prospectus - asx · 2014. 5. 14. · prospectus | skywards limited (to be renamed ziptel limited) 3...

PROSPECTUS

(TO BE RENAMED ZIPTEL LIMITED) ACN 108 042 593

For a public offer of up to 25,000,000 New Shares (post-Consolidation) at an issue price of $0.20 per New Share to raise up to $5,000,000, together with one (1) free attaching New Option (post-Consolidation) for every two (2) New Shares subscribed for and issued (Public Offer).

The Public Offer is scheduled to close at 5:00pm (WST) on 22 May 2014 unless extended or withdrawn. Application must be received before that time to be valid.

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This Prospectus also contains:

• an offer of up to 25,000,000 New Shares and 12,500,000 New Options (post-Consolidation) to the AussieSim Vendors in consideration for the acquisition of all of the issued capital in AussieSim (AussieSim Offer). Refer to Section 6.1.2 of this Prospectus for further details of the AussieSim Offer; and

• an offer of up to 3,500,000 New Options (post-Consolidation) to Patersons (or its nominee) as part consideration for corporate advisory services provided by Patersons in connection with the Public Offer (Broker Offer). Refer to Section 6.1.3 of this Prospectus for further details of the Broker Offer.

The AussieSim Offer and Broker Offer is scheduled to close at 5:00pm (WST) on 26 May 2014 unless extended or withdrawn. Applications must be received before that time to be valid.

Completion of each of the Offers is conditional upon Shareholders approving, at the General Meeting to be held on 23 May 2014, various resolutions, including the change in nature and scale of activities, consolidation of capital, and the issue of the New Shares and New Options offered by this Prospectus. Please refer to Section 6.2 of this Prospectus for further details.

PROSPECTuS

IMPORTANT INFORMATION

This Prospectus is a re-compliance prospectus for the purposes of satisfying Chapters 1 and 2 of the ASX Listing Rules and to satisfy the ASX requirements for re-listing following a change to the nature and scale of the Company’s activities.

All references to Securities in this Prospectus are made on the basis that the 500:1 Consolidation, unless otherwise stated, for which Shareholder approval is being sought at the General Meeting to be held on 23 May 2014, has taken effect.

This is an important document that should be read in its entirety.

If you do not understand it you should consult your professional advisers without delay. The Securities offered by this Prospectus should be considered highly speculative.

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PROSPECTuS | SKYWARDS LIMITED (TO BE RENAMED ZIPTEL LIMITED) 1

CONTENTS

1. CORPORATE DIRECTORY 2

2. IMPORTANT NOTICES 3

3. TIMETABLE* 5

4. CHAIRMAN’S LETTER 6

5. INVESTMENT OVERVIEW 7

6. DETAILS OF THE OFFERS 19

7. COMPANY OVERVIEW UPON COMPLETION OF ACQUISITION 22

8. RISK FACTORS 29

9. INVESTIGATING ACCOUNTANT’S REPORT 33

10. BOARD, MANAGEMENT AND CORPORATE GOVERNANCE 52

11. MATERIAL CONTRACTS 60

12. ADDITIONAL INFORMATION 65

13. DIRECTORS’ AUTHORISATION 70

14. GLOSSARY 71

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CORPORATE DIRECTORY

Directors

Mathew Walker Non-Executive Chairman

Timothy Allen Johnston Non-Executive Director

Eugene Loy Non-Executive Director

Proposed Directors

Joshua Hunt Proposed Non-Executive Chairman

Umberto (Bert) Mondello Proposed Non-Executive Director and Chief Executive Officer

Keaton Wallace Proposed Executive Director

Salvatore Vallelonga Proposed Non-Executive Director

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

Registered Office

Suite 9 330 Churchill Avenue Subiaco WA 6008

Telephone: +61 8 6489 1600 Facsimile: +61 8 6489 1601 Email: [email protected] Website: www.ziptel.com.au

Solicitors

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

Share Registry*

Security Transfer Registrars Pty Limited 770 Canning Highway Applecross WA 6153

Telephone: +61 8 9315 2333 Facsimile: +61 8 9315 2233

Company Secretary

Loren Jones

ASX Code

Current: SKL Proposed: ZIP

Investigating Accountant and Auditor

Stannards Accountants and Advisors Pty Ltd Level 1 60 Toorak Road South Yarra VIC 3141

Lead Manager

Patersons Securities LimitedExchange Plaza 2 The EsplanadePerth WA

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IMPORTANT NOTICES

2. IMPORTANT NOTICES

This Prospectus is dated 14 May 2014 and was lodged with the ASIC on that date. The ASIC and its officers take no responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates.

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

Application will be made to the ASX within seven days after the date of this Prospectus for Official Quotation of the Securities the subject of this Prospectus.

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

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

This Prospectus does not constitute an offer in any place in which, or to any person to whom, it would not be lawful to make such an offer. No action has been taken to register or qualify the Securities or the Offer or to otherwise permit a public offering of the Securities in any jurisdiction outside Australia.

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

2.1 Risk Factors

Potential investors should consider that an investment in the Company is highly speculative and should consult their professional advisers before deciding whether to apply for Securities pursuant to this Prospectus. For further information in relation to the risk factors of the Company please refer to the summary in the Investment Overview Section in Section 5.7 and Section 8 of this Prospectus.

2.2 Photographs and Diagrams

Photographs used in this Prospectus which do not have descriptions are for illustration only and should not be interpreted to mean that any person shown endorses the

Prospectus or its contents or that the assets shown in them are owned by the Company. Diagrams used in this prospectus are illustrative only and may not be drawn to scale.

2.3 Web Site – Electronic Prospectus

A copy of this Prospectus can be downloaded from the website of the Company at www.ziptel.com.au. If you are accessing the electronic version of this Prospectus for the purpose of making an investment in the Company, you must be an Australian resident and must only access this Prospectus from within Australia.

The Corporations Act prohibits any person passing onto another person an Application Form unless it is attached to a hard copy of this Prospectus or it accompanies the complete and unaltered version of this Prospectus. You may obtain a hard copy of this Prospectus free of charge by contacting the Company.

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

2.4 Forward-looking statements

This Prospectus contains forward-looking statements which are identified by words such as ‘may’, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’, or ‘intends’ and other similar words that involve risks and uncertainties.

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

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

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

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

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These forward looking statements are subject to various risk factors that could cause our actual results to differ materially from the results expressed or anticipated in these statements. These risk factors are set out in Section 8 of this Prospectus.

2.5 Consolidation

The Offers are subject to and conditional upon the Shareholders approving the various resolutions at the General Meeting. Please refer to the details of the Shareholder Approvals to be obtained at the General Meeting as set out in Section 6.2 of this Prospectus.

Unless stated otherwise, all references to Securities of the Company as set out in this Prospectus are on the basis that the Consolidation (for which approval is being sought at the General Meeting to be held on 23 May 2014) has occurred.

IMPORTANT NOTICES

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TIMETABLE

3. TIMETABLE*

* The above dates are indicative only and may change without notice. The Company reserves the right to extend the Closing Dates or close the Offers early without notice.

Date

Dispatch of Notice of Meeting 7 April 2014

Lodge Prospectus with ASIC and the ASX 14 May 2014

Opening Date of Offers 14 May 2014

Public Offer Closing Date 22 May 2014

General Meeting of Shareholders Company’s Shares are suspended from Official Quotation on ASX 23 May 2014

AussieSim Offer Closing DateBroker Offer Closing Date 26 May 2014

Securities issued under Prospectus 5 June 2014

Settlement Date 12 June 2014

Re-quotation of Shares (including New Shares) and quotation of New Options on ASX 12 June 2014

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CHAIRMAN’S LETTER

4. CHAIRMAN’S LETTER

Dear Investor,

On behalf of the Directors of Skywards Ltd (Skywards or Company), I am pleased to present you with this opportunity to become a Shareholder of Skywards.

Skywards is an Australian Securities Exchange (ASX) listed Perth based company which underwent a restructure in late 2012, including divestment of its assets by way of a spinoff of its subsidiaries. In consultation with its major Shareholders and advisors, the Company has decided to pursue new business opportunities for which market sentiment is deemed to be favourable.

After reviewing several new business opportunities, Skywards has entered into an agreement pursuant to which the Company has agreed to acquire 100% of the issued capital of AussieSim Pty Ltd (AussieSim) (Acquisition).

AussieSim in an Australian-owned and operated telecommunications business, offering customers a discounted mobile phone roaming service for overseas travel in over 180 countries. AussieSim deploys a prepaid travel sim card into the overseas travel market assisting Australian travellers to avoid major “bill shock”. AussieSim offers consumers discounted roaming rates for talk, text and data usage of up to 95% when compared to other Australian telecommunications providers.

Over the past two and a half years AussieSim has developed a fully integrated retail and online trading solution for the travel sim marketplace. This includes infrastructure, such as SMS based top up technology, along with a call forwarding platform, which enables customers to receive international calls on their Australian phone number while travelling overseas.

AussieSim has experienced exceptional growth in sales since its first product launch in March 2013. Key milestones in the first year of commercial operation have included the introduction of its destination specific UK/Europe Sim, US Sim and Indonesia/Bali Sim.

Importantly, as part of the Acquisition, the expertise of the AussieSim Board will be retained with Bert Mondello, Keaton Wallace, Josh Hunt and Salvatore Vallelonga to join the Board of Skywards upon completion of the Acquisition.

As successful completion of the Acquisition will result in a material change in the nature and scale of the Company’s activities, the purpose of this Prospectus is to ensure that Skywards is able to re-comply with Chapters 1 and 2 of the ASX Listing Rules and the provide the Company with funding to develop the existing AussieSim business and pursue new business opportunities as set out in this Prospectus.

Under this Prospectus, the Company is seeking to raise up to $5,000,000 by the issue of, on a post-Consolidation basis, 25,000,000 fully paid ordinary shares in the capital of the Company (New Shares), at an issue price of $0.20 per New Share, together with one (1) free attaching option to acquire a Share (New Option) for every two (2) New Shares subscribed for and issued (Public Offer).

This Prospectus contains detailed information about Skywards, AussieSim, the Public Offer, the Acquisition and associated transactions, as well as the risks of investing in the Company, and I encourage you to read it carefully.

On behalf of the Board of Skywards, I recommend this investment opportunity to you and look forward to welcoming you are a fellow Shareholder of the Company.

Yours sincerely

MATHEW WALKER NON-EXECuTIVE CHAIRMANF

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INVESTMENT OVERVIEW

5. INVESTMENT OVERVIEW

This Section is a summary only and not intended to provide full information for investors intending to apply for Securities offered pursuant to this Prospectus. This Prospectus should be read and considered in its entirety.

5.1 Company History

Skywards Ltd (Skywards or the Company) is a public company listed on the official list of ASX (ASX code: SKL) with a historical focus on sportswear clothing. The Company was incorporated in March 2004 and was admitted to the Official List of the ASX on 15 June 2004.

During late 2012, the Company underwent a restructure, including divestment of its assets by way of a spinoff of its subsidiaries, and subsequently began a review of new business opportunities.

In June 2013, the Company announced the proposed acquisition of two projects located in Western Australia which are prospective for nickel. On 26 November 2013, the Company announced it had reached an agreement to extend the end date for satisfaction of the conditions precedent to 31 January 2014. However, on 24 January 2014, the Company announced that it had resolved not to pursue the acquisition of the projects and had terminated the relevant option agreements.

In consultation with its major Shareholders and advisors, the Company has decided to pursue business opportunities outside the mining sector for which market sentiment is deemed to be more favourable.

On 24 January 2014, the Company announced it had entered into a binding agreement (Agreement) to acquire 100% of the issued capital in AussieSim Pty Ltd (ACN 147 227 638) (AussieSim), an Australian proprietary company (Acquisition).

AussieSim conducts a telecommunications business with a focus on the global roaming market. AussieSim offers customers a discounted mobile phone roaming service for overseas travel.

A condition of completion of the Acquisition is that Company obtains approval from Shareholders for a change in nature and scale of the activities of the Company to include telecommunications.

5.2 AussieSim - Key Investment Highlights

The following is a non-exhaustive list of investment highlights:

a. AussieSim’s business model is underpinned by 3 years of research and development, creating superior, scalable products with high barriers to entry;

b. AussieSim’s products are differentiated from competitors’ products by a unique, scalable and fully integrated retail and online trading technology platform;

c. AussieSim has several network partnerships with leading international telecommunications companies;

d. AussieSim has a strong national distribution network in place to drive sales growth;

e. majority of Australian outbound tourists currently use post-paid mobile roaming services, leading to “bill shock”;

f. AussieSim has experienced ongoing sales growth since its first product (named AussieSim) launched in March 2013. The directors of AussieSim believe the company is well positioned for further growth and market penetration through roll-out of three new products in 2014, being RoamEzy, International Call Forwarding Product (ICFP) and Ziptalk (ZipT);

g. subject to satisfaction or waiver of the conditions precedent in accordance with their terms, upon completing the Agreement, the Company will acquire 100% of the issued share capital in AussieSim; and

h. the acquisition of AussieSim comes with an experienced management team who will join the Board of the Company.

5.3 The Acquisition

In exchange for the Company acquiring 100% of the issued share capital in AussieSim, the Company will issue by way of consideration on a post-Consolidation basis, the following to the AussieSim Vendors (in proportion to their existing holdings in AussieSim):

a. 25,000,000 New Shares; and

b. 12,500,000 New Options,

(together, the Consideration Securities).

The Consideration Securities are being offered to the AussieSim Vendors under the AussieSim Offer and will be subject to escrow restrictions in accordance with Chapter 9 of the ASX Listing Rules.

Completion of the Acquisition remains subject to (amongst other things) the satisfaction or waiver by the parties of the following material conditions precedent on or before 5:00 pm (WST) on 30 June 2014:

i. completion of a capital raising by the Company to raise a minimum of $3,000,000 through the issue of New Shares at an issue price of $0.20 each with one free attaching New Option for every two New Shares subscribed for and issued. This condition will be satisfied upon completion of the Public Offer;

ii. completion of a consolidation of capital by the Company

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iii. completion of financial, legal and technical due diligence by AussieSim on the Company’s business and operations to the absolute satisfaction of AussieSim on or before 28 February 2014. This review has been completed to the satisfaction of the AussieSim;

iv. the Company obtaining all necessary Shareholder approvals pursuant to the ASX Listing Rules, Corporations Act or any other law to allow the Company to lawfully complete the matters set out in the Agreement;

v. the Company obtaining all necessary third party approvals or consents to give effect to the matters set out in the Agreement to allow the Company to lawfully complete the matters set out in the Agreement;

vi. the Company obtaining all necessary regulatory approvals pursuant to the ASX Listing Rules, Corporations Act or any other law to allow the Company to lawfully complete the matters set out in the Agreement, including but not limited to, approval to reinstatement to official quotation on ASX on conditions satisfactory to the Company;

vii. the Company not incurring any material liability other than those incurred in the normal course of business or otherwise in connection with the transaction evidenced by the Agreement without the express approval of AussieSim except for the Converting Loans; and

viii. the Company raising sufficient funds to repay current outstanding liabilities prior to the transaction completing.

For further details, refer to the material contract summary of the Agreement in Section 11.1 of this Prospectus.

More detail in respect of AussieSim’s assets and business plan is set out in Section 7 of this Prospectus.

5.4 Effect of the Acquisition

The effect of the Acquisition is that the nature and scale of the activities of the Company will change as the Company proposes to focus on marketing and development of global communications services upon completion of the Acquisition.

The acquisition of AussieSim is an event which requires the Company to re-comply with the requirements of Chapters 1 and 2 of the ASX Listing Rules, including seeking Shareholder approval for the acquisition of AussieSim, issuing a prospectus and obtaining a sufficient number of Shareholders with the requisite number of Shares in accordance with those rules.

Shareholder approval with respect to all resolutions relating to the Acquisition will be sought at the General Meeting to be held on 23 May 2014.

The effect of the Acquisition is set out in the capital structure table in Section 5.11 of this Prospectus and the Investigating Accountant’s Report in Section 9 of this Prospectus which

sets out the pro-forma balance sheet of the Company as at 31 December 2013.

5.5 Company Suspension

The Company will be suspended from trading on the ASX from the date of the General Meeting, being 23 May 2014 until the following activities have been completed:

a. the Offers;

b. the Acquisition; and

c. the resultant change of activities and re-admission to the Official List.

It is anticipated that the Company will be re-admitted to the Official List on or around 12 June 2014, subject to satisfying all ASX admission requirements under Chapters 1 and 2 of the ASX Listing Rules.

Indicative details in respect of the timetable are set out above in Section 3 of this Prospectus.

5.6 Business Model, New Business Development and Company Objectives

The Company’s main focus for the period immediately following re-listing will be the development of the current business and operations of AussieSim.

The Company’s main objectives on completion of the Offers are:

a. reinstating its Securities to trading on the ASX;

b. introducing and developing the ZipTalk (ZipT), RoamEzy and International Call Forwarding Product (ICFP)products into target markets across the globe;

c. expanding distribution partnerships with major online travel booking companies, including the offer of a white label solution;

d. launching the ZipT smartphone application;

e. expanding target markets for AussieSim’s products to include the corporate sector and introducing ICFP;

f. pursuing further relationships with global telecommunications companies; and

g. rolling out a marketing and public relations campaign.

The AussieSim business is focused on providing international mobile phone roaming and calling solutions. These core products will be distributed both domestically and internationally with the key focus being to save the consumer money.

The AussieSim business is firmly underpinned by a retail and online presence. AussieSim is reliant on establishing key relationships within the retail sector to ensure increased sales and growth. The focus is on business development in this sector to drive product into new retail outlets. AussieSim is also dependant on driving increased traffic flow to our

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INVESTMENT OVERVIEW

website to increase unique visitors and increase conversions and therefore sales.

AussieSim is dependent on maintaining its direct network partnerships globally to supply a quality product at a substantial discount to ensure that AussieSim has a clear point of difference and can offer substantial savings to the customer base of Telstra, Optus and Vodafone.

AussieSim plans to have four key products on offer both within Australia and globally which all offer clear paths to revenue immediately for the Company. The four key products are as follows:

a. AussieSim – a roaming solution for Australian outbound tourist market. This is AussieSim’s established business, which has been operational for 12 months and is earning revenue;

b. Roam Ezy – a global roaming solution to be offered for sale in any country around the world;

c. International call forwarding product - a call forwarding business solution for corporate Australia; and

d. ZipT – a smart phone application for the international calling market.

AussieSim has entered into network telecommunication partnerships around the world. This gives AussieSim a clear point of difference and the ability to offer more competitive savings to the customer along with flexibility on product offerings, tariffing and technology advances. These partnerships take significant time and resources and form part of AussieSim’s intellectual property.

The direct network partnerships also allow AussieSim to offer direct call technology to our customers. This means the customers user experience is more closely resembles that in their home country and allows them to roam like they are in their own country.

Further detail on the AussieSim products and key agreements are set out in Sections 7 and 11.2 of this Prospectus

5.7 Key Risks

The business, assets and operations of our Company are subject to certain risk factors that have the potential to influence the operating and financial performance of the Company in the future. These risks can impact on the value of an investment in the securities of our Company.

There is a risk that the Company may not be able to meet the requirements of the ASX for re-quotation of its Shares (including New Shares) on the ASX. Should this occur, the Shares will not be able to be traded on the ASX until such time as those requirements can be met, if at all. Shareholders may be prevented from trading their Shares should the Company be suspended until such time as it does re-comply with the ASX Listing Rules.

Set out below are specific risks that the Company is exposed to. Further risks associated with an investment in the Company are outlined in Section 8 of this Prospectus.

a. Re-Quotation of Shares on ASX The acquisition of AussieSim constitutes a significant change in the nature and scale of the Company’s activities and the Company needs to re-comply with Chapters 1 and 2 of the ASX Listing Rules as if it were seeking admission to the Official List of ASX. There is a risk that the Company may not be able to meet the requirements of the ASX for re-quotation of its Shares (including New Shares) on the ASX. Should this occur, the Shares will not be able to be traded on the ASX until such time as those requirements can be met, if at all. Shareholders may be prevented from trading their Shares should the Company be suspended until such time as it does re-comply with the ASX Listing Rules.

b. Dilution Risk The Company currently has 4,000,000,000 Shares on issue (on a pre-Consolidation basis) and will issue a further 1,550,000,000 Shares (on a pre-Consolidation basis) on conversion of the Converting Loans if Resolution 7 is approved at the General Meeting. On completion of the Acquisition, the Company proposes to issue the relevant number of New Shares and New Options under the Acquisition and issue a minimum of a further 15,000,000 New Shares (on a post-Consolidation basis) together with free attaching New Options on a 1:2 basis under the Public Offer. Assuming no exercise of New Options, the existing Shareholders will retain approximately 15.66% of the issued capital of the Company, with the AussieSim Vendors holding 48.92% and investors under the Public Offer holding 29.35% of the issued capital of the Company respectively. The remaining 6.07% will be held by unrelated party lenders on conversion of the Converting Loans. On issue of the consideration under the Acquisition and the maximum subscription of the New Shares under the Public Offer (assuming no exercise of New Options), the existing Shareholders will retain approximately 13.09% of the issued capital of the Company, with the AussieSim Vendors holding 40.92%, the investors under the Public Offer holding 40.92% and the unrelated party lenders on conversion of the Converting Loans holding 5.07% respectively. If all New Options are exercised (and provided that no other Shares are issued), the interests of existing Shareholders in the Company will reduce to 10.72% on a post-Offers basis, assuming minimum subscription under the Public Offer. The interests of existing Shareholders in the Company will reduce to 8.93% on a post-Offers basis, assuming maximum subscription under the Public Offer.

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c. New Product Development and Technology Risk Moving forward the Company will be reliant upon certain technologies and upon the successful commercialisation of these technologies. There is a risk that as marketable technologies continue to develop in the communications industry there may be certain product developments that supersede, and render obsolete, the products and services of the Company, this would adversely affect the profitability of the Company and likely the value of the Shares.

d. Dependence on Third Party Servers and Products As set out in this Prospectus, part of the business model of the Company will be reliant upon leased third party servers and the performance of those servers. If servers upon which the technology of the Company depends do not operate as expected then the services that the Company operates may be adversely affected. The majority of the products of the Company require the use of a smartphone or other similar device and as such the business model of the Company will be dependent upon the existence and ownership of these devices. There can be no guarantee that these devices will continue to be as widely used as they are currently or that they will not be replaced by alternate devices upon which the Company’s technology will not function as described in this Prospectus.

e. Liquidity Risk On completion of the Acquisition, the Company proposes to issue 25,000,000 New Shares and 12,500,000 New Options to the AussieSim Vendors (on a post-Consolidation basis) and 3,500,000 New Options to Patersons (on a post-Consolidation basis). These securities will be subject to escrow restrictions in accordance with Chapter 9 of the ASX Listing Rules. Based on the post-Offers capital structure (on a post-Consolidation basis), and assuming minimum subscription under the Public Offer and no further Shares are issued or New Options exercised, these Shares will equate to approximately 48.92% of the post-Offers issued Share capital of the Company. This could be considered an increased liquidity risk as a large proportion of issued capital may not be able to be traded freely for a period of time.

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

g. Contractual Risk The business of AussieSim has a significant dependence

on its counterparties and their ability to meet their contractual obligations pursuant to the agreements entered into with AussieSim. In particular, AussieSim relies on the continuation of the Network Agreements and Supply Agreement between AussieSim and its network partners. The ability of the Company and AussieSim to achieve their stated objectives will depend upon the performance of counterparties to each of the agreements, of their respective obligations under those agreements. If any counterparty defaults in the performance of their obligations, it may be necessary for the Company or AussieSim (as the case may be) to approach a court to seek a legal remedy. Legal action can be costly and there can be no guarantee that a legal remedy will be ultimately granted on the appropriate terms. The Company has no current reason to believe that any of the parties which it or AussieSim has contracted with will not meet and satisfy their obligations under their respective agreements.

h. Competition There is significant competition in the telecommunications industry generally. There is no assurance that AussieSim or the Company will succeed in the strategy of developing products that are effective or economic. Competitors’ products may render the potential digital global roaming products obsolete and/or otherwise uncompetitive. The Company and AussieSim may be unable to compete successfully against future competitors where aggressive policies are employed to capture market share. If the Company or AussieSim are successful in developing global roaming products, which may never occur, such competition could result in price reductions, reduced gross margins and loss of market share, any of which could materially adversely affect the Company’s and AussieSim’s potential future business, operating results and financial position.

i. Future Capital Requirements The funds raised under the Public Offer are considered sufficient to meet the immediate objectives of the Company. Additional funding may be required in the event costs exceed the Company’s estimates and to effectively implement its business and operations plans in the future (including in relation to AussieSim) to take advantage of opportunities for acquisitions, joint ventures or other business opportunities, and to meet any unanticipated liabilities or expenses which the Company may incur. If such events occur, additional financing will be required. The Company may seek to raise further funds through equity or debt financing, joint ventures, licensing arrangements, or other means. Failure to obtain


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sufficient financing for the Company’s and AussieSim’s activities and future projects may result in delay and indefinite postponement of their activities and potential development programmes. There can be no assurance that additional finance will be available when needed or, if available, the terms of the financing might not be favourable to the Company or AussieSim and might involve substantial dilution to Shareholders.

j. Foreign Operations and Compliance with Law The Company and AussieSim do, and will, market and sell products in foreign jurisdictions and therefore will be exposed to risks relating to operating in those countries. Many of these risks are inherent in doing business internationally and these will include, but not be limited to:

i. changes in the regulatory environment;

ii. trade barriers or the imposition of taxes;

iii. difficulties with staffing and/or managing any foreign operations;

iv. issues or restriction on the free transfer of funds;

v. technology export or import restrictions; and

vi. delays in dealing across borders caused by customers or governmental agencies.

It should be noted that the Company will still be largely based in Australia and it is expected that for the immediate future most of the compliance obligations of the Company will be based upon Australian law.

The above list of risk factors ought not to be taken as exhaustive of the risks faced by our Company and you should refer to the additional risk factors in Section 8 of this Prospectus before deciding whether to apply for Securities pursuant to this Prospectus.

5.8 The Offers

By this Prospectus, the Company invites applications for up to 25,000,000 New Shares (post-Consolidation) at an issue price of $0.20 per New Share to raise up to $5,000,000, together with one (1) free attaching New Option (post-Consolidation) for every two (2) New Shares subscribed for and issued (Public Offer).

This Prospectus also contains:

• an offer of up to 25,000,000 New Shares and 12,500,000 New Options (post-Consolidation) to the AussieSim Vendors in consideration for the acquisition of all of the issued capital in AussieSim (AussieSim Offer). Refer to

Section 6.1.2 of this Prospectus for further details of the AussieSim Offer; and

• an offer of up to 3,500,000 New Options (post-Consolidation) to Patersons (or its nominee) as part consideration for corporate advisory services provided by Patersons in connection with the Public Offer (Broker Offer). Refer to Section 6.1.3 of this Prospectus for further details of the Broker Offer.

The New Shares offered under this Prospectus will rank equally with the existing Shares on issue. Please refer to Section 12.2 for further information regarding the rights and liabilities attaching to the Shares.

All of the New Options offered under this Prospectus will be issued on the terms and conditions set out in Section 12.3 of this Prospectus.

All Shares issued on conversion of the New Options will rank equally with the Shares on issue at the date of this Prospectus.

The key information relating to the Offers and references to further details are set out below.

5.9 Purpose of the Offers

The primary purpose of the Public Offer under this Prospectus is to enable the Company to complete the acquisition of AussieSim.

The Company is aiming to apply the funds raised under the Public Offer in the manner detailed in Section 5.10. The Board believes that the funds raised from the Public Offer, combined with existing funds will provide the Company with sufficient working capital at anticipated expenditure levels to achieve the objectives as shown in the table in that Section.

This Prospectus has also been issued to:

a. meet the re-admission requirements of ASX under Chapters 1 and 2 of the ASX Listing Rules;

b. to remove the need for an additional disclosure document to be issued upon the sale of any New Shares and New Options that are issued under the AussieSim Offer and/or Broker Offer to, and/or the issue or sale of any Shares issued upon the exercise of any such New Options; and

c. meet the objectives set out in section 5.6 of this Prospectus.

5.10 Use of Funds

The Company intends to apply funds raised from the Public Offer, together with existing cash reserves, over the next two years following re-admission of the Company to the Official


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Allocation of fundsMinimum

Subscription ($) ($3,000,000)

Percentage of FundsFull Subscription ($)

($5,000,000)Percentage of Funds

AussieSim – website development, product development, marketing and public relations

600,000 20.00% 1,000,000 20.00%

ZipT - product development, marketing and distribution

1,350,000 45.00% 2,250,000 45.00%

RoamEzy - product development, marketing and distribution

100,000 3.34% 167,000 3.34%

ICFP - product development, marketing and distribution

250,000 8.34% 417,000 8.34%

Patersons success fee1 80,000 2.66% 80,000 1.60%

Expenses of the Offer2 298,655 9.95% 421,963 8.44%

Working capital 321,345 10.71% 664,037 13.28%

Total 3,000,000 100% 5,000,000 100%

Notes

1. Refer to Section 11.2.1 of this Prospectus for further details.

2. Refer to Section 12.7 of this Prospectus for further details.

List of ASX (for the purpose of satisfying ASX’s requirements for re-listing following a significant change to the nature and scale of the Company’s activities) as follows:

INVESTMENT OVERVIEW

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In the event the Company raises more than the minimum subscription of $3,000,000 but less than the maximum subscription, the additional funds raised will be first applied towards expenses of the Offers and then applied pro rata towards the development of the ZipT, RoamEzy and ICFP, with the balance to be spent on marketing for each of the products of the Company. On completion of the Public Offer, the Board believes the Company will have sufficient working capital to achieve these objectives.

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

5.11 Capital Structure

The capital structure of the Company following completion of the Offers (assuming full subscription) is summarised below1:

Notes

1. Refer to the Investigating Accountant’s Report set out in Section 9 of this Prospectus for further details.

2. The rights attaching to the Shares are summarised in Section 12.2 of this Prospectus.

3. Each New Option will be quoted and is exercisable at $0.30 each on or before 31 December 2016. The terms and conditions of the New Options are summarised in

Section 12.3 of this Prospectus.

Shares2Number (Minimum Subscription -

$3,000,000)Number (Maximum Subscription -

$5,000,000)

Pre 500:1 Consolidation

Currently on issue 4,000,000,000 4,000,000,000

Issued on conversion of Converting Loans 1,550,000,000 1,550,000,000

Post 500:1 Consolidation

Currently on issue3 8,000,000 8,000,000

Issued on conversion of Converting Loans 3,100,000 3,100,000

Issued pursuant to the Public Offer 15,000,000 25,000,000

Issued pursuant to AussieSim Offer 25,000,000 25,000,000

Total (post – Consolidation basis) 51,100,000 61,100,000

OptionsNumber (Minimum Subscription -

$3,000,000)Number (Maximum Subscription -

$5,000,000)

Pre 500:1 Consolidation

Currently on issue Nil Nil

Post 500:1 Consolidation

Currently on issue Nil Nil

Issued pursuant to the Public Offer4 7,500,000 12,500,000

Issued pursuant to AussieSim Offer4 12,500,000 12,500,000

Issued pursuant to Broker Offer4 3,500,000 3,500,000

Total (post-Consolidation basis) 23,500,000 28,500,000


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5.12 Change in Nature and Scale of Activities

At the General Meeting to be held on 23 May 2014, the Company is seeking Shareholder approval for a change in nature and scale of its activities.

The ASX requires the Company to re-comply with the admission requirements set out in Chapters 1 and 2 of the ASX Listing Rules. This Prospectus is issued to assist the Company to re-comply with these requirements.

The Company’s Securities will remain suspended from trading on the ASX from 23 May 2014 and will not be reinstated until satisfaction of the conditions to the Offers and the ASX approving the Company’s re-compliance with the admission requirements of Chapters 1 and 2 of the ASX Listing Rules.

There is a risk that the Company may not be able to meet the requirements of the ASX for re-quotation on the ASX. In the event the conditions to the Offers are not satisfied or the Company does not receive conditional approval for re-quotation on the ASX then the Company will not proceed with the Offers and will repay all application monies received (without interest).

5.13 Substantial Shareholders

As at the date of this Prospectus, the following Shareholders hold 5% or more of the total number of Shares on issue (on a post-Consolidation basis):

Note:

1. Mr Walker is a Director of the Company.

On completion of the Acquisition (assuming full subscription of the Offers), the following Shareholders are expected to hold 5% or more of the total number of Shares on issue (on a post-Consolidation basis):

Note:

1. This entity is controlled by Umberto Mondello, a Proposed Director.

2. This entity is controlled by Keaton Wallace, a Proposed Director.

The Company will announce to the ASX details of its top 20 Shareholders and Optionholders (following completion of the Offers) prior to the New Shares and New Options commencing trading on ASX.

5.14 Restricted Securities

Subject to the Company re-complying with Chapters 1 and 2 of the ASX Listing Rules, certain securities on issue prior to the Offers and certain securities issued as part of the Acquisition will be classified by ASX as restricted securities and will be required to be held in escrow for up to 24 months from the date of reinstatement to Official Quotation. During the period in which these securities are prohibited from being transferred, trading in Shares may be less liquid which may impact on the ability of a Shareholder to dispose of his or her Shares in a timely manner.

The securities likely to be subject to escrow will be the Consideration Securities and the New Options issued to Patersons under the Broker Offer.

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

INVESTMENT OVERVIEW

Shareholder Shares %

Mathew Donald Walker1 915,000 11.44%

Strategic Funding Management Pty Ltd & Sabreline Pty Ltd ATF The JPR Investment A/C

602,327 7.53%

Sacco Developments Australia Pty Limited ATF Sacco Family A/C

460,000 5.75%

AussieSim Vendor Shares Options % (undiluted) % (fully diluted)

UCM Holdings Limited1 8,307,500 4,153,750 13.60% 13.91%

KW Investment Holdings Limited2 7,242,500 3,621,250 11.85% 12.12%

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5.15 Financial Information

Following the change in nature of its activities, the Company will be focused on marketing and development of global mobile phone roaming services, including the new ZipTalk, RoamEzy and ICFP products. Therefore, the Company’s past operations and financial historical performance will not be of significant relevance to future activities.

As a result, the Company is not in a position to disclose any key financial ratios other than its statement of financial position which is included in the Investigating Accountant’s Report set out in Section 9 of this Prospectus.

The initial funding for the Company’s future activities will be generated from the offer of Securities pursuant to the Public Offer under this Prospectus and existing cash reserves. The Company may contemplate raising further funding from equity raisings in the future to accelerate the marketing and development of the ZipTalk, RoamEzy and ICFP products. The Company may also consider alternative forms of debt or quasi-debt funding if required.

5.16 Taxation

The acquisition and disposal of Securities will have tax consequences, which will differ depending on the individual financial affairs of each investor. All potential investors in the Company are urged to obtain independent financial advice about the consequences of acquiring Securities from a taxation viewpoint and generally.

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

5.17 Dividend Policy

It is anticipated that significant expenditure will be incurred in the development of the AussieSim products. These activities are expected to dominate the two year period following the date of this Prospectus. Accordingly, the Company does not expect to declare any dividends during that period.

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

5.18 Directors and Key Personnel

As at the date of this Prospectus, the Board comprises of:

a. Mathew Walker - Non-Executive Chairman;

b. Timothy Johnston - Non-Executive Director; and

c. Eugene Loy - Non-Executive Director.

Following successful completion of the Acquisition, it is proposed that four nominees of AussieSim will be elected to the Board (Proposed Directors) and Messrs Mathew Walker, Timothy Johnston and Eugene Loy will resign as Directors of the Company.

The Proposed Directors to be appointed are the current AussieSim directors who bring with them significant experience in the telecommunications industry. AussieSim’s existing board and executives have extensive experience in the establishment and development of telecommunications companies in Australia.

The profiles of each of the Directors and Proposed Directors are set out below.

Josh Hunt - Proposed Non-Executive Chairman

Mr Josh Hunt is a lawyer and Principal of project law firm Hunt & Humphry, with experience in providing advice to listed public and private companies and in all aspects of project acquisitions and disposals. Mr Hunt has practised corporate and commercial law for over 12 years and has been intimately involved in the formation, acquisition and development a numerous successful companies over this time.

Mr Hunt’s experience extends internationally, where he has acted for a number of companies with operations in Africa, South East Asia, Mongolia, the United States, Canada, the United Kingdom and throughout South America.

Mr Hunt does not expect that his other business activities will interfere with his ability to act as a Non-Executive Director of the Company.

umberto (Bert) Mondello - Proposed Executive Director and Chief Executive Officer

Mr Bert Mondello first entered the telecommunications industry in 1997, and up until 2002, he managed key retail distribution channels for Optus and Vodafone. During this period, the telecommunications industry evolved significantly, shifting from the basic analogue network to digital and 3G. In 2002, Bert was invited to assist in building the business model and blueprint of Vodafone’s outsourced pilot distribution model called Vodafone Alliance. As an equity partner and General Manager of Vodafone Alliance, his responsibility was to build and manage a national business to business sales team.

In 2004, his private company iCommunications Pty Ltd was appointed by 3 Mobile to manage part of their Australian business channel. Subsequently in 2009, Vodafone and 3


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Mobile merged in Australia and 3G Corporate became one of the largest Vodafone business channels in the country. As the Managing Director of the company, Bert was responsible for signing up over 50,000 subscribers to the Vodafone and 3 Network over a ten year period. Today it is still one of Vodafone’s most prominent and long-standing business partners.

Keaton Wallace - Proposed Executive Director

Mr Keaton Wallace recently oversaw the tender and negotiation process with the four major telecommunication network providers in Indonesia and the three major telecommunications providers in Thailand. He has also successfully reached terms with Indosat Pt Indonesia and DTAC Thailand for partnership with AussieSim.

Prior to co-founding AussieSim, Keaton was in property management and development. During this time, he oversaw major property development syndications and capital raisings within Australia and Indonesia, with award-winning results for Parkwater Estate and Brookfield Estate in Margaret River. Keaton has also managed a residential and commercial property portfolio for Jamac Properties, with assets in excess of $200 million.

Salvatore Vallelonga - Proposed Non-Executive Director

Mr Salvatore Vallelonga is a Chartered Accountant and a director of Plexus Global Consultants Pty Ltd, a Chartered Accounting and business advisory business specialising in the provision of tailored tax and consultative solutions to its SME clients and emerging growth clients. Salvatore is also a director of Plexus Wealth Pty Ltd, which provides financial planning and wealth solutions to clients. Salvatore is a director of numerous private companies and is also on a number of boards and committees of non-profit organisations.

Salvatore has worked closely with his clients in business to business distribution and retail channels in the telecommunication industry, servicing clients working with national and global brands such as Telstra, Vodafone, 3Mobile, Optus, People telecom, M2 Communication and Commander.

Mr Vallelonga does not expect that his directorships with other companies or other business activities will interfere with his ability to act as a Non-Executive Director of the Company.

Mathew Walker - Non-Executive Chairman (to resign on completion of the Acquisition)

Mr Walker has extensive experience in public company management and in the provision of corporate advice. Specialising in the natural resources section, Mr Walker has served as executive Chairman or Managing Director for public companies with mineral interests in North America, South America, Africa, Eastern Europe, Australia and Asia.

Currently he serves as a director of West Peak Iron Limited (ASX: WPI) and Chairman of Blue River Mining Limited. He is Chairman of corporate advisory firm Cicero Corporate Services Pty Ltd based in Subiaco, Australia. For twenty years, Mr Walker has served as a director of his family livestock business, which was sold in part to Australia’s largest beef cattle producer, the Australian Agricultural Company Limited (ASX: ACC) in 2006, described by ACC at the time as “the world’s largest and most credentialed full blood herd outside Japan and is viewed as Australia’s premier Wagyu Business”.

Mr Walker is a member of the Australian Institute of Company Directors and holds a Bachelor of Business from the University of Technology, Sydney.

Timothy Johnston - Non-Executive Director (to resign on completion of the Acquisition)

Mr Johnston holds a Bachelor of Science in Business Administration-Accountancy from Oklahoma State University. Mr Johnston has extensive experience in financial administration having worded in various capacities for both public and private companies in the resources industry for over 35 years.

Mr Johnston is currently the President of Energy Financial Management Inc., which provides resources entities with their accounting, administration and taxation requirements. Mr Johnston is also President of Oklahoma Energy Consultants Inc. which advises international clients on the acquisition and administration of oil and gas properties in North America.

Eugene Loy - Non-Executive Director (to resign on completion of the Acquisition)

Mr Loy has had a career spanning 12 years with areas of experience which include commercial banking, capital markets and corporate advisory. He is a member of the Australian Institute of Company Directors and holds a Bachelor of Business for the Australian Catholic University.

5.19 Corporate Governance

To the extent applicable, in light of the Company’s size and nature, the Company has adopted The Corporate Governance Principles and Recommendations (2nd Edition) as published by ASX Corporate Governance Council (Recommendations).

The Company’s main corporate governance policies and practices as at the date of this Prospectus are outlined in Section 10.2 of this Prospectus and the Company’s compliance and departures from the Recommendations are set out in Section 10.3 of this Prospectus.

In addition, the Company’s full Corporate Governance Plan may be requested from the Company Secretary on +61 8 6489 1600 and from the Company’s website (www.ziptel.com.au).


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5.20 Disclosure of Interests

The Company’s Constitution provides that the remuneration of non-executive Directors will be not more than the aggregate fixed sum determined by a general meeting (currently $250,000). The remuneration of any executive director that may be appointed to the Board will be fixed by the Board and may be paid by way of fixed salary or consultancy fee. Directors are not required under the Company’s Constitution to hold Securities.

Details of the Directors’ and Proposed Directors’ remuneration (inclusive of superannuation) and relevant interests in the securities of the Company as at the date of this Prospectus and upon completion of the Offers are set out in the tables below.

Interests as at the date of this Prospectus (post-Consolidation basis):

INVESTMENT OVERVIEW

Note:

1. Mr Walker, Mr Johnston and Mr Loy were appointed on 11 June 2013.

2. 239,500 Shares (post-Consolidation) held indirectly by Eug Pty Limited of which Mr Loy is a director and shareholder and 130,000 Shares (post-Consolidation) held by Orca Management Pty Ltd of which Mr Loy is a director of the trustee company and a beneficiary of the trust.

Interests upon completion of the Acquisition for Proposed Directors (Post-Consolidation):

Note:

1. New Options exercisable at $0.30 each on or before 31 December 2016 and otherwise on the terms and conditions set out in Section 12.3 of this Prospectus.

2. Hunt & Humphry will be paid legal fees of $100,000 in accordance with its retainer agreement with AussieSim. Mr Hunt is a principal of Hunt & Humphry.

3. Subject to Shareholder approval which is being sought at the General Meeting, the Company will issue 525,000 New Shares and 262.500 New Options to NYG Pty Ltd as trustee for The JNH Law Fund Trust (of which Mr Hunt is a director of the trustee company and a beneficiary of the trust) in consideration for the acquisition by the Company of the AussieSim shares currently held by Mr Hunt.

4. Subject to Shareholder approval which is being sought at the General Meeting, the Company will issue 8,307,500 New Shares and 4,153,750 New Options to UCM Holdings Limited (of which Mr Mondello is a director) in consideration for the acquisition by the Company of the AussieSim shares currently held by Mr Mondello.

5. Subject to Shareholder approval which is being sought at the General Meeting, the Company will issue 7,242,500 New Shares and 3,621,250 New Options to KW Investments Limited (of which Mr Keaton is a director) in consideration for the acquisition by the Company of the AussieSim shares currently held by Mr Wallace.

6. Plexus Global Consultants will be paid accounting fees of $26,125 in accordance with its letter of engagement with AussieSim. Mr Vallelonga is a director of Plexus Global Consultants.

7. Subject to Shareholder approval which is being sought at the General Meeting, the Company will issue 350,000 New Shares and 175,000 New Options to Shelf Pty Ltd as trustee for the Cruz Trust (of which Mr Vallelonga is a director of the trustee company and a beneficiary of the trust) in consideration for the acquisition by the Company of the AussieSim shares currently held by Mr Vallelonga.

DirectorRemuneration for

year ended 30 June 2013

Proposed remuneration for

current year to 30 June 2014

Shares Options

Existing Directors

Mathew Walker1 Nil Nil 915,000 Nil

Timothy Johnston1 Nil 5,000 Nil Nil

Eugene Loy1 Nil 52,500 369,500 Nil

Proposed Directors

Josh Hunt Nil Nil Nil Nil

Bert Mondello Nil Nil Nil Nil

Keaton Wallace Nil Nil Nil Nil

Salvatore Vallelonga Nil Nil Nil Nil

Director

Remuneration for year ended

30 June 2013 and 30 June 2014

Proposed remuneration

for year to 30 June 2015

Shares Options1

Proposed Directors

Josh Hunt Nil2 $60,000 525,0003 262,500

Bert Mondello Nil $180,000 8,307,5004 4,153,750

Keaton Wallace Nil $180,000 7,242,5005 3,621,250

Salvatore Vallelonga Nil6 $30,000 350,0007 175,000

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INVESTMENT OVERVIEW

5.21 Agreements with Directors, Proposed Directors or Related Parties

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

a. a Director with a material personal interest in a matter is required to give notice to the other Directors before such a matter is considered by the Board; and

b. for the Board to consider such a matter, the Director who has a material personal interest is not present while the matter is being considered at the meeting and does not vote on the matter.

The Company has not entered into any services agreements or appointment letters with the Directors of the Company. Following successful completion of the Acquisition, it is proposed that Messrs Mathew Walker, Timothy Johnston and Eugene Loy will resign as Directors of the Company. No payments or termination benefits will be paid to the Directors on their resignation from the Company.

Administrative Services Agreement

The Company has entered into an administrative services agreement with Cicero Corporate Services Pty Ltd (Cicero) (an entity associated with Mr Mathew Walker, a Director of the Company), pursuant to which Cicero has agreed to provide administration services to the Company. This agreement was negotiated on arms length commercial terms. The terms of the administrative services agreement are summarised in section 11.1.5 of this Prospectus.

Executive Services Agreement – Bert Mondello

The Company has entered into an executive services agreement with Bert Mondello (Mondello ESA) effective from the date on which the Company is readmitted to the official list of ASX following completion of the Acquisition. In the event that the Acquisition does not complete, the Mondello ESA is of no force or effect.

Under the Mondello ESA, Mr Mondello will be employed by the Company to provide services to the Company in the capacity of Chief Executive Officer and Executive Director.

Mr Mondello will be paid a salary of $180,000 per annum (plus superannuation at the statutory rate). Mr Mondello will also be reimbursed for reasonable expenses incurred by Mr Mondello in carrying out his duties under the Mondello ESA.

The Mondello ESA contains standard termination provisions under which each party much give 3 months’ written notice of termination (in which case the Company may elect to pay Mr Mondello an amount equal to the unexpired period of notice and terminate the employment immediately). The Company may also terminate the Mondello ESA immediately without notice or payment in lieu of notice in the event of serious misconduct or material breach of the agreement by Mr Mondello.

Executive Services Agreement – Keaton Wallace

The Company has entered into an executive services agreement with Keaton Wallace (Wallace ESA) effective from the date on which the Company is readmitted to the official list of ASX following completion of the Acquisition. In the event that the Acquisition does not complete, the Wallace ESA is of no force or effect.

Under the Wallace ESA, Mr Wallace will be employed by the Company to provide services to the Company in the capacity of Executive Director.

Mr Wallace will be paid a salary of $180,000 per annum (plus superannuation at the statutory rate). Mr Wallace will also be reimbursed for reasonable expenses incurred by Mr Wallace in carrying out his duties under the Wallace ESA.

The Wallace ESA contains standard termination provisions under which each party much give 3 months’ written notice of termination (in which case the Company may elect to pay Mr Wallace an amount equal to the unexpired period of notice and terminate the employment immediately). The Company may also terminate the Wallace ESA immediately without notice or payment in lieu of notice in the event of serious misconduct or material breach of the agreement by Mr Wallace.

Deeds of indemnity, insurance and access

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

Sub-Lease

AussieSim has entered a sub-lease agreement with iCommunications Pty Ltd, of which Mr Mondello, a Proposed Director of the Company, is a director. The agreement expires in approximately 12 months and the outstanding sun-lease payments are approximately $50,000, including outgoings.

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DETAILS OF THE OFFERS

6. DETAILS OF THE OFFERS

6.1 The Offers

6.1.1 Public Offer

Pursuant to this Prospectus, the Company invites applications for up to 25,000,000 New Shares at an issue price of $0.20 per New Share, together with one free attaching New Option for every two (2) New Shares subscribed for and issued, to raise up to $5,000,000.

Each New Option will be exercisable at $0.30 (on a post-Consolidation basis) on or before 31 December 2016. The full terms of the New Options are set out in Section 12.3 of this Prospectus.

The New Shares offered under this Prospectus will rank equally with the existing Shares on issue. A summary of the rights and liabilities attaching to Shares (including New Shares) is set out in Section 12.2 of this Prospectus.

The Company is seeking Shareholder approval at the General Meeting for a consolidation of its capital on a 500:1 basis (see Section 2.5 of this Prospectus) (Consolidation). Assuming that approval is given, all New Shares and New Options issued pursuant to the Public Offer will be issued on a post-Consolidation basis.

a. Minimum subscription The Public Offer is subject to a minimum subscription of 15,000,000 New Shares at an issue price of $0.20 per New Share, and 7,500,000 free attaching New Options, to raise $3,000,000 (Minimum Subscription). If the Minimum Subscription has not been raised within 4 months after the date of this Prospectus, the Company will not issue any Securities and will repay all application monies for the Securities within the time prescribed under the Corporations Act, without interest.

b. Oversubscriptions No oversubscriptions will be accepted by the Company.

c. Not underwritten The Offer is not underwritten.

d. Minimum application amount Applications under the Public Offer must be for a minimum of 10,000 New Shares and thereafter in multiples of 1,000 New Shares and payment for the New Shares must be made in full at the issue price of $0.20 per New Share.

6.1.2 AussieSim Offer

The Company has entered into the Agreement with AussieSim and the AussieSim Majority Shareholders pursuant to which the Company will acquire 100% of the issue capital in AussieSim.

In exchange for the Company acquiring 100% of the issued share capital in AussieSim, the Company will issue by way of consideration on a post-Consolidation basis, the following to the AussieSim Vendors (in proportion to their existing holdings in AussieSim):

a. 25,000,000 New Shares; and

b. 12,500,000 New Options,

(together, the Consideration Securities).



The material terms of the Agreement are set out in Section 11.1 of this Prospectus.

The AussieSim Offer is a separate offer to the AussieSim Vendors (or their nominees) only.

The AussieSim Offer is being made with disclosure under this Prospectus to ensure that the on-sale of the New Shares and New Options issued to the AussieSim Vendors (or their nominees) in the 12 months following the date of issue and the issue of Shares upon exercise of the New Options as well as the on-sale of such Shares in the 12 months following the date of issue does not require a disclosure document.

Only the AussieSim Vendors (or their nominees) may accept the AussieSim Offer. A personalised Application Form in relation to the AussieSim Offer will be issued to each AussieSim Vendor together with a copy of this Prospectus.

The Consideration Securities will be subject to any escrow restrictions in accordance with Chapter 9 of the ASX Listing Rules.

6.1.3 Broker Offer

The Company has entered into a mandate agreement with Paterson pursuant to which the Company has appointed Patersons to act as its corporate advisor and lead manager in relation to the Public Offer (Patersons Mandate).

Under the Patersons Mandate, in addition to a selling fee of 6.0% of the gross amount raised by the Public Offer from all sources, fees are payable by AussieSim to Patersons pursuant to a corporate advisory mandate between AussieSim and Patersons (Corporate Advisory Mandate).

Under the terms of the Corporate Advisory Mandate, following successful conclusion of the Acquisition, AussieSim must pay to Patersons a success fee of:

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a. $80,000; and

b. 3,500,000 New Options, which are the subject of the Broker Offer.



The material terms of the Patersons Mandate and Corporate Advisory Mandate are summarised in Sections 11.1.4 and 11.2.1 of this Prospectus.

The Broker Offer is a separate offer to Patersons (or its nominee) only.

The Broker Offer is being made with disclosure under this Prospectus to ensure that the on-sale of the New Options issued to Patersons (or its nominee) in the 12 months following the date of issue and the issue of Shares upon exercise of the New Options as well as the on-sale of such Shares in the 12 months following the date of issue does not require a disclosure document.

Only Patersons (or its nominee) may accept the Broker Offer. A personalised Application Form in relation to the Broker Offer will be issued to Patersons together with a copy of this Prospectus.

All New Options issued under the Broker Offer will be subject to any escrow restrictions in accordance with Chapter 9 of the ASX Listing Rules.

6.2 Conditional Offers

Completion of each of the Offers is conditional upon Shareholders approving a change in nature and scale of activities of the Company, the Consolidation, the issue of Securities offered under the Public Offer and the AussieSim Offer and the issue of the New Options under the Broker Offer at the General Meeting scheduled to be held on 23 May 2014.

The business of the General Meeting will consider resolutions in relation to:

a. a change in the nature and scale of the Company’s activities;

b. the Consolidation;

c. the capital raising (which is the subject of the Public Offer);

d. issue of Consideration Securities in consideration of the Acquisition;

e. issue of New Options to Patersons;

f. change of Company name; and

g. issue of Shares on conversion of Converting Loans.

A copy of the Notice of Meeting is available upon request.

Completion of the Offers are also subject to:

a. the Company re-complying with Chapters 1 and 2 of the ASX Listing Rules;

b. the Company raising the Minimum Subscription; and

c. the Company receiving conditional approval for re-quotation of the Company’s Shares on the ASX.

In the event that the above conditions are not satisfied, the Offers will not proceed and no Securities will be issued pursuant to this Prospectus. If this occurs, the Company will repay all application monies received (without interest).

6.3 Applications

Applications for Securities under the Offers must be made using the relevant Application Form. By completing an Application Form, you will be taken to have declared that all details and statements made by you are complete and accurate and that you have received personally the Application Form together with a complete and unaltered copy of the Prospectus.

Completed Application Forms and accompanying cheques (required for Public Offer only), made payable to “Skywards Ltd” and crossed “Not Negotiable”, must be mailed or delivered to the address set out on the Application Form so they are received by no later than the 5:00pm (WST) on the relevant Closing Date. The Public Offer Closing Date is currently scheduled to occur on 22 May 2014.

The AussieSim Offer Closing Date and Broker Offer Closing Date are currently scheduled to occur on 26 May 2014.

Public Offer applications must be accompanied by payment in full in Australian currency.

The Company reserves the right to close the Offers early.

6.4 Lead Manager

Patersons will act as Lead Manager to the Company in relation to the Public Offer. Refer to section 11.1.4 of this Prospectus for further details including the fees and terms of the engagement.

6.5 Issue of Securities and Allocation Policy

6.5.1 General

Subject to the Minimum Subscription being reached and satisfaction of each of the Conditions to the Offers (refer to Section 6.2 of this Prospectus), the issue of Securities offered by this Prospectus will take place as soon as practicable after the respective Closing Dates.

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

6.5.2 Public Offer

The allocation of New Shares and New Options under the Public Offer will be determined by the Board in consultation with Patersons as lead manager to the Public Offer and the Proposed Directors, and otherwise in its absolute discretion.

There is no guaranteed allocation of New Shares and New Options under the Public Offer.

The Board, in conjunction with Patersons and the Proposed Directors, reserves the right to reject any application or to allocate any applicant fewer Securities than the number applied for. Where the number of Securities issued is less than the number applied for, or where no issue is made, surplus application monies will be refunded without any interest to the applicant as soon as practicable after the Public Offer Closing Date.

The Company’s decision on the number of New Shares and New Options to be allocated to an applicant will be final.

6.5.3 Other Offers

Each of the AussieSim Offer and the Broker Offer are specific offers made to AussieSim Vendors and Patersons respectively. As such, New Shares and New Options under those Offers will be allocated and issued to those parties (or their nominees) only.

Subject to receiving necessary Shareholder approvals to the issue of Securities under those Offers at the General Meeting, allocation of the AussieSim Offer and the Broker Offer to the AussieSim Vendors and Patersons (or their respective nominees) are guaranteed.

6.6 ASX Listing

The Company will apply for Official Quotation of all New Shares and New Options issued under this Prospectus within 7 days after the date of this Prospectus. However, applicants should be aware that ASX will not commence Official Quotation of any Shares or Options until the Company has re-complied with Chapters 1 and 2 of the ASX Listing Rules and has received the approval of ASX to be re-admitted to the Official List (see Section 5.12 of this Prospectus). As such, the New Shares and New Options may not be able to be traded for some time after the close of the Offers.

If the Securities are not admitted to Official Quotation by ASX before the expiration of 3 months after the date of issue of this Prospectus, or such period as varied by the ASIC, or if ASX rejects the Company’s re-admission to the Official List, the Company will not issue any Securities and will repay all application monies for the Securities within the time prescribed under the Corporations Act, without interest. In those circumstances, the Acquisition will not proceed.

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

6.7 Applicants outside Australia

This Prospectus does not, and is not intended to, constitute an offer in any place or jurisdiction, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any of these restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

No action has been taken to register or qualify the securities or otherwise permit a public offering of the Securities the subject of this Prospectus in any jurisdiction outside Australia. Applicants who are resident in countries other than Australia should consult their professional advisers as to whether any governmental or other consents are required or whether any other formalities need to be considered and followed in order to accept any of the Offers.

If you are outside Australia it is your responsibility to obtain all necessary approvals for the issue of the Securities pursuant to this Prospectus. The return of a completed Application Form will be taken by the Company to constitute a representation and warranty by you that all relevant approvals have been obtained.

6.8 Withdrawal of Offers

The Offers may be withdrawn at any time. In this event, the Company will return all application monies (without interest) as soon as practicable.

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COMPANY OVERVIEW uPON COMPLETION OF ACQuISITION

7. COMPANY OVERVIEW UPON COMPLETION OF ACQUISITION

7.1 Background

A general background on the Company and the Acquisition is set out in Section 5.1 of this Prospectus.

7.2 Background of AussieSim

AussieSim is an Australian-owned and operated telecommunications business, offering customers a cheap mobile phone roaming service for overseas travel in over 180 countries. AussieSim deploys a prepaid travel sim card into the overseas travel market assisting Australian travellers to avoid major “bill shock”. AussieSim offers consumers discounted roaming rates for talk, text and data usage of up to 95% when compared to other Australian telecommunications providers.

Over the past two and a half years AussieSim has developed a fully integrated retail and online trading solution for the travel sim marketplace. This includes, infrastructure, such as SMS based top up technology, along with a call forwarding platform, which enables customers to receive international calls on their Australian mobiles while travelling overseas.

AussieSim has direct partnerships with a number of international telecommunications networks. It has also developed an online trading platform which is scalable, can be rebranded, and is capable of being deployed offshore with domestic currency and different languages.

The global roaming market is significant.

AussieSim has experienced growth in sales since its first product launch in March 2013. Key milestones in the first year of commercial operation have included the introduction of its destination specific UK/Europe Sim, US Sim and Indonesia/Bali Sim. In October 2013, AussieSim launched its ‘OneSim’ solution which allows consumers the ability to roam across the globe with a single Sim card.

AussieSim has four distinct revenue streams within its business model:

a. upfront revenue from online sales;

b. upfront revenue from distribution partners;

c. trailing revenue on Sim Top Up; and

d. trailing revenue on Call Forwarding Top Up.

AussieSim continues to expand its distribution footprint throughout Australia. AussieSim currently has numerous online and retail partners throughout Australia.

7.3 Business Model

The AussieSim business is focused on providing international mobile phone roaming and calling solutions. These core products will be distributed both domestically and internationally with the key focus being to save the consumer money.

The AussieSim business is firmly underpinned by a retail and online presence. AussieSim is reliant on establishing key relationships within the retail sector to ensure increased sales and growth. The focus is on business development in this sector to drive product into new retail outlets. AussieSim is also dependant on driving increased traffic flow to its website to increase unique visitors and increase conversions and therefore sales.

AussieSim is dependant on maintaining its direct network partnerships globally to supply a quality product at a substantial discount to ensure that AussieSim has a clear point of difference and can offer substantial savings to the customer base of Telstra, Optus and Vodafone.

AussieSim plans to have four key products on offer both within Australia and globally which all offer clear paths to revenue immediately for the Company. The four key products are as follows:

a. AussieSim – a roaming solution for Australian outbound tourist market. This is AussieSim’s established business, which has been operational for 12 months and is earning revenue;

b. Roam Ezy – a global roaming solution to be offered for sale in any country around the world;

c. International call forwarding product - a call forwarding business solution for corporate Australia; and

d. ZipT – a smart phone application for the international calling market.

AussieSim has entered into network telecommunication partnerships around the world. This gives AussieSim a clear point of difference and the ability to offer more competitive savings to the customer along with flexibility on product offerings, tariffing and technology advances. These partnerships take significant time and resources and form part of AussieSim’s intellectual property.

The direct network partnerships also allow AussieSim to offer direct call technology to our customers. This means the customers user experience more closely resembles that in their home country and allows them to roam like they are in their own country.

AussieSim intends to fund the AussieSim business via the funds raised from the Public Offer and will apply the funds as set out in Section 5.10 of this Prospectus.

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COMPANY OVERVIEW uPON COMPLETION OF ACQuISITION

AussieSim Platform

a. Overview The AussieSim platform (AussieSim Platform) is comprised of six key sub-platforms (Platform Components) that have been integrated to provide a complete online trading solution for SIM resale and support. The six Platform Components are:

i the Call Forwarding Platform;

ii the Online Store;

iii the Customer Portal;

iv the Support and Knowledge Base Portal;

v the Affiliates Portal; and

vi the AussieSim Rich Internet Application (RIA).

Each of the Platform Components is described in further detail below.

The overall solution has been engineered to allow the operator to leverage multiple existing wholesale SIM and network offerings available on the global market to create a unified product that can be front-ended in domestic marketplaces. Currently, the AussieSim Platform operates in the Australian domestic market where it retails a range of international products under the unified AussieSim brand. At the highest level the AussieSim Platform is designed to simplify domestic access to international mobile services for travellers.

b. Call Forwarding Platform The call forwarding component of the solution is designed to allow AussieSim to offer customers the ability to maintain their local mobile number whilst travelling. Customers forward their local mobile to the Call Forwarding Platform which then handles the routing and termination of calls direct to their AussieSim Sim. The Call Forwarding Platform utilises time-division multiplexing (TDM) over voice over internet protocol (VOIP) for call routing and termination to ensure voice quality and provide a guaranteed command-line interface (CLI) (maintaining consistency of AussieSim branding). The diagram above provides an overview of the Call Forwarding Platform.

prospectus - asx · 2014. 5. 14. · prospectus | skywards limited (to be renamed ziptel limited) 3...

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