.

The following is not intended to be an exhaustive list of the risk factors to which the Company is exposed.

5.2 Company specific

(a) Limited History

The Company is a newly established company and has minimal operational track record, relying primarily on the experience of its key management personnel. The Company’s operational business plan requires substantial upfront capital investment, and there can be no assurance that subsequent operational objectives, including achieving sales will be achieved. Failure to achieve these objectives may have a material adverse impact on the financial performance and/ or position of the Company. An investment in Shares must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development

(b) Technical Risk

The Company’s market involves rapidly evolving products and technological change. To succeed, the Company will need to research, develop, design, manufacture, assemble, test, market and support (i) substantial enhancements to its existing products and (ii) new products, on a timely and cost-effective basis. The Company cannot guarantee that it will be able to engage in development at the requisite levels. The Company cannot assure investors that it will successfully identify new technological opportunities and continue to have the needed financial resources to develop new products in a timely or cost-effective manner. At the same time, products and technologies developed by others may render the Company’s products and systems obsolete or non-competitive.

A substantial part of the Company’s commercial success will depend on its ability to maintain, or as the case may be establish, and protect, the Company’s intellectual property, maintain trade secret protection and operate without infringing the proprietary rights of third parties.

(c) Leasing Racks to Customers

The Company relies on market demand for rental of colocation rack-space. A lack of demand or a change in the nature of that demand may eliminate demand for the Company’s products and services. A lack of demand or oversupply of colocation space could adversely impact the Company’s ability to achieve the desired rates of return on investment and have a material adverse effect on the growth prospects and financial position of the company.

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Risk Factors

(d) Customer Contract Deliverables Failure

The Company’s key deliverable to customers is the continuous and stable supply of key utilities, including electricity and water for power and cooling in accordance with its customer contracts. Any outage, being a failure to deliver power or cooling to a customer rack or space within the terms of a customer contract for a period of time, could result in service credits being applied to a customer account, reducing the amount payable to the Company under a customer contract, or a requirement to pay compensation. In some rare circumstances (for example force majeure or a breach of contract which the Company is not capable of remedying), an event or outage could result in the cancellation of a customer contract which would have a materially adverse effect on the financial performance of the Company.

(e) Contract Risk

Customer contracts may allow for immediate termination and customers may default due to bankruptcy or other reasons. Customer termination or default would have a materially adverse effect on the financial performance of the Company.

The Company may offer fixed price contracts and should costs increase above anticipated levels during the term of those contracts, then those contracts would have a materially adverse effect on the financial performance of the Company.

(f) Development Risk

The Company is involved in the development of data centres, including the proposed new sites for Sydney and Melbourne. Generally, development projects have a number of risks including:

(i) the risk that suitable sites or required planning consents and regulatory approvals, including approvals from the local water authority and the local power distribution grid operator, are not obtained or, if obtained, are received later than expected, or are adverse to the Company’s interests, or are not properly adhered to;
(ii) the escalation of development costs (including the costs of construction and fit out and any associated delays) beyond those originally expected;
(iii) unforeseeable project delays beyond the control of the Company; and
(iv) non-performance/breach of contract by a contractor or sub-contractor. Increases in supply or falls in demand could influence the acquisition of sites, the timing and value of sales and carrying value of projects.

Other risks include contamination risk, risks relating to the contractual allocation of risk, risks relating to authorisations and permits, future development risks, capital expenditure risk, contractor insolvency risk, financial leverage, technology risk, competition risk, a lack of industry diversification, CPI risk, reliance on management expertise and financial information and forecasts risk.

(g) Infrastructure and Technology Failure

The Company relies on its infrastructure and technology to provide its customers with a highly reliable service. There may be a failure to deliver this level of service as a result of numerous factors, including human error, power loss, equipment failure, improper maintenance including by landlords and security breaches. Service interruptions, regardless of their cause, may cause contractual and other losses to the Company.

(h) Lease risks

The Company holds long term leases over buildings in Melbourne and Sydney. Any breach or termination of these leases could have a material adverse impact on the Company.

(i) Reputational Risk

Any negative publicity regarding the Company or its Board, officers or employees, or the performance of its products, will adversely affect the Company’s ability to generate revenue.

(j) Competition Risk

The market in which the Company participates is competitive and characterised by rapid technological change. The Company’s potential inability to improve existing product lines and develop new products and technologies could have a material adverse effect on the Company’s business. In addition, the Company’s competitors could introduce new products with greater

DATA EXCHANGE | PROSPECTUS 2018 <47>

capabilities or better pricing which could have a material adverse effect on the Company’s business. The Company competes with larger companies with greater resources on the basis of performance, cost, overall value, delivery and reputation.

(k) Approval Risk

The operation of colocation facilities by the Company may require some local, state or federal authority approvals associated with building works and the delivery of utility services to the sites.

There is no guarantee that approvals will be obtained within a timely fashion or on the terms requested or expected. A delay in obtaining the necessary approvals or changes made to a development in order to obtain the necessary approvals may materially adversely affect a development and consequently the returns to be paid to the Company.

(l) Key Personnel Risk

A failure to attract and retain executive, business development, technical and other key personnel could reduce the Company’s revenues and operational effectiveness. There is a continuing demand for relevant qualified personnel, and the Company believes that its future growth and success will depend upon its ability to attract, train and retain such personnel. Competition for personnel in the Company’s industry is intense, and there is a limited number of persons with knowledge of, and experience in, this industry. An inability to attract or maintain a sufficient number of requisite personnel could have a material adverse effect on the Company’s performance or on the Company’s ability to capitalise on market opportunities.

(m) Dilution

Investors may be diluted by future capital raisings by the Company. Shares may be issued to finance future data centre development, acquisitions or pay down debt which may, under certain circumstances, dilute the value of Shareholders’ interests. The Company will only look to raise equity if it believes that the benefit to investors of acquiring the relevant assets or reducing gearing is greater than the impact caused by the dilution associated with a capital raising.

(n) Liquidity risk and concentration of shareholding

The Shares to be issued pursuant to this Prospectus will comprise 43.88% of the Company’s issued Shares. In addition, substantial shareholders will hold more than 38.20% of the Company’s issued capital (refer Section 3.15 for further details of substantial Shareholders). There can be no guarantee that an active market in the Company’s Shares will develop or that there will be an ongoing liquid market for the Company’s Shares. Accordingly, there is a risk that, should the market for the Company’s Shares become illiquid, Shareholders will be unable to realise their investment in the Company. In addition, any sale of Shares by a substantial Shareholder could have a negative impact on the price of Shares.

(o) Funding for the Company

Although the Directors believe that, on completion of the Offer, the Company will have sufficient working capital to carry out its stated business objectives, there can be no assurance that such objectives can be met without further financing or, if further financing is necessary, that it can be obtained on favourable terms or at all. If additional funds are raised by issuing equity securities, this may result in dilution of some or all of the existing Shareholders of the Company.

The Company’s ability to raise capital from either debt or equity markets on favourable terms for future activities cannot be guaranteed and is dependent on a number of factors, including:

(i) the general economic climate;

(ii) the state of debt and equity capital markets; and

(iii) the performance, reputation and financial strength of the Company.

A lack of or increased cost of capital could impact the funding costs of the Company and therefore impact the Company’s earnings

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Risk Factors

(p) Management of future growth

The Company may experience rapid growth and an increase in the number of its employees. This growth will potentially result in new and increased responsibilities for management and place a significant strain on the Company’s management. The Company will be required to continue to implement and improve its systems in a timely manner in order to accommodate the increased number of transactions and customers and the increased size of its operation. A failure to do so may adversely affect the Company’s revenue and profitability.

(q) Foreign Operation

The Company has operations outside of Australia and investors should be aware of the risks of operating internationally. These risks include but are not limited to regulatory requirements, tariffs, customs, duties and other trade barriers, exchange rates, collecting amount receivable, political instability, expropriation, nationalisation and war.

(r) Litigation, Claims and Disputes

The Company may be subject to litigation and other claims and disputes in the course of its business, including contractual disputes, employment disputes, occupational and personal claims. Such litigation, claims and disputes, including the costs of settling such claims, could materially adversely affect the Company’s business, operations and financial performance.

5.3 Industry specific

(a) Risks associated with the regulatory environment

The Company’s main operating entity is Australian based and subject to Australian regulation. The Company is required to comply with the Corporations Act and the Competition and Consumer Act 2010. Users, competitors, members of the general public or regulators could allege breaches of this legislation, if they considered an advertisement to be misleading or deceptive. This could result in remedial action or litigation, which could potentially lead to the Company being required to pay compensation or a fine.

The Company’s operations may become subject to regulatory requirements, such as licensing and reporting obligations, which would increase the costs and resources associated with its regulatory compliance. Any such increase in the costs and resources associated with regulatory compliance could impact upon the Company’s profitability. In addition, if regulators took the view that the Company had failed to comply with regulatory requirements, this could lead to enforcement action resulting in public warnings, infringement notices or the imposition of a pecuniary penalty. This could lead to significant reputational damage to the Company and consequently impact upon its revenue.

(b) Supply and pricing of electricity

The Company’s primary input is electricity. The Company will rely on third parties for the reliable and sufficient supply of electrical power to its data centres. It cannot be guaranteed that these third parties will be able to consistently provide sufficient levels of electrical power or will have the necessary infrastructure to deliver any additional power that the Company may require. The Company intends to mitigate this risk by fitting back-up power generation capability at each site to cover temporary power outage. However, this may be unable to provide ongoing service to the extent outages last beyond backup and alternative power arrangements. Inability to satisfy customer obligations by these means may materially adversely impact the financial position, profits and growth prospects of the Company. Further, restriction of supply to its colocation sites can adversely affect the Company’s results by constraining the number of computers that can be housed in a facility which would limit the colocation revenue able to be generated from that facility.

(c) Environmental Impact

Data centres consume more electricity than many other industries in similar metropolitan locations. Regulatory constraints placed on energy intense industries might increase the cost of operating data centres in some countries and could adversely affect the Company’s results.

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(d) Insurance

The Company intends to insure its operations in accordance with industry practice. However, in certain circumstances the Company’s insurance may not be of a nature or level to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the business, financial condition and results of the Company.

Insurance of all risks associated with the Company’s business may not always be available and where available the costs may be prohibitive.

(e) Security Risk

Security risks, including physical threats, loss of power, flooding, fire, explosion, aircraft impact, terrorism, malicious damage and external hacking and/ or the malfunction of response equipment may have sustained and adverse impacts on the Company’s business viability through the loss of future revenues or payment of damages (not otherwise insured).

(f) Future Acquisitions

The Company will evaluate property investments and other opportunities that it believes are consistent with its strategy. There is no guarantee that the Company will be able to successfully complete future acquisitions.

Further, the Company may not be successful in identifying future acquisition opportunities, assessing the value, strengths and weaknesses of these opportunities or finalising acquisitions on acceptable terms or at all. While it is the Company’s policy to conduct a thorough due diligence process in relation to any such acquisition, risks remain that are inherent in such acquisitions. The Company’s past and future acquisitions may subject it to unanticipated risks and liabilities, or disrupt its operations and divert management’s attention and resources from the Company’s day-to-day operations.

5.4 General risks

(a) Economic

General economic conditions, introduction of tax reform, new legislation, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company’s activities, as well as on its ability to fund those activities.

(b) Market conditions

Share market conditions may affect the value of the Company’s quoted securities regardless of the Company’s operating performance. Share market conditions are affected by many factors such as:

general economic outlook;
introduction of tax reform or other new legislation;
interest rates and inflation rates;
changes in investor sentiment toward particular market sectors;
the demand for, and supply of, capital; and
terrorism or other hostilities.

The market price of securities can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general and industrial stocks in particular. Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company.

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Risk Factors

(c) Additional requirements for capital

The Company’s capital requirements depend on numerous factors. Depending on the Company’s ability to generate income from its operations, the Company may require further financing in addition to amounts raised under the capital raising. Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations and scale back its construction of its proposed colocation facilities. There is, however, no guarantee that the Company will be able to secure any additional funding or be able to secure funding on terms favourable to the Company.

(d) Reliance on key personnel

The responsibility of overseeing the day-to-day operations and the strategic management of the Company depends substantially on its senior management and its key personnel. There can be no assurance given that there will be no detrimental impact on the Company if one or more of these employees cease their employment.

(e) Investment speculative

The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the Shares offered under this Prospectus.

Therefore, the Shares to be issued pursuant to this Prospectus carry no guarantee with respect to the payment of dividends, returns of capital or the market value of those Shares.

Potential investors should consider that the investment in the Company is highly speculative and should consult their professional advisers before deciding whether to apply for Shares pursuant to this Prospectus.

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Intellectual 6 property report

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Intellectual property report

The Board of Directors

The Data Exchange Network Limited Level 25, 108 St Georges Terrace

Perth WA 6000 Australia

12 February 2018

Dear Directors,

Re: Intellectual Property Report – The Data Exchange Network Limited

1. Introduction and report Summary

This report has been prepared at the request of the Directors of The Data Exchange Network Limited, trading as ‘Data Exchange’, (hereinafter “TDEN”), a public company registered in Australia (ACN 620 888 548), for inclusion in a Prospectus required for lodgement at the Australian Securities and Investments Commission for the purpose of raising funds through the issue of securities.

Patenteur is engaged by TDEN for professional patent and trade mark services. Patenteur has been, and will continue to be, involved in the preparation, filing, prosecution and maintenance of the patent and trade mark applications detailed in Section 3 below. The status summary of the patents and trade marks (both registered and pending) provided in this report is correct to the best of our knowledge after conducting reasonable due diligence and research, as at the date of this report.

Section 2 provides general information on Intellectual Property (hereinafter “IP”).

Section 3 provides an overview of TDEN’s IP Portfolio.

Section 4 addresses Proprietorship of the IP portfolio.

Section 5 outlines the Qualifications and Limitations of this report.

Section 6 presents our Statement of Independence.

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2. Intellectual Property

2.1 Meaning of Intellectual Property

Generally, “intellectual property” refers to a group of registrable and non-registrable rights, including rights in patents, designs, trade marks, plant varieties, copyright, confidential information and trade secrets. Intellectual property has many of the characteristics possessed by real and personal property. In particular, intellectual property is an asset, which may be bought, sold, licensed, exchanged, or otherwise transferred as other forms of property. Accordingly, an intellectual property owner has the right to prevent the unauthorised use, manufacture, import, or sale of its property.

Patents are a form of intellectual property which protect new and non-obvious inventions, such as new products or processes, and are granted in exchange for the inventor’s full disclosure of the invention to the public. Trade marks are used to distinguish good or services of one trader from another and can include words, logos, colours, sounds and smells. This report is primarily concerned with patents, patent applications, registered trade marks and applications for the registration of trade marks which are the property of TDEN.

This section is meant to provide only a high level summary of some of the IP systems and should not be interpreted as providing an exhaustive description of law or of related risks regarding these IP systems.

2.2 Patents

Patent rights constitute an important component of intellectual property and provide protection for new, inventive (or innovative, in the case of Australian innovation patents), and useful inventions for a limited period. Patents may be granted in respect of new or improved products, compositions, and processes in most areas of current scientific, commercial, and industrial activities. The requirements for patent-eligible subject matter differ from jurisdiction to jurisdiction and may also change over time. We have not formed an opinion on whether the subject matter of the currently pending Australian provisional patent applications constitutes patent-eligible subject matter on a jurisdiction-byjurisdiction basis.

Pursuant to the Paris Convention for the Protection of Industrial Property, the filing of an initial patent application in, for example, Australia establishes a priority date for the invention in Australia and all other countries that are a party to this Convention, including

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countries such as the United States, Canada, New Zealand, Europe and Japan. The usual steps towards obtaining a patent in Australia and other countries in respect of an invention begins by filing a provisional patent application. The filing of a provisional patent application establishes the priority in respect of the invention disclosed in the specification accompanying the provisional patent application. A provisional patent does not grant any enforceable monopoly right in relation to the invention to which it refers.

Within twelve months from the date of the filing of the provisional patent application, a complete application must be lodged, failing which the provisional patent application, which remains pending for only twelve months, ceases to exist, along with the priority date set thereby. Thus if no application is filed within one year of the provisional patent application, the priority date is no longer valid. Within the one year pendency of the provisional application, to obtain protection other countries the applicant may file separate national patent application in each of the countries in which protection is require. Alternatively, the applicant may file a single international application in terms of the provisions of the Patent Cooperation Treaty (generally referred to as a “PCT” application or an “International” application) in which it is possible to designate countries or regions in which protection is required. The International application itself does not mature into a worldwide patent, but at the end of the international phase, during the so-called National Phase, steps may be taken to file the application into any of the countries or regions designated in the original International application.

Regional patent applications, such as a European regional application, may also be filed. A European application may designate any or all countries that are a party to the European Patent Convention. The European patent application is processed centrally and in a single language and, if ultimately successful, can mature into a granted European patent, which must then be validated in each country in which protection is sought, some of which require translation into that country’s native language.

Usually before patents are granted in any jurisdictions, the patents are examined by the national or regional Patent Office for novelty and an inventive step. The degree of examination varies from country to country and in some jurisdictions can merely be an examination as to the formality of the paper work. In other jurisdictions examination is much more rigorous and, subject to that examination, a patent may or may not be granted in respect of an invention.

In Australia and most other countries, patent rights may be kept in force for a period of twenty years from the date of the filing of the complete application on which the patent is granted, and while the patent is in force the owner has the exclusive right to stop others

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from exploiting the invention. After a patent has been granted, renewal or maintenance fees may need to be paid, otherwise the patent will cease or expire.

Enforcement of patent rights varies from country-to-country. The remedies for unauthorised use (patent infringement) available to the patent owner may include an injunction, which effectively stops further infringement of the patent, damages or account of profits, and costs. The cost of patent enforcement varies significantly from country-tocountry in addition to the calculation for damages and the basis for determining whether to grant an injunction. Infringement proceedings cannot be initiated on the basis of a pending application.

2.3 Trade marks

Trade marks are used to distinguish goods and/or services of one trader from another and can include words, logos, colours, sounds, shapes and scents. Trade marks can be registered. They may also be used without registration. The main advantage of obtaining protection through registration is that this simplifies enforcement. In Australia and some other jurisdictions registration of a trade mark also provides a defence in an infringement proceeding against the trade mark owner. Like patents, trade marks are national rights. If protection is to be sought in a particular jurisdiction, an application for registration of the trade mark must be made in that jurisdiction. Most countries in the world have trade mark systems and usually a registered trade mark in one country provides rights only in the country in which the trade mark is registered. The registration process involves filing an application which specifies the trade mark, the owner and the goods and services in relation to which registration of the trade mark is sought. The goods and services are organised according to specific “classes” as specified under the Nice Classification System.

In most countries, after the application is filed, examination is conducted to determine, primarily: 1) if any other same or similar trade marks for the same or similar goods and/or services have an earlier priority date; and 2) if the trade mark sufficiently distinctive. Once examination is completed and the trade mark registered, it can be renewed indefinitely. In most countries, the registration period is 10 years. To validly file an application for registration the trade mark owner must be using the trade mark, have a genuine intention to use the trade mark or to authorise use of the trade mark to third parties. Furthermore, the ongoing registrability of the trade mark is dependent on continuous use of the trade mark. If the trade mark is not used, the registration may be removed for non-use. As mentioned, to obtain trade mark registrations in different countries, individual trade mark registrations need to be obtained in each country.

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Unlike patents, there is no requirement to file applications for registration by a particular deadline. Trade mark applications may be filed at any time. However, priority may be claimed from the earliest trade mark application for a period of 6 months from the date of filing that application. A notable exception to the rule of having to obtain separate trade mark registrations in individual countries is the European Community Trade Mark (“CTM”). A European Community Trade Mark registration covers all of the member states of the European Union, including the UK, France, Germany, Italy and Spain.

An alternative approach to obtaining trade mark protection in several jurisdictions is to file an International application under the Madrid Protocol. An International application must be based on one or more national applications or registrations, referred to as the “basic registration(s)” or the “basic application(s)”. For Australian entities this would usually be an Australian trade mark application or registration. The International application must designate one or more of the countries that are signatories of the Madrid Protocol. It is possible to add further designated countries to the International application after it has been filed. The goods and/or services covered by the International application may be more restricted but may not be broader than those covered by the basic application or basic registration. The International application, once filed, will be treated as a national application in each country and will be examined separately by the respective Trade Marks Office of each designated country. Objections may be therefore raised in one or more designated countries, including on the grounds of prior similar trade marks or that the trade mark is descriptive.

2.4 Confidential Information / Trade Secrets

Confidential information can be any information of an entity that is secret and not publically known. For a business, confidential information can include business plans, customer lists, supply chain details and financial records as well as technical information relating to the business’ products and processes such as software, databases, design specifications, formulae and know-how. Confidential information is not registrable. A critical aspect to maintaining the value in confidential information is taking steps to keep the relevant information confidential. This may be done by entering confidentiality/nondisclosure agreements as well as taking other practical steps to prevent disclosure of confidential information

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2.5 Copyright

Copyright protection is automatic and arises when a literary, dramatic, artistic or musical work is created. Significantly, for TDEN, works protectable by copyright can include engineering drawings, software code, technical specifications, operating manuals, and a website. Copyright can also protect other media including sound recordings, films and radio and television broadcasts. Copyright protection entitles the copyright owner to a bundle of exclusive rights depending on the type of work in question. They include the right to reproduce the work in a material form, to publish the work, to communicate the work to the public and to make an adaption of the work. Moral rights prevent others from falsely attributing or acknowledging another as the creator of a copyright work or defacing such a work.

3. The TDEN IP Portfolio

3.1 Patent Portfolio

TDEN owns the following patent applications, all generally in the field of data centre technology:

(i) International Patent Application No. PCT/AU2016/050691

International Patent Application No. PCT/AU2016/050691 titled “ An equipment displacement system for a containerised data centre ” was lodged on 30 July 2016 and claims priority from Australian Provisional Patent Application No. 2015903967 having a priority date of 29 September 2015. The Applicant is The Data Exchange Network Limited and the application lists Timothy Mark DESMOND, Dean COETZEE and Bill POPE as co-inventors.

This application was published under Publication No. WO2017054035 on 6 April 2017 by the World Intellectual Property Office (WIPO). The International Preliminary Examining Authority of WIPO issued a Written Opinion on 19 October 2017 confirming the novelty of all the claims of this application. The National Phase of this application is due before 29 March 2018.

The application broadly covers a containerised data centre having an equipment displacement system to facilitate maintenance access to data centre equipment, thereby improving the usefulness and practicality of small-footprint containerised data centres.

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(ii) International Patent Application No. PCT/AU2018/050023

International Patent Application No. PCT/AU2018/050023 titled “High-density modular data centre” was lodged on 16 January 2018 and claims priority from Australian Provisional Patent Application No. 2017900127 having a priority date of 17 January 2017. The Applicant is The Data Exchange Network Limited and the application lists Timothy Mark DESMOND and Dean COETZEE as co-inventors.

This application is due for publication by the World Intellectual Property Office (WIPO) around 17 July 2018. The International Searching Authority of WIPO is expected to issue an International Search Report and Written Opinion around 17 May 2018. The National Phase of this application is due before 17 July 2019.

This patent application broadly relates to high-density data centre modules, assemblies and arrangements for arranging data centres and associated services in a high-density footprint, allowing high-density data centres to be constructed in a volume-agnostic manner.

3.2 Trade Mark Portfolio

TDEN owns the following trade mark:

Mark : AUTOFLOOR Goods/Services: Class 9: Apparatus for data storage; Computer data storage apparatus; Computer databases; Computer installations for the communication and processing of data; Computer installations for the storage of data; Data handling apparatus; Data handling installations; Data networks; Data processing apparatus, systems and equipment; Data storage apparatus for computers; Data storage devices; Data storage installations; Data transmission apparatus; Data transmission installations and networks; Apparatus for linking computers and linking computers into networks; Cabinets adapted to hold computers; Computer hardware; Computer installations; Computer installations (networks); Fibre optics communications installations for use with computers; Racks and mountings for computer and telecommunications equipment. Jurisdiction & No: Australia - 1783904 Owner: The Data Exchange Network Limited Status: Registered/Protected Registered from: 16 July 2016 Renewal due: 16 July 2026

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3.3 TDEN Confidential Information / Trade Secrets

A significant aspect of TDEN’s IP resides in its confidential information and copyright relating in particular to its data centre technologies. TDEN has undertaken considerable development activity, which has given rise to a pool of knowledge, some of which provides a basis for formalised protection (such as patents) and some of which is retained confidentially for internal use to aid subsequent development activities (such as trade secrets). Notwithstanding the aforementioned patent applications, TDEN has also identified a number of confidential information innovations for consideration for formal patent applications in the future. We understand from TDEN that it takes steps to protect and maintain the confidentiality of this material, including the use of contractual confidentiality obligations.

We have not reviewed the standard employment contracts, in particular the clauses that relate to IP, that TDEN uses for its employees to determine if employees are required to maintain confidentiality of TDEN’s confidential information, both during and subsequent to their employment. In general, by signing such suitable employment contracts, employees acknowledge TDEN’s ownership of any IP that the employee may create in the course of the employee’s employment and assigns that IP to TDEN. Further, though subject to certain qualifications, IP developed by an employee in the course of his or her employment is generally the property of the employer.

4. Proprietorship

A patent for an invention may only be granted to the inventor(s) or to a person who has entitlement to the invention by way of assignment, employment contract or other means. In the preparation of this report, we have not conducted a full assessment of the validity of entitlement to the patent applications. Although we have not fully assessed the validity of the inventorship status, based on the information provided to us to prepare this report, we are not aware of any issues that may invalidate TDEN’s claim to ownership, or invalidate the inventorship status, of the patent applications.

5. Qualifications and Limitations of Report

In most countries, a patent application is subjected to examination for novelty and obviousness (and other grounds) before a patent is granted. There can be no assurance that the TDEN patent applications will result in the grant of a patent, or that the scope of protection provided by any granted patent will be identical to the scope of the application as original filed or that the granted patent will effectively block competition.

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The scope of protection provided by a granted patent in one jurisdiction may differ from that provided by a granted patent in another jurisdiction, due to difference in examination between counties and regions and scope of available protection.

A patentability search, such as international searches carried out by various patent offices under the PCT procedure, cannot be guaranteed to locate all prior art that may exist which is potentially relevant to the assessment of novelty and an inventive step of a claimed invention. Such searches are generally computer-based searches and are dependent on the database search strategy and the coverage provided by the databases used. Further, all patentability searches are subject to the accuracy of records, as well as the indexing and classification of the subject matter comprising the records. The scope of each search is also dependent on the search strategy utilised and, for example, the keyword(s) selected for the search.

The grant of a patent does not guarantee validity of that patent since it may be revoked by a court on the grounds of invalidity at any time during its life. If none of the claims of a granted patent are valid, then the patent is unenforceable. For example, relevant prior disclosure may be discovered that were not raised during examination, which may limit the scope of patent protection sought, perhaps to a very narrow filed. In the preparation of this report, we have not assessed the validity of the patent applications nor the likelihood that the patent application will grant with commercially effective patent claims.

It should also be noted that the granting of a patent does not guarantee that the patentee has freedom to operate the invention claimed in the patent. It may be that working of a patented invention is prevented by the existence of another pre-existing patent. In the preparation of this report, we have not assessed whether or not the commercialisation of the TDEN technology embodied by the patents and patent applications listed above will infringe third party patent rights.

The searches conducted for this report and the results of which are in part relied upon in this report, have been substantially computer based and as such, would have been limited in terms of the time periods and the geographical areas covered. In preparing this report, in addition to reviewing our internal databases, we have relied upon information contained in relevant publicly available databases. We have not independently verified the information in such databases, and we are not responsible for the accuracy of that information.

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6. Statement of Independence

Patenteur is an Australian patent and trade mark attorney practice, proudly representing a number of Australian and international businesses. Neither Patenteur nor any of its Directors has any entitlement to any securities in TDEN, or has any other interest in the promotion of TDEN. Furthermore, the payment of fees to Patenteur for the preparation of this report is not contingent upon the outcome of the Prospectus.

We have given and, at the date of this report have not revoked, our consent to the issue of the Prospectus by TDEN with this report appearing therein in the form which it now appears.

Yours sincerely,

PATENTEUR

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Neal Schutte

Director – Patent & Trade Mark Attorney (AU, NZ, ZA) [email protected]

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FINANCIAL INFORMATION AND INDEPENDENT LIMITED 7 ASSURANCE REPORT

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9 February 2018

The Directors The Data Exchange Network Limited Level 28 140 St Georges Terrace Perth WA 6000

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Level 15, Exchange Tower, 2 The Esplanade, Perth, WA 6000 PO Box 5785, St Georges Terrace, WA 6831 T +61 (0)8 9225 5355 F +61 (0)8 9225 6181

www.moorestephens.com.au

Dear Directors

INVESTIGATING ACCOUNTANT’S REPORT

1. Introduction

This report has been prepared at the request of the Directors of The Data Exchange Network Limited (“DXN” or “the Company”) for inclusion in the Prospectus dated on or around 16 February 2018.

Pursuant to the Prospectus, the Company is offering for subscription a total of up to 80,000,000 ordinary shares at an issue price of $0.20 (20 cents per share), payable in full on application to raise a minimum of $16,000,000. (“Capital Raising” or the “Offer”). Upon completion of the Capital Raising, the Company will apply for admission of the Company’s shares to the official list of the Australian Securities Exchange Limited (“ASX”).

Expressions defined in the Prospectus have the same meaning in this report.

2. Basis of Preparation

This report has been prepared to provide investors with information in relation to historical and pro-forma financial information of DXN as at 30 November 2017 and for the financial period then ended.

The historical and pro-forma financial information is presented in an abbreviated form insofar as it does not include all of the disclosures required by Australian Accounting Standards applicable to financial reports in accordance with the Corporations Act 2001 .

The report does not address the rights attaching to the shares to be issued in accordance with the Offer, nor the risks associated with accepting the Offer. Moore Stephens Perth Corporate Services Pty Ltd has not been requested to consider the prospects for DXN nor the merits and risks associated with becoming a shareholder and accordingly has not done so, nor purports to do so.

Consequently, Moore Stephens Perth Corporate Services Pty Ltd has not made and will not make any recommendation, through the issue of this report, to potential investors of the Company, as to the merits of the Offer and takes no responsibility for any matter or omission in the Prospectus, other than responsibility for this report.

3. Background

DXN is an Australian public Company which was incorporated in Western Australia on 4 August 2017. The proposed activities and business model of the Company are to design, engineer, construct, own and operate modular colocation data centres and derive revenues from the rental of racks within its colocation data centres and from the design, engineering, manufacture and maintenance of modular data centre solutions for other operators. Since incorporation, the Company has focused on formulation of its business plans and preliminary negotiations to secure key management personnel, working capital and future development sites.

Moore Stephens Perth Corporate Services Pty Ltd ABN 41 421 048 107. Liability limited by a scheme approved under Professional Standards Legislation. The Perth Moore Stephens firm is not a partner or agent of any other Moore Stephens firm. An independent member of Moore Stephens International Limited - members in principal cities throughout the world

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3. Background (continued)

DXN’s proposed capital structure following completion of the Capital Raising (assuming the minimum Capital Raising of $16,000,000) is as follows;


F u l l y p a i d o r d i n a r y s h a r e s Fully paid ordinary shares on issue at 4 August 2017 Shares issued to pre-IPO investors since 4 August 2017 Shares to be issued on conversion of convertible notes Shares to be issued pursuant to the Prospectus (assuming $16,000,000 is raised) Total shares on issue at completion O p t i o n R e s e r v e Options exercisable at $0.30 on or before 30 November 2020 issued since 4 August 2017 Options exercisable at $0.30 and expiring 3 years from date of issue	60,000,000 15,000,000 27,312,500 80,000,000
	182,312,500
	32,500,000 6,828,125
	39,328,125

Further information about the Company and its future plans can be found in other sections of the Prospectus.

4. Scope of Report

You have requested Moore Stephens Perth Corporate Services Pty Ltd to prepare an Investigating Accountant’s Report on:

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The Statement of Profit or Loss and Other Comprehensive Income of DXN for the financial period 4 August 2017 (date of incorporation) to 30 November 2017.

The Statement of Cashflows of DXN for the financial period 4 August 2017 (date of incorporation) to 30 November 2017.

The Statement of Financial Position of DXN as at 30 November 2017.

The pro-forma Statement of Financial Position of DXN as at 30 November 2017 adjusted to include funds to be raised pursuant to the Prospectus (assuming the minimum capital raising of $16,000,000) and the completion of certain other transactions, as disclosed in this report.

5. Scope of Review

Sources of information

The historical financial information has been extracted from the audited financial statements of the Company for the financial period ended 30 November 2017.

These financial statements of the Company were audited by Moore Stephens Perth. The audit opinion was unmodified, but the audit report did include an Emphasis of Matter paragraph in relation to the going concern position of the Company.

Management’s Responsibilities

The Directors of DXN are responsible for the preparation and presentation of the historical and pro-forma financial information, including the determination of the pro-forma transactions.

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5. Scope of Review (continued)

Our Responsibilities

We have conducted our review of the historical financial information in accordance with Australian Auditing Standard ASRE 2405 Review of Historical Financial Information Other than a Financial Report . We have also considered the requirements of ASAE 3420 Assurance Engagements to Report on the Compilation of Pro Forma Historical Financial Information included in a Prospectus or other Document.

For the purposes of this engagement, we are not responsible for updating or reissuing any reports or opinions on any historical financial information used to compile the pro-forma financial information, nor have we, in the course of this engagement, performed an audit of the financial information used in compiling the proforma financial information, or the pro-forma information itself.

The purpose of the compilation of the pro-forma information is solely to illustrate the impact of the proposed Capital Raising and related transactions on unadjusted financial information of the Company as if the event had occurred at an earlier date selected for purposes of the illustration. Accordingly, we do not provide any assurance that the actual outcome of the proposed Capital Raising and related transactions would be as presented.

We made such inquiries and performed such procedures as we, in our professional judgement, considered reasonable in the circumstances including:

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a review of contractual arrangements;

a review of financial statements, management accounts, work papers, accounting records and other documents, to the extent considered necessary;
a review of work papers of the auditor of DXN, including making enquiries of the auditor, to the extent considered necessary.
a comparison of consistency in application of the recognition and measurement principles in Accounting Standards and other mandatory professional reporting requirements in Australia, with the accounting policies adopted by the Company;
a review of the assumptions used to compile the pro-forma Statement of Financial Position; and
enquiry of directors, management and advisors of DXN.

These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than that given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

These procedures have been undertaken to form a conclusion as to whether we have become aware, in all material respects, that the historical financial information set out in Appendix 1 to 4 does not present fairly, in accordance with Australian Accounting Standards and the accounting policies adopted by the Company, a view which is consistent with our understanding of the financial position and pro-forma financial position of the Company as at 30 November 2017 and of its financial results and cashflows for the financial period ended 30 November 2017.

Historical and Pro-Forma Financial Information

The Statement of Profit or Loss and Other Comprehensive Income of DXN for the financial period ended 30 November 2017 is included and presented without adjustment at Appendix 1.

The Statement of Cashflows of DXN for the financial period ended 30 November 2017 is included and presented without adjustment at Appendix 3.

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5. Scope of Review (continued)

Historical and Pro-Forma Financial Information (continued)

The Statement of Financial Position as at 30 November 2017 of the Company is included in Appendix 2. Also included in Appendix 2 is the pro-forma Statement of Financial Position of the Company which incorporates the Statement of Financial Position as at 30 November 2017, adjusted on the basis of the completion of the proposed minimum Capital Raising of $16,000,000 and the completion of certain other transactions as disclosed in this report. Details of these transactions are set out in Note 3 of Appendix 4.

6. Conclusion

Based on our review, which is not an audit, nothing has come to our attention which causes us to believe that:

The Statement of Profit or Loss and Other Comprehensive Income of the Company for the financial period 4 August 2017 (date of incorporation) to 30 November 2017, as set out in Appendix 1, does present fairly the results for the period then ended in accordance with the accounting methodologies required by Australian Accounting Standards;
The Statement of Cash Flows of the Company for the financial period 4 August 2017 (date of incorporation) to 30 November 2017, as set out in Appendix 3, does present fairly the cash flows for the period then ended in accordance with the accounting methodologies required by Australian Accounting Standards;
The Statement of Financial Position of the Company, as set out in Appendix 2, does present fairly the assets and liabilities of the Company as at 30 November 2017 in accordance with the accounting methodologies required by Australian Accounting Standards;
The pro-forma Statement of Financial Position of the Company, as set out in Appendix 2, does present fairly the assets and liabilities of the Company, as at 30 November 2017 in accordance with the accounting methodologies required by Australian Accounting Standards and on the basis of assumptions and transactions set out in Note 3 of Appendix 4.

7. Subsequent Events

Subsequent to 30 November 2017, the Company has:

Entered into a Convertible Note Agreement and Escrow Deed with Ellerston Capital Limited as trustee for Ellerston Special Opportunities Platform ( Ellerston ), whereby Ellerston subscribed for convertible notes to the value of $1,400,000;
Issued convertible notes to the value of $1,320,000;
Issued 5,000,000 options at $0.000001 per option, exercisable at $0.30 on or before 30 November 2020;
Entered into lease agreement for premises situated at 5 Parkview Drive, Sydney Olympic Park, NSW; and
Entered into a lease agreement for 286-292 Lorimer Street, Port Melbourne, Victoria.

Other than as noted above, and set out in Note 3 and reflected in the pro-forma statement of financial position, there have been no matters or circumstances that have arisen since 30 November 2017 which significantly affected or may significantly affect the company's operations in future years or the results of those operations in future years or the company's state of affairs in future years.

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8. Other Matters

Moore Stephens Perth Corporate Services Pty Ltd does not have any pecuniary interest that could reasonably be regarded as being capable of affecting our ability to give an unbiased opinion on this matter.

Moore Stephens Perth, a related practice entity, currently acts as auditor of the Company.

Moore Stephens Perth Corporate Services Pty Ltd will receive a professional fee for the preparation of this Investigating Accountant’s Report.

Moore Stephens Perth Corporate Services Pty Ltd were not involved in the preparation of any other part of the Prospectus and accordingly makes no representations or warranties as to the completeness and accuracy of any information contained in any other part of the Prospectus.

Moore Stephens Perth Corporate Services Pty Ltd consents to the inclusion of this report in the Prospectus in the form and context in which it is included. At the date of this report, this consent has not been withdrawn.

Yours faithfully

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Neil Pace Director

Moore Stephens Perth Corporate Services Pty Ltd

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APPENDIX 1 THE DATA EXCHANGE NETWORK LIMITED AUDITED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Summarised below is the Company’s Statement of Profit or Loss and Other Comprehensive Income for the financial period 4 August 2017 (date of incorporation) to 30 November 2017. These results were subject to audit and exclude any pro-forma adjustments.

Continuing operations Contracting income Revenue Cost of Sales Gross Profit Other income Expenses Administration expenses Amortisation and depreciation Compliance and legal expenses Consultants and contractor expenses Employee expenses Finance expenses Convertible note transaction costs Foreign exchange loss Marketing expenses Occupancy expenses Telecommunication and technology expenses Travel expenses Loss before income tax expense Income tax expense Total comprehensive loss for the period	Actual 4 August 2017 to 30 November 2017 $ 81,710
	81,710 (39,123)
	42,587 280 (8,981) (3,543) (84,875) (296,523) (184,470) (1,889) (55,880) (2,881) (4,276) (15,448) (28,608) (48,643)
	(736,017)
	(693,150) -
	(693,150)

Investors should note that past results are not a guarantee of future performance.

To be read in conjunction with the accounting policies set out in Appendix 4

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APPENDIX 2 THE DATA EXCHANGE NETWORK LIMITED AUDITED STATEMENT OF FINANCIAL POSITION

The Pro-Forma Statement of Financial Position represents the Statement of Financial Position of the Company as at 30 November 2017 adjusted for subsequent events and pro-forma transactions outlined in note 3 of Appendix 4. It should be read in conjunction with the notes to the historical and pro-forma financial information.

Note ASSETS Current Assets Cash and cash equivalents 4 Trade and other receivables 5 Deposits 6 Bank guarantee 7 Other assets 8 Loan receivable 9 Deferred transaction costs 10 Total Current Assets Non-Current Assets Plant and equipment 11 Intangible 12 Total Non-Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables 13 Borrowings 14 Income in advance Provisions 15 Total Current Liabilities TOTAL LIABILITIES NET ASSETS (LIABILITIES)	Actual as at 30 Nov 2017 $ Pro-forma as at 30 Nov 2017 $ 843,239 18,209,394 167,615 167,615 82,241 82,241 76,000 76,000 20,307 20,307 5,500 5,500 572,770 -
	1,767,672 18,561,057
	54,823 54,823 33,390 33,390
	88,213 88,213

	1,855,885 18,649,270
	302,789 302,789 2,179,650 - 47,532 47,532 18,961 18,961
	2,548,932 369,282

	2,548,932 369,282

	(693,047) 18,279,988

To be read in conjunction with the accounting policies set out in Appendix 4

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APPENDIX 2 THE DATA EXCHANGE NETWORK LIMITED AUDITED STATEMENT OF FINANCIAL POSITION

APPENDIX 2 THE DATA EXCHANGE NETWORK LIMITED AUDITED STATEMENT OF FINANCIAL POSITION
Note EQUITY Issued capital 16 Option reserve 17 Accumulated losses TOTAL EQUITY	Actual as at 30 Nov 2017 $ Pro-forma as at 30 Nov 2017 $ 75 20,271,925 28 310,303 (693,150) (2,302,240)
	(693,047) 18,279,988

To be read in conjunction with the accounting policies set out in Appendix 4

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APPENDIX 3 THE DATA EXCHANGE NETWORK LIMITED AUDITED STATEMENT OF CASH FLOWS

Summarised below is the Company’s Statement of Cashflows for the financial period 4 August 2017 (date of incorporation) to 30 November 2017. These cashflows were subject to audit and exclude any pro-forma adjustments.

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Net cash used in operating activities Cash flows from investing activities Payment of deposits and guarantees Purchase of plant and equipment Purchase of intangible assets Net cash used in financing activities Cash flows from financing activities Proceeds from convertible notes Proceeds from the issue of shares and options Net cash provided by financing activities Net increase in cash held Cash and cash equivalents on incorporation Cash and cash equivalents at the end of the period	Actual 4 August 2017 to 30 November 2017 $ - (551,518) 151
	(551,367)
	(163,741) (55,623) (36,133)
	(255,497)
	1,650,000 103
	1,650,103
	843,239 -
	843,239

Investors should note that past results are not a guarantee of future performance.

To be read in conjunction with the accounting policies set out in Appendix 4

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APPENDIX 4 THE DATA EXCHANGE NETWORK LIMITED NOTES TO THE FINANCIAL INFORMATION

1. Basis of Preparation

The condensed financial information of The Data Exchange Network Limited (“DXN”) for the financial period 4 August 2017 (date of incorporation) to 30 November 2017 has been prepared on a condensed basis in accordance with the Australian Accounting Standard 134 Interim Financial Reporting.

The condensed financial information does not include all the information and disclosures required in annual financial statements.

The financial information has been prepared in accordance with applicable Accounting Standards including the Australian Equivalents of International Financial Reporting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The Company is a forprofit entity for financial reporting purposes. Material accounting policies adopted in the preparation of this financial information are presented below.

The financial information has been prepared on an accrual basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

Going Concern

The financial report has been prepared on a going concern basis, which contemplates the continuity of normal business activities and the realisation of assets and the settlement of liabilities in the normal course of business. The ability of the Company to continue as a going concern is dependent on the Company raising additional funding pursuant to this prospectus or from other sources as and when required over the 12 months from the date of this financial information and generating sufficient cash flows from its business activities.

Should the company not achieve the matters set out above, the company may not be able to continue as a going concern or may have to dispose of assets other than in the normal course of business. No adjustments related to the recoverability and classification of recorded assets or liabilities related to the above have been made in the financial information.

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APPENDIX 4 THE DATA EXCHANGE NETWORK LIMITED NOTES TO THE FINANCIAL INFORMATION

2. Significant Accounting Policies

a) New and amended accounting policies adopted by the company

The company has adopted all new and revised accounting standards and interpretations that are relevant to its operations and effective for reporting periods beginning 1 January 2017. None of the new and revised standards and interpretations adopted during the year had a material impact.

b) New accounting standards for application in future periods

The Australian Accounting Standards Board (AASB) has issued a number of new and amended Accounting Standards that have mandatory application dates for future financial periods, some of which are relevant to the Company. The Directors have decided not to early adopt any of the new and amended pronouncements. Their assessment of the pronouncements that are relevant to the Company but applicable in future reporting periods is set out below:

AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting periods beginning on or after 1 January 2018).

The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) and includes revised requirements for the classification and measurement of financial instruments, revised recognition and derecognition requirements for financial instruments, and simplified requirements for hedge accounting.

The key changes that may affect the company on initial application of include certain simplifications to the classification of financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected credit loss, and the irrevocable election to recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. AASB 9 also introduces a new model for hedge accounting that will allow greater flexibility in the ability to hedge risk, particularly with respect to hedges of nonfinancial items. Should the entity elect to change its hedge policies in line with the new hedge accounting requirements of the Standard, the application of such accounting would be largely prospective.

Although the directors anticipate that the adoption of AASB 9 may have an impact on the company’s financial instruments, it is not expected to have a significant impact.

– AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods beginning on or after 1 January 2018, as deferred by AASB 2015-8: Amendments to Australian Accounting Standards – Effective Date of AASB 15). In May 2016, the AASB issued AASB 2016-3 Amendments to Australian Accounting Standards – Clarifications to AASB 15.

When effective, this Standard will replace the current accounting requirements applicable to revenue with a single, principles-based model. Apart from a limited number of exceptions, including leases, the new revenue model in AASB 15 will apply to all contracts with customers as well as non-monetary exchanges between entities in the same line of business to facilitate sales to customers and potential customers.

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APPENDIX 4 THE DATA EXCHANGE NETWORK LIMITED NOTES TO THE FINANCIAL INFORMATION

2. Significant Accounting Policies (continued)

b) New accounting standards for application in future periods (continued)

The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. To achieve this objective, AASB 15 provides the following five-step process:

identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
determine the transaction price;
allocate the transaction price to the performance obligations in the contracts; and
recognise revenue when (or as) the performance obligations are satisfied.

AASB 15, AASB 2015-8 and AASB 2016-3 apply to the Company from 1 July 2018, with early application permitted. The transitional provisions of this Standard permit an entity to either: restate the contracts that existed in each prior period presented per AASB 108: Accounting Policies, Changes in Accounting Estimates and Errors (subject to certain practical expedients in AASB 15); or recognise the cumulative effect of retrospective application to incomplete contracts on the date of initial application. There are also enhanced disclosure requirements regarding revenue.

The Directors are continuing their analysis and assessment of the impact of the new revenue standard on its future financial results. This includes identifying changes to accounting policies, internal and external reporting requirements, IT systems, business processes and associated internal controls with the objective of quantifying the expected first-time adoption impacts as well as supporting ongoing compliance with the new accounting requirements. The adoption of AASB 15 is not expected to have a significant impact on the Company’s current revenue recognition policies.

AASB 16: Leases (applicable to annual reporting periods beginning on or after 1 January 2019).
When effective, this Standard will replace the current accounting requirements applicable to leases in AASB 117: Leases and related Interpretations. AASB 16 introduces a single lessee accounting model that eliminates the requirement for leases to be classified as operating or finance leases.

The main changes introduced by the new Standard are as follows:

recognition of a right-of-use asset and liability for all leases (excluding short-term leases with less than 12 months of tenure and leases relating to low-value assets);
depreciation of right-of-use assets in line with AASB 116: Property, Plant and Equipment in profit or loss and unwinding of the liability in principal and interest components;
inclusion of variable lease payments that depend on an index or a rate in the initial measurement of the lease liability using the index or rate at the commencement date;
application of a practical expedient to permit a lessee to elect not to separate non-lease components and instead account for all components as a lease; and
inclusion of additional disclosure requirements.

The transitional provisions of AASB 16 allow a lessee to either retrospectively apply the Standard to comparatives in line with AASB 108 or recognise the cumulative effect of retrospective application as an adjustment to opening equity on the date of initial application.

Although the directors anticipate that the adoption of AASB 16 will impact the company's financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact.

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APPENDIX 4 THE DATA EXCHANGE NETWORK LIMITED NOTES TO THE FINANCIAL INFORMATION

2. Significant Accounting Policies (continued)

c) Intangible assets

Internally generated software

Internally developed software is capitalised at cost less accumulated amortisation. Amortisation is calculated using the straight-line basis over the asset’s useful economic life which is generally three years. Their useful lives and potential impairment are reviewed at the end of each financial year.

Licences/trademarks/copyrights

Certain licences, trademarks and copyrights that DXN possesses have an indefinite useful life and are carried at cost less impairment losses and are subject to impairment review at least annually and whenever there is an indication that it may be impaired. Other licences that DXN acquires are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over the estimated useful life. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period.

Software under development

Costs incurred in developing products or systems and costs incurred in acquiring software and licences that will contribute to future period financial benefits through revenue generation and/or cost reduction are capitalised to software and systems. Costs capitalised include external direct costs of materials and services and employee costs.

Assets in the course of construction include only those costs directly attributable to the development phase and are only recognised following completion of technical feasibility and where the Company has an intention and ability to use the asset.

Other licences that DXN acquires are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation is recognised on a straight-line basis over the estimated useful life. The estimated useful life and amortisation method are reviewed at the end of each annual reporting period.

d) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

e) Plant and equipment

Plant and equipment is stated at historical cost less depreciation. Depreciation is calculated on a straight-line basis so as to write off the net cost of each asset during their expected useful life of 3 years. The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not shown in the accounts at a value in excess of the recoverable amount from assets.

f) Fair value estimation

The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes. The fair value of financial instruments traded in active markets (such as shares in listed companies) is based on quoted market prices at the reporting date.

The nominal value, less any estimated credit adjustments, of trade receivables and payables are assumed to approximate their fair value.

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APPENDIX 4 THE DATA EXCHANGE NETWORK LIMITED NOTES TO THE FINANCIAL INFORMATION

2. Significant Accounting Policies (continued)

g) Impairment of assets

At the end of each reporting period, the company assesses whether there is any indication that an asset may be impaired. The assessment will include the consideration of external and internal sources of information. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, to the asset’s carrying amount. Any excess of the asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in accordance with another Standard (e.g. in accordance with the revaluation model in AASB 116: Property, Plant and Equipment). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that other Standard.

Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Impairment testing is performed annually for goodwill, intangible assets with indefinite lives and intangible assets not yet available for use.

h) Trade and other receivables

Trade and other receivables include amounts due from customers for goods sold and services performed over an ordinary course of business. Receivables expected to be collected within 12 months of the end of the reporting period are classified as current assets. All other receivables are classified as non-current assets.

Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Refer to note 1(h) for further discussion on the determination of impairment losses.

i) Trade and other payables

Trade payables and other accounts payable are recognised when the Company becomes obliged to make future payments resulting from the purchase of goods and services.

j) Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable.

The Company recognises revenue when the amount of revenue can be reliably measured, it is probable that future economic benefits will flow to the company and specific criteria have been met for each of the activities as described below. Where appropriate, the Company bases its estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.

Revenue is recognised for the major business activities as follows:

Data Centre Services

Revenue is recognised only when the service has been provided, the amount of revenue can be measured reliably, and it is probable that the economic benefits associated with the transaction will flow to the Company. Any upfront discounts provided to customers are amortised over the contract term.

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APPENDIX 4 THE DATA EXCHANGE NETWORK LIMITED NOTES TO THE FINANCIAL INFORMATION

2. Significant Accounting Policies (continued)

j) Revenue Recognition (continued)

Interest Income

Interest income is recognised using the effective interest method. When a receivable is impaired, the Company reduces the carrying amount to its recoverable amount, being the estimated future cash flow discounted at the original effective interest rate of the instrument, and continues unwinding the discount as interest income. Interest income on impaired loans is recognised using the original effective interest rate.

k) Income Tax

The income tax expense or revenue for the year is the tax payable on the current year’s taxable income based on the notional income tax rate, adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

A deferred tax asset for unused tax losses is recognised only if it is probable that future taxable amounts will be available to utilise losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the assets and settle the liability simultaneously.

l) Financial Instruments

Initial recognition and measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified “at fair value through profit or loss”, in which case transaction costs are expensed to profit or loss immediately.

Classification and subsequent measurement

Financial instruments are subsequently measured at fair value, amortised cost using the effective interest method, or cost.

Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that initial amount and the maturity amount calculated using the effective interest method.

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models.

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APPENDIX 4 THE DATA EXCHANGE NETWORK LIMITED NOTES TO THE FINANCIAL INFORMATION

2. Significant Accounting Policies (continued)

l) Financial Instruments (continued)

The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) over the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying amount with a consequential recognition of an income or expense item in profit or loss.

The company does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of Accounting Standards specifically applicable to financial instruments other than loans receivables and financial liabilities, the entity does not currently hold any other classification of financial assets.

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Financial assets at fair value through profit or loss

Financial assets are classified at “fair value through profit or loss” when they are held for trading for the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a Group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying amount being included in profit or loss.

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Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial asset is derecognised.

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Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the company’s intention to hold these investments to maturity. They are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial asset is derecognised.

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Available-for-sale investments

Available-for-sale investments are non-derivative financial assets that are either not capable of being classified into other categories of financial assets due to their nature or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.

They are subsequently measured at fair value with any re-measurements other than impairment losses and foreign exchange gains and losses recognised in other comprehensive income. When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit or loss.

Available-for-sale financial assets are classified as non-current assets when they are expected to be sold after 12 months from the end of the reporting period. All other available-for-sale financial assets are classified as current assets.

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APPENDIX 4 THE DATA EXCHANGE NETWORK LIMITED NOTES TO THE FINANCIAL INFORMATION

2. Significant Accounting Policies (continued)

l) Financial Instruments (continued)

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Financial liabilities

Non-derivative financial liabilities other than financial guarantees are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial liability is derecognised.

m) Contributed equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

n) Employee benefits

Provision is made for the company’s obligation for short-term employee benefits. Short-term employee benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service, including wages, salaries and sick leave. Short-term employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled.

The company’s obligations for short-term employee benefits such as wages, salaries and sick leave are recognised as a part of current trade and other payables in the statement of financial position. The company’s obligations for employees’ annual leave and long service leave entitlements are recognised as provisions in the statement of financial position.

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APPENDIX 4 THE DATA EXCHANGE NETWORK LIMITED NOTES TO THE FINANCIAL INFORMATION

3. The Preparation of the Pro-Forma Statement of Financial Position

The 30 November 2017 Statement of Financial Position of DXN has been adjusted to reflect the impact of the following proposed transactions or actual transactions which have taken place subsequent to 30 November 2017:

The issue pursuant to the Prospectus of 80,000,000 ordinary shares at $0.20 per share, raising a minimum of $16,000,000. For the purposes of the pro forma, we have assumed the minimum level of subscription of 80,000,000 shares shall be issued to raise $16,000,000.
The payment of an estimated $1,190,650 in costs incurred by the Company in relation to the listing and capital raising, and the subsequent write off of these costs against issued capital.
The issue of $2,720,000 in Pre-IPO Convertible Notes, between 1 December 2017 and the date of this report, measured at fair value of $3,593,120.
Expensing of management and placing fee associated with the issue of the convertible notes issued between 1 December 2017 and the date of this report, of $163,200.
The conversion upon listing on ASX of $4,370,000 in Pre-IPO Convertible Notes (with a fair value of $5,772,770) into 27,312,500 fully paid ordinary shares and 6,828,125 options exercisable at $0.30 and expiring 3 years from date of issue.
Amortisation in full of deferred transaction costs of $1,445,890 upon conversion of the convertible notes to equity.
Issued 5,000,000 options at $0.000001 per option, exercisable at $0.30 on or before 30 November 2020.

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APPENDIX 4 THE DATA EXCHANGE NETWORK LIMITED NOTES TO THE FINANCIAL INFORMATION

Actual as at 30 Nov 2017 $ Pro-forma as at 30 Nov 2017 $ 4. Cash and Cash Equivalents CURRENT Cash at bank and on hand 843,239 18,209,394 The movements in cash at bank are as follows: Actual – 30 November 2017 843,239 Convertible notes issued post 30 November 2017 2,720,000 Issue of shares pursuant to Prospectus 16,000,000 Issue of options 5 Estimated total transaction costs (1,190,650) Management and placing fee for convertible notes (163,200) 18,209,394 Note: The proforma cash balance has been prepared on the basis that the proposed capital of $16,000,000 shall be raised. There is no allowance for oversubscriptions. 5. Trade and other receivables Trade receivables 142,167 142,167 GST receivable 25,319 25,319 TFN withholding tax 129 129 167,615 167,615 6. Deposits Deposit - 5 Parkview Dr, Homebush, NSW 50,000 50,000 Deposit – 9 Mumford Place, Balcatta, WA 32,241 32,241 82,241 82,241 7. Bank guarantee 9 Mumford Place, Balcatta, WA 76,000 76,000 76,000 76,000 8. Other assets Prepayments 20,307 20,307 20,307 20,307 9. Loan receivable Loan to employee 5,500 5,500 5,500 5,500	Actual as at 30 Nov 2017 $	Pro-forma as at 30 Nov 2017 $
	843,239	18,209,394
		843,239 2,720,000 16,000,000 5 (1,190,650) (163,200)
		18,209,394
	50,000 50,000 32,241 32,241
	82,241 82,241
	76,000 76,000
	76,000 76,000
	20,307 20,307
	20,307 20,307
	5,500 5,500
	5,500 5,500

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APPENDIX 4 THE DATA EXCHANGE NETWORK LIMITED NOTES TO THE FINANCIAL INFORMATION

APPENDIX 4 THE DATA EXCHANGE NETWORK LIMITED NOTES TO THE FINANCIAL INFORMATION
10. Deferred transaction costs Deferred transaction costs (convertible notes) – at fair value Accumulated amortisation The movements in deferred transaction costs are as follows: Actual 30 November 2017 – fair value Deferred transaction costs post 30 November 2017 – fair value Amortisation of transaction costs on conversion of convertible notes 11. Plant and Equipment Plant & equipment – at cost Accumulated depreciation 12. Intangibles Software Accumulated amortisation 13. Trade and Other Payables Trade creditors Accruals and sundry creditors Payroll liabilities 14. Borrowings Convertible notes – fair value The movements in convertible notes are as follows: Actual – 30 November 2017 Convertible notes issued post 30 November 2017 – fair value Transfer to issued capital on conversion of notes Transfer to option reserve on conversion of notes	Actual as at 30 Nov 2017 $ 628,650 (55,880)	Pro-forma as at 30 Nov 2017 $ 1,501,770 (1,501,770)
	572,770	-
	55,623 (800)	572,770 873,120 (1,445,890)
		-
		55,623 (800)
	54,823	54,823
	36,133 (2,743)	36,133 (2,743)
	33,390	33,390
	95,447 143,607 63,735	95,447 143,607 63,735
	302,789	302,789
	2,179,650	-
	2,179,650	-
		2,179,650 3,593,120 (5,462,500) (310,270)
		-

The convertible notes will convert into ordinary shares upon the Company being admitted to the official list of the ASX, or completion of an alternative transaction. The conversion price is at a discount of 20% to the issue price of shares offered by the Company in connection with the IPO or alternative capital raising. In addition, each convertible note will entitle the holder to 1 option for every 4 shares allotted.

DATA EXCHANGE | PROSPECTUS 2018 <83>

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APPENDIX 4 THE DATA EXCHANGE NETWORK LIMITED NOTES TO THE FINANCIAL INFORMATION

		Actual	Pro-forma
		as at	as at
		30 Nov 2017	30 Nov 2017
		$	$
15.	Provisions
	Annual Leave	18,961	18,961
		18,961	18,961
16.	Issued Capital
	Issued and fully paid	No. of shares	$
	Ordinary shares fully paid	182,312,500	20,271,925
	Movements during the period
	Ordinary issued and paid up share capital
	Shares on issue at 30 November 2017	75,000,000	75
	Shares issued on conversion of convertible notes	27,312,500	5,462,500
	Shares issued pursuant to current prospectus (assume 80,000,000 shares issued at $0.20 each)	80,000,000	16,000,000
	Transaction costs related to $16,000,000 Capital Raising	-	(1,190,650)
		182,312,500	20,271,925
	Rights attaching to ordinary shares;
	Ordinary shares participate in dividends and the proceeds on winding up of the company in
	proportion to the number of shares held.
	At shareholder meetings, when a poll is called, each ordinary share is entitled		to one vote
	otherwise each shareholder has one vote on a show of hands.
17.	Option Reserve
	Options	No. of options	$
	Options on issue	39,328,125	310,303
	Movements during the period
	Options
	Options on issue at 30 November 2017	27,500,000	28
	Options issued on conversion of convertible notes	6,828,125	310,270
	Options issued on subscription	5,000,000	5
		39,328,125	310,303

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APPENDIX 4 THE DATA EXCHANGE NETWORK LIMITED NOTES TO THE FINANCIAL INFORMATION

18. Financial Risk Management Objectives and Policies

The company has exposure to the following risks from their use of financial instruments:

i. credit risk;
ii. liquidity risk; and
iii. market risk

This note presents information about the company’s exposure to each of the above risks, their objectives, policies and processes for measuring and managing risk. The Board has overall responsibility for the establishment and oversight of the risk management framework. The Board reviews and agrees policies for managing each of these risks and they are summarised below.

The company’s principal financial instruments comprise cash and convertible notes. The company also has other financial instruments such as receivables and payables which arise directly from its operations. For the year under review, it has been the Company’s policy not to trade in financial instruments.

Financial Instruments

Financial assets Cash and cash equivalents Trade and other receivables Deposits and bonds Bank guarantee Financial liabilities At amortised cost: Trade and other payables Convertible notes	Actual as at 30 Nov 2017 $ Pro-forma as at 30 Nov 2017 $ 843,239 18,209,394 167,615 167,615 82,241 82,241 76,000 76,000
	1,169,095 18,535,250
	302,789 302,789 2,179,650 -
	2,482,439 302,789

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Credit risk

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company. The Company has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. The company only transacts with entities that are rated the equivalent of investment grade and above.

The company’s exposure and the credit ratings of its counterparties are continuously monitored. Credit exposure is controlled by counterparty limits that are reviewed and approved by the Board annually.

The Company does not have any significant credit risk exposure to the bank. The credit risk on liquid funds is reduced because the counterparty is a bank with a high credit rating assigned by international credit rating agencies.

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APPENDIX 4 THE DATA EXCHANGE NETWORK LIMITED NOTES TO THE FINANCIAL INFORMATION

18. Financial Risk Management Objectives and Policies (continued)

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Liquidity risk

Ultimate responsibility for liquidity risk management rests with the Board of Directors, who have built an appropriate liquidity risk management framework for the management of the company’s short, medium and long-term funding and liquidity management requirements. The company manages liquidity risk by maintaining adequate reserves and banking facilities and by continuously monitoring forecast and actual cash flows and matching maturity profiles of financial assets and liabilities. The company did not have any undrawn facilities at its disposal as at reporting date.

The table below analyses the company’s financial liabilities into relevant maturity groupings based on their contractual maturities. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.

Contractual maturities of financial liabilities 30 November 2017 Actual Convertible notes Trade and other payables Net maturity 30 November 2017 Pro-forma Convertible notes Trade and other payables	Less than 1 year 1-2 years 2-5 years >5 years Total contractual cash flows Carrying Amount $ $ $ $ $ 2,179,650 - - - 2,179,650 2,179,650 302,789 302,789 302,789
	2,482,439 - - - 2,482,439 2,482,439
	- - - - - - 302,789 - - - 302,789 302,789
	302,789 - - - 302,789 302,789

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Market risk

Market risk is the risk that changes in the market prices such as foreign exchange rates, interest rates and equity prices will affect the company’s income or value of its holdings of financial instruments. The company does not have any interest bearing short or long-term debt and therefore the risk is minimal. The company limits its exposure to credit risk by only investing in liquid securities and only with counterparties that have acceptable credit ratings.

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Interest rate risk

Interest rate risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to changes in market interest rates. Current financial assets and financial liabilities are generally not exposed to interest rate risk because of their short-term nature. The company’s cash and cash equivalents at 30 November 2017 are fixed interest rate instruments. Therefore, they are not subject to interest rate risk.

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Fair value measurements

The fair values of cash, receivables, trade and other payables approximate their carrying amounts as a result of their short-term maturity.

The company’s convertible notes have been recorded at their fair value reflecting the terms of the note agreements.

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APPENDIX 4 THE DATA EXCHANGE NETWORK LIMITED NOTES TO THE FINANCIAL INFORMATION

19. Commitments

ommitments
Building Leases No later than 1 year Between 1 and 5 years Greater than 5 years	Actual as at 30 Nov 2017 $ Pro-forma as at 30 Nov 2017 $ 220,000 1,361,777 440,000 6,097,077 - 16,992,345
	660,000 24,451,199

The Company is currently leasing premises at the following locations:

9 Mumford Place, Balcatta WA – 3 year period commencing 20 November 2017, with an option to renew for a further 3 years;
5 Parkview Drive, Sydney Olympic Park NSW – 15 year period commencing 1 February 2018, with an option to renew for a further 5 years; and
286-292 Lorimer Street, Port Melbourne, Victoria – 10 year period commencing 1 February 2018, with an option to renew for 2 further periods of 5 years each (10 years in total).

Capital Expenditure Commitments

The Company has no significant capital expenditure commitments.

20. Contingent Liabilities

The directors are not aware of any contingent liabilities that may have arisen from the company’s operations as at 30 November 2017.

21. Events after the Reporting Period

Subsequent to 30 November 2017, the Company has:

Entered into a Convertible Note Agreement and Escrow Deed with Ellerston Capital Limited as trustee for Ellerston Special Opportunities Platform ( Ellerston ), whereby Ellerston subscribed for convertible notes to the value of $1,400,000;
Issued convertible notes to the value of $1,320,000;
Issued 5,000,000 options at $0.000001 per option, exercisable at $0.30 on or before 30 November 2020;
Entered into lease agreement for premises situated at 5 Parkview Drive, Sydney Olympic Park, NSW; and
Entered into a lease agreement for 286-292 Lorimer Street, Port Melbourne, Victoria.

Other than as noted above and set out in Note 3 and reflected in the pro-forma statement of financial position, there have been no other matters or circumstances that have arisen since 30 November 2017 which significantly affected or may significantly affect the company's operations in future years or the results of those operations in future years or the company's state of affairs in future years.

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BOARD, MANAGEMENT 8 AND INTERESTS

8.1 Directors and key personnel

The Board of the Company consists of:

(a) Richard Carden – Independent Non-executive Chairman ;
(b) Terry David Smart – Independent Non-executive Director ; and
(c) Peter Christie – Managing Director .

Other senior management positions held by the Company are Tim Desmond appointed as Chief Technology Officer, Dean Coetzee as Chief Sale Officer and George Lazarou appointed as Company Secretary and Chief Financial Officer.

The biographies for the Directors and senior management are contained in Section 3.11.

The Company is aware of the need to have sufficient management to properly supervise its operations and the Company has, or will in the future have, an interest and the Board will continually monitor the management roles in the Company. As the Company’s activities require an increased level of involvement, the Board will look to appoint additional management and/or consultants when and where appropriate to ensure proper management of the Company’s activities.

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Board, management and interests

8.2 Disclosure of Interests

Interests in Securities

Directors are not required under the Company’s Constitution to hold any Shares to be eligible to act as a director. As at the date of this Prospectus, the Directors have relevant interests in Securities as follows:

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CONVERTIBLE
DIRECTOR SHARES OPTIONS [1] NOTES
Richard Carden Nil Nil 40,000 [4]
Terry David Smart [2] Nil 10,000,000 300,000 [5]
Peter Christie [3] 13,925,000 2,166,667 Nil
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Notes:

The Options are exercisable at $0.30 per Option and expire on or before 30 November 2020. Full terms and conditions of the Options are set out in Section 11.3.
Held indirectly through Smart Capital Investments Pty Ltd as trustee for The Smart Capital Investments Trust, an entity controlled by Mr Smart.
Held indirectly through Herdsman Lake Capital Asia Pte Ltd, an entity controlled by Mr Christie.
The Investor Convertible Notes held by Richard Carden will convert into 250,000 Shares and 62,500 Options upon receipt by the Company of ASX conditional approval to be admitted to the Official List.
The Investor Convertible Notes held by Smart Capital Investments Pty Ltd as trustee for The Smart Capital Investments Trust will convert into 1,875,000 Shares and 468,750 Options upon receipt by the Company of ASX conditional approval to be admitted to the Official List.

Following the successful completion of the Offer, the Directors will have relevant interests in Securities as follows:

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CONVERTIBLE
DIRECTOR SHARES OPTIONS NOTES [5]
Richard Carden 650,000 [3] 62,500 [3] Nil
Terry David Smart [1] 5,375,000 [4] 10,468,750 [4] Nil
Peter Christie [2] 13,925,000 2,166,667 [6] Nil
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Notes:

Held indirectly through Smart Capital Investments Pty Ltd as trustee for The Smart Capital Investments Trust, an entity controlled by Mr Smart.
Held indirectly through Herdsman Lake Capital Asia Pte Ltd, an entity controlled by Mr Christie.
This figure includes the 250,000 Shares and 62,500 Options to be issued to Mr Carden upon conversion of his Convertible Notes. The Options are exercisable at $0.30 per Option and expire on the date which is 36 months from the date of issue. Full terms and conditions of the Options are set out in Section 11.3. Additionally, Mr Carden intends to subscribe for 400,000 Shares under the Offer.
This figure includes the 1,875,000 Shares and 468,750 Options to be issued to Smart Capital Investments Pty Ltd as trustee for The Smart Capital Investments Trust upon conversion of the Convertible Notes. Full terms and conditions of the Options on issue as at the date of this Prospectus and those to be issued on conversion of Convertible Notes are set out in Section 11.3. Additionally, Mr Smart intends to subscribe for 3,500,000 Shares under the Offer.
The Convertible Notes on issue will convert into Shares and Options upon receipt by the Company of ASX conditional approval to be admitted to the Official List.
The Options are exercisable at $0.30 per Option and expire on or before 30 November 2020. Full terms and conditions of the Options are set out in Section 11.3.

DATA EXCHANGE | PROSPECTUS 2018 <89>

Remuneration

Details of the Directors’ remuneration for the current financial year and proposed remuneration for the two subsequent financial years (on an annualised basis) are set out in the table below:

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PROPOSED PROPOSED PROPOSED
REMUNERATION REMUNERATION REMUNERATION
FOR THE FINANCIAL FOR THE FINANCIAL FOR THE FINANCIAL
YEAR ENDED 30 JUNE YEAR ENDED 30 JUNE YEAR ENDED 30 JUNE
DIRECTOR 2018 2019 2020
Richard Carden [1] $50,000 [2] $60,000 $60,000
Terry David Smart [1] $30,000 [2] $36,000 $36,000
Peter Christie [2] $150,000 [3] $180,000 $180,000
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Notes:

Appointed on 4 August 2017.
Remuneration accrues from 1 September 2017 with payment to commence on official admission to the ASX.
Remuneration commenced on 1 September 2017.

The remuneration of any executive director that may be appointed to the Board will be fixed by the Board and may be paid by way of fixed salary or consultancy fee.

8.3 Agreements with Directors and Related Parties

The Company’s policy in respect of related party arrangements is:

(a) a Director with a material personal interest in a matter is required to give notice to the other Directors before such a matter is considered by the Board; and
(b) for the Board to consider such a matter, the Director who has a material personal interest is not present while the matter is being considered at the meeting and does not vote on the matter.

8.4 Deeds of indemnity, insurance and access

The Company has entered into a deed of indemnity, insurance and access with each of its Directors. Under these deeds, the Company will agree to indemnify each officer to the extent permitted by the Corporations Act against any liability arising as a result of the officer acting as an officer of the Company. The Company will also be required to maintain insurance policies for the benefit of the relevant officer and allow the officers to inspect board papers in certain circumstances.

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Section name
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CORPORATE 9 GOVERNANCE

9.1 ASX Corporate Governance Council Principles and Recommendations

The Company has adopted comprehensive systems of control and accountability as the basis for the administration of corporate governance. The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company’s needs.

To the extent applicable, the Company has adopted The Corporate Governance Principles and Recommendations (3rd Edition) as published by ASX Corporate Governance Council (Recommendations).

In light of the Company’s size and nature, the Board considers that the current Board is a cost effective and practical method of directing and managing the Company. As the Company’s activities develop in size, nature and scope, the size of the Board and the implementation of additional corporate governance policies and structures will be reviewed.

The Company’s main corporate governance policies and practices as at the date of this Prospectus are outlined below and the Company’s full Corporate Governance Plan is available in a dedicated corporate governance information section of the Company’s website www.dataexchange.io.

9.2 Board of directors

The Board is responsible for corporate governance of the Company. The Board develops strategies for the Company, reviews strategic objectives and monitors performance against those objectives. The goals of the corporate governance processes are to:

(a) maintain and increase Shareholder value;
(b) ensure a prudential and ethical basis for the Company’s conduct and activities; and
(c) ensure compliance with the Company’s legal and regulatory objectives.

Consistent with these goals, the Board assumes the following responsibilities:

(a) leading and setting the strategic direction and objectives of the Company;
(b) appointing the Chairman of the Board, Managing Director or Chief Executive Officer and approving the appointment of Executives and the Company Secretary and the determination of their terms and conditions including remuneration and termination;
(c) overseeing the Executive’s implementation of the Company’s strategic objectives and performance generally;
(d) approving operating budgets, major capital expenditure and significant acquisitions and divestitures;
(e) overseeing the integrity of the Company’s accounting and corporate reporting systems, including the external audit (satisfying itself financial statements released to the market fairly and accurately reflect the Company’s financial position and performance);

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Corporate governance

(f) overseeing the Company’s procedures and processes for making timely and balanced disclosure of all material information that a reasonable person would expect to have a material effect on the price or value of the Company’s securities;
(g) reviewing, ratifying and monitoring the effectiveness of the Company’s risk management framework, corporate governance policies and systems designed to ensure legal compliance; and
(h) approving the Company’s remuneration framework.

The Company is committed to the circulation of relevant materials to Directors in a timely manner to facilitate Directors’ participation in the Board discussions on a fully-informed basis.

9.3 Composition of the Board

Election of Board members is substantially the province of the Shareholders in general meeting. However, subject thereto:

(a) membership of the Board of Directors will be reviewed regularly to ensure the mix of skills and expertise is appropriate; and
(b) the composition of the Board has been structured so as to provide the Company with an adequate mix of directors with industry knowledge, technical, commercial and financial skills together with integrity and judgment considered necessary to represent shareholders and fulfil the business objectives of the Company.

The Board will consist of three directors (two of whom will be Non-executive Directors) of whom Mr Richard Carden and Mr Terry Smart are considered independent. The Board considers the proposed balance of skills and expertise is appropriate for the Company for its currently planned level of activity. The Board intends to appoint an additional independent director within six months from the Company’s admission to the Official List.

To assist the Board in evaluating the appropriateness of the Board’s mix of qualifications, experience and expertise, the Board will maintain a Board Skills Matrix.

The Board undertakes appropriate checks before appointing a person as a Director or putting forward to Shareholders a candidate for election as a Director.

The Board ensures that Shareholders are provided with all material information in the Board’s possession relevant to a decision on whether or not to elect or re-elect a Director.

The Company shall develop and implement a formal induction program for Directors which allows new directors to participate fully and actively in Board decision-making at the earliest opportunity, and enable new Directors to gain an understanding of the Company’s policies and procedures.

9.4 Identification and management of risk

The Board’s collective experience will enable accurate identification of the principal risks that may affect the Company’s business. Key operational risks and their management will be recurring items for deliberation at Board meetings.

9.5 Ethical standards

The Board is committed to the establishment and maintenance of appropriate ethical standards.

9.6 Independent professional advice

Subject to the Chairman’s approval (not to be unreasonably withheld), the Directors, at the Company’s expense, may obtain independent professional advice on issues arising in the course of their duties.

DATA EXCHANGE | PROSPECTUS 2018 <93>

9.7 Remuneration arrangements

The remuneration of the Managing Director is determined by the Remuneration Committee of the Board comprising of Non-executive and independent directors.

The total maximum remuneration of Non-executive Directors is initially set by the Constitution and subsequent variation is by ordinary resolution of Shareholders in general meeting in accordance with the Constitution, the Corporations Act and the ASX Listing Rules, as applicable. The determination of Non-executive Directors’ remuneration within that maximum will be made by the Board having regard to the inputs and value to the Company of the respective contributions by each Non-executive Director. The current amount has been set at an amount not to exceed $500,000 per annum.

In addition, a Director may be paid fees or other amounts (i.e. subject to any necessary Shareholder approval, non-cash performance incentives such as Options) as the Directors determine where a Director performs special duties or otherwise performs services outside the scope of the ordinary duties of a Director.

Directors are also entitled to be paid reasonable travelling, hotel and other expenses incurred by them respectively in or about the performance of their duties as Directors.

The Board reviews and approves the remuneration policy to enable the Company to attract and retain executives and Directors who will create value for Shareholders having consideration to the amount considered to be commensurate for a company of its size and level of activity as well as the relevant Directors’ time, commitment and responsibility. The Board is also responsible for reviewing any employee incentive and equity-based plans including the appropriateness of performance hurdles and total payments proposed.

9.8 Trading policy

The Board has adopted a policy that sets out the guidelines on the sale and purchase of securities in the Company by its directors, officers, employees and contractors. The policy generally provides that for directors, the written acknowledgement of the Chair (or the Board in the case of the Chairman) must be obtained prior to trading.

9.9 External audit

The Company in general meetings is responsible for the appointment of the external auditors of the Company, and the Board from time to time will review the scope, performance and fees of those external auditors.

9.10 Audit committee

The Company will not have a separate audit committee until such time as the Board is of a sufficient size and structure, and the Company’s operations are of a sufficient magnitude for a separate committee to be of benefit to the Company. In the meantime, the full Board will carry out the duties that would ordinarily be assigned to that committee under the written terms of reference for that committee, including but not limited to, monitoring and reviewing any matters of significance affecting financial reporting and compliance, the integrity of the financial reporting of the Company, the Company’s internal financial control system and risk management systems and the external audit function.

9.11 Departures from Recommendations

Under the ASX Listing Rules the Company will be required to provide a statement in its annual financial report or on its website disclosing the extent to which it has followed the Recommendations during each reporting period. Where the Company has not followed a Recommendation, it must identify the Recommendation that has not been followed and give reasons for not following it.

The Company’s departures from the Recommendations will also be announced prior to admission to the official list of the ASX.

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DATA EXCHANGE | PROSPECTUS 2018 <95>

MATERIAL 10 CONTRACTS

Set out below is a brief summary of the certain contracts to which the Company is a party and which the Directors have identified as material to the Company or are of such a nature that an investor may wish to have details or particulars of them when making an assessment of whether to apply for Shares.

To fully understand all rights and obligations of a material contract, it would be necessary to review it in full and these summaries should be read in this light.

10.1 Supply Agreement

On or about 23 November 2017, the Company entered into a supply agreement (Supply Agreement) with Datacenter Limited (ACN 152 238 714) (DCL). DCL is engaged in the development and operation of colocation data and hardware hosting centres and associated infrastructure.

(a) (Supply of products and services): The Supply Agreement sets out the terms and conditions upon which:
(i) DCL will purchase from the Company, and the Company will develop, manufacture and sell to DCL, products, parts, human resources and services for the purpose of constructing retail colocation data centres (Vendor Products); and
(ii) DCL will engage the Company to provide, and the Company will provide DCL with, consulting services (Consulting Services).
(b) (Fees): The fees for Vendor Products, support and maintenance of Vendor Products and Consultancy Services (including license fees for software) are set out in each purchase order executed by the parties, which together, form separate customer contracts. The fees are subject to review on a quarterly basis.
(c) (Term): The Supply Agreement continues for a period of five years unless terminated by agreement of both parties in writing or unless terminated early, as set out below.
(d) (Restriction): During the Term and for period of 3 years after termination of the Supply Agreement, DCL and any party that is either directly or indirectly controlled by DCL, shall not construct modular data centre technology that has similar form or function to products listed as available for purchase from the Company at the time of termination.
(e) (Intellectual Property): All intellectual property rights in any material developed in the performance of a customer contract shall remain vested in the owner of those intellectual property rights. All intellectual property developed in the performance of a contract formed under the Supply Agreement, vest in the creator or developer of that material with the exception of intellectual property rights in any modifications, enhancements, adaptions or derivations to, of or from pre-existing material (Pre-Existing Material). Intellectual property rights in Pre-Existing Material will vest in the owner of the Pre-Existing Material.
(f) (Termination): The Supply Agreement will continue for the Term, unless terminated earlier by:
(i) agreement of both parties in writing;

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MATERIAL CONTRACTS

(ii) DCL at any time by giving 90 days written notice to the Company;
(iii) either party where the other party breaches a material provision of the Supply Agreement or a Purchase Order and fails to cure such breach within 30 days from the date of a written notice requiring rectification of the breach; or
(iv) either party being the subject of a winding up order or making an assignment for the benefit of creditors.
(g) (Indemnity): Each party agrees to indemnify the other party and its officers, employees and contractors against all losses, expenses, damages and legal costs incurred by an indemnitee arising from any act or omission of an officer, employee or contractor of the indemnifying party that is: unlawful, fraudulent, deceitful or grossly negligent; the cause of death, personal injury or damage to tangible property; a breach of the confidentiality clause set out in the Supply Agreement; a breach of a party’s or any third party’s intellectual property rights; or a breach of the Supply Agreement.

10.2 Olympic Park New South Wales Lease

(a) The Company is the sub-lessee of head lease E796385 for Folio Identifier 70/818981 known as 5 Parkview Drive, Sydney Olympic Park, New South Wales 2127.
(b) The lease term is 15 years from 1 February 2018 plus a five (5) year option of renewal.
(c) The premises may be used for a colocation data centre, including associated power, cooling, data communications infrastructure and associated administration and storage, and car parking on the relevant sections of the leased land.
(d) The rent for the premises is $753,307.50 per annum (plus GST) and the rent for the car parking is $116,000 per annum (plus GST), being a total of $869,307.50 per annum (plus GST), payable monthly in advance, on the first day of each month, with the first payment on 1 March 2018. Provided the Company is not in breach of the agreement, the lessor grants the Company a rental discount of $31,332.52 plus GST per calendar month over the 48-month period commencing from and including March 2018 and ending on and including February 2022, and a rental discount of $1,145.03 plus GST per calendar month over the 131-month period from and including March 2022 until and including January 2033.
(e) The initial rent is reviewable annually on 1 March each year during the term in accordance with a fixed percentage increase of 3.25% per annum other on 1 March 2024, in which year the rent is subject to a market review, subject to the new rent payable, neither increasing nor decreasing by more than 10%.
(f) The Company is obliged to pay all rates, taxes, insurances, maintenance, cleaning expenses, security, management fees, and other outgoings in respect of the leased premises.
(g) The Company must provide a bank guarantee security to the lessor on or before the commencing date being a sum of $495,000 (plus GST).
(h) The Company is obliged to remove all tenant fixtures and fittings and to reinstate certain of the lessor’s fit out to the premises and any alterations to the premises made by the Company at the end of the lease.
(i) The lease has reasonably standard form undertakings by the Company with respect to insurances, repairs and maintenance, cleaning, painting and keeping the premises safe, hazard free and compliant with regulatory requirements, not overloading the premises or creating a nuisance.
(j) Permission is needed from the lessor to any alterations or additions to the premises.
(k) The lessor’s consent is needed for an assignment or subletting of the premises or the lease but such consent cannot unreasonably be withheld.

DATA EXCHANGE | PROSPECTUS 2018 <97>

(l) The lessor may terminate the lease if the Company:
(i) is in default of a rental payment for 14 days;
(ii) fails to comply with an essential term of the lease;
(iii) fails to comply with an obligation under the lese, which is not an essential term and in the in the lessor’s reasonable opinion:
- (A) the non-compliance can be remedied but the Company does not remedy it to the Lessor’s reasonable satisfaction within a reasonable time after the lessor gives the Company notice to remedy;
- (B) the non-compliance cannot be remedied or compensated for;
- (C) the non-compliance cannot be remedied but the lessor can be compensated, and the lessee does not pay the lessor compensation satisfactory to the lessor for the breach within 28 days after the lessor gives the Company notice to pay; or
- (D) an insolvency event occurs that relates to the Company or a guarantor.
(m) The Company must indemnify the lessor for any breach of lease by the Company.

10.3 Port Melbourne Victoria Lease

(a) The Company has entered into a commercial lease agreement for the lease of the whole of the land in Certificate of Title Volume 10811 Folio 521 being known as 286 – 292 Lorimer Street, Port Melbourne, Victoria.
(b) The lease term is 10 years from 1 February 2018 plus a further two (2) option terms, with each further term being for (5) years.
(c) The premises may be used for a colocation data centre including associated power, cooling, data communications infrastructure and associated administration, storage, warehouse and offices not involving the retail provision of goods and or services, and car parking on the relevant sections of the land.
(d) The rent is $760,000 per annum (plus GST) payable monthly in advance. Provided that the Company is not in breach of the agreement, the lessor grants the Company an initial two (2) month rent free period during the first year, and a rental discount of $4,367.32 plus GST per calendar month over the following 58 months.
(e) The initial rent is reviewable annually in accordance with the fixed review percentage, being a 3.5% increase (plus GST) other than every fifth year of the lease term, in which years the rent is subject to market review limited to a maximum increase of 5% (plus GST) and a maximum decrease of 5% (plus GST).
(f) The Company is obliged to pay all rates, taxes, insurances, maintenance, cleaning expenses, security, management fees, and other outgoings in respect of the leased premises.
(g) The Company must provide a bank guarantee security to the lessor of $500,000 (plus GST).
(h) The Company is obliged to remove all tenant fixtures and fittings and to reinstate certain of the lessor’s fit out to the premises and any alterations to the premises made by the Company at the end of the lease.
(i) The lease has reasonably standard form undertakings by the Company with respect to insurances, repairs and maintenance, cleaning, painting and keeping the premises safe, hazard free and compliant with regulatory requirements, not overloading the premises or creating a nuisance.
(j) Permission is needed from the lessor to any alterations or additions to the premises.

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(k) The lessor’s consent is needed for an assignment or subletting of the premises or the lease but such consent cannot unreasonably be withheld.
(l) The lessor may terminate the lease if the Company:
(i) is in default of a rental payment for 14 days;
(ii) is in default of another lease covenant for 28 days after written notice of default is given by the lessor and the breach remains unremedied;
(iii) goes into liquidation or is insolvent or has an administrator or receiver and/or manager appointed;

(iv) abandons the premises.

The Company must indemnify the lessor for any breach of lease by the Company.

10.4 Joint Lead Managers Mandate

The Company entered into a mandate agreement with Cadmon and Bell Potter Securities Limited (Bell Potter) dated 21 December 2017 pursuant to which it has appointed Cadmon and Bell Potter as joint lead managers in relation the Offer on the following terms and conditions (Joint Lead Managers Mandate).

Under the Joint Lead Managers Mandate, Cadmon and Bell Potter will be paid the following fees:

(a) a management fee of 4% of the total funds raised under the Prospectus plus GST payable by way of a deduction from the gross proceeds raised under the Offer; and
(b) a selling fee of 2% of the total funds raised under the Prospectus plus GST payable by way of a deduction from the gross proceeds raised under the Offer.

The management fee will be equally divided between the Joint Lead Managers. The placement fee will be paid to the parties in proportion to the funds raised from investors introduced by each party.

10.5 Cadmon Mandate

The Company entered into a mandate agreement with Cadmon on 17 October 2017 (as varied on 29 January 2018) pursuant to which Cadmon was appointed as lead manager to the Company’s seed capital raising (Cadmon Mandate).

Under the Cadmon Mandate, Cadmon will be paid a monthly retainer fee of $10,000 per month plus GST, for a minimum of 6 months after the date the Company is admitted to the Official List. Additionally, in consideration for services provided under the Cadmon Mandate, Cadmon and its nominees currently hold 5,000,000 Shares and 7,500,000 Existing Options. Ellerston currently holds 2,500,000 Existing Options. Further, Bell Potter holds 5,000,000 Existing Options in consideration for capital raising and brokage services provided.

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10.6 Executive Services Agreement – Peter Christie

The Company and Peter Christie entered into an executive services agreement dated 17 January 2018 pursuant to which Mr Christie is appointed as Managing Director commencing on 1 September 2017 (Commencement Date) (ESA).

The material terms of the ESA are as follows:

(a) (Salary): $180,000 per annum (excluding directors’ fees), on a total employment cost basis, which will be reviewed annually by the Company in accordance with the relevant policy of the Company;
(b) (Expenses): The Company will reimburse Mr Christie for all reasonable expenses (including travel) incurred in the performance of his duties; and
(c) (Termination): The Company may terminate the ESA:
(i) without cause by giving not less than six (6) months’ written notice; or
(ii) summarily without notice if Mr Christie is removed as a director, is of unsound mind, commits any serious breach of the ESA that is not remedied within 14 days, demonstrates incompetence in terms of performance, commits or is guilty of gross misconduct or is convicted of a criminal offence.

The ESA also contains various other terms and conditions that are considered standard for an agreement of this nature.

10.7 Consultancy Agreements – Dean Coetzee and Tim Desmond

On 19 January 2018, the Company entered into consultancy agreements with the Data Exchange Network Singapore Pte Ltd (DX Singapore), Dean Coetzee and Tim Desmond under which DX Singapore agreed to provide services to the Company in relation to product and facility management, design, engineering and construction services (DX Singapore Consultancy Agreements).

The key terms of the DX Singapore Consultancy Agreements are as follows:

(a) (Engagement): The Company shall engage DX Singapore as a consultant to the Company, with Dean Coetzee and Tim Desmond as the persons nominated to perform the services on behalf of DX Singapore under each agreement, each for a term of three years;
(b) (Fees): In consideration for DX Singapore providing services to the Company, the Company will pay to DX Singapore a monthly fee of A$15,000 (exclusive of GST) under each agreement;
(c) (Expenses): The Company will reimburse DX Singapore for all reasonable expenses (including travel) incurred in the performance of the services; and
(d) (Termination): The DX Singapore Consultancy Agreements can be terminated by either party giving 6 months’ notice, or otherwise upon the occurrence of termination events akin to misconduct or incapacity.

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10.8 Non-Executive Director Appointment Letters – Messrs Smart and Carden

The Company has entered into non-executive letters of appointment with Messrs Smart and Carden (NED Agreements or NED Agreement as the context requires) which set out the terms and conditions upon which each of these parties will serve as non-executive Directors.

Each Director will receive the following remuneration for services rendered under the NED Agreements:

(a) Mr Carden – $60,000 per annum; and
(b) Mr Smart – $36,000 per annum.

Directors are subject to the provisions of the Company’s Constitution relating to retirement by rotation and re-election of directors. A Director may terminate their directorship at any time by advising the Board in writing. The NED Agreements are otherwise made on standard commercial terms.

10.9 Convertible Note Agreement

The Company has entered into a Convertible Note Agreement with Ellerston Capital Limited as trustee for Ellerston Special Opportunities Platform (Ellerston) pursuant to which Ellerston agreed to subscribe for 1,400,000 unsecured convertible notes in the Company (Ellerston Convertible Notes) (Subscription) for a subscription price of $1,400,000. The material terms of the Convertible Note Agreement are:

(a) (Interest): interest is payable on the Notes at the rate of 6% per annum although no interest will be payable provided the Company is admitted to the Official List of ASX within 6 months of the Subscription;
(b) (Redemption by Ellerston): Ellerston may require the Company to immediately redeem the Ellerston Convertible Notes and accrued interest where the Company suffers an insolvency event or breaches its obligations under the Convertible Note Agreement or does not complete the Offer by the 12 month anniversary of the date that the Convertible Notes are issued by the Company to the Investor (Maturity Date);
(c) (Conversion): on completion of the Offer, the Ellerston Convertible Notes will automatically convert into 8,750,000 Shares and 2,187,500 Options;
(d) (Board): for so long as Ellerston holds Shares equal to 10% or more of the Company’s issued share capital, it will be entitled to appoint a director to the Board.

The Convertible Note Agreement also contains other representations, warranties, covenants and conditions considered standard for an agreement of this nature.

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10.10 Convertible Note Terms Sheets

The Company has entered into binding term sheets (Convertible Note Terms Sheets) for the issue of 2,970,000 convertible notes to professional, sophisticated or other exempt investors (Subscribers) at a face value of $1.00 each to raise a total of $2,970,000 (Investor Convertible Notes).

The material terms of the Investor Convertible Notes are:

(a) (Maturity Date): the maturity date is the date which is 12 months after the date the Investor Convertible Note is issued;
(b) (Interest): no interest is payable on the principal amount subscribed for by the investor;
(c) (Conversion on Conditional Approval): the Investor Convertible Notes will automatically convert into Shares at a 20% discount to the price at which Shares are offered under the Offer and one free attaching Conversion Option for every four Shares so issued upon the Company’s receipt of ASX conditional approval to be admitted to the Official List (Conditional Approval), provided such Conditional Approval is received within 12 months from the date of execution of the Convertible Note Terms Sheets;
(d) (Conversion on Maturity Date): the Investor Convertible Notes will automatically convert into Shares on the date that is three business days after the Maturity Date at the issue price of Shares under the next capital raising to be undertaken by the Company;
(e) (Redemption): the subscriber may elect to have the Investor Convertible Notes be immediately redeemed upon an event of default occurring, which includes an insolvency event in the Company or a breach of the Company’s obligations under the Investor Convertible Note Terms Sheet; and
(f) (Unsecured): the Company’s obligations under the Investor Convertible Notes are unsecured.

The Convertible Note Terms Sheets also contains other representations, warranties, covenants and conditions considered standard for an agreement of this nature.

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ADDITIONAL 11 INFORMATION

11.1 Litigation

So far as the Directors are aware, as at the date of this Prospectus, the Company is not involved in any legal proceedings and the Directors are not aware of any legal proceedings pending or threatened against the Company.

11.2 Rights attaching to Shares

The following is a summary of the more significant rights attaching to Shares. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of Shareholders. To obtain such a statement, persons should seek independent legal advice.

Full details of the rights attaching to Shares are set out in the Constitution, a copy of which is available for inspection at the Company’s registered office during normal business hours.

(a) General meetings

Shareholders are entitled to be present in person, or by proxy, attorney or representative to attend and vote at general meetings of the Company.

Shareholders may requisition meetings in accordance with section 249D of the Corporations Act and the Constitution.

(b) Voting rights

Subject to any rights or restrictions for the time being attached to any class or classes of Shares, at general meetings of Shareholders or classes of Shareholders:

(i) each Shareholder entitled to vote may vote in person or by proxy, attorney or representative;
(ii) on a show of hands, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder has one vote; and
(iii) on a poll, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder shall, in respect of each fully paid Share held by him, or in respect of which he is appointed a proxy, attorney or representative, have one vote for the Share, but in respect of partly paid Shares shall have such number of votes as bears the same proportion to the total of such Shares registered in the Shareholder’s name as the amount paid (not credited) bears to the total amounts paid and payable (excluding amounts credited).

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(c) Dividend rights

Subject to the rights of any preference Shareholders and to the rights of the holders of any shares created or raised under any special arrangement as to dividend, the Directors may from time to time declare a dividend to be paid to the Shareholders entitled to the dividend which shall be payable on all Shares according to the proportion that the amount paid (not credited) is of the total amounts paid and payable (excluding amounts credited) in respect of such Shares.

The Directors may from time to time pay to the Shareholders any interim dividends as they may determine. No dividend shall carry interest as against the Company. The Directors may set aside out of the profits of the Company any amounts that they may determine as reserves, to be applied at the discretion of the Directors, for any purpose for which the profits of the Company may be properly applied.

Subject to the ASX Listing Rules and the Corporations Act, the Company may, by resolution of the Directors, implement a dividend reinvestment plan on such terms and conditions as the Directors think fit and which provides for any dividend which the Directors may declare from time to time payable on Shares which are participating Shares in the dividend reinvestment plan, less any amount which the Company shall either pursuant to the Constitution or any law be entitled or obliged to retain, be applied by the Company to the payment of the subscription price of Shares.

(d) Winding-up

If the Company is wound up, the liquidator may, with the authority of a special resolution of the Company, divide among the shareholders in kind the whole or any part of the property of the Company, and may for that purpose set such value as he considers fair upon any property to be so divided, and may determine how the division is to be carried out as between the Shareholders or different classes of Shareholders.

The liquidator may, with the authority of a special resolution of the Company, vest the whole or any part of any such property in trustees upon such trusts for the benefit of the contributories as the liquidator thinks fit, but so that no Shareholder is compelled to accept any Shares or other securities in respect of which there is any liability.

(e) Shareholder liability

As the Shares under the Prospectus are fully paid shares, they are not subject to any calls for money by the Directors and will therefore not become liable for forfeiture.

(f) Transfer of Shares

Generally, Shares are freely transferable, subject to formal requirements, the registration of the transfer not resulting in a contravention of or failure to observe the provisions of a law of Australia and the transfer not being in breach of the Corporations Act or the ASX Listing Rules.

(g) Variation of rights

Pursuant to section 246B of the Corporations Act, the Company may, with the sanction of a special resolution passed at a meeting of Shareholders vary or abrogate the rights attaching to Shares.

If at any time the share capital is divided into different classes of Shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class), whether or not the Company is being wound up, may be varied or abrogated with the consent in writing of the holders of three-quarters of the issued shares of that class, or if authorised by a special resolution passed at a separate meeting of the holders of the shares of that class.

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(h) Alteration of Constitution

The Constitution can only be amended by a special resolution passed by at least three quarters of Shareholders present and voting at the general meeting. In addition, at least 28 days written notice specifying the intention to propose the resolution as a special resolution must be given.

11.3 Terms and conditions of Options

The terms and conditions of the Options currently on issue (Existing Options) and the Options to be issued on conversion of the Convertible Notes (Conversion Options) are set out below.

(a) Entitlement

Each Option entitles the holder to subscribe for one Share upon exercise of the Option.

(b) Exercise Price

Subject to paragraph (i), the amount payable upon exercise of each Option will be $0.30 (Exercise Price)

(c) Expiry Date

Each Option will expire at 5:00 pm (WST) on:

(i) in relation to the Existing Options, 30 November 2020,
(ii) in relation to the Conversion Options, the date which is 36 months from their date of issue,

(Expiry Date).

An Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

(d) Exercise Period

The Options are exercisable at any time on or prior to the Expiry Date (Exercise Period).

(e) Notice of Exercise

The Options may be exercised during the Exercise Period by notice in writing to the Company in the manner specified on the Option certificate (Notice of Exercise) and payment of the Exercise Price for each Option being exercised in Australian currency by electronic funds transfer or other means of payment acceptable to the Company.

(f) Exercise Date

A Notice of Exercise is only effective on and from the later of the date of receipt of the Notice of Exercise and the date of receipt of the payment of the Exercise Price for each Option being exercised in cleared funds (Exercise Date).

(g) Timing of issue of Shares on exercise

Within 15 Business Days after the Exercise Date, the Company will:

(i) issue the number of Shares required under these terms and conditions in respect of the number of Options specified in the Notice of Exercise and for which cleared funds have been received by the Company;

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(ii) if required, give ASX a notice that complies with section 708A(5)(e) of the Corporations Act, or, if the Company is unable to issue such a notice, lodge with ASIC a prospectus prepared in accordance with the Corporations Act and do all such things necessary to satisfy section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors; and
(iii) if admitted to the official list of ASX at the time, apply for official quotation on ASX of Shares issued pursuant to the exercise of the Options.

If a notice delivered under (g)(ii) for any reason is not effective to ensure that an offer for sale of the Shares does not require disclosure to investors, the Company must, no later than 20 Business Days after becoming aware of such notice being ineffective, lodge with ASIC a prospectus prepared in accordance with the Corporations Act and do all such things necessary to satisfy section 708A(11) of the Corporations Act to ensure that an offer for sale of the Shares does not require disclosure to investors.

(h) Shares issued on exercise

Shares issued on exercise of the Options rank equally with the then issued shares of the Company.

(i) Reconstruction of capital

If at any time the issued capital of the Company is reconstructed, all rights of an Optionholder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.

(j) Participation in new issues

There are no participation rights or entitlements inherent in the Options and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options without exercising the Options.

(k) Change in exercise price

An Option does not confer the right to a change in Exercise Price or a change in the number of underlying securities over which the Option can be exercised.

(l) Transferability

The Options are transferable subject to any restriction or escrow arrangements imposed by ASX or under applicable Australian securities laws.

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11.4 Interests of Directors

Other than as set out in this Prospectus, no Director or proposed director of the Company holds, or has held within the 2 years preceding lodgement of this Prospectus with the ASIC, any interest in:

(a) the formation or promotion of the Company;
(b) any property acquired or proposed to be acquired by the Company in connection with:
(i) its formation or promotion; or
(ii) the Offer; or
(c) the Offer,

and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to a Director or proposed director of the Company:

(a) as an inducement to become, or to qualify as, a Director; or
(b) for services provided in connection with:
(i) the formation or promotion of the Company; or
(ii) the Offer.

11.5 Interests of Experts and Advisers

Other than as set out below or elsewhere in this Prospectus, no:

(a) person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus; or
(b) promoter of the Company,

holds, or has held within the 2 years preceding lodgement of this Prospectus with the ASIC, any interest in:

(a) the formation or promotion of the Company;
(b) any property acquired or proposed to be acquired by the Company in connection with:
- (i) its formation or promotion; or
- (ii) the Offer; or
(c) the Offer,

and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to any of these persons for services provided in connection with:

(d) the formation or promotion of the Company; or
(e) the Offer.

Moore Stephens Perth Corporate Services Pty Ltd has acted as Investigating Accountant and has prepared the Independent Limited Assurance and Financial Information Report which is included in Section 7. The Company estimates it will pay Moore Stephens Perth Corporate Services Pty Ltd a total of $10,000 (excluding GST) for these services. During the 24 months preceding lodgement of this Prospectus with the ASIC, Moore Stephens Perth Corporate Services Pty Ltd has not received any fees from the Company for any other services.

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Moore Stephens has acted as auditor to the Company. The Company estimates it will pay Moore Stephens a total of $10,000 (excluding GST) for these services. During the 24 months preceding lodgement of this Prospectus with the ASIC, Moore Stephens has not received any fees from the Company for any other services.

Cadmon has acted as joint lead manager and following the successful completion of the Offer will be paid fees on the terms set out in Section 10.1 of this Prospectus. Together with Bell Potter, Cadmon will be responsible for paying all capital raising fees that Cadmon and the Company agree with any other financial service licensees. Further details in respect to the Cadmon Mandate with Cadmon are summarised in Section 10.5. Cadmon has not received any other fees for other services provided to the Company in the last two years.

Bell Potter Securities Limited has acted as joint lead manager and following the successful completion of the Offer will be paid fees on the terms set out in Section 10.1 of this Prospectus. Together with Cadmon, Bell Potter Securities Limited will be responsible for paying all capital raising fees that Bell Potter Securities Limited and the Company agree with any other financial service licensees. Further details in respect to the Joint Lead Managers Mandate with Bell Potter Securities Limited are summarised in Section 10.5 Bell Potter Securities Limited has not received any other fees for other services provided to the Company in the last two years.

Steinepreis Paganin has acted as the solicitors to the Company in relation to the Offer. The Company estimates it will pay Steinepreis Paganin $95,000 (excluding GST) for these services. Subsequently, fees will be charged in accordance with normal charge out rates. During the 24 months preceding lodgement of this Prospectus with the ASIC, Steinepreis Paganin has received $103,360 in fees for legal services provided to the Company.

Patenteur has acted as the patent attorneys to the Company in relation to the Offer. The Company estimates it will pay Patenteur $10,000 (excluding GST) for these services. Subsequently, fees will be charged in accordance with normal charge out rates. During the 24 months preceding lodgement of this Prospectus with the ASIC, Patenteur has not received any other fees for other services provided to the Company in the last two years.

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11.6 Consents

Chapter 6D of the Corporations Act imposes a liability regime on the Company (as the offeror of the Securities), the Directors, the persons named in the Prospectus with their consent as proposed directors, any underwriters, persons named in the Prospectus with their consent having made a statement in the Prospectus and persons involved in a contravention in relation to the Prospectus, with regard to misleading and deceptive statements made in the Prospectus. Although the Company bears primary responsibility for the Prospectus, the other parties involved in the preparation of the Prospectus can also be responsible for certain statements made in it.

Each of the parties referred to in this Section:

(a) does not make, or purport to make, any statement in this Prospectus other than those referred to in this section; and
(b) in light of the above, only to the maximum extent permitted by law, expressly disclaim and take no responsibility for any part of this Prospectus other than a reference to its name and a statement included in this Prospectus with the consent of that party as specified in this section.

Moore Stephens Perth Corporate Services Pty Ltd has given its written consent to being named as Investigating Accountant in this Prospectus and to the inclusion of the Independent Limited Assurance Report and the Financial Information included in Section 7 in the form and context in which the information and report is included. Moore Stephens Perth Corporate Services Pty Ltd has not withdrawn its consent prior to lodgement of this Prospectus with the ASIC.

Moore Stephens has given its written consent to being named as auditor in this Prospectus in the form and context in which the information is included. Moore Stephens has not withdrawn its consent prior to lodgement of this Prospectus with the ASIC.

Steinepreis Paganin has given its written consent to being named as the Australian solicitors to the Company in this Prospectus in the form and context in which the information is included. Steinepreis Paganin has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

Patenteur has given its written consent to being named as the patent attorneys to the Company in this Prospectus and to the inclusion of the Intellectual Property Report included in Section 6 in the form and context in which the information and report is included. Patenteur has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

Cadmon has given its written consent to being named as Joint Lead Manager to the Company in this Prospectus. Cadmon has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

Bell Potter has given its written consent to being named as Joint Lead Manager to the Company in this Prospectus. Bell Potter has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

Automic has given its written consent to being named as the share registry to the Company in this Prospectus. Automic has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

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11.7 Expenses of the Offer

The total expenses of the Offer (excluding GST) are estimated to be approximately $1,190,650 and are expected to be applied towards the items set out in the table below:

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ITEM OF EXPENDITURE EXPENSES ($)
ASIC Fees 2,400
ASX Fees 96,250
Joint Lead Manager Fees 960,000
Legal Fees 95,000
Patent Attorney Fees 10,000
Investigating Accountant’s Fees 10,000
Printing and Distribution 17,000
TOTAL 1,190,650
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11.8 Continuous disclosure obligations

The Company will be a “disclosing entity” (as defined in section 111AC of the Corporations Act) following admission to the Official List and, as such, will be subject to regular reporting and disclosure obligations. Specifically, like all listed companies, the Company will be required to continuously disclose any information it has to the market which a reasonable person would expect to have a material effect on the price or the value of the Company’s securities.

Price sensitive information is publicly released through ASX before it is disclosed to shareholders and market participants. Distribution of other information to shareholders and market participants is also managed through disclosure to the ASX. In addition, the Company posts this information on its website after the ASX confirms an announcement has been made, with the aim of making the information readily accessible to the widest audience.

11.9 Electronic Prospectus

If you have received this Prospectus as an electronic Prospectus, please ensure that you have received the entire Prospectus accompanied by the Application Form. If you have not, please contact the Company and the Company will send you, for free, either a hard copy or a further electronic copy of this Prospectus or both. Alternatively, you may obtain a copy of this Prospectus from the website of the Company at http://dataexchange.io/.

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11.10 Financial Forecasts

The Directors have considered the matters set out in ASIC Regulatory Guide 170 and believe that they do not have a reasonable basis to forecast future earnings on the basis that the operations of the Company are inherently uncertain. Accordingly, any forecast or projection information would contain such a broad range of potential outcomes and possibilities that it is not possible to prepare a reliable best estimate forecast or projection.

11.11 Privacy statement

If you complete an Application Form, you will be providing personal information to the Company. The Company collects, holds and will use that information to assess your application, service your needs as a Shareholder and to facilitate distribution payments and corporate communications to you as a Shareholder.

The information may also be used from time to time and disclosed to persons inspecting the register, including bidders for your securities in the context of takeovers, regulatory bodies including the Australian Taxation Office, authorised securities brokers, print service providers, mail houses and the share registry.

You can access, correct and update the personal information that we hold about you. If you wish to do so, please contact the share registry at the relevant contact number set out in this Prospectus.

Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (as amended), the Corporations Act and certain rules such as the ASX Settlement Operating Rules. You should note that if you do not provide the information required on the application for Shares, the Company may not be able to accept or process your application.

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DIRECTORS’ 12 AUTHORISATION

This Prospectus is issued by the Company and its issue has been authorised by a resolution of the Directors.

In accordance with section 720 of the Corporations Act, each Director has consented to the lodgement of this Prospectus with the ASIC.

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Peter Christie

Managing Director For and on behalf of THE DATA EXCHANGE NETWORK LIMITED

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13 Glossary

Where the following terms are used in this Prospectus they have the following meanings:

Company or Data Exchange means The Data Exchange Network Limited (ACN 620 888 548).

$ means an Australian dollar.

Application Form means the application form attached to or accompanying this Prospectus relating to the Offer.

ASIC means Australian Securities & Investments Commission.

ASX means ASX Limited (ACN 008 624 691) or the financial market operated by it as the context requires.

Convertible Notes means the Ellerston Convertible Notes and the Investor Convertible Notes. Constitution means the constitution of the Company.

Conversion Options means the Options to be issued on conversion of the Convertible Notes.

Corporations Act means the Corporations Act 2001 (Cth).

Data Exchange or Company means The Data Exchange Network Limited (ACN 620 888 548).

ASX Listing Rules means the official listing rules of ASX.

Automic or Automic Pty Ltd means Automic Pty Ltd (ACN 152 260 814).

Bell Potter or Bell Potter Securities Limited means Bell Potter Securities Limited (ABN 25 006 390 772).

Board means the board of Directors as constituted from time to time.

DCL means Data Centre Limited.

Directors means the directors of the Company at the date of this Prospectus.

Ellerston means Ellerston Capital Limited as trustee for Ellerston Special Opportunities Platform.

Ellerston Convertible Notes means the 1,400,000 unsecured convertible notes in the Company held by Ellerston on the terms set out in Section 10.9.

Cadmon or Cadmon Advisory Pty Ltd means Cadmon Advisory Pty Ltd (ACN 616 484 756).

Existing Options means the Options on issue as at the date of this Prospectus.

CHESS means Clearing House Electronic Subregister System.

Cleansing Offer means the offer of one Share, for the purpose of facilitating secondary trading of Shares to be issued by the Company, which shall remain open (unless closed earlier at the discretion of the Directors) until the date of the Company’s admission to the Official List.

Exposure Period means the period of 7 days after the date of lodgement of this Prospectus, which period may be extended by the ASIC by not more than 7 days pursuant to section 727(3) of the Corporations Act.

Investor Convertible Notes means the unsecured convertible notes in the capital of the Company on the terms set out in Section 10.10.

Closing Date means the closing date of the Offer as set out in the indicative timetable in the Key Offer Information Section of this Prospectus (subject to the Company reserving the right to extend the Closing Date or close the Offer early).

Joint Lead Managers mean Cadmon and Bell Potter.

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Joint Lead Manager Mandate means the mandate between the Company, Bell Potter and Cadmon dated 21 December 2017, as summarised at Section 10.4.

Minimum Subscription means the minimum amount to be raised under the Offer, being $16,000,000.

Offer means the offer of Shares pursuant to this Prospectus as set out in Section 2.

Offers means the Offer and the Cleansing Offer.

Official List means the official list of ASX.

Official Quotation means official quotation by ASX in accordance with the ASX Listing Rules.

Option means an option to acquire a Share, and refers to either the Existing Options or the Conversion Options, as the context requires.

Optionholder means a holder of an Option.

Patent Attorneys means Patenteur.

Patenteur or Patenteur Pty Ltd means Patenteur Pty Ltd (ACN 159 561 761). Prospectus means this Prospectus.

Recommendations means the Corporate Governance Principles and Recommendations (3rd Edition) as published by ASX Corporate Governance Council.

Section means a section of this Prospectus.

Securities means a security issued or to be issued in the capital of the Company, including a Share or an Option.

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

Shareholder means a holder of Shares.

WST means Western Standard Time as observed in Perth, Western Australia.

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DATA EXCHANGE | PROSPECTUS 2018 <117>

APPLICATION 14 FORM

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<118>

THE DATA EXCHANGE NETWORK LIMITED ACN 620 888 548

must return their Public Application Form and Section name Application Monies back to their broker

Broker Code

Adviser Code

Application Options:

Option A: Apply Online and Pay Electronically (Recommended)

Apply online at: https://investor.automic.com.au/thedataexchange .html

Pay electronically: Applying online allows you to pay electronically, for Australian residents through BPAY® . Overseas applicants in permitted jurisdictions can also pay electronically through an electronic funds transfer.
Get in first, it’s fast and simple: Applying online is very easy to do, it eliminates any postal delays and removes the risk of it being potentially lost in transit.
It’s secure and confirmed: Applying online provides you with greater privacy over your instructions and is the only method which provides you with confirmation that your applicationhas been successfully processed.

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To apply online, simply scan the barcode to the right with your tablet or mobile device or you can enter the URL above into your browser.

Option B: Standard Application and Pay by Cheque

Enter your details below (clearly in capital letters using pen), attach cheque and return in accordance with the instructions on the reverse.

Number of Shares applied for Application payment (multiply box 1 by $0.20 per share) , , A$ , , . Applications must be for a minimum of 10,000 Shares (A$2,000), and thereafter in multiples of 2,500 Shares (A$500)
Applicant name(s) and postal address: refer to naming standards for correct form of registrable title(s) overleaf Name of Applicant 1

Name of Applicant 2 or Name of Applicant 3 or Postal address Unit / Street Number / Street name or PO Box Suburb/Town State Postcode Country and ZIP Code (if outside Australia) 3. Contact details Contact details Telephone Number phone Number hone Number Contact Name (PLEASE PRINT)

Contact details Contact details Telephone Number phone Number hone Number ( ) Email Address

By providing your email address, you elect to receive all communications despatched by the Company electronically (where legally permissible).

CHESS Holders Only – Holder Identification Number (HIN) X
TFN/ABN/Exemption Code Applicant 1 Applicant #2

Note: if the name and address details in sections 2 do not match exactly with your registration details held at CHESS, any Shares issued as a result of your Application will be held on the Issuer Sponsored subregister.

Applicant #3

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If NOT an individual TFN/ABN, please note the type in the box C = Company; P = Partnership; T = Trust; S = Super Fund DATA EXCHANGE | PROSPECTUS 2018 <119>

YOUR PRIVACY

Automic Pty Ltd (ACN 152 260 814) trading as Automic advises that Chapter 2C of the Corporation Act 2001 requires information about you as a securityholder (including your name, address and details of the securities you hold) to be included in the public register of the entity in which you hold securities. Primarily, your personal information is used in order to provide a service to you. We may also disclose the information that is related to the primary purpose and it is reasonable for you to expect the information to be disclosed. You have a right to access your personal information, subject to certain exceptions allowed by law and we ask that you provide your request for access in writing (for security reasons). Our privacy policy is available on our website – www.automic.com.au

CORRECT FORMS OF REGISTRABLE TITLE

Note that ONLY legal entities can hold Shares. The application must be in the name of a natural person(s), companies or other legal entities acceptable by the Company. At least one full given name and surname is required for each natural person.

Type of Investor	Correct Form of Registration	Incorrect Form of Registration
Individual	Mr John Richard Sample	J R Sample
Joint Holdings	Mr John Richard Sample & Mrs Anne Sample	John Richard & Anne Sample
Company	ABC PtyLtd	ABC P/L or ABC Co
Trusts	Mr John Richard Sample	John Sample Family Trust
Superannuation Funds	Mr John Sample & Mrs Anne Sample	John & Anne Superannuation Fund
Partnerships	Mr John Sample & Mr Richard Sample	John Sample & Son
Clubs/Unincorporated Bodies	Mr John Sample < Food Health Club A/C>	Food Health Club
Deceased Estates	Mr John Sample	Anne Sample (Deceased)

INSTRUCTIONS FOR COMPLETING THE FORM

YOU SHOULD READ THE PROSPECTUS CAREFULLY BEFORE COMPLETING THIS APPLICATION FORM.

This is an Application Form for Ordinary Fully Paid Shares (‘Shares’) in The Data Exchange Network Limited (ACN 620 888 548) (‘Company’), made under the terms set out in the Prospectus dated 16 February 2018. The expiry date of the Prospectus is the date which is 13 months after the date of the Prospectus. The Prospectus contains important information relevant to your decision to invest and you should read the entire Prospectus before applying for Shares. If you are in doubt as to how to deal with this Application Form, please contact your accountant, lawyer, stockbroker or other professional adviser. To meet the requirements of the Corporations Act, this Application Form must not be distributed unless included in, or accompanied by, the Prospectus and any supplementary prospectus (if applicable). While the Prospectus is current, the Company will send paper copies of the Prospectus, and any supplementary prospectus (if applicable) and an Application Form, on request and without charge.

Shares applied for & payment amount - Enter the number of Shares you wish to apply for. Your application must be for a minimum of 10,000
Shares (A$2,000). Applications for greater than 10,000 shares must be in multiples of 2,500 Shares (A$500). Next, enter the amount of the
Application Monies payable. To calculate this amount, multiply the number of Shares applied for by the offer price, which is A$0.20 per share.
Applicant name(s) and postal address - Note that ONLY legal entities can hold Shares. The application must be in the name of a natural person(s),
companies or other legal entities acceptable by the Company. At least one full given name and surname is required for each natural person. You
should refer to the table above for the correct forms of registrable title(s). Applicants using the wrong form of names may be rejected. Next, enter
your postal address for the registration of your holding and all correspondence. Only one address can be recorded against a holding.
Contact Details - Please provide your contact details for us to contact you between 9:00am AEDT and 5:00pm WST should we need to speak to you
about your application. In providing your email address you elect to receive electronic communications. You can change your communication
preferences at any time by logging in to the Investor Portal accessible at https://investor.automic.com.au/#/home
CHESS Holders - If you are sponsored by a stockbroker or other participant and you wish to hold shares allotted to you under this Application on
the CHESS subregister, enter your CHESS HIN. Otherwise leave the section blank and on allotment you will be sponsored by the Company and a “Securityholder Reference Number” (SRN) will be allocated to you.
TFN/ABN/Exemption - If you wish to have your Tax File Number, ABN or Exemption registered against your holding, please enter the details.
Payment - Payments for applications made through this application form can only be made by cheque. Payment can be made by both BPAY and
EFT but only by making an online application, which can be accessed by following the web address provided on the front of the application form. Do not forward cash with this Application Form as it will not be accepted.
Your cheque must be made payable to “The Data Exchange Network Limited” and drawn on an Australian bank and expressed in Australian
currency and crossed "Not Negotiable". Cheques or bank drafts drawn on overseas banks in Australian or any foreign currency will NOT be
your acceptance may be rejected if your cheque is dishonoured.

DECLARATIONS

BY SUBMITTING THIS APPLICATION FORM WITH THE APPLICATION MONIES, YOU DECLARE THAT:

all details and statements made on the form are complete and accurate;
where information has been provided about another individual, that individual’s consent has been obtained to transfer the information to the Company;
the Company and their respective officers and agents are authorised to do anything on your behalf (including the completion and execution of
documents) to enable the Shares to be allocated to you;
you agree to be bound by the constitution of the Company;
neither the Company not any person or entity guarantees any particular rate of return on the Shares, nor do they guarantee the repayment of capital.

LODGEMENT INSTRUCTIONS

The Offer opens at 9.00am (WST) on 26 February 2018 and is expected to close at 5.00pm (WST) on 9 April 2018. The Company may elect to extend the Offer

or close it (after the Offer is open) at any earlier date and time, without further notice. Applicants are therefore encouraged to submit their Applications as early as possible. Completed Application Forms and cheques must be:

POSTED TO :	DELIVERED TO (during business hours only - 9am to 5pm (WST):
The Data Exchange Network Limited C/- Automic PO Box 2226 STRAWBERRY HILLS NSW 2012	The Data Exchange Network Limited C/- Automic Level 3, 50 Holt Street SURRY HILLS NSW 2010
Your Application Form must be received by Automic no later than 5.00pm (WST) 9 April 2018

If you have any enquiries in respect of this Application, please contact Automic by either phone on 1300 288 664 or at [email protected] <120>

AI assistant

DXN LIMITED — Capital/Financing Update 2018

64806_rns_2018-04-09_e7638f5c-69e2-40a0-8375-8438aa111906.pdf

PROSPECTUS 2018

IMPORTANT INFORMATION

CONTENTS

CORPORATE DIRECTORY

Directors

Company Secretary

Proposed ASX Code

Patent Attorney

Patenteur Pty Ltd

Registered Office

Investigating Accountant

Solicitors

Steinepreis Paganin

DXN

Joint Lead Managers

Share Registry*

Automic

Cadmon Advisory Pty Ltd

Bell Potter Securities Limited

Auditor*

Important notice

a. Exposure Period

b. Applicants outside Australia

Hong Kong

Switzerland

United Arab Emirates

c. Web Site – Electronic Prospectus

d. Investment Advice

e. Risks

f. Website

g. Forward-looking statements

h. Photographs and Diagrams

i. Enquiries

j. Definitions

Chairman’s Letter

Dear Investor

Section name Data centres are rapidly becoming the world’s next utility

Key OFFER INFORMATION

KEY DATES - INDICATIVE TIMETABLE[1]

KEY OFFER DETAILS

INVESTMENT 1 OVERVIEW

Details of 2 the offer

2.1 The Offer

2.2 Minimum subscription

2.3 Oversubscriptions

2.4 Joint Lead Managers

2.5 Cleansing Offer

2.6 Use of Funds

Notes :

2.7 Applications

2.8 ASX listing

2.9 Issue

2.10 Clearing House Electronic Sub-Register System (CHESS) and Issuer Sponsorship

2.11 Commissions payable

2.12 Taxation

2.13 Withdrawal of Offer

SERVE THE FUTURE

COMPANY AND 3 BUSINESS OVERVIEW

3.1 Data Exchange’s Business

3.2 General information - Data Centre

3.3 Tier Certification

3.4 Data Exchange Business Model

3.5 Manufacture of data centre modules

3.6 Data Exchange’s Proposed Colocation Data Centres

b. Self-contained modules

c. Reduced upfront capital expenditure

3.7 Initial Development

Strategic Priorities for Growth

Identify Expansion Sites in Asia

Consolidate manufacturing

Expand Technology Sales Capacity

Construct New Data Centres

Deliver Front-of-house Services

Build a Colocation Sales Team

3.8 Competitive Advantages

Capital Efficient

Proposed colocation facilities

DXN LIMITED Capital/Financing Update 2018