SEQUOIA FINANCIAL GROUP LTD — Proxy Solicitation & Information Statement 2005

Jun 15, 2005

CommSoft Group Limited ABN 90 091 744 884

Notice of General Meeting to be held on 20 July 2005

Explanatory Memorandum for the Notice of General Meeting

and

Independent Expert's Report

NOTICE OF THE GENERAL MEETING TO BE HELD AT LEVEL 9, 55 HUNTER STREET, SYDNEY AT 10.00AM SYDNEY TIME ON 20 JULY 2005 TO BE VALID, FORMS OF PROXY FOR USE AT THE GENERAL MEETING MUST BE COMPLETED AND RETURNED TO THE COMPANY NO LATER THAN 10.00AM SYDNEY TIME ON 18 JULY 2005

Table of Contents

Section A - Chairman's Letter
	Section B - Glossary
	1.	Definitions and Interpretation
		Section C - Notice of General Meeting
	1.2.3.4.5.6.7.	Special BusinessNotice Requirements and Disclosures for ResolutionsVoting Exclusion StatementsDetermination of Membership and Voting EntitlementVotes of MembersProxiesTimetable for Consolidation of Shares
		Section D - Explanatory Memorandum
		Part A - Resolutions 3 and 4
	1.2.3.4.	Overview of the Proposed TransactionDetails of the Proposed Acquisition of Shares in CommSoft byMDSnews Group Shareholders and the MDSnews Group 65MDSnews Group and CommSoftAdditional Information
		Part B - Additional Information
	5.	Regulatory Requirements
Section E - Independent Expert's Report
Section F - Proxy Form

Section A - Chairman's Letter

CommSoft Group Limited Level 21 1 O'Connell Street Sydney NSW 2000

Shareholder enquiries to: shareholder@mdsnews.com

Dear Shareholder

The Company has previously announced that it had entered into an agreement (Share Purchase Agreement) with the shareholders of the MDSnews Group for the scrip for scrip acquisition of the MDSnews Group. The Company executed the Share Purchase Agreement on 13 May 2005.

The MDSnews Group's core technology is a series of investor tools that interact with an extensive data delivery and storage system for the global financial markets. If the Share Purchase Agreement is completed, which is subject to certain conditions precedent including the approval by Shareholders of certain resolutions contained in this Notice of General Meeting, the MDSnews Group will become wholly-owned by the Company. The MDSnews Group will continue to operate the business after completion of the transaction.

The Company's recent history

On 22 July 2003, the Company announced that the Deed of Company Arrangement, entered into on 28 April 2003, had been wholly effectuated and CommSoft Group Limited was placed back into the control of the Directors. As a consequence of this, the Company no longer owned, controlled or operated an active business.

The Board of Directors then took further action including:

• the search for a new business to be acquired by the Company that would enable Ä. the Company to satisfy the ASX requirements for the recommencement of trading in its Shares:
• the review of over 50 businesses seeking a listing through the CommSoft shell; ٠
• the selection of the MDSnews Group as the preferred acquisition choice:
• the execution of a conditional Heads of Agreement for the scrip for scrip acquisition of the MDSnews Group on 8 December 2004;
• negotiations with the MDSnews Group Shareholders to determine the terms upon which the Company would acquire the MDSnews Group and the proposed capital raising of up to $4,000,000; and

the raising to date of $270,000 in Pre-Acquisition funding.

The MDSnews Group Business

Through its own retail distribution channel www.mdsnews.com, the MDSnews Group provides a branded version of its core technology for retail and professional investors. The technology is distributed under the brand name "Market Analyser" and is targeted at the sophisticated active investor. As a complete market data, research and analysis platform for the global financial markets, the product has maintained a high level of acceptance among its target audience.

MDSnews Australia Pty Limited is the holder of an Australian Financial Services Licence issued by ASIC. MDSnews Australia Pty Limited is responsible for maintaining the compliance programme in relation to any investment advice that it or its Authorised Representatives provide.

Market Data Services Pty Limited's clients pay a monthly fee for access to the various technology applications and market information services via an online credit card gateway which is set up to auto debit client's credit cards monthly in advance

The CommSoft Board believes the core business of the MDSnews Group, together with the funding that will be available with the capital raising, underscores the ability of the MDSnews Group to compete successfully in the competitive wholesale market environment. The Directors believe that such capability will drive sales growth in the future.

The transaction to purchase the MDSnews Group will enable the refocussed CommSoft to successfully exploit the market data services industry, which the Directors believe is an exciting opportunity.

The Transaction

The principal terms of the transaction include:

• a 383 for 1 Consolidation of Shares. As an example, a Shareholder with 383,000 Shares will have 1,000 Consolidated Shares after the Consolidation of Shares. Shareholders will be given the opportunity to participate in the Capital Raising:

• the change of the Company's name to MDSnews Limited;

• the proposed acquisition of the MDSnews Group, the consideration for which will be the issue of new Consolidated Shares by CommSoft;

• Completion of the proposed acquisition is conditional on, amongst other things, the Company having satisfied the requirements of Chapters 1 and 2 of the Listing Rules so as to enable trading in its Shares to recommence;

• the issue of new Consolidated Shares to the holders of convertible notes issued in 2001:

• the issue of new Consolidated Shares to secured convertible noteholders who provided pre-acquisition funding to the Company;

• the resignation of certain existing Directors and appointment of new Directors;

• the issue of up to 3,000,000 new Consolidated Shares to proposed executive Directors Leon Hinde and Barry Littler in consideration of future services to be provided to the Company and to be granted pursuant to an employee incentive scheme:

• the issue of new Consolidated Shares to raise capital of up to $4,000,000;

• the issue of Options to certain Directors and proposed Directors; and

• the issue of Options to employees pursuant to an employee share option plan.

The following table details the proposed capital restructure at the date that trading in the Company's Shares will recommence, including the various issues of equity to be made prior to that date:

Projected Capital Structure as at the day that trading in theCompany's Consolidated Shares recommences (Assumingresolutions 3, 5, 9, 14 and 17 are passed by Shareholders)
Current Issued Capital of CommSoft	406,524,494 Shares
Post Consolidation	Consolidated Shares
Consolidation of Capital 383:1	1,061,422
Issue of Shares to convertible noteholders	3,353,086
Issue of Shares to secured convertiblenoteholders	2,700,000
Acquisition of MDSnews Group	41,750,000
Issue of Prospectus Shares	20,000,000
Projected Issued Capital	68,864,508

The Notice of General Meeting and Accompanying Documents

This letter is accompanied by a Notice of General Meeting, an Explanatory Memorandum and an Independent Expert's Report. The Notice of General Meeting sets out the resolutions that CommSoft's Shareholders are to consider regarding the proposed transactions. The Explanatory Memorandum explains in greater detail the background to the proposed resolutions.

Shareholders are encouraged to read the enclosed Explanatory Memorandum and Independent Expert's Report closely in their entirety and to attend the General Meeting and vote on the Resolutions. A proxy form is enclosed at Section F to enable any Shareholder who is unable to attend the General Meeting to vote at that meeting.

The Directors appointed an Independent Expert, BDO Corporate Finance Pty Limited, to review and report on the key elements of the proposed acquisition of the MDSnews

The Independent Expert has concluded that this transaction is fair and Group. reasonable to Shareholders of CommSoft.

David Whitfield has elected not to make any recommendation to Shareholders regarding this transaction. David is a director of The Toddlers Manufacturing Co Pty Ltd (Toddlers), a company which holds shares in MDSnews.com Limited. As a shareholder of an entity in the MDSnews Group, Toddlers will receive 1,461,250 Consolidated Shares on Completion.

David is also a director and shareholder of Barrack Capital. Barrack Capital has provided advice and assistance to the MDSnews Group regarding this transaction and will receive a cash payment from the Company equivalent to 7% of the proceeds of the proposed Capital Raising on Completion.

Bruce Ind and I believe that the proposed transaction is in the best interests of the Company and Shareholders, and recommend that Shareholders vote in favour of each of the resolutions set out in the Notice of General Meeting.

Yours sincerely

Jeff Zulman Chairman

Section B - Glossary

$\mathbf{1}$ Definitions and Interpretation

$1.1$ Definitions

The following definitions are used in the Chairman's Letter, the Notice of General Meeting and the Explanatory Memorandum:

ASIC means the Australian Securities and Investments Commission;

Associate has the meaning given to that term in Section 12 of the Corporations $Act:$

ASX means the Australian Stock Exchange Limited ACN 008 624 691;

Barrack Capital means Barrack Capital Pty Limited ACN 100 536 909;

Barry Littler means Barry Arthur Littler;

Board of Directors means the board of Directors of the Company;

Bruce Ind means Bruce Suttor Ind:

Business means the business of providing real-time comprehensive news and quote services for the financial markets to retail and corporate clients, owned and conducted by the MDSnews Group;

Business Days means a day which is not a Saturday. Sunday or public holiday in Sydney;

Capital Raising means the public offering to be undertaken by the Company prior to Completion and consisting of the offering of up to 20,000,000 Consolidated Shares at the issue price of 20 cents per Consolidated Share to raise up to $4,000,000;

CommSoft or the Company means CommSoft Group Limited ABN 90 091 744 884:

Company or CommSoft means CommSoft Group Limited ABN 90 091 744 884:

Company's Constitution means the constitution of the Company, as amended from time to time:

Completion means completion of the Share Purchase Agreement;

Completion Date means the date that Completion occurs in accordance with clause 5 of the Share Purchase Agreement;

Consolidated Share means an ordinary share in the issued capital of the Company after the Consolidation of Shares:

Consolidation of Shares means the consolidation of all Shares by consolidating each 383 Shares into one Consolidated Share;

Corporations Act means the Corporations Act, 2001 (Cth);

Coyne Holdings means Coyne Holdings Pty Limited ACN 063 361 491;

David Whitfield means David Ronald Whitfield:

Directors means the directors of the Company;

Disclosure Document has the meaning ascribed to that term in Section 9 of the Corporations Act:

Employee Share Option Plan means the share option plan for the issue of Options in the Company to employees of, and consultants to, CommSoft and, post-Completion, the MDSnews Group, as adopted by the Company on 2 August 2000;

Explanatory Memorandum means the explanatory memorandum set out in Section D of this document:

Foley Employment Agreement means the employment agreement to be entered into between Market Data Services and Craig Foley on terms to be approved by CommSoft, such terms to include a total remuneration of $139,450;

General Meeting means the general meeting of the Company to be held on 20 July 2005 pursuant to the Notice of General Meeting;

Hinde Employment Agreement means the employment agreement to be entered into between an entity in the MDSnews Group and Leon Hinde on terms to be approved by CommSoft, such terms to include a total remuneration of $200,000 for the first 12 months of the term of the agreement;

Income Tax Assessment Act means the Income Tax Assessment Act 1936 $(Cth)$ ;

Independent Expert means BDO Corporate Finance Pty Limited ACN 003 946 $030:$

Independent Expert's Report means the report prepared by the Independent Expert set out in Section E of this document:

Issue Shares means 41,750,000 Consolidated Shares to be issued by the Company to the MDSnews Group Shareholders;

Jeff Zulman means Jeffrey Joel Zulman;

Key Employee Agreements means the:

• $(a)$ Hinde Employment Agreement;

• $(b)$ Shek Employment Agreement;

• Foley Employment Agreement; and $(c)$

• $(d)$ Littler Employment Agreement;

Leon Hinde means Leon Travis Hinde:

Listing Rules means the official listing rules issued and enforced by the ASX as amended from time to time:

Littler Employment Agreement means the employment agreement to be entered into between Market Data Services and Barry Littler on terms to be approved by CommSoft;

Market Data Services means Market Data Services Pty Limited ACN 082 076 346, a wholly-owned subsidiary of MDSnews.com;

MDSnews Australia means MDSnews Australia Pty Limited ACN 002 314 310;

MDSnews Global means MDSnews Global Pty Limited ACN 090 611 680;

MDSnews Group means:

• $(a)$ MDSnews.com;
• MDSnews Australia: $(b)$
• $(c)$ MDSnews Solutions:
• MDSnews Global; and $(d)$
• $(e)$ Market Data Services:

MDSnews Group Shareholders means:

• Leon Hinde: $(a)$
• Global Equity Management Pty Ltd ACN 088 976 336; $(b)$
• $(c)$ Craig Foley;
• Allan Shek: $(d)$
• lan Frost: $(e)$
• SAS Global Finance Pty Ltd ACN 052 954 524; $(f)$
• $(q)$ Tricom Equities Limited ACN 067 161 755;
• Cyprus Investments Pty Limited ACN 087 185 804; and $(h)$
• $(i)$ Toddlers;

MDSnews Group Warrantors means the MDSnews Group Shareholders and Leon Hinde:

MDSnews Solutions means MDSnews Solutions Pty Limited ACN 088 190 283, a wholly-owned subsidiary of MDSnews.com;

MDSnews.com means MDSnews.com Limited ACN 072 209 762;

New Convertible Notes means the $1.00 convertible notes issued in March 2005 to the New Noteholders, each note being convertible into Shares at a conversion price of 10 cents per Consolidated Share on Completion;

New Noteholders means:

• $(a)$ Scrimshaw Nominees Pty Ltd ACN 006 366 070;
• $(b)$ Riverstone Nominees Pty Ltd ATF The RF Percival Family Trust No 2 ACN 063 086 546;
• $(c)$ Wyser Developments Pty Ltd ATF Barrier Reef Discretionary Trust ABN 92 054 410 276:
• Carey Nominees Qld Pty Ltd ATF The Carey Family Trust ACN 106 196 $(d)$ $525.$
• Christopher Twigg: $(e)$
• $(f)$ Mazal Finance Pty Limited ACN 107 917 313;
• $(g)$ Carbax Trading Pty Ltd ABN 38 092 087 600;
• Riverstone Nominees Pty Ltd Russell Family Trust No 2 & Judith $(h)$ Lorraine Hare ATF The Hare Property Trust ABN 75 283 885 747;
• JED Investments Pty Ltd ACN 107 340 563; and $(i)$
• $(i)$ Barrack Capital;

Notice of General Meeting or Notice means the notice of General Meeting set out in Section C of this document;

Officially Quoted and Official Quotation means, in relation to a Share, Consolidated Share or an Option, officially quoted by the ASX:

Old Convertible Notes means the $1.00 convertible notes issued in 2001 to the Old Noteholders and varied by deeds of variation entered into in March 2005, each note being convertible into Consolidated Shares at a conversion price of 28.7 cents or redeemable at a redemption price of 45 cents on Completion;

Old Noteholders means:

• AJW Howard & Co.: $(a)$

• Arton No. 001 Pty Ltd; $(b)$

• $(c)$ Coyne Holdings;

• $(d)$ Donna Maree Wilding;

• $(e)$ Golden Words Pty Ltd:

• $(f)$ Hettinger Nominees Ltd;

• $(g)$ Jangada Trust;

• Talimor Pty Ltd ATF the Glowine Investment Trust: $(h)$

• $(i)$ Waikiwi Trust:

• $(i)$ Wilcrow Pty Ltd; and

• $(k)$ David Marcuson:

Option means an option in the issued capital of the Company which when exercised converts into 1 Share, or if converted after the Consolidation of Shares, into 1 Consolidated Share (after the appropriate adjustment to the number and issue price of the Options has been made);

Prospectus means the prospectus to be issued by the Company to conduct the Capital Raising;

Related Corporation means a "related body corporate" as that expression is defined in the Corporations Act and includes a body corporate which is currently a "related body corporate" but ceases to be a "related body corporate" because of an amendment, consolidation or replacement of the Corporations Act:

Resolution means a resolution passed by the requisite majority of members of the Company on a show of hands or by the requisite majority of votes given on a poll:

Restricted Securities means securities of the Company that:

• are subject to escrow restrictions as determined in accordance with $(a)$ Appendix 9B of the Listing Rules; or
• $(b)$ in the ASX's opinion, should be treated as restricted securities:

Sale Shares means the entire issued capital of each company in the MDSnews Group;

Share means a fully paid ordinary share in the issued capital of the Company prior to the Consolidation of Shares;

Share Purchase Agreement means the agreement between CommSoft and the MDSnews Group Shareholders for the acquisition by CommSoft of all the Sale Shares, which was executed by the parties on 13 May 2005:

Shareholder means a holder of a Share or a Consolidated Share, as the case may be;

Special Resolution means a resolution:

• of which notice as set out in Section 249L(1)(c) has been given; and $(a)$
• $(b)$ that has been passed by at least 75% of the votes cast by members entitled to vote on the resolution;

Subsidiary has the meaning ascribed to that term in Section 46 of the Corporations Act:

Toddlers means The Toddlers Manufacturing Co Pty Ltd ACN 000 021 116;

Transaction Documents means the Key Employee Agreements and any other document incidental to the Share Purchase Agreement; and

Transaction Events means the execution of each of the Transaction Documents and the satisfaction of the conditions precedent to Completion as described in paragraph 1.2(a) of the Explanatory Memorandum (Section D) of this document.

$1.2$ Interpretation

For the purposes of interpreting the Chairman's Letter, the Explanatory Memorandum and the Notice of General Meeting:

• $(a)$ the singular includes the plural and vice versa;
• $(b)$ words importing any gender include the other genders;
• $(c)$ reference to any statute, ordinance, regulation, rule or other law includes all regulations and other instruments and all consolidations. amendments, re-enactments or replacements for the time being in force;
• $(d)$ all headings bold typing and italics (if any) have been inserted for convenience of reference only and do not define limit or affect the meaning or interpretation of the Chairman's Letter, the Explanatory Memorandum and the Notice of General Meeting;
• reference to persons includes bodies corporate and government $(e)$ authorities and in each and every case, includes a reference to the person's executors, administrators, successors, substitutes (including without limitation persons taking by novation and assignment); and
• $(f)$ reference to $. A$. Australian Dollars or dollars or cents is a reference to the lawful tender for the time being and from time to time of the Commonwealth of Australia.

Section C - Notice of General Meeting

NOTICE IS HEREBY GIVEN that the General Meeting of the Shareholders of CommSoft Group Limited ABN 90 091 744 884 (CommSoft or the Company) will be held at Level 9, 55 Hunter Street, Sydney on 20 July 2005 at 10.00am (Sydney time).

Defined terms used in this Notice of General Meeting have the meanings given to them in the Glossary accompanying this Notice of General Meeting.

$\mathbf{1}$ . Special Business

$1.1$ Change of Company name

To consider and, if thought fit, to pass the following resolution as a special resolution:

"That in accordance with Section 157(1)(a) of the Corporations Act, the name of the Company be changed from "CommSoft Group Limited" to "MDSnews Limited"

(Resolution 1).

$1.2$ Consolidation of Company's Issued Capital

To consider and, if thought fit, to pass the following resolution:

"That, in accordance with Section 254H(1) of the Corporations Act, the issued capital of the Company be consolidated by consolidating each 383 Shares into 1 Consolidated Share and to deal with fractional entitlements arising from the Consolidation of Shares in accordance with paragraph 2.2(b)(i) of this Notice"

(Resolution 2).

$1.3$ Significant change to activities

To consider and, if thought fit, to pass the following resolution:

"Conditional on Resolutions 4 and 5 being passed in accordance with their terms, as stated in this Notice, and Completion occurring, that, in accordance with Listing Rules 11.1.2 and 11.1.3, the Company be permitted to make a significant change to both the nature and scale of its activities by entering into and performing its obligations in accordance with the provisions of the Share Purchase Agreement, as described in the Explanatory Memorandum"

(Resolution 3).

$1.4$ Issue of Consolidated Shares to the MDSnews Group Shareholders

To consider and, if thought fit, to pass the following resolution:

"Conditional on Resolutions 3 and 5 being passed in accordance with terms, as stated in this Notice, and Completion occurring, that, in accordance with Section 611, Item 7 of the Corporations Act, the Company be permitted and authorised to issue to the MDSnews Group Shareholders 41,750,000 Consolidated Shares in consideration for the transfer by the MDSnews Group Shareholders of their unencumbered right title and interest in the Sale Shares in accordance with the Share Purchase Agreement, as described in the Explanatory Memorandum"

(Resolution 4).

$1.5$ Issue of Consolidated Shares pursuant to the Prospectus

To consider and, if thought fit, to pass the following resolution:

"Conditional on Resolutions 3 and 4 being passed in accordance with their respective terms, as stated in this Notice, and Completion occurring, that, in accordance with Listing Rule 7.1, the Company be permitted and authorised to issue up to 20,000,000 Consolidated Shares pursuant to the Prospectus at a subscription price of 20 cents per Consolidated Share"

(Resolution 5).

$1.6$ Approval of issue of Consolidated Shares to Old Noteholders

To consider and, if thought fit, to pass the following resolution:

"Conditional on Resolutions 3, 4 and 5 being passed in accordance with their respective terms, as stated in this Notice, and Completion occurring, that in accordance with Listing Rule 7.1, the Company be permitted and authorised to issue 3.276.150 Consolidated Shares to the Old Noteholders in consideration for the conversion of 941,074 Old Convertible Notes held by them"

(Resolution 6).

$1.7$ Approval of issue of Consolidated Shares to Coyne Holdings

To consider and, if thought fit, to pass the following resolution:

"Conditional on Resolutions 3, 4 and 5 being passed in accordance with their respective terms, as stated in this Notice, and Completion in accordance with Listing Rule 10.11 occurring. that. and Section 208(1)(a)(i) of the Corporations Act, the Company be permitted and authorised to issue 76,936 Consolidated Shares to Coyne Holdings in consideration for the conversion of 22,100 Old Convertible Notes held by Coyne Holdings"

(Resolution 7).

$1.8$ Approval of issue of Consolidated Shares to New Noteholders

To consider and, if thought fit, to pass the following resolution:

"Conditional on Resolutions 3, 4 and 5 being passed in accordance with their respective terms, as stated in this Notice, and Completion occurring, that in accordance with Listing Rule 7.1, the Company be permitted and authorised to issue 2,440,000 Consolidated Shares to the New Noteholders (excluding Barrack Capital) in consideration for the conversion of 244,000 New Convertible Notes held by them"

(Resolution 8).

$1.9$ Approval of issue of Consolidated Shares to Barrack Capital

To consider and, if thought fit, to pass the following resolution:

"Conditional on Resolutions 3, 4 and 5 being passed in accordance with their respective terms, as stated in this Notice, and Completion occurring, that, in accordance with Listing Rule 10.11 and Section $208(1)(a)(i)$ of the Corporations Act, the Company be permitted and authorised to issue 260,000 Consolidated Shares to Barrack Capital in consideration for the conversion of 26,000 New Convertible Notes held by Barrack Capital"

(Resolution 9).

$1.10$ Issue of Consolidated Shares pursuant to Employee Share Option Plan

To consider and, if thought fit, to pass the following resolution:

"Conditional on Resolutions 3, 4 and 5 being passed in accordance with their respective terms, as stated in this Notice and Completion occurring, that in accordance with Listing Rule 7.2, Exception 9, the Company be permitted and authorised to issue to employees of and consultants to each company in the MDSnews Group and the Company. including executive directors of the Company, Consolidated Shares on exercise by those employees or consultants of Options issued pursuant to the Employee Share Option Plan, as described in paragraph 2.10 of this Notice"

(Resolution 10).

$1.11$ Appointment of Leon Hinde as a Director

To consider and, if thought fit, to pass the following resolution:

"Conditional on Resolutions 3, 4 and 5 being passed in accordance with their respective terms stated in this Notice, and Completion occurring, that Leon Hinde be appointed as a Director of the Company with effect from the closure of this General Meeting"

(Resolution 11).

$1.12$ Appointment of Barry Littler as a Director

To consider and, if thought fit, to pass the following resolution:

"Conditional on Resolutions 3, 4 and 5 being passed in accordance with their respective terms stated in this Notice, and Completion occurring. that Barry Littler be appointed as a Director of the Company with effect from the closure of this General Meeting"

(Resolution 12).

Approval of issue of Consolidated Shares to Executive Directors pursuant $1.13$ to an Employee Incentive Scheme

To consider and, if thought fit, to pass the following resolution:

"Conditional on Resolutions 3, 4 and 5 being passed in accordance with their respective terms, as stated in this Notice, and Completion that, in accordance with Listing Rule $10.14$ occurrina. and Section 208(1)(a)(i) of the Corporations Act. the Company be permitted and authorised to issue an aggregate of up to 3,000,000 Consolidated Shares to Leon Hinde and Barry Littler over a 3-year period pursuant to an employee incentive scheme the terms of which are described in paragraph 2.13 of this Notice"

(Resolution 13).

$1.14$ Issue of Options to Leon Hinde

To consider and, if thought fit, to pass the following resolution:

"Conditional on Resolutions 3, 4 and 5 being passed in accordance with their respective terms, as stated in this Notice, and Completion occurring, that, in accordance with Listing Rule 10.11 and Section $208(1)(a)(i)$ of the Corporations Act, the Company be permitted and authorised to issue 500,000 Options to Leon Hinde for nil cash consideration, with each Option vesting immediately and being exercisable up until and including 31 December 2006 and entitling the holder to subscribe for one Consolidated Share at an exercise price of 20 cents per Consolidated Share, and on further terms as set out in paragraph 2.14 of this Notice, in consideration for the provision of his services to the MDSnews Group"

(Resolution 14).

$1.15$ Issue of Options to Barry Littler

To consider and, if thought fit, to pass the following resolution:

"Conditional on Resolutions 3, 4 and 5 being passed in accordance with their respective terms, as stated in this Notice, and Completion occurring, that, in accordance with Listing Rule 10.11 and

Section 208(1)(a)(i) of the Corporations Act, the Company be permitted and authorised to issue 500,000 Options to Barry Littler for nil cash consideration, with each Option vesting immediately and being exercisable up until and including 31 December 2006 and entitling the holder to subscribe for one Consolidated Share at an exercise price of 20 cents per Consolidated Share, and on further terms as set out in paragraph 2.15 of this Notice, in consideration for the provision of his services to the MDSnews Group"

(Resolution 15).

$1,16$ Issue of Options to Bruce Ind

To consider and, if thought fit, to pass the following resolution:

"Conditional on Resolutions 3, 4 and 5 being passed in accordance with their respective terms, as stated in this Notice, and Completion occurrina. that, in accordance with Listing Rule $10.11$ and Section 208(1)(a)(i) of the Corporations Act, the Company be permitted and authorised to issue 500,000 Options to Bruce Ind for nil cash consideration, with each Option vesting immediately and being exercisable up until and including 31 December 2006 and entitling the holder to subscribe for one Consolidated Share at an exercise price of 20 cents per Consolidated Share, and on further terms as set out in paragraph 2.16 of this Notice, in consideration for the provision of his services to the Company"

(Resolution 16).

$1.17$ Issue of Options to David Whitfield

To consider and, if thought fit, to pass the following resolution:

"Conditional on Resolutions 3, 4 and 5 being passed in accordance with their respective terms, as stated in this Notice. Completion occurring and that David Whitfield holds the office of Director at Completion. that. in accordance with Listing Rule 10.11 and Section 208(1)(a)(i) of the Corporations Act, the Company be permitted and authorised to issue 500,000 Options to David Whitfield for nil cash consideration, with each Option vesting immediately and being exercisable up until and including 31 December 2006 and entitling the holder to subscribe for one Consolidated Share at an exercise price of 20 cents per Consolidated Share, and on further terms as set out in paragraph 2.17 of this Notice. in consideration for the provision of his services to the Company"

(Resolution 17).

$1.18$ Issue of Options to Jeff Zulman

To consider and, if thought fit, to pass the following resolution:

"Conditional on Resolutions 3, 4 and 5 being passed in accordance with their respective terms, as stated in this Notice, Completion occurring

and that Jeff Zulman holds the office of Director at Completion, that, in accordance with Listing Rule 10.11 and Section 208(1)(a)(i) of the Corporations Act, the Company be permitted and authorised to issue 500,000 Options to Jeff Zulman for nil cash consideration, with each Option vesting immediately and being exercisable up until and including 31 December 2006 and entitling the holder to subscribe for one Consolidated Share at an exercise price of 20 cents per Consolidated Share, and on further terms as set out in paragraph 2.18 of this Notice, in consideration for the provision of his services to the Company"

(Resolution 18).

1.19 Increase in Directors' Fees

To consider and, if thought fit, to pass the following resolution:

That in accordance with Listing Rule 10.17, the total amount of Directors' Fees payable by the Company be increased from nil to $100,000 per annum.

(Resolution 19).

$2-$ Notice Requirements and Disclosures for Resolutions

$2.1$ Notice Requirements for Resolution 1

It is proposed that the name of the Company be changed to "MDSnews" Limited". On Resolution 1 being passed, the Company will be renamed to adopt the brand name of its principal business.

$2.2$ Notice Requirements for Resolution 2

If the issue of Consolidated Shares pursuant to Resolutions 4, 5, 6, 7, 8 and 9 would be made in Shares (that is, in pre-Consolidated Shares), CommSoft would have had approximately 26.375 billion Shares on issue. This is a substantial number of shares compared to companies listed on the ASX of a similar size and market capitalisation. The Consolidation of Shares should result in a more normal relationship between the price per Consolidated Share and the market capitalisation of the Company.

Pursuant to Listing Rule 7.20:

Rule 7.20.1: The effect of the proposal on the number of securities and $(a)$ the amount unpaid (if any) on the securities:

The existing issued share capital of CommSoft, being 406,524,494 Shares, will be consolidated at the ratio of 383 Shares equal 1 Consolidated Share. There are no Shares in respect of which an amount is unpaid. The final number of shares after Consolidation will be 1.061.422 Consolidated Shares.

Rule 7.20.2: The proposed treatment of any fractional entitlements $(b)$ arising from the reorganisation:

Fractions of Shares resulting from the Consolidation of Shares will be treated as follows:

• $(i)$ a fraction of 0.5 of a Share or less will be disregarded; and
• $(ii)$ a fraction of greater than 0.5 will be rounded up to a full Share.
• $(c)$ Rule 7.20.3: The proposed treatment of any convertible securities on issue:

The agreement reached between the Company and the Old Noteholders for the conversion of the Old Convertible Notes in accordance with the terms of Resolutions 6 and 7, provides for the issue of Consolidated Shares on conversion of those notes.

The New Convertible Notes are convertible into Consolidated Shares.

There are no other convertible securities currently on issue.

$2.3$ Notice Requirements for Resolution 3

The Company directs you to the Explanatory Memorandum and the Independent Expert's Report in Sections D and E respectively. A Voting Exclusion Statement is included at paragraph 3.1 of the Notice of General Meeting.

$24$ Notice Requirements for Resolution 4

Approval of Shareholders of the issue of 41,750,000 Consolidated Shares to the MDSnews Group Shareholders is being sought pursuant to Section 611, Item 7 of the Corporations Act. In accordance with the disclosure requirements set out in paragraph (b) of that item and ASIC Policy Statement 74, the Company has prepared an Explanatory Memorandum (Section D) and commissioned an Independent Expert's Report (Section E) regarding this proposed transaction. A Voting Exclusion Statement is included at paragraph 3.2 of this Notice of General Meeting.

Pursuant to Listing Rule 7.2:

Rule 7.2, Exception 16: Approval not required under Rule 7.1: $(a)$

As approval for the issue of the Consolidated Shares referred to in Resolution 4 is being sought under Section 611, Item 7 of the Corporations Act, approval is not required under Listing Rule 7.1.

2.5 Notice Requirements for Resolution 5

Pursuant to Listing Rule 7.3, the following information is provided regarding Listing Rule 7.1 approval:

Rule 7.3.1: Maximum number of securities to be issued pursuant to $(a)$ Resolution 5:

20,000,000 Consolidated Shares.

$(b)$ Rule 7.3.2 and 7.3.7: Date by which securities will be issued and allotted:

If Shareholder approval is obtained, the issue and allotment of the Consolidated Shares pursuant to the Prospectus will occur on a date which is 2 Business Days after the date of this General Meeting or the date that this Resolution becomes unconditional (whichever is the latter), but in any case no later than 3 months after the date of this General Meeting.

$(c)$ Rule 7.3.3: Issue price of securities:

The issue price of Consolidated Shares under the Prospectus is 20 cents per Consolidated Share.

Rule 7.3.4: Names of allottees: $(d)$

Consolidated Shares will be issued to persons who subscribe for Consolidated Shares pursuant to the Prospectus.

Rule 7.3.5: Terms of securities: $(e)$

The Company will apply to the ASX to have the Consolidated Shares issued pursuant to the Prospectus Officially Quoted and these Consolidated Shares will rank equally with all the other Consolidated Shares on issue. In all other respects the rights and entitlements of the holders in respect of the Consolidated Shares issued pursuant to the Prospectus will be identical to the rights and entitlements of the holders of issued Consolidated Shares.

$(f)$ Rule 7.3.6: Intended use of the funds:

The Capital Raising funds will be used to fund the ongoing working capital requirements of the Business;

$(a)$ Rule 7.3.8: Votina Exclusion Statement:

A Voting Exclusion Statement is included in paragraph 3.3 of this Notice of General Meeting.

$26$ Notice Requirements for Resolution 6

Pursuant to Listing Rule 7.3, the following information is provided regarding Listing Rule 7.1 approval:

Rule 7.3.1: Maximum number of securities to be issued pursuant to $(a)$ Resolution 6:

3.276.150 Consolidated Shares.

$(b)$ Rule 7.3.2 and 7.3.7: Date by which securities will be issued and allotted:

If Shareholder approval is obtained, the issue and allotment of the Consolidated Shares to the Old Noteholders will occur on a date which is 2 Business Days after the date of this General Meeting or the date that this Resolution becomes unconditional (whichever is the latter), but in any case no later than 3 months after the date of this General Meeting.

$(c)$ Rule 7.3.3: Issue price of securities:

The issue price of the Consolidated Shares to be issued to the Old Noteholders on conversion of the Old Convertible Notes is 28.7 cents per Consolidated Share. This Conversion Price is achieved after notionally converting the Old Convertible Notes into (pre-Consolidation) Shares and then consolidating them in accordance with the Consolidation of Shares

A further 413,574 Old Convertible Notes will, subject to Completion occurring, be redeemed by the Company at a redemption price of 45 cents per Convertible Note, for a total payment of $186,108.

$(d)$ Rule 7.3.4: Name of allottees:

• AJW Howard & Co.: $(i)$

• $(ii)$ Arton No. 001 Pty Ltd;

• $(iii)$ Coyne Holdings;

• $(iv)$ Donna Maree Wilding:

• Golden Words Pty Ltd; $(v)$

• $(vi)$ Hettinger Nominees Ltd;

• $(vii)$ Jangada Trust;

• Talimor Pty Ltd ATF the Glowine Investment Trust; $(viii)$

• Waikiwi Trust: $(ix)$

• Wilcrow Pty Ltd; and $(x)$

• $(x_i)$ David Marcuson.

• $(e)$ Rule 7.3.5: Terms of securities:

The Company will apply to the ASX to have the Consolidated Shares issued to the Old Noteholders Officially Quoted and, subject to any ASX ruling regarding Restricted Securities, these Consolidated Shares will rank equally with all the other Consolidated Shares on issue. In all other respects the rights and entitlements of the holders in respect of the Consolidated Shares issued to the Old Noteholders will be identical to the rights and entitlements of the holders of issued Consolidated Shares

$(f)$ Rule 7.3.6: Intended use of the funds:

The funds raised by the issue of the Old Convertible Notes in 2001 were used by the Company to fund its working capital requirements at that time. No additional funds will be raised or received by the Company on conversion of the Old Convertible Notes.

$(q)$ Rule 7.3.8: Votina Exclusion Statement:

A Voting Exclusion Statement is included in paragraph 3.4 of this Notice of General Meeting.

$2.7$ Notice Requirements for Resolution 7

Pursuant to Listing Rule 10.13, the following information is provided regarding Listing Rule 10.11 approval:

$(a)$ Rule 10.13.1: Name of person:

Covne Holdings.

$(b)$ Rule 10.13.2. Number of securities to be issued to the person:

76.936 Consolidated Shares on conversion of 22.100 Old Convertible Notes

Rule 10.13.3: Date by which the securities are to be issued: $(c)$

If Shareholder approval is obtained, the issue and allotment of the Consolidated Shares to Coyne Holdings will occur on a date which is 2 Business Days after the date of this General Meeting or the date that this Resolution becomes unconditional (whichever is the latter), but in any case no later than 1 month after the date of this General Meeting.

$(d)$ Rule 10.13.4: Nature of relationship:

Jeff Zulman is a director and shareholder of Coyne Holdings. He is also a Director of the Company.

Rule 10.13.5: Issue price of the securities and a statement of terms of $(e)$ issue:

The issue price of the Consolidated Shares to be issued to Coyne Holdings on conversion of the Old Convertible Notes is 28.7 cents per Consolidated Share. This is the same conversion price that applies to all other Old Convertible Notes that are being converted.

The Company will apply to the ASX to have the Consolidated Shares issued to Coyne Holdings Officially Quoted and, subject to any ASX ruling regarding Restricted Securities, will rank equally with all the other Shares on issue. In all other respects the rights and entitlements of Coyne Holdings in respect of those Consolidated Shares will be identical to the rights and entitlements of the holders of issued Consolidated Shares.

Rule 10.13.6A: The intended use of the funds: $(f)$

See paragraph 2.6(f) above.

$(q)$ Rule 10.13.6: Votina exclusion statement:

A Voting Exclusion Statement is included at paragraph 3.5 of this Notice of General Meeting.

Pursuant to Listing Rule 7.2:

$(h)$ Rule 7.2, Exception 14: Approval not required under Rule 7.1:

As approval for the issue of the Consolidated Shares referred to in Resolution 7 is being sought under Listing Rule 10.11, approval is not required under Listing Rule 7.1.

In addition to Listing Rule 10.11, approval of Shareholders of the issue of Consolidated Shares (financial benefit) to Coyne Holdings (related party) is being sought pursuant to Section 208(1)(a) of the Corporations Act. $ln$ accordance with Section 219, the Company discloses the following information:

$(i)$ The related party to whom the proposed resolution would permit a financial benefit to be given:

Covne Holdinas.

The nature of the financial benefits: $(i)$

76.936 Consolidated Shares on conversion of 22.100 Old Convertible Notes.

$(k)$ Directors' recommendations:

Each of David Whitfield and Bruce Ind recommends that Shareholders vote in favour of Resolution 7.

Jeff Zulman is a director and shareholder of Coyne Holdings and is a Director of the Company. Jeff Zulman makes no recommendation regarding this Resolution because he has an interest in it.

$($ $|$ Director's interest in resolution:

Neither David Whitfield nor Bruce Ind has an interest in Resolution 7.

Jeff Zulman has an interest in Resolution 7, as set out in paragraph (k) above.

$(m)$ All other relevant information:

If Resolution 7 is passed. Covne Holdings will receive Consolidated Shares in the Company on the conversion of the Old Convertible Notes held by it on the same terms as the other Old Noteholders will if Shareholders approve Resolution 6. The other Old Noteholders are not related parties of the Company.

Jeff Zulman is also a director and shareholder of Coyne Capital Pty Limited (Coyne Capital). The Company currently pays Coyne Capital a service fee of $5,000 per month. This arrangement will terminate effective as at the conclusion of the General Meeting.

$2.8$ Notice Requirements for Resolution 8

Pursuant to Listing Rule 7.3, the following information is provided regarding Listing Rule 7.1 approval:

Rule 7.3.1: Maximum number of securities to be issued pursuant to $(a)$ Resolution 8:

2,440,000 Consolidated Shares.

$(b)$ Rules 7.3.2 and 7.3.7: Date by which securities will be issued and allotted:

If Shareholder approval is obtained, the issue and allotment of the Consolidated Shares to the New Noteholders (excluding Barrack Capital) will occur on a date which is 2 Business Days after the date of this General Meeting or the date that this Resolution becomes unconditional (whichever is the latter), but in any case no later than 3 months after the date of this General Meeting.

$(c)$ Rule 7.3.3: Issue price of securities:

The issue price of the Consolidated Shares to be issued to the New Noteholders on conversion of the New Convertible Notes is 10 cents per Consolidated Share.

Rule 7.3.4: Names of Allottees: $(d)$

The Consolidated Shares to be issued to the New Noteholders will be apportioned as follows:

Recipient	Shares
Scrimshaw Nominees Pty Ltd	250,000
Riverstone Nominees Pty Ltd ATF The PercivalFamily Trust	500,000
Wyser Developments Pty Ltd ATF Barrier ReefDiscretionary Trust	250,000
Carey Nominees Qld Pty Ltd	250,000
Christopher Twigg	100,000
Mazal Finance Pty Limited	250,000
Carbax Trading Pty Ltd	140,000
Riverstone Nominees Pty Ltd ATF Russell FamilyTrust No. 2 and Judith Lorraine Hare ATF The HareProperty Trust	500,000
JED Investments Pty Ltd	200,000
Total	2,440,000

Rule 7.3.5: Terms of securities: $(e)$

The Company will apply to the ASX to have the Consolidated Shares issued to the New Noteholders Officially Quoted and, subject to any ASX ruling regarding Restricted Securities, these Consolidated Shares will rank equally with all the other Consolidated Shares on issue. In all other respects the rights and entitlements of the holders in respect of the Consolidated Shares issued to the New Noteholders will be identical to the rights and entitlements of the holders of issued Consolidated Shares.

Rule 7.3.6: Intended use of the funds: $(f)$

The sum of $270,000 was raised by the Company from the issue of the New Convertible Notes to the New Noteholders, (including those New Convertible Notes issued to Barrack Capital, the subject of Resolution 9). Of this $270,000:

• $(i)$ $200,000 is being used by the Company to finance transaction costs including lawyers' and accountants' fees associated with the acquisition of the MDSnews Group and the Capital Raising and the cost of printing this Notice and the Prospectus; and
• $70,000 has been used to redeem, in full, convertible notes $(ii)$ issued in 2002 with a face value of $116,000 held by Golden Words Pty Limited.

$(g)$ Rule 7.3.8: A voting exclusion statement:

A Voting Exclusion Statement is included at paragraph 3.6 of this Notice of General Meeting.

2.9 Notice Requirements for Resolution 9

Pursuant to Listing Rule 10.13, the following information is provided regarding Listing Rule 10.11 approval:

$(a)$ Rule 10.13.1: Name of person:

Barrack Capital.

$(b)$ Rule 10.13.2: Number of securities to be issued to the person:

260,000 Consolidated Shares on conversion of 26,000 New Convertible Notes.

$(c)$ Rule 10.13.3: Date by which the securities are to be issued:

If Shareholder approval is obtained, the issue and allotment of the Consolidated Shares to Barrack Capital will occur on a date which is 2 Business Days after the date of this General Meeting or the date that this Resolution becomes unconditional (whichever is the latter), but in any case no later than 1 month after the date of this General Meeting.

Rule 10.13.4: Nature of relationship: $(d)$

David Whitfield is a director and shareholder of Barrack Capital. He is also a Director of the Company.

Rule 10.13.5: Issue price of the securities and a statement of terms of $(e)$ issue:

The issue price of the Consolidated Shares to be issued to Barrack Capital on conversion of the New Convertible Notes is 10 cents per Consolidated Share. This is the same conversion price that applies to all other New Convertible Notes.

The Company will apply to the ASX to have the Consolidated Shares issued to Barrack Capital Officially Quoted and, subject to any ASX ruling regarding Restricted Securities, will rank equally with all the other Shares on issue. In all other respects the rights and entitlements of Barrack Capital in respect of those Consolidated Shares will be identical to the rights and entitlements of the holders of issued Consolidated Shares.

Rule 10.13.6A: The intended use of the funds: $(f)$

See paragraph 2.7(f) above.

$(g)$ Rule 10.13.6: Voting exclusion statement:

A Voting Exclusion Statement is included at paragraph 3.7 of this Notice of General Meeting.

Pursuant to Listing Rule 7.2:

$(h)$ Rule 7.2, Exception 14: Approval not required under Rule 7.1:

As approval for the issue of the Consolidated Shares referred to in Resolution 9 is being sought under Listing Rule 10.11, approval is not required under Listing Rule 7.1.

In addition to Listing Rule 10.11, approval of Shareholders of the issue of Consolidated Shares (financial benefit) to Barrack Capital (related party) is being sought pursuant to Section 208(1)(a) of the Corporations Act. In. accordance with Section 219, the Company discloses the following information:

The related party to whom the proposed resolution would permit a $(i)$ financial benefit to be given:

Barrack Capital.

$(i)$ The nature of the financial benefits:

260,000 Consolidated Shares.

$(k)$ Directors' recommendations:

Each of Jeff Zulman and Bruce Ind recommends that Shareholders vote in favour of Resolution 9.

David Whitfield is a director and shareholder of Barrack Capital and is a Director of the Company. David Whitfield makes no recommendation regarding this Resolution because he has an interest in it.

$($ | Director's interest in resolution:

Neither Jeff Zulman nor Bruce Ind has an interest in Resolution 9. David Whitfield has an interest in Resolution 9, as set out in paragraph (k) above.

$(m)$ All other relevant information:

If Resolution 9 is passed, Barrack Capital will receive 260,000 Consolidated Shares in the Company on conversion of the New Convertible Notes held by it on the same terms as the other New Noteholders will if Shareholders approve Resolution 8.

David Whitfield is a director and shareholder of Toddlers. As a shareholder of MDSnews.com, Toddlers will receive 1,461,250 Consolidated Shares on Completion.

Barrack Capital has provided advice and assistance to the MDSnews Group regarding the transaction and will receive a cash payment from the Company equivalent to 7% of the proceeds of the proposed Capital Raising on Completion.

$210$ Notice Requirements to Resolution 10

The aim of the Employee Share Option Plan is to incentivise, reward and retain employees and consultants critical to the Business. The Directors believe that the value of the Company going forward can be increased by aligning the interests of the employees and consultants with the Company's performance and maximisation of Shareholder value

Pursuant to Listing Rule 7.2, Exception 9, an issue of securities under an employee incentive scheme will not breach Listing Rule 7.1 if within 3 years of the date of issue the holders have approved the issue of the securities under the scheme as an exception to Listing Rule 7.1:

$(a)$ A summary of the terms of the scheme:

For the purposes of this paragraph $2.10(a)$ , Shares means an ordinary share in the capital of the Company after the Consolidation of Shares.

Employee means a person employed by, or retained as a consultant to, a member of the Group and shall include an executive or non-executive Director of the Company where the Company has first approved the issue of Options to the Director by special resolution of Shareholders.

Group means the Company and MDSnews Group.

Market Value shall mean, as at or on any date of determination:

• if the Shares are quoted on the ASX, the weighted average closing sale price per Share on the ASX, for the last 5 days on which there was a sale of such Shares on the ASX immediately preceding the date of determination or, if the Shares are not quoted on the ASX:
• a valuation of the fair market value for the Shares as of the close of business on the Business Day immediately preceding the date of such determination, determined in good faith by the Board of Directors in such manner as they shall in their reasonable discretion determine using normal share valuation procedures.

Material Breach means the gross breach or continued gross neglect by an Employee in the performance of his or her duties or obligations to any member of the Group pursuant to any contract of employment, retainer or consulting agreement, restraint of trade, law or under any agreement made under the Employee Share Option Plan rules.

Option Limit means the number of Options which when aggregated with the number of shares issued by the Company during the previous

5 years pursuant to employee share or option plans is equal to 5% of the total number of Shares or Consolidated Shares (as the case may be) in the Company on issue at the date of the issue of Options.

Selected Employee means an Employee nominated to participate in the Employee Share Option Plan.

Share Issue Price means the price determined by the Company as being the price payable for shares purchased pursuant to the exercise of Options.

Triggering Event means:

• the Company resolves to amalgamate with any other company where such amalgamation will not result in the Shareholders of the Company holding more than 50% of the voting rights of the amalgamated company ;
• the Shareholders of the Company approve the disposition of assets comprising more than half the value of the Company's assets to an entity not controlled by, controlling or under common control with the Company or to an entity in which Shareholders of the Company do not hold at least 51% of that entity's voting rights; or
• the Company is listed on the ASX and there is an unconditional takeover offer made for the Company which will result in the Company ceasing to comply with the minimum spread requirements under the Listing Rules;

The Employee Share Option Plan shall be administered by the Board of Directors which shall conduct itself in compliance with the requirements of the Company's constitution, the Corporations Act and the Listing Rules.

No member of the Board of Directors shall participate in any decision of the Board of Directors which directly affects his or her entitlement to any Options under the Employee Share Option Plan.

• The Board of Directors shall require the prior approval of the Shareholders of the Company in general meeting by way of ordinary or special resolution in accordance with the Listing Rules before it may implement the following changes to the Employee Share Option Plan:

• issue Options to a Director of the Company or any of its subsidiaries:

• issue Options which, in aggregate with all Options issued by the Company under the Employee Share Option Plan, would exceed the Option Limit;

• issue Options where the Share Issue Price is less than the Market Value as required by this document:

• amend the terms of issue of Options under this document provided that the terms of Options shall in no case be changed to reduce the Share Issue Price, increase the number of Shares to be issued on the exercise of the Options or change any periods for the exercise of Options.

The Board of Directors is authorised to make any changes to the Employee Share Option Plan that may be required to be made by the ASX. Subject to the restrictions referred to above, the Board of Directors is also authorised to:

• construe and interpret the Employee Share Option Plan rules:
• prescribe such further rules and regulations relating to the Employee Share Option Plan as it may deem advisable to carry out the Employee Share Option Plan (including eligibility criteria for Selected Employees) and to change such rules and regulations from time to time as the Board of Directors considers it necessary to do so;
• determine the terms, restrictions and provisions of allocations to Selected Employees;
• make all other determinations necessary or advisable for administering the Employee Share Option Plan; and
• make any changes to the Employee Share Option Plan rules as may from time to time be required to enable the objects of the Employee Share Option Plan to be carried out.

The Employee Share Option Plan shall continue until terminated by the Board of Directors.

The Board of Directors may from time to time in its absolute discretion nominate any Employee to be a Selected Employee who has met the Board of Directors' eligibility criteria to participate in the Employee Share Option Plan and the maximum number of Options that may be issued by the Company to the Selected Employee.

The Options issued to a Selected Employee shall not be assigned. charged, pledged or otherwise encumbered or transferred except as provided in the Employee Share Option Plan without the prior approval of the Board of Directors. The Board of Directors may in its absolute discretion cancel any Option that is assigned, charged, pledged or otherwise encumbered or transferred without its approval.

The total number of Shares reserved for the grant of Options issuable by the Company to all Selected Employees pursuant to the Employee Share Option Plan shall not exceed the Option Limit.

No Options shall be exercisable more than 5 years from the date of its grant.

The Share Issue Price (together with any amount paid in respect to the issue of the Options) shall be the higher of the Market Value of the Shares as at the day immediately prior to the date on which the Options are allocated to the Selected Employee or the price (or prices) determined by the Board of Directors in its absolute discretion.

The Options shall vest in and become exercisable by the Selected Employee in 1 or a number of tranches. Where the Options are issued in a number of tranches, each tranche shall vest and become exercisable on such date that the Board of Directors shall determine provided the Selected Employee is employed by, or a consultant to, a member of the Group on that date, and the subsequent tranches on the subsequent dates determined by the Board of Directors provided the Selected Employee is employed by or a consultant to a member of the Group on those dates.

The Company shall issue the Options upon payment of the price for the issue of the Options (if any) and upon exercise of the Options, issue the Shares to the Selected Employee upon payment of the applicable Share Issue Price of the Shares and shall immediately apply for such Shares to be quoted on the ASX.

Any Option, to the extent not exercised on or prior to the exercise date stipulated in the terms on which the Option has been issued, shall terminate. In order to exercise an Option, the Selected Employee shall give notice thereof to the Company and pay in full the Share Issue Price to the Company on or before such date.

Where the Selected Employee wishes to exercise any Options, the Selected Employee shall give to the Company:

• 2 working days' written notice to the Company stating the whole number of Options which are being exercised; and
• payment in full of the Share Issue Price in respect to each of the Options being exercised.

If the Employee fails to pay for all or any of the Shares in respect to which the Options are being exercised, the Company may terminate the Employee's entitlement to such Shares even though the date by which the Options terminate may not have passed.

Any duty or tax payable upon the issue of Options under the Employee Share Option Plan rules or on the issue of Shares as a result of the exercise of Options shall be paid by the Selected Employee to whom the Options or Shares are issued. The Company may deduct the duty or tax from any remuneration payable by the Company to the Selected Employee at its discretion and any amount deducted shall only be used to pay the required duty or tax.

The Company shall have the right to either require the Selected Employee to pay to it the amount of any withholding taxes in respect to the issue of the Shares as may be required by law or to withhold and sell an appropriate number of Shares (based on the Shares' fair market value on the date of exercise) for payment of taxes required by law, or to take such other action as may be necessary in the opinion of the Company to satisfy all its tax withholding obligations in respect to the Selected Employee.

Except as provided by Listing Rules 6.22 and 6.23, Options shall not entitle their holder to participate in any distribution nor any issue of Shares, bonus Shares (being Shares issued for no consideration) or other securities in or in respect to the Company other than the Shares to be issued upon exercise of the Options in accordance with the Employee Share Option Plan.

The Board of Directors shall, in respect of each decision to allocate Options to Selected Employees, determine:

• the terms of payment for the Share Issue Price upon exercise of the Options;
• the amount and term (including the applicable rate of interest if any) of any loan or financial arrangement (including the giving of a guarantee) to be given to the Selected Employee in connection with the purchase of Shares in respect to Options held by the Selected Employee;
• the numbers and periods over which the Options may be exercised having regard to the restriction stipulated under the terms governing the exercise of Options in this clause $2.10(a)$ ; and
• any and all other terms and conditions applying to the issue of Options, and whether they are to be held by the Selected Employee or on trust for the Selected Employee.

Shares issued pursuant to the exercise of Options shall rank for dividend from the date they are issued and shall otherwise rank pari passu with the other shares then on issue.

If Shares are quoted on the ASX, the Company shall apply for the shares issued pursuant to the Options to be quoted on the ASX as soon as practicable after their issue, but in any event within the time limit (if any) prescribed by the Listing Rules, subject to any restriction agreement that might be in place between the Company and the ASX in respect to the Shares.

Where the Selected Employee has ceased to be employed by, or a consultant to, a member of the Group as a result of death or disability. the Selected Employee or his or her personal representatives shall be entitled to exercise all Options held by the Selected Employee that had vested as at the time he or she ceased to be employed by, or a consultant to, a member of the Group and may exercise such Options on or before the earlier of:

• the exercise date of the Options:
• the expiry of 1 year from the date that he or she ceased to be $\bullet$ employed by, or a consultant to, a member of the Group; or
• in the event that the Option exercise date is accelerated by a Triggering Event, such accelerated date;

and any Options not exercised shall lapse.

Where the Selected Employee has ceased to be employed by or a consultant to, a member of the Group as a result of a Material Breach, the Company may:

• terminate all Options therefore granted and not exercised (whether or not then vested);
• cancel all other benefits the Selected Employee may be entitled to receive under the Employee Share Option Plan;
• require the Selected Employee to repay to the Company any financial benefits that the Selected Employee may have enjoyed as a result of the Employee Share Option Plan;
• repurchase the shares that have been issued to the Employee pursuant to the exercise of Options under the Employee Share Option Plan at the lower of either the aggregate of the price at which the Options were issued and the Share Issue Price, or the Market Value; and
• require the Selected Employee to pay to the Company the proceeds from any sale of shares issued to the Selected Employee pursuant to the exercise of Options under the Employee Share Option Plan less the aggregate of the price at which the Options were issued, and the Share Issue Price, any tax paid by the Selected Employee in respect to the exercise of the Options and any brokerage costs incurred by the Selected Employee on the sale of such shares.

Where the Selected Employee has ceased to be employed by, or a consultant to, a member of the Group for any reason other than death, disability or Material Breach, the Selected Employee shall be entitled to exercise all Options held by the Selected Employee that had vested as at the time he or she ceased to be employed by, or a consultant to, a member of the Group and may exercise such Options on or before the earlier of:

the exercise date of the Options:

• the expiry of 1 month from the date that he or she ceased to be employed by, or a consultant to, a member of the Group; or
• in the event that the Option exercise date is accelerated by a Triggering Event, such accelerated date;

and any Options not exercised shall lapse.

$(b)$ The number of securities issued under the scheme since the date of the last approval:

No securities have been issued under the Employee Share Option Plan. as it has not been previously approved by the members of CommSoft.

$(c)$ A voting exclusion statement:

A Voting Exclusion Statement is included at paragraph 3.8 of this Notice of General Meeting.

$2.11$ Notice Requirements for Resolution 11

None.

$2.12$ Notice Requirements for Resolution 12

None.

2.13 Notice Requirements for Resolution 13

Pursuant to Listing Rule 10.15A, the following information is provided regarding Listing Rule 10.14 approval:

Rule 10.15A.1: Nature or relationship: $(a)$

The employee incentive scheme the subject of Resolution 13 is open to Leon Hinde and Barry Littler, each an executive Director of the Company.

$(b)$ Rule 10.15A.2: The maximum number of securities that may be acquired by all persons for whom approval is required, including the formula (if one is used) for calculating the number of securities to be issued:

Up to a total of 1,000,000 Consolidated Shares to Leon Hinde during the 3-year period commencing on the date of this General Meeting.

Up to 2,000,000 Consolidated Shares to Barry Littler during the 3-year period commencing on the date of this General Meeting.

The award of Consolidated Shares to executive Directors will be made at the discretion of the Remuneration Committee established by the Board of Directors. No executive Director will serve on the Remuneration Committee.

Rule 10.15A.3: The price (including a statement whether the price will $(c)$ be, or be based on, the market price) or the formula for calculating the price, for each security to be acquired under the scheme:

Consolidated Shares issued under the employee incentive scheme the subject of Resolution 13 will be issued:

• $(i)$ for a nil consideration price;
• $(ii)$ as part payment of the allottee's remuneration; and
• $(iii)$ at an assumed value of market value.
• $(d)$ Rule 10.15A.4: The names of all persons who are persons referred to in Rule 10.14 who received securities under the scheme since the last approval, the number of securities received and the acquisition price for each security:

None.

Rule 10.15A.5: The names of all persons referred to in Rule 10.14 $(e)$ entitled to participate in the scheme:

Leon Hinde: If Shareholders approve Resolution 11, Leon Hinde will become an executive Director of the Company at the close of the General Meeting in accordance with the terms of that Resolution.

Barry Littler: If Shareholders approve Resolution 12, Barry Littler will become an executive Director of the Company in accordance with the terms of that Resolution.

$(f)$ Rule 10.15A.6: Voting exclusion statement:

A Voting Exclusion Statement is included at paragraph 3.9 of this Notice of General Meeting.

$(q)$ Rule 10.15A.7: The terms of any loan in relation to the acquisition:

No loans are available pursuant to the employee incentive scheme the subject of Resolution 13.

Rule 10.15A.8: Undertakings by the Company: $(h)$

The Company gives the following undertakings:

• $(i)$ details of any securities issued under the employee incentive scheme the subject of Resolution 13 will be published in each annual report of the Company relating to a period in which securities have been issued and will state that approval for the issue of the securities was obtained under Listing Rule 10.14; and
• $(ii)$ any additional persons who become entitled to participate in the employee incentive scheme after Resolution 13 is approved and

who are not named in this Notice of General Meeting will not participate until Shareholder approval is obtained under Listing Rule 10.14.

Rule 10.15A.9: The date by which the entity will issue the securities, $(i)$ which must be no later than 3 years after the meeting:

If Shareholder approval is obtained in respect of Resolution 13, the issue of Consolidated Shares will, subject to the conditions set out in this paragraph 2.13, be at the discretion of the Remuneration Committee established by the Board of Directors. If Consolidated Shares are issued, the issue(s) will occur on or before the third anniversary of the date of this General Meeting.

In addition to Listing Rule 10.15A.1, approval of Shareholders of the issue of Consolidated Shares (financial benefit) to Leon Hinde and Barry Littler (related parties) is being sought pursuant to Section 208(1)(a) of the Corporations Act. In accordance with Section 219, the Company discloses the following information:

The related party to whom the proposed resolution would permit a $(i)$ financial benefit to be given:

Leon Hinde and Barry Littler, each a proposed Director.

$(k)$ The nature of the financial benefits:

Up to a total of 1,000,000 Consolidated Shares to Leon Hinde during the 3-year period commencing on the date of this General Meeting. Based on the Independent Expert's valuation of 2 cents per Share, the value of 1,000,000 Consolidated Shares is $20,000.

Up to 2,000,000 Consolidated Shares to Barry Litter during the 3-year period commencing on the date of this General Meeting. Based on the Independent Expert's valuation of 2 cents per Share, the value of 2,000,000 Consolidated Shares is $40,000.

Directors' recommendations: $($ |

Each of the current Directors, Jeff Zulman, David Whitfield and Bruce Ind. recommends that Shareholders vote in favour of Resolution 13.

Director's interest in resolution: $(m)$

None of the current Directors has an interest in Resolution 13.

All other relevant information: $(n)$

Leon Hinde is a director and principal shareholder of the MDSnews Group. On Completion, Leon Hinde will have a relevant interest in 37,544,722 Consolidated Shares, which will equate to approximately 54.52% of the issued capital of the Company at that time.

On Completion, Barry Littler will not have a relevant interest in Consolidated Shares in the Company.

$2.14$ Notice Requirements for Resolution 14

Pursuant to Listing Rule 10.13, the following information is provided regarding Listing Rule 10.11 approval:

Rule 10.13.1: Name of person: $(a)$

Leon Hinde.

$(b)$ Rule 10.13.2: Number of securities to be issued to the person:

500,000 Options.

$(c)$ Rule 10.13.3: Date by which the securities are to be issued:

If Shareholders approve Resolution 14, the issue and allotment of the Options to Leon Hinde will occur on a date which is 2 Business Days after the date of this General Meeting or the date that this Resolution becomes unconditional (whichever is the latter), but in any case no later than 1 month after the date of this General Meeting.

$(d)$ Rule 10.13.4: Nature of relationship:

If Resolution 11 is passed, Leon Hinde will become a Director of the Company on Completion in accordance with the terms of that Resolution.

Rule 10.13.5: Issue price of the securities and a statement of terms of $(e)$ issue:

The Options will be issued to Leon Hinde for nil consideration and vest immediately on issue. The exercise price payable to the Company for each Consolidated Share on exercise of an Option is 20 cents.

The Options are subject to the following salient terms and conditions:

• $(i)$ the Options will be issued at no cost:

• $(ii)$ each Option entitles the holder thereof to subscribe for one Consolidated Share in the Company;

• $(iii)$ the Options may be exercised in whole or in part by notice in writing being delivered to the Company at any time prior to or on 31 December 2006 (Expiry Date);

• the exercise price of the Options is 20 cents for each $(iv)$ Consolidated Share subscribed for:

• any Option not exercised on or before the Expiry Date will $(v)$ expire and cease to carry any rights or benefits;

• a statement will be issued for the Options. A new holding $(vi)$ statement will be issued when a change takes place in the number of Options held:

• $(vii)$ the holders of Options will have the right to participate in new issues of capital which may be offered to Shareholders during the currency of the Options, provided the entitlement arises in accordance with Listing Rule 6.20. Any change to the Option's exercise price or the number of underlying securities must be made in accordance with Listing Rules 6.21 and 6.22;

• $(viii)$ the rights of the holders of Options will change to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation;

• $(ix)$ Consolidated Shares issued pursuant to the exercise of the Options will be allotted following receipt of all relevant documents and payments in respect thereto and will rank for dividends pro rata with the existing issued Consolidated Shares, as at the date of exercise of the Options. Subject to any ASX ruling regarding Restricted Securities, the Consolidated Shares so issued will rank pari passu with the then issued Consolidated Shares of the Company; and

• $(x)$ the Options will not be listed on the ASX. The Company will make application for any Consolidated Shares issued upon the exercise of any Option to be granted Official Quotation by the ASX.

• $(f)$ Rule 10.13.6A: The intended use of the funds:

No funds will be raised from the issue of Options to Leon Hinde. On exercise of an Option. Leon Hinde will subscribe 20 cents per Consolidated Share

$(q)$ Rule 10.13.6: Voting exclusion statement:

A Voting Exclusion Statement is included at paragraph 3.10 of this Notice of General Meeting.

Pursuant to Listing Rule 7.2:

$(h)$ Rule 7.2, Exception 14: Approval not required under Rule 7.1:

As approval for the issue of the Shares referred to in Resolution 14 is being sought under Listing Rule 10.11, approval is not required under Listing Rule 7.1.

In addition to Listing Rule 10.11, approval of Shareholders of the issue of Options (financial benefit) to Leon Hinde (related party) is being sought pursuant to Section 208(1)(a) of the Corporations Act. In accordance with Section 219, the Company discloses the following information:

The related party to whom the proposed resolution would permit a $(i)$ financial benefit to be given:

Leon Hinde. If Shareholders approve Resolution 11, Leon Hinde will become a Director of the Company.

$(i)$ The nature of the financial benefits:

500,000 Options.

$(k)$ Directors' recommendations:

Each of David Whitfield, Jeff Zulman and Bruce Ind recommends that Shareholders vote in favour of Resolution 14.

Director's interest in resolution: $(1)$

None of David Whitfield, Jeff Zulman or Bruce Ind has an interest in Resolution 14.

All other relevant information: $(m)$

The proposed issue of Options to Leon Hinde forms part of his remuneration by the Company.

The terms of issue of the Options to Leon Hinde the subject of Resolution 14 have been approved by the Board of Directors.

The exercise price of the Options issued to Leon Hinde is 20 cents, the issue price of Consolidated Shares under the proposed Capital Raising.

Valuation: Due to the Company not having a recent trading history and the uncertain future of trading in its Shares, it is difficult to provide a definitive valuation of the Options the subject of Resolution 14. To provide a valuation the Company has adopted two valuation methods, the Income Tax Assessment Act and Black Scholes.

Income Tax Assessment Act: the methodology is set out in Division 13A, Subdivision F of the Income Tax Assessment Act.

The value of the Options the subject of Resolution 14 is principally a function of:

• the difference between the market price of Consolidated Shares $(i)$ in the Company and the exercise price of the Option; and
• $(ii)$ the term of the Option.

For example, if the exercise price is lower than the current market price. the Option has an immediate value. Similarly, the greater the term of the Option, the higher its value. The proposed Options may be exercised in whole or in part at any time prior to or on 31 December 2006

Under the Income Tax Assessment Act the assessable income of Leon Hinde includes the 'discount' attributable to the Options. This discount is treated as a measure of the benefit received. The Income Tax Assessment Act contains a formula for working out the market value of an option at the time of acquisition, although this is not necessarily the Using this formula, the value of the proposed taxable "discount". Options would be 1.4 cents per Option if the price of the Consolidated Shares in the Company was 20 cents. The aggregate value of 500,000 Options (if the price of Consolidated Shares in the Company was 20 cents) is $7,000.

Black Scholes: the Black Scholes option pricing model has also been applied. The proposed number of 500,000 Options was negotiated with Leon Hinde in February 2005. At that time, the Reserve Bank of Australia Cash Target Rate was 5.25%. Applying the Black Scholes model as at February 2005, and assuming no volatility, the 500,000 Options are valued at $7,000.

On 2 March 2005, the Reserve Bank of Australia raised the Cash Target Rate to 5.5%. Applying the Black Scholes model at that prevailing rate, and assuming no volatility, the 500,000 Options are valued at $8,000.

The Black Scholes model is critically dependent upon the volatility of the relevant share price. In this instant case, the use of the Black Scholes model is seen to be subjective for the following reasons:

• trading in the Shares of the Company has been suspended since 17 March 2003:
• shares in the MDSnews Group have never been publicly traded; and
• the Black Scholes model assumes that there is a liquid market for options. The 500,000 Options will not be listed and, accordingly, a marketability discount would generally be applicable.

$2.15$ Notice Requirements for Resolution 15

Pursuant to Listing Rule 10.13, the following information is provided regarding Listing Rule 10.11 approval:

$(a)$ Rule 10.13.1: Name of person:

Barry Littler.

$(b)$ Rule 10.13.2: Number of securities to be issued to the person:

500,000 Options.

$(c)$ Rule 10.13.3: Date by which the securities are to be issued:

If Shareholders approve Resolution 15, the issue and allotment of the Options to Barry Littler will occur on a date which is 2 Business Days after the date of this General Meeting or the date that this Resolution becomes unconditional (whichever is the latter), but in any case no later than 1 month after the date of this General Meeting.

Rule 10.13.4: Nature of relationship: $(d)$

If Resolution 12 is passed, Barry Littler will become a Director of the Company on Completion in accordance with the terms of that Resolution.

Rule 10.13.5: Issue price of the securities and a statement of terms of $(e)$ issue:

The Options will be issued to Barry Littler for nil consideration and vest immediately on issue. The exercise price payable to the Company for each Consolidated Share on exercise of an Option is 20 cents.

The Options are subject to the following salient terms and conditions:

• $(i)$ the Options will be issued at no cost;

• each Option entitles the holder thereof to subscribe for one $(ii)$ Consolidated Share in the Company:

• $(iii)$ the Options may be exercised in whole or in part by notice in writing being delivered to the Company at any time prior to or on 31 December 2006 (Expiry Date);

• $(iv)$ the exercise price of the Options is 20 cents for each Consolidated Share subscribed for:

• any Option not exercised on or before the Expiry Date will $(v)$ expire and cease to carry any rights or benefits;

• $(vi)$ a statement will be issued for the Options. A new holding statement will be issued when a change takes place in the number of Options held:

• $(vii)$ the holders of Options will have the right to participate in new issues of capital which may be offered to Shareholders during the currency of the Options, provided the entitlement arises in accordance with Listing Rule 6.20. Any change to the Option's exercise price or the number of underlying securities must be made in accordance with Listing Rules 6.21 and 6.22;

• $(viii)$ the rights of the holders of Options will change to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation;

• Consolidated Shares issued pursuant to the exercise of the $(ix)$ Options will be allotted following receipt of all relevant documents and payments in respect thereto and will rank for dividends pro rata with the existing issued Consolidated Shares, as at the date of exercise of the Options. Subject to any ASX ruling regarding Restricted Securities. Consolidated Shares so issued will rank pari passu with the then issued Consolidated Shares of the Company; and

• $(x)$ the Options will not be listed on the ASX. The Company will make application for any Consolidated Shares issued upon the exercise of any Option to be granted Official Quotation by the ASX.

• Rule 10.13.6A: The intended use of the funds: $(f)$

No funds will be raised from the proposed issued of Options to Barry Littler. On exercise of an Option, Barry Littler will subscribe 20 cents per Consolidated Share.

$(q)$ Rule 10.13.6: Voting exclusion statement:

A Voting Exclusion Statement is included at paragraph 3.11 of this Notice of General Meeting.

Pursuant to Listing Rule 7.2:

$(h)$ Rule 7.2, Exception 14: Approval not required under Rule 7.1:

As approval for the issue of the Shares referred to in Resolution 15 is being sought under Listing Rule 10.11, approval is not required under Listing Rule 7.1.

In addition to Listing Rule 10.11, approval of Shareholders of the issue of Options (financial benefit) to Barry Littler (related party) is being sought pursuant to Section 208(1)(a) of the Corporations Act. In accordance with Section 219, the Company discloses the following information:

$(i)$ The related party to whom the proposed resolution would permit a financial benefit to be given:

Barry Littler. If Shareholders approve Resolution 12, Barry Littler will become a Director of the Company.

The nature of the financial benefits: $(i)$

500,000 Options.

$(k)$ Directors' recommendations:

Each of David Whitfield. Jeff Zulman and Bruce Ind recommends that Shareholders vote in favour of Resolution 15.

$(1)$ Director's interest in resolution:

None of David Whitfield, Jeff Zulman or Bruce Ind has an interest in Resolution 15.

All other relevant information: $(m)$

The proposed issue of Options to Barry Littler forms part of his remuneration by the Company.

The terms of issue of the Options to Barry Littler the subject of Resolution 15 have been approved by the Board of Directors.

The exercise price of the Options issued to Barry Littler is 20 cents, the issue price of Consolidated Shares under the proposed Capital Raising.

Valuation: Due to the Company not having a recent trading history and the uncertain future of trading in its Shares, it is difficult to provide a definitive valuation of the Options the subject of Resolution 15. To provide a valuation the Company has adopted two valuation methods. the Income Tax Assessment Act and Black Scholes.

Income Tax Assessment Act: the methodology is set out in Division 13A, Subdivision F of the Income Tax Assessment Act.

The value of the Options the subject of Resolution 15 is principally a function of:

• $(i)$ the difference between the market price of Consolidated Shares in the Company and the exercise price of the Option; and
• the term of the Option. $(ii)$

For example, if the exercise price is lower than the current market price, the Option has an immediate value. Similarly, the greater the term of the Option, the higher its value. The proposed Options may be exercised in whole or in part at any time prior to or on 31 December 2006.

Under the Income Tax Assessment Act the assessable income of Barry Littler includes the 'discount' attributable to the Options. This discount is treated as a measure of the benefit received. The Income Tax Assessment Act contains a formula for working out the market value of an option at the time of acquisition, although this is not necessarily the taxable "discount". Using this formula, the value of the proposed Options would be 1.4 cents per Option if the price of the Consolidated Shares in the Company was 20 cents. The aggregate value of 500,000 Options (if the price of Consolidated Shares in the Company was 20 cents) is $7,000.

Black Scholes: the Black Scholes option pricing model has also been applied. The proposed number of 500,000 Options was negotiated with Barry Littler in February 2005. At that time, the Reserve Bank of Australia Cash Target Rate was 5.25%. Applying the Black Scholes model as at February 2005, and assuming no volatility, the 500,000 Options are valued at $7,000.

On 2 March 2005, the Reserve Bank of Australia raised the Cash Target Rate to 5.5%. Applying the Black Scholes model at that prevailing rate, and assuming no volatility, the 500,000 Options are valued at $8,000.

The Black Scholes model is critically dependent upon the volatility of the relevant share price. In this instant case, the use of the Black Scholes model is seen to be subjective for the following reasons:

• trading in the Shares of the Company has been suspended since 17 March 2003;
• shares in the MDSnews Group have never been publicly traded; and
• the Black Scholes model assumes that there is a liquid market for options. The 500,000 Options will not be listed and. accordingly, a marketability discount would generally be applicable.

$2.16$ Notice Requirements for Resolution 16

Pursuant to Listing Rule 10.13, the following information is provided regarding Listing Rule 10.11 approval:

$(a)$ Rule 10.13.1: Name of person:

Bruce Ind.

$(b)$ Rule 10.13.2: Number of securities to be issued to the person:

500,000 Options.

$(c)$ Rule 10.13.3: Date by which the securities are to be issued:

If Shareholders approve Resolution 16, the issue and allotment of the Options to Bruce Ind will occur on a date which is 2 Business Days after the date of this General Meeting or the date that this Resolution becomes unconditional (whichever is the latter), but in any case no later than 1 month after the date of this General Meeting.

$(d)$ Rule 10.13.4: Nature of relationship:

Bruce Ind is a current Director of the Company.

Rule 10.13.5: Issue price of the securities and a statement of terms of $(e)$ issue:

The Options will be issued to Bruce Ind for nil consideration and vest immediately on issue. The exercise price payable to the Company for each Consolidated Share on exercise of an Option is 20 cents.

The Options are subject to the following salient terms and conditions:

• $(i)$ the Options will be issued at no cost;
• $(ii)$ each Option entitles the holder thereof to subscribe for one Consolidated Share in the Company;
• $(iii)$ the Options may be exercised in whole or in part by notice in writing being delivered to the Company at any time prior to or on 31 December 2006 (Expiry Date);
• the exercise price of the Options is 20 cents for each $(iv)$ Consolidated Share subscribed for:
• any Option not exercised on or before the Expiry Date will $(v)$ expire and cease to carry any rights or benefits;
• $(vi)$ a statement will be issued for the Options. A new holding statement will be issued when a change takes place in the number of Options held:
• $(vii)$ the holders of Options will have the right to participate in new issues of capital which may be offered to Shareholders during the currency of the Options, provided the entitlement arises in accordance with Listing Rule 6.20. Any change to the Option's exercise price or the number of underlying securities must be made in accordance with Listing Rules 6.21 and 6.22;
• $(viii)$ the rights of the holders of Options will change to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation;
• $(ix)$ Consolidated Shares issued pursuant to the exercise of the Options will be allotted following receipt of all relevant documents and payments in respect thereto and will rank for dividends pro rata with the existing issued Consolidated Shares, as at the date of exercise of the Options. Subject to any ASX ruling regarding Restricted Securities, Consolidated Shares so issued will rank pari passu with the then issued Consolidated Shares of the Company; and
• $(x)$ the Options will not be listed on the ASX. The Company will make application for any Consolidated Shares issued upon the exercise of any Option to be granted Official Quotation by the ASX.

Rule 10.13.6A: Intended use of the funds: $(f)$

No funds will be raised from the issue of Options to Bruce Ind. On an exercise of an Option. Bruce Ind will subscribe 20 cents per Consolidated Share.

$(g)$ Rule 10.13.6: A voting exclusion statement:

A Voting Exclusion Statement is included at paragraph 3.12 of this Notice of General Meeting.

Pursuant to Listing Rule 7.2:

$(h)$ Rule 7.2, Exception 14: Approval not required under Rule 7.1:

As approval for the issue of the Shares referred to in Resolution 16 is being sought under Listing Rule 10.11, approval is not required under Listing Rule 7.1.

In addition to Listing Rule 10.11, approval of Shareholders of the issue of Options (financial benefit) to Bruce Ind (related party) is being sought pursuant to Section 208(1)(a) of the Corporations Act. In accordance with Section 219 the Company discloses the following information:

$(i)$ The related party to whom the proposed resolution would permit a financial benefit to be given:

Bruce Ind. Bruce Ind is currently a Director of the Company.

The nature of the financial benefits: $(i)$

500,000 Options.

Directors' recommendations: $(k)$

Each of David Whitfield and Jeff Zulman recommends that Shareholders vote in favour of Resolution 16. Bruce Ind makes no recommendation regarding Resolution 16 because he has an interest in it.

$($ |) Director's interest in resolution:

None of David Whitfield or Jeff Zulman has an interest in Resolution 16. Bruce Ind has an interest in Resolution 16 as set out in paragraph (a) above.

All other relevant information: $(m)$

The proposed issue of Options to Bruce Ind is in consideration of past services provided to the Company.

The terms of issue of the Options to Bruce Ind the subject of Resolution 16 have been approved by the Board of Directors.

The exercise price of the Options issued to Bruce Ind is 20 cents, the issue price of Consolidated Shares under the proposed Capital Raising.

Valuation: Due to the Company not having a recent trading history and the uncertain future of trading in its Shares, it is difficult to provide a definitive valuation of the Options the subject of Resolution 16. To

provide a valuation the Company has adopted two valuation methods, the Income Tax Assessment Act and Black Scholes.

Income Tax Assessment Act: the methodology is set out in Division 13A, Subdivision F of the Income Tax Assessment Act.

The value of the Options the subject of Resolution 16 is principally a function of:

• $(i)$ the difference between the market price of Consolidated Shares in the Company and the exercise price of the Option; and
• $(ii)$ the term of the Option.

For example, if the exercise price is lower than the current market price, the Option has an immediate value. Similarly, the greater the term of the Option, the higher its value. The proposed Options may be exercised in whole or in part at any time prior to or on 31 December 2006

Under the Income Tax Assessment Act the assessable income of Bruce Ind includes the 'discount' attributable to the Options. This discount is treated as a measure of the benefit received. The Income Tax Assessment Act contains a formula for working out the market value of an option at the time of acquisition, although this is not necessarily the taxable "discount". Using this formula, the value of the proposed Options would be 1.4 cents per Option if the price of the Consolidated Shares in the Company was 20 cents. The aggregate value of 500,000 Options (if the price of Consolidated Shares in the Company was 20 cents) is $7,000.

Black Scholes: the Black Scholes option pricing model has also been applied. The proposed number of 500,000 Options was negotiated with Bruce Ind in February 2005. At that time, the Reserve Bank of Australia Cash Target Rate was 5.25%. Applying the Black Scholes model as at February 2005, and assuming no volatility, the 500,000 Options are valued at $7,000.

On 2 March 2005, the Reserve Bank of Australia raised the Cash Target Rate to 5.5%. Applying the Black Scholes model at that prevailing rate. and assuming no volatility, the 500,000 Options are valued at $8,000.

The Black Scholes model is critically dependent upon the volatility of the relevant share price. In this instant case, the use of the Black Scholes model is seen to be subjective for the following reasons:

• trading in the Shares of the Company has been suspended since 17 March 2003;
• shares in the MDSnews Group have never been publicly traded; and

the Black Scholes model assumes that there is a liquid market for options. The 500,000 Options will not be listed and. accordingly, a marketability discount would generally be applicable.

2.17 Notice Requirements for Resolution 17

Pursuant to Listing Rule 10.13, the following information is provided regarding Listing Rule 10.11 approval:

$(a)$ Rule 10.13.1: Name of person:

David Whitfield.

$(b)$ Rule 10.13.2: Number of securities to be issued to the person:

500,000 Options.

$(c)$ Rule 10.13.3: Date by which the securities are to be issued:

If Shareholders approve Resolution 16, the issue and allotment of the Options to David Whitfield will occur on a date which is 2 Business Days after the date of this General Meeting or the date that this Resolution becomes unconditional (whichever is the latter), but in any case no later than 1 month after the date of this General Meeting.

$(d)$ Rule 10.13.4: Nature of relationship:

David Whitfield is a current Director of the Company.

$(e)$ Rule 10.13.5: Issue price of the securities and a statement of terms of issue:

The Options will be issued to David Whitfield for nil consideration and vest immediately on issue. The exercise price payable to the Company for each Consolidated Share on exercise of an Option is 20 cents.

The Options are subject to the following salient terms and conditions:

• $(i)$ the Options will be issued at no cost;

• $(ii)$ each Option entitles the holder thereof to subscribe for one Consolidated Share in the Company:

• $(iii)$ the Options may be exercised in whole or in part by notice in writing being delivered to the Company at any time prior to or on 31 December 2006 (Expiry Date):

• $(iv)$ the exercise price of the Options is 20 cents for each Consolidated Share subscribed for:

• $(v)$ any Option not exercised on or before the Expiry Date will expire and cease to carry any rights or benefits;

• a statement will be issued for the Options. A new holding $(vi)$ statement will be issued when a change takes place in the number of Options held:

• $(vii)$ the holders of Options will have the right to participate in new issues of capital which may be offered to Shareholders during the currency of the Options, provided the entitlement arises in accordance with Listing Rule 6.20. Any change to the Option's exercise price or the number of underlying securities must be made in accordance with Listing Rules 6.21 and 6.22;

• $(viii)$ the rights of the holders of Options will change to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation;

• $(ix)$ Consolidated Shares issued pursuant to the exercise of the Options will be allotted following receipt of all relevant documents and payments in respect thereto and will rank for dividends pro rata with the existing issued Consolidated Shares, as at the date of exercise of the Options. Subject to any ASX ruling regarding Restricted Securities, Consolidated Shares so issued will rank pari passu with the then issued Consolidated Shares of the Company; and

• $(x)$ the Options will not be listed on the ASX. The Company will make application for any Consolidated Shares issued upon the exercise of any Option to be granted Official Quotation by the ASX.

• $(f)$ Rule 10.13.6A: Intended use of the funds:

No funds will be raised from the issue of Options to David Whitfield. On an exercise of an Option, David Whitfield will subscribe 20 cents per Consolidated Share

$(q)$ Rule 10.13.6: A voting exclusion statement:

A Voting Exclusion Statement is included at paragraph 3.13 of this Notice of General Meeting.

Pursuant to Listing Rule 7.2:

$(h)$ Rule 7.2, Exception 14: Approval not required under Rule 7.1:

As approval for the issue of the Shares referred to in Resolution 17 is being sought under Listing Rule 10.11, approval is not required under Listing Rule 7.1.

In addition to Listing Rule 10.11, approval of Shareholders of the issue of Options (financial benefit) to David Whitfield (related party) is being sought pursuant to Section 208(1)(a) of the Corporations Act. In accordance with Section 219 the Company discloses the following information:

$(i)$ The related party to whom the proposed resolution would permit a financial benefit to be given:

David Whitfield. David Whitfield is currently a Director of the Company.

$(i)$ The nature of the financial benefits:

500,000 Options.

$(k)$ Directors' recommendations:

Each of Bruce Ind and Jeff Zulman recommends that Shareholders vote in favour of Resolution 17. David Whitfield makes no recommendation regarding Resolution 17 because he has an interest in it.

Director's interest in resolution: $(1)$

None of Bruce Ind or Jeff Zulman has an interest in Resolution 17. David Whitfield has an interest in Resolution 17 as set out in paragraph (a) above.

$(m)$ All other relevant information:

The proposed issue of Options to David Whitfield is in consideration of the provision of his services to the Company.

The terms of issue of the Options to David Whitfield the subject of Resolution 17 have been approved by the Board of Directors.

The exercise price of the Options issued to David Whitfield is 20 cents, the issue price of Consolidated Shares under the proposed Capital Raising.

Valuation: Due to the Company not having a recent trading history and the uncertain future of trading in its Shares, it is difficult to provide a definitive valuation of the Options the subject of Resolution 17. To provide a valuation the Company has adopted two valuation methods. the Income Tax Assessment Act and Black Scholes.

Income Tax Assessment Act: the methodology is set out in Division 13A. Subdivision F of the Income Tax Assessment Act.

The value of the Options the subject of Resolution 17 is principally a function of:

• $(i)$ the difference between the market price of Consolidated Shares in the Company and the exercise price of the Option; and
• $(ii)$ the term of the Option.

For example, if the exercise price is lower than the current market price, the Option has an immediate value. Similarly, the greater the term of the Option, the higher its value. The proposed Options may be

exercised in whole or in part at any time prior to or on 31 December 2006.

Under the Income Tax Assessment Act the assessable income of David Whitfield includes the 'discount' attributable to the Options. This. discount is treated as a measure of the benefit received. The Income Tax Assessment Act contains a formula for working out the market value of an option at the time of acquisition, although this is not necessarily the taxable "discount". Using this formula, the value of the proposed Options would be 1.4 cents per Option if the price of the Consolidated Shares in the Company was 20 cents. The aggregate value of 500,000 Options (if the price of Consolidated Shares in the Company was 20 cents) is $7,000.

Black Scholes: the Black Scholes option pricing model has also been applied. The proposed number of 500,000 Options was negotiated with David Whitfield in February 2005. At that time, the Reserve Bank of Australia Cash Target Rate was 5.25%. Applying the Black Scholes model as at February 2005, and assuming no volatility, the 500,000 Options are valued at $7,000.

On 2 March 2005, the Reserve Bank of Australia raised the Cash Target Rate to 5.5%. Applying the Black Scholes model at that prevailing rate, and assuming no volatility, the 500,000 Options are valued at $8,000.

The Black Scholes model is critically dependent upon the volatility of the relevant share price. In this instant case, the use of the Black Scholes model is seen to be subjective for the following reasons:

• trading in the Shares of the Company has been suspended since 17 March 2003;
• shares in the MDSnews Group have never been publicly traded; and
• the Black Scholes model assumes that there is a liquid market for options. The 500,000 Options will not be listed and, accordingly, a marketability discount would generally be applicable.

2.18 Notice Requirements for Resolution 18

Pursuant to Listing Rule 10.13, the following information is provided regarding Listing Rule 10.11 approval:

$(a)$ Rule 10.13.1: Name of person:

Jeff Zulman.

$(b)$ Rule 10.13.2: Number of securities to be issued to the person:

500,000 Options.

$(c)$ Rule 10.13.3: Date by which the securities are to be issued:

If Shareholders approve Resolution 18, the issue and allotment of the Options to Jeff Zulman will occur on a date which is 2 Business Days after the date of this General Meeting or the date that this Resolution becomes unconditional (whichever is the latter), but in any case no later than 1 month after the date of this General Meeting.

Rule 10.13.4: Nature of relationship: $(d)$

Jeff Zulman is a current Director of the Company.

$(e)$ Rule 10.13.5: Issue price of the securities and a statement of terms of issue:

The Options will be issued to Jeff Zulman for nil consideration and vest immediately on issue. The exercise price payable to the Company for each Consolidated Share on exercise of an Option is 20 cents.

The Options are subject to the following salient terms and conditions:

• $(i)$ the Options will be issued at no cost:
• $(ii)$ each Option entitles the holder thereof to subscribe for one Consolidated Share in the Company;
• $(iii)$ the Options may be exercised in whole or in part by notice in writing being delivered to the Company at any time prior to or on 31 December 2006 (Expiry Date);
• the exercise price of the Options is 20 cents for each $(iv)$ Consolidated Share subscribed for;
• any Option not exercised on or before the Expiry Date will $(v)$ expire and cease to carry any rights or benefits;
• $(vi)$ a statement will be issued for the Options. A new holding statement will be issued when a change takes place in the number of Options held:
• $(vii)$ the holders of Options will have the right to participate in new issues of capital which may be offered to Shareholders during the currency of the Options, provided the entitlement arises in accordance with Listing Rule 6.20. Any change to the Option's exercise price or the number of underlying securities must be made in accordance with Listing Rules 6.21 and 6.22:
• $(viii)$ the rights of the holders of Options will change to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation;
• $(ix)$ Consolidated Shares issued pursuant to the exercise of the Options will be allotted following receipt of all relevant documents and payments in respect thereto and will rank for

dividends pro rata with the existing issued Consolidated Shares, as at the date of exercise of the Options. Subject to any ASX ruling regarding Restricted Securities, Consolidated Shares so issued will rank pari passu with the then issued Consolidated Shares of the Company; and

• $(x)$ the Options will not be listed on the ASX. The Company will make application for any Consolidated Shares issued upon the exercise of any Option to be granted Official Quotation by the ASX.
• Rule 10.13.6A: Intended use of the funds: $(f)$

No funds will be raised from the issue of Options to Jeff Zulman. On an exercise of an Option, Jeff Zulman will subscribe 20 cents per Consolidated Share

$(q)$ Rule 10.13.6: A voting exclusion statement:

A Voting Exclusion Statement is included at paragraph 3.14 of this Notice of General Meeting.

Pursuant to Listing Rule 7.2:

$(h)$ Rule 7.2, Exception 14: Approval not required under Rule 7.1:

As approval for the issue of the Shares referred to in Resolution 18 is being sought under Listing Rule 10.11, approval is not required under Listing Rule 7.1.

In addition to Listing Rule 10.11, approval of Shareholders of the issue of Options (financial benefit) to Jeff Zulman (related party) is being sought pursuant to Section 208(1)(a) of the Corporations Act. In accordance with Section 219 the Company discloses the following information:

The related party to whom the proposed resolution would permit a $(i)$ financial benefit to be given:

Jeff Zulman. Jeff Zulman is currently a Director of the Company.

The nature of the financial benefits: $(i)$

500,000 Options.

$(k)$ Directors' recommendations:

Each of David Whitfield and Bruce Ind recommends that Shareholders vote in favour of Resolution 18. Jeff Zulman makes no recommendation regarding Resolution 18 because he has an interest in it.

$(1)$ Director's interest in resolution:

None of David Whitfield or Bruce Ind has an interest in Resolution 18. Jeff Zulman has an interest in Resolution 18 as set out in paragraph (a) above.

$(m)$ All other relevant information:

The proposed issue of Options to Jeff Zulman is in consideration of the provision of his services to the Company.

The terms of issue of the Options to Jeff Zulman the subject of Resolution 18 have been approved by the Board of Directors.

The exercise price of the Options issued to Jeff Zulman is 20 cents, the issue price of Consolidated Shares under the proposed Capital Raising.

Valuation: Due to the Company not having a recent trading history and the uncertain future of trading in its Shares, it is difficult to provide a definitive valuation of the Options the subject of Resolution 18. To provide a valuation the Company has adopted two valuation methods, the Income Tax Assessment Act and Black Scholes.

Income Tax Assessment Act: the methodology is set out in Division 13A. Subdivision F of the Income Tax Assessment Act.

The value of the Options the subject of Resolution 18 is principally a function of:

• $(i)$ the difference between the market price of Consolidated Shares in the Company and the exercise price of the Option; and
• $(ii)$ the term of the Option.

For example, if the exercise price is lower than the current market price, the Option has an immediate value. Similarly, the greater the term of the Option, the higher its value. The proposed Options may be exercised in whole or in part at any time prior to or on 31 December 2006.

Under the Income Tax Assessment Act the assessable income of Jeff Zulman includes the 'discount' attributable to the Options. This discount is treated as a measure of the benefit received. The Income Tax Assessment Act contains a formula for working out the market value of an option at the time of acquisition, although this is not necessarily the taxable "discount". Using this formula, the value of the proposed Options would be 1.4 cents per Option if the price of the Consolidated Shares in the Company was 20 cents. The aggregate value of 500,000 Options (if the price of Consolidated Shares in the Company was 20 cents) is $7,000.

Black Scholes: the Black Scholes option pricing model has also been applied. The proposed number of 500,000 Options was negotiated with Jeff Zulman in February 2005. At that time, the Reserve Bank of Australia Cash Target Rate was 5.25%. Applying the Black Scholes model as at February 2005, and assuming no volatility, the 500,000 Options are valued at $7,000.

On 2 March 2005, the Reserve Bank of Australia raised the Cash Target Rate to 5.5%. Applying the Black Scholes model at that prevailing rate, and assuming no volatility, the 500,000 Options are valued at $8,000.

The Black Scholes model is critically dependent upon the volatility of the relevant share price. In this instant case, the use of the Black Scholes model is seen to be subjective for the following reasons:

• trading in the Shares of the Company has been suspended since 17 March 2003;
• shares in the MDSnews Group have never been publicly traded; and
• the Black Scholes model assumes that there is a liquid market for options. The 500,000 Options will not be listed and, accordingly, a marketability discount would generally be applicable.

$2,19$ Notice Requirements for Resolution 19

None

$31$ Voting Exclusion Statements

$31$ Resolution 3

In accordance with the notice requirements of Listing Rule 11.1.2 for approval under Listing Rule 11.1.3 and Listing Rule 14.11.1, the Company will disregard any votes cast on Resolution 3 by the MDSnews Group Shareholders, the MDSnews Group and the respective Associates of each of the foregoing.

However, the entity will not disregard a vote if:

• it is cast by a person as proxy for a person who is entitled to vote, in $(a)$ accordance with the directions on the proxy form; or
• $(b)$ it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Resolution 4 $3.2$

In accordance with Section 611, Item 7 of the Corporations Act, the Company will disregard any votes cast on Resolution 4 by the MDSnews Group Shareholders, the MDSnews Group and the respective Associates of each of the foregoing.

However, the entity will not disregard a vote if:

• $(a)$ it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
• it is cast by the person chairing the meeting as proxy for a person who is $(b)$ entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Resolution 5 $3.3$

In accordance with the notice requirements of Listing Rule 7.3.8 for approval under Listing Rule 7.1 and Listing Rule 14.11.1, the Company will disregard any votes cast on Resolution 5 by:

• a person who may participate in the proposed Capital Raising;
• any Associate of that person; and
• a person who might obtain, except a benefit solely in the capacity of a Shareholder, if the resolution is passed, and an Associate of any such person.

However, the entity will not disregard a vote if:

• it is cast by a person as proxy for a person who is entitled to vote, in $(a)$ accordance with the directions on the proxy form; or
• it is cast by the person chairing the meeting as proxy for a person who is $(b)$ entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Note: If you intend to participate in the proposed Capital Raising by subscribing for Shares pursuant to the Prospectus, you must not vote on this Resolution.

$3.4$ Resolution 6

In accordance with the notice requirements of Listing Rule 7.3.8 for approval under Listing Rule 7.1 and Listing Rule 14.11.1, the Company will disregard any votes cast on Resolution 6 by the Old Noteholders or any of their Associates.

However, the entity will not disregard a vote if:

• $(a)$ it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
• $(b)$ it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Resolution 7 $3.5$

In accordance with the notice requirements of Listing Rule 10.13.6 for approval under Listing Rule 10.11 and Listing Rule 14.11.1 and in accordance with However, in accordance with Section 224(2) of the Corporations Act, the Company will not disregard a vote if:

• it is cast by a person as proxy appointed in writing that specifies how the $(a)$ proxy is to vote on the proposed resolution; or
• it is not cast on behalf of Coyne Holdings (related party) or any of that $(b)$ Related Party's Associates.

$3.6$ Resolution 8

In accordance with the notice requirements of Listing Rule 7.3.8 for approval under Listing Rule 7.1 and Listing Rule 14.11.1, the Company will disregard any votes cast on Resolution 8 by the New Noteholders and any of their Associates.

However, the entity will not disregard a vote if:

• it is cast by a person as proxy for a person who is entitled to vote, in $(a)$ accordance with the directions on the proxy form; or
• $(b)$ it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

$3.7$ Resolution 9

In accordance with the notice requirements of Listing Rule 10.13.6 for approval under Listing Rule 10.11 and Listing Rule 14.11.1 and in accordance with Section 224(1) of the Corporations Act, the Company will disregard any votes cast on Resolution 9 by Barrack Capital or any of its Associates.

However, in accordance with Section 224(2) of the Corporations Act, the Company will not disregard a vote if:

• $(a)$ it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; and
• $(b)$ it is not cast on behalf of Barrack Capital (related party) or any of that Related Party's Associates.

Resolution 10 $3.8$

In accordance with the requirements of Listing Rule 7.2, Exception 9 and Listing Rule 14.11.1 and in accordance with Section 224(1) of the Corporations Act, the Company will disregard any votes cast on Resolution 10 by any Director of the Company, except any Director who is ineligible to participate in the Employee Share Option Plan or any other employee share option plan, being the nonexecutive Directors.

However, the entity will not disregard a vote if:

• $(a)$ it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
• it is cast by the person chairing the meeting as proxy for a person who is $(b)$ entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Resolution 13 3.9

In accordance with the notice requirements of Listing Rule 10.15A.6 for approval under Listing Rule 10.14 and Listing Rule 14.11.1, the Company will disregard any votes cast on Resolution 13 by Leon Hinde or Barry Littler (proposed executive Directors) or any of their Associates.

However, the entity will not disregard a vote if:

• $(a)$ it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
• $(b)$ it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

$3.10$ Resolution 14

In accordance with the notice requirements of Listing Rule 10.13.6 for approval under Listing Rule 10.11 and Listing Rule 14.11.1 and in accordance with Section 224(1) of the Corporations Act, the Company will disregard any votes cast on Resolution 14 by Leon Hinde or any of his Associates.

However, in accordance with Section 224(2) of the Corporations Act, the Company will not disregard a vote if:

• it is cast by a person as a proxy appointed by writing that specifies how $(a)$ the proxy is to vote on the proposed resolution; or
• $(b)$ it is not cast on behalf of Leon Hinde (related party) or any of that Related Party's Associates.

Resolution 15 $3.11$

In accordance with the notice requirements of Listing Rule 10.13.6 for approval under Listing Rule 10.11 and Listing Rule 14.11.1 and in accordance with Section 224(1) of the Corporations Act, the Company will disregard any votes cast on Resolution 15 by Barry Littler or any of his Associates.

However, in accordance with Section 224(2) of the Corporations Act, the Company will not disregard a vote if:

$(a)$ it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; or

it is not cast on behalf of Barry Littler (related party) or any of that $(b)$ Related Party's Associates.

$3.12$ Resolution 16

In accordance with the notice requirements of Listing Rule 10.13.6 for approval under Listing Rule 10.11 and Listing Rule 14.11.1, the Company will disregard any votes cast on Resolution 16 by Bruce Ind or any of his Associates.

However, the entity will not disregard a vote if:

• $(a)$ it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; or
• $(b)$ it is not cast on behalf of Bruce Ind (related party) or any of that Related Party's Associates.

$3, 13$ Resolution 17

In accordance with the notice requirements of Listing Rule 10.13.6 for approval under Listing Rule 10.11 and Listing Rule 14.11.1, the Company will disregard any votes cast on Resolution 17 by David Whitfield or any of his Associates.

However, the entity will not disregard a vote if:

• it is cast by a person as a proxy appointed by writing that specifies how $(a)$ the proxy is to vote on the proposed resolution; or
• it is not cast on behalf of David Whitfield (related party) or any of that $(b)$ Related Party's Associates.

$314$ Resolution 18

In accordance with the notice requirements of Listing Rule 10.13.6 for approval under Listing Rule 10.11 and Listing Rule 14.11.1, the Company will disregard any votes cast on Resolution 18 by Jeff Zulman or any of his Associates.

However, the entity will not disregard a vote if:

• $(a)$ it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; or
• $(b)$ it is not cast on behalf of Jeff Zulman (related party) or any of that Related Party's Associates.

Resolution 19 $3.15$

In accordance with the requirements of Listing Rule 10.17.1, the Company will disregard any votes cast on Resolution 19 by any Director or any of his Associates.

However, the entity will not disregard a vote if:

• $(a)$ it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; or
• $(b)$ it is not cast on behalf of a Director or any of his Associates (related party) or any of that Related Party's Associates.

$\mathbf{4}$ . Determination of Membership and Voting Entitlement

For the purpose of determining a person's entitlement to vote at the General Meeting, a person will be recognised as a member of the Company and the holder of Shares if that person is registered as a holder of those Shares at 5:00pm Sydney time on 18 July 2005, being the second Business Day prior to the date of the General Meeting.

5. Votes of Members

On a show of hands, each member present in person or by proxy or in the case of a body corporate by a representative at the General Meeting shall have one vote

On a poll, every member present in person or by attorney or by proxy or in the case of a body corporate by a representative shall have one vote for each Share held by him, her or it provided that all Shares are fully paid.

6. Proxies

Please note that:

• a member entitled to attend and vote is entitled to appoint a proxy to $(a)$ attend and vote instead of the member;
• $(b)$ where the member is entitled to cast 2 or more votes, the member may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise;
• $(c)$ if the member appoints 2 proxies and the appointment does not specify the proportion or number of the member's votes each proxy may exercise, each proxy may exercise half of the votes;
• $(d)$ a proxy need not be a member;
• $(e)$ an instrument of proxy deposited or received at the registered office of the Company in which the name of the appointee is not filled in shall be deemed to be given in the favour of the chairman of the General Meeting to which it relates; and
• $(f)$ to be effective the instrument of appointment of a proxy (and power of attorney or other authority, if any, under which it is signed or a certified copy of the power or authority) must be deposited with the Company c/- MDSnews.com Limited, Level 21, 1 O'Connell Street, Sydney or be received by facsimile on facsimile number (02) 9251 6244 not less than

2 Business Days prior to the General Meeting, that is, by 10.00am Sydney time on 18 July 2005.

A form of proxy accompanies this Notice of General Meeting and is set out in Section F.

$7.$ Timetable for Consolidation of Shares

The dates indicated below are indicative and may be subject to change.

	iawan a	DENS
1.	Shareholder approval of the Consolidation ofShares	20 July 2005
2.	commencement of trading in ConsolidatedShares on deferred settlement basis	21 July 2005*
3.	last day for registration of transfers of Shares(on a pre-Consolidation of Shares basis)	27 July 2005*
4.	first day for despatch of notice to eachShareholder	28 July 2005*
5.	despatch date for new holding statementsdeferred settlement trading endslast day for Shares (pre the Consolidation ofShares) to be entered into the holdings ofShareholders	3 August 2005*

* As noted elsewhere, trading in the Company's Shares is currently suspended.

By Order of the Board

Company Secretary

Dated: 9 June 2005 Sydney

Section D - Explanatory Memorandum

Introduction

This Explanatory Memorandum contains the information needed for CommSoft's Shareholders to assess Resolution 1 through to Resolution 16 (inclusive) to be put to them at an General Meeting of CommSoft on 20 July 2005. A Notice of General Meeting accompanies this document. In addition, an Independent Expert's Report has been provided which contains independent evaluations of the transaction embodied in Resolutions 3 and 4.

This Explanatory Memorandum, as well as the Notice of General Meeting and the Independent Expert's Report, should be read carefully and in their entirety.

This Explanatory Memorandum is divided into 3 parts:

• Part A deals with the Company's proposed acquisition of MDSnews Group, the subject of Resolutions 3 and 4; and
• Part B provides additional information on various regulatory requirements to further assist Shareholders assess Resolutions 3 and 4.

Current and proposed shareholdings: Summary details of the relative Share holdings of current and proposed principal Shareholders are set out in the table below. The proposed final interest is calculated assuming all Resolutions are approved.

Shareholder	CurrentInterest(Issued capital)	Proposed FinalInterest(Issued capital)on a fully dilutedbasis, seeparagraph 1.1below	Proposed FinalInterest(ISSUEC)Shares)
Existing Shareholders (as atthe date of this Notice)	100%	1.6%	1,061,422
Convertible Noteholders	$0%$	4.9%	3,353,086
MDSnews Group Shareholders	$0%$	60.6%	41,750,000
Secured ConvertibleNoteholders	$0%$	3.9%	2,700,000
Consolidated Shares to beissued under the $4,000,000capital raising	$0%$	29%	20,000,000
Total	100%	100%	68,864,508

Issue of the Issue Shares to the MDSnews Group Shareholders: The Issue Shares will be issued to the MDSnews Group Shareholders as follows:

Recipient	Consolidated Shares
Leon Hinde	18,772,361
Global Equity Management Pty Ltd	18,772,361
Craig Foley	62,575
Allan Shek	62,575
lan Frost	62,575
SAS Global Finance Pty Ltd	625,745
Tricom Equities Limited	469,308
Cyprus Investments Pty Limited	1,461,250
Toddlers	1,461,250

Leon Hinde is a director and shareholder of Global Equity Management Pty Limited. On Completion, Leon Hinde will have a relevant interest in 37,544,722 Consolidated Shares (in aggregate), which will equate to approximately 54.52% of the issued capital of the Company at that time.

The issue price of the Issue Shares is the value attributed by the Board of Directors to the Sale Shares. In this regard, your attention is drawn to paragraph 11.9 of the Independent Expert's Report (Section E) where the comparative value of the MDSnews Group as to CommSoft is discussed.

Part A – Resolutions 3 and 4

$\mathbf{1}$ . Overview of the Proposed Transaction

$1.1$ Description of the Proposed Transaction

Resolution 3 and Resolution 4 concern the proposed "scrip for scrip" acquisition of MDSnews Group by CommSoft. CommSoft is proposing to issue 41,750,000 fully paid ordinary shares after the Consolidation of Shares (the Issue Shares) to the MDSnews Group Shareholders, in consideration for the acquisition by CommSoft of the entire issued capital of each of the entities that comprise the MDSnews Group (the Sale Shares), on the terms and conditions of the Share Purchase Agreement.

The Issue Shares will represent approximately 60.6% of the issued Consolidated Share capital of CommSoft on a fully diluted basis, comprising:

• $(a)$ the entire present issued Share Capital of CommSoft;
• $(b)$ all issued Options, whether or not presently capable of exercise; and
• $(c)$ Consolidated Shares to be issued pursuant to Resolution 5 through Resolution 9 (inclusive).

but excluding any Consolidated Shares to be issued under the Employee Share Option Plan the subject of Resolution 10; the executive incentive scheme the subject of Resolution 13 and the Options the subject of Resolutions 14 through $181$

$1.2$ Description of the Transaction Documents

$(a)$ Share Purchase Agreement

The Share Purchase Agreement is the "umbrella agreement" for this transaction, and is the only agreement to be executed prior to the holding of the General Meeting of CommSoft. This agreement was executed on 13 May 2005.

The principal terms of the Share Purchase Agreement are:

• $(i)$ As stated in paragraph 1.1 above, CommSoft will at Completion issue and allot the Issue Shares to the MDSnews Group Shareholders in consideration for the acquisition by CommSoft of the Sale Shares from the MDSnews Group Shareholders.

• $(ii)$ Completion of the Share Purchase Agreement occurs upon completion of the Transaction Events, being:

  • $(A)$ compliance by the Company with Chapters 1 and 2 of the Listing Rules as required by Listing Rules 11.1.2 and 11.1.3;

• $(B)$ completion of the Capital Raising pursuant to the Prospectus, with a minimum of $2,500,000 having been raised:

• $(C)$ completion of the acquisition of the Sale Shares by CommSoft:

• $(D)$ completion of the allotment and issue of the Issue Shares to the MDSnews Group Shareholders; and

• $(E)$ execution of each of the Key Employee Agreements;

• $(iii)$ Completion will not proceed unless certain pre-conditions are satisfied, including:

  • $(A)$ the members of CommSoft have voted to approve Resolutions 3, 4 and 5;
  • $(B)$ Shareholders approve the appointment of 2 Directors as contemplated in Resolution 11 and Resolution 12, such that the total number of appointed Directors will be 4;
  • $(C)$ a CommSoft board meeting is held to acknowledge and record the appointment and resignation of Directors and the issue and allotment of the Issue Shares:
  • $(D)$ CommSoft and the MDSnews Group Shareholders are not in breach of the Share Purchase Agreement and none of the warranties provided by CommSoft to the MDSnews Group Shareholders, or by the MDSnews Group Warrantors to CommSoft, in that agreement have become materially false, misleading or incorrect; and
  • $(E)$ each of the matters referred to in paragraph 1.2(a)(ii) above has occurred.

• $(iv)$ Within 2 Business Days of the date on which the Issue Shares are allotted under the Share Purchase Agreement, CommSoft must apply for Official Quotation of the Issue Shares on the ASX.

• CommSoft has provided the MDSnews Group Shareholders, $(v)$ and the MDSnews Group Warrantors have provided CommSoft with certain warranties, including:

  • $(A)$ warranties regarding corporate governance and the capacity to enter into the Share Purchase Agreement;
  • $(B)$ solvency and in the case of CommSoft, listing on the ASX:
  • $(C)$ accounts have been prepared in accordance with Australian Accounting Standards and, other than

disclosed, all taxation returns have been lodged and taxes have been paid:

• $(D)$ in the case of MDSnews Group, business has been conducted in the ordinary course of ordinary business since 31 December 2004:
• $(E)$ assets, including intellectual property, are owned, leased or licensed as disclosed and do not infringe any third party rights;
• $(F)$ no default under any material contract;
• $(G)$ all required payments employees under to. superannuation legislation have been made;
• $(H)$ other than as disclosed, an entity is not subject to investigation, prosecution, litigation, proceeding or other form of dispute resolution or mediation, and the relevant directors are not aware of any circumstances which would give rise to such action; and
• $(1)$ all insurance policies are in full force and effect.
• $(vi)$ The limitations on liability of CommSoft to the MDSnews Group Shareholders and the MDSnews Group Warrantors to CommSoft under these warranties include:
  • $(A)$ where the claim by the beneficiary of the warranty relates to loss or damage caused by any negligent act or omission of, or violation of any applicable law by that beneficiary;
  • $(B)$ the amount of each individual claim by the beneficiary of the warranty must be more than $50,000, and the total aggregated claims must be at least $100,000;
  • $(C)$ the maximum aggregate amount which the beneficiary of the warranty may recover in respect of all claims and actions under the Share Purchase Agreement is $4,175,000; and
  • $(D)$ the beneficiary must have given CommSoft written notice of its claim or action on or before the second anniversary of the Completion Date.

$(b)$ Shareholder approval

The regulatory regime under which Shareholder approval of this transaction and the issue and allotment of Issue Shares by CommSoft pursuant to the Share Purchase Agreement is required, is discussed in Part B of this Section D.

Details of the Proposed Acquisition of Shares in CommSoft by $2.$ MDSnews Group Shareholders and the MDSnews Group

$2.1$ CommSoft's reasons for the Proposed Transaction

Background: On 22 July 2003 it was announced that the Deed of Company Arrangement, entered into on 28 April 2003, had been wholly effectuated and CommSoft Group Limited was placed back into the control of the Directors. Since then, CommSoft has not owned or conducted, directly or indirectly, any active business.

As a publicly listed company, the Listing Rules require that CommSoft be engaged in a business in order for its Shares to be traded on the ASX. By acquiring the entire issued capital of the MDSnews Group, CommSoft will have the opportunity to own a business that not only enables it to meet the requirements of the Listing Rules, but also one with substantial prospects.

If the proposed acquisition of the MDSnews Group does not proceed, there is a strong possibility that the Company will be put into administration.

CommSoft's search for a new business: The Directors of CommSoft had considered over 50 other opportunities to acquire a new business before resolving to acquire the MDSnews Group on the terms set out in paragraph 1.2(a) above. This search failed to identify any other businesses or business opportunities with as much substance as that presented to the Company by the MDSnews Group.

$2.2$ The MDSnews Group and the Business

Principal entities: The principal entities of the MDSnews Group and their business operations are as follows:

Segment	Entire s	Eunciton
MDSnewsbrand	MDSnews.com	Corporate and BusinessDevelopment
AdvisoryServices	MDSnewsAustralia	AFS LicenceRequirementsComplianceVideo ReportsStock RecommendationsAnalyser ResultsNewsletter Services
Market DataAnalysis	Market DataServices	Product DevelopmentMarket AnalyserMember ServicesData DeliveryWeb DevelopmentIntegrated Transactions

The current business activities and proposed business activities of the MDSnews Group are as follows:

MDSnews.com Limited (MDSnews.com): The MDSnews Group has developed a strategic and corporate plan to facilitate its development. The plan outlines the strategic direction, objectives, core business processes and resources, importance of alliance partners, corporate governance and the business planning responsibilities of each business segment.

The objectives developed under the strategic and corporate plan provide a framework for the MDSnews Group in the development and implementation of the specific business plans for each business segment.

The strategic and corporate plan will be regularly reviewed by the Directors to ensure that future operations are controlled and are consistent with the objectives determined under the strategic planning process. The principal activities of MDSnews.com are to:

• develop the MDSnews Group's strategic direction;
• continue to protect and develop its intellectual property;
• maintain and establish alliance partners; and
• provide financial and administration services to other MDSnews Group entities.

The proceeds raised in the Capital Raising will assist with the funding of the investment and development plan of the MDSnews Group, as outlined in this document.

Selected extracts of the financial aspects of the investment and development plan are included in the financial information section (see paragraph 2.6 below).

The investment and development plan encompasses the IT plan and development of additional capabilities of the MDSnews Group, primarily targeted at financial market data, financial services, Internet services and information based products both in Australia and overseas.

The MDSnews Group's current operations have been separated into 2 trading segments:

• MDSnews Australia; and
• Market Data Services.

The MDSnews Group's revenue to date has largely been attributable to subscribers to Market Data Services.

A summary of the 2 trading business segments is outlined below:

MDSnews Australia holds an Australian Financial MDSnews Australia: Services Licence issued by ASIC. MDSnews Australia is responsible for maintaining the compliance programme in relation to any investment advice it or any of its authorised representatives provide. The compliance program is intended to ensure that the MDSnews Group complies with its obligations under the Corporations Act, particularly when its activities constitute "dealing in a financial product", providing a "financial product" or "financial services", or providing advice in relation to such products or services.

Products and services such as MDSnews Advisory Services, video reports, forum discussions, market scanning and educational tools are all operated under the compliance program of MDSnews Australia.

Market Data Services: Market Data Services employs all staff for the MDSnews Group in the areas of administration, IT development, support and sales. Market Data Services is the contracting entity for redistribution of market data with all MDSnews Group clients.

The principal activities of Market Data Services are as follows:

• provision of real time financial market and business data;
• provision of subscriber services, including media delivery and client support;
• development and enhancement of MDSnews Group products;
• provision of human resources to the MDSnews Group; and
• provision of Internet and web based marketing of the groups technology.

The Business: The Company's core technology is a series of investor tools that interact with an extensive data delivery and storage system for the global financial markets.

Through its own retail distribution channel www.mdsnews.com, the MDSnews Group provides a branded version of its core technology for retail and professional investors. The technology is distributed under the brand name Market Analyser and is targeted at the sophisticated active investor. As a complete market data, research and analysis platform for the global financial markets, the product has maintained a high level of acceptance among its target audience.

Market Data Services clients pay a monthly fee for access to the various technology applications and market information services via an online credit card gateway which is set up to auto debit client credit cards monthly in advance.

At 31 December 2004 there were approximately 3,500 subscribers to the MDSnews Group market information services.

Product and Services

Media Services: The media services aspect of the Business has a clear vision to become a global leader in the provision of timely financial market commentary and company related information via various broadcasting channels.

Currently the MDSnews Group produces 6 market commentary updates throughout the days trading on the ASX and an end of day market wrap on the US market. These reports are proving to be a very popular service and are helping to increase brand awareness and drive new potential business to www.mdsnews.com.

Existing redistribution arrangements are in place with the following group of companies:

• Microsoft:
• News Corporation:
• Telstra:
• Yahoo:
• CMC Group:
• Shaw Stockbrokers; and
• Street Vision.

Market Data: The MDSnews Group has financial and data vending agreements with the ASX, SFE, NASDAQ, NYSE, NZSE and Reuters News.

These agreements permit the MDSnews Group to provide its customers with information sourced from these information providers.

Through its technology licensing arrangement with Reuters, Market Data Services has built a complex database and delivery system which enables the

MDSnews Group clients to gain access to global financial market data in areas such as quotes, news, company announcements and company fundamentals.

Data services are available in either end of day, 20-minute delayed, or real time. MDSnews develops various technology applications that make interacting with the data easier for both professional and non-professional market participation.

These applications can be seen in the MDSnews Group product "MARKET ANALYSER" which enables users to perform an array of studies using scanning tools, system testing, pay-off diagrams and many other functions.

The MDSnews Group is also extending its product reach in the funds management industry. Fund Managers require sophisticated data modeling systems accompanied by clean, precise, accurate market information. The MDSnews Group recognises this as a growth area and is currently working with the industry to allow greater analytical studies of company data.

The MDSnews Group data delivery systems have been designed to disseminate market information to users of third party software applications in both the retail and professional sectors.

Historically the MDSnews Group's market data business has been driven largely by new subscribers to the "MARKET ANALYSER" through www.mdsnews.com. Whilst this growth is likely to continue through the various marketing initiatives undertaken by the MDSnews Group, it is anticipated that the licensing and rebadging distribution through third party distributors will help to scale up subscriber numbers at a more rapid pace.

Distribution channels for the "MARKET ANALYSER" are:

• Market Analyser technology;
• direct retail distribution: $\bullet$
• wholesale distribution:
• re-branding distribution;
• broker dealer desktop space; and
• broker client front-end solution.

Existing distribution agreements are in place with:

MDSnews UK: this distributor operates under a non-exclusive arrangement whereby they actively undertake initiatives to help drive new traffic to www.mdsnews.com, all leads for their region are then passed through to their sales and marketing team;

Islaminvest: operating out of Dubai Islaminvest (IIC) has an exclusive arrangement with MDSnews for the technology supply of their specialist branded Islamic investment tool. The Market Analyser has been rebranded to meet their requirements and is delivered through the same concept of www.mdsnews.com at www.islaminvest.com;

Share Market Institute: operating out of Hong Kong and delivering the rebranded "MARKET ANALYSER" through their own portal www.sharemarketinstitute.com.

Share Market College (SMC): operates out of Brisbane, Australia on a non-exclusive agreement. The SMC specialises in providing market-related education and bundles the Market Analyser together with an education program. The SMC has been successful in this approach for over 7 years and has been a regular contributor to MDSnews revenue as a result of its successful business model.

MDSnews - Advisory Services: With the growing interest among retail investors to have access to professional research, analysis and stock recommendations, the MDSnews Group has launched a new advisory service where clients can choose from a range of services to meet their needs. All reports are on a month-to-month subscription basis, billed in advanced. Currently the following services are available:

• Investor:
• Trader.
• Professional,
• Managed super; and
• Global trader

Transaction Services: The MDSnews Group has entered into a technology license agreement with Iress to facilitate direct order processing with brokers who utilise the Iress technology platform. As an initial roll out of this service, the MDSnews Group has entered into a licensing agreement with Morrison Securities Limited enabling Market Analyser users to route orders for equities and options at a flat fee. Through its relationship with Iress and reliance on Iress' technology, the MDSnews Group has the flexibility to introduce a range of brokers who can facilitate Market Analyser client orders in equities, options and futures.

$23$ Advantages of the Proposed Transaction

In addition to the benefits that the transaction may bring to CommSoft as outlined in 2.1 and 2.2 above, the Directors believe that the transaction, if approved, has the advantages set out below.

Sophisticated Investors: As people are becoming increasingly financially educated and informed, an increasing trend in individuals taking control of their investment decisions is emerging. The MDSnews Group provides financial analytical software and online financial based products, data and services to traders and investors in Australia.

Delivery via the Internet: The MDSnews Group exploits the growing emergence of the Internet as the preferred delivery platform for media, data and portal support technologies for the financial markets.

Intellectual property: The MDSnews Group's product, Market Analyser, is a powerful analysis tool used by both professional and retail traders and investors, to assist in identifying risk adverse trading opportunities in the capital markets.

2.4 Potential Disadvantages or Risks of the Proposed Transaction

The transaction, if approved, may have the disadvantages, or the Business may be subject to the risks, set out below:

General economic conditions: Any prolonged economic slowdown of global economies may impact on the number of members and subscribers the MDSnews Group attracts.

Stock market fluctuations: The extent to which investor interest will lead to the development of a trading market in the Company's Shares, or how liquid that market may be, is not known. The Company's Share price will be dependant on a variety of factors including the capital markets generally. Although investors have shown great interest in technology and service companies focused on the Internet, many publications indicate these companies trade at overly inflated prices. If investor interest in Internet stocks should decline, the price of the Company's Shares could drop suddenly and significantly, even if, after completion of the acquisition of the MDSnews Group, its operating results are positive.

Increased or new competition: The Internet is a relatively new business medium with low barriers to entry. Therefore, competition to the Business may arise from a number of sources and may include companies with greater capital resources and expertise. While the Directors believe that the MDSnews Group's depth of services and industry knowledge effectively reduces the impact of future competition, no assurances can be given that such competition will not adversely affect the future performance of the MDSnews Group and that of the Company in its capacity as the holding company.

Dependence on quality personnel: The loss of key executives and staff, or the inability to attract and retain high-quality personnel to manage future growth effectively, may impact on the results of the MDSnews Group and that of the Company.

The MDSnews Group will enter into a service contract with Leon Hinde, the chief executive officer and founder of the MDSnews Group, prior to Completion. The MDSnews Group will also take out a key man insurance policy in respect of Leon Hinde. In addition, the MDSnews Group will enter into employment agreements with MDSnews Group senior executives, Craig Foley, Barry Littler and Allan Shek. It is a condition precedent to Completion of the Share Purchase Agreement that each of these Key Employee Agreements is executed prior to Completion.

Nevertheless, if one or more executives or current senior employees cease employment, the MDSnews Group may be unable to complete existing projects in the anticipated timeframe.

Effective management of growth: The MDSnews Group has grown rapidly. As it continues to grow, the MDSnews Group must continue to implement operating and financial systems and controls necessary to ensure effective management of future growth.

The MDSnews Group must continue to improve its operational and financial systems, procedures and controls and expand, train, retain and manage its emplovee base. While the MDSnews Group considers it has been successful in managing its rapid growth to date, no assurance can be given by the Company of the ability to manage future growth.

Industry outlook: Although Internet usage has displayed tremendous growth over the last decade, the Internet is only currently beginning to develop into a commercially viable medium. The services offered by the MDSnews Group depend on its ability to keep pace with rapid changes occurring in communication technologies and the new and improved devices and services that result from these changes. If the MDSnews Group were unable to respond quickly and cost effectively to changing communications technologies, the existing service offerings could become non-competitive. The convergence of the means of delivery of information may adversely effect the ability of the Group to retain and/or attract members and subscribers. Additionally, if the Internet is rendered obsolete or less important by faster, more efficient technologies, the MDSnews Group must be prepared to embrace aggressively more efficient technologies and/or offer non-Internet-based services, or risk losing current and potential clients.

Financial market volatility: The financial and capital markets are volatile. There is a risk that demand for the products and services provided by the MDSnews Group could vary with the movements in the financial and capital markets.

Dependence on the Web Infrastructure: The web has experienced, and is expected to continue to experience significant growth in user numbers and Internet traffic. To the extent that the web continues to experience increased numbers of users means there can be no assurance that the web infrastructure will continue to be able to support the demands placed on it by this continued growth.

Reliance on third party operating systems and information: The MDSnews Group relies on the operating systems of third parties, which enable its subscribers to access information. The failure of these systems or a shift towards other operating environments could have a detrimental effect on the MDSnews Group's performance.

The MDSnews Group relies on third parties to provide information to it, which it then sells to its subscribers. Most of the current information provider contracts that MDSnews Group has in place can be terminated by either party giving 30 to 90 days' notice and the fees charged by the information provider can be varied by giving notice. Other contacts are for a relatively short fixed term and with no quarantee of renewal.

Technological developments: The MDSnews Group must update its products in line with new technological developments. Failure to do so could lead to opportunities for competitors and adversely impact on the MDSnews Group's continuing performance.

Transmission facilities: The MDSnews Group is reliant on data transmission services provided by third parties in order for it to be able to provide subscribers with access to its database. The reliability of these data transmission services is outside the MDSnews Group's control – so is the security of the transmission Poor reliability or security could result in loss of revenue to the network. MDSnews Group. The cost of provision of these services is also largely outside the control of the MDSnews Group. Accordingly, there is a risk that costs may increase, reducing the profitability of the MDSnews Group or deterring customers, members and/or subscribers from accessing the database.

Product liability: The licence agreements with customers generally contain provisions designed to limit exposure to potential product liability claims.

Competition: The MDSnews Group has a variety of competitors. Some of these competitors are much larger organisations, which could use their size to exert pressure in the markets in which the MDSnews Group operates, particularly with respect to pricing.

Exchange rate fluctuations: It is intended that the MDSnews Group will operate in different countries around the world and its revenue and costs may be denominated in local currencies. The MDSnews Group operations may therefore be subject to adverse currency fluctuations.

Regulation and legal issues: It is possible laws and other policies may be introduced, amended, or adopted in Australia, or international jurisdictions, relating to aspects of the Business which may have a material adverse effect on the financial position and operating results of the MDSnews Group.

ASIC, for instance, is currently investigating companies, including the MDSnews Group, which market software relating to analysing share prices of ASX-listed entities. The outcome of these investigations and the resultant effect, if any, on the MDSnews Groups' operations, is not known at the date of the Notice of General Meeting.

Competitive risks: The Business, being technology based and operating in the financial and Internet field, is exposed to various industry related risks including:

• product failure and liability: the testing, marketing and sale of new technology based services and products entails an inherent risk of service or product failure and/or liability and there can be no assurance that service and/or product liability claims will not be asserted against the Business:
• customer demand: there may be unexpected changes in customer demands or expectations for the services or products of the Business. The Company may not be able to anticipate these changes or adequately modify its business plans to cater for these changes; and
• strategic decisions: the Company may make a design, manufacturing, pricing, servicing or marketing decision which could have a material effect on the Business, including results of operations and financial operations.

Capital requirements: Whilst the Company believes that the funds raised pursuant to the Capital Raising will be sufficient to satisfy its medium term

working capital needs, there can be no assurances that the Company will not need to raise additional capital from equity and debt sources.

Growth management: The anticipated growth of the Business, including the proposed international operations, may place a significant strain on the Company's managerial, operational and financial resources. There can be no assurance that the Company will be able to successfully manage the expansion of its operations.

Intellectual property: The enforceability of the patent(s) protecting the intellectual property of the Business is dependent on a number of factors which may vary between jurisdictions. These factors include the validity of the patent and the scope of the protection it provides. The validity of a patent and/or the ability to enforce other proprietary rights depends on many factors. The legal interpretation of these requirements often varies between jurisdictions. There can be no assurance that any patented or other technology used in the Business will able to be adequately protected or that others will not seek to imitate the Business technology, services or products, and in doing so, attempt to design their technologies, services or products in such a way to circumvent the MDSnews Group's rights. Enforcement of rights regarding actual or suspected infringements can also vary considerably between jurisdictions.

Dilution of existing Shareholders: Although existing Shareholders will continue to hold the same number of Consolidated Shares in CommSoft before and after the issue of the Issue Shares to the MDSnews Group Shareholders, the percentage of the total share capital of CommSoft held by each Shareholder will be reduced (see the table of current and proposed final interests on page $60$ ).

General economic conditions: The general state of the Australian and international economies and the sophisticated investor market as well as changes in taxation, monetary policy, interest rates, statutory requirements and currency exchange rates may effect the Business, the MDSnews Group and the Company.

Consolidation Risk: There can be no guarantee that the value as determined by the market price of the Consolidated Shares multiplied by their number will be or remain equal to the value of the Shares when last traded and prior to the Consolidation of Shares, ie the last market price of the Shares prior to the suspension of trading multiplied by their number.

Settlement Risk: If the conditions precedent in the Share Purchase Agreement are not satisfied, including CommSoft having complied with the requirements of Chapters 1 and 2 of the Listing Rules as required by Listing Rule 11.1.3, then Completion will not occur.

Trading in CommSoft Shares is currently suspended and will remain so until such time that CommSoft has complied with Chapters 1 and 2 of the Listing Rules. To comply, CommSoft must, among other things, complete the Capital Raising.

Regulation: Any unfavourable changes to the regulatory framework may adversely impact on the Business and the Company.

Alternatives to the proposed transaction 2.5

The Directors are not aware at this time of any other viable proposed transactionthat could be placed before the Shareholders and which would provide the opportunities in, and potential of, the Business.

Financial Information 2.6

Pro-forma Statement of Financial Position $(a)$

Actual Historical andProforma Statements ofFinancial Position	Auchted30 June 2004	AutinReviewed31 Dec 2004	ProformaConsolidated
Cash	137,443	46,009	4,159,523
Receivables	275	26,343	229,406
Other			102,872
Total Current Assets	137,718	72,352	4,491,801
Receivables
Property, plant & equipment			338,557
Other Financial Assets			31,691
Other Assets			245,915
Intangible Asset			3,033,022
Total Non-Current Assets			3,649,185
Total Assets	137,718	72,352	8,140,986
Creditors	24,040	22,000	466,835
Provisions			101,963
Other LiabilitiesConvertible Notes	1,492,748	1,492,748	7,520
Total Current Liabilities	1,516,788	1,514,748	576,318
Non-Interest BearingLiabilities
Provisions			24,325
Total Non-CurrentLiabilities			24,325
Total Liabilities	1,516,788	1,514,748	600,643
Net Assets	(1,379,070)	(1,442,396)	7,540,343
Share Capital andReserves*	26,610,714	26,610,714	35,593,453
(Accumulated Losses)*	(27, 989, 784)	(28,053,110)	(28,053,110)
Shareholder Equity	(1, 379, 070)	(1,442,396)	7,540,343

Notes to the Pro-forma Statement of Financial Position $(b)$

The pro-forma consolidated statement of financial position has been prepared based on the:

• audited independent review of the statement of financial position of CommSoft as at 31 December 2004:
• audited independent review of the consolidated statement of financial position of MDSnews.com (incorporating) its wholly-owned subsidiary, Market Data Services) and MDSnews Australia:
• unaudited statement of financial position of MDSnews Global; and
• unaudited statement of financial position of MDSnews Solutions,

and on the basis that the following transactions and adjustments had occurred at that date:

• the issue of Consolidated Shares under a Disclosure Document raising cash funds of $4,000,000;
• total costs of the issue estimated to be $698,900 being charged against issued capital;
• convertible notes of $1,492,748 have been converted into 3,353,086 Consolidated Shares and $256,108 used to redeem the convertible notes not converted into Consolidated Shares:
• the MDSnews Group has been acquired in consideration for the issue of 41,750,000 Consolidated Shares in CommSoft; and
• convertible notes of $270,000 have been converted into 2,700,000 Consolidated Shares.

The Options the subject of Resolutions 14, 15 and 16 have been disregarded.

The pro-forma Statements of Financial Position balance sheets have been prepared in accordance with the accounting policies of CommSoft set out in the audited Financial Statements of 30 June 2004

$3.$ MDSnews Group and CommSoft

$3.1$ The MDSnews Group Shareholders' entitlement to Shares

As at the date of the Notice of General Meeting, the MDSnews Group Shareholders do not have a relevant interest in CommSoft Shares or Options. except for Barrack Capital which has an entitlement to 260,000 Consolidated Shares upon conversion of 26,000 Secured Convertible Notes.

Assuming that the transaction proceeds in accordance with the terms of the Share Purchase Agreement, the MDSnews Group Shareholders will hold 41.750.000 Consolidated Shares on Completion. This shareholding represents approximately 60.6% of the issued capital of CommSoft.

$3.2$ Existing and proposed new Directors

The current Board of CommSoft consists of 3 non-executive Directors: the Chairman, Jeff Zulman, David Whitfield and Bruce Ind.

Subject to Shareholder approval (Resolutions 11 and 12), the following appointments will be made, conditional upon the approval of the transaction by Shareholders in accordance with Resolution 4 and Resolution 5, and effective from the date of the General Meeting:

• Barry Littler, as executive Director who will also be Chairman; and
• Leon Hinde, as executive Director and chief executive officer.

Assuming Shareholders approve the appointment of Barry Littler and Leon Hinde as Directors, the CommSoft Board will have 4 members between the time of closing of the General Meeting and Completion. It is proposed that CommSoft will have a 4-member Board of Directors for CommSoft from Completion. Bruce Ind has tendered his resignation to the Company as a Director of CommSoft conditional upon approval of the transaction by Shareholders in accordance with Resolution 4 and Resolution 5, and effective from Completion.

A summary of the profile of each Director and the executive managers of the MDSnews Group is outlined below.

$(a)$ Jeff Zulman - current Chairman: Jeff Zulman was appointed a non-executive Director in May 2002. He is currently a Principal of Lexicon Partners Pty Limited, a corporate advisory firm and managing director of Coyne Holdings Pty Ltd, an investment company.

He has a strong track record of commercial success in business development, management and investment banking, gained in New York and London with Goldman Sachs and in Australia with Audant Investments. Mr Zulman holds a BA in law and a Dip. Jurisprudence, having completed studies at Oxford University (UK), Sydney University (Australia) and the University of Witwatersrand (South Africa).

$(b)$ David Whitfield - current and continuing non-executive Director: David Whitfield is a chartered accountant with over 35 years' experience in business and public company practice in the areas of corporate advice, taxation, mergers and acquisitions, company reconstructions and public offerings.

Mr Whitfield was previously a partner of Court & Co. Chartered Accountants Sydney for 19 years. Since retiring from private practice. he has acted as a director and chairman of various listed and unlisted companies in the mining, technology and telecommunications areas.

Bruce Ind - non-executive Director: Bruce Ind is a business person $(c)$ with experience as both director and secretary of a public company.

Mr Ind previously owned a technology distribution company whose main customers were Australia's leading mass merchants. This company was subsequently purchased by a public company, which lead to his dual official roles. Bruce also runs his own consulting business that provides companies with the tools to grow the retail appeal of their products. Mr Ind has also had experience with various manufacturing companies.

$(d)$ Barry Littler - proposed Executive Chairman: Barry Littler is a member of the Sydney Futures Exchange.

Mr Littler provides a range of consulting services to clients in the banking, funds management and broking sectors of the financial markets.

Leon Hinde - proposed Chief Executive Officer: Leon Hinde is the $(e)$ founder and Chief Executive Officer of the MDSnews Group.

Mr Hinde is responsible as the CEO for developing the strategic direction of the Group and the implementation of the business development plan. Mr Hinde has been instrumental in developing and maintaining the Company's relationship with its various alliance partners and the Distributors. His business operational skills, combined with a strong global financial market awareness, has provided a solid base in the strategic direction and product development of the Group.

Going forward, the Board of Directors intends to give further consideration to the appointment of additional independent non-executive directors.

$3.3$ Intentions regarding the future of CommSoft

Business: As outlined above, the new Board intends to focus on developing and expanding the Business in accordance with the business plan as described above in paragraph 2.2.

Assets: There is no current intention to pursue any property transfers or dealings other than those which may be contemplated by the Transaction Documents.

Employees: CommSoft currently has no employees.

The MDSnews Group Shareholders envisage that the Business will be structured to ensure maximum efficiency and profitability. Employees and consultants have and will be engaged by the MDSnews Group to ensure the continued development and expansion of the Business.

In addition to the executive Directors, Leon Hinde and Barry Littler, the senior employees in the Business will be as follows:

Allan Shek - MDSnews Australia Executive Manager: Allan Shek $(a)$ has been with the Company since 1998 and has 13 years' experience in the IT Industry.

Prior to working with the MDSnews Group, Mr Shek has held various positions in information technology, including technical IT consulting.

Since November 1999, Mr Shek has been managing the MDSnews Group's internal compliance programme, and is currently the Executive Manager of the MDSnews Australia business segment.

$(b)$ Craig Foley - Market Data Services Executive Manager: Craig Foley has been working with the MDSnews Group since 1995 and has 12 years' experience in the IT industry.

Mr Foley's experience within this field has enabled him to contribute substantially to the advancement of the MDSnews Group, having fulfilled the migration of the Company's primary software product from MS-DOS to Microsoft Windows and the management and implementation of four major version releases of its primary software Mr Foley has also created and managed the in house product. development, administration and support of the Company's IT practices.

During Mr Foley's service, he has managed all IT operations within the MDSnews Group and is currently the Executive Manager of the Market Data Services business segment.

A summary of the proposed organisational structure and the key executives of the MDSnews Group on Completion is outlined below.

Financial and dividend policies: CommSoft has indicated that it does not intend to pay any dividends for the year ending 30 June 2005. The payment of any dividend in the future will be a matter for decision of the Board of Directors of CommSoft at the appropriate time, based on relevant information at that time.

No assurance or guarantee can be given about future dividends as these matters are dependent on future profits and the financial and taxation position of CommSoft. The Company intends to pay dividends at an appropriate time in the future.

The future capital requirements of CommSoft will depend on many factors, including ongoing development costs.

Should CommSoft require additional funding, there can be no assurance that additional financing will be available, either from existing Shareholders at that time, or other investors or lenders, on acceptable terms or at all.

Additional Information $\mathbf{4}$ .

$4.1$ Timing of the Proposed Transaction

A General Meeting of CommSoft will take place at 10.00am Sydney time on 20 July 2005. If the Shareholders resolve to approve Resolutions 3, 4 and 5 and, subject to the preconditions to Completion set out in paragraph 1.2(a) having been satisfied. CommSoft will issue the Issue Shares to the MDSnews Group Shareholders.

$4.2$ Reasons for the Proposed Transaction

The reasons for the transaction are set out in paragraph 2.1 to this Explanatory Memorandum.

4.3 Directors' interests

Other than David Whitfield, none of the current Directors of CommSoft has any interest in the transaction, the subject of Resolutions 3 and 4 other than as an officer or a Shareholder of CommSoft.

$4.4$ Directors' approval

On 9 June 2005, each of Jeff Zulman and Bruce Ind (both as Directors), met and resolved at that meeting to convene the General Meeting in order to enable the Shareholders to consider and vote on Resolutions 4 and 5. Jeff Zulman and Bruce Ind resolved on 9 June 2005 to issue this Explanatory Memorandum to Shareholders along with the Notice of General Meeting.

The reasons which motivated each of Jeff Zulman and Bruce Ind to vote as he did are set out below along with their recommendation in respect of the transaction.

4.5 David Whitfield

Section 195(1) of the Corporations Act prohibits a director or a public company who has a material personal interest in a matter that is being considered at a directors' meeting from voting on, or being present at the discussion of, the proposal by the board.

David Whitfield was not present at the Board meeting held on 9 June 2005 at which Jeff Zulman and Bruce Ind resolved to approve the transaction and call the General Meeting in accordance with the Notice of General Meeting and to recommend the transaction to Shareholders. David Whitfield has elected not to make any recommendation to Shareholders regarding this transaction. David is a director of Toddlers, a company which holds shares in MDSnews.com Limited. As a shareholder of an entity in the MDSnews Group. Toddlers will receive 1,461,250 Consolidated Shares on Completion.

David is also a director and shareholder of Barrack Capital. Barrack Capital has provided advice and assistance to the MDSnews Group regarding this transaction and will receive a cash payment from the Company equivalent to 7% of the proceeds of the proposed Capital Raising on Completion. Barrack Capital will also receive 260,000 Consolidated Shares on conversion of its 26,000 New Convertible Notes.

4.6 Recommendations

Each of Jeff Zulman and Bruce Ind recommends that all Shareholders agree to the transaction and vote to approve Resolution 3 and Resolution 4.

The reasons why each of Jeff Zulman and Bruce Ind has made that recommendation are as follows:

• no viable alternative to the current proposal to acquire the MDSnews Group;
• the advantages of the proposed acquisition of the MDSnews Group as set out above in paragraph 2.2; and
• the Independent Expert has concluded that the terms of the transaction are "fair and reasonable" to non-interested Shareholders.

4.7 Independent Expert's Report

The Directors have commissioned the Independent Expert's Report to Shareholders which is provided in conjunction with this Explanatory Memorandum. On the information set out in the Independent Expert's Report. the Independent Expert has formed the view, having regard to relevant ASIC Policy Statements and Practice Notes, that the fair and reasonable transaction that is the subject of Resolution 3 and Resolution 4, is "fair and reasonable" to Shareholders. Shareholders are encouraged to read the full text of the Independent Expert's Report in Section E.

Part B - Additional Information

5. Regulatory Requirements

$5.1$ Resolution 3

ASX Listing Rules 11.1.2 and 11.1.3: A listed company that proposes to make a significant change, either directly or indirectly to the nature or scale of its activities or both must, if the ASX requires:

• $(a)$ get approval of holders of its shares and comply with any requirements of the ASX in relation to the notice of meeting (Listing Rule 11.1.2); and
• meet the requirements in chapters 1 and 2 of the Listing Rules as if the $(b)$ entity were applying for admission to the official list of the ASX (Listing Rule 11.1.3).

$5.2$ Resolution 4

Corporations Act: Section 606 of the Corporations Act. amongst other things. prohibits a person from acquiring shares in a listed public company if, as a result of that acquisition, any person entitled to less than 20% of the voting shares in that company would, immediately after the acquisition, become entitled to 20% or more of the voting shares in the company, or if any person entitled to 20% or more, but less than 90% of the voting shares in the company would, immediately after the acquisition, increase their entitlement.

Section 611, Item 7 of the Corporations Act provides that no breach of Section 606 occurs if the relevant acquisition arises by virtue of an allotment or purchase of shares which is approved by a resolution passed at a general meeting of the relevant company at which no votes are cast in respect of any shares held by the proposed allottee or purchaser of the shares or any persons associated with the proposed allottee or purchaser.

ASX Listing Rule 7.1: Pursuant to ASX Listing Rule 7.1, CommSoft must not issue and allot shares that represent more than 15% of its existing share capital without the prior approval of CommSoft Shareholders in general meeting. The 41,750,000 Consolidated Shares that CommSoft proposes to issue and allot to the MDSnews Group Shareholders represent more than 15% of CommSoft's existing share capital. Therefore, CommSoft Shareholders are asked to approve the proposed acquisition not only to satisfy Section 611 Item 7 of the Corporations Act but also in order to satisfy ASX Listing Rule 7.1.

In compliance with Listing Rule 11.1.2, CommSoft seeks the approval of its Shareholders as set out in Resolution 3 of the Notice of General Meeting of the transaction.

So as to comply with Listing Rule 11.1.3, CommSoft will, amongst other things, issue the Prospectus to the public.

5.3 Resolutions 7, 9, 13, 14, 15, 16, 17 and 18 (Related Party Transactions)

Corporations Act Section 208 - Related Party Transactions: Approval of the issues of Consolidated Shares that constitute the giving of a financial benefit to a related party is being sought under Section 208(1)(a) of the Corporations Act in respect of each of the Related Party Transactions.

Disclosures that must given to Shareholders in relation to Resolutions 7, 9, 13, 14, 15, 16, 17 and 18 must comply with Section 219 of the Corporations Act.

In addition to the disclosures made in paragraphs 2.7, 2.9, 2.13, 2.14, 2.15, 2.16, 2.17 and 2.18, the following information is provided regarding the Related Party Transactions and the relevant related parties:

Remuneration

Related Party	Cash RemunerationPrior to Completion	Cash RemunerationPost-Completion
Jeff Zulman	Jeff Zulman is a director ofCoyne Capital. TheCompany currently paysCoyne Capital a service feeof $5,000 per month. Thisarrangement will terminateeffective as at the conclusionof the General Meeting.	Nil
David Whitfield	David Whitfield is a directorof Barrack Capital. BarrackCapital has provided adviceand assistance to theMDSnews Group regardingthe transaction and willreceive a cash payment fromthe Company equivalent to7% of the proceeds of theproposed Capital Raising onCompletion.	Nil
Bruce Ind	Nil	Nil
Leon Hinde	Nil	Pursuant to an employmentagreement, Leon Hinde willreceive a totalremuneration package of$200,000 (excluding anyentitlements to equity).

Equity Interests

Reface Pary	Equity Interest in theCompany Prior toCompletion	Equity Interest in theCompanyPost-Completion
Jeff Zulman	34,716,977 Shares (pre theConsolidation of Shares).Jeff Zulman is a director andshareholder of CoyneHoldings. Coyne Holdingsholds 22,100 OldConvertible Notes. Subjectto Shareholders approvingResolution 7, CoyneHoldings will receive 76,936Consolidated Shares onconversion of the 22,100 OldConvertible Notes onCompletion.	167,581 ConsolidatedShares500,000 Options
	If Shareholders approveResolution 18, Jeff Zulmanwill receive 500,000 Optionson Completion.
David Whitfield	David Whitfield is a directorand shareholder of Toddlers.As an MDSnews GroupShareholder, Toddlers willreceive 1,461,250Consolidated Shares onCompletion.	1,721,250 ConsolidatedShares500,000 Options
	David Whitfield is a directorand shareholder of BarrackCapital. Barrack Capitalholds 26,000 NewConvertible Notes. IfShareholders approveResolution 9, BarrackCapital will receive 260,000Consolidated Shares onconversion of 26,000 New

	Convertible Notes onCompletion.Subject to Shareholdersapproving Resolution 17,David Whitfield will receive500,000 Options onCompletion.
Bruce Ind	Subject to Shareholdersapproving Resolution 16,Bruce Ind will receive500,000 Options onCompletion.	500,000 Options
Leon Hinde	Leon Hinde is a director andprincipal shareholder of theMDSnews Group. OnCompletion, Leon Hinde willhave a relevant interest in37,544,722 ConsolidatedShares, which will equate toapproximately 54.52% of theCompany.If Shareholders approveResolution 14, Leon Hindewill receive 500,000 Optionson Completion.	37,544,722 ConsolidatedShares500,000 OptionsIf Shareholders approveResolution 13, Leon Hindewill be eligible to receive upto 1,000,000 ConsolidatedShares under an executiveincentive scheme, subject tothe determination of theCompany's RemunerationCommittee.
Barry Littler	If Shareholders approveResolution 15, Barry Littlerwill receive 500,000 Optionson Completion.	500,000 OptionsIf Shareholders approveResolution 13, Barry Littlerwill be eligible to receive upto 2,000,000 ConsolidatedShares under an executiveincentive scheme, subject tothe determination of theCompany's RemunerationCommittee.

Section E - Independent Expert's Report

FINANCIAL SERVICES GUIDE AND INDEPENDENT EXPERT'S REPORT

COMMSOFT GROUP LIMITED May 2005

PART 1 - FINANCIAL SERVICES GUIDE

Dated 31 May 2005

BDO Corporate Finance Pty Ltd ABN 91 003 946 030 ("BDO Corporate Finance" or "we" or "us" or "ours" as appropriate) has been engaged to issue general financial product advice in the form of a report to be provided to you.

FINANCIAL SERVICES GUIDE $\blacksquare$

In the above circumstances we are required to issue to you, as a retail client, a Financial Services Guide ("FSG"). This FSG is designed to help retail clients make a decision as to their use of the general financial product advice and to ensure that we comply with our obligations as financial services licensees. This

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REFERRALS 6

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$\overline{7}$ ASSOCIATIONS AND RELATIONSHIPS

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COMPLAINTS RESOLUTION 8

$8.1$ INTERNAL COMPLAINTS RESOLUTION PROCESS

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing, addressed to The Complaints Officer, BDO Corporate Finance, GPO Box 2551, Sydney NSW 2001,

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9 CONTACT DETAILS

You may contact us using the details set out at the top of our letterhead on page 1 of this FSG.

COMMSOFT GROUP LIMITED INDEPENDENT EXPERT'S REPORT TABLE OF CONTENTS

ı	INTRODUCTION
2	SUMMARY AND OPINION
	21	FAIRNESS
	22	REASONABLENESS
	23	CONCLUSION
3		OUTLINE OF OFFER
	3 I	HEADS OF AGREEMENT
	32	SHARE PURCHASE AGREEMENT
	33	EXPLANATORY MEMORANDUM
4		REPORT REQUIREMENTS
5.		BASIS OF EVALUATION
	5 1	REGULATORY GUIDELINES
	52	ADOPTED BASIS OF EVALUATION
6		PROFILE OF COMMSOFT
	61	HISTORY
	6.2	CONSOLIDATION OF ORDINARY SHARES ON ISSUE
	63	CONVERSION OF NOTES
	64	CAPITAL STRUCTURE
	65	HISTORICAL BALANCE SHEETS
	66	HISTORICAL INCOME STATEMENTS
7.		PROFILE OF THE MDSNEWS GROUP
	71	HISTORY
	72	HISTORICAL BALANCE SHEETS
	73	HISTORICAL INCOME STATEMENTS
8		PRO-FORMA GROUP'S CAPITAL STRUCTURE
9		SELECTED VALUATION APPROACHES
	91	COMMSOFT
	92	MDSNEWS GROUP
	93	SURPLUS ASSETS
	94	FUTURE EVENTS
	9.5	VALUATION OF POTENTIAL SYNERGIES
	9.6	VALUATION OF CONSIDERATION OFFERED

10	VALUATION OF COMMSOFT
	10.1 NET TANGIBLE ASSET VALUATION OF COMMSOFT
	10.2 ASX MARKET PRICES FOR COMMSOFT SHARES
	10.3 VALUATION SUMMARY OF COMMSOFT
$\mathbf{1}$	VALUATION OF MDSNEWS GROUP
	11.1 OVERVIEW OF FME METHODOLOGY
	11.2 DETERMINATION OF FME
	11.3 APPLIED WEIGHTINGS
	11.4 BASIS OF ASSUMPTIONS OF FORECAST
	11.5 CAPITALISATION MULTIPLE
	11.6 FME VALUATION OF AN EQUIVALENT LISTED COMPANY
	11.7 FME VALUATION OF MDSNEWS GROUP
	11.8 NTA VALUATION OF MDSNEWS GROUP
	11.9 VALUATION SUMMARY
-12	IS THE PROPOSAL FAIR?
	12.1 COMPARISON OF VALUE OF MDSNEWS GROUP TO CONSIDERATION OFFERED23
13	IS THE PROPOSAL REASONABLE?
	13.1 ADVANTAGES OF ACCEPTING THE TRANSACTION
	13.2 DISADVANTAGES OF ACCEPTING THE TRANSACTION
	13.3 POSITION OF SHAREHOLDERS IF TRANSACTION IS NOT APPROVED
14	SOURCES OF INFORMATION
15	INDEPENDENCE
16	QUALIFICATIONS
17	DISCLAIMERS AND CONSENTS
18	INDEMNITY

	Appendix A Valuation Methodologies
--	------------------------------------	--

BDO Corporate Finance Pty Limited AFS Licence 244345 ABN 91-003-946-030

Level 19, 2 Market St. Sydney NSW 2000 GPO Box 2551 Sydney NSW 2001 Tel (61-2) 9286 5555 Fax (61-2) 9286 5599 Email bdosyd@bdosyd.com.au www.bdo.com.au

31 May 2005

The Directors CommSoft Group Limited Suite 221, Level 2 Canada House 111 Harrington Street SYDNEY NSW 2000

Dear Sirs

INDEPENDENT EXPERT'S REPORT - COMMSOFT GROUP LIMITED

$\mathbf{I}$ INTRODUCTION

BDO Corporate Finance Pty Limited ("BDO Corporate Finance") has been engaged by CommSoft Group Limited ("CommSoft") to prepare an Independent Expert's Report ("the Report") to express an opinion as to whether or not the acquisition of MDSnews.Com Limited and MDSnews Australia Pty Ltd ("MDSnews Group") by CommSoft ("the Transaction") is fair and reasonable to shareholders of CommSoft ("Shareholders").

Our Report is to be included in the Notice of Meeting for CommSoft to be sent to all Shareholders to assist them in deciding whether to accept or reject the Transaction.

$\mathbf{2}$ SUMMARY AND OPINION

We have considered the terms of the Transaction as outlined in the body of this Report and have concluded that the Transaction is fair and reasonable and in the best interests of Shareholders

A summary of our analysis in forming the above opinion is provided below:

$2.1$ FAIRNESS

In accordance with our basis of evaluation, set out in Section 5.2, we have assessed whether or not the Transaction is fair to Shareholders with reference to the value of shares in MDSnews Group and the consideration being offered under the Transaction. The results of our analysis are summarised in the tables below.

Value of MDSnews Group Shares Acquired	193	148.000	75.000
Consideration Offered		55 M A

ability limited by the Accountains Scheine, ausnoved under the Professional Standards Act 1994 (NSW)

The comparison is also shown graphically below:

$2.2$ REASONABLENESS

We have considered the analysis detailed in Section 13 of this Report, in terms of both:

• Advantages and disadvantages of accepting the Transaction; and
• Position of Shareholders if the Transaction does not proceed and CommSoft remains suspended on the ASX.

The respective advantages and disadvantages considered are summarised below:

	ADVANTAGES AND DISADVANTAGES OF ACCEPTING THE TRANSACTION
	A TATTLE DAY	WARDTOWN	SPICE GUERRISTORIE
13.I.I	Potential increase in marketcapitalisation and liquidity of shares	13.2.1	Dilution of shareholding and loss of control
13.1.2	Introduction of new operatingactivities
13.1.3	Increased net tangible asset backing
1314	Potential increase in futuredistribution per share and payout ratio-

$2.3$ CONCLUSION

In our opinion, the Transaction is fair and reasonable to the Shareholders.

OUTLINE OF OFFER 3

$3.1$ HEADS OF AGREEMENT

In December 2004, CommSoft and MDSnews Group entered into a Heads of Agreement for the proposed scrip for scrip acquisition of the MDSnews Group. This Agreement sets out the material terms and conditions of the Transaction between CommSoft and the MDSnews Group.

• CommSoft is proposing to acquire all of the fully paid ordinary shares ("Sale Shares") in the capital of MDSnews Group from the MDSnews Group Shareholders.
• In consideration for the MDSnews Group Shareholders transferring to CommSoft all of the Sale Shares, CommSoft will issue to the MDSnews Group Shareholders 41.75 million ordinary shares ("Issue Shares").
• In order to grow the MDSnews Group business through increased marketing. CommSoft intends to raise up to $4 million on the ASX by issuing 20 million shares at $0.20 each following Shareholders approval of the Transaction.
• Upon completion of the Transaction, CommSoft will change its name to MDSnews ٠ Limited.

$3.2$ SHARE PURCHASE AGREEMENT

On 13 May 2005, CommSoft, MDSnews Group and its CEO and major shareholder. Leon Hinde, entered into a Share Purchase Agreement. In this agreement, MDSnews Group Shareholders agreed to sell the Sale Shares to CommSoft and CommSoft agreed to acquire the Sale Shares at completion in accordance with the provisions of this agreement. In consideration for the Sale Shares, CommSoft will issue 41.75 million Consolidated Shares. The completion of this agreement is conditional on the occurrence of the following events:

• Capital Raising of at least $2.5 million;
• Compliance with ASX Listing Rules and the Corporations Act;
• Section 611 approval; $\bullet$
• Resignation of one existing Director; and $\bullet$
• Appointment of two new Directors.

Completion will take place within 5 business days of the last condition being satisfied or waived.

CommSoft will apportion the allotment of the Issue Consolidated Shares between the MDSnews Group Shareholders. MDSnews Group Shareholders and their Sale Shares as well as the appointment of the Issue Shares and proportional liability are summarised in the table helow.

Shareholder	Number of	Numbero?	Proportional
	Sale Shares	Issue Shares	THE BUILTING
MDSnews.Com
Leon Hinde	30,000,000	18,772.361	44.965%
Global Equity Management	30.000.000	18,772.361	44.965%
Craig Foley	100.000	62.575	0.150%
Allan Shek	100.000	62.575	0.150%
lan Frost	100.000	62.575	0.150%
SAS Global Finance	1.000.000	625.745	1.500%
Tricom Equities	750.000	469.308	1.120%
Cypress Investments	2,335,215	1.461.250	3.500%
Toddlers Manufacturing Co	2,335.215	1,461.250	3.500%
MDSnews Australia
Global Equity Management	103
TTOL
Global Equity Management	ΙÛ
Total.. .$\sim$$\sim$	66.720.5435.555	41.750,000	100.00%

Source: Share Purchase Agreement dated 13 May 2005

All Sale Shares in MDSnews.Corn and TTOL are ordinary shares. 101 of Sale Shares in MDSnews Australia are Noteredeemable preference shares.

$3.3$ EXPLANATORY MEMORANDUM

The draft Explanatory Memorandum outlines the principal terms of the Transaction which include:

• the consolidation of the total number of ordinary CommSoft shares on issue (i.e. 406,524,494) at a 383 to 1 ratio, these shares are to be called Consolidated Shares;
• the change of CommSoft's name to MDSnews Limited;
• the proposed acquisition of the MDSnews Group, the consideration for which will be the issue of new Issue Shares by CommSoft:
• the completion of the proposed acquisition is conditional on terms as outlined in Section 3.2:
• the issue of new Issue Shares to the holders of convertible notes issued in 2001 (Section 6.3):
• the issue of new Issue Shares to secured convertible noteholders who provided preacquisition funding to CommSoft;
• the resignation of certain existing Directors and appointment of new Directors;
• the Issue of up to 3 million new Issue Shares to proposed executive Directors Leon Hinde and Barry Littler in consideration of future services to be provided to MDSnews Group and to be granted pursuant to an employee incentive scheme:
• the issue of new Issue Shares to raise capital of up to $4 million;
• the issue of options to certain Directors and proposed Directors; and
• the issue of options to employees pursuant to an employee share option plan. $\bullet$

REPORT REQUIREMENTS $\boldsymbol{\Lambda}$

• $4.1$ Prior to the Transaction there will be 7,114,508 Consolidated Shares on Issue. As consideration under the Share Purchase Agreement described in Section 3.2. MDSnews.com shareholders will receive 41,750,000 Consolidated Shares in Commsoft. As a result of the Transaction, the shareholders of MDSnews.com will control approximately 85% of CommSoft's issued capital.
• $4.2$ Section 606 of the Corporations Act ("the Act") expressly prohibits the acquisition of further shares by a person where the acquisition increases the person's voting power from 20% or below to more than 20% of the issued shares of a listed entity, unless the acquisition falls within one of the exemptions in Section 611 of the Act.
• 4.3 Item 7 of Section 611 permits an acquisition of shares in a listed entity by a person who, holding 20% or less, would acquire more than 20% or who already holds more than 20%, if the shareholders of that entity have agreed to the acquisition of such shares. This agreement must be by resolution passed at a general meeting at which no votes are cast in relation to any party who is associated with the party acquiring the shares. Item 7 of Section 611 states that CommSoft Shareholders must be given all information that is material to the decision on how to vote at the meeting.
• $4.4$ Policy Statement 74 ("PS74") issued by ASIC deals with "Acquisitions Agreed to by Shareholders". It states that the obligation to supply CommSoft Shareholders with all information that is material can be satisfied by the directors of CommSoft, by either:
  • Undertaking a detailed examination of the Transaction themselves, if they consider that they have sufficient expertise; or
  • By commissioning an Independent Expert's Report.

The directors of CommSoft have commissioned this Report to satisfy this obligation.

$4.5$ The report should provide an opinion by the expert stating whether or not the terms and conditions in relation to the Transaction are fair and reasonable to non-associated shareholders of CommSoft

BASIS OF EVALUATION $\overline{5}$

5.1 REGULATORY GUIDELINES

In determining whether the Transaction is "fair and reasonable" we have had regard to the views expressed by the ASIC in their PS74 and Practice Notes 42 and 43.

PS74 provides that the assessment of whether the Transaction is "fair and reasonable" should involve a comparison of the likely advantages and disadvantages for Shareholders if the Transaction is implemented with the advantages and disadvantages to the Shareholders if it is not.

Under PS74, "fair and reasonable" is a single concept and is assessed in all circumstances of the Transaction.

$5.2$ ADOPTED BASIS OF EVALUATION

Having regard to the above, BDO Corporate Finance has completed this assessment in two parts:

• A comparison between the value of consideration paid by CommSoft (i.e. 41.75 million new CommSoft Consolidated shares and the value of MDSnews Group (fairness); and
• An investigation into other significant factors to which Shareholders might give consideration (reasonableness).

We have assessed that in all cases the advantages and disadvantages of rejecting the Transaction are the inverse of accepting the Transaction. Thus, for simplicity and ease of the evaluation of the Transaction we have set out the significant factors in Section 13 only in the context of accepting the Transaction.

6 PROFILE OF COMMSOFT

6.1 HISTORY

CommSoft Group Limited ("CommSoft") is a public company listed on the Australian Stock Exchange ("ASX") and New Zealand Stock Exchange ("NZX"). CommSoft's shares are currently suspended from trading. CommSoft did not have any operating activities during the 2004 financial year and to the date of this Report.

As at the date of this report CommSoft has a 100% interest in the following entities:

• CommSoft Australasia Limited (in liquidation);
• CommSoft (Europe) Limited (in liquidation); and
• CommSoft South Africa Pty Limited (in liquidation).

$6.2$ CONSOLIDATION OF ORDINARY SHARES ON ISSUE

According to the Explanatory Memorandum, the total number of ordinary shares on issue (i.e. 406.524.494) will be consolidated at a 383 to 1 ratio (Section 3.3).

6.3 CONVERSION OF NOTES

In May 2005, CommSoft's twelve convertible noteholders agreed to either convert or redeem their notes. The face value of the notes issued by CommSoft amounted to $1,492,748 at $1.00 each, of which $256,108 is redeemable in cash, with the remaining balance converted to equity (Section 3.3).

Management have advised that new capital of $270,000 (i.e. 2.7 million consolidated shares at $0.10 each) has been raised in order to fund the partial conversion of the notes and provide working capital in respect of the transaction.

6.4 CAPITAL STRUCTURE

The following table sets out CommSoft's capital structure as at 30 June 2004, before consolidation of shares (Section 6.2) and conversion of notes (Section 6.3):

Re si,这就是我们的人,我们的人,我们也不能会在这里的时候,我们也不能会在这里的时候,我们的人,我们也不能会在这里的时候,我们也不能会
Total Number of Ordinary Shares on Issue	406.524.494
Total Ordinary Shares held by Top 20 Shareholders	230.530.530
Percentage of Total Issued Ordinary Shares hold by Top 20 Shareholders	56.71%
Source: Annual Financial Report for the year ended 30 June 2004.

The following table sets out the proposed capital structure of CommSoft after consolidation (Section 6.2), conversion and new capital raising (Section 6.3):

	WARDED BA
Ordinary Shares on Issue after Consolidation (383:1)	1.061.422	26.610.714
Ordinary Shares issued to noteholders	3.353.086	1.236.640
New Capital Raising	2.700.000	270,000
Total Number of Consolidated Ordinary Shares on Issue	7.114.508	28.117.354

6.5 HISTORICAL BALANCE SHEETS

CommSoft's historical Balance Sheets are set out below:

CommSole	Actual AS AC	Added AvAC	Pro-forma As At-
	30 june 2004	31 December 2004	3 December 2004
Current Assets
Cash Assets	137,443	46.009	246,009
Receivables		26.101	26.101
Other	275	242	242
Total Current Assets	137.718	72.352	272,352
Current Liabilities
Payables	24.040	22.000	22,000
Total Current Liabilities	24.040	22,000	22,000
Non-Current Liabilities
Interest Bearing Liabilities 131	1,492,748	1,492,748	186,108
Total Non-Current Liabilities	1,492.748	1,492,748	186,108
Total Liabilities	1,516.788	1.514.748	208,108
Net Assets (Liabilities)	(1.379.070)	(1.442.396)	64.244
Equity
Contributed Equity (Section 6.4)	26.610.714	26.610.714	28,117,354
Accumulated Losses	(27,989,784)	(28.053, 110)	(28,053,110)
Total Equity	(1,379,070)	(1.442.396)	64.244

Source:

Audited Financial Report for the year ended 30 June 2004 and reviewed Half-Year Report for the 6 months to 31 December 2004.

The Pro-forma Balance Sheet as at 31 December 2004 has been based on the reviewed Half Yearly Report for the 6 months to 31 December 2004. This has been adjusted for the conversion of the notes and the seed capital raising (Section 6.4).

Note: -1

In the course of the conversion of the notes, $1,236,640 of the interest-bearing liabilities ($1,492,748 as at 31 December 2004) was converted into shares. The balance ($256,108) was partly redeemed in cash $70,000, the balance of which will be settled from the proceeds of an issue to the public trefer 3.2). In order to fund the redemption, new capital of $270,000 was raised (Section 6.3).

6.6 HISTORICAL INCOME STATEMENTS

CommSoft's historical Income Statements are summarised below:

Commissile	Year Ended:30 June 200463	Yonashat E18December 2004
Revenue from Ordinary Activities	10.214	504
Operating Expenses
Administration Expenses	94.745
Consultancy Expense	63.155	30.000
Employee Expenses	32.283
Accounting and Audit Fees	28,526
Subscription Fees	19.630	21,016
Legal Expenses	10.170
Other	12.299	12,814
Total Operating Expenses	(260.808)	(63, 830)
Loss Before Interest and Tax ("EBIT")	(250.594)	(63.326)

Audited Financial Report for the year ended 30 June 2004 and reviewed Half-Year Report for the 6 months to 31 Source: December 2004.

$\overline{7}$ PROFILE OF THE MDSNEWS GROUP

$7.1$ HISTORY

Established in 1995, the MDSnews Group specialises in the development of software and quote vending for the financial markets. MDSnews Group is the owner of the intellectual property and trademarks relating to the Trade Tech Market Analyser ("Market Analyser"), a tool used by professional and retail share traders and asset managers to assist in identifying share market trading opportunities.

MDSnews Group's principal activities are the distribution and marketing of the Market Analyser throughout Australia and the provision of financial market data as well as real-time news and quote services to both retail and corporate subscribers to Market Analyser.

During the past 6 months, MDSnews Group has changed its business model towards putting a stronger emphasis on services offered to wholesale subscribers.

The current structure of MDSnews Group is shown in the following diagram:

MDSnews Group consists of three separate entities, MDSnews.Com Limited ("MDSnews.Com"), MDSnews Australia Pty Ltd ("MDSnews Australia") and the currently dormant company TTOL Pty Ltd ("TTOL"). MDSnews.Com holds a 100% interest in Market Data Services Pty Ltd and the currently dormant company MDSnews Solutions Pty Ltd ("MDSnews Solutions").

MDSnews Group currently employs approximately 20 staff, one executive and two nonexecutive Directors.

$7.2$ HISTORICAL BALANCE SHEETS

MDSnews Group's historical Balance Sheets are set out below:

MDSnews Group	AGAEto inne 2003	87320100e 2004	Rockhing ASIA31 December 2004
Current Assets
Cash Assets	1,283,030	1,259,767	798,522
Receivables	215,086	395,238	88,380
Other	87.924	106,668	103,920
Total Current Assets	1,586,040	1,761,673	990,822
Non-Current Assets
Receivables	141.198	141,869	(1, 290)
Property, Plant and Equipment	421,620	309,259	338,557
Related Party Assets			114,925
Other	209,091	218,396	277,607
Total Non-Current Assets	771,909	669,524	729,799
Total Assets	2,357,949	2,431,197	1,720,621
Current Liabilities
Payables	241,734	554,214	444,835
Interest Bearing Liabilities	73,554	1,904	275
Tax Liabilities	(45,041)	5.504	7,245
Provisions	72,817	97,822	101,963
Total Current Liabilities	343,064	659,444	554,318
Non-Current Liabilities
Interest Bearing Liabilities	336,627	67,654
ProvisionsTotal Non-Current Liabilities	2,945	12,479	24,325
	339,572	80,133	24,325
Total Liabilities	682,636	739,577	578,643
Net Assets	1,675,313	1,691,620	1,141,978
Equity
Contributed Equity	215,104	215,104	215,124
Retained Profits	1,460,209	1,476,516	926,854
Total Equity	1,675,313	1,691,620	1,141,978
Source Audited Financial Reports for the vears ended 30 lyne 2003 and 2004 and reviewed Half-Year Reports for the 6

Audited Financial Reports for the years ended 30 June 2003 and 2004 and reviewed Half-Year Reports for the 6 months to 31 December 2004.

Note:

The consolidated balances for the years ended 30 June 2003 and 2004 includes MDSnews.Com and MDSnews Australia only. This is not a legal consolidation (refer current structure at Section 7.1).

The balance Sheet for the 6 months to 31 December 2004 is a pro-forma balance sheet only. It includes the wholeMDSnews Group trefer current structure at Section 7.1) after adjusting for related party transactions and inte 2004 and have not contributed any profit or losses to MDSnews Group's results.

7.3 HISTORICAL INCOME STATEMENTS

MDSnews Group's historical Income Statements are summarised below:

MDSnews Group	Yean Bridget30 June 2003	Year and the30 June 2004	$6$ months $16.31$December 2004
Total Revenue	3.989,520	3.185.526	1,598,102
Expenses
Employee Expenses	1,113,408	1,222,941	862.293
Consultancy Fees	751,544	330,968	318.399
Registry Costs	419,480	478,285	316.420
Communication Costs	246,788	478,284	150,097
Occupancy Expenses	366,880	221,622	148,481
Other	611.182	309.299	338.960
Total Expenses	3,509,282	3.041.399	2,134,650
Earnings Before Interest, Taxes,Depreciation and Amortisation ("EBITDA")	480,238	144,127	(536, 548)
Depreciation and Amortisation	{139,332}	(104,035)	(42, 759)
Earnings Before Interest and Taxes ("EBIT")	340,906	40,092	(579, 307)
Net Borrowing Income/(Expense)	(25.938)	42.928	27.946
Profit/(Loss) Before Tax	314,968	83,020	(551, 361)
Income Tax (Expense)/Benefit	{112,099}	(66, 713)	4.400
Net Profit/(Loss) After Tax	202,869	16,307	(546, 961)

Source: Audited Financial Reports for the year ended 30 June 2003 and 2004 and reviewed Half-Year Reports for the 6 months to 31 December 2004.

Note: This is not a legal consolidation (refer current structure at Section 7.1). MDSnews Solution and TTOL have been dormant during the 6 months to 31 December 2004 and have not contributed any profits and losses to MDSnews Group's results.

8 PRO-FORMA GROUP'S CAPITAL STRUCTURE

The following table sets out the Pro-forma Group's capital structure post Transaction:

Russian Requirement of the Contract of the Contract of the Contract of the Contract of the Contract of the Con	WASHINGTON	RATHERS
Total Number of CommSoft Consolidated Shares on Issuepre Transaction	64	7.114.508	14.6%
Acquisition of MDSnews Group:
Number of Consolidated Share Issued to MDSnews Group'sShareholders		41.750.000	85.4%
Total Number of Consolidated Shares on Issue post
Transaction		48.864.508	100.0%

SELECTED VALUATION APPROACHES Q

Valuation methodologies commonly used for valuing assets and businesses are summarised at Appendix A.

In accordance with our adopted basis of evaluation set out in Section 5.2 we have considered the fairness of the Transaction by comparing the value of the consideration paid by CommSoft (i.e. 41.75 million CommSoft consolidated shares) to the value of the assets being acquired (being 14.6% of MDSnews Group).

Our selected valuation methodologies are set out below.

$9.1$ COMMSOFT

Given that the majority of CommSoft's assets consist of cash as at 31 December 2004 we consider the Net Tangible Asset Value on a Going Concern Basis ("NTA") methodology to be the most appropriate for valuing CommSoft. In addition, CommSoft has been suspended from ASX trading and has not carried on a business since March 2003.

$9.2$ MDSNEWS GROUP

Given the nature of MDSnews Group's business and the fact that MDSnews Group is in the process of changing its business model (Section 7.1) we consider the discounted cashflow methodology to be the most appropriate for valuing MDSnews Group. However, as long term future cashflows have not been provided for the purpose of this report, we have selected both the Future Maintainable Earnings ("FME") and the NTA methodologies as the basis for our valuation.

We have adopted the FME methodology for the following reasons:

• MDSnews Group's business has been operating for a number of years;
• MDSnews Group's business would be considered to have a non-finite life;
• Reliable historical results are available: and
• Comparable companies are available within the market.

As MDSnews Group is currently changing the focus of its business, we have also considered the NTA Methodology as a comparison to the FME valuation. The NTA methodology is usually appropriate where the majority of assets consist of cash or other capital assets or the business is under performing. It is also commonly used as a secondary valuation methodology with FME and DCF valuations.

9.3 SURPLUS ASSETS

Companies may hold surplus assets that are not used in the normal operating activities. Management have advised that MDSnews Group holds surplus cash amounting to approximately $500,000 as at the date of this report.

$9.4$ FUTURE EVENTS

The businesses of CommSoft and MDSnews Group to be considered in both valuations are those that which exist as at the date of this Report. Future growth potential which may result from new activities, business initiatives and the like are not within the scope of our valuations.

However, future growth which arises from existing business has been considered in the FME valuation of MDSnews Group by the selection of the capitalisation multiple.

$9.5$ VALUATION OF POTENTIAL SYNERGIES

We assess market value by reference to a likely sale transaction assuming a "willing buyer, willing seller" scenario. This approach does not take into account the particular circumstances of any specific transaction.

We do not consider any premium in value attached to the strategic benefits or gains from synergies that may be inherent in an acquisition by a specific party, eg. an industry competitor.

9.6 VALUATION OF CONSIDERATION OFFERED

CommSoft has offered 41.75 million shares in CommSoft to MDSnews Group Shareholders. The details of the consideration are included in the Notice of Meeting and are summarised in Section 3 of this Report.

10 VALUATION OF COMMSOFT

10.1 NET TANGIBLE ASSET VALUATION OF COMMSOFT

$10.1.1$ PRO FORMA NET TANGIBLE ASSETS

As detailed in Section 9.1 we have valued shares in CommSoft based on the NTA approach. The audited balance sheet as at 31 December 2004 does not take the conversion of the notes into account (Section 6.3). We have therefore based our valuation on net tangible assets of the pro forma balance sheet (Section 6.5). The pro forma net tangible asset position of CommSoft as at 31 December 2004 is provided below.

246.009
26.101
242
272.352
22,000
186.108
208,108
64.244

the notes and new capital raising (Section 6.5).

10.1.2 NTA VALUATION SUMMARY OF COMMSOFT

The NTA Valuation of CommSoft at the date of this report is summarised in the table below:

mmson and the community of the community of the community of the community of the community of the community of the community of the community of the community of the community of the community of the community of the com
NTA Value ($)	10 L L	-64.244
Total Number of Shares after conversion and new capital Raising	-6.4	7.114.508
NTA per Share ($)		0.009

10.2 ASX MARKET PRICES FOR COMMSOFT SHARES

To provide a comparison to the valuation of CommSoft's in Section 10.1, we have also assessed the market price for CommSoft shares.

$10.2.1$ 12 MONTH PRICE/VOLUME HISTORY

As outlined in Section 6.1, CommSoft shares have been suspended from trading since 13 March 2003. The following chart provides a summary of the monthly weighted average trading prices and volumes in CommSoft shares over the 12 month period from 14 March 2002 to 13 March 2003.

Source: Bioomberg

The daily price of CommSoft shares from 14 March 2002 to 13 March 2003 ranged from a high of $0.54 on 5 April 2002 to a low of $0.02 on the two days before suspension (i.e. 12 and 13 March 2003).

$10.2.2$ ASX MARKET PRICE VALUATION

We believe that the current value of CommSoft shares is below its market price as at the date of suspension.

10.3 VALUATION SUMMARY OF COMMSOFT

We have assessed that the market value of CommSoft shares is $64,244. In arriving at this valuation we have considered the following:

• The NTA valuation is based on the market value of net assets. We have not included a premium to take account of CommSoft's listed status, because it is currently suspended from trading on the ASX and NZX and accordingly the shares lack trading liquidity.
• Shares in CommSoft have been suspended from trading since 13 March 2003. Therefore, the ASX market price for CommSoft as at 13 March 2003 may not be a true reflection of the company's current value.

$11$ VALUATION OF MDSNEWS GROUP

In accordance with our valuation approach set out in Section 9.2 we have selected both the FME and NTA methodologies as our methods for the valuation of MDSnews Group.

OVERVIEW OF FME METHODOLOGY $11.1$

The FME methodology requires consideration of the following factors:

$11.1.1$ DETERMINATION OF AN APPROPRIATE LEVEL OF MAINTAINABLE EARNINGS

The determination of an appropriate level of FME requires assessment of:

• The historical and forecast operating results;
• Items of income and expenditure, that are non recurring, not on commercial terms, or related to surplus assets; and
• Any other known factors likely to affect the future operating performance $\bullet$ of the business existing at the valuation date.

SELECTION OF AN APPROPRIATE CAPITALISATION MULTIPLE $11.1.2$

In deciding what multiple range to use, assessment must be made of:

• Comparable companies:
• The extent and nature of competition in the industry; $\blacksquare$
• Quality of earnings and future growth opportunities; and
• Relative risk compared to other investments.

11.2 DETERMINATION OF FME

The FME valuation of MDSnews Group has been based on EBITDA. In determining the estimated FME, we considered actual results for the vear ended 30 lune 2004, for the 6 months to 31 December 2004 and forecasts for the 6 months ending 30 June 2005.

To determine FME, historical and forecast results need to be adjusted for items of revenue or expenditure of an abnormal or non-recurring nature (which are not considered to be sustainable in the future or part of the ongoing business).

		Section Adual Year anded30 June 2002,S	Actual 6 months to Forecast 6 months31 December 2004	to 30 June 2005
EBITDA		144.127	(536, 548)	106,666
Adjustments:
Consulting Fees	11.2.1	181.818	136,364
CEO Remuneration	11.2.2	(150.000)	(75,000)	(75,000)
Payroll Tax	11.2.3	(39.996)	165,053	(3.383)
Occupancy Costs	11.2.4		36.802	[8, 40]
Programmer Costs	11.2.5	164.135
Repairs	11.2.6			15,500
Adjusted Earnings		300.084	(273, 329)	62.184
Annualised Adjusted Earnings				124,368
Weighting				100%
Weighted FME				124.368

Note: EBITDA for the year ended 30 June 2004 is based on audited financial reports for MDSnews.Com and MDSnews Australia. This is not a legal consolidation (refer current structure at Section 7.1).

EBITDA for the 6 months to 31 December 2004 is based on reviewed half-year reports for MDSnews.Com and MDSnews Australia. The EBITDA forecasts for the 6 months to 30 June 2005 include unaudited actual results for the 4 months ended 30 April 2005.

Following our review of historical and forecast financial information and discussions with management of MDSnews Group we have determined that the following normalisation adjustments should be made in assessing the FME of MDSnews Group:

$11.2.1$ CONSULTING FEES

Management have advised that during the year ended 30 June 2004 and the 6 months to 31 December 2004, MDSnews Group's Chief Executive Officer ("CEO") has provided non-recurring consulting services relating to the development of new technologies to Global Equity Management Pty Ltd. Expenses relating to these consulting services have been excluded as normalisation adjustments for the relevant years.

$11.2.2$ CEO REMUNERATION

Excluding the consulting fees noted above, the CEO of MDSnews Group did not or will not receive remuneration for the years ended 30 June 2004 to 2005. An estimated market salary amounting to $12,500 per month has been included as a normalisation adjustment for each of the three years.

11.2.3 PAYROLL TAX

Accrued prior years' payroll tax was paid in December 2004. This amount has been reallocated to the relevant financial vears.

11.2.4 OCCUPANCY COSTS

MDSnews Group moved from offices in Bridge Street, Sydney to O'Connell Street, Sydney during 2005. Following the relocation, rent continued to be paid for Bridge Street for a short period. Occupancy costs for the ceased office location in Bridge Street have been excluded as normalisation adjustments.

11.2.5 PROGRAMMER COSTS

MDSnews Group expensed the salaries and on-costs of 5 staff members employed by Market Data Services Pty Ltd during the 2003 and 2004 years to redevelop its software. Management have advised that these are one-off costs that will not be incurred in the future and we have therefore excluded these costs from the FMF

11.2.6 REPAIRS

Management have advised that expenses in relation to electrical repairs in the new premises in O'Connell Street, Sydney, during 2005 are one-off costs that will not be incurred in the future. We have therefore excluded these costs from the FME.

$11.3$ APPLIED WEIGHTINGS

In determining the FME for MDSnews Group we have applied weightings to the adjusted EBITDA and have taken into account the following factors:

• We have been provided with reviewed half-year reports for MDSnew.Com and MDSnews Australia for the 6 months to 31 December 2004 and with unaudited management accounts for the 4 months to 30 April 2005 which indicate that MDSnews Group's results are broadly in line with its forecast results for the 2 months to 30 June 2005.
• Management have advised that losses generated during the 6 months to 31 December 2004 are primarily due to extensive advertising and consulting expenses in relation to change to its business model (Section 7.1). Further, MDSnews Group has scaled back labour, rent and advertising expenses over the past 6 months.
• We recognise that the earnings for the 6 months to 30 June 2005 are not subject to review or audit, however, given the current trading results and the change of business model we believe a 100% weighting should be applied to results for the 6 months to 30 June 2005 as this reflects the Directors' best estimate of results for the business in its current market position.

11.4 BASIS OF ASSUMPTIONS OF FORECAST

The Directors of MDSnews Group are responsible for the preparation and presentation of the MDSnews Group's forecasts for the 2 months to 30 June 2005 ("Forecasts"). Our procedures have consisted primarily of enquiry and comparison and such other analytical review procedures we considered necessary to ensure the assumptions adopted provide a reasonable basis for the Forecasts. These procedures included discussions with MDSnews Group's management.

The Forecasts provided to BDO Corporate Finance are based on assumptions about events and circumstances that have not yet occurred. Accordingly, we cannot provide any assurance that the Forecasts will be representative of results that will actually be achieved. BDO Corporate Finance disclaims any possible liability in respect of the Forecasts.

The Directors have approved the Forecasts. The Forecasts are also supported by specific assumptions. The major assumptions underlying the Forecasts are set out below:

• Retail subscribers are expected to grow from approximately 3,500 subscribers as at 30 June 2004 to 3,740 subscribers by 30 June 2005.
• The churn rate of existing retail subscribers is expected to be immaterial. Lost subscribers are expected to be replaced immediately.

Our review of the Forecasts is substantially less in scope than an audit examination conducted in accordance with Australian Auditing and Assurance Standards. A review of this nature provides less assurance than an audit. We have not performed an audit and we do not express an audit opinion on the Forecasts.

11.5 CAPITALISATION MULTIPLE

11.5.1 SELECTION OF THE MULTIPLE

The selection of an appropriate earnings multiple to apply to the FME is ultimately a matter of judgement, reflecting both expected returns from investments in the relevant industry and the expected risks in achieving those returns.

In selecting the appropriate multiple, we considered companies listed on the ASX in Australia with operations in the financial information services and analytical software sector, and companies that are considered to face similar market risk as the MDSnews Group.

11.5.2 LISTED COMPARABLE COMPANIES

The following table sets out the applicable comparable companies.

Ulikeamama		在竹枝等的MORTHERROOM	SERVERS
Iress Market Technology Limited		428.083	13.52	E3 59
IWL Ltd	11.	112.162	7.40	9 60
Tomato Technologies Ltd	iii.	71.454	5.48	814
Average.			8.80	10.44

Source: Bloomberg

Notes:

• IWE Ltd and Tomato Technologies Etd's 2004 EBITDA Multiples have been calculated as at 30 June $\mathbf{a}$ 2004. Iress Market Technology Limited's 2004 EBITDA Multiple has been calculated as at 31 December 2004
• Current EBITDA Multiples have been calculated based on EBITDA as reported in the 2004 financial Ъì statements and enterprise value as at 23 May 2005.
• Forecast EBITDA Multiples are not available for any of the comparable companies. c)

Details of the comparable companies have been provided below:

• $\mathbf{i}$ Iress Market Technology Limited provides real-time information services to businesses that specialise in the equity, equity options and future information markets in Australia and New Zealand. The Group supplies a range of pricing data, charting, news and equity and equity derivatives and also offers real-time trading tools, including a domestic order routing product and financial planning.
• IWL Limited is a financial information services company. The Group provides ii. online brokerage, develops and distributes financial advisory and data software, and provides financial research and market data products for use primarily by financial advisers.
• Tomato Technologies Limited is involved in the research, development and iii distribution of software products and solutions which provide stock market analysis and portfolio management. The Company also offers a financial website subscription services that disseminates ASX and related market prices.

11.5.3 ADOPTED MULTIPLE

Based on the above, we have selected an EBITDA multiple of 6 to 7 after consideration of the following factors:

• The range of current EBITDA multiples observed in comparable entities (due to the unavailability of forecast multiples for all comparable companies); and
• Relativity of MDSnews Group to the identified comparables in terms of $\blacksquare$ size, markets risks and business segmentations.

11.6 FME VALUATION OF AN EQUIVALENT LISTED COMPANY

By applying the capitalisation multiple range determined at Section 11.5.3 to the FME determined at Section 11.2, the following values for the listed equivalent of MDSnews Group are derived:

	Section	BEER AND REALReading
Future Maintainable Earnings	[1.2	124.368	124.368
Capitalisation Multiple	-1.5.3	6.0	7.0
Listed Equivalent Enterprise Value		746,208	870,576
Less: Net Debt	7.2
Listed Equivalent Equity Value		746.208	870,576

11.7 FME VALUATION OF MDSNEWS GROUP

The value of the listed equivalent of MDSnews Group was determined at Section 11.6. However, MDSnews Group is an unlisted private company. Shares in unlisted entities trade at discounts to their listed counterparts due to a lack of liquidity in the unlisted entity's securities.

We have examined such discounts in the following markets; Australia, the United Kingdom ("UK") and the United States ("US"). This evidence is presented below:

$11.7.1$ AUSTRALIAN EVIDENCE

Wayne Lonergan1 refers to the discounts for the non-negotiability of shares not listed on exchanges. Lonergan sites evidence from Australian and international court decisions and concludes that "a reasonable discount for non-negotiability would generally be in the range of 10 to 25 per cent."

11.7.2 UNITED KINGDOM EVIDENCE

BDO Stoy Hayward (UK) publishes a quarterly Private Company Price Index ("PCPI") which compares the Price Earnings multiples ("PE Multiple") of private companies to the PE Multiple of listed entities.

The PCPI over the past three years has ranged between 8% and 46%, indicating that private companies trade at such a discount range to comparable listed entities.

The transactions included in this analysis generally involve the acquisition of 100% of the unlisted company. Therefore the PCPI inherently includes a control premium.

11.7.3 UNITED STATES EVIDENCE

We have sourced US private and listed transaction data from Mergerstat, who supply global information on mergers and acquisitions, to analyse the relationship between private and listed company PEM in the US Market. Mergerstat statistics calculate the nine-year average private company discount to be 22%.

11.7.4 CONCLUSION

Having considered the above markets, we have determined that a discount adjustment of 20% should be applied to the value of the listed equivalent of MDSnews Group.

Wayne Lonergan, The Valuation of Businesses, Shares and Other Equity, 3rd Edition, page 479 $^\circ$

11.7.5 FME VALUATION SUMMARY

Based on the value of a listed company determined at Section 11.6 and an appropriate private company discount at Section 11.7.4, 100% of the equity value of MDSnews Group is determined as follows.

Listed Equivalent Equity Value	11 6	746 208	870,576
Less: 20% Private Company Discount	11.7.4	(149.242)	(174,115)
MDSnews Group's Equity Value		596.966	696,461
Add: Surplus Cash	Q 3	500.000	500.000
100% of MDSnews Group's Equity Value		1.096.966	1.196.461

11.8 NTA VALUATION OF MDSNEWS GROUP

11.8.1 PRO FORMA BALANCE SHEET

As discussed in Section 9.2 we have also valued shares in MDSnews Group based on the NTA approach as a comparison. The pro forma net tangible asset position of MDSnews Group as at 31 December 2004 (Section 7.2) is provided below:

Shews Group	Experience Pro-forma As At an31 December 2004
Total Tangible Assets	1,720,621
Less: Total Liabilities	(578, 643)
Net Tangible Assets	1,141.978
Dro-forma Financial Cratement as at 21 December 2004Caussa.

Pro-forma Financial Statement as at 31 December 2004. Source:

The pro-forma balance sheet as at 31 December 2004 includes the whole MDSnews Group after Note: inter-group adjustments and related party eliminations. This is not a legal consolidation (refer current structure at Section 7.1).

11.8.2 NTA VALUATION SUMMARY

The NTA Valuation of MDSnews Group at the date of this report is summarised in the table below:

Snews Group	RADE TRAS
Listed Equivalent NTA	11.8.1	1,141,978
Less: Surplus Cash	-9.3	500,000
		641,978
Less: 20% Private Company Discount	11.7.4	(128, 396)
		513,582
Add: Surplus Cash	9.3	500,000
100% of MDSnews Group's Equity Value		1,013,582

11.9 VALUATION SUMMARY

11.9.1 COMPARISON OF VALUATIONS

The table below compares the valuation results of MDSnews Group's Equity under a FME and NTA methodology:

FME Valuation	1175	1.096.966	1,196,461
- NTA Valuation	1 E A 2	1.013.582	1,013,582

11.9.2 ADOPTED VALUATION RANGE

The adopted value of 100% of MDSnews Group's equity as at the date of the Report is in the following range:

Adopted Valuation Range
1,013.582
196.46 1

In determining the above range we have placed greater reliance on both methodologies taking into consideration:

• the FME methodology is based on a limited trading history since the × change in business model and accordingly uncertainty exists as to its sustainability; and
• the NTA methodology excludes the value of any intangible assets $\blacksquare$ including business goodwill and tax effect accounting entries and may therefore undervalue MDSnews Group.

11.9.3 VALUATION OF SHARES BEING ACOUIRED BY COMMSOFT

As noted in Section 8, CommSoft Shareholders will own approximately 14.6% of the post-Transaction group. Therefore the value of the MDSnews Group shares being acquired by CommSoft Shareholders is as follows:

100% of MDSnews Group's Equity Value	19 I	1.013.582	1.196.461
14.6% of MDSnews Group's Equity Value		147.982	174.683

12 IS THE PROPOSAL FAIR?

$12.1$ COMPARISON OF VALUE OF MDSNEWS GROUP TO CONSIDERATION OFFERED

Under the Share Purchase Agreement, CommSoft is issuing 41.75 million new shares to MDSnews Group Shareholders (i.e. approximately 85.4% of the total shares issued after the Transaction) as consideration for the acquisition of fully paid ordinary shares in the MDSnews Group (Section 8). The consideration offered is outlined below:

Consideration Offered (85.4%)	54.864
- Value of CommSoft Shares -	64.244
$\sim$ Section $\sim$ $\sim$ $\sim$ $\sim$ $\sim$ $\sim$ $\sim$ $\sim$

A comparison of the value derived for MDSnews Group's shares to consideration offered by CommSoft is provided below:

Valuation of MDSnews Group Shares Acquired	-193	148.000	175.000
Consideration Offered		55 OOO	- h5.00b -

13 IS THE PROPOSAL REASONABLE?

In accordance with our basis of evaluation (Section 5.2) we have investigated other significant factors to which Shareholders might give consideration prior to approving the Transaction.

13.1 ADVANTAGES OF ACCEPTING THE TRANSACTION

POTENTIAL INCREASE IN MARKET CAPITALISATION AND LIQUIDITY OF SHARES 13.1.1

If the Transaction is approved, CommSoft may apply for re-listing. Based on our valuations, but ignoring the potential value of any synergies between CommSoft and MDSnews Group, the estimated market value of the combined Group (CommSoft and MDSnews Group) is approximately $1.2 to $1.3 million post Transaction. Such an increase in market value represents an advantage to Shareholders as it may lead to increased interest in the stock and improved liquidity in the shares on the ASX.

INTRODUCTION OF NEW OPERATING ACTIVITIES 13.1.2

The merger with MDSnews Group would allow CommSoft to commence its operating activities and to generate recurring income. This is considered to be an advantage for Shareholders as CommSoft currently receives interest income only, while incurring the expenses of being a public company.

13.1.3 INCREASED NET TANGIBLE ASSET BACKING

Approval of the Transaction would allow CommSoft shares to recommence ASX trading and thus to raise monies under the Prospectus Capital Raising (Section 3). This, together with the restart of CommSoft's operating activities, may allow CommSoft to increase the level of recurring income and to reduce debt. The net tangible asset backing per consolidated share post Transaction is estimated to increase from approximately $0.01 to $0.02. This is detailed in the following graph:

13.1.4 POTENTIAL INCREASE IN FUTURE DISTRIBUTION PER SHARE AND PAYOUT RATIO

CommSoft currently does not generate profits and has not paid dividends since its ASX listing in 2000. If the Proposal is accepted, Shareholders may receive dividend distributions resulting from the combined Group's forecast profits. A potential increase in future distributions represents an advantage to Shareholders.

13.2 DISADVANTAGES OF ACCEPTING THE TRANSACTION

$13.2.1$ DILUTION OF SHAREHOLDING AND LOSS OF CONTROL

If the Transaction is accepted, 41.75 million additional consolidated shares will be issued to MDSnews Group Shareholders. This represents a disadvantage to CommSoft Shareholders, as their current interest in CommSoft will be diluted. However, this is not considered to be a significant disadvantage because CommSoft's shares are not currently listed and therefore have limited liquidity and value.

13.3 POSITION OF SHAREHOLDERS IF TRANSACTION IS NOT APPROVED

If the Transaction does not proceed, CommSoft will remain suspended on the ASX and will unlikely be able to continue any further business operations without the continuing support of its shareholders.

SOURCES OF INFORMATION 14

BDO Corporate Finance has referred to on the following information for the purposes of preparing this report:

• Heads of Agreement dated December 2004;
• Share Purchase Agreement dated 13 May 2005;
• Notice of Meeting and Explanatory Memorandum;
• CommSoft Annual Report for the year ended 30 June 2004:
• CommSoft Half Year Financial Report for the 6 months to 31 December 2004;
• MDSnews.Com Limited Consolidated Annual Report for the years ended 30 June 2002 to 2004;
• MDSnews Australia Pty Limited Annual Report for the years ended 30 June 2002 to $2004:$
• MDSnews.Com Limited reviewed Half-Year Financial Report for the 6 months to 31 December 2004:
• MDSnews Australia Pty Limited reviewed Half-Year Financial Report for the 6 months to 31 December 2004:
• MDSnews.Com Limited Management Accounts for the 6 months to 31 December 2004:
• MDSnews Australia Pty Limited Management Accounts for the 6 months to 31 December 2004·
• Market Date Services Pty Ltd Management Accounts for the 6 months to 31 December 2004:
• Access to KPMG review papers for the year ended 30 June 2004 and the 6 months to 31 December 2004;
• Normalisation Adjustments on Management Accounts for MDSnews Group for the years ended 30 June 2003 and 2004 and the 6 months to 31 December 2004;
• Consolidated Management Accounts for the MDSnews Group for the 4 months to 30 April 2005:
• Consolidated Forecasts for the MDSnews Group for the 2 months to 30 June 2005:
• Key assumptions regarding revenue forecasts for the 4 months to 30 June 2005;
• BDO Stoy Hayward Private Company Price Index data from 2000 to 2004;
• Lonergan, Wayne, "The Valuation of Businesses, Shares and Other Equity", 3rd Edition;
• IBISWorld Ptv Ltd:
• Bloomberg:
• Information available in the public domain: and
• Discussions with Directors and Management of CommSoft and MDSnews Group.

15 INDEPENDENCE

BDO Corporate Finance is entitled to receive a fee of approximately $35,000 (excluding GST and reimbursement of out of pocket expenses) for completion of this Report. Except for this fee, BDO Corporate Finance has not received and will not receive any pecuniary or other benefit whether direct or indirect in connection with the preparation of this Report.

BDO Corporate Finance is wholly owned by BDO, a member of BDO International. Prior to accepting this engagement BDO Corporate Finance considered its independence with respect to CommSoft and any of their respective associates with reference to the ASIC Practice Note 42 "Independence of Expert's Reports". In BDO Corporate Finance's opinion it is independent of CommSoft and its respective associates.

BDO Corporate Finance and BDO do not have at the date of the Report, and have not had within the previous two years, any shareholding in or other relationship with CommSoft or any of its respective associates.

A draft of this report was provided to CommSoft and its advisors for confirmation of the factual accuracy of its contents. No significant changes were made to this report as a result of this review

16 OUALIFICATIONS

BDO Corporate Finance has extensive experience in the provision of corporate finance advice, particularly in respect of takeovers, mergers and acquisitions.

BDO Corporate Finance Pty Limited holds an Australian Financial Services Licence issued by the Australian Securities and Investment Commission for giving expert reports pursuant to the Listing Rules of the ASX and the Corporations Act.

The persons specifically involved in preparing and reviewing this report were Ralph Goodman and Sebastian Stevens of BDO Corporate Finance. They have significant experience in the preparation of independent expert reports, valuations and merger and acquisitions advice across a wide range of industries in Australia.

DISCLAIMERS AND CONSENTS 17

• 17.1 This Report has been prepared at the request of CommSoft for inclusion in the Notice of Meeting which will be sent to all CommSoft Shareholders. CommSoft engaged BDO Corporate Finance to prepare an independent expert's report to consider the Transaction on behalf of shareholders.
• 17.2 BDO Corporate Finance hereby consents to this Report being included the above Explanatory Memorandum. Apart from such use, neither the whole nor any part of this Report, nor any reference thereto may be included in or with, or attached to any document. circular resolution, statement or letter without the prior written consent of BDO Corporate Finance.
• 17.3 BDO Corporate Finance takes no responsibility for the contents of the Explanatory Memorandum other than this Report.
• 17.4 BDO Corporate Finance has not independently verified the information and explanations supplied to us, nor has it conducted anything in the nature of an audit of MDSnews Group or CommSoft. However, we have no reason to believe that any of the information or explanations so supplied are false or that material information has been withheld.
• 17.5 With respect to taxation implications it is recommended that individual Shareholders obtain their own taxation advice, in respect of the Transaction, tailored to their own particular circumstances. Furthermore, the advice provided in this Report does not constitute legal or taxation advice to the Shareholder of CommSoft, MDSnews Group or any other party.

The taxation implications addressed are based on the Income Tax Assessment Act 1997 (Cth) (as amended), the Income Tax Assessment Act 1936 (Cth) (as amended), and the established interpretations of those Acts at the date of this Report.

17.6 The statements and opinions included in this Report are given in good faith and in the belief that they are not false, misleading or incomplete.

The terms of this engagement are such that BDO Corporate Finance has no obligation to update this Report for events occurring subsequent to the date of this Report.

18 INDEMNITY

18.1 CommSoft has provided an indemnity to BDO Corporate Finance for any claims arising out of any mis-statement or omission in any material or information provided to it in the preparation of this Report.

Yours faithfully BDO CORPORATE FINANCE PTY LIMITED

`{``````{``{}

RALPH GOODMAN Director

SEBASTIAN STEVENS Director

VALUATION METHODOLOGIES A

Methodologies commonly used for valuing assets and businesses are as follows:

$A.1$ DISCOUNTED FUTURE CASH FLOWS ("DCF METHODOLOGY")

DCF valuations are applicable to all businesses and specifically ones that demonstrate the following characteristics:

• Limited lives
• Current growth
• Start-up phase
• Irregular cashflows

The DCF methodology is based on the generally accepted theory that the value of an asset or business depends on its future net cash flows. Future cash flows are discounted to their present value at an appropriate discount rate. This discount rate represents an opportunity cost of capital reflecting the expected rate of return which investors can obtain from investments having equivalent risks.

A terminal value for the asset or business is calculated at the end of the future cash flow period. This is also discounted to its present value using the appropriate discount rate.

$A.2$ Capitalisation of Future Maintainable Earnings

The FME methodology is particularly applicable to businesses with relatively steady growth histories and forecast, regular capital expenditure requirements and non-finite lives.

This method places a value on the business by estimating the likely FME. The FME is then capitalised at an appropriate rate which reflects:

• Business outlook.
• Business risk.
• Investor expectations,
• Future growth prospects and $\bullet$
• Other entity specific factors. $\bullet$

This approach relies on the availability and analysis of comparable market data.

The FME used in the valuation can be based on net profit after tax or alternatives to this such as EBIT or EBITDA. The capitalisation rate or earnings multiple is adjusted to reflect which FME base is being used.

$A.3$ Net Tangible Asset Value on a Going Concern Basis

The NTA methodology is usually appropriate where the majority of assets consist of cash or passive investments, or the business is under performing. All assets and liabilities of the entity are valued at market value under this alternative and this combined market value forms the basis for the entity's valuation.

Often the FME and DCF methodologies are used in valuing assets forming part of the overall NTA valuation.

$A.4$ Future Maintainable Dividends ("FMD Methodology")

The FMD Methodology applies particularly to minority holdings in private and unlisted public companies. This methodology places a value on a company based on expected future dividend streams.

The FMD Methodology is similar to the FME Methodology and requires an estimation of the future maintainable dividends, a required rate of return and expected rate of dividend growth.

Ouoted Market Price Basis $A.5$

Another alternative valuation approach that can be used in conjunction with (or as a replacement for) any of the above methods is the quoted market price of listed securities. Where there is a ready market for securities such as the ASX, through which securities are traded, recent prices at which securities are bought and sold can be taken as the market value per security. Such market value includes all factors and influences that impact upon the ASX. The use of ASX pricing is more relevant where a security displays regular high volume trading, creating a "deep" market in that security.

Section F - Proxy Form

Proxy

CommSoft Group Limited (the Company) ABN 90 091 744 884

I/We (name of member)

of

Shareholder Reference Number/Holder Identification Number

being a member of CommSoft Group Limited appoint:

(Name of the proxy, or name of the office held by the proxy) (Address of the proxy)

or failing him or her, the chairman of the meeting as my proxy vote on my behalf at the General Meeting of the Company to be held on 20 July 2005 and any adjournment of that meeting.

If 2 proxies are being appointed, the proportion of the voting rights that this proxy is authorised to exercise is %. (The Company will supply an additional form on request.)

Proxy Instructions:

The Chairman will vote in favour of each resolution in which he receives undirected proxies.

If you do not wish to direct your proxy how to vote, please place a mark in the box.

П

By marking this box, you acknowledge that the Chairman may exercise your proxy even if he has an interest in the outcome of the resolution and votes cast by him other than as proxy holder will be disregarded because of that interest.

If you wish to instruct your proxy how to vote, insert $X$ in the appropriate column against each item of business set out below. Otherwise your proxy may vote as he/she thinks fit or abstain from voting.

I/We instruct my/our proxy vote as follows:

	For	Against Abstain
Resolution 1
1. Change of Company name	П

		For	Against	Abstain
	Resolution 2
2.	Consolidation of Company's IssuedCapital	$\Box$	П
	Resolution 3
3.	Significant change to activities	П	Π
	Resolution 4
4.	Issue of Consolidated Shares to theMDSnews Group Shareholders	П	O
	Resolution 5
5.	Issue of Consolidated Shares pursuantto the Prospectus	Π	П
	Resolution 6
6.	Approval of issue of ConsolidatedShares to Old Noteholders	П	П
	Resolution 7
7.	Approval of issue of ConsolidatedShares to Coyne Holdings	$\Box$	□	П
	Resolution 8
8.	Approval of issue of ConsolidatedShares to New Noteholders	П	П
	Resolution 9
9.	Approval of issue of ConsolidatedShares to Barrack Capital	П	l l
	Resolution 10
10.	Issue of Consolidated Shares pursuantto Employee Share Option Plan	П	П
	Resolution 11
11.	Appointment of Leon Hinde as a Director	П	Π
	Resolution 12
12.	Appointment of Barry Littler as a Director	П	O
	Resolution 13
13.	Approval of issue of ConsolidatedShares to Executive Directors pursuantto an Employee Incentive Scheme	П	П
	Resolution 14
14.	Issue of Options to Leon Hinde	Ω	Ω

		For	Against	Abstain
	Resolution 15
15.	Issue of Options to Barry Littler	П
	Resolution 16
16.	Issue of Options to Bruce Ind	□	П
	Resolution 17
17.	Issue of Options to David Whitfield	□
	Resolution 18
18.	Issue of Options to Jeff Zulman	П
	Resolution 19
19.	Increase in Directors' Fees

Where this Proxy Form is signed under power of attorney, the Attorney(s) declare(s) that he/she/they has/have not received any notice of the revocation of such power.

Dated:

Signed****

Name (printed): Capacity ****

Name (printed): Capacity ****

****

• If joint holders, each must sign.
• Companies must execute:
  • under seal; or
  • by 2 Directors signing this Proxy Form; or $\bullet$
  • by a Director and a company secretary signing this Proxy Form; or
  • (where it is a proprietary company where the sole director is also the sole company secretary) by that director signing this Proxy Form; or
  • by authorised officer; or
  • by attorney.

Please forward your proxy to the Company, c/- MDSnews.com, Level 21, 1 O'Connell Street, Sydney NSW 2000 or by fax on 02 9251 6244