Rights Issue Offer Information Statement

Transcription

1 Rights Issue Offer Information Statement DMX Corporation Limited ACN This Rights Issue Offer Information Statement is dated 3 September 2014 and is for a non-renounceable pro rata offer to Eligible Shareholders of five (5) New Shares for every one (1) Existing Share held by Eligible Shareholders on the Record Date (subject to a pro rata scale back) at an issue price of 96.7 cents per New Share to raise a maximum of $10,000, IMPORTANT INFORMATION: This important document should be read in its entirety. If you do not understand it, you should consult your professional advisors. This document is not a prospectus and has a lower level of disclosure than that which would be required under a prospectus. The Offer is not underwritten. This Rights Issue Offer Information Statement was lodged with ASIC on 3 September 2014 by DMX Corporation. Roger Collison Executive Chairman This Rights Issue Offer Information Statement provides important information about the Company. You should read the entire document including the Entitlement and Acceptance Form. If you have any questions about the New Shares being offered under this Rights Issue Offer Information Statement, or any other matter relating to an investment in the Company, you should consult your professional adviser. An investment in the New Shares offered under this Rights Issue Offer Information Statement is highly speculative.

2 Important Notices This Rights Issue Offer Information Statement is issued under Part 6D.2 of the Corporations Act, is dated 3 September 2014, and was lodged with ASIC on that date. Neither ASIC nor its officers take any responsibility for the contents of this Rights Issue Offer Information Statement or the merits of the investment to which this Rights Issue Offer Information Statement relates. No securities will be allotted or issued based on this Rights Issue Offer Information Statement later than 1 October Nature of this Rights Issue Offer Information Statement: The content requirements of Rights Issue Offer Information Statement (set out in s715 Corporations Act) do NOT include all of the information that would be included in a prospectus or which may be required to make an informed decision regarding the New Shares. Rights Issue Offer Information Statement availability: Shareholders with a registered address in Australia and New Zealand can obtain a copy of this Rights Issue Offer Information Statement during the Offer period on the Company s website at or by contacting the Company. If you access an electronic copy of this Rights Issue Offer Information Statement, you should ensure that you download and read the entire Rights Issue Offer Information Statement. In particular, Eligible Shareholders should refer to section 10 for details of the risk factors that could affect the performance of the Company. The Offer does not take into account the investment objectives, personal circumstances (including financial and taxation issues) and particular needs of Eligible Shareholders. Eligible Shareholders should consider the prospects of the Company in the light of their individual objectives, circumstances and needs The electronic copy of this Rights Issue Offer Information Statement available from the Company s website does not include a personalised Entitlement and Acceptance Form. Eligible Shareholders will only be able to accept the Offer by completing the personalised Entitlement and acceptance form which accompanies this Rights Issue Offer Information Statement (refer to section 6 of this Rights Issue Offer Information Statement for further information). Exposure Period: The Corporations Act prohibits the Company from accepting applications in the seven (7) day period after the date on which the Rights Issue Offer Information Statement is lodged with ASIC. This period is known as the exposure period. This exposure period may be extended by the ASIC by up to fourteen (14) days. Applications received during the exposure period will not be processed until after the expiry of that period. No preference will be conferred on applications received during the exposure period. Foreign jurisdictions: This Rights Issue Offer Information Statement has been prepared having regard to the Australian disclosure requirements. The Offer is not intended to, constitute an offer in any place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or to issue this Rights Issue Offer Information Statement under the laws applicable in that jurisdiction. It is not practicable for the Company to comply with the securities laws of every overseas jurisdiction, having regard to the number of overseas Shareholders, the number and value of the Shares these Shareholders would be offered, and the cost of complying with regulatory requirements in each relevant jurisdiction. Accordingly, the Offers are limited to those Shareholders with a registered address which is in Australia or New Zealand Applicants who are resident in countries other than Australia or New Zealand should consult their professional advisers as to whether any governmental or other consent is required or whether any other formalities need to be considered and followed. This Rights Issue Offer Information Statement does not constitute an offer in any place in which, or to any person to whom, where it would be unlawful to make such an offer. New Zealand warnings: This Offer to New Zealand investors is a regulated offer made under Australian and New Zealand law. In Australia, this is Chapter 8 of the Corporations Act 2001 and Regulations. In New Zealand, this is Part 5 of the Securities Act 1978 and the Securities (Mutual Recognition of Securities Offerings Australia) Regulations This offer and the content of the offer document are principally governed by Australian rather than New Zealand law. In the main, the Corporations Act 2001 and Regulations (Australia) set out how the offer must be made. There are differences in how securities are regulated under Australian law. For example, the disclosure of fees for collective investment schemes is different under the Australian regime. The rights, remedies, and compensation arrangements available to New Zealand investors in Australian securities may differ from the rights, remedies, and compensation arrangements for New Zealand securities. Both the Australian and New Zealand securities regulators have enforcement responsibilities in relation to this offer. If you need to make a complaint about this offer, please contact the Financial Markets Authority, Wellington, New Zealand. The Australian and New Zealand regulators will work together to settle your complaint. The taxation treatment of Australian securities is not the same as for New Zealand securities. If you are uncertain about whether this investment is appropriate for you, you should seek the advice of an appropriately qualified financial adviser. 2

3 The offer may involve a currency exchange risk. The currency for the securities is not New Zealand dollars. The value of the securities will go up or down according to changes in the exchange rate between that currency and New Zealand dollars. These changes may be significant. Disclaimer of representations: No person is authorised to provide any information or make any representation in connection with the Offer that is not contained in this Rights Issue Offer Information Statement. Forward-looking statements: This Rights Issue Offer Information Statement contains forward-looking statements that, despite being based on the Company s current expectations about future events, are subject to known and unknown risks, uncertainties and assumptions, many of which are outside the control of the Company and its Directors. These known and unknown risks, uncertainties and assumptions, could cause actual results, performance or achievements to differ materially from future results, performance or achievements expressed or implied by forward-looking statements in this Rights Issue Offer Information Statement. These risks, uncertainties and assumptions include, but are not limited to, the risks outlined in section 10 of this Rights Issue Offer Information Statement. Forward-looking statements do not constitute, and should not be regarded as, a representation that the relevant results will actually be achieved or that the underlying assumptions are valid. The opinions, estimates, forecasts and projections are subject to uncertainties and contingencies, all of which are difficult to predict and many of which are beyond the control of DMX. Definitions: Certain terms and abbreviations used in this Rights Issue Offer Information Statement have defined meanings that are explained in the Glossary. 3

4 Table of Contents 1 TIMETABLE TO THE OFFER KEY OFFER TERMS AND CAPITAL STRUCTURE INVESTMENT OVERVIEW AND KEY RISKS THE COMPANY DETAILS OF THE OFFER ACTIONS REQUIRED BY ELIGIBLE SHAREHOLDERS FOREIGN SHAREHOLDERS TAXATION AND DUTY IMPLICATIONS RIGHTS AND LIABILITIES ATTACHING TO SECURITIES RISK FACTORS ADDITIONAL INFORMATION DIRECTORS' RESPONSIBILITY AND CONSENT GLOSSARY Company Directors Mr Roger Collison (Executive Chairman) Mr John Welsh (Non-Executive Director) Mr Michael Haddad (Non-Executive Director) Registered and Business Office Level 4, 92 Pitt St Sydney NSW 2000 Phone: Fax: Auditor Nexia Australia Level 16, 1 Market Street Sydney NSW 2000 Phone: Fax: Company Secretary Mr Jon McArthur Share Registry Link Market Services Level 12, 680 George Street Sydney NSW 2000 Phone: Fax: Legal Adviser Addisons Lawyers Level Carrington Street Sydney NSW 2000 Phone: Fax: TIMETABLE TO THE OFFER ASIC Lodgement Date 3 September 2014 Record date to determine Eligible Shareholders and Entitlement 4 September 2014 Rights Issue Offer Information Statement with Entitlement and Acceptance Form dispatched 12 September 2014 Offer opens for receipt of Applications 12 September 2014 Closing date for receipt of applications 1 October 2014 Allotment and issue of New Shares 15 October 2014 Dispatch of shareholding statements 15 October

5 3. INVESTMENT OVERVIEW Prospective investors should read the Rights Issue Offer Information Statement in full before deciding whether to invest in New Shares Question Response Where to find more informati on What is this document? What is being offered? Are the directors participating? Should you accept the Offer? How will the proceeds of the Offer be used? What is the dilution effect of the Offer? What will be the effect on control of the Offer? What are my choices? How can I obtain further information? Under Chapter 6D.2 of the Corporations Act, an offer of securities for issue needs disclosure to investors unless a relevant exemption applies. Accordingly, DMX Corporation has prepared this Rights Issue Offer Information Statement in connection with the Offer. Each Eligible Shareholder is being offered 5 New Shares for every 1 Share held by that Eligible Shareholder on the Record Date at an issue price of 96.7 cents per New Share. The issue price is the same as the Director s assessment of the current value of the shares. It is therefore at neither a premium nor discount. If the Offer is fully subscribed, the Board has the discretion to scale back the number of New Shares to be issued to each subscribing shareholder pro rata, such that the total amount raised by the Company will not exceed $10,000,000. All three directors have agreed to partially participate in the offering. Mr Roger Collison has indicated that he will, subject to the extent of rights take up by others, aim to maintain his percentage ownership in the company (29%). Both Mr John Welsh and Mr Michael Haddad have indicated that they each intend to purchase a minimum of $10,000 of additional shares in the offering. Nothing in this Rights Issue Offer Information Statement constitutes a recommendation by DMX Corporation or any other person. You should obtain independent professional advice in relation to any decision made in connection with this Rights Issue Offer Information Statement. A maximum of $10,000,000 will be raised under this Rights Issue Offer Information Statement. The Directors currently intend to apply the proceeds from the Offer firstly to pay the costs of the Offer, secondly for general working capital purposes and thirdly to fund future investments by the Company. Eligible Shareholders will not be diluted if they take up their full Entitlement. Shareholders who do not take up their full Entitlement may have their holding diluted. The total level of subscriptions for New Shares received by the Company will determine how many New Shares will be issued As an eligible shareholder you may: take up all or part of your entitlement by completing the personalised Entitlement and Acceptance Form and sending it to the Company together with the application monies by the Closing Date; or do nothing and allow your Entitlement to lapse. Contact Roger Collison, the Executive Chairman of DMX Corporation on at any time between 8.30am and 5.00pm (AEST time) Monday to Friday until the Closing Date. Alternatively, consult your accountant or other professional advisor. Section 5 Section 5.4 Section 5.7 Section 5.9 Section 5.9 Section 6 5

6 2. CAPITAL STRUCTURE Shares currently on issue 2,108,120 Maximum number of New Shares that will be issued under this Rights Issue Offer Information 10,460,251 Statement at an issue price of 96.7 cents each Maximum amount raised under this Rights Issue Offer Information Statement 1 $10,000, if all Shareholders fully take up their Entitlement. 4. THE COMPANY 4.1 Background information about the Company, its business and plans DMX Corporation is an unlisted public company. The focus of the Company is on making listed and unlisted investments. The investment approach of the DMX Corporation is based around the fact that some businesses are inherently better than others. The approach of DMX Corporation is to find these superior businesses, wait for them to be cheaply priced and then invest in them. The Company currently has three investments: A. Nina s Chocolates: the Company s purchase of 100% of the shares in Nina s Chocolates was completed on 7 July Nina s Chocolates is a leading manufacturer, retailer and wholesaler of handmade chocolates in Sydney. It supplies handmade chocolates throughout Australia to select major retailers (David Jones & Woolworth s Thomas Dux), numerous chocolate speciality stores, leading hotels, restaurants, caterers and other corporate clients. B. ASK Funding (AKF): the Company has a 1.8% shareholding in ASK Funding Limited which is a listed public company which is running down a loan portfolio. Information on the business, operations including the status of the portfolio liquidation and distributions of AKF can be found on its website and on the ASX Company Announcements Platform. C. DMX Asset Management: DMX Asset Management is a start-up company which is 100% owned by DMX Corporation. An application for an Australian Financial Services Licence (AFSL) by DMX Asset Management is currently being considered by ASIC. If an AFSL is granted, DMX Asset Management intends to establish a Listed Investment Company and an unlisted ethical unit trust. It is the current intention to operate the Listed Investment Company with a wide mandate focused on value investing principles. To be granted an ASX listing, the company will need to raise a minimum of $15 million. The ethical unit trust will target the not for profit clients with investments focusing on providing franked dividends and avoiding sectors such as alcohol, tobacco, gambling, and adult entertainment It is currently intended that some of the future investments of DMX Corporation will be in the funds management/asset management sectors which have low capital requirements, high barriers to entry, and which in the opinion of the Board are attractively priced. 4.2 Financial Information about the Company Set out below is the pro-forma Consolidated Statement of Financial Position of the Company as at 30 June 2014, based on the following assumptions: (a) Nina s Chocolates is consolidated on 30 June 2014 (the actual acquisition date was 7 July 2014); (b) the Rights Issue Offer was effective on 30 June 2014 and was fully subscribed for with costs of approximately $18,851; and (c) no further Shares are issued (beyond those on issue at the date of this Rights Issue Offer Information Statement) other than all Shares offered under this Rights Issue Offer Information Statement. 6

7 Statement of Financial Position 30 June 2014 Audited $ 30 June 2014 proforma Nina s Chocolates $ Maximum rights take-up $ Current Assets Cash Assets 1,801,285 51,196 10,051,196 Receivables and other assets 259,172 64,718 64,718 Inventory 70,000 70,000 Financial Assets 281, , ,591 Total Current Assets 2,342, ,505 10,467,505 Non-Current Assets Plant and equipment 95,747 95,747 Goodwill 1,868,213 1,868,213 Total Non-Current Assets 1,963,960 1,963,960 TOTAL ASSETS 2,342,048 2,431,465 12,431,465 Current Liabilities Trade and other payables 998,672 1,088,089 1,088,089 Borrowings Total Current Liabilities 998,672 1,088,089 1,088,089 TOTAL LIABILITIES 998,672 1,088,089 1,088,089 NET ASSETS 1,343,376 1,343,376 11,343,376 EQUITY Issued capital 19,603,644 19,603,644 29,603,644 Accumulated losses (18,260,268) (18,260,268) (18,260,268) TOTAL EQUITY 1,343,376 1,343,376 11,343,376 The significant accounting policies upon which the Statement of Financial Position and the Pro-Forma Statement of Financial Position are based are contained in the Annual Report s audited financial report for year ended 30 June DETAILS OF THE OFFER 5.1 Offer overview The Company is offering each Eligible Shareholder five New Shares for every one Existing Share held as at 7.00pm (AEST) on the Record Date for an issue price of 96.7 cents per New Share, subject to the discretion of the Board to scale back the Offer as set out below. The Company is seeking to raise a maximum of $10,000,000. If the Offer is fully subscribed, the Board has the discretion to scale back the number of New Shares to be issued to each subscribing shareholder pro rata, such that the total amount raised by the Company will not exceed $10,000,000. There is no minimum subscription for the Offer and the Offer is not underwritten. All New Shares offered under this Rights Issue Offer Information Statement will rank equally with Existing Shares. The rights and liabilities of the New Shares offered under this Rights Issue Offer Information Statement are summarised in section Issue price Valuation of DMX is difficult. There is not a ready market for the shares we hold in the subsidiary (DMX Confectionary Investments Pty Ltd) that acquired the Nina s Chocolates business. Instead, the Directors consider that the pre-tax earnings of Nina s Chocolates should be capitalised at a rate of 3.75x. The Directors anticipate that this multiple should rise as the diversification, and the scale of DMX grows. In the absence of a better alternative, the Directors plan to list DMX sometime in the future. At that time we would hope (although cannot guarantee) to obtain a significantly greater multiple reflecting this improved liquidity and diversification. 7

8 The Directors consider it in the interests of shareholders to increase the size of DMX to better cover its fixed costs, which remain significant, and in preparation for a re-listing. However, any this capital raising needs to be done at a fair price, so that it is not so low as to be unnecessarily dilutive to existing shareholders, and not too high as to be unattractive to new shareholders. The Directors consider the following the most appropriate approach for valuing DMX: Use the mark to market values for debt, cash, listed shares, and term deposits; Use the book value of associates and unlisted companies where contemporary data is not available; and Use a 4.5x capitalisation multiple of pre-tax earnings for subsidiaries or associates where data is available. On this basis, the Directors of DMX estimate the value of DMX shares at the time of this Offer Information Statement at 96.7c per share (Valuation Price), assuming no premium for control. Shareholders should note that the Directors have not obtained an independent valuation of DMX shares, nor have they sought professional financial advice in this respect. The Valuation Price has been determined by the Directors acting in good faith for the purposes of setting the price of its rights issue. The Directors are not qualified to give shareholders financial advice. Small parcel shareholders and persons who may participate in the rights issue should determine their own valuation of DMX shares for these purposes, and each of DMX and the Directors disclaim any liability howsoever arising, to the extent permitted by law, to any person in connection with the Valuation Price. Shareholders should further note that the Valuation Price should not be relied on by shareholders for their own accounting or taxation purposes in relation to their DMX shareholding. The issue price in this Rights Issue is neither a premium nor discount to this assessment of value. 5.3 Entitlement and acceptance The Offer is only open to Eligible Shareholders who are those Shareholders that: (a) are the registered holder of Shares as at 7.00pm (AEST) on the Record Date; and (b) have a registered address in Australia or New Zealand. The Company reserves the right to reject any application that it believes comes from a person who is not an Eligible Shareholder. This Offer may be accepted in whole or in part prior to the Closing Date, subject to the rights of the Company to extend the Offer period or to close the Offer early. Instructions for accepting your Entitlement are set out in section 6 and on the Entitlement and Acceptance Form which accompanies this Rights Issue Offer Information Statement. 5.4 Rights trading not permitted The Offer is non-renounceable. This means that the rights of Eligible Shareholders to subscribe for New Shares under this Rights Issue Offer Information Statement are not transferable. 5.5 Director participation in the Rights Issue All three directors have agreed to partially participate in the offering. Mr Roger Collison has indicated that he will, subject to the extent of rights take up, aim to maintain his percentage ownership in the company (29%). Both Mr John Welsh and Mr Michael Haddad have indicated that they each intend to purchase a minimum of $10,000 of additional shares in the offering. 5.6 Placement of Shortfall Shares If the offer is not fully subscribed, the Directors reserve the right to issue the Shortfall Shares at their discretion for up to 3 months after the Closing Date. Any Shortfall Shares: (a) must be issued at the same issue price and terms as the New Shares offered under the Offer; and (b) will not be issued to any Shareholder which would result in a person acquiring a Relevant Interest in the Company which results in someone s Voting Power in the Company increasing above 19.9% or increasing at all from a starting point that is above 20% and below 90%. 5.7 Proposed use of funds raised The Directors currently intend to apply the proceeds from the Offer: (a) firstly to pay the costs of the Offer (see section 11.5 for further information); (b) secondly for general working capital purposes; and 8

9 (c) thirdly to fund future investments by the Company. The company currently has no loans outstanding and so no proceeds will be used for repayment of loans. As noted above, this is the current intention of the Directors as at the date of this Rights Issue Offer Information Statement. As with any budget, intervening events and new circumstances have the potential to affect the way funds will be applied. The Board reserves the right to vary the way funds are applied on this basis. 5.8 Consolidated capital structure The effect of the Offer on the capital structure of the Company, assuming no Shares are issued prior to the Record Date and that the Offer is fully subscribed, is set out in the table below: Minimum Maximum Existing shares 2,108,120 2,108,120 Maximum number of New shares that will be issued under this Rights - 10,460,251 Issue Offer Information Statement Total shares 2,108,120 12,568, Potential dilution Shareholders who do not participate in the Offer will have their holdings diluted. Following is a table, which sets out some examples of the dilutionary effect: Holding at Record Date Entitlement Holding following the Offer if no Entitlement taken up and all other shareholders take up the Offer Holder Number of % of total Number of Number of Shares % of total Shares on issue Shares Shares on issue Shares 1 100, % 500, , % 2 50, % 250,000 50, % 3 10, % 50,000 10, % 4 1, % 5,000 1, % 5.10 What to do if you have queries or want extra copies of this OIS Further copies of the statement are available on the Company s website at dmxcorp.com.au 6. ACTIONS REQUIRED BY ELIGIBLE SHAREHOLDERS 6.1 What you may do As an Eligible Shareholder, you may: (a) subscribe for all or part of your Entitlement (see section 6.2); or (b) allow all or part of your Entitlement to lapse (see section 6.3). 6.2 To subscribe for all or part of your Entitlement Applicants should read this Rights Issue Offer Information Statement in its entirety in order to make an informed decision on the prospects of the Company and the rights attaching to the New Shares offered by this Rights Issue Offer Information Statement before deciding to apply for New Shares. If you do not understand this Rights Issue Offer Information Statement, you should consult your stockbroker, accountant or other professional adviser in order to satisfy yourself as to the contents of this Rights Issue Offer Information Statement. If you wish to subscribe for all or part of your Entitlement, complete the accompanying Entitlement and Acceptance Form in accordance with the instructions set out on that form. The Entitlement and Acceptance Form sets out the number of New Shares you are entitled to subscribe for. 6.3 Entitlements not taken up If you are an Eligible Shareholder and do not wish to accept any of your Entitlement, you are not obliged to do anything. If you do nothing, your Entitlement will lapse and become Shortfall Shares. The number of Existing Shares you hold as at the Record Date and the rights attached to those Existing Shares will not be affected if you choose not to accept any of your Entitlement, however, you will be diluted. 9

10 6.4 Payment methods The completed Entitlement and Acceptance Form must be accompanied by a cheque, bank draft or money order made payable to DMX Corporation Limited Application Funds A/C and crossed Not Negotiable for the appropriate application money in Australian dollars calculated at 96.7 cents per New Share accepted. Your cheque, bank draft or money order must be paid in Australian currency and be drawn on an Australian branch of an Australian financial institution. The Company will present the cheque or bank draft on or around the day of receipt of the Entitlement and Acceptance Form. You must ensure that your cheque account has sufficient funds to cover your payment, as your cheque will be presented for payment on receipt. If your bank dishonours your cheque your application will be rejected. Dishonoured cheques will not be represented. If the amount of your cheque(s), bank draft(s) or money order(s) for application money (or the amount for which those cheque(s) or bank draft(s) clear in time for allocation) is insufficient to pay for the number of New Shares you have applied for in your Entitlement and Acceptance Form, you may be taken to have applied for such lower number of New Shares as your cleared application money will pay for (and to have specified that number of New Shares in your Entitlement and Acceptance Form) or your Application may be rejected. The Entitlement and Acceptance Form must be received at the following address by no later than 5.00 pm AEST on the Closing Date: DMX Corporation Limited PO Box 916 Milsons Point NSW Entitlement and Acceptance Form is binding A completed and lodged Entitlement and Acceptance Form together with a cheque, bank draft or money order for the application moneys constitutes a binding offer to acquire New Shares on the terms and conditions set out in this Rights Issue Offer Information Statement and, once lodged, cannot be withdrawn. By completing and returning your Entitlement and Acceptance Form with the requisite application monies, you will be deemed to have represented that you are an Eligible Shareholder. In addition, you will also be deemed to have represented and warranted on behalf of yourself or each person on whose account you are acting that the law in your place of residence and/or where you have been given the Rights Issue Offer Information Statement, does not prohibit you from being given the Rights Issue Offer Information Statement and that you: (a) agree to be bound by the terms of the Offer; (b) declare that all details and statements in the Entitlement and Acceptance Form are complete and accurate; (c) declare that you are over 18 years of age and have full legal capacity and power to perform all your rights and obligations under the Entitlement and Acceptance Form; (d) authorise the Company and its respective officers or agents, to do anything on your behalf necessary for the New Shares to be issued to you, including to act on instructions of the Company s share registry upon using the contact details set out in the Entitlement and Acceptance Form; (e) declare that you are the current registered holder of Shares and are an Australian or New Zealand resident, and you are not in the United States or a US Person, or acting for the account or benefit of a US Person; (f) acknowledge that the information contained in, or accompanying, the Rights Issue Offer Information Statement is not investment or financial product advice or a recommendation that New Shares are suitable for you given your investment objectives, financial situation or particular needs; and (g) acknowledge that the New Shares have not, and will not be, registered under the securities laws in any other jurisdictions outside Australia and New Zealand and accordingly, the New Shares may not be offered, sold or otherwise transferred except in accordance with an available exemption from, or in a transaction not subject to, the registration requirements of applicable securities laws in particular the US Securities Act. The Entitlement and Acceptance Form does not need to be signed to be a valid application. An Application will be deemed to have been accepted by the Company upon allotment of the New Shares. If the Entitlement and Acceptance Form is not completed correctly or if the accompanying payment of the application moneys is for the wrong amount, it may still be treated as a valid Application for New Shares. The Directors decision whether to treat an acceptance as valid and how to construe, amend or complete the Entitlement and Acceptance Form is final. However, an Applicant will not be treated as having applied for more Shares than is indicated by the amount of the cheque for the application moneys. 10

11 6.6 Privacy The Company collects information about each Applicant provided on an Entitlement and Acceptance Form for the purposes of processing the Application and, if the Application is successful, to administer the Applicant s security holding in the Company. By submitting an Entitlement and Acceptance Form, each Applicant agrees that the Company may use the information provided by an Applicant on the Entitlement and Acceptance Form for the purposes set out in this privacy disclosure statement and may disclose it for those purposes to the Share Registry, the Company s related body corporate, agents, contractors and third party service providers, including mailing houses and professional advisors, and to ASX and regulatory authorities. If an Applicant becomes a Shareholder, the Corporations Act requires the Company to include information about the Shareholder (including name, address and details of the Shares held) in its public register. The information contained in the Company s public register must remain there even if that person ceases to be a Shareholder. Information contained in the Company s register is also used to facilitate distribution payments and corporate communications (including the Company s financial results, annual reports and other information that the Company may wish to communicate to its security holders) and compliance by the Company with legal and regulatory requirements. If you do not provide the information required on the Entitlement and Acceptance Form, the Company may not be able to accept or process your Application. An Applicant has the right to gain access to the information that the Company holds about that person subject to certain exceptions under law. A fee may be charged for access. Such requests must be made in writing to the Company s registered office. 7. FOREIGN SHAREHOLDERS 7.1 Offer outside Australia and New Zealand This Rights Issue Offer Information Statement does not constitute an offer of securities in any jurisdiction where, or to any person to whom, it would not be lawful to issue the Rights Issue Offer Information Statement or make the Offer. No action has been taken to register or qualify the New Shares or the Offer or otherwise to permit an offering of the New Shares in any jurisdiction outside Australia and New Zealand. Given the small number of Shareholders with registered addresses outside Australia or New Zealand and the cost of complying with applicable regulations in those jurisdictions, the Company has decided that it would be unreasonable to extend the Offer to any Shareholder, as at the Record Date, whose registered address is not situated in Australia and New Zealand. The Rights Issue Offer Information Statement will not be sent to those Shareholders. Recipients must not send or otherwise distribute this Rights Issue Offer Information Statement or the Entitlement and Acceptance Form to any person outside Australia or New Zealand (other than to Eligible Shareholders). 7.2 Beneficial holders, nominees, trustees and custodians The foreign selling restrictions under the Offer summarised in section 7.1 of this Rights Issue Offer Information Statement apply to the underlying beneficial holder. Nominees, trustees and custodians must not apply on behalf of any beneficial holder that would not itself be an Eligible Shareholder. Shareholders who are nominees, trustees or custodians are advised to seek independent advice as to how they should proceed. Shareholders who hold Shares on behalf of persons whose registered address is not in Australia or New Zealand are responsible for ensuring that applying for New Shares does not breach securities laws in the relevant overseas jurisdictions. 8. TAXATION AND DUTY IMPLICATIONS The Directors do not consider that it is appropriate to give Shareholders advice regarding the taxation consequences of the Company conducting the Offer or Shareholders applying for New Shares under this Rights Issue Offer Information Statement, as it is not possible to provide a comprehensive summary of the possible taxation positions of all Shareholders. The Company, its advisers and officers, do not accept any responsibility or liability for any taxation consequences to all Shareholders in the Offer. Shareholders should, therefore, consult their own professional tax adviser in connection with the taxation implications of the Offer. No brokerage or stamp duty is payable by Applicants in respect of Applications for New Shares under this Rights Issue Offer Information Statement 9. RIGHTS AND LIABILITIES ATTACHING TO NEW SHARES The New Shares issued will be fully paid and rank equally with Existing Shares. Full details of the rights and liabilities attaching to the Shares are: 11

12 detailed in the Constitution, a copy of which can be inspected, free of charge, at the registered office of the Company during normal business hours; and in certain circumstances, regulated by the Corporations Act, the Listing Rules and the general law. The following is a summary of the more significant rights and liabilities attaching to the Shares. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of Shareholders. To obtain such a statement, persons should seek independent legal advice. (a) Share capital Subject to the Constitution, and Corporations Act, the directors of DMX Corporation may issue, or grant options in respect of, Shares on such terms as the directors think fit. DMX Corporation may issue preference shares, including preference shares that are liable to be redeemed. (b) Voting rights At a general meeting of DMX Corporation, every Shareholder present in person, by an attorney, representative or proxy has 1 vote on a show of hands and 1 vote on a poll for each fully-paid Share that that Shareholder holds. A partly paid share in the issued capital of DMX Corporation will entitle its holder to, on a poll, a fraction of a vote equal to the proportion that the total amount paid, or credited as paid on that share bears to the total amount paid, credit and payable on that Share. Where, in respect of a resolution, there is an equality of votes, the Chairperson of the meeting will have the casting vote. (c) Dividend rights Subject to the Corporations Act, the directors of DMX Corporation may resolve to pay interim and final dividends on the Shares as the financial position of DMX Corporation justifies. Dividends in respect of any partly-paid share issued in the capital of DMX Corporation will be paid proportionately to the amount(s) paid (not credited) on that Share. (d) Rights on winding-up If DMX Corporation is wound up: any surplus assets of DMX Corporation will, subject to the Constitution and any rights or restrictions attached to any shares issued by DMX Corporation, be divided among the shareholders of DMX Corporation in proportion to the number of shares held by them in DMX Corporation (reduced by any amount unpaid on those shares); and the liquidator may, with the authority of a special resolution, divide the property of DMX Corporation amongst its shareholders in kind and determine how the division is to be carried out as between the shareholders or different classes of shareholders. (e) Transfer of shares Shares in DMX Corporation may be transferred freely, subject to the requirements of the Constitution, the Corporations Act. The directors of DMX Corporation may refuse to register a transfer of DMX Shares. (f) Variation of rights attaching to shares The rights attaching to any class of shares in DMX Corporation may only be varied or cancelled by a special resolution passed at a separate meeting of the holders of the shares of that class, or, with the written consent of the holders of 75% of the shares of that class. (g) General meeting Each shareholder, director and the auditor of DMX Corporation is entitled to receive notice of, and to attend, general meetings of DMX Corporation. 10. RISK FACTORS The New Shares offered under this Rights Issue Offer Information Statement are considered highly speculative. An investment in the Company is not risk free and the Directors strongly recommend potential investors to consider the risk factors described below, together with information contained elsewhere in this Rights Issue Offer Information Statement and to consult their professional advisers before deciding whether to apply for New Shares pursuant to this Rights Issue Offer Information Statement. There are specific risks, which relate directly to the Company s business. In addition, there are other general risks, many of which are largely beyond the control of the Company and the Directors. The risks identified in this section, or other risk factors, may have a material impact on the financial performance of the Company and the market price of the New Shares. 12

13 The following is not intended to be an exhaustive list of the risk factors to which the Company is exposed Company specific risks (a) Shares in DMX Corporation are not listed and therefore are illiquid. Being unlisted may make it difficult or even impossible to find a buyer when a shareholder wishes to sell its Shares. Where a buyer is found, the price achieved may not reflect the true value of the underlying business. (b) The successful operation of DMX is dependent, to a significant extent, upon the performance and expertise of a small number of key staff. Should those key staff leave, the investment performance of DMX may be significantly adversely affected. (c) The net asset value of DMX may rise or fall because of its financial performance. The future earnings of DMX or the capital appreciation of its investments cannot be guaranteed. The success and profitability of DMX will depend in part on the ability of the Directors to manage its investment portfolio and to undertake investment opportunities that have the potential to increase in value over time. The value of investments made by DMX and the net asset value of DMX may fall or rise over time. (d) The performance of the Company and operating results of Nina s Chocolates may differ materially from the past. There is no guarantee that the business will make any profit in the future. The business may make losses in the future. (e) The price for DMX shares may be impacted by the Offer. DMX does not believe it can make any prediction of the likely impact. (f) As far as its investments are concerned, DMX concentrates its available capital into a small number of investments at any one time. Due to this concentration, the investment portfolio is not diversified and therefore exposes Shareholders to additional risk. (g) The ability to attract new equity capital will influence the ability of DMX to grow its current assets, to make new investments and also the degree to which overhead costs are covered. The ability of DMX to raise additional equity will be influenced by many factors including equity market conditions, the willingness of existing and new shareholders to increase the size of investment and the investment performance of DMX over time. (h) If additional equity capital is raised your investment in DMX may be diluted. (i) The ability of DMX to pay dividends will depend on the dividends received from its investments and the overall performance of those investments. The portfolio investments undertaken by DMX may pay no dividends in which case DMX may not be in a position to pay dividends. (j) ASK Funding Limited in which the Company has a 1.8% shareholding is currently liquidating its loan portfolio. The amount, if any, of further distributions of ASK assets to the Company, in respect of this investment, is unknown. (k) DMX Asset Management has made application for an Australian Financial Services Licence. ASIC is currently considering this application and there is no guarantee that the licence will be granted General investment risks The risks outlined below are some of the general risks that may affect an investment in the Company. (a) To assist in increasing the net asset position and earnings of the Company, DMX may need to raise further money from Shareholders and other investors to facilitate growth of current investments and to pursue further investments. If additional funds are not able to be raised, such increases will be difficult to obtain. (b) The price of Shares may because of factors specific to DMX, as well as other more general issues such as the state of the economy, investor sentiment, regulatory issues, global hostilities and tensions and acts of terrorism. (c) The Company may be impacted by general economic conditions, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company s activities, as well as on its ability to fund those activities. (d) A change to current taxation legislation and regulations in Australia or overseas may affect the Company and as a consequence, its Shareholders. The personal tax liabilities are the responsibility of each individual investor and the Company is not responsible either for taxation or penalties incurred by investors. (e) The offer may involve a currency exchange risk for New Zealand shareholders as the currency for the Shares is not New Zealand dollars. The value of the Shares will go up or down according to changes in the exchange rate between that currency and New Zealand dollars. These changes may be significant. Potential investors should consider that the investment in the Company is speculative and should consult their professional advisors before deciding whether to subscribe for the New Shares pursuant to this Rights Issue Offer Information Statement. 13

14 11. ADDITIONAL INFORMATION 11.1 Who are the Directors? DMX has three directors: Roger Collison (Executive Chairman) Roger is an experienced company director working for both not for profit and for profit organisations. Current board positions include: Sydney Church of England Grammar School (Shore): Councillor, St Catherine s School, Waverley: Councillor, Anglican Church Property Trust, diocese of Sydney: Trustee, and Waterford Retirement Village Limited: Director. He has over 20 years investment experience. He has worked both as a Director of Credit Suisse (based in Sydney and London) and as Head of Research at Tyndall Asset Management. At bulge bracket investment bank, Credit Suisse, he led the firm s global research into building and construction materials and was involved in a range of capital market actions including IPOs, takeovers, placements, and rights issues. He advised many of the world s leading institutional investment houses, as well as hedge funds, private equity, sovereign wealth funds, and family offices. While at Credit Suisse, Roger received over twenty industry awards. Tyndall Asset Management is an institutional fund manager with around $4.5bn under management. Roger jointly managed a $1.2bn concentrated value fund and a research team of nine. During Roger s management of the fund, it outperformed its benchmark by 2.4% pa. He has worked in 24 countries, had people reporting to him from 11 countries and covered companies in 13 countries. Roger has an honours degree in economics from the University of Sydney, a master s of business administration from the Australian Graduate School of Management at the University of New South Wales, a graduate diploma of applied corporate governance from Chartered Secretaries Australia, a graduate diploma in applied finance from the Financial Services Institute of Australia. He is a Chartered Financial Analyst, a Fellow of the Financial Services Institute of Australia, a Fellow of the Chartered Institute of Secretaries, a Fellow of Chartered Secretaries Australia and a Graduate of the Australian Institute of Company Directors. He has studied equity valuation at Harvard University and the University of Nebraska at Omaha Roger has been a Director of DMX Corporation since 2012 and Chairman since John Welsh John has extensive operational and investment banking experience. He was a highly rated industrial analyst while working at BBY, Australia's 4th largest domestic stockbroking firm. With its global reach in equity capital markets and M&A, BBY maintained a core focus on the resource and industrial sectors. He is a graduate of the Institute of Company Directors. Mr Welsh continues to maintain an extensive and direct exposure with manufacturing and healthcare end-users globally. John has been a Director of DMX Corporation since Michael Haddad Michael has over 14 years funds management industry experience, commencing his career with New Zealand-based Fisher Funds Management as an Investment Analyst focusing on NZ domestic equities. In 2002 Michael joined Sydney-based Peters MacGregor Capital Management as an Investment Analyst focused on global equities. He remains with Peters MacGregor as a shareholder and Principal of the firm, working closely with the firm s founder in overseeing strategic and operational matters in addition to maintaining a key role in the investment research and management function. Michael has been a Director of DMX Corporation since Directors interests As at the date of this Rights Issue Offer Information Statement the Directors have a relevant interest in Shares of the Company and remuneration as set out below. Director Roger Collison John Welsh Michael Haddad Shares 611, , ,965 Remuneration paid to Directors in the two years prior to the date of this Rights Issue Offer Information Statement is set out below Roger Collison $6,333 $5,000 John Welsh $3,196 $5,462 Michael Haddad - - Note: This does not include any reimbursements that the Directors may receive for work related expenses. 14

15 The Company has entered into indemnity, insurance and access deeds with each of the Directors (Deeds). Under the Deeds, the Company agrees to indemnify each of the Directors to the extent permitted by the Corporations Act against certain liabilities incurred by the Directors whilst acting as an officer of the Company, and to insure each Director against certain risks to which the Company is exposed as an officer of the Company. The Deeds also grant each Director a right of access to certain records of the Company for a period of up to 7 years after the Director ceases to be an officer of the Company. The Deeds were entered into as part consideration for the Directors agreeing to hold office as directors of the Company. The Constitution of the Company provides that the Directors may be paid for their services as Directors. Non-executive directors may only be paid a sum not exceeding such fixed sum per annum as may be determined by the Company in general meeting, to be divided among the non-executive directors and in default of agreement then in equal shares. The Company also pays premiums to insure all of the Directors against liabilities for costs and expenses incurred by them in defending legal proceedings arising from their conduct whilst acting in the capacity as a Director of the Company Interests of promoters and named persons Except as disclosed in this Rights Issue Offer Information Statement, no expert, promoter or any other person named in this Rights Issue Offer Information Statement as performing a function in a professional advisory or other capacity in connection with the preparation or distribution of the Rights Issue Offer Information Statement, nor any firm in which any of those persons is or was a partner nor any company in which any of those persons is or was associated with, has now, or has had, in the 2 year period ending on the date of this Rights Issue Offer Information Statement, any interest in: (a) the formation or promotion of the Company; or (b) property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offer; or (c) the Offer. Addisons Lawyers has acted as solicitors to the Offer. In respect of this work, the Company will pay approximately $8,000 exclusive of GST. Subsequently fees will be paid in accordance with normal hourly rates. During the 24 months preceding lodgement of this Rights Issue Offer Information Statement with the ASIC, Addisons Lawyers has received fees from the Company totalling $34,365 (inclusive of GST) Consents Each of the persons referred to in this section: (a) has given and has not, before the date of lodgement of this Rights Issue Offer Information Statement with ASIC withdrawn their written consent: i. to be named in the Rights Issue Offer Information Statement in the form and context which it is named; and ii. where applicable, to the inclusion in this Rights Issue Offer Information Statement of the statement(s) and/or reports (if any) by that person in the form and context in which it appears in this Rights Issue Offer Information Statement; (b) has not caused or authorised the issue of this Rights Issue Offer Information Statement; (c) has not made any statement in this Rights Issue Offer Information Statement or any statement on which a statement in this Rights Issue Offer Information Statement is based, other than specified below; (d) to the maximum extent permitted by law, expressly disclaims all liability in respect of, makes no representation regarding, and takes no responsibility for, any part of this Rights Issue Offer Information Statement, other than the references to their name and the statement(s) and/or report(s) (if any) specified below and included in this Rights Issue Offer Information Statement with the consent of that person. Name Roger Collison John Welsh Michael Haddad Addisons Lawyers Link Market Services Limited Nexia Role Director Director Director Lawyers Share Registry Auditor 15