Wholesale Investor Magazine

1www.wholesaleinvestor.com.au

Unique combination of real estate and gaming with a new offering for buyers and sellers (29)

Rapidly growing IT infrastucture provider to the financial services industry (30)

Precious metals refining business based in Queensland (34)

National logistics provider offering door to door service (31)

Innovative pharmacy retailer with unique hearing aid solution (21)

Investment Opportunities for Wholesale, Sophisticated & High Net Worth Investors

Mar

ch

20

12

Life sciences company with diagnostic tests for prostate cancer (18)

3

Contents

MARCH 2012

Editorial

4 Letter from the Managing Director5 Upcoming Events6 Company Updates7 12 Lessons for CEOs and Investors: Insights from over 200 interviews (by Tony Featherstone)9 WI Sentiment Index ‘What the smart money thinks’11 3 Reasons Investment Decisions Can Go Wrong (by Neil Slomin)12 Understand the Worst Case Scenario (by Tom Mckaskill)

Wholesale Investor Magazine is published by:

Wholesale Investor Pty Ltd

ACN 131 512 715

Managing Director - Steve Torso

Publisher - Reuben Buchanan

Editor - Lachlan Colquhoun

General Manager - Kimber Rothwell

Senior Account Managers:- Daniel Coombes- Jim Brown

Directors

Reuben Buchanan – Executive DirectorDomenic Carosa – Non Executive Director

Advisory board Tim Trumper

Sydney:

Address - Suite 204, 66 King St. SydneyPhone - 1300 597 595Web - www.wholesaleinvestor.com.au

Editorial Enquiries

[email protected]

Advertising Enquiries

[email protected]

Listing Enquiries

[email protected]

1300 597 595

Subscription Enquiries

[email protected]

Design - Bubblefish Designwww.bubblefish.com.au

Printer - GEON Groupwww.geongroup.com

Distribution - GEON Groupwww.geongroup.com

Disclaimer

This Publication contains prominent statements

appropriate for the particular medium by which

the Publication is made to the effect that:

(A) the information contained in the Publication

about the proposed business opportunity

and the securities or scheme interests is not

intended to be the only information on which

the investment decision is made and is not a

substitute for a disclosure document, Product

Disclosure Statement or any oth er notice that

may be required under the Act, as that Act may

apply to the investment. Detailed information may

be needed to make an investment decision, for

example: financial statements; a business plan;

information about ownership of intellectual or

industrial property; or expert opinions including

valuations or auditors’ reports; and

(B) a prospective investor is strongly advised

to take appropriate professional advice before

accepting an offer for issue or sale of any

securities or scheme interests;

For more information, please visit our website

www.wholesaleinvestor.com.au or email

[email protected]

Feature Articles

36 ESOPs and Early Growth Companies (by Andrew Ireland)37 The Art and Mystery of Start-Up Valuations (by Jordan Green)38 HNW Investors and the Australian Life Science sector

Opportunities

13 Benitec Biopharma Limited (ASX:BLT)14 Bioatrix15 Jubilent Health Australia Ltd16 Global Kinetics Corporation17 BioDiem Ltd (ASX:BDM)18 Caldera Health19 Phylogica Limited (ASX: PYC)20 Photonz Corporation Ltd21 Retail Pharmacy Group22 Cynergy Health23 BioPower Systems24 Eastern Harmony New Zealand Ltd25 Blew Chip26 Mint Wireless Ltd (ASX:MNW)27 Exa Web Solutions28 Qanda Technology Ltd (ASX:QNA)29 Australian Real Estate Lottery30 Easylodge Infrastructure Services31 Hannan Logistics Pty Ltd32 Bizpanel Limited33 Investment Administration 34 Australian Bullion Refinery35 Folkestone Limited

44

Letter from the Managing Director

Cautious, but positive, is the sentiment from investors.So, welcome to 2012, and already the tone of the year is being set.

Wholesale Investor subscribers are an optimistic cross-section of the investor community – always looking for opportunities – but they also represent the smart money, and the smart money is cautious, cashed up and actively seeking new opportunities.

Our Sentiment Index shows as much. In these turbulent times, recourse to cash is a significant indicator of caution, and 70 percent of the respondents had 10 percent or more of their assets in cash. Most had between 10 and 30 percent in cash while some even had 100 percent!

This means, of course, that there is money out there for the right opportunities and that is where we at Wholesale Investor come in.

Already we are showcasing an amazing diversity of companies across all sectors which proves that the entrepreneurial spirit is alive and well, despite the economic uncertainty.

Our Wholesale Investor community are by nature optimists. That is one of the brilliant things about being involved with Wholesale Investor.

And we are confident that given the quality of the deals we are showcasing, many of our investors will find the attractive opportunities they are looking for.

Changes to Wholesale Investor in 2012

2012 is shaping as an exciting year for Wholesale Investor, and there will be some changes to our offering.

First of all, we will be moving to expand our online offering to include expert articles, tips on IPOs, Capital Raising and the whole range of subjects from private equity, banking matters for the HNW community and private wealth.

As part of expanding our online offering, it is our objective to make it easier and quicker for you to get the information you desire on the companies and sectors which interest you. We will be looking to provide more articles, video and audio based CEO interviews.

We will be aiming to deliver quality content and information to the vastly underserviced audience of HNWs, CEOs and Industry Participants.

And as we move to enhance our online product, we will be moving the Wholesale Investor magazine to quarterly publication. Subscribers will also be asked if they wish to subscribe to the magazine, rather than having it mailed to them automatically.

It’s all part of updating the Wholesale Investor platform to enhance its functionality and make it even more relevant and useful for our subscribers.

Regards,

Steve Torso - Managing Director, Wholesale Investor Magazine

55

Upcoming Events

Mackay Entertainment and Convention Centre

INVEST Mackay Isaac Whitsunday Conference 2012

Wholesale Investor Capital Showcase Brisbane 2012

Mines and Money Hong Kong

Australian Copper Conference

2012 Annual Stockbrokers Conference

Excellence in Oil and Gas 2012

Brisbane Sofitel

PwC Offices Brisbane, Riverside Centre Crown Promenade, Melbourne

28 -29 March, 2012 27 -28 March, 2012

4 April, 2012 31 May - 1 June, 2012

Hong Kong Sofitel Sydney Wentworth Hotel19 - 23 March, 2012 20 - 21 March, 2012

Previous years have seen delegates from all over Australia, China and India

travel to attend the conference. REDC and the Mackay, Isaac and Whitsunday

Regional Councils will once again be putting their full weight behind the

event and early indications suggest the conference will attract a larger

audience than ever before.

Presenters will provide forthright and informative views, leaving attendees

with key takeouts in understanding the current investment climate and how

to benefit from opportunities in the Mackay-Isaac-Whitsunday Region.

For more information or to register for this event visit www.wholesaleinvestor.com.au

Copper is one of the oldest metals used by man and the one with arguably

the greatest utility in terms of social development. Australia is one of the

world’s leading copper suppliers and has distinct advantages over some

of its major competitors when it comes to being in a position to meet the

world’s growing needs. The 2012 Australian Copper Conference brings

together Australia’s leading players in the copper mining sector with an

audience of industry experts and bona-fide retail investors eager to discover

who the big winners will be in this valuable market sector going forward.

For more information or to register for this event www.verticalevents.com.au

Wholesale Investor and AusBiotech will bring together over 200 investors,

brokers and industry participants for the Wholesale Investor Capital

Showcase 2012. Hear live presentations from 12 high growth Private, Pre-

IPO and ASX Listed Companies in the Life Sciences, Cleantech, Technology

and Agriculture Sectors. The Capital Showcase is the first of its kind where

industry leaders, growth companies from a range of sectors, high net worth,

private and professional investors, brokers and service providers have the

opportunity to meet, network and create strategic long-term relationships.

For more information or to register for this event visit www.wholesaleinvestor.com.au

The Stockbrokers Association of Australia, the peak industry body representing

institutional and retail stockbroking firms and investment banks in Australasia,

invite you to join them at their 2012 Annual Stockbrokers Conference, the largest

and most important event in Australia for the Stockbroking industry group.

The 2012 conference event will feature a fresh and exciting program addressing

many topical issues facing the market and market participants today.

For more information or to register for this event visit www.stockbrokers.org.au/conference

Excellence in Oil and Gas conference and exhibition is east coast Australia’s

leading oil and gas investment event. With a highly relevant conference agenda

for 2012, showcasing lucrative junior and midcap investment opportunities

plus local and international industry insight, the event takes place from 20-21

March at the Sofitel Sydney Wentworth Hotel. This luxurious Sydney CBD location

provides great accessibility for the financial sector audience. With investment in

shale gas reportedly on the rise, there is no better time to attend the Excellence

in Oil and Gas conference and exhibition.

To review the complete conference agenda and speaker line-up, please visit Excellence Oil and Gas online.

In three years Mines and Money Hong Kong has increased in size by 800%

making it the largest mining investment event in the region. In March 250

mining companies will be exhibiting their investment opportunities to over

2500 people making it the must attend event in Asia-Pacific for the mining

and investment communities.

For more information or to register for this event visit www.minesandmoney.com/hongkong

66

Company Updates

New acquisition for CynergyConsumer Health company Cynergy Health has made a new acquisition

which managing director Geoff Crittenden says could become Cynergy’s

core business in the next few years. Cynergy has acquired Medi-Stream,

which produces an asthma inhaler sold through pharmacies in Australia and

around the world under the Sportshaler brand.

Medi-Stream has two other products: a first response inhaler for paramedics

to administer pain relief medication, and a product – still in development

phase - which enables emergency crews wearing breathing apparatus to

receive pain relief.

Mr Crittenden said a key part of the deal was the acquisition of the global

intellectual property rights to the products.He said Cynergy was planning a

capital raising this year as it looked to develop its global business, and that

it was also looking for local and international partners.

BioDiem in China licensing dealASX-listed vaccine developer BioDiem Ltd (BDM) this week announced that

it has licensed its Live Attenuated Influenza Virus (LAIV) vaccine technology

to China-based Changchun BCHT Biotechnology Co. This is an exclusive

licence for the Chinese private sector market for pandemic and seasonal

influenza vaccines made using an egg-based production method. BCHT

holds a complementary licence to the LAIV for the public market in China via

a sublicence from the World Health Organisation. BCHT is a well-established

technology company engaged in medical research and development,

marketing and production, based in Jilin Province’s High Tech Zone.

Established in 2004, the company now employs more than 600 employees

and has developed significant in-house expertise in viral technology

development with particular successes in the areas of influenza and

preventative HIV vaccines.The Chinese announcement caps a busy holiday

season for BioDiem, which in December announced the acquisition of Savine

Therapeutics Pty Ltd (Savine), which owns proprietary technology to design

antigens which can be incorporated into vaccines for different diseases.

Mint Wireless in Payments DealASX-listed payments provider Mint Wireless has signed a landmark

deal in Australia, providing mobile payments solutions to the country’s

largest privately owned pest control company. The three year deal with

Amalgamated Pest Control (APC) will see Mint roll out its state of the art

payments solution to up to 300 licences, using components from business

partners TouchStar and Touchstar.

The contract is valued at approximately $400,000 and comes after Mint

Wireless announced a similar deal in Ireland with footwear company Dubarry,

announced last week. “This is quite a significant deal for Mint Wireless

because it’s our first full payments contract of its kind in Australia,” said

chief executive Alex Teoh.

The Mint Wireless solution delivers the ability for APC to accept both credit

card payments and EFTPOS solutions from customers, and had been

accredited by participating banks.

Jumbo profit keeps getting biggerOnline lottery provider Jumbo Interactive has posted its sixth consecutive

record half year result, announcing a before tax profit of $5.1 million for the

six months to the end of December 2011.The ASX listed company’s result was

a 46 percent increase on the corresponding half year in 2010, while EBITDA

was up 56 percent to $5.2 million over the period.

Mike Verveka, Jumbo Interactive founder and CEO, attributed the result to

the continued popularity of internet lotteries, technical innovations and

the growth of social media. “Social media has helped drive Jumbo to record

sales and profit,” he said. With cash at the bank increasing 35 percent to

$15.9 million, the company is well placed to execute its expansion plans

to enter international lottery markets, particularly in the US. In January,

Jumbo announced the appointment of two US-based executives to work

on securing contracts with state lottery operators after the US Department

of Justice recently gave the green light for internet lottery sales, a market

estimated at US$56 billion in that country.

7

Too many small companies make a crucial, sometimes fatal, mistake when

raising capital through an initial public offering (IPO) and listing on the

Australian Securities Exchange. After intensely promoting their prospects before

and during the float, these companies seemingly “go to ground” when their

offer closes. Their stop-start investor relations efforts contribute to poor after-

market share price support.

I see this pattern often, having interviewed more than 200 chief executives

of newly listed companies and analysed their IPOs for the Australian Financial

Review in the past five years. My work as BRW magazine managing editor early

last decade, and before that Shares magazine, also highlighted a pattern of

small listed companies with poor investor relations processes.

Here is what often happens. Instead of working only on the business, the CEO

works almost full-time on developing a prospectus and promoting the IPO

for three to six months. They meet extensively with broking firms and fund

managers, depending on their company’s size, and do public or background

media interviews. Some CEOs actively promote their company’s offer overseas.

Once the offer closes, the CEO understandably wants to focus on their main

job and put the capital to work. A small exploration company starts drilling,

a biotech increases its research, and a manufacturer makes an acquisition,

for example.. But an absence of news after listing kills the company’s IPO

momentum. Early investors lose interest, new buyers are missing, and the

share price falls below the issue price – in turn sending a bad early message

about the company’ s prospects, which can be hard to recover from.

Not every company follows this script. Some CEOs have the foresight to build on

their IPO work after the float. They ensure their company has good news soon

after they float, and spend up to a third of their time on investor relations. They

12 Lessons for CEOs and Investors: Insights from over 200 interviews (by Tony Featherstone)

build relationships with the investment community and media, knowing that

smart emerging companies are perpetually in capital-raising mode.

A weak sharemarket and tough IPO market means CEOs have to work

harder than ever to promote their company after listing. Seven in 10 IPOs in

2011 finished the year below their issue price. The median share price loss

(compared to the issue price) from the 104 IPOs was 22 per cent. Only 11 IPOs

raised more than $20 million; the median capital raising was a tiny $5 million

as small explorers dominated IPO volumes in 2011. Eighteen companies were

forced to withdraw their listing application.

This analysis shows two key trends: building strong after-market support for

IPOs is becoming harder in a volatile sharemarket; and after raising less capital

than first sought, many companies will have to bring forward their next capital

raising. Those whose share prices have fallen below the issue price, and had

poor investor relations strategy, will find the process harder. They may be

unable to raise funds, or have to issue many shares at a lower price – and badly

dilute shareholders – to survive.

It is not just IPOs that have to work hard on investor relationships. Small listed

companies generally are receiving less attention in this market. Lower ASX

trading volumes have seen more sharebroking firms cut back or axe their small-

company research. Small-cap fund managers have lower fund inflows to put to

work, as retail investors reduce their sharemarket exposure. Offshore investors

who may have previously supported small-caps have to contend with the

higher Australian dollar.

All of this means companies need to communicate clearly – before, during

and after the IPO – to maximise their chances of success in a tough market.

The best investor relations in the world will not help a newly listed company

that misses its exploration targets or has disappointing research. And short

term “company spin” may do more harm than good in the long run. But a well-

considered investor relations and governance strategy can add significant

value for newly listed companies.

Here are 12 points to consider:

1. Run like a listed company before you list

Many companies, especially in mining, are formed to buy an asset through

an IPO. Those that have been around longer need to operate like a listed

companies from at least two years before an IPO. This might involve forming

a board, providing more formal communication to seed investors, lifting

company reporting standards, and developing a clear environmental, social

and governance strategy. The aim is for a smooth transition when the company

goes from private to public.

2. Focus on the right share register

Any capital will do for companies that are struggling to raise their minimum

subscription. Smart companies think about their share register before and

during their IPO. They try to attract long-term investors who can provide stability

to the share register and will participate in future capital raisings. Having a

prominent small-cap fund on the register, for example, may attract others.

8

from its drilling program within months of listing. A biotech might announce

its research progress. An industrial company might provide a quarterly update

or release an investor presentation as a company announcement. But resist

announcing meaningless news designed to inflate the share price. Investors

soon tire of it.

9. Maintain the communication

Know that up to a third of your time as CEO could be spent on market

communication and listing compliance issues. Aim to build long-term

relationships with several broking firms and the media. Take advantage of

services such as ASX’s small and mid-cap investor roadshows that help

promote more-established small listed companies to offshore investors. Think

about a regular investor communication program and how technology, such as

webcasts and webinars, can help.

10. Spread the communication burden

In many small listed companies, only the CEO talks to investors, analysts or

the media. That makes sense, but consider the role of the chairman and chief

financial officer. The CEO might talk on all matters relating to company strategy.

The chairman might talk on governance issues and broader industry issues

where appropriate. The CFO might talk to professional investors and analysts on

the company’s numbers. Of course, the CEO should be the focal point and there

is nothing worse than mixed messages from having too many spokespeople.

But with careful planning, a small company can maximise its investor relations

effort and minimise communication risk.

11. Escrow anniversaries

I’m always surprised how little attention newly listed companies give to escrow

anniversaries, when shares that the ASX deems as restricted securities are

able to be sold a year or two after listing. All too often the company’s share

price is hammered as seed investors dump their stock as soon as they can.

Smart companies think about how investor relations before and during escrow

anniversaries can minimise share register volatility. It doesn’t take much selling

to crunch illiquid small stocks.

12. The next capital raising

The best emerging companies always have an eye on their next capital raising.

They do not lose momentum when capital is raised. They know the name of

the game is getting a higher share price that allows more capital to be raised,

with less dilution from excessive share issuance. Even better is growing the

company from its cash flow and issuing few new shares. But cash flow for most

small IPOs is at best several years away. Survival depends on their ability to

raise fresh capital, and a having strong, well-planned investor relations program

to support the process.

About Tony FeatherstoneTony Featherstone is a former managing editor of BRW, Shares, Personal Investor, CFO and Asset magazines. Tony has been a business journalist and editor for almost 20 years and has written for publications such as Company Director, The Australian Financial Review, Sydney Morning Herald and Sun-Herald. He is currently a Director of Featherstone Media & Publishing, a specialist editorial consulting and freelance-writing firm.

Tony writes a weekly column for the Australian Financial Review on IPOs, a weekly column for BRW magazine on small and mid-cap investment strategies, and a weekly blog for The Age on entrepreneurship. He is also the consulting editor for the ASX Investor Update e-newsletter. Tony has a Master’s of Entrepreneurship and Innovation (SWIN), an honours degree in economics (UQ), a graduate diploma in applied finance (FINSIA) and has almost completed a master’s degree in marketing (UNSW). Tony lectures in entrepreneurship and innovation at Swinburne University.

3. Communicate well in seed funding

The booming fast-food chain, Pie Face Holdings, is a good example. It produced

a well-designed, well-written 36-page information memorandum for its

$10-million capital raising last year. The report clearly outlined the company’s

strategy and the capital raising attracted new investors, such as Macquarie

Group. Early investors could see Pie Face’s long-term growth targets; some may

stick with the company well after its intended IPO late this year or next, knowing

it could be more valuable.

4. Think about service providers

The involvement of other firms in a float can be a strong investor relations

tool in itself. Spending more on better-known professional services firms, be it

accounting, law or geology, can make a big difference. Working with a better-

known broker or corporate adviser also helps. This is not always possible and

some small service providers do an excellent job with IPOs, but think about how

other service providers sell the float to investors. Internally, an experienced

chief financial officer can give investors more confidence in a company’s

accounting, which is critical with unknown IPOs.

5. Get the board right

Small IPOs often take one of two approaches with boards. They recruit a

“trophy” chairman or director, more for their name than what they contribute.

Or the board has three of four directors (none well known as governance

specialists), little independence, and does not comply with several ASX

Corporate Governance Council Principles and Recommendations. It is such

a lost opportunity. Thinking about board composition early, and showing a

company has strong governance, can be an important selling point for IPOs.

6. The prospectus

The Australian Securities and Investments Commission has lifted its scrutiny

of IPO prospectuses in the past few years and provided new guidelines on how

to write disclosure documents. ASX also pays great attention to IPOs and their

compliance with ASX Listing Rules. Yet many IPO still have prospectuses that

regulators consider misleading. They contain forward-looking statements with

too few assumptions; aggressive marketing, including unrealistic photos (often

of producing mines); and too much generic information on risks. The company

then wastes time and money producing supplementary or replacement

prospectuses and is off to a terrible start before it lists. Spending more time

on a clear, balanced, readable prospectus can make a big difference to IPO

prospects and after-market support.

7. Watch the ‘spin’

Good CEOs find the right balance between promoting the company’s prospects

while complying with continuous disclosures rules and treating all shareholders

equally. Bad CEOs hype their company’s announcements, provide information to

some investors before others, and only care about short-term gains. The hype

quickly fades and the company damages its investor relationships.

8. Plan the news flow

Smart companies think about their announcements after listing, while

complying with compliance obligations during the prospectus process, and

continuous disclosure rules, and avoiding corporate spin (as per point seven

above). An exploration company, for example, might announce assay results

CEO Insights

9

Wholesale Investor National Investor Sentiment Index

10


11

For over 25 years, former senior NAB banker Neil Slonim worked closely with many

HNWs and entrepreneurs. Some were hugely successful whilst others were

less so. Based on this experience he has identified three types of reasons why

investment decisions go wrong - People, Financial and Environmental.

PEOPLE

Some investors pay large sums for goodwill only to see it dissipate through

their own actions that disrupt the company’s capacity to produce the results

that justify the goodwill paid. When buying or investing in a business, HNW’s/

entrepreneurs can struggle with the balance between the role they play as

shareholders and managers/leaders particularly alongside an incumbent

management team which includes co-shareholders.

Conflict can easily arise between management who have usually started and

grown the business and the investor who brings cash to the table but has other

expectations. The classic example of this is the wealthy individual who invests

in a business either to buy themselves or more often their children a job. Whilst

the capacity to inject new capital into a growing business puts the investor in

a strong bargaining position, neither party should proceed with any transaction

unless both are totally comfortable with the ongoing role the investor or their

family members wish to play, especially if this involves day to day management.

When they do become actively involved in the business, investors can come

unstuck because they lack the management, leadership or industry experience

required to be make a meaningful contribution. They might assume (wrongly)

that being an owner entitles them to be a leader but injecting new cash into a

business gives the investor ownership but leaders gain traction and respect

from personal conduct not personal wealth. A self aware investor knows if he/she

has the ability to define and articulate a vision and to inspire people to join them

on the journey. Unfortunately not all investors have this level of self awareness

with their attitude more akin to “I am an owner and therefore I am entitled to be

respected”. These situations usually turn out badly for all concerned. Finally,

some investors are just not suited to be in partnership situations so rather than

try to work through these challenges, it is perhaps better to accept this upfront

and structure any investment accordingly.

FINANCIAL

There are no new ways why businesses fail and the oldest and most common

cause is lack of equity or “hurt money”. HNWs/entrepreneurs are optimistic by

nature and accordingly don’t always take into account all the things that could

go wrong. Thus the business could lack a strong capital base which is needed

to weather the economic storms which play out from time to time. In the event

Plan A falters every business needs a Plan B and even a Plan C. This invariably

involves access to more funds albeit possibly only for a short period. Businesses

need to be appropriately capitalized in the first instance and also be able to

access a contingency fund in the event the need arises.

Similarly, when preparing forecasts, owners should undertake best case, most

likely case and worst case scenarios and ensure that even under the worst case

3 Reasons Investment Decisions Can Go Wrong (by Neil Slomin)

scenario the business still has access to sufficient funds to ensure its survival.

When considering the worst case scenario, investors should assume Murphy’s

Law applies ie anything that can go wrong, will go wrong. More often than not

businesses fail due to the occurrence of more than one unrelated adverse event.

HNWs/entrepreneurs generally prefer to minimise the level of their financial

commitment by leveraging their reputation and standing with the banks

to access the maximum level of bank debt without the need for a personal

guarantee. This reduces the weighted average cost of capital, provides a

better return on the capital invested and also minimises and caps the absolute

amount of funds at risk. Everybody is happy when things go well but if the

business hits turbulent times and breaches banking covenants, the situation

can rapidly deteriorate. HNWs who previously assured the bank that “my word

is my bond” can be placed under immense pressure by banks which are longer

placated by words and instead insist on additional tangible support. And when

the pressure is on, banks will always look to protect their balance sheet ahead

of any individual client relationship regardless of the borrower’s standing. Along

with lack of equity, inadequate due diligence (“DD”) is another common cause

of failure. Some investors simply pay “over the odds” for a good business whilst

others completely misread the situation and end up investing in a “lemon”. Either

way, the root cause is lack of or poor DD. Investors might be put off by the cost

of external and/or specialists conducting DD whilst some believe they possess

the necessary skills themselves. Often they will rely on their external accountant

who whilst relatively inexpensive may lack the technical or industry experience

of larger or specialist professional firms.

The costs of external DD even if it is to review the work carried out by the

investor invariably outweigh the losses incurred from a bad decision. Whether

it is ego, time pressure, complacency or any other factor, there is no substitute

for proper DD. Having a solid understanding of the business and knowing the

owner might encourage an investor to dispense with a formal DD process but in

fact DD is even more critical where there is existing knowledge and especially

an existing personal relationship. Investors should work on the principle of “Trust

but Verify”.

ENVIRONMENTAL

Looking at the broader environment in which businesses operate, perhaps

the biggest error HNWs/entrepreneurs make is failing to properly recognise

the impact of technological change. There are countless examples where

technological change has substantially reduced the value of an investment for

instance the shift from vinyl records to cassettes to CDs, the DVDs and now

digital. Companies which don’t quickly adapt to such change eg Kodak will

struggle to survive. Secondly any industry which is reliant upon government

incentives involves risk which can be difficult to quantify because governments

do not make decisions on the same basis as businesses. Classic examples

include home insulation, solar energy, gaming and the motor vehicle industry.

Many investors have been brought undone by the stroke of a pen of politicians

and bureaucrats. Finally, the compliance burden can have a significant impact on

investment profitability and returns. HNWs/entrepreneurs can easily overlook the

impact, not just in terms of cost, of meeting changing regulatory and compliance

standards. Perhaps the best example of this is the financial services sector.

Neil Slonim established Slonim Consulting in 2008 to help growing businesses grow profitably and safely by applying the lessons learned in a career in corporate and business banking. He sits on a number of boards and advises several family businesses on issues as broad as investment decisions and succession planning.


12

The mistake we made was to rely on the profitability of the acquired firm to

partly fund the acquisition and to assume that the change of ownership would

require little attention from the UK executive team. Even though we undertook a

proper due diligence, we were let down by our advisors. Basically, we had failed

to build in enough capacity to deal with possible problems.

If you start the evaluation process by looking at what might go wrong and

how you could mitigate the costs, delays and risks, you have a much better

appreciation for what resources you need to have on call in order to get through

the process. The worst situation to be in is to suddenly be confronted with an

unanticipated problem for which you have no strategy. You need to plan for

the loss of key employees, disruption of both businesses, a heavy drain on

executive time, more time to bring the business under new management and

a longer time to achieve investment outcomes. If you can still make a positive

case for the acquisition under a worst-case scenario, you are probably looking

at a very good investment.

Written by Tom McKaskill Global serial entrepreneur, consultant, educator and author, Dr Tom McKaskill has

established a reputation for providing insights into how entrepreneurs start, develop and

harvest their ventures.

When acquiring companies, keep the worst case scenario in mind.

Acquisitions tend to stretch most acquirers to the limit. Perhaps they tend

to take on more than they should or maybe they are simply unprepared for

the process, but what is obvious is that most buyers fail to achieve their

investment objectives. Few anticipate the level of executive commitment

required, the extent of disruption to their own business or the size of the

project they are taking on. The timing of the deal is often outside their control

and thus can come when the firm is already working at capacity. What they

often fail to do is to work out what could go wrong before they decide to launch

their acquisition bid.

Perhaps the most valuable tool in the armory of the acquirer is the worst-case

scenario. Murphy’s Law is great technique for working out whether you have the

capacity and capability to take on an acquisition activity. If you project that you

can get through the activity when things go wrong, the chances are that you

will come out the other end in reasonable shape.

When I was the President of a UK based software firm of 34 staff, I undertook

an acquisition of one of my software suppliers in San Diego which had 57

employees. We agreed the deal, raised venture capital to finance 75% of it and

used surplus cash and anticipated earnings to cover the balance. A US based

national firm of accountants undertook the due diligence and gave the firm a

clean bill of health. Three months after we took control, the same accounting

firm undertook an audit and discovered serious irregularities with revenue

recognition and inventory counting. As a result of these findings we took the

accountants and prior owners to the federal court in the US. Over the next five

years the business was severely disrupted, lost money most years, terminated

about one third of the employees and drained the UK of cash. Both businesses

were almost brought to their knees by the litigation activity.

Understand the Worst Case Scenario (by Tom Mckaskill)

13

Benitec Biopharma Limited (ASX:BLT)

Biotechnology-therapeutics

1997

Early Stage

Sydney

Company Name

Sector

Year Established

Business Stage

Location

BIO TECH

Executive Summary Benitec Biopharma Limited is a publicly listed (ASX:BLT) biotechnology company whose key

assets are exclusive irrevocable worldwide rights to a platform technology which has the

potential to permanently silence any gene associated with human diseases or conditions.

Benitec Biopharma is demonstrating the efficacy and safety of this technology through

collaboration with leading organisations globally. With over 100 granted patents and patent

applications, BLT holds the dominant position in the field. Benitec’s current projects are

directed to using gene silencing to treat or cure intractable pain, viral infections, cancer and

genetic disease, demonstrating the extraordinary scope of the technology in human therapy.

Competitive Advantages•Cancer-associated neuropathic pain. Benitec Biopharma is utilizing its platform technology

to develop a once-only innovative therapeutic to overcome intractable pain in patients

suffering from terminal cancer.

•The non-small cell lung cancer program, is using ddRNAi to silence the beta III tubulin gene

which has been demonstrated to significantly overcome the resistance of lung cancer cells

to chemotherapy drugs.

•Thehepatitis B program is being done in partnership with Biomics Biotechnologies Co, Ltd

in China. The aim is to develop a curative therapy for chronic hepatitis B infection based on

long term silencing of a key viral gene.

• Inoculopharyngeal muscular dystrophy (OPMD), the program aims to develop a cure for this

currently untreatable and often fatal genetic disease which affects around 1 in 3000

people worldwide.

Key Milestones & Investment Highlights•Extensivepatentportfoliostrengthenedthroughfivemoregrantedandallowedpatentsin

the US and Europe recently, taking the current tally to 49 granted or allowed patents globally.

•Progressinpreclinicalstudiesinallprogramscontinuestoprovideconfidenceofprogress

towards clinical trials.

•CommencementoftheOPMDprojectinJanuary2012signalsthefirstapplicationofBLT’s

technology to genetic disease.

•ApplicationsofBLT’stechnologyshowpromiseinenhancingstemcelltherapyinrecent

publications. This opens new opportunities for ddRNAi.

•Financiallystrengthenedbyrecentsuccessful$8Mfundingviaarenounceablerightsissue

Further InformationTo learn more about this opportunity go towww.wholesaleinvestor.com.au and search forBenitec.

Board & Management:

Peter French - CEOBSc, MSc, MBA, PhDCell and molecular biologist. Principal Scientist - Centre for Immunology, St Vincent’s Hospital; Founder of Cryosite (CTE); Ex-President ANZSCDBI.

Peter Francis - Non-Executive ChairmanLLB Grad Dip (Intellectual Property)Partner at Francis Abourizk Lightowlers (FAL), a firm of commercial and technology lawyers. He is a legal specialist in the areas of intellectual property & licensing.

Mel Bridges - Non-Executive DirectorBAppSc FAICDMore than 30 years experience in the global biotechnology and healthcare industry. Chairman of Alchemia Limited, Impedimed Limited and Leaf Energy Limited. He also co-founded the listed company Panbio Ltd. Tissue Therapies Limited. The Queensland Entrepreneur of the Year in 2004.

John Chiplin – Non-Executive DirectorPh.DFormer CEO of Arana Therapeutics (acquired by Cephalon). Former head of the $300M ITI Life Sciences investment fund in the UK. Owns Newstar Ventures Ltd.

Code

Market Capitalisation

Current Share Price

52 Week High

52 Week Low

ASX:BLT

18,441,942

$0.0190

0.0450

0.0130

Share Information As at 27 February 2012

ASX:BLT 6 month price chart0.03

80

40

120

160

0.02

0.02

Sep 2011 Oct 2011 Nov 2011 Dec 2011 Jan 2012 Feb 2012

14

BIO TECH

Board & Management:

Jay Hennock - Managing Director BEcOver 20 years in corporate advisory services including Citibank and Bank of America. Founding shareholder of Xenexus Pharmaceuticals and Nuon Therapeutics.

Roger Moore - Executive DirectorBPharm40 years experience in the international pharmaceutical industry. Headed Novo Nordisk`s Japan region operations for 30 years.

Professor Greg Fulcher - Chief Medical OfficerMBBS, MD, FRACPClinical Professor of Medicine at the University of Sydney, Director of the Department of Diabetes, Endocrinology & Metabolism at RNSH. Principal investigator on 32 clinical trials over the past 5 years.

A-Prof Christopher John Jackson - Chief Scientific Officer PhDDirector, Sutton Laboratories, Institute of Bone and Joint Research (IBJR), Co-inventor of Activated Protein C as a wound healing agent.

Dr Michael L. Selley - VP Research and Development PhDFounder and Chief Scientific Officer of Nuon Therapeutics. Chief of Staff to the Australian Minister for Science

Corporate StructureBioatrix Pty Ltd was incorporated in February, 2012.

Exit StrategyBioatrix will seek to list on the ASX at an appropriate time.

Further InformationTo learn more about this opportunity go towww.wholesaleinvestor.com.au and search for Bioatrix.

Executive SummaryBioatrix focuses on two key therapeutic areas: dermatology and diabetes. Our global mission

is to become a significant diabetes and dermatology drug company starting with Activated

Protein C (APC) therapies. This is being achieved through scientific innovation and new

technology.

Bioatrix’s lead program is APC to treat diabetic foot ulcers and it is initiating Phase II trials.

BTX102 is in studies for the treatment of equine wounds.

In addition, the small molecule BTX103 has excellent potential for diabetic nephropathy.

Competitive Advantages•Sydney University’s Kolling Institute has successfully reprofiled APC – that is they have

discovered that APC is effective in the treatment of wounds, in particular, chronic wounds

such as diabetic ulcers

•AsAPChasaknowntoxicityprofileandwasusedsystemically,Bioatrixisabletogostraight

into Phase II clinical trials, thereby substantially shortening the time until the drug reaches

the market, from 15 years to 5 years

•DosageoftopicalAPCinwoundhealingisapproximately250timeslessthantheapproved

dosage of recombinant APC (Xigris) in Sepsis

•VerylowriskofPhaseIItrialfailuresduetotoxicity/sideeffects

•BioatrixhaslicensedSydneyUniversity’stechnologyandwillundertakeaPhaseIIclinical

trial

•BioatrixisnegotiatingwiththreegroupsonthedevelopmentofanAPCcelllineandGMP

manufacture of recombinant APC – Bioatrix will own this IP.

Key Investment Highlights•ExcellentAPCPhaseIclinicaldatainChronicWoundHealing–BTX101

•Discoveredanddocumentedmechanismsofaction–publishedpapers

•BTX101intoPhaseIItrial–withNHMRCgrant

•BTX101existingpatentportfolio

•BTX102–USprovisionalpatentbeinglodged

•BTX103–smallmolecule,cytoprotectivedrug-inanimalstudies

•FurtherpatentsandIPbeingdevelopedineachdrug

•Lowcost,lowriskdrugreprofilingmodel–earlypartneringwithpharma

•Strong,managementteamwithexpertiseinallareasofdrugcommercialisation

•OutstandingScientificAdvisoryBoard.

Bioatrix Pty Ltd

Biotechnology

2012

Phase II trials, Pre-IPO or Series A Funding

$5 million

Company Name

Sector

Year Established

Business Stage

Seeking

15

BIO TECH

Jubilent Health Aust Limited

OTC medicines

4

Market ready

Australia

$5 mil equity to scale

Company Name

Sector

Year Established

Business Stage

Location

Seeking

Executive Summary Jubilent Health Aust. Limited is poises for rapid growth and is inviting investors onboard in

order to fund the scaling up of proven existing business and expansion of the unique product

range to sell into existing and new pharmacy customers and begin the global expansion of it’s

brands.

Jubilent Health Aust. Limited, an Australian Pharmaceutical company, has unique patented

technologies resulting in formulae’s and API’s (Active Pharmaceutical Ingredients) which will

change the way many medical conditions and diseases are treated. Conditions like Obesity,

Diabetes, High Cholesterol, and even male infertility will be treated by medicines produced by

Jubilent, by targeting fundamental cellular mechanisms to reverse symptoms at their origins

and so reverse diagnosis.

Jubilent Health Aust. Limited will continue to manufacture products with lots of market “Sizzle”

like ToneUP® the world’s first ‘Body Composition Change Product’, already proven in the

Australian market place to be capable of generating Gross profits in excess of $10million if

marketed nationally and clinically proven in university trials to reduce fat and increase muscle

mass without change in diet or exercise.

Competitive Advantages•API’s(ActivePharmaceuticalIngredients)

•Uniquediagnosisreversingmedicines.

•StrongPipelineofproducts

•Paradigmshiftingtreatmentoptions

•Multipledistributionchannelsestablished

•Realmarketexperience,backrobustprojections

•Strongmanagementteamwithprovenrecord

Key Investment Highlights•Rapidgrowthwithgoodmarketuptakeachievealready

•Highmarginproductsinahighgrowthsector

•Revenuesachievedinthefirstyear

Further InformationTo learn more about this opportunity go towww.wholesaleinvestor.com.au and search forJubilent Health.

Board & Management:

Norman Ohl - Director/ Company SecretaryNorman is the founder of Jubilent Health Aust. Limited and brings a wealth of management and entrepreneurial acumen to the Company. Long track record of high growth high value business

Peter Degnian - DirectorB.PharmPeter has been a registered pharmacist since 1983 and still active in retail and patient interaction

Cathrine Dahlgren - DirectorM.AppSc (App Chem), Dip. Bus (F’line M’ment)This vast experience, including work with Sigma Nutraceuticals/Herron Nutraceuticals, Progen , Mediherb, provides solid regulatory expertise to the Compan.

Mario Gattino - DirectorApp Sc( Med Admin), MBA ( Exec), Dip Bus (M’ment)Mario Gattino is a former global VP level senior executive with Pfizer Inc., the world’s leading biopharmaceutical company, with extensive international experience.

Corporate StructureAustralian Public Company

Exit StrategyJubilent Health hopes to list on a suitable exchange at an appropriate time.

16

BIO TECH

Board & Management:

Dr David Fisher - Director 1st Class Honours Rural Science; PhD Chemical Engineering; Masters in Applied Finance and InvestmentsDavid is a founding Venture Partner with Brandon Capital Partners. David was CEO of Peptech Limited. Prior to Peptech, David spent ten years with Pharmacia AB (now part of Pfizer, Inc). David is a past president of the Australian Biotechnology Association and past chairman of the CSIRO’s Division of Animal Production Industry Advisory Committee.

Andrew Maxwell - Managing DirectorMBA, MAcc, ACPA, MAICDAndrew has a proven track record of entrepreneurial business success in Australia and Asia spanning over 25 years. Andrew is the former CEO of ESCOR Private Equity (a Smorgon Family Company). Prior to joining ESCOR, Andrew was a serial start-up company entrepreneur with a history of successful company launch, business growth and exit.

Corporate StructureProprietary Limited Company.

Exit StrategyThe exit plan for investors is via a listing on an appropriate exchange or a trade sale.

Further InformationTo learn more about this opportunity go towww.wholesaleinvestor.com.au and search for Global Kinetics.

Executive SummaryGlobal Kinetics Corporation (GKC) provides point of care measurement and reporting of

Parkinson’s disease (PD) motor symptoms for neurologists and professional carers to manage:

• Surgicalandpharmacologicalinterventionstotreatdyskinesia;

• Routinepharmacologicaltreatmentofbradykinesiaanddyskinesia;and

• Ameansforpatientstomanagetheirtherapeuticcompliance.

Adoption of the PKG System will result in better patient clinical outcomes, lower patient

management costs and a better quality of life for PD patients. The addressable market in

Europe, US and Australia is $345M+ which represents only 20% of the 12M+ people forecast to

have PD by 2015. The company forecasts annual revenue of $20M+ and NPAT of $8M within the

five years.

Competitive AdvantagesGKC’s core intellectual property is founded on sophisticated software that differentiates

clinically important movement from normal movement and reports this as a bradykinesia and

dyskinesia score.

This intellectual property is protected by:

• Patent;

• UniquedomainexpertiseoftheGKCteam;

• Retainingdatamanagementservicesin-houselimitingaccesstoGKC’sproprietary

algorithms and data library; and

• InvestinginongoingresearchanddevelopmentaloneandinpartnershipwiththeHoward

Florey Institute.

Key Investment Highlights•SolvingasignificantunmetneedinthemanagementofPD;

•Alargeandgrowingglobalmarket;

•Uniqueanddefendableintellectualproperty;

•RegulatoryapprovalinAustralia,UnitedKingdomandEurope;

•Engagementwithkeyindustrystakeholders;

•Ateamthathasaprovenrecordofdeliveringvalueforshareholders.

Global Kinetics Corporation

Medical Devices

2007

Commercialisation

Melbourne

Capital Raising

Company Name

Sector

Year Established

Business Stage

Location

Seeking

17

BIO TECH

BioDiem Ltd (ASX:BDM)

Biotechnology

2004 (IPO)

Commercialisation

Melbourne

Company Name

Sector

Year Established

Business Stage

Location

Executive SummaryBioDiem is a developer of vaccines for both treatment and prevention of diseases. The lead

technology is the LAIV influenza vaccine, licenced to the Serum Institute of India, and recently

to Changchun BCHT Biotechnology Co. for commercialization in India and China, respectively.

The first royalties flowed to BioDiem from influenza vaccine sales in 2010. BioDiem is also

developing vaccines to treat cancer and serious infections based on the LAIV technology. This

technology could be sold or licenced to other vaccine developers. The acquisition of Savine

Therapeutics Pty Ltd in December 2011 will expand the range of vaccines being targeted e.g. to

include tuberculosis (TB).

Current Projects•Researchofnewvaccinesfortreatmentofcancerandseriousinfections,includinginfluenza.

•DevelopmentofBDM-Ifortreatmentofseriousinfections.

Competitive Advantages•Proveninfluenzavaccinetechnology,alreadymarketedinIndiaandRussia;approvedfor

marketing in Thailand.

•ResearchexcellencethroughrelationshipwithInstituteofExperimentalMedicine,St

Petersburg.

•Widevaccinetechnologybaseallowingdevelopmentofpreventativeandtreatmentvaccines

for multiple applications e.g. cancers and infections.

•Extensiveclinicaltrialandon-marketexperienceoftheLAIVvaccine(100mdoses)inRussia:

the egg-based vaccine has established efficacy and safety.

• Intranasaldeliveryincreasespatientacceptabilitybyeliminatingneedforneedles.Patients

can administer the nasal vaccine themselves.

Key Milestones and Investment Highlights•Largetargetmarketforvaccines(US$27bwithfastgrowthat9.8%)andforBDM-I(anti-

infectives market estimated at US$50b in 2011).

•BioDiem’stechnologyallowsavarietyofpotentialvaccinestobedevelopede.g.cancer

treatment vaccines and vaccines to treat and prevent serious infections.

•NewinfluenzalicencesforIndiaandChinainlast12monthsareinplace–licencefeesand

royalty payments of $255K in FY2011 and $550K to date in FY2012.

•August2011:BioDiemsignedanexclusivelicencefortheIndianprivatesectorofBioDiem’s

LAIV vaccine technology to India-based Serum Institute of India (SII).

•February2012:BioDiemsignedanexclusivelicencefortheChineseprivatesectorof

BioDiem’s LAIV vaccine technology to Changchun BCHT Biotechnology Co. (BCHT).

Share Information

Code


Current Share Price

52 Week High

52 Week Low

ASX:BDM

9,143,080

$0.0900

0.2000

0.0700

Further InformationTo learn more about this opportunity go towww.wholesaleinvestor.com.au and search for BioDiem .

As at 27 February 2012

ASX:BDM 6 month price chart


0.10

0.09

0.08

0.07

120160

8040

Board & Management:

Hugh Morgan AC - ChairmanLLB, BComHugh Morgan is Principal of First Charnock. He is also a member of the Lafarge International Advisory Board, an Emeritus Trustee of the Asia Society New York; Chairman Emeritus of the Asia Society AustralAsia Centre, and President of the National Gallery of Victoria.

Julie Phillips – Executive Director & Chief Executive OfficerBPharm, MSc, MBAMs Phillips has been CEO of BioDiem since July 2009 and was appointed a director in May 2010. She has experience as a CEO and director of start-up Australian biotechnology companies in the life sciences sector.

Larisa Rudenko - DirectorMD, PhD, DScProfessor Rudenko is Head of the Virology Department in the Institute of Experimental Medicine, St Petersburg, Russia. She is recognized as one of the world’s leading experts in live attenuated influenza vaccines.

18

BIO TECH

Board & Management:

Dr James Douglas Watson - Co-founder and Chief Executive BSc, MSc & PhDExperience in R&D and starting and exiting biotech ventures. Dr Watson was the founder and CEO of Genesis, NZ and ASX listed in 2000.

Dr Richard Forster - Co-founder and Chief Scientific OfficerBSc, MSc & PhDSignificant experience in intellectual property development and commercialisation. Dr Forster is also the co-founder of Lanzatech Limited.

Dr Roland Toder - Vice President Business DevelopmentBSc, MSc & PhDProven skills and a track record in technology transfer, business development and management in the life science industry.

Prof Alastair MacCormick - ChairmanBSc, Mcom, PhDProfessional director of a diverse range of public and private companies.

Corporate StructureCaldera is a New Zealand registered private company

Exit StrategyA trade sale to a larger molecular diagnostics player will be the earliest opportunity to realise liquidity at a significant return. An alternative is an IPO on a suitable public exchange.

Further InformationTo learn more about this opportunity go towww.wholesaleinvestor.com.au and search for Caldera.

Executive SummaryCaldera Health is developing a suite of diagnostic tests for prostate cancer designed to be

more reliable and informative than the existing PSA test. The current PSA test misses around

15% of prostate cancers and is frequently positive when no cancer is present. In a preliminary

test of two of Caldera’s tests, the accuracy was 100% with no incorrect false negatives or

positives. Caldera’s suite includes tests that are expected to predict how aggressive cancers

are and how successful therapy is. Caldera is preparing for clinical studies in 2012 to validate

its diagnostics and anticipates that it will commence commercial sales shortly through

licensing agreements and be adopted globally as the diagnostic gold-standard.

Competitive Advantages•Asuiteofnon-invasivediagnostictestswiththeprognosticpowertopredictwhether a

tumour is a high, intermediate or low risk to the patient’s life.

•Nocurrentcompetitioninmonitoringefficacyofprostatecancertreatment.

•Competingproductsdonotappeartohavethesamebreadthofutilityasthosebeing

developed by Caldera, which offer early detection, cancer characterisation, improved

accuracy and monitoring.

•CurrentcompetitionbasedprimarilyonthePSAtestandbiopsies.

•Caldera’sdiagnostictestsaimtoreplaceprostatebiopsies:nocompetitorproductoffersthis

solution.

•SixpatentapplicationshavebeenfiledintheUSA.

Key Milestones & Investment Highlights•Superiordifferentiatedtechnology

•Proprietaryclaimsfiledinpatentapplications

•Proprietarytechnologyplatform

•Clearpathtomarket

•Progressiveproductlaunches,beginning2013

•Largemarketandvaluepotential

•Rangeofexitoptions

•Highlyexperiencedmanagementwithinternationalnetworksintomoleculardiagnostics

Caldera Health Limited

Life Science / Diagnostics

2009

Early Stage

Auckland, New Zealand

$NZ 3.5 million

Company Name

Sector

Year Established

Business Stage

Location

Seeking

19

BIO TECH

Executive SummaryPhylogica is engaged in the discovery and development of novel peptide-based

biopharmaceuticals. Phylogica enters into discovery alliances with large Pharmaceutical

companies for which it identifies potent bioactive peptides. These deals provide access to

short term revenue as well as future milestone payments and royalties.

Phylogica has discovered and validated a proprietary class of targeted peptide therapeutics

(Phylomers®) which constitute the most structurally diverse source of peptides available.

Phylogica has made libraries of billions of Phylomers from which drug candidates can be

selected using the company’s advanced screening methods. Phylogica owns this unique

class of peptides, with 16 patent families, including multiple granted patents in the US and

Europe. Phylogica is in the commercialization phase and is beginning to sign discovery deals

with some of the world’s largest pharmaceutical companies, including Roche, MedImmune

(biologics unit of AstraZeneca) and Pfizer.

Competitive Advantages•Advantagesoverbiologicsdiscoveryplatforms(antibodies,proteinscaffoldsorrandom

peptides)

•Phylomerlibrariesarethemoststructurallydiversebiologicslibrariesavailable

•Thehit-to-targetratiosfromPhylomer®librariesarehighandtheproportionofhitswhichare

of high target affinity, and are biologically functional, is also high

•Phylomerscanbestraightforwardlymadebychemicalsynthesis

•Phylomerscanbedeliveredbypatientfriendlymeanssuchasintranasally

•Phylomerlibraries(unlikeantibodylibraries)arenotassociatedwithpatent‘royaltystacks’

Key Milestones & Investment Highlights•Phylomersofferclearadvantagesovercompetingbiologicsdrugs

•Phylogicahasvalidateditstechnologyandstreamlineditsprocessestoallowscalability

•PhylogicahassigneddrugdiscoverypartnershipswiththreeleadingPharmacompaniessince2009

•PhylogicaandRocheextendedtheircollaborationinMay2011followinginitialsuccess

•PhylogicaisindiscussionswithmultiplePharmacompaniesandexpectsmoredealsover

next 12 months

•UnlikemostAustralianbiotechnologycompanies,Phylogicabearsnoriskfromfailurein

clinical trials since its candidates are licensed at the discovery stage to partners

•Phylogica’sstrategyisdrivingnear-termrevenuegrowthandacceleratedcashsustainability

•Phylogica’speersarevaluedatmorethanUS$100million

•TheaverageacquisitionvalueforadrugdiscoverycompanylikePhylogicaishundredsof

millions of dollars

Board & Management:

Dr Doug Wilson - Executive Chairman MB, ChB, PhD, FRACP, FRCPAFormally Global Head of Medicine Boehringer Ingelheim. Oversaw regulatory approval and launch of 10 drugs.

Professor Paul Watt - Executive Director/CEO BSc. D. Phil (Oxon)Doctorate from Oxford, Postdoctoral Fellowships at Harvard and Oxford; 40 publications, 19 patents.

Nick Woolf - Executive Director/CFOMA (Oxon), FCCA18 years experience in the industry, equity research and investment banking. Formerly Chief Business Officer and Executive Director of Oxford BioMedica. Previously, he was Head of European Biotechnology Research at ABN Amro and he has held similar roles.

Bruce McHarrie - Non-Executive DirectorB.Com FCADirector, Finance/Business Development, Telethon Institute for Child Health Research. Former roles: Assistant Director Biotech Division, Rothschild Asset Management, London, Coopers&Lybrand, Deloitte.

Share Information

Code


Current Share Price

52 Week High

52 Week Low

ASX:PYC

15,606,176

$0.0350

0.0860

0.0320

Further InformationTo learn more about this opportunity go towww.wholesaleinvestor.com.au and search for Phylogica Limited (ASX:PYC).

As at 27 February 2012

ASX:PYC 6 month price chart 0.07

0.06

0.05

0.04

0.03

68

10

42


Phylogica Limited

(ASX:PYC)

Biotechnology and Pharmaceuticals

2003

Commercialisation

Perth, Australia

Company Name

Sector

Year Established

Business Stage

Location

20

Executive SummaryPhotonz is a world-leader in the production of the omega-3 compound “EPA” by fermentation

for high purity, pharmaceutical applications.

Demand for EPA is growing exponentially but the world’s supply is extracted from wild fisheries

that are a variable and risky source. Photonz avoids these supply risks and makes EPA “like

beer” that is economic to purify to pharmaceutical concentration.

Photonz will sell EPA to manufacturers of regulated pharmaceuticals making products for the

cardiovascular disease drug market – specifically, treatments for dyslipidemia (high blood

cholesterol and triglycerides).

The Company is currently completing process development at pilot industrial scale and

expects to begin product sales in 2012.

Competitive Advantages•Sustainability–Photonz’processusessimpleindustrialcommodityinputsandisnot

dependent on the continuing viability of wild fisheries or affected by natural variability or

environmental change.

•Security–Pharmaceuticalqualitymanagementsystemscanbeappliedovertheentire

Photonz process chain (unlike fish extract product) and multiple independent manufacturing

sites can be established.

•Consistency–Independencefromthenaturalvariabilityofwildfisheriesandtheapplication

of pharmaceutical quality management systems throughout the manufacturing process

ensure a consistent product.

•Proprietaryprocess–PatentshavebeenappliedforcriticalelementsofPhotonz’process

and intermediate products.

Key Investment Highlights•Proprietarymanufacturingtechnologywithfreedomtooperate.

•Validatedmanufacturingtechnology,December2011.

•Saleslate2012.

•MarketneedforEPAinestablishedcardiovasculardisease(highcholesterol)market.

•Growthmarket-exponentialgrowthindemandforEPA.

•Exposuretodrugmarketsbutlowertechnical&commercialrisk.

•Excellentmanagementteamwithpriorrelevantsuccess.

Board & Management:

Greg Moss-Smith - CEOMSc, MBA, IP LawFormer Global Sales Director Novozymes Biopharma. Former VP Commercial Operations GroPep Ltd (ASX:GRO)Director NZBIO

Richard Justice - CFOBCom, MBA, ACA, CMA, ACISFormer CFO Living Cell Technologies (ASX:LCT). Former COO Brocker Technology Group (NASDAQ:BKI)

Doug Wilson - Director MB, ChB, PhD, FRACP, FRCPAExec. Chair Phylogica LtdFormer Head of Worldwide Medical Research, Boehringer Ingleheim

David Kyle - AdvisorBSc, PhDCo-Founder of Martek BioscienceFormer Head of R&D Martek Bioscience

Corporate StructurePrivate, New Zealand Company .33 Shareholders. 71% owned by four holdings.

Exit StrategyPhotonza Corporation hope for a trade sale but may list on a suitable exchange at an appropriate time prior to acquisition.

Further InformationTo learn more about this opportunity go towww.wholesaleinvestor.com.au and search for Photonz Corporation Limited.

BIO TECH

Photonz Corporation Limited

Pharmaceuticals

2002

Late pre-revenue

Auckland, New Zealand

Capital Raising

Company Name

Sector

Year Established

Business Stage

Location

Seeking

21

BIO TECH

Retail Pharmacy Group

Health

2006

Growth Stage

Queensland

Company Name

Sector

Year Established

Business Stage

Location

Executive Summary Retail Pharmacy Group is the retail expertise behind the Alive Discount Pharmacy and the V

Pharmacy brands. Retail Pharmacy Group also is a Joint Venture partner in Pindrop Retail Group

(PRG), an innovative retail model for hearing solutions.

Retail Pharmacy Group is a major shareholder of PRG, which has developed a unique retail

model to sell hearing solutions via retail channels. PRG sells personal applifiers (PA) at prices

80% cheaper than the average hearing aid. PRG’s intellectual property includes our own hearing

test via a tablet interface. PRG has had interest from overseas retailers to license the model.

Alive Discount Pharmacy is a retail pharmacy franchise building on the retail expertise of

the management team. Right for the current economy the Alive Discount Pharmacy brand is

expanding with stores opening in Brisbane and regional Queensland.

Competitive Advantages•Retailexpertiseinpharmacy

•FirsttomarketonHearingsolutionviaalternativeretailingchannels

•UniquemarketpositionforAliveDiscountPharmacyFranchise

•Vibrantstoredesignsandmerchandiseinastalemarketsegment

Key Investment Highlights•Developingaretailmodeltoanewmarketsegmentinthehearingindustry

•FirsttomarketwithPindropHearing

•SigningamajornationalpharmacychainforPindrophearing

•Winning2AmericanExpressNationalRetailAwardsforVPharmacyin2006forinnovationin

retail and best store design

•ExpandingintotheBrisbanemarketwiththefirstsouthernfranchiseinMarch2012

Further InformationTo learn more about this opportunity go towww.wholesaleinvestor.com.au and search forRetail Pharmacy Group.

Board & Management:

Nick Loukas - Managing DirectorB Pharm B BusFounder and Managing Director of Retail Pharmacy Group, Chair of James Cook University Pharmacy Advisory Board, Adjunct Senior Lecturer at James Cook University, Current owner of 3 pharmacies.

Robyn Hayes - Merchanise and Marketing Manager25 years experience in retail pharmacy with 5 years as merchandise and marketing manager with Retail Pharmacy Group.

Adrian McFedries - Advisory Board MemberB.Com, LLB. Founder and CEO of the departure gate, an investment group.

Corporate StructureRetail Pharmacy Group is a private company.

Exit StrategyTrade sale is the most likely and most attractive exit strategy.

22

Executive SummaryOur objective is to grow a consumer health company by developing or acquiring high potential

brands or products and selling them through retail and online channels. Our brands can be

summarised as follows:

Herb Valley : Well established range of supplements and personal care products sold

exclusively through the health food channel.

Activecare : Developing range of pharmacy only complementary medicines

Activelife : An open brand of personal care products including a Paw Paw Lip Balm and

Aluminium Free Deodorants and Anti-Perspirant.

Sports-haler : Innovative medical device for the delivery of Ventolin and Asimol.

Stay-Healthy : A wholly owned subsidiary established to develop direct to consumer online

and catalogue sales.

Competitive Advantages•Coreofinnovativeanduniqueproducts

•Lowcostbase

•Nationalsalesteam

•Establishedcustomerbaseanddistributionnetwork

Key Investment Highlights•Salesgrowth444.76%

•Customergrowth151.96%

•AcquisitionofHerbValley

•AcquisitionofSports-haler

•LaunchofActivelifepersonalcarerange

•LaunchofChiaSeedOil&NatralgesicComplementaryMedicines

•DevelopmentofbrandandStayHealthyClubwebsites

•Re-packagingandpositioningofHerbValley

Board & Management:

Joe Bayer - ChairmanBBus (Acctg) CPA MAICDFormer Executive General Manager, Mayne (Faulding) Pharma Asia Pacific and Mayne Consumer Products.

Geoff Crittenden - Managing DirectorBSc(Hons)Eng CengAn experienced entrepreneur who has held senior executive appointments in Australia and overseas.

Rakesh Raj - DirectorMBA BSc EngSenior pharma executive former Director Pharmacy Division, Sanofi-aventis and GM Sales Sandoz.

Craig Stokoe - DirectorMD of LPN, a leading marketing and design consultancy.

Exit StrategyTo grow sales to more than $10 million within the next five years and look for trade sale or buy-out opportunities.

Further InformationTo learn more about this opportunity go towww.wholesaleinvestor.com.au and search for Cynergy Health.

HEALTHCARE

Cynergy Health

Consumer Healthcare

2008

Development

Sydney

Company Name

Sector

Year Established

Business Stage

Location

23

RENEWABLE ENERGY

BioPower Systems Pty Ltd

Renewable Energy

2006

Commercialisation

Sydney

$6 million

Company Name

Sector

Year Established

Business Stage

Location

Seeking

Executive SummaryBioPower Systems is focused on developing advanced technologies which convert the energy

in waves and tides to grid-ready electricity. Developed by a group of professional engineers

with a deep understanding of the challenges posed by harnessing ocean energy, the designs

address all the problems that have been experienced by other technologies. In achieving this,

ocean engineering principles have been augmented with survival and performance concepts

drawn from natural marine species such as kelp and sharks. This use of “biomimicry” leads to

wave and tidal system designs that are simpler, easier to install, and less expensive on a $/

MWh basis, than other ocean energy technologies.

Competitive AdvantagesBioPower’s primary technology, a wave energy system called bioWAVE™, is designed to sway

back and forth beneath powerful swell waves while capturing the energy and converting it into

electricity.

The key advantages of the bioWAVE technology are:

•Highefficiencyofenergycapture,withinsitu(onboard)conversiontohighvoltage

electricity, and direct low-loss transmission power to grid

•Abilitytostreamlinebylyingflatagainsttheseabedduringextremeconditions,enabling

extreme weather survival at low cost

•Simplelow-costinstallation,requiringonlystandardservicevessels

•Detachablepowerconversionmodule,allowingforsimplelow-costmaintenanceprocedure

•Zerovisualimpactandminimalaffectontheenvironment.

Key Investment Highlights•BioPoweremploys6-10specialisedprofessionals

•Extensivenetworkofpartners/alliances

•A$5millionfundingreceivedfromVictorianGovernment

• 100percentownerofIP,includingover28individualpatents(grantedandpending)

•Demonstrationprojectinlatestagesofdevelopment:

250kW grid-connected bioWAVE™

$14 million budget

4 year duration in total

Validation after 6 months

13 project partners

Planning, design, development near complete

Installation scheduled for 2012/13 summer

Board & Management:

David Iverach – Chairman BE, PhDDr Iverach has over 40 years experience at the executive level in the public and private sectors.

Timothy Finnigan – Managing DirectorBASc, MASc, PhDDr Finnigan has been involved in ocean engineering for 18 years.

Bill Highland – Non-executive DirectorB EngMr Highland is an investment manager with CVC Investment Managers Limited and has extensive general management experience.

Aaron Spicer – Non-executive DirectorB. Com, MBAMr Spicer is a Director of Lend Lease’s venture capital business..

Corporate StructurePrivate company limited by shares. Significant shareholders include Lend Lease Ventures, CVC REEF,

and CVC Sustainable Investments.

Exit StrategyTo find a global technology company to become a cornerstone investor.

Further InformationTimothy Finnigan 0488 587475 [email protected]

24

FMCG

Board & Management:

David Iverach – Chairman BE, PhDDr Iverach has over 40 years experience at the executive level in the public and private sectors.

Timothy Finnigan – Managing DirectorBASc, MASc, PhDDr Finnigan has been involved in ocean engineering for 18 years.

Bill Highland – Non-executive DirectorB EngMr Highland is an investment manager with CVC Investment Managers Limited and has extensive general management experience.

Aaron Spicer – Non-executive DirectorB. Com, MBAMr Spicer is a Director of Lend Lease’s venture capital business..

Corporate StructurePrivate company limited by shares. Significant shareholders include Lend Lease Ventures, CVC REEF,

and CVC Sustainable Investments.

Exit StrategyTo find a global technology company to become a cornerstone investor.

Further InformationTimothy Finnigan 0488 587475 [email protected]

Eastern Harmony New Zealand Limited

FMCG

2011

Commercial – Phase 1

Australia, New Zealand, Hong Kong, China

Capital Raising

Company Name

Sector

Year Established

Business Stage

Location

Seeking

Executive Summary•EHNZisawholesaler/distributorofNZmilkpowderproductsintheNorthAsiaregion

•PremiumNZmilkpowderproductsareinhighdemandinmainlandChina(inparticular)and

other developed Asian nations

•EHNZhassignedalongtermdistributionagreementforMi-NZ,anewNZmadepremium

infant milk formula

•Strategicdistributionalliancebeingfinalised(letterofintentreceived)withahighlyreputable

Chinese government owned trading company (SOE)

•ExpressionsofinteresthavebeenreceivedfromothermainlandChinesecustomers

•Leasetermsagreedforaretailpropertyandsalesofficelocatedinaduty-freetradingzone

on the border between HK and China to support own sales of Mi-NZ

Competitive Advantages•Low cost importer and distributor in key Asian markets

•ExclusivedistributionrightsforMi-NZIMFproductrangeinHongKong,Macau,and19

Chinese provinces; plus first right of refusal over Japan, South Korea, Taiwan and Singapore

•StrategicdistributionalliancewithaChineseSOE

• IMFentrybarrierovercomeduetoaccesstodairyproductimportlicensethroughChineseSOE

•Retailshopandsalesofficeinaduty-freetradingzoneontheborderbetweenHongKong

and China to support own sales of Mi-NZ

•OtherstrategicallianceswithdistributionandretailpartnersinmainlandChina

• Importdutyremovalfrom2012underFTAbetweenNZandChina

Key Investment Highlights•Infantmilkformula(IMF)isprojectedtobethefastestgrowingfoodandbeveragesegmentin

China over the next five years

•NZsourcedpremiumIMFisviewedbycustomersasaproxyforquality

•EHNZhassecuredexclusivedistributionrightsforMi-NZIMFproductrangeinkeymarkets

•StrategicalliancebeingfinalisedwithaChineseSOEtofacilitateChinaImportandQuarantine

licensing, importation and sub-distribution in Southern China

•Negotiatingfurtheralliancesinrespectofotherwholesale/retaildistributionchannelsin

China to ensure that customers receive genuine quality premium NZ milk powder products

•RetailshopandsalesofficepresenceinShenzhen,China,duty-freezone

• ImmediatemarketopportunitiesinHongKongandChinaduetorecentlocalIMFscandals

and contamination concerns over Japanese imported products

•Received$3millionintradefinance

25

TECHNOLOGY

Board & Management:

David Mohr - Managing Director Chip Tyre owner, experienced business operator and explosives operative. Controls process development and new machinery design.

Alan Twomey - Technologies DirectorB.Ag, M.ChemWide experience in chemistry, industry and management procedures including CEO and Director roles in technology. Designer of the rubber explosives process.

Keith Quigg - Marketing Director AMIA CPMLong-term FMCG and retail sales and marketing experience. Has worked in business development in 9 countries for major organizations

Steven Payne - DirectorQuarry and blast company owner providing trial sites and initial market entry.

Corporate StructureA partnership between Chip Tyre, BioAust Energy and Sequel Drill& Blast.

Exit StrategyChip Tyre will seek to list on an appropriate exchange at a suitable time.

Further InformationTo learn more about this opportunity go towww.wholesaleinvestor.com.au and search for Chip Tyre.

Chip Tyre Pty Ltd

Mining Services

2010

Commercialisation

Ipswich, Queensland

Equity or Investment Partners

Company Name

Sector

Year Established

Business Stage

Location

Seeking

Executive SummaryChip Tyre (in conjunction with BioAust Energy) have, under the Blew Chip banner, developed

a new system of producing and delivering ANFO style explosives for major mining through to

small-scale earth moving. The new system is highly suited to large-scale mining and it delivers

environmental benefits that will impress environmentalists and governments around the world. A

partner/investor is sought to support commercialisation.

The patented technologies consist of a method of granulating rubber to a specific size and

shape and blending the granules with AN, polymer and iron. The product used is 22.5 percent

less than equivalent ANFO explosive. The result is a powerful explosive mix that has great heave

and a complete burn process. In addition a waterproof version is under testing and this version

will provide between 24 and 72 hours efficacy in wet drill holes.

Competitive AdvantagesThis product has been through a series of government monitored trials with documented results.

The trials were conducted by a renowned expert in explosives, who worked independently of the

Blew Chip operation. The results showed both greater heave and higher overall earth movement.

The product is a world first and will be offered as a patented explosive process with government

registration. Blew Chip is negotiation with a quarry group for distribution to their sites.

Advantages of the product include:

•Completeburnwithnoresidualeffectonsoilsorwatersystems

•Waterproofapplicationinwetdrillholesandinwetconditionhandling

•Totallystablefortransportationandon-sitemixing(reducestransportcost)

• Free-floweffectwhenfillinglongdrillholes

•Mixingprocessprovidesevenexplosivespreadthroughoutthedrillholes

Key Investment Highlights•Low end investment required as the development to registration is complete and the

technology proven

•Majorgovernmentsupportastherecycledrubberbaseproductreduceslandfillissuesand

mining used EMT used as raw material

•Fasttracktomarketonceinvestmentisinjected

• Leadingedgedevelopmentwithafree-flowwaterproofexplosiveprovidingmajorbenefitsto

big mining companies, reducing lost time for drag-lines held up by water

•Fastreturnoninvestmentwithhighvolumeuptakeandcontrolledcosttomanufacture

• Investmentincludesdevelopmentplansforglobalexpansionofpatentedtechnology

•Scientificconfirmationbyleadingindependentexplosiveexpert

•SupportfromGovtagenciesforGrantapplicationson$-$basis

26

TELCO/FINANCIAL SERVICE

Mint Wireless Limited (ASX:MNW)

Telco/Financial Services

Early

Sydney, Singapore, Kuala Lumpur,

London

Company Name

Sector

Business Stage

Location

Executive SummaryMint Wireless Limited (Mint) is a global payments and mobile transactions company listed on

the Australian Securities Exchange (ASX: MNW). Mint’s core business specifically focuses on

the developed and emerging markets.

Our vision is “To become the largest, global micro-transactions processing company for the

poorly banked and cash economy”

Mint’s subsidiary, Intermoni is unique from other mobile money solutions that are evolving

globally:

• ‘Bricks and mortar’ deployment and front end, bridging market gaps between the developed

online world and the poorly banked, cash economy

•Scalable: self-service ‘plug-and-play’ cash acceptance kiosks – simple to operate with ability

for rapid deployment

•Focusonmicro valued transactions below USD$20

Current Projects•Malaysia–Firstdevelopingcountrydeploymentandrolloutofmicro-transactionterminals.

Malaysia is the 2nd largest remittance-sender country amongst developing countries with

~2.4 million migrants remitting $6.8 billion annually. Binding order received from distributors

in July 2011 for 3,000 terminals in Malaysia over the next 6 months (valued at ~ USD$5M).

•OpeningnewmarketsinAsia(discussionsunderwayinIndonesia,Singapore,HongKongand

Vietnam markets) with further opportunity to scale globally.

•Advanceddiscussionswithleadingmicrofinancecooperativesinoneofthemostvibrant

microfinance countries in the world for the use of Intermoni’s micro-transaction terminals for

the repayment of micro-loans.

Key Milestones & Investment Highlights•Successful launch of Intermoni (fully owned subsidiary of MNW) in Singapore, focused on

deploying micro-transaction services to the poorly banked population of emerging markets

globally

•Acquisition of 51% of J&C Pacific in Malaysia, immediately providing the Company with

operations and revenues in Malaysia and mobile technology and infrastructure that the

Company will use as a base to develop its suite of micro-transactions services

•Excellent progress with terminal rollout: Orders received for 3,000 terminal in Malaysia over

the next 6 months and advanced discussions with key partners in other South East Asian

markets

•Capital raising: Balance sheet strengthened with over $2 million raised via institutional

placement and share purchase plan

Board & Management:

Terry Cuthbertson - Non-Executive Chairman B.Business, ACAChairman of seven ASX listed companies. Wide corporate finance experience (including merger and public offerings) as well as with the IT industry.

Alex Teoh - CEO & Managing DirectorB. Science (Information Systems / Finance)Extensive experience in Australasia with global management consulting practices specialising in the IT & Telco sector.

Dr. Seng Chuan Tan - Non-Executive Director Mechanical engineering, Masters and Ph.D in Engineering and ScienceExecutive Director of Malaysian KLSE listed Insas Berhad. Wide experience in the IT and payments industry.

Andrew Teoh - Executive DirectorBachelor of Commerce (Accounting/ Finance)Extensive experience with emerging consumer and telecommunication technologies with prior experience in the pre-paid Telco industry.

Further InformationTo learn more about this opportunity go towww.wholesaleinvestor.com.au and search for Wireless Limited (ASX: MNW).

Share Information

Code


Current Share Price

52 Week High

52 Week Low

ASX:MNW

13,699,096

$0.0550

0.1500

0.0230

As at 8 March 2012

ASX:MNW 6 month price chart

0.08

0.06

0.04

0.02

0.00

1.52

2.5

10.5


27

TECHNOLOGY/INTERNET

Further InformationTo learn more about this opportunity go to www.wholesaleinvestor.com.au and search for Exa Web Solutions.

Board & Management:

Peter Ball - Managing Director M.D.25 years of building successful technology companies.

Mitch How - CFOLawyer and CPA4 years at EXA. Similar previous roles in Media, Music & Tourism in Australia, UK & Europe.

Jim Vincent - Special Operations Manager B.Sc, Maths, Physics & Comp 30 Years @ IBM. Programs in 22 languages, 6 patents and extensive patent work.

Corporate StructurePrivate Company Limited by shares.

Exit Strategy: Exa aims to list on a suitable exchange at an appropriate time.

Web Solutions Your Online Success

Executive SummaryExa is Australia’s largest Online / Apps / Web / Mobile company, with over 1000 clients.

Exa generates significant recurring revenue from its client base and is ranked at the top of

Google for online marketing, tools and technologies.

Exa operates 24x7, 365 days per year, is the most efficient player in its space and has unique

ecommerce solutions for a range of social media and smart phone technologies.

The business maintains high margins due to over $10M+ invested in back end & support

systems.

Exa is well positioned to capitalise on the rapid growth in the digital economy and is seeking to

raise up to $2M for product and geographic expansion.

Competitive Advantages•SeniorManagementareequityholders

•Leadingedgetechnology(Online/Apps/Mobile)

•CostEfficient

•NationalFootprint

•Brand

•Broadclientbase

•Explosivegrowthinmobileapps

•Genuine24x7x365operations

Key Investment Highlights•ExperienceBoard&ManagementTeam

• InternationalMarketPotential

•BlueChipClientBase(toptierbanks)

•Multiplerevenuestreams

Exa Web Solutions

Internet, Technology

2000

Expanding

Melbourne, Australia

$2 million

Company Name

Sector

Year Established

Business Stage

Location

Seeking

28

TECHNOLOGY/FINANCIAL SERVICES

Executive SummaryQanda Technology owns 2 operating businesses.

Marketboomer provided online procurement services and technology to hotels in 11 countries.

Customers such as Intercontinental, Starwood, Mirvac and Hyatt hotels save money through

better pricing and process improvement. They also maintain robust workflow and auditability. It

generates revenues through annual recurring license fees charged to buying hotels as well as

turnover-based fees charged to suppliers.

Webspy sells it’s Vantage software globally that allows companies to report on network

Internet usage across all staff and networks. This enables them to better optimise network

bandwidth, speed and costs. It also allows forensic analysis of network traffic. Compliance,

Duty of Care and Security are all improved with its reporting suite.

Current Projects•Launch Marketboomer in the USA via existing customers such as Starwood Hotels and

Resorts

•AbouttoreleasemultilingualcapabilityinMarketboomertodriveSouthEastAsiasales

• Implementexcellentmobilereportingdashboardsforcustomersexecutivelevelusers

• IncreaseWebspysalesinUSAviacombineddirectandchannelsalesefforts

•LaunchofnewstreamlinedglobalpricingandsimplifiedproductrangeforWebspy

•Restructuringcompanyentitiestoeliminateunnecessarycostsandadministrationandtax

•Consolidatingreportingandinternalsystemstodrivecorporateefficiency

Key Miles Stones & Investment Highlights•Recentlyrestructuredtoreduceannualisedcostsbyover$2.4m

•USmarketpotential20timesAustralianrunrate.ReadytoimplementUSgrowthstrategy.

•Webspygenerating1.4minsaleswithonly5staffandreadytogrow

•Technologyplatformupdatenearingcompletiontoincreasewebbasedsaleschennel

Qanda Technology Ltd (ASX:QNA)

Technology

2000

Sydney

Company Name

Sector

Year Established

Location

Board & Management:

Nathan Gyaneshwar - CEO & Executive DirectorNathan founded Marketboomer in 1997 and has extensive mgt, cost control and procurement experience.

Ben Donovan - Non-Executive DirectorBen holds a B.Commerce in Finance and Commercial Law. He is a Chartered Secretary with ASX experience.

Kim Redstall - Non-Executive Director Kim has significant operational, sales, marketing, and M&A experience in the technology sector.

Declan Monahan - Non-Executive Director Declan has over 20 years experience in senior mgt roles in the hospitality, education and IT sectors.

Further InformationTo learn more about this opportunity go to www.wholesaleinvestor.com.au and search for Qanda Technology.

Code


Current Share Price

52 Week High

52 Week Low

ASX:QNA

9,280,596

$0.0150

0.0150

0.0040

Share Information As at 27 February 2012

ASX:QNA 6 month price chart0.01

0.01

0.01

0.01

0.01

0.00

0.30.4

0.20.1


29

SUPERANNUATION

Executive SummaryThe Australian Real Estate Lottery model is a unique mixture of gaming and property to create a

financing tool to acquire real estate.

Only one thousand tickets are offered for any property. The Australian Real Estate Lottery

provides a platform where buyers have a “gaming chance” of owning outright free of

encumbrance real estate for several hundred dollars. Equally, it provides an alternative platform

from where real estate can be listed. It is a unique buying and listing opportunity against the

traditional real estate models in Australia.

Competitive Advantages• Innovative Business Model. An innovative, online real estate business model connecting

motivated vendors with players who have a 1 in 1000 chance to acquire real estate through

the sale of lottery tickets.

•HighCashFlowBusinesswithGlobalPotentialWithlowmarketpenetrationthecompanycan

generate over $10m in revenue by Year 3. Plans to license IP to 16 key territories.

•ExpansiveDemandinTargetMarketsTheAustralianRealEstatemarketisamatureindustry

and the Australian gaming market exceeds $8.9bn per annum. In both industries there are

opportunities for new business models to find traction.

•CompellingInvestmentOpportunityDebtbondinvestmentsoughtwith12.5%yieldwith

rollover and conversion options available. Securitised against future income in pipeline.

Key Investment Highlights•12.5% bond offering per annum, for a period of two years, paid in either cash or equity.

• Itisanticipatedthatsalesof$10millionwouldbeachievedafteryear3ofoperations,

which equates to approximately 0.1% of the Australian Real Estate sales market captured.

This reflects a return of over 40% gross profit, when full licensing activities have commenced

in New Zealand, Canada, USA, Europe and Asia.

•Asophisticated,effectiveandefficientwebsitehasalreadybeencompleted.Approved

payment gateways with the Commonwealth Bank subsidiary Bankwest are in place,

providing secured leading edge receipting of lottery tickets.

•TheAustralianRealEstateLotteryhasanInnovationPatentinAustraliawithcommencement

of IP protection in 15 other countries.

Board & Management:

David Smaluck - FounderExperienced in 6 previous start-up businesses with successful exits which have included, Aviation, Heavy Industry, Chemicals, Real Estate and Technology.

Cullum Francis – Marketing AdvisorExperienced CEO both in United Kingdom and Australia, in publishing and IT.

Garry Ahearn – Real Estate AdvisorPast CEO of REMAX Australasia, one of Australia’s most networked Real Estate professionals.

Corporate StructureProprietary Limited Company

Exit StrategyIPO on a suitable exchange within 3 years.

Further InformationTo learn more about this opportunity go to www.wholesaleinvestor.com.au and search for Australian Real Estate Lottery.

Australian Real Estate Lottery

Gaming

2009

Early Stage

Sydney

$300,000

Company Name

Sector

Year Established

Business Stage

Location

Seeking

30

PROPERTY

Executive SummaryEasylodge was founded in 2006 to provide software and infrastructure services to the non-

mortgage finance industry, and is now Australia’s largest non-mortgage finance trading network

with over 2700 brokers and dealers using The Easylodge Community™.

Easylodge also markets Australia’s most advanced finance origination platform, EasyLodge®,

which provides instant credit decisioning, contract creation and application tracking between

lenders and their distribution networks in one cloud-based service. Easylodge also provides the

EasyTrack™ loan/asset management platform. Future opportunities lie in utilising Easylodge’s

existing network to market insurance products on EasyLodge®, and the opportunity to partner

with a foreign bank wanting to enter the Australian market.

Competitive Advantages•The ability to gain a loan approval and a loan contract, completed and emailed, in less than 30

seconds, from any finance broker, dealership, store point of sale, accountant or branch

Australia wide.

•Anetworkof2700brokers,dealersandstoresAustraliawide–Australia’slargestfinance

distribution network.

•Thelicense,infrastructureandexpertisetoenablethecreditindustrytoaccuratelycredit

decision, originate, fund and manage large scale finance operations – an ideal partner for a

foreign Bank to enter the Australian market.

•Afullsuiteofsoftwareservicesthatalsomanagetheloan(EasyTrack™),managecustomer

relationships (EasyClient™), offer insurance (EasyInsurance™) & manage arrears (EasyArrears™).

•Servicesareofferedtothemarketviaahighlysecurecloud-basedsolution

Key Investment Highlights•Alreadyestablishedbusiness,builtupoverfiveyears.Easylodgecurrentlyhaseightclientsand

a network of over 2700 members Australia wide

•Onthecuspofprofitabilityafterfiveyears,abouttogotoanewlevelwiththeintroducingof

the foreign bank offering

•EasylodgeoperatesAustralia’slargestnon-mortgagefinancenetwork,aswellasproviding

software and services to the finance industry

•EasylodgeownsitsIP.Over$4millionhasalreadybeenspentindevelopingthebusiness,

including over $3 million on software – the core of the competitive advantage

• LimitedCompetition.Easylodgefocusesonthenon-mortgagemarket,whichhasverylittle

competition and high barriers to entry

•Strongbusinessmodel.Easylodgeservicesarepredominantlycloudbased“softwareasa

service (SaaS)”, making for a highly efficient, scalable, and lower risk solution to clients

Easylodge Infrastructure Services

Financial

2006

Expansion

New South Wales/Queensland

$1.96 million

Company Name

Sector

Year Established

Business Stage

Location

Seeking

Board & Management:

Kosta Patsan - Managing DirectorMBA, GradQual Mktg, GAICD26 years in business management, including Telstra & IBM. Founded Australia’s largest consumer finance originator & 2nd largest non-Bank personal finance company.

Dr Adrian Smith – CIOBE, PhDOver 10 years’ management of software developments, including for Lockheed Martin, CSIRO, BBC and Suncorp.

Hugh Hofmeister - Software Development Manager BE, MBAEight years’ experience in managing complex software developments across multiple platforms, including for Boeing, GKN and Ennova.

Corporate StructureEasylodge Infrastructure Services is a public unlisted company.

Exit StrategyThe most likely exit strategy is a trade sale – either full or partial – to a foreign or domestic bank in the near term.

Further InformationTo learn more about this opportunity go to www.wholesaleinvestor.com.au and search for Easylodge.

31

LOGISTICS

Executive SummaryHannan Logistics has branches and fully equipped depots strategically placed in every

mainland capital city of Australia with a head office in Mooloolaba, Queensland, The company

has access to over 300 ISO shipping containers and uses the national rail system for the

shipping of commercial retail furniture and white goods, household furniture and effects and

other specialised goods around Australia.

Hannan has over 80 permanent and casual employees and four main operating divisions:

private removals, government removals, commercial removals and special projects.

The sales by each of the divisions are completed by the depot teams around Australia who

report to the Executive Chairman and National Operations Manager, Col Hannan.

The estimated (annualised) turnover in 2012 will exceed $15.3 million.

Competitive Advantages•Australiawideinterstateandterritoryfocususingsealedcontainersfordoor-to-doordelivery.

•Theprovisionofahighqualityvalueformoneycustomerbenchmarkedservice:TheSmartest

Move You’ll Make.

•Stronginternalsalesandexecutionefficienciesinahighcost/lowmarginbutreliable

business sector.

•Experiencedandwelltrainedemployeesforthepacking,loading,unloadingandunpackingof

the customers precious goods and effects.

•Industrygrowthoverthenext10yearsislikelytomorethandouble.

•TheHannanGuarantee,whichofferstoprotectthecustomersagainstlossanddamagerisk

•Tailoredpackagestosuitindividualfamilies,businessesfromtimingandschedulesto

complete packaging solutions with client branded containers.

Key Investment Highlights•Theuseofadditionalcapitaltocompletethebusinessacquisitionandtofurther

electronically streamline the booking, invoicing and tracking processes.

•Attractive10percentperannumparticipatingRedeemableCumulativeConvertingPreference

Shares for up to 30 percent ownership in the Company for A$750,000.00 with Board

representation available to major investors.

• ExperiencedfounderandotheremployeesacrossAustralia,wellplacedtodeliverthegrowth

strategies in selected categories of goods and customers, remote and other route

expansions, and acquisitions of other synergistic operations.

• Industrycompetitiveedgeusingprovenstrategies,flexibleresponses,innovativeideasand

safe work procedures to meet the needs of customers and emerging market demands.

Hannan Logistics Pty Ltd

Logistics

1991

Expansion

Queensland (head office)

Expansion Capital & Development Partners

Company Name

Sector

Year Established

Business Stage

Location

Seeking

Board & Management:

Colin R Hannan - Executive ChairmanOver 40 years industry experience in interstate contai-nerised removals and transport logistics. Col has made the Hannan name recognisable as a leading service provider in the Australian logistics industry.

Donna M Hannan – Proposed directorInvolved with the business since inception, experienced in home renovation, art, design and fashion.

Bryan D Weir – Proposed directorFormer Chairman of Wridgways Australia Limited. A Director of Walker Douglas & Company, a private investment and advisory group. Mr Weir was also formerly a partner of Freehill, Hollingdale & Page and a Director of Macquarie Corporate Finance Limited.

Corporate StructureProprietary Limited Company with Ordinary Shares held by the founders and the Redeemable Cumulative Converting Preference Shares referred to above held by investors. A Notional Profit and Capital Growth Par-ticipation Scheme operates for the benefit of selected employees.

Further InformationTo learn more about this opportunity go towww.wholesaleinvestor.com.au and search for Hannan Logistics.

32

FUND MANAGEMENT

Bizpanel Limited

Franchise and Investment

2011

Seeking Franchise Investments

Sydney

Ongoing according to opportunities

Company Name

Sector

Year Established

Business Stage

Location

Seeking

Executive SummaryBizpanel operates as a franchise investment company by developing it’s own franchise

businesses and acquiring other quality franchise operations.

Our most recent investment Oswill launches in March 2012. Oswill is a very unique trades and

services business as well as an online shopping business. Prior to the official launch we have

more than 20 potential franchisees on a 12 month trial basis and a further 60 planned over the

next 3 months. Oswill has engaged the services of the prior manager for Australia’s largest

home services group with more than 3000 franchisees nationally to assist the franchisee

rollout process. The “Win an Oswill Franchise” campaign is set to launch across the DMG radio

network in March 2012.

Oswill has been approved to list on the Australian Small Scales offering board in March 2012.

Bizpanel will retain more than 70% of Oswill shares.

Competitive Advantages•StrongbackgroundinMultiAwardwinningfranchisesoverthepast11years

•Trackrecordof3priorstart-upssuccessfullydeveloped,builtandsold

•Diverseboardacrossfinance,law,accounting&managementofamultibilliondollar

portfolio

•Thebusinessembracestechnology&outsourcingacrossallinvestments.Bydoingso

Bizpanel achieves greater flexibility in fixed costs and access to labour and talent both

locally and offshore.

Key Investment Highlights•Franchiseindustryspecific,a$100Billiondollarayearindustry

•Exitstrategies-Asaninvestmentbusinessweconsideranexitstrategyparamountto

the success of any planned investment. In planning a new investment we use this same

methodology for our investors and always model potential short, medium and long term exit

strategies.

Further InformationTo learn more about this opportunity go towww.wholesaleinvestor.com.au and search for Bizpanel Limited.

Board & Management:

Matthew Holland - Managing Director Sold a major franchise in 2011, yielding a multi million dollar trade sale for the franchise group.

Chris Kalpage - DirectorSolicitor 27 years as solicitor with the Law Society of NSW

Andrew Garouniatis - DirectorAccountant CorporateMember of the Institute of Public Accountants. Worked with blue chip organizations for 26 years.

Roger Collison - Non Executive DirectorAccountant / CPAGrad. Dip. in Applied Corporate Governance (2011) Company Directors Course (2009) Investment Management Workshop (2008) NYSE – Supervisory Analyst (1999) Certified Financial Analyst (1998) Master of Business Administration (1990) Graduate Diploma of Applied Finance (1990) Bachelor of Economics (Honours)Roger was formerly head of investment research at Tyndall investments.

Corporate StructureAn unlisted Public Company with multiple separate investments.

Exit StrategyEach investment of Bizpanel has a separate exit strategy. Oswill has several potential exits that include a franchisee shareholder offer, share buy back from franchise sales, listing, full or partial trade sale.

33

SUPERANNUATION

Executive SummaryInvestment Administration (InvestAdmin) provides a complete, robust, scalable, technology

based solution for the end-to-end administration of Self Managed Superannuation Funds

(SMSFs). This solution is available on a wholesale basis to SMSF fund administrators including

accountants, stockbrokers, financial planners and wealth managers.

InvestAdmin offers SMSF Administrators a ‘back-office’ service. Branded as SMSF+, the

application gathers financial data in real time from the ASX, stockbrokers, banks, & fund

managers. This stored data is managed to provide relevant tax, audit & portfolio information for

end-users and financial intermediaries.

The company is ready to exploit opportunities in the SMSF sector and seeks $2.5m to scale up

to full commercial operations and implement its aggressive marketing, merger and acquisition

program.

Competitive Advantages•Commercialisation of SMSF+; a platform based SMSF administration application

•GaininganAFSL–anticipatedinDecember2011.

•Launchofauniqueterm-lifeinsuranceoffertoSMSFclientsinJanuary2012

•DevelopmentofafullAdministrationCentre

•Expansionofadministrationapplicationtoincludenonsuperassets

• Inclusionofanintermediaryandtrusteecompliancetrainingmultimediainterface

Key Investment Highlights•Original platform developed for major listed financial services group. Same development team

now running Investment Administration/SMSF+ development

•Raisedadditional$1.25mseedcapitalin2009/10forcustomisationandoperationaltrial

•SuccessfullycompletedlivetrialofSMSF+fromDecember2010toOctober2011

•Establishedexperiencedexecutiveandmanagementteams

•Establishedoperationaloffice/baseinAdelaide

Board & Management:

Peter Bartleet - ChairmanExperienced executive at both private and public company level. Has had several years experience in the Venture Capital industry

Ludwid Bachmayer – Chief Operational OfficerFormerly General Manager of Client Services for State-wide Superannuation and IOOF Trustees, with a team of 75 people. Holds a Diploma of Financial Services.

Paul Massey – Marketing DirectorFormerly State Manager of Compliance and Retail/Financial Services for CBA and NAB. Holds DFP 1-3 and PS-146 qualifications.

Damian Taylor – Technical DirectorThe Architect of InvestAdmin’s SMSF administration platform and application. Formerly CEO of AET Super Solutions and is a qualified SMSF specialist with a PS-146 qualification.

Further InformationTo learn more about this opportunity go to www.wholesaleinvestor.com.au and search for Investment Administration.

Investment Administration Pty Ltd

Superannuation

2007

Commercialisation

Adelaide and Melbourne

$2.5 million

Company Name

Sector

Year Established

Business Stage

Location

Seeking

34

Executive Summary•AustralianBullionRefinery(ABR)isapreciousmetalsrefiningbusinessbasedin South East

Queensland.

•ABR’srefiningfacilitywilltreatrawmaterialminedfrompreciousmetaloperationsthroughout

Australia.

•ABRwillproduceinvestmentgradebullionproductsusingworldbestmanufacturing

practices; then distribute products into both the Australian and international bullion market.

•AdefinitivefeasibilitystudywascompletedinQ22011.

•Thereisapre-committedsalespipelineinplace.

Current economic uncertainty has heightened the need not only for precious metal bullion but

also the need for assurances in supply. Australia is well positioned to benefit from the demand

for precious metals as one of the largest producers of gold in the world.

Australia currently incurs the burden of an unprecedented lack of competition in precious

metals refining. The Australian precious metals industry currently operates under a unique

monopoly, with only one major bullion refiner in the country.

Competitive Advantages•Geographic location – ABR is the only large scale precious metals refinery on Australia’s

East Coast. Competitive cost advantages to the entire Australian East Coast and South Pacific

Region’s production.

•Technologicalpartnershipwiththeworld’sleadingpreciousmetalsrefiningequipment

manufacturer - highly autonomous low labour input, cost effective equipment.

•Anestablishedpre-committedsalespipelineforvaluedadded,highprofitmarginend

products into the international bullion market.

•Keyrelationshipswithproducersandrawmaterialsuppliersestablished.

Key Investment Highlights•High project NPV and IRR.

•Strongcashflowsandpaybackperiod.

•Willbecomealarge-scalerefinerinoneoftheworld’slargestgoldproducingcountries.

•Directexposuretopreciousmetalsmarket.

•Uniquebusinessmodel.

•Exposuretolucrativebulliontreasurybusiness.

Australian Bullion Refinery

Precious Metals

2011

Development

Queensland

Capital Raising

Company Name

Sector

Year Established

Business Stage

Location

Seeking

Board & Management:

Dylan Kelly - Commercial DirectorB.Bus(Com), M.Sc (Mineral Econ)Finance professional in the mining, oil and gas industry. Operational and corporate experience in commercial aspects of mining industry in Australia, Europe, Africa and South America. Postgraduate qualifications in Mineral Economics.

David Charles – DirectorLLB (Commercial); GD Legal PracticeA business-orientated lawyer who is experienced in both front-end and contentious modes. David has acted for some of the world’s largest and most prominent entities across four continents.

Thomas Couglin – Director10+ years’ experience in the investment, fund management and bullion trading industries.Thomas has extensive experience and expertise in capital markets and portfolio management. Thomas sits on the board of four public investment and commodity companies.

Michael Coughlin – DirectorB.Bus, CPA, Company Auditor37 years’ experience in the Accountancy and Financial Services industries. Michael has owned and operated a Brisbane based public accountancy firm and financial services company since 1984.

Exit StrategyIPO and listing on a suitable exchange at an appropriate time.

Further InformationTo learn more about this opportunity go to www.wholesaleinvestor.com.au and search for Australian Bullion Refineries.

FUND MANAGEMENT

35

PROPERTY

Executive SummaryFolkestone is a real estate investment, development and funds management company listed

on the ASX (Code: FLK).

Following an Extraordinary General Meeting of Shareholders in March 2011, the New Board and

senior management have recapitalised the Company by successfully raising $31.5m and are

now implementing a new strategy to enable Folkestone to take advantage of the attractive

opportunities created by the dislocation in real estate and financial markets across:

• investmenttypes:directinvestment,jointventuresandco-investinginFolkestonemanaged

funds;

•capitalstructures–ordinaryequity,preferredequityandmezzaninedebt;and

•sectors–office,retail,industrial,residentialandsocialinfrastructure.

Folkestone’s on balance sheet activities will focus on value-add and opportunistic investments

while Folkestone’s funds management platform (Equity Real Estate Funds Managament) will

offer real estate funds to private clients, high net worth individuals and select institutional

investors across core, value-add and opportunistic real estate investments.

The focus of Folkestone’s investment strategy will be on delivering capital growth for

Shareholders. Folkestone will target an after-tax return on equity of 15% per annum on a rolling

three year basis.

Current Projects•CliftonHill–Melbourne(residentialapartments)

•AltonaNorth–Melbourne(bulkygoods/industrial)

•Mickleham–Melbourne(industrialland)

•Karratha-WA(residentialaccommodation)

•Officer–Melbourne(residentiallandsub-division)

•TivoliDevelopmentFund(residentialdevelopmentfund)

Key Investment Highlights•Newexperiencedboardandmanagementteam

•Alignmentofinterest–seniormanagementownmorethan12%oftheCompany

•Uniqueofferinginthelistedrealestatesector

•Positionedtocapitaliseonattractiverealestateopportunities

•Exposuretofundsmanagementplatform–EquityRealEstateFundsManagement

•Stronginvestmentsourcingcapabilities

Company Name

Sector

Year Established

Business Stage

Location

Board & Management:

Garry Sladden - Non-executive Chairman Garry is a business and strategic adviser who has a diversified business background in the areas of real estate, private equity, banking and finance.

Greg Paramor - Managing DirectorGreg has been involved in the real estate and funds management industry for more than 40 years. Greg was the CEO of Mirvac between 2004 and 2008.

Ben Dodwell - Head of PropertyBen has been responsible for the development of retail centres, integrated mixed use and apartment projects at Lend Lease and Stockland.

Adrian Harrington - Head of Funds ManagementAdrian is the former CEO of Funds Management, US and UK at Mirvac and has more than 18 year experience in funds management and real estate industries.

Jonathan Sweeney - Chief Operating OfficerJonathan has more than 24 years experience in the finance services industry and was the former Managing Director of the Trust Company from 2000 to 2008.

Further InformationTo learn more about this opportunity go towww.wholesaleinvestor.com.au and search for Folkestone (ASX: FLK).

Folkestone

(ASX:FLK)

Property

1960 – listed on ASX June 2000

ASX Listed

Australia

36

ESOPs and Early Growth Companies (by Andrew Ireland)

however, in most cases that the skilled personnel has magnified value to the

early growth company as the personnel compliment is typically very small and

is expected to make the right decisions at the right time.

The question is usually not whether there is an ESOP for an early growth

company, rather the questions become what type of ESOP operates, what the

quantum and value of the ESOP is relative to the existing equity contributed,

the activation conditions of the ESOP and the balance between short term and

long term incentive. The answer to these questions will influence the value

considerations for both existing and future equity contributors and reflect on

the board’s caliber and business acumen.

There are many types of ESOPs, each with sub-category permutations. The

more usual forms of ESOPs include:

•sharesissuedatmarketvalueandanalliedcorporateloan(usuallyinterest

free).

•sharesissuedatadiscountoronapartpaidbasis.

• Issuanceofalternateclassshares.

•shareoptions,withorwithoutvestingconditionsandnon-exerciseperiods.

•sharetrusts.

• replicatororparallelschemes.

•bonusstructures.

ESOPs for going concern entities typically require careful consideration of

international accounting standards and taxation issues, such as CGT and

income tax, Division 7A deemed dividend provisions, fringe benefit tax and

payroll tax, as well as regard to the ability to access tax exempt and deferred

plans. In the main, although still very important, the significance of these

considerations is somewhat reduced for early growth companies in their start-

up phase, as usually they have to pass a significant value increment threshold.

ESOPs can fulfill an indispensable role for early growth companies as a means

of attracting, motivating, retaining and rewarding key personnel. However, the

key personnel, the company, the existing equity contributors and the future

equity contributors need to be satisfied and confident that the ESOP has been

correctly designed and implemented to deliver real value. All have an interest in

the ESOP eventually being exercised into marketable shares or cash equivalent

at some time in the future which properly reflects their investment. Otherwise,

the ESOP may work against the parties’ objects.

Written by Andrew IrelandShould you have any questions or queries or suggestions, please do not hesitate to contact

any of our commercial and corporate team including Andrew Ireland, Principal - aireland@

argylelawyers.com.au and Sarah Thomas, Lawyer [email protected].

Employee share ownership plans (ESOPs) are regularly used in listed and

unlisted going concern entities for their senior executive and strategic

personnel.

ESOPs are noted as being valuable for going concern entities for a variety of

reasons including assisting with:

•attractingtherightpersonnelfortherightposition.

• retainingpersonnel.

•aligningthepersonnel’sobjectswiththoseofthekeystakeholders.

•motivatingpersonneltoachieveorganisationalperformanceobjectives.

• recognisingandrewardingpersonnel.

• reducingbusinesscashoutflows.

•maximisingcapitalinvestmentinpersonnel.

•sharingsurplusvaluewithpersonnel.

•successionplanningofmanagementandpotentiallystakeholders.

Indeed most studies undertaken on the subject inevitably conclude that ESOPs

benefit organisations through both increased productivity and profitability.

But what about early growth companies, whose near term objectives, drivers,

risk and reward structures are very different to going concern entities?

The importance of ESOPs are elevated in early growth companies and almost

without exception form a critical component to the senior executive and

strategic personnel’s engagement. This is typically due to the common

circumstances of early growth companies, namely being pre-revenue and

balance sheet constrained but with an attractive business proposition. Like

all entities the early growth company must strive to attract the best skilled

personnel it can, but is challenged by being unable to match the financial

reward and stability that a going concern business can offer. The reality is,

37

Most pre-revenue entrepreneurs determine their company valuation through

calculations of Discounted Cash Flow, Net Present Value, or comparisons with the

early valuation of already successful companies.

Most experienced early-stage investors looking at a pre-revenue company start

with a valuation of zero. These two starting points are obviously far apart but,

neither is the right answer. Valuation of an early-stage venture is a strategy for

future success. Valuation should be determined on two primary factors, future

value growth and equity position and, ultimately, should be agreed in discussion.

Existing cash investment and sacrifices by the founders are important but, their

sum does not create a defensible valuation. Investors and founders are both

betting on the future not the past.

An entrepreneur should prepare a valuation position and supporting rationale

prior to engaging with investors. Setting this number in the right range sends

a strong signal that the opportunity is worthwhile and that the founders know

what they are doing. A credible number is always better than an ambit claim. An

high valuation to concede in negotiations with investors may preclude having

those negotiations. Too low a valuation may raise concerns about the founders’

business acumen but, is better than too high. What are too high and too low?

The honest answer is ‘it depends’ but, a fairly standard range for the first round

of external investment in a pre-revenue or early revenue business seeking up

to $1m is from $200,000 - $1,200,000 or, to put it another way, 20%-45% of

post money equity.Equity position is relative to the amount being invested and

is dependent on the philosophies of the founders and investors. Generally, the

first external investor (typical role of an Angel) will want a substantial minority

position. Founders need to balance concerns about control with a respect for

the investors’ money. Together, founders and investors should consider future

demands on equity and ensure the valuation underpins that forward strategy.

The Art and Mystery of Start-Up Valuations (by Jordan Green)

Investment terms can effectively alter the valuation through preferences,

options and conversion ratios. Traditionally, Australian Angels use ordinary shares

to keep things simple and easy for founders. The emerging trend is for early-

stage investors to use preferred shares that better reflect their financial risk by

delivering a return of capital before converting preferred into ordinary shares to

participate in distributions. Founders should be wary of investors seeking more

onerous preferences and be confident of the value those investors will deliver.

Future value growth is an external measurement of performance. Most rapid

growth companies seek to double their valuation at least every 12-18 months for

the first 3 or 4 years. That performance encourages investors and acquirers to

pay a premium presuming that growth will continue. Achieving that performance

for a pre-revenue company valued at $5m, or $50m is much, much harder than for

one valued at $1m.

Founders, particularly first time entrepreneurs, tend to worry a lot about control

and fear that ceding a large equity position to investors may threaten the

future of the venture. This is not entirely wrong but, it is usually blown out of

proportion. Experienced, early-stage investors rarely want a simple majority of

equity, especially in Australia with the adverse legal and taxation implications. An

investor that intends to fill an executive role, or otherwise become a substantial

contributor to execution may seek a majority position. It is up to the entrepreneur

to judge the expected value added by the investor to determine if the proposed

equity position is reasonable.

For investors who intend to be proactive through a non-executive director, or

similar role, it is reasonable they achieve that 20%-45% equity stake discussed

above. Even those investors, if experienced, are likely to seek ‘negative control

rights’ in their terms of investment. These empower the investors to stop the

company doing something substantially different from the proposition they

agreed to back. These rights usually cover new debt and equity, hire and fire

of executives, business strategy and objectives, capital expenditure and

changes to the governance and shareholder structures and procedures. Even a

shareholder with a small equity position can, through terms of investment, have

complete control. So, founders should think holistically about the control and not

focus only on equity position.

Valuation is a complex topic and interdependent on terms of investment, investor

involvement, future rounds of funding, projected revenues and profits, founder

capability to execute, capital intensity of the venture and other concerns. Neither

founders nor investors should rely on an accountant, lawyer, or corporate adviser

to set the valuation. Early-stage investors are taking a risk on the entrepreneur

who must articulate the valuation rationale and understand how to reach an

agreement with investors. Investors should be able to articulate their valuation

rationale and explain how they will add value to the business in a way that

supports the valuation strategy.

Written by Jordan Green Jordan Green is an internationally sought after thought leader in early-stage investing.

Founder of Melbourne Angels [www.melbourneangels.net] and co-founder of the Australian

Association of Angel Investors [www.aaai.net.au].

38

Summit (ALSIS), the biggest investment event of its kind in this part of the world,

which recently attracted 120 invited investors - almost half from overseas.

Australasian Life Sciences Investment Summit 2012 on Friday 2 November

ALSIS has been held annually since 2009, and research and consulting firm,

Insync Surveys, conducted an independent and confidential review of the

event, to: help participating companies and supporters to quantify the value

of investor meetings; and track the outcomes of specific investment events in

commercial terms for investors. Investors were asked to estimate the value of

deals they expect from investment discussions they initiated at the 2011 ALSIS,

and the actual value of deals that were done as a result of the 2010 and 2009

events. The result shows that at the very least, $33 million has been invested in

presenting companies. Data for the value expected to be generated from deals

in discussion as a result of the 2011 event, suggests the Summit will generate

even greater interest than previous years.

AusBiotech Investment Series

AusBiotech has now established a regular series of showcase local and

international investment events, and work closely with well-positioned

organisations like the ASX and Wholesale Investor. This year AusBiotech

Investment will feature events:

‘Brokers meet Biotech’ Luncheon: Melbourne 2012

March 2012 (TBC)

Melbourne Convention Centre, Melbourne, Victoria

‘Brokers meet Biotech’ Luncheon: Perth 2012

April 2012 (TBC)

Perth, Western Australia

Small Cap Showcase Brisbane 2011 (with Wholesale Investor)

4 April 2012

PwC office Brisbane, Riverside Centre, Brisbane, Queensland

Medtech Investment Summit

14 May 2012 (preceding AusMedtech annual conference)

Four Seasons Hotel, Sydney, New South Wales

Australian Life Science Showcase: Hong Kong 2012

23 May 2012 (in conjunction with ASX small to mid-caps), Hong Kong

Australian Life Science Showcase: New York 2012

15 June 2012 (prior to BIO2012 convention in Boston) New York, United States

Australian Life Science Showcase: Edinburgh 2012

3 October 2012

Australian Life Science Showcase: London 2012

5 October 2012

Australasian Life Science Investment Summit 2012

2 November (part of the AusBiotech 2012 conference)

Melbourne Convention & Exhibition Centre, Melbourne, Victoria

Written by Dr Anna Lavelle and Glenn CrossDr Anna Lavelle is CEO of AusBiotech and Glenn Cross is COO of AusBiotech

Australia has a biotechnology and life sciences sector that is maturing and

growing fast. It was recently ranked number five globally by Scientific America’s

World View. The Australian biotech sector has outperformed the ASX 300

consistently since 2009 and now Australia can also boast it has the largest

listed biotechnology sector as a proportion of GDP in the world.

Driven by companies such as Acrux, Australia dominates the list of fastest-

growing companies in the Asia-Pacific Region (BioSpectrum Asia 2011). The

top five companies have shown 1,000 per cent growth in the 12-month period.

Australia is proud to be a country that can take discoveries through the

innovation process to commercialisation, and to value inflection points that is of

great interest to investors.

After years of AusBiotech campaigning, the Federal Government has recently

introduced the R&D Tax Incentive, providing the most significant positive news

that the industry has had for a number of years. It will undoubtedly bring new

cash flows into the industry and stimulate new investment with its provisions:

•45%refundabletaxcreditforR&Dforcompanieswithaturnoverof<$20m;

•40%non-refundablecreditforcompanieswithaturnoverof>$20m.

If a company is in tax loss, these credits can be taken as cash refunds. Small to

mediumbusinesses(<20mturnover)willbeabletoclaimtaxcreditsquarterly

from 2014. Overseas companies who undertake R&D in Australia and companies

that hold their intellectual property offshore now have more access to claim.

The program expands on the kinds of entities that were eligible for the R&D Tax

Concession to “foreign corporations”.

Companies can now seek an advance finding, where they are uncertain of the

eligibility of their activity and are able to make claims of up to 50% on an R&D

project conducted overseas. At the start of 2012, BioShares released its annual

capital raising figures for the industry, which saw a 14% increase in 2011 to $630

million, after $554 million was raised in 2010. The notable investments were

made in Pharmaxis, Starpharma and Phosphagenics.

The year has already seen Starpharma release positive results from its pre-

clincial study of its dendrimer-docetaxel chemotherapy formulation, and

Mesoblast has been given the go-ahead by the FDA to conduct phase II trials

of its stem cell treatment for Type 2 diabetes. Bionomics has announced a

collaboration, research, and licensing agreement with US-based Ironwood

Pharmaceuticals, potentially worth up to US$345 million.

AusBiotech’s investment program

Responding to demand and based on the success of previous events,

AusBiotech has now established a regular series of showcase investment

events. “AusBiotech Investment” provides local and international meetings as

a global platform for life sciences companies to showcase their company’s

offering for partnership and investment.

The major annual investment event is the Australasian Life Sciences Investment

HNW Investors and the Australian Life Science sector

“Mackay.... is a regional centre with critical mass and plenty going on in its economy other than resources related activity. The MIW region is well-situated to thrive from the upturn in resources activity, with lots of businesses that service the mining sector and also plenty of residents who live in Mackay and work in the mines. The expansion of port facilities and development of new rail links will create lots of new jobs....and benefits to investors.” The Australian, 9 February 2012.

29 March 2012

Mackay Entertainment & Convention Centre

Register now at www.investmackay.com.au !

Proudly sponsored by:

FEATURING A SHOWCASE OF INVESTMENT OPPORTUNITIES!

Mackay-Isaac-WhitsundayInvest conference 2012

How can you kick start every day success?

Carolyn Creswell founded Carman’s Fine Foods as an eighteen year old uni student with just $1000. Today, with the help from our Private Clients team, Carman’s is now a multi-million dollar business. Carolyn has grown the business by working with her Private Clients advisor to broaden Carman’s product offering, spread the customer base and number of suppliers and improve business systems. Carolyn uses us as a sounding board and as support for many of her decisions, both business and personal. With a growing international business built on muesli, it’s clearly a mix that works.

What do you value?Discover how we can create value together at creatingvalue.com.au

Wholesale Investor Magazine

Documents

Transcript of Wholesale Investor Magazine