Download 01/18 CORPORATE DIRECTORY

01/18
CORPORATE DIRECTORY
AFSL 79 99
PROSPECTUS
ACN 6
7 66
For an ofer o’ up to 8,7 ,
Shares at an issue price o’ $ .
per Share to raise up to $ ,7 ,
Public Ofer .
Oversubscripions o’ up to a ’urther
,7 ,
Shares at an issue price
o’ $ . per Share to raise up to a
’urther $7 ,
may be accepted.
The Public Ofer is subject to the
Condiions set out in Secion . .
The Prospectus also contains the
Secondary Ofers.
IMPORTANT INFORMATION
This is an important document that should be read in its enirety. I’ you do not understand it you
should consult your pro’essional advisers without delay. The Securiies ofered by this Prospectus
should be considered highly speculaive.
PROSPECT U S
This is a Replacement Prospectus dated 6 February
7. It replaces a prospectus dated
01
January
7 relaing to the Securiies o’ De.Mem Limited ACN 6 7 6 6 .
CONTENTS
CORPORATE DIRECTORY
02
IMPORTANT NOTICE
03
INDICATIVE TIMETABLE
07
CHAIRMAN’S LETTER
09
INVESTMENT OVERVIEW
11
DETAILS OF THE OFFERS
23
BUSINESS & TECHNOLOGY OVERVIEW
27
COMPANY OVERVIEW
41
INDUSTRY OVERVIEW
45
FINANCIAL INFORMATION AND INVESTIGATING ACCOUNTANT'S REPORT
49
TECHNOLOGY REPORT
65
RISK FACTORS
85
BOARD, MANAGEMENT AND INTERESTS
89
CORPORATE GOVERNANCE
93
MATERIAL CONTRACTS
103
ADDITIONAL INFORMATION
113
DIRECTORS’ AUTHORISATION
123
GLOSSARY
125
01
D EM EM
02/18
IMPORTANT NOTICE
01/18
CORPORATE DIRECTORY
DIRECTORS
INDEPENDENT TECHNICAL EXPERT
Mr Cosimo Trimigliozzi
Non-Execuive Chairman
Wave Six Pty Ltd
/
Labouchere Road,
Como WA 6
Mr Andreas Kroell
Chie’ Execuive Oicer & Director
Mr Bernd Dautel
Non-Execuive Director
Mr Stuart Carmichael
Non-Execuive Director
Mr Michael Edwards
Non-Execuive Director
COMPANY SECRETARY
Mr Bret Tucker
PROPOSED ASX CODE
DEM
CORPORATE ADVISOR
Ventnor Capital Pty Ltd
6 Ord Street
West Perth, WA, 6
SOLICITORS
Steinepreis Paganin
Level , The Read Buildings
6 Milligan Street
Perth, WA 6
INVESTIGATING ACCOUNTANT
RSM Corporate Australia Pty Ltd
8 St Georges Terrace
Perth, WA 6
REGISTERED OFFICE
Ground Floor, 6 Ord Street
West Perth, WA, 687
Australia
Telephone: + 6 8 9 8
Facsimile: +6 8 9 8
BUSINESS OFFICE
Tagore Industrial Avenue #
Tagore 8, Singapore 7878
Singapore
-
,
Tel: +6 6
Email: in’[email protected]
Website: www.demembranes.com
SHARE REGISTRY*
Link Market Services Limited
Central Park, Level ,
St Georges Tce
Perth, WA, 6
Telephone: +6 8 9
667
Facsimile: +6
9 87
LEAD MANAGER
Alto Capital
Ground Level, 6 Ord Street
West Perth, WA 6
ACN
6 9 AFSL 79 99
AUDITOR
RSM Australia Partners
8 St Georges Terrace
Perth, WA 6
* This enity is included ’or in’ormaion purposes only. It has not been involved in the preparaion
o’ this Prospectus.
PROSPECT U S
02
02/18
IMPORTANT NOTICE
02/18
IMPORTANT NOTICE
This Prospectus is dated 16 February 2017
and was lodged with the ASIC on that date.
This Prospectus replaces the prospectus
dated 31 January 2017 relating to the
securities of De.Mem Limited (Original
Prospectus). 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 Securiies may be issued on
the basis o’ this Prospectus later
than
months ater the date o’
the Original Prospectus.
No person is authorised to give
in’ormaion or to make any
representaion in connecion
with this Prospectus, which
is not contained in the
Prospectus. Any in’ormaion
or representaion not so
contained may not be relied on
as having been authorised by the
Company in connecion with this
Prospectus.
03
It is important that you read this
Prospectus in its enirety and
seek pro’essional advice where
necessary. The Securiies the
subject o’ this Prospectus should
be considered highly speculaive.
It is important that you read this
Prospectus in its enirety and
seek pro’essional advice where
necessary. The Securiies the
subject o’ this Prospectus should
be considered highly speculaive.
D EM EM
02/18
2.1
IMPORTANT NOTICE
REPLACEMENT PROSPECTUS
2.4 CONDITIONAL OFFERS
The diferences between this Prospectus and the
Original Prospectus are:
The Public Ofer and the Consideraion Ofer are
condiional on:
a provision o’ an updated Invesigaing
Accountant s Report;
a ASX condiional approval to admit the Shares to
Oicial Quotaion; and
b provision o’ an updated Technology Report;
b the Company receiving valid applicaions ’or
at least $ ,7 ,
worth o’ Shares under the
Public Ofer,
c addiional disclosure in respect o’ the
planned commercialisaion o’ the hollow iber
nanoiltraion membrane;
d clariicaion in respect o’ the expiry dates o’
patents licensed by De.mem; and
e addiional disclosure in respect o’ the waste
water treatment industry, the barriers to entry
o’ the industry, and risks associated with the
industry.
2.2 INVESTMENT ADVICE
This Prospectus does not provide investment
advice and has been prepared without taking
account o’ your inancial objecives, inancial
situaion or paricular needs including inancial
or taxaion issues . You should seek pro’essional
investment advice be’ore subscribing ’or Shares
under this Prospectus.
2.3 ADDITIONAL OFFERS
This Prospectus also includes:
’ a private ofer o’ 6 ,
,
Shares ’or
nil cash consideraion to the holders o’
securiies in De.mem Private Limited, a
company incorporated in Singapore UEN
No.
7
R DMS or De.mem or their
nominee s in consideraion ’or the acquisiion
o’
% o’ the issued capital o’ DMS
(Consideraion Ofer ; and
g a private ofer o’ up to ,8 ,
Opions
’or an issue price o’ $ .
per Opion to
Ventnor Capital Pty Ltd Ventnor and Alto
Capital Pty Ltd Alto Capital or their nominee s
(Advisor Opions in consideraion ’or the
provision o’ corporate advisory services and
lead manager services respecively
(Advisor Ofer ,
together, the Secondary Ofers .
PROSPECT U S
together, the Condiions .
The Ofers under this Prospectus are efecively
inter-condiional on the success’ul compleion o’
the Acquisiion.
2.5 WEB SITE – ELECTRONIC
PROSPECTUS
A copy o’ this Prospectus can be downloaded
’rom the website o’ the Company at
www.demembranes.com. I’ you are accessing
the electronic version o’ this Prospectus ’or the
purpose o’ making an investment in the Company,
you must be an Australian resident and must only
access this Prospectus ’rom within Australia.
There is no ’acility ’or the Ofers to be accepted
electronically or by applying online. Securiies will
not be issued under the electronic version o’ the
Prospectus. The Corporaions Act prohibits any
person passing onto another person an Applicaion
Form unless it is atached to a hard copy o’ this
Prospectus or it accompanies the complete and
unaltered version o’ this Prospectus. You may
obtain a hard copy o’ this Prospectus ’ree o’
charge by contacing the Company.
The Company reserves the right not to accept an
Applicaion Form ’rom a person i’ it has reason to
believe that when that person was given access
to the electronic Applicaion Form, it was not
provided together with the electronic Prospectus
and any relevant supplementary or replacement
prospectus or any o’ those documents were
incomplete or altered.
2.6 WEBSITE
No document or in’ormaion included on our
website is incorporated by re’erence into this
Prospectus.
04
02/18
IMPORTANT NOTICE
2.7 FORWARD-LOOKING STATEMENTS
This Prospectus contains ’orward-looking
statements which are ideniied by words such
as may , could , believes , esimates , targets ,
expects , or intends and other similar words that
involve risks and uncertainies.
These statements are based on an assessment o’
present economic and operaing condiions, and on
a number o’ assumpions regarding ’uture events
and acions that, as at the date o’ this Prospectus,
are expected to take place.
Such ’orward-looking statements are not
guarantees o’ ’uture per’ormance and involve
known and unknown risks, uncertainies,
assumpions and other important ’actors, many
o’ which are beyond the control o’ our Company,
the Directors and our management.
Although the Company believes that the
expectaions relected in the ’orward looking
statements included in this Prospectus are
reasonable, none o’ the Company, its Directors,
proposed Directors or oicers, or any person
named in this Prospectus, can give, or gives,
any assurance that the results, per’ormance or
achievements expressed or implied by the ’orwardlooking statements contained in this Prospectus
will actually occur or that the assumpions on
which those statements are based will prove to
be correct or exhausive beyond the date o’ its
making. Investors are cauioned not to place undue
reliance on these ’orward-looking statements.
Except to the extent required by law, the Company
has no intenion to update or revise ’orwardlooking statements, or to publish prospecive
inancial in’ormaion in the ’uture, regardless o’
whether new in’ormaion, ’uture events or any
other ’actors afect the in’ormaion contained in
this Prospectus.
These ’orward looking statements are subject
to various risk ’actors that could cause our
actual results to difer materially ’rom the results
expressed or anicipated in these statements.
These risk ’actors are set out in Secion
o’
this Prospectus.
2.8 PHOTOGRAPHS AND DIAGRAMS
Photographs used in this Prospectus which do
not have descripions are ’or illustraion 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
illustraive only and may not be drawn to scale.
05
2.9 OFFERS IN OVERSEAS
JURISDICTIONS
Singapore
This document and any other materials relaing to
the Shares have not been, and will not be, lodged
or registered as a prospectus in Singapore with the
Monetary Authority o’ Singapore. Accordingly, this
document and any other document or materials
in connecion with the ofer or sale, or invitaion
’or subscripion or purchase, o’ Shares, may not
be issued, circulated or distributed, nor may the
Shares be ofered or sold, or be made the subject
o’ an invitaion ’or subscripion or purchase,
whether directly or indirectly, to persons in
Singapore except pursuant to and in accordance
with exempions in Subdivision
Division , Part
XIII o’ the Securiies and Futures Act, Chapter 89
o’ Singapore SFA , or as otherwise pursuant to,
and in accordance with the condiions o’ any other
applicable provisions o’ the SFA.
This document has been given to you on the basis
that you are i an exising holder o’ Shares, ii an
insituional investor as deined in the SFA or iii
a relevant person as deined in secion 7
o’
the SFA . In the event that you are not an investor
’alling within any o’ the categories set out above,
please return this document immediately. You
may not ’orward or circulate this document to any
other person in Singapore.
Any ofer is not made to you with a view to the
Shares being subsequently ofered ’or sale to
any other party. There are on-sale restricions in
Singapore that may be applicable to investors who
acquire Shares. As such, investors are advised
to acquaint themselves with the SFA provisions
relaing to resale restricions in Singapore and
comply accordingly.
I’ you or any person ’or whom you are acquiring
the Shares are in Singapore, you and any such
person :
a are an insituional investor or a relevant
person as such terms are deined in the
Securiies and Futures Act o’ Singapore SFA ;
b will acquire the new shares in accordance with
applicable provisions o’ the SFA; and
c acknowledge that the ofer o’ the Shares is
subject to the restricions including selling
restricions set out in the SFA.
D EM EM
02/18
IMPORTANT NOTICE
Germany
The in’ormaion in this document has been
prepared on the basis that all ofers o’ Shares
will be made pursuant to an exempion under
the Direcive
/7 /EC Prospectus Direcive ,
as amended and implemented in Germany, ’rom
the requirement to produce a prospectus ’or ofers
o’ securiies.
An ofer to the public o’ Shares has not been
made, and may not be made, in Germany except
pursuant to one o’ the ’ollowing exempions
under the Prospectus Direcive as implemented in
Germany:
a to any legal enity that is authorized or
regulated to operate in the inancial markets
or whose main business is to invest in inancial
instruments;
b to any legal enity that saisies two o’ the
’ollowing three criteria: i balance sheet total
o’ at least € ,
,
; ii annual net turnover
o’ at least € ,
,
and iii own ’unds
o’ at least € ,
,
as shown on its last
annual unconsolidated or consolidated inancial
statements ;
c to any person or enity who has requested to
be treated as a pro’essional client in accordance
with the EU Markets in Financial Instruments
Direcive Direcive
/ 9/EC, MiFID ; or
d to any person or enity who is recognised as an
eligible counterparty in accordance with Aricle
o’ the MiFID.
Neither this document nor any other ofering or
markeing material relaing to the Shares have
been or will be iled with or approved by any Swiss
regulatory authority. In paricular, this document
will not be iled with, and the ofer o’ Shares will
not be supervised by, the Swiss Financial Market
Supervisory Authority FINMA .
This document is personal to the recipient only
and not ’or general circulaion in Switzerland.
2.10 DEFINED TERMS
Unless the contrary intenion appears or the
context otherwise requires, words and phrases
contained in this Prospectus have the same
meaning and interpretaion as given in the
Corporaions Act and capitalised terms have the
meaning given in the Glossary in Secion 8.
2.11 TIME
All re’erences to ime in this Prospectus are
re’erences to Australian Western Standard Time.
2.12 ENQUIRIES
I’ you are in any doubt as to how to deal with
any o’ the maters raised in this Prospectus, you
should consult your broker or legal, inancial or
other pro’essional adviser without delay. Should
you have any quesions about the Ofers or how
to accept the Ofers, please call the Company
Secretary, Bret Tucker on +6 8 9 8
.
I’ you or any person ’or whom you are acquiring
the Shares are in Germany, you and any such
person are a qualiied investor within the
meaning o’ the Prospectus Direcive Direcive
/7 /EC as amended and implemented in
Germany.
Switzerland
The Shares may not be publicly ofered in
Switzerland and will not be listed on the SIX Swiss
Exchange SIX or on any other stock exchange
or regulated trading ’acility in Switzerland. This
document has been prepared without regard to
the disclosure standards ’or issuance prospectuses
under art. 6 a or art.
6 o’ the Swiss Code
o’ Obligaions or the disclosure standards ’or
lising prospectuses under art. 7 f. o’ the SIX
Lising Rules or the lising rules o’ any other
stock exchange or regulated trading ’acility in
Switzerland. Neither this document nor any other
ofering or markeing material relaing to the
Shares may be publicly distributed or otherwise
made publicly available in Switzerland.
PROSPECT U S
06
03/18
INDICATIVE TIMETABLE
03/18
INDICATIVE TIMETABLE
07
D EM EM
03/18
INDICATIVE TIMETABLE
Lodgement of Original Prospectus with the ASIC
January
7
Lodgement of Prospectus with the ASIC
6 February
7
Opening Date of the Ofers
6 February
7
Closing Date of the Ofers
March
7
Compleion of the Acquisiion
8 March
7
Issue of Securiies under the Ofers and despatch of holding statements
8 March
7
March
7
Expected date for quotaion on ASX
*The above dates are indicaive only and may change without noice. The Company reserves the right to extend the Closing Date or close the
Ofers early without noice.
PROSPECT U S
08
01/18
CORPORATE DIRECTORY
04/18
CHAIRMAN’S LETTER
09
D EM EM
04/18
CHAIRMAN’S LETTER
DEAR INVESTOR,
ON BEHALF OF THE BOARD IT IS
MY PLEASURE TO INVITE YOU TO
PARTICIPATE IN THE PUBLIC OFFER
BY THE COMPANY AS PART OF THE
PROCESS TO LIST ON ASX.
Water polluion is one o’ the most serious
environmental challenges ’acing emerging and
developing economies across the globe. As a
consequence, many governments have adopted
strict regulaions with respect to water and waste
water treatment, discharge and recycling. This has
led to the emergence o’ a ’ast growing industry
which is addressing residenial and industrial water
and waste water treatment challenges worldwide.
De.mem, which was established in
, is a
specialized provider ’ocused on commercializing
innovaive products and technologies ’or
decentralized water and waste water treatment –
in the Board s opinion, a ’ast growing segment o’
the global water treatment industry.
Over the last ’ew years the company has built
strong competences in building and operaing
waste water treatment systems, addressing the
complex challenges in diferent industrial seings,
ranging ’rom industries ’ocussed on electronics, to
’ood and beverage, and to oil processing.
De.mem uses various licensed proprietary
technologies in its water treatment systems which
allow it to increase eiciency and drive down
operaing costs.
De.mem s lagship technology, a novel low
pressure hollow iber nanoiltraion membrane,
allows ’or the generaion o’ high quality water
at a comparable low pressure which leads to
signiicantly lower operaing costs. The hollow iber
nanoiltraion membrane technology is currently in
the development phase, with De.mem intending
to commence a pilot manu’acturing line in the irst
quarter o’
7. The membrane was originally
developed at Singapore s Nanyang Technological
University NTU , one o’ the leading insituions
in water research worldwide. This technology has
a number o’ unique ’eatures which make it ideal
’or a range o’ applicaions and has the potenial
to displace the use o’ combined ultrailtraion
and reverse osmosis systems in various water
and water treatment applicaions. This, combined
with energy cost savings ’rom lower operaing
pressures, can provide cost savings ’or end users in
both capital and operaional expenditures.
entry into long term contracts, under which the
Company designs and manu’actures water and
waste water treatment systems, retaining the
legal ownership in the systems. Under these
agreements, it is paid by the customer through
a recurring, mostly monthly, ’ee. De.mem also
designs, manu’actures and sells water and waste
water treatment systems and equipment to its
customers.
De.mem is currently in discussions in relaion to a
number o’ contracts with industrial customers ’rom
the Asia Paciic region and Europe. We strongly
believe that our licensed proprietary technologies
combined with our know how in building and
operaing cost efecive water treatment systems
will enable the company to expand our reach to
new industries and geographies at a comparable
low cost.
The Company is supported by an experienced
Board o’ Directors. The Board and management
team are led by Andreas Kroell, Chie’ Execuive
Oicer and Director, and supported by a strong
execuive team who have signiicant industry
experience.
The Company is seeking to raise up to $ ,
,
under the Public Ofer. The ’unds raised will
be used to support the coninued growth and
expansion o’ the Company, coninue technology
research and development as well as the planned
geographic expansion into Australia, and an
intended entry into the markets in China and
other regions during the third quarter o’
7, in
addiion to providing general working capital.
An investment in the Company involves a number
o’ risks which are addressed in both Secions
and .
This Prospectus contains important in’ormaion
regarding the Company and I encourage you to
read it in its enirety.
I look ’orward to welcoming you as a Shareholder.
Yours sincerely
Cosimo Trimigliozzi
Chairman
De.mem s revenues are generated based upon
PROSPECT U S
10
05/18
INVESTMENT OVERVIEW
05/18
INVESTMENT OVERVIEW
This Section is a summary only and is
not intended to provide full information for
investors intending to apply for Shares
offered pursuant to this Prospectus.
This Prospectus should be read and
considered in its entirety.
11
D EM EM
05/18
INVESTMENT OVERVIEW
ITEM
A.
SUMMARY
FURTHER
INFORMATION
COMPANY
Who is the
issuer of this
Prospectus?
De.mem Limited ACN 6 7 6 6
proposed ASX code: DEM .
Who is the
Company?
The Company was incorporated on
September
6 as a
holding company to complete the acquisiion o’
% o’ the
issued capital o’ DMS Acquisiion . On
October
6,
the Company, DMS and two major shareholders o’ DMS,
New Asia Investments Pte Ltd and NA Singapore Early Stage
Venture Fund I Pte Ltd Major Shareholders entered into
an implementaion agreement to complete the Acquisiion
(Implementaion Agreement .
Secions 7 and 8
DMS was incorporated ’or the primary purpose o’ designing,
building and operaing systems and technology ’or decentralised water treatment sector in the Asia Paciic region.
DMS s de-centralised water treatment systems are used to
provide potable water or to treat waste water so that it can
be recycled or discharged in compliance with government
standards. DMS is currently providing water treatment systems
to customers in both the industrial and municipal/residenial
sectors in Singapore and Vietnam, and intends to enter the
Australian market ater the Company's admission to the Oicial
List. The company is targeing entry to the Chinese market
during the third quarter o’
7.
DMS s core target market is the industrial market where
customers include ’actories, corporaions, mulinaionals and
industrial parks. The electronics, specialty chemicals, ’ood and
beverage, oil and gas and mining sectors have been ideniied
as key target market segments, given the highly complex waste
water that is produced as part o’ the manu’acturing or reining
processes in these industries. DMS also serves municipal,
private and residenial customers who have a requirement ’or
de-centralized water treatment systems. DMS ofers a range
o’ systems and soluions ’rom the delivery o’ standardised
small scale systems and containers up to the construcion o’
municipal water treatment plants.
DMS s equipment and products are currently available ’or
sale directly to customers or through a build, own, operate
(BOO model. Further in’ormaion on the Company s proposed
revenue model on compleion o’ the Acquisiion Compleion
is included in Secion 7 o’ the Prospectus.
DMS s product ofering is backed by a range o’ licensed
proprietary products and technologies including control and
monitoring systems and innovaive membranes originally
developed by NTU. Further in’ormaion on DMS s technology
interests are included in Secion 7 o’ the Prospectus.
PROSPECT U S
12
05/18
INVESTMENT OVERVIEW
ITEM
SUMMARY
FURTHER
INFORMATION
How will the
Acquisiion be
implemented?
The Acquisiion will be implemented in accordance with the
terms o’ the Implementaion Agreement, as summarised in
Secion . .
Secion
How were the
terms of the
Acquisiion
agreed?
The Acquisiion was negoiated on an arm s length basis, and
the Company is saisied that the terms o’ the Implementaion
Agreement are the best terms that the Company was able to
negoiate with DMS.
.
The historical posiion o’ DMS does not provide a suicient
basis, nor is it possible or appropriate to apply ’ormal valuaion
methodologies e.g. discounted cash low to the Acquisiion
consideraion.
In determining whether the consideraion ’or the Acquisiion
was appropriate, and accordingly whether the Company should
make the Acquisiion, the Company considered the ’ollowing
qualitaive ’actors:
a the market and business ’or waste water products is
growing see Secion 7 ’or ’urther in’ormaion on the
market and business growth ;
b DMS s intellectual property interests are licenced ’rom
the NTUiive, which protects its intellectual property by
a number o’ patents. This gives the Board com’ort on
the status o’ the technology and the intellectual property
interests o’ DMS see Secions . and . ; and
c DMS has a credible technical and management team see
Secion
’or details o’ management proiles .
The Board is o’ the view that proceeding with the Acquisiion
is in the best interests o’ the Company ’or the reasons set out
above.
What are the
key business
objecives of the
Company?
The Company s main objecives on compleion o’ the Public
Ofer and the Acquisiion are to:
a ’und a research and development program o’ the nanoiltraion membrane;
b ’und the investment into new BOO water treatment plants;
c provide general working capital;
d pay the expenses o’ the Ofers; and
e enable admission to the oicial list o’ the ASX Oicial List
to provide the Company with improved access to capital
markets.
13
D EM EM
05/18
INVESTMENT OVERVIEW
ITEM
B.
SUMMARY
FURTHER
INFORMATION
BUSINESS MODEL
What are the
key business
strategies of the
Company?
Upon Compleion o’ the Acquisiion, compleion o’ the Ofers
and the admission to quotaion o’ the Shares on the ASX,
the Company will proceed with the business and expansion
strategy.
Secions 7.9 and
7.
The Company s expansion strategy is based on the ’ollowing
elements:
a Customer adopion
Coninue to pursue industrial customers operaing in the
electronics, specialty chemicals, ’ood and beverage, oil and
gas and mining sectors;
b Product development
i.
Nanoiltraion membrane – De.mem has exclusively
licensed a low cost, high water quality treatment
soluion originally developed at NTU that can be applied
to both the residenial and industrial sectors;
ii. De.live – a remote monitoring and control system ’or
water treatment systems and plants;
c Geographical expansion
Expand the business into Australia ater the Company s
admission to the Oicial List and into the Chinese market
during the third quarter o’
7 using ’unds raised under
the Public Ofer.
The Directors consider that the Public Ofer will provide the
Company with the capital to execute its commercialisaion
strategy.
Further in’ormaion on the Company s business model is
included in Secion 7.9 o’ the Prospectus. Investors should
note, given the Company s limited operaing history, limited
revenue, and the ’act that it is currently loss making, the ability
to achieve its objecives is high risk.
How will the
Company
generate income?
De.mem derives revenues ’rom the sales o’ products, soluions
and services to customers that require water and/or waste
water treatment.
Secions 7.9, 7.
and 7.
Revenues are generated based on two diferent types o’
business models:
a BOO agreements: Long term contracts, under which the
Company designs and manu’actures water and waste
water treatment systems. Once complete, De.mem rents
the systems out and operates them on behal’ o’ its
customers at the customer s site. The Company retains the
legal ownership in the systems. It is paid by the customer
through a recurring, mostly monthly, ’ee.
PROSPECT U S
14
05/18
INVESTMENT OVERVIEW
ITEM
SUMMARY
How will the
Company
generate income?
b System and equipment sales: De.mem designs,
manu’actures and sells water and waste water treatment
systems and equipment to its customers.
As detailed in Secion 7. , De.mem currently
manu’actures its water and waste water treatment systems
and equipment. Given the Company s exising revenue
models, the Company is not dependent on the success’ul
commercialisaion o’ the hollow iber nanoiltraion
membrane technology. I’ the Company is not success’ul in
commercialising this technology it will coninue to pursue
the design, manu’acture and maintenance o’ industrial
waste water treatment plants.
De.mem s licensed hollow iber nanoiltraion membrane
technology is currently in the development phase, with
De.mem intending to commence a pilot manu’acturing
line in the irst quarter o’
7. The Company believes
that the success’ul commercialisaion o’ the nanoiltraion
membrane can have a signiicant posiive impact on the
Company s business. I’ the technology is success’ully
validated, it can strengthen the posiion o’ the Company
as a provider o’ water treatment systems. Re’er to Secion
7. ’or ’urther details.
What stage of
commercialisaion
is De.mem’s
licensed
hollow iber
nanoiltraion
membrane
technology at?
As set out in Secion 7. , De.mem s licensed hollow iber
nanoiltraion membrane technology is currently in the
development phase with De.mem intending to commence a
pilot manu’acturing line in the irst quarter o’
7.
FURTHER
INFORMATION
Secions 7. , 7.9,
7. and 7.
Once the pilot line is operaional, the Company intends to
undertake in-ield validaion ’or those applicaions that have
been tested in the laboratory at De.mem and NTU as at the
date o’ this Prospectus, including the treatment o’ diferent
types o’ industrial waste waters and palm oil mill eluent,
but also other types o’ industrial waste water that have not
been tested in the laboratory be’ore. The in-ield validaion
aims to provide ’urther operaing data that is required ’or the
opimisaion o’ operaions and deployment o’ the membranes
at a larger, commercial scale and is expected to be completed
in
7.
The hollow iber nanoiltraion membrane has been ’ully
developed and the Company does not expect the design
composiion to change materially during the validaion tesing
phase. In the event that any changes are made as a result o’
the in-ield validaion, these changes are expected to relate to
the operaing parameters o’ the implementaion o’ the hollow
iber nanoiltraion membrane.
15
D EM EM
05/18
INVESTMENT OVERVIEW
ITEM
SUMMARY
What stage of
commercialisaion
is De.mem’s
licensed
hollow iber
nanoiltraion
membrane
technology at?
Ater compleion o’ the in-ield validaion, the Company
intends to scale up manu’acture o’ the new hollow iber
nanoiltraion membranes. To accommodate the addiional
storage capacity and manu’acturing equipment the Company
intends to source a larger ’actory. Subject to the per’ormance
o’ the Company, this is expected to take place in
8.
What are
De.mem’s
compeiive
strengths?
De.mem s compeiive strengths include:
What are the key
dependencies of
the Company’s
business model?
The key ’actors that the Company will depend on to meet its
objecives on Compleion are:
C.
FURTHER
INFORMATION
Secion 7.
a Established customer base: De.mem has an established
revenue generaing business with approximately
S$ ,
,
in cumulaive revenues to
June
6
recorded since the establishment o’ De.mem in
;
b Proprietary technology: De.mem has licensed a range o’
technologies ’rom Singapore s NTU;
c Scalable business model: De.mem intends to scale its
business model along its exising customers and markets,
within the key industries covered as well as into new
industries and markets, such as iniially Australia and an
intended entry into the Chinese market during the third
quarter o’
7; and
d Coninued investment in technology development:
De.mem intends to invest in ’urther development eforts
to improve and expand the range o’ licensed proprietary
technologies. The Company also intends to in-license
’urther new technologies developed at NTU or other
insituions.
Secion 7.
a the success’ul compleion o’ the Public Ofer;
b the ability to protect the Company s intellectual property;
c the success’ul development and commercialisaion o’ the
low pressure nanoiltraion technology; and
d retaining key personnel o’ De.mem.
KEY INVESTMENT HIGHLIGHTS
What are the
key investment
highlights?
The Directors are o’ the view that an investment in the
Company provides the ’ollowing non-exclusive list o’ key
highlights:
Secion 7
a DMS has licensed a range o’ technologies ’rom Singapore s
NTU, one o’ the world s leading universiies in water
research.
b The Company intends to scale its business model along its
exising customers and markets, within the key industries
covered as well as into new industries and markets, such
as iniially the Australian market ater the Company s
admission to the Oicial List and an intended entry into the
Chinese market during the third quarter o’
7.
c The Company intends to undertake ’urther development
eforts to improve and expand the range o’ licensed
proprietary technologies.
PROSPECT U S
16
05/18
INVESTMENT OVERVIEW
ITEM
SUMMARY
FURTHER
INFORMATION
What are the
key investment
highlights?
d DMS makes use o’ advanced technologies and components
such as licensed proprietary monitoring systems and
membranes.
Secion 7
e DMS is able to ofer soluions to customers under a build,
own, operate model.
’ DMS s product ofering covers key aspects o’ the value
chain, including proprietary products, process know-how,
implementaion / systems integraion and operaions knowhow.
D.
KEY BUSINESS RISKS
What are the
key risks of an
investment in the
Company?
The business, assets and operaions o’ the Company ater
Compleion are subject to certain risk ’actors that have the
potenial to inluence the operaing and inancial per’ormance
o’ the Company in the ’uture. These risks can impact on the
value o’ an investment in the securiies o’ the Company.
Secion
The Board aims to manage these risks by care’ully planning
its aciviies and implemening risk control measures. Some o’
the risks are, however, highly unpredictable and the extent to
which they can be efecively managed is limited.
Based on the in’ormaion available, a summary o’ the key risk
’actors afecing the business o’ the Company are as ’ollows:
a Limited history
The Company is essenially a start-up company with
limited trading history. No assurance can be given that the
Company will achieve commercial viability through its water
treatment products and technology.
b Sales risk
While the Company already has secured a number o’ iniial
contracts and customer relaionships, its ability to sell its
products at a larger scale sill needs to be proven.
c Product quality risks
The products and technology supplied by the Company may
not be ’uncional, may be ’aulty, or not meet customers
expectaions. This may lead to requirements ’or the
Company to repair or improve its products ater sale and/or
installaion, which may diminish operaing margins or lead
to losses.
d Manufacturing risks
Given the short manu’acturing experience in comparison to
other market compeitors, the Company s products may be
subject to product quality risks.
e Supplier risk
The Company sources certain key components ’or its
systems ’rom third party suppliers. The delivery o’ such
components may be delayed, or a speciic supplier may
not be able to deliver at all, which may lead to a longer
sales cycle or may ’orce the Company to shit to another
supplier.
17
D EM EM
05/18
INVESTMENT OVERVIEW
ITEM
SUMMARY
FURTHER
INFORMATION
’ Key personnel risk
The Company depends on certain key personnel and
the departure o’ any o’ them may lead to disrupions o’
customer relaionships or delays in the manu’acturing and
product development eforts.
g Development risks
The Company s new licensed proprietary nanoiltraion
membrane technology is sill at an early stage o’
development and validaion. While the Company is not
presently aware o’ any potenial problems that may result
’rom the in-ield validaion tesing process and is unlikely
to, unil such ime as the in-ield valuaion tesing has been
completed, this process is subject to uncertainies and
there may be delays, or the project may be unsuccess’ul as
a whole. The technology sill requires substanial work to be
able to be used at a commercial scale.
h New product technology risk
The Company may be reliant upon certain technologies
and upon the success’ul commercialisaion o’ these
technologies. There is a risk that as marketable technologies
coninue to develop in the water industry there may be
certain product developments that supersede, and render
obsolete, the products and services o’ the Company.
i
Intellectual property risks
The success o’ the Company s new licensed proprietary
nanoiltraion membrane technology depends largely on the
ability o’ the Company to protect the underlying knowhow, while not in’ringing the proprietary rights o’ others.
There is no assurance that others will not be able to copy
the technology.
The above list o’ risk ’actors ought not to be taken as
exhausive o’ the risks ’aced by the Company. For ’urther
in’ormaion on these key risks and addiional risks ’aced by the
Company, please re’er to Secion .
E.
DIRECTORS AND KEY MANAGEMENT PERSONNEL
Who are the
Directors and key
management?
The Directors are as ’ollows:
Secion
a Cosimo Trimigliozzi – Non-Execuive Chairman;
b Andreas Kroell – Chie’ Execuive Oicer and Director;
c Bernd Dautel – Non-Execuive Director;
d Stuart Carmichael – Non-Execuive Director; and
e Michael Edwards – Non-Execuive Director.
In’ormaion about the experience, background and
independence o’ each Director and each member o’ key
management are set out in Secion . . Details o’ the
personal interests o’ each o’ the Directors are set out in
Secion . .
PROSPECT U S
18
05/18
INVESTMENT OVERVIEW
ITEM
F.
SUMMARY
FURTHER
INFORMATION
SUBSTANTIAL SHAREHOLDERS
Who will be
the substanial
shareholders of
the Company
upon compleion
of the Ofers?
As set out in Secion 8. , the Major Shareholders will become
substanial shareholders as a result o’ receiving Consideraion
Shares as Vendors under the Consideraion Ofer.
Secion 8.
In addiion to their Consideraion Shares, NA Singapore EarlyStage Venture Fund I Pte Ltd has advised the Company that
it intends to subscribe ’or up to ,
,
Shares under the
Public Ofer, which will result in an increase in shareholding
’rom . % on compleion o’ the Acquisiion, to 6. % on
compleion o’ the Ofers these percentages assume minimum
subscripion , as set out below:
SHAREHOLDER
SHARES
% (UNDILUTED)
% (FULLY
DILUTED)
NA Singapore
Early-Stage
Venture Fund
I Pte Ltd
,79 , 68
6. 9
.67
New Asia
Investments
Pte Ltd
,9
.9
.9
,6
On compleion o’ the Ofers, the Major Shareholders will have
a maximum combined relevant interest in ,7 6,779 Shares,
with a maximum percentage o’ 9. %, assuming minimum
subscripion under the Public Ofer. As a result o’ their
shareholding, the Major Shareholders are considered to be
related paries o’ the Company.
Further details in relaion to the Major Shareholders and their
maximum shareholding interests on compleion o’ the Ofers
are set out in Secion 8. .
G.
FINANCIAL INFORMATION
How have the
Company and
De.mem Group
performed over
the past
months?
The audited statements o’ inancial posiion ’or the Company
and De.mem Group ’or the six months ended
June
6
and the years ended
December
and
December
are set out in the Invesigaing Accountant s Report in
Secion .
Secion
What is the
The reviewed pro-’orma statement o’ inancial posiion ’or
inancial outlook
the Company as at
June
6 which assumes compleion
for the Company? o’ the Acquisiion occurs is set out in the Invesigaing
Accountant s Report in Secion .
Secion
How will the
Company fund
the aciviies?
19
The ’unding ’or the Company s short to medium term aciviies Secion 6.
will be generated ’rom a combinaion o’ the money raised
under the Public Ofer, the exising cash reserves and the
commercialisaion strategy. The Board believes that these
’unds will provide the Company with suicient working capital
at anicipated expenditure levels to achieve its objecives set
out in this Prospectus.
D EM EM
05/18
INVESTMENT OVERVIEW
ITEM
SUMMARY
FURTHER
INFORMATION
Has the Company
included
forecast inancial
informaion in
respect of its
business?
Given the current status o’ the Company s operaions the
Directors do not consider it appropriate to ’orecast ’uture
earnings.
Secion
H.
Any ’orecast or projecion in’ormaion would contain such a
broad range o’ potenial outcomes and possibiliies that it is
not possible to prepare a reliable best esimate ’orecast or
projecion on a reasonable basis.
OFFERS
What is being
ofered and who
is enitled to
paricipate?
The Public Ofer is an ofer o’ up to 8,7 ,
Shares at
an issue price o’ $ . per Share to raise up to $ ,7 ,
.
Oversubscripions o’ up to a ’urther ,7 ,
Shares at
an issue price o’ $ . per Share to raise up to a ’urther
$7 ,
may be accepted.
Secion 6.
The Public Ofer is open to retail investors and sophisicated
investors in Australia and New Zealand, and sophisicated
investors in Singapore, Germany and Switzerland.
What is the
purpose of the
Public Ofer?
The purpose o’ the Public Ofer is to posiion the Company
to seek to achieve the objecives set out in Secion 6. and
to ’acilitate an applicaion by the Company ’or admission to
the Oicial List. On compleion o’ the minimum raising o’
$ ,7 ,
under the Public Ofer, the Board believes the
Company will have suicient working capital to achieve
these objecives.
Secions 6. and
6. .
The Company intends to apply ’unds raised ’rom the Public
Ofer, together with exising cash reserves ’ollowing admission
o’ the Company to the Oicial List in the manner set out in the
table in Secion 6. .
Is the Public Ofer The Public Ofer is not underwriten.
underwriten?
Secion 6.9
Who is the
manager to the
Public Ofer?
The manager to the Public Ofer is Alto Capital.
Secion
What is being
ofered under
the Secondary
Ofers and what
are the purposes
of the Secondary
Ofers?
This Prospectus also contains an ofer o’:
.9
Further details o’ the appointment o’ Alto Capital as lead
manager is set out in Secion .9.
a 6 ,
,
Secion 6.
Shares to the Vendors or their nominee s ; and
b up to ,8 ,
Opions to Ventnor and Alto Capital or
their respecive nominee s .
The purposes o’ the Secondary Ofers are to remove the need
’or an addiional disclosure document to be issued upon the
sale o’ any Securiies that are issued under the Secondary
Ofers.
The Secondary Ofers are made to the Vendors, Ventnor and
Alto Capital or their respecive nominee s . You should not
complete an Applicaion Form in relaion to a Secondary Ofer
unless speciically directed to do so by the Company.
PROSPECT U S
20
05/18
INVESTMENT OVERVIEW
ITEM
SUMMARY
FURTHER
INFORMATION
What will the
The Company s capital structure upon compleion o’ the Ofers Secion 8.
Company’s capital and the Acquisiion is set out in Secion 8. .
structure look like
ater compleion
of the Ofers and
the Acquisiion?
Will I be
guaranteed
a minimum
allocaion under
the Public Ofer?
No, the Company is not in a posiion to guarantee a minimum
applicaion o’ Shares under the Public Ofer.
Secion 6.7
What are the
key terms of
the Securiies
ofered under this
Prospectus?
A summary o’ the material rights and liabiliies ataching to the
Shares ofered under the Public Ofer and the Consideraion
Ofer are set out in Secion 6. .
Secions 6.
and 6.
Will any
Securiies be
subject to
escrow?
Subject to the Company complying with Chapters and
o’ the ASX Lising Rules and compleing the Ofers, certain
Securiies on issue may be classiied by ASX as restricted
securiies and will be required to be held in escrow ’or up to
months ’rom the date o’ Oicial Quotaion.
The terms and condiions o’ the Opions ofered under the
Advisor Ofer are set out in Secion 6. .
Secion 8.
During the period in which these Securiies are prohibited ’rom
being trans’erred, trading in Shares may be less liquid which
may impact on the ability o’ a Shareholder to dispose o’ his or
her Shares in a imely manner.
The Company will announce to ASX ’ull details quanity and
duraion o’ the Securiies required to be held in escrow prior
to the Shares commencing trading on ASX.
Will the Shares
be quoted?
The Company will make an applicaion to ASX ’or quotaion
o’ all Shares to be issued under the Public Ofer no later than
seven 7 days ater the date o’ this Prospectus.
Secion 6.
What are the
key dates of the
Ofers?
The key dates o’ the Ofers are set out in the indicaive
imetable in Secion .
Secion
What is the
minimum
investment size
under the Public
Ofer?
Applicaions under the Public Ofer must be ’or a minimum
o’ $ ,
worth o’ Shares
,
Shares and thereater, in
muliples o’ $
worth o’ Shares ,
Shares .
Secion 6.
Are there any
condiions to the
Ofers?
The Public Ofer and the Consideraion Ofer are condiional
on:
Secion .
a the Company receiving valid applicaion ’or at least
$ ,7 ,
pursuant to the Public Ofer; and
b ASX condiional approval to admit the Shares to Oicial
Quotaion.
21
D EM EM
05/18
INVESTMENT OVERVIEW
ITEM
I.
SUMMARY
FURTHER
INFORMATION
USE OF PROCEEDS
How will the
proceeds of the
Public Ofer be
used?
Secion 6.
Together with exising cash reserves o’ the Company, the
Public Ofer proceeds will be used ’or:
a the development and execuion o’ BOO contracts;
b nanoiltraion membrane development;
c geographic expansion, in paricular into Australia upon the
Company s admission to the Oicial List and an intended
entry into the Chinese market during the third quarter o’
7; and
d contribuion to the working capital o’ the Company.
J.
ADDITIONAL INFORMATION
Is there any
brokerage,
commission
or stamp duty
payable by
applicants?
No brokerage, commission or duty is payable by Applicants on
the acquisiion o’ Securiies under the Ofers.
What are the
tax implicaions
of invesing in
Shares?
Shares may be subject to Australian tax on dividends and
possibly capital gains tax on a ’uture disposal o’ Shares issued
under this Prospectus.
Where can
I ind more
informaion?
• By speaking to your sharebroker, solicitor, accountant or
other independent pro’essional adviser.
PROSPECT U S
Secion 8.
The tax consequences o’ any investment in Shares will depend
upon an investor s paricular circumstances. Applicants should
obtain their own tax advice prior to deciding whether to
subscribe ’or Shares ofered under this Prospectus.
• By contacing the Company Secretary on +6 8 9 8
.
22
06/18
DETAILS OF THE OFFERS
06/18
DETAILS OF THE OFFERS
23
D EM EM
06/18
6.1
DETAILS OF THE OFFERS
THE PUBLIC OFFER
Pursuant to this Prospectus, the Company invites
applicaions ’or up to 8,7 ,
Shares at an
issue price o’ $ . per Share to raise up to
$ ,7 ,
.
The Company may accept oversubscripions o’
up to a ’urther $7 ,
through the issue o’ up
to a ’urther ,7 ,
Shares at an issue price
o’ $ . per Share under the Public Ofer. The
maximum amount which may be raised under this
Prospectus is $ ,
,
.
The Shares ofered under the Public Ofer will rank
equally with the exising Shares on issue.
The purpose o’ the Public Ofer is to ’acilitate an
applicaion by the Company ’or admission o’ the
Company to the Oicial List. The ’unds raised ’rom
the Public Ofer will be used in the manner set out
in Secion 6. .
6.2 SECONDARY OFFERS
This Prospectus also includes an ofer o’:
a 6 ,
,
Shares to be issued to the
Vendors pursuant to the Acquisiion under
the Consideraion Ofer; and
b
,8 ,
Opions to be issued to Ventnor
and Alto Capital or their respecive nominee s
under the Advisor Ofer. The Opions will be
equally distributed between Ventnor and Alto
Capital.
The terms o’ the Shares ofered under the
Consideraion Ofer are summarised in Secion
6. . The Shares ofered under the Consideraion
Ofer will rank equally with the exising Shares
on issue.
The terms o’ the Opions to be ofered under the
Advisor Ofer are summarised in Secion 6. . The
Shares to be issued upon exercise o’ the Opions
will rank equally with the exising Shares on issue.
Each o’ the Secondary Ofers is personal to
the Vendors, Ventnor and Alto Capital or their
respecive nominee s , as the case may be, and an
Applicaion Form in respect o’ the Consideraion
Ofer and/or the Advisor Ofer will be issued to the
Vendors, Ventnor and Alto Capital as applicable
together with a copy o’ this Prospectus.
As such, Securiies ofered under those Secondary
Ofers will be allocated and issued to those paries
or their respecive nominees only. Subject to
sais’acion o’ the Condiions, allocaions under
the Secondary Ofers are guaranteed.
PROSPECT U S
The Securiies issued under the Secondary Ofers
may be subject to escrow under the ASX Lising
Rules. Please re’er to Secion 8. ’or a summary o’
the likely escrow posiion.
6.3 MINIMUM SUBSCRIPTION
I’ the minimum subscripion to the Public Ofer
o’ $ ,7 ,
has not been raised within three
months ater the date o’ the Original Prospectus,
the Company will not issue any Shares and will
repay all applicaion monies ’or the Shares within
the ime prescribed under the Corporaions Act,
without interest.
6.4 APPLICATIONS
Applicaions ’or Shares under the Public Ofer
must be made using the Applicaion Form.
Applicaions ’or Shares must be ’or a minimum o’
,
Shares and thereater in muliples o’ ,
Shares and payment ’or the Shares must be made
in ’ull at the issue price o’ $ . per Share.
Completed Applicaion Forms and accompanying
cheques, made payable to De.mem Limited
and crossed Not Negoiable , must be mailed or
delivered to the address set out on the Applicaion
Form by no later than the Closing Date.
The Company reserves the right to close the Public
Ofer early.
6.5 ASX LISTING
Applicaion ’or Oicial Quotaion by ASX o’ the
Shares ofered pursuant to this Prospectus was
made within seven 7 days ater the date o’ the
Original Prospectus.
I’ the Shares are not admited to Oicial Quotaion
by ASX be’ore the expiraion o’ months ater the
date o’ issue o’ the Original Prospectus, or such
period as varied by the ASIC, the Company will
not issue any Shares and will repay all applicaion
monies ’or the Shares within the ime prescribed
under the Corporaions Act, without interest.
The ’act that ASX may grant Oicial Quotaion
to the Shares is not to be taken in any way as an
indicaion o’ the merits o’ the Company or the
Shares now ofered ’or subscripion.
The Company will not apply ’or Oicial Quotaion
by ASX o’ the Opions ofered pursuant to this
Prospectus. Applicaion ’or Oicial Quotaion o’
the Shares to be issued on exercise o’ the Opions
will be made in accordance with the ASX Lising
Rules.
24
06/18
DETAILS OF THE OFFERS
6.6 ISSUE
Subject to the minimum subscripion to the Public
Ofer being reached and ASX graning condiional
approval ’or the Company to be admited to the
Oicial List, issue o’ the Securiies ofered by this
Prospectus will take place as soon as pracicable
ater the Closing Date.
I’ you are outside Australia it is your responsibility
to obtain all necessary approvals ’or the issue o’
the Shares pursuant to this Prospectus. The return
o’ a completed Applicaion Form will be taken by
the Company to consitute a representaion and
warranty by you that all relevant approvals have
been obtained.
Pending the issue o’ the Shares or payment o’
re’unds pursuant to this Prospectus, all applicaion
monies will be held by the Company in trust ’or
the Applicants in a separate bank account as
required by the Corporaions Act. The Company,
however, will be enitled to retain all interest that
accrues on the bank account and each Applicant
waives the right to claim interest.
6.8 OVERSUBSCRIPTIONS
The Directors will determine the recipients o’ the
issued Shares under the Public Ofer in their sole
discreion. The Directors reserve the right to reject
any applicaion or to allocate any applicant ’ewer
Shares than the number applied ’or. Where the
number o’ Shares issued is less than the number
applied ’or, or where no issue is made, surplus
applicaion monies will be re’unded without any
interest to the Applicant as soon as pracicable
ater the Closing Date.
6.9 NOT UNDERWRITTEN
The Company may accept oversubscripions o’ up
to a ’urther $7 ,
through the issue o’ up to a
’urther ,7 ,
Shares at an issue price o’ $ .
per Share under the Public Ofer. The maximum
amount which may be raised under this Prospectus
is $ ,
,
.
The Public Ofer is not underwriten.
6.7 APPLICANTS OUTSIDE AUSTRALIA
This Prospectus does not, and is not intended to,
consitute an ofer in any place or jurisdicion, or
to any person to whom, it would not be law’ul to
make such an ofer or to issue this Prospectus.
The distribuion o’ this Prospectus in jurisdicions
outside Australia may be restricted by law and
persons who come into possession o’ this
Prospectus should seek advice on and observe
any o’ these restricions. Any ’ailure to comply
with such restricions may consitute a violaion o’
applicable securiies laws.
No acion has been taken to register or quali’y the
Securiies or otherwise permit a public ofering
o’ the Shares the subject o’ this Prospectus in
any jurisdicion outside Australia. As detailed in
Secion .9, the Shares may be issued to certain
types o’ investors in Singapore, Switzerland
and/or Germany. Applicants who are resident
in countries other than Australia should consult
their pro’essional advisers as to whether any
governmental or other consents are required
or whether any other ’ormaliies need to be
considered and ’ollowed.
25
D EM EM
06/18
DETAILS OF THE OFFERS
6.10 USE OF FUNDS
The Company intends to apply ’unds raised ’rom the Public Ofer, together with exising cash reserves,
over the irst two years ’ollowing admission o’ the Company to the Oicial List as ’ollows:
FUNDS AVAILABLE
Exising cash
reserves
MINIMUM
SUBSCRIPTION ($)
($3,750,000)
6
Cash reserves o’
DMS
PERCENTAGE OF
FUNDS (%)
,
,
FULL SUBSCRIPTION
($)
($4,500,000)
.6 %
8.
6
,
.9 %
,
7. 8%
,
,
8 .8 %
,
,
.
%
,
.
%
%
%
Funds raised ’rom
the Public Ofer
,7
,
78.9 %
Total
,7
,
.
%
,
.
%
PERCENTAGE OF
FUNDS (%)
Allocaion of funds
Expenses o’ the
Ofers
BOO contracts
,7
,
6.
%
,8
,
.
Nanoiltraion
membrane
manu’acture
9
,
.
%
,
,
.6 %
,
.
%
8 ,
. 7%
Other product
development and
patent expenses
Geographic
expansion
79 ,
6.6 %
Sales and markeing
expenses
,
7. 7%
Working capital
,
6.
%
,
.
%
Total
,7
Re’er to the Invesigaing Accountant s Report set out in Secion
8
,
,
.
%
,
6. 6%
7 ,
6.7 %
,
.
%
o’ this Prospectus ’or ’urther details.
The cash reserves o’ De.mem Pte Ltd are to be acquired by the Company ’ollowing compleion o’ the Consideraion Ofer. These ’unds are
held in Singapore dollars and are converted to Australian dollars at an assumed exchange rate o’ . SGD: AUD.
Re’er to Secion 6.9 o’ this Prospectus ’or ’urther details.
This includes ’unds to be spend on the pilot manu’acturing line, as set out in Secion 7.
In the event the Company raises more than
the minimum subscripion o’ $ ,7 ,
, the
addiional ’unds raised will be allocated pro rata to
the expenditure items listed in the table above. On
compleion o’ the Public Ofer, the Board believes
the Company will have suicient working capital to
achieve these objecives.
The above table is a statement o’ current
intenions as o’ the date o’ this Prospectus.
As with any budget, intervening events
including commercial success or ’ailure and new
circumstances have the potenial to afect the
manner in which the ’unds are ulimately applied.
The Board reserves the right to alter the way
’unds are applied on this basis.
PROSPECT U S
.
6.11 COMMISSIONS PAYABLE
The Company reserves the right to pay a
commission o’ 6% exclusive o’ goods and
services tax o’ amounts subscribed through any
licensed securiies dealers or Australian inancial
services licensee, including paries associated with
Directors on idenical terms, in respect o’ any valid
applicaions lodged and accepted by the Company
and bearing the stamp o’ the licensed securiies
dealer or Australian inancial services licensee.
Payments will be subject to the receipt o’ a proper
tax invoice ’rom the licensed securiies dealer or
Australian inancial services licensee.
26
07/18
BUSINESS AND TECHNOLOGY OVERVIEW
07/18
BUSINESS AND
TECHNOLOGY OVERVIEW
De.mem specializes in the application
of membranes and membrane-based
technologies in de-centralized waste water
treatment. Membranes provide a physical
barrier to water contaminants as, while
clean water can permeate the membranes,
contaminants are retained and therefore
removed from the treated water stream.
Membranes are a widely applicable
technology in water treatment.
27
D EM EM
07/18
7.1
BUSINESS AND TECHNOLOGY OVERVIEW
BACKGROUND
De.mem specializes in the applicaion o’ membranes
and membrane-based technologies in de-centralized
waste water treatment. Membranes provide a
physical barrier to water contaminants as, while
clean water can permeate the membranes,
contaminants are retained and there’ore removed
’rom the treated water stream. Membranes are a
widely applicable technology in water treatment.
De.mem designs, builds, owns and operates
membrane-based, de-centralized water and waste
water treatment systems with a ’ocus on the Asia
Paciic region.
De.mem was incorporated in
and is
headquartered in Singapore. The group structure o’
De.mem is set out below in Secion 7. .
De.mem has commercialized a range o’ licensed
proprietary products and technologies developed
’or de-centralized water treatment applicaions.
It is through these technologies that De.mem is
able to substanially reduce its clients operaing
expenditures or capital expenditures ’or water or
waste water treatment compared to some other
common water treatment technologies.
As detailed in Secion 7. , De.mem currently
manu’actures its water and waste water treatment
systems and equipment. Given the Company s
exising aciviies, the Company is not dependent
on the success’ul commercialisaion o’ the hollow
iber nanoiltraion membrane technology. I’ the
Company is not success’ul in commercialising
the hollow iber nanoiltraion technology it will
coninue to pursue the design, manu’acture and
maintenance o’ industrial waste water treatment
plants.
De.mem s licensed hollow iber nanoiltraion
membrane technology is currently in the
development phase, with De.mem intending to
commence a pilot manu’acturing line in the irst
quarter o’
7. The Company believes that the
success’ul commercialisaion o’ the nanoiltraion
membrane can have a signiicant posiive impact on
the Company s business. I’ success’ully validated,
it can strengthen the posiion o’ the Company as
a provider o’ water treatment systems. Re’er to
Secion 7. ’or ’urther details.
De.mem s licensed proprietary technologies,
products and soluions help to convert diferent
types o’ ’eed water into output water o’ the desired
quality. A simpliied process which treats water using
De.mem s hollow iber membranes is shown below:
DIRECTION OF WATER FLOW
DE.MEM NANOFILTRATION MEMBRANE MODULE
WITH MEMBRANE FIBER BUNDLE
FEED WATER
I.E INDUSTRIAL
WASTE WATER
CLEAN
WATER
NANOFILTRATION
MEMBRANE FIBERS
As low pressure is applied,
water passes, through the
pores in the selecive layer
o’ the membrane.
PROSPECT U S
28
07/18
BUSINESS AND TECHNOLOGY OVERVIEW
De.mem s licensed proprietary technologies, which
are licensed ’rom Singapore s NTU, include a novel
sensor technology ’or the monitoring o’ membrane
’ouling and integrity. De.mem can make use o’ this
technology as part o’ its monitoring and controlling
soluions. Furthermore, De.mem has exclusively
licensed an innovaive low-pressure hollow iber
nanoiltraion membrane ’rom NTU, which is
intended to be used ’or diferent sectors and
applicaions and is currently in the manu’acturing
scale up. A summary o’ the exclusive licence
agreement entered into by DMS and Nanyang
Technological University – Ntuiive Pte Ltd
a wholly owned subsidiary o’ NTU Ntuiive
(Exclusive Licence Agreement is set out in
Secion . .
De.mem presents its product ofering within two
business segments:
a Industrial: In the industrial segment, De.mem
provides systems and soluions to its customers
mainly ’or applicaions in industrial waste
water treatment. With the licensed proprietary
technologies being a key part o’ its soluions,
De.mem designs and engineers its water
and waste water treatment systems exactly
according to the customers speciic water/
waste water characterisics and requirements.
Depending on the customer s requirements,
De.mem can ofer to run the systems on the
clients behal’, based on a long term contract
under a BOO model.
b Municipal and residenial: In the municipal and
residenial segment, De.mem ofers its products
and soluions to municipaliies or residenial
developers and other related companies.
7.2 GROUP STRUCTURE
De.mem Limited is a public company registered in Australia on
September
6. Other than in its
capacity as the ulimate holding company ’or De.mem Pte Ltd, Singapore and De.mem Viet Nam Co Ltd
on compleion o’ the Acquisiion, it is currently not involved in any business aciviies and does not have
any material assets.
The corporate structure o’ the Company on Compleion will be as ’ollows:
DE.MEM LIMITED
AUSTRALIA
DE.MEM PTE LTD
SINGAPORE
%
%
DE.MEM VIET NAM CO LTD
GD WASSER PTE LTD
VIETNAM
SINGAPORE
%
GD WASSER VIET NAM CO LTD
VIETNAM
9 %
9 %
29
GD WASSER LONG AN CO LTD
VIETNAM
GD WASSER NGHE AN CO LTD
VIETNAM
D EM EM
07/18
BUSINESS AND TECHNOLOGY OVERVIEW
De.mem Pte Ltd, Singapore is a company registered
in Singapore on 7 March
. De.mem Pte Ltd
owns
% o’ the shares in De.mem Viet Nam Co
Ltd, Vietnam, and GD Wasser Pte Ltd, Singapore.
De.mem Viet Nam Co Ltd, Vietnam, is a company
registered in Ho Chi Minh City, Vietnam, on
6 August
, which serves as the operaing
company o’ the De.mem Group ’or the
Vietnamese market.
GD Wasser Pte Ltd, Singapore, is a holding
company registered in Singapore on 7 March
. It owns
% o’ the shares in GD Wasser
Viet Nam Co Ltd, Vietnam, which was registered
in Ho Chi Minh City on 6 April
and serves
as a holding company ’or water treatment plants
and related assets in Vietnam. GD Wasser Viet
Nam Co Ltd, Vietnam, makes it possible ’or the
De.mem Group to potenially enter into new BOO
agreements in Vietnam.
GD Wasser Vietnam Co Ltd, Vietnam, owns 9 %
o’ the shares in both GD Wasser Nghe An Co Ltd,
Vietnam, and GD Wasser Long An Co Ltd, Vietnam.
GD Wasser Nghe An Co Ltd, Vietnam, owns
equipment ’or water treatment, buildings, tanks
and the rights to sell water to municipal clients
near the city o’ Vinh, Nghe An Province, Vietnam,
unil at least November
.
Tthe Company provided working capital to DMS
through an intercompany loan arrangement
(Intercompany Loan Agreement . Please re’er to
Secion .6 ’or a summary o’ the Intercompany
Loan Agreement.
It is anicipated that all revenues and proits
generated ’rom the exising operaions o’ DMS
will be retained within this enity.
The Company does not ’oresee any risks with
this revenue structure.
7.3 KEY MILESTONES OF DE.MEM
The De.mem Group commenced its commercial
operaions during
and recorded its irst
commercial revenues in
. De.mem completed
its irst project in Vietnam in
and, since then,
has success’ully completed more than
projects
in Singapore and Vietnam. The individual plants
have a capacity o’ up to ,
m treated water
per day.
A brie’ descripion o’ the key milestones De.mem
has achieved since incorporaion is set out below:
KEY MILESTONES AND PROGRESS TO DATE
Company
started
business
Established
subsidiary
in HCMC,
Vietnam
Completed
irst project
in Vietnam
municipal
plant, up to
,
m3 per
day
Further projects
in Vietnam
completed i.e.
with residenial
developer
m3 plant per
day
Completed
milestone
project
with Hanoi
University of
Agriculture
First system
delivered to
industrial
customer in
Singapore
Signed BOO
agreement
with industrial
customers in
Singapore.
In-licensed
break-through
nanoiltraion
NF technology
from NTU
Set up of inhouse system
manufacturing
H1
H2
H1
H2
H1
H2
2014
2014
2015
2015
2016
2016
PROSPECT U S
30
07/18
BUSINESS AND TECHNOLOGY OVERVIEW
7.4 COMMERCIAL VALIDATION
De.mem s new nanoiltraion membrane has been
validated ’or diferent applicaions, including
the treatment o’ industrial waste water ’rom
diferent industries such as ’ood and beverage,
oil and gas, and electronics as well as ’rom palm
oil processing. It is currently in the manu’acturing
scale up phase. The Company intends to use the
new nanoiltraion technology at a larger scale in
its water treatment plants and projects ’rom the
second quarter o’
7 onwards.
The De.mem Group has already completed
numerous projects since
including the
design, manu’acturing and sale o’ water treatment
systems and plants ’or customers ’rom industrial
and municipal & residenial sectors, as well as the
provision o’ services to customers under long-term
BOO agreements. A sample o’ projects undertaken
by De.mem include the ’ollowing:
• The design, manu’acturing, installaion and
commissioning o’ an ultrailtraion UF water
treatment plant ’or the Hanoi University o’
Agriculture, Vietnam.
• The design, manu’acturing, installaion,
commissioning and operaions o’ a ,
m
per day UF water treatment plant located near
the city o’ Vinh, Nghe An province, Vietnam,
which is owned by the De.mem Group and
earns revenues under a BOO agreement.
The plant is designed so its capacity can be
expanded easily to up to ,
m per day.
• The design, manu’acturing, installaion and
commissioning o’ an ultrailtraion – reverse
osmosis UF-RO water treatment plant in
Duc Hoa, Long An province, Vietnam.
• The supply o’ ultra-clean de-ionized water
to a car wash irm in Singapore using a UF-RO
system under a long term BOO agreement.
• The provision o’ waste water treatment
services to the Singapore ’actory o’ a
mulinaional corporaion ’rom the electronics
industry.
• The delivery o’ a system ’or industrial waste
water treatment to the Singapore ’actory o’
a mulinaional corporaion ’rom the oil &
gas industry.
De.mem has built a substanial pipeline o’ projects
and is currently in discussions with prospecive
clients in Singapore, Vietnam and Germany in both
the industrial and municipal & residenial sectors.
7.5 PRODUCT OFFERING
De.mem ofers a range o’ products ’or water and
waste water treatment ’or customers ’rom the
industrial and municipal & residenial segments.
The Company designs, builds, owns and operates
water and waste water treatment systems ’or and
on behal’ o’ such customers, in which it is applying
modern membrane technologies.
De.mem s licensed proprietary technologies include
a monitoring and operaing plaform ’or water
treatment plants which is branded as de.live .
The de.live product is based on patented sensor
technologies which are licensed ’rom NTUiive.
Re’er to Secion . ’or a summary o’ the
Non-Exclusive Licence Agreement.
De.mem s licensed lagship technology is a novel
low pressure hollow iber nanoiltraion membrane.
This new membrane can be applied to projects both
on the industrial and municipal & residenial sectors.
It can treat industrial waste water at reduced capital
and operaing expenditures compared to the
current market standard, which is reverse osmosis
(RO technology. The technology has been validated
’or diferent applicaions, including diferent types
o’ waste water, ’or example ’rom ’actories in the
’ood & beverage and oil & gas industries, or on
palm oil mill eluent. The lower operaing pressure
required ’or nanoiltraion leads to the energy and
cost savings compared to RO treatment.
De.mem integrates the components outlined in the
paragraphs above into complete and turn-key water
and waste treatment systems. Other components
such as, ’or example, UF and RO membranes
as well as pumps and valves, which are more
standardized and readily available on the market,
are purchased by De.mem ’rom a range o’ exising
suppliers, where and i’ required ’or a certain project.
I’ requested by the client, the systems can be
packaged in a standard industrial container.
• The operaions o’ a containerized waste
water treatment system on behal’ o’
the Singapore ’actory o’ a mulinaional
corporaion, Givaudan.
INDUSTRIAL WASTE WATER TREATMENT SYSTEM BY DE.MEM
31
D EM EM
07/18
BUSINESS AND TECHNOLOGY OVERVIEW
De.mem s systems can deal with speciic industry
problems including water with heavy metals, high oil
content, volaile organic compounds, high biological
oxygen demand/ chemical oxygen demand or
high temperature. Furthermore, De.mem provides
systems that can ’ulil the customers requirements,
that is, provide clean water which meets regulatory
or discharge limits, or, generate water that can
be recycled ’or manu’acturing or other uses.
Due to De.mem s speciic know-how and
proprietary sensors and monitoring products, the
systems can be deployed reliably in de-centralized
or remote locaions.
De.mem also ofers a range o’ more standardized
products, which can be used in municipal &
residenial projects. Those more standardized
products include containerized water treatment
systems or De.mem s de.pure product line, a ’amily
o’ systems ’or small-scale water treatment.
While De.mem designs, builds and supplies
equipment, De.mem also ofers to its clients to work
under a BOO model. Under this model, De.mem
designs and builds a water or waste water treatment
plant ’or a customer, retains the ownership in
the plant and operates the plant on behal’ o’ the
customer at the desired locaion. This BOO ofer
can eliminate the need ’or larger up’ront capital
expenditure ’or the customer and provides them
with an all-in soluion, as any maintenance o’ the
plant is included in the agreement. The minimum
ixed term in a BOO agreement is generally two
years, which provides De.mem with cash lows
that can be reliably ’orecast over the respecive
ixed term.
7.6 TECHNOLOGY
De.mem has licensed a number o’ innovaive
technologies with applicaions in water and waste
water treatment ’rom NTUiive, which were
developed at NTU.
Those technologies are as ’ollows:
a Membrane integrity sensor: A novel sensor
technology ’or the monitoring o’ membrane
’ouling and integrity Membrane Integrity
Sensor . De.mem can make use o’ this
technology as part o’ its monitoring and
controlling soluions.
b Acousic sensor technology: This technology
uses acousic waves to determine the ’ouling
status o’ membranes. This technology is
currently under evaluaion by De.mem. It could
be used as part o’ De.mem s monitoring and
controlling soluions.
PROSPECT U S
c Low pressure hollow iber nanoiltraion
membrane: Based on years o’ research, NTU
has developed a new low pressure hollow
iber nanoiltraion membrane technology. The
membrane is made ’rom a polymer material
based on a proprietary materials ’ormulaion.
The Membrane Integrity Sensor is an innovaive
sensor system, which can detect the integrity o’
iltraion membranes or the presence o’ ’ouling
materials within a luid by using a small-area
membrane as a paricle sensor. De.mem can apply
this technology within its monitoring and operaing
soluions ’or its water treatment systems, which
De.mem has branded as its de.live product.
Another key element to de.live is a custom-made
structured query language database, which De.mem
uses to collect, store and analyse data. Based on
such technologies, De.mem is able to remotely
monitor its water treatment plants ’rom any desired
locaion.
MEMBRANE INTEGRITY SENSOR (IN DEMO SET-UP)
The acousic sensor technology which the company
is tesing under an evaluaion license ’rom NTU
may be used ’or characterizing the bio’ouling
status o’ membranes, and to determine when and
how the membrane maintenance and cleaning is
per’ormed. This could be applicable to commercially
available membrane modules. Subject to success’ul
evaluaion, De.mem could use this novel sensor
technology as part o’ its de.live product. The
evaluaion licence is not considered to be a material
contract at this stage.
De.mem s low pressure hollow iber nanoiltraion
membrane is a membrane technology which enables
nanoiltraion at a comparably low pressure o’
two bars. The membrane is made ’rom posiively
charged PEI polyethyleneimine , a polymer material,
using a simple and scalable manu’acturing process
based on chemical cross-linking. A loose substrate
structure allows ’or high water permeability. The
hollow iber architecture gives the membrane
certain advantages compared to RO, such as the
ability to easily clean it through simple backlush
rouines during operaions, which is not possible
with a RO membrane that typically comes in a lat
sheet coniguraion.
32
07/18
BUSINESS AND TECHNOLOGY OVERVIEW
HOLLOW FIBER NANOFILTRATION MEMBRANE
PERMEATE
EPOXY TUBE
SHEET
HOLLOW FIBERS
RETENATE
FEED
HOLLOW FIBRE MEMBRANE MODULE
Nanoiltraion is a physical separaion method which eliminates paricles o’ a certain size range
down to . nanometers ’rom a luid stream.
< ST Microscope
< Scanning Electron Microscope
Ionic Range
Micrometers
μ
Molecular Range
.
< Opical Microscope
Macro Molecular Range
.
.
Micro Paricle Range
.
.
Albumin Protein
Aqueos Salts
Metal Ion
Bacteria
Beach Sand
VIRUS
Synthetic
Dye
Granular
Activated
Carbon
Milled Flour
Tobacco Smoke
Latex/Emulsion
Pesticide
Colloidial Silica
Blue Indigo Dye
Gelatin
Ciardia
Cyst
Mist
Particle Filtration
Ultrafiltration
Nanofiltration
Human Hair
Coal Dust
Cryptosporidium
Reverse Osmosis
Pollen
Red
Blood
Cells
Asbestos
Herbicide
MEMBRANE
SELECTION
.
Paint Pigment
Endotoxin/Pyrogen
RELATIVE
SIZE OF
COMMON
MATERIALS
.
Yeast Cells
Carbon Black
Sugar
< Naked Eye
Microfiltration
FILTRATION SPECTRUM AND USE OF NANOFILTRATION
33
D EM EM
07/18
BUSINESS AND TECHNOLOGY OVERVIEW
In a typical water or waste water treatment
process, amongst other treatment steps, a UF
membrane ilters out small paricles be’ore a
RO membrane is used. During the RO process
step, water is pushed through an extremely ine
membrane at high pressure to separate water
molecules ’rom any remaining contaminants, which
are iny – about a thousand imes smaller than the
width o’ a human hair. This high water pressure,
typically
bars and above, means that the water
pumps consume a lot o’ energy.
De.mem s low pressure hollow iber nanoiltraion
membrane technology allows customers to
replace both UF and RO in one single process
step ’or certain applicaions. It also requires only
two bars o’ water pressure, to ilter out the same
type o’ contaminants as a combined UF and RO
process. This lower operaing pressure can lead to
signiicant energy savings and cost compared to a
RO process.
CURRENT STATE OF THE ART
• Negaively charged membrane sur’ace
• Tight pores and dense structure limits
water permeaion
• Flat sheet coniguraion
• High operaing pressure required
• Complicated ’abricaion process with
solvents required
The technology has been validated by both NTU
and De.mem ’or certain water types, including
diferent types o’ industrial waste water and
sur’ace river water. Based on this, De.mem
believes there are several potenial applicaions ’or
the technology in both the industrial as well as the
municipal & residenial segments.
De.mem intends to start a pilot manu’acturing
line ’or the new membrane in Singapore in the
irst quarter o’
7. This will allow De.mem to
manu’acture modules o’ standard industrial size,
which are intended to be applied immediately in
the ield to help De.mem to ’urther opimize the
product and manu’acturing process, that is, in
terms o’ stability and cost, and to pick the iniial
areas ’or larger scale commercializaion.
>
DE.MEM TECHNOLOGY
• Posiively charged sur’ace - allows ’or
rejecion o’ divalent ions
• Loose substrate structure increases water
permeaion
• Hollow iber coniguraion
• Low operaion pressure similar UF
• Simple and environmentally ’riendly
’abricaion
SUMMARY: DE.MEM’S NANOFILTRATION TECHNOLOGY VS. CURRENT “STATE OF THE ART”
PROSPECT U S
34
07/18
7.7
BUSINESS AND TECHNOLOGY OVERVIEW
APPLICATION RANGE AND
MARKETS
Nanoiltraion can be applied in diferent areas, as
summarized below:
Ground Water
Arsenic, Pesicide and Fluoride
removal, water sotening.
ENVIRONMENTAL
>
Surface Water
Water sotening, NOM. DBPs,
hormones removal
Waste Water
Heavy metal and PPCPs removal,
dyes decoloraion
NF MEMBRANES
DESALINATION
PHARMACEUTICAL
NON-WATER
APPLICATION
FOOD INDUSTRY
However, the overall market size o’ nanoiltraion
membranes is sill relaively low when compared to
the market size o’ UF and RO membranes.
The technology can be relevant ’or many o’
De.mem s target markets, that is ’or projects to
treat waste water ’rom ’actories in the ’ood &
beverage and oil & gas industry, palm oil mills,
or the treatment o’ sur’ace water ’or municipal
applicaions.
35
>
>
>
>
Ani-scaling pre-treatment ’or
RO, alternaive approach to RO
Puriicaion o’ acive
pharmaceuical ingredient
Organic solvent NF process
Vegetable oil processing, beverage,
dairy and sugar industry
NOM – NATURAL ORGANIC MATTER
DBP – DISINFECTION BY PRODUCTS
PPCP – PHARMACEUTICALS AND PERSONAL
CARE PRODUCTS
D EM EM
07/18
BUSINESS AND TECHNOLOGY OVERVIEW
7.8 CASE STUDY: APPLICATION
OF DE.MEM’S NANOFILTRATION
MEMBRANE ON PALM OIL MILL
EFFLUENT
Both De.mem and NTU have tested the novel
nanoiltraion membrane on diferent types
o’ industrial waste water. This includes the
per’ormance o’ lab tests on water samples
obtained ’rom a palm oil mill.
Palm oil mill eluent is a type o’ waste water
which is generally diicult to treat. Typically, it
comprises o’ a high solids, oil and grease and a
high organic content. Furthermore, it has a thick
brownish colour. Currently, a treatment method
called ponding is the most common way to
treat palm oil mill eluent in Malaysia. In a series
o’ ponds, each pond has a speciic purpose, ’or
example, sedimentaion, de-oiling, acidiicaion,
anaerobic or aerobic treatment. This biological
process is generally ineicient as it takes a long
ime between 8 to
days and there is a lack
o’ operaional control.
Laboratory test results support the potenial use
o’ the De.mem nanoiltraion membrane ’or the
treatment o’ certain types o’ palm oil mill eluent.
The membrane was tested on water samples
taken ’rom a palm oil mill, both stand-alone and
in combinaion with simple pre-treatment steps
such as microiltraion. The results indicate a
strong reducion o’ crucial parameters, such as
the TOC Total Organic Carbon , and a substanial
improvement o’ the waste water s strong brownish
colour.
Those outcomes could be achieved with the use
o’ De.mem s nanoiltraion membrane as major
treatment process – replacing the potenial
applicaion o’ combined UF and RO water
treatment processes.
DEMONSTRATION OF DE.MEM NANOFILTRATION
MEMBRANE ON PALM OIL MILL EFFLUENT IN LAB SETTING
The treatment o’ palm oil mill eluent can be
one o’ the applicaions o’ the new membrane
once larger producion capabiliies have been
established. With more than 6 palm oil mills
in Indonesia alone, this represents a key growth
market ’or De.mem.
7.9 BUSINESS MODEL
De.mem derives revenues ’rom the sales o’
products, soluions and services to customers that
require water and/or waste water treatment.
In paricular, revenues are generated based on two
diferent types o’ business models:
a BOO agreements: Long term contracts, under
which De.mem designs and manu’actures
water and waste water treatment systems.
Once complete, De.mem rents the systems
out and operates them on behal’ o’ its
customers at the customer s site. De.mem
retains the legal ownership in the systems.
It is paid by the customer through a recurring,
usually monthly, ’ee.
b System and equipment sales: De.mem
designs, manu’actures and sells water and
waste water treatment systems and equipment
to its customers. De.mem is paid either a
one-of ’ee by the customer, or ’or larger
orders, receives the price ’or the equipment
over several instalments according to the
progress o’ the order.
Customers ’or both business models are primarily
’actories, small and medium sized enterprises
and mulinaional corporaions ’or applicaions
in industrial waste water treatment, and small
to medium sized municipaliies with up to
approximately
,
inhabitants in the area o’
municipal water supply.
De.mem supplies a wide range o’ systems and
soluions, which implies that the price range varies
widely. BOO agreements can be in the range ’rom
$
up to approximately $ ,
income per
month. Depending on the size and capacity, the
price range ’or the equipment can vary between
approximately $ ,
’or the smallest, and reach
up to approximately $
,
’or the largest
and most advanced systems ofered. De.mem
also paricipates in tender ofers ’or the supply o’
larger industrial or municipal water or waste water
treatment plants, which can have a value o’ several
million dollars.
To be able to implement the BOO agreements,
De.mem incurs up’ront costs ’or the system
components and manu’acturing.
INPALME, Internaional Palm Oil Exhibiion, Indonesia / PT Hutan
Gaya Indonesia Organizer
PROSPECT U S
36
07/18
BUSINESS AND TECHNOLOGY OVERVIEW
Part o’ the use o’ ’unds o’ the Public Ofer is
dedicated ’or such ’unding needs. In the medium
term, De.mem intends to use bank ’unding to
sais’y these ’unding requirements.
For the system and equipment sales, De.mem
typically requires signiicant advance payments,
which cover all or most o’ the working
capital needs. For larger projects, payment is
typically made in instalments according to the
manu’acturing progress.
The Company s main objecives on compleion o’
the Public Ofer are to:
a ’und a research and development program o’
the nano-iltraion membrane;
b ’und the investment into new BOO water
treatment plants;
c provide general working capital;
d pay the costs o’ the Ofers; and
e list on the ASX, which provides the Company
with improved access to capital markets.
The Company considers that its growth strategy in
Secion 7. and its key strengths in Secion 7. 6
are integral to its ability to generate income and
ulimately achieve growth ’or shareholders.
7.10 GROWTH STRATEGY
De.mem has already secured, iniiated and/
or executed a number o’ re’erence projects in
Singapore with customers ’rom the electronics, oil
& gas and ’ood & beverage industries, as well as
with a number o’ private, municipal and industrial
customers in Vietnam.
The expansion plan is based on those iniial
re’erences which De.mem has secured, and
targets key industries in which De.mem sees the
strongest need and market potenial ’or advanced
waste water treatment. Those include the above
menioned sectors in which De.mem already
operates, such as electronics, oil & gas and ’ood
& beverage. Going ’orward, De.mem also intends
to expand its product ofering into other industrial
sectors such as the mining sector.
Based on this core strategy, the Company intends
to grow its customer base and revenues as ’ollows:
a Along the exising customer base, with the
objecive to win new projects/installaions at
other sites o’ an exising customer, such as
addiional ’actories o’ the same mulinaional
corporaion in other locaions.
b Targeing new customers within the key
industries, in which iniial re’erences have been
secured and ’or which the technical capabiliies
have been proven.
c Targeing customers both exising and new
’rom new countries, with an iniial ’ocus on
Australia ater the Company s admission to
the Oicial List and, an intended entry into
the Chinese market during the third quarter
o’
7.
d Targeing new customers ’rom new industries
and industry segments, such as mining and
power generaion.
With respect to the geographical expansion listed
under paragraph c above, De.mem intends to
open representaive oices in Australia and China
within a period o’
months ’rom the Closing
Date o’ the Ofers. Through the representaive
oices, De.mem intends to market its products
and build partnerships with local agents and
representaives that shall market De.mem s
products under a commission or joint venture
structure. The Company will also provide the
required customer support ’rom these local oices.
To protect its technical know-how, however,
De.mem intends to keep its manu’acturing
centralized at the exising ’acility in Singapore
re’er to Secion 7. . De.mem is also currently
pursuing a number o’ project and customer leads
in Europe.
The expansion strategy outlined above shall be
backed and ampliied by De.mem s technology and
product development eforts, which aim to improve
the per’ormance o’ the Company s products and/
or lead to cost savings ’or its customers. This
shall add to De.mem s brand and standing in the
market. In relaion to the low pressure hollow iber
nanoiltraion membrane technology, De.mem
does not intend to market this new membrane
as a component to other system suppliers, but
shall iniially retain it in-house ’or use in the
Company s BOO projects and systems.
DE.MEM MANUFACTURING AT TAGORE 8 SINGAPORE
37
D EM EM
07/18
7.11
BUSINESS AND TECHNOLOGY OVERVIEW
MANUFACTURING
De.mem has an exising manu’acturing ’acility in
Singapore at
Tagore Industrial Avenue, # , Tagore 8, Singapore 7878 . At this ’actory,
the company manu’actures its water and waste
water treatment systems and equipment.
With the commercial scale up, De.mem intends to
keep the manu’acturing capability in a centralized
’acility, to protect its know-how and technology.
The system maintenance and customer support
will be provided ’rom the local representaive
oices.
7.12 TECHNOLOGY AND PRODUCT
DEVELOPMENT AND SCALE UP
PLAN
As set out in Secion 6. , De.mem intends to
invest part o’ the proceeds ’rom the Public Ofer
into the set up o’ a pilot manu’acturing line
’or its low pressure hollow ibre nanoiltraion
membrane. The pilot manu’acturing line shall be
located in Singapore, either within the current
manu’acturing plant ’or the Company s systems
and equipment or at a separate locaion nearby. It
is expected that the pilot manu’acturing line will
be operaional during the irst quarter o’
7.
On
October
6, De.mem entered into an
equipment sale agreement with Foshan Chinese
Academy o’ Science Membrane Technology Co.
Ltd, Guangdong, China FCA , ’or the purchase
o’ equipment to be used by De.mem ’or this
membrane producion. A summary o’ the
Equipment Sale Agreement is set out in Secion
. .
The manu’acturing o’ the membrane is based
on standard processes and equipment ’or the
so-called spinning o’ membrane ibres. The
membrane is made out o’ polymer materials. The
exact ’ormulaion and materials used remains a
strictly protected trade secret o’ De.mem.
The pilot manu’acturing line will allow De.mem to
produce membrane ibres ’or use in standard ’our
inch- or eight inch- membrane modules, which
can be used in De.mem s industrial or municipal &
residenial projects.
The hollow iber nanoiltraion membrane has been
’ully developed and the Company does not expect
the design composiion to change materially during
the validaion tesing phase. In the event that
any changes are made as a result o’ the in-ield
validaion, these changes are expected to relate to
the operaing parameters o’ the implementaion
o’ the hollow iber nanoiltraion membrane. The
in-ield validaion aims to provide ’urther operaing
data that is required ’or the opimisaion o’
operaions and deployment o’ the membranes at
a larger, commercial scale and is expected to be
completed in
7.
While the Company is not presently aware o’ any
potenial problems that may result ’rom the in-ield
validaion tesing process and is unlikely to, unil
such ime as the in-ield valuaion tesing has been
completed, this process is subject to uncertainies
and there may be delays, or the project may be
unsuccess’ul as a whole.
Ater compleion o’ the in-ield validaion, the
Company intends to scale up manu’acture o’ the
new hollow iber nanoiltraion membranes. To
accommodate the addiional storage capacity and
manu’acturing equipment the Company intends to
source a larger ’actory. Subject to the per’ormance
o’ the Company, this is expected to take place in
8.
7.13 INTELLECTUAL PROPERTY
Non-Exclusive Licence
De.mem holds a non-exclusive license ’rom
NTUiive over three patents and one patent
applicaion as set out in the table below that cover
the key aspects o’ the Membrane Integrity Sensor
technology Non-Exclusive Licence Agreement .
The patents and applicaion listed below relate
to technology currently used by De.mem in the
water treatment plants which have already been
deployed and do not relate to the new hollow iber
nanoiltraion technology. As such, the Company
does not consider the non-exclusive nature o’ the
agreement to be a risk.
Once the pilot line is operaional, the Company
intends to undertake in-ield validaion ’or
those applicaions that have been tested in the
laboratory at De.mem and NTU as at the date
o’ this Prospectus, including the treatment o’
diferent types o’ industrial waste waters and palm
oil mill eluent, but also other types o’ industrial
waste water that have not been tested in the
laboratory be’ore.
PROSPECT U S
38
07/18
BUSINESS AND TECHNOLOGY OVERVIEW
The patents and applicaions held by NTUiive and licensed by De.mem are set out in the table below:
TITLE
COUNTRY
Detecion Apparatus and Method
Uilizing Membranes and Raio o’
Transmembrane Pressures
Singapore
Detecion Apparatus and Method
Uilizing Membranes and Raio o’
Transmembrane Pressures
U.S.A
A Membrane Sensor and Method o’
Detecing Fouling In A Fluid
Singapore
A Membrane Sensor and Method
o’ Detecing Fouling In A Fluid
(Applicaion
U.S.A
GRANT NO.
FILING DATE
7
8,
,
89
7B
8
/88 ,78
GRANT DATE
.
. 7
8.
.
. 7
.
.
.
.
.
. 8
.
.
.
Each o’ the patents listed above has an expiry
date
years ’rom the iling date listed above.
As such, the Company considers that this ime
’rame provides the Company with suicient ime
to coninue its business operaions.
7.14 KEY DEPENDENCIES
Exclusive Licence
b the ability to protect the Company s intellectual
property;
In addiion, De.mem holds an exclusive, worldwide
license ’rom NTUiive ’or details on ’abricaion,
characterisics and per’ormance relaing to the
low pressure hollow ibre nanoiltraion membrane
technology.
A summary o’ the Exclusive Licence Agreement is
set out in Secion . .
Evaluaion Licence
Furthermore, the Company holds an evaluaion
license ’rom NTUiive covering a patent which has
been granted in both Singapore and the US, which
relates to a novel acousic sensor technology
’or the measurement o’ membrane ’ouling.
Under the evaluaion license, which is dated
November
6, De.mem has the right to evaluate
the technology over a period o’ one year ’rom
execuion ’or nil consideraion. De.mem shall be
responsible ’or all costs involved in this evaluaion.
The terms ’or a commercial license are subject to
negoiaion with NTU upon success’ul evaluaion.
The key ’actors that the Company will depend on
to meet its objecives are:
a the success’ul compleion o’ the Public Ofer;
c success’ul development and commercialisaion
o’ the low pressure nanoiltraion technology
and membrane integrity sensor;
d retaining key personnel o’ De.mem; and
e the relaionship to NTU and the coninued
support o’ the insituion in the technology
trans’er relaing to the licenses held by
De.mem.
The evaluaion licence is not considered to be a
material contract at this stage.
39
D EM EM
07/18
BUSINESS AND TECHNOLOGY OVERVIEW
7.15 COMPETITIVE STRENGTHS
a Established customer base
De.mem has an established revenue generaing
business with approximately S$ ,
,
in cumulaive revenues recorded since the
establishment o’ De.mem in
.
b Proprietary technology
De.mem has licensed a range o’ technologies
’rom Singapore s NTU, one o’ the world s
leading universiies in water research.
c Scalable business model
De.mem intends to scale its business model
along its exising customers and markets, within
the key industries covered as well as into new
industries and markets, such as iniially Australia
ater the Company s admission to the Oicial
List and an intended entry into the Chinese
market during the third quarter o’
7.
d Coninued investment in technology
development
De.mem intends to invest in ’urther
development eforts to improve and expand
the range o’ licensed proprietary technologies.
The Company also intends to in-license ’urther
new technologies developed at NTU or other
insituions.
PROSPECT U S
40
08/18
COMPANY OVERVIEW
08/18
COMPANY OVERVIEW
41
D EM EM
08/18
8.1
COMPANY OVERVIEW
CAPITAL STRUCTURE
The capital structure o’ the Company ’ollowing compleion o’ the Ofers is summarised below:
Shares
NUMBER (MINIMUM
SUBSCRIPTION)
Shares currently on issue
Shares to be issued to pursuant to the Consideraion
Ofer
Shares to be issued pursuant to the Public Ofer
Shares to be issued to Alto Capital
Total Shares on compleion of the Ofers
NUMBER (MAXIMUM
SUBSCRIPTION)
7,
7,69
7,
7,69
6 ,
,
6 ,
,
8,7
,
,
,
,
,
,
,
9 ,
7,69
9 ,8 7,69
Opions4
NUMBER
Opions currently on issue
,
Opions to be issued pursuant to the Advisor Ofer
Total Opions on compleion of the Ofers6
,8
8,
,
,
,
The rights ataching to the Shares are summarised in Secion 6. o’ this Prospectus.
The Shares currently on issue were issued on
November
6 at an issue price o’ $ . each to investors to ’und the costs associated
with the Ofers and to provide working capital. These Shares were issued at a discount to the issue price o’ the Shares ofered pursuant to
the Public Ofer to relect the increased risk associated with an investment in the Company at the ime o’ issue o’ these Shares.
6 ,
,
Shares to be issued to the Vendors as consideraion ’or the Acquisiion pursuant to the Consideraion Ofer and the terms o’
the Implementaion Agreement, as summarised in Secion . o’ this Prospectus.
Re’er to Secion
.9 o’ the Prospectus ’or a summary o’ the Alto Capital Mandate.
Each Opion will be unquoted and is exercisable at $ .
6
each on or be’ore three years ’rom the date o’ issue.
The Company intends to issue Opions under its employee opion plan ESOP in the ’uture to provide a cost efecive incenive to
key employees, management and, subject to Shareholder approval, Directors. A summary o’ the ESOP is set out at Secion 6. o’ this
Prospectus.
PROSPECT U S
42
08/18
COMPANY OVERVIEW
8.2 SUBSTANTIAL SHAREHOLDERS
Those Shareholders holding % or more o’ the Shares on issue both as at the date o’ this Prospectus and
on compleion o’ the Ofers assuming minimum subscripion are set out in the respecive tables below.
As at the date of the Prospectus prior to compleion of the Acquisiion
SHAREHOLDER
SHARES
Gleneagle Asset Management
<Alium Alpha Fund>
,
OPTIONS
7,69
-
Theodore Bernhard Blank
6 ,
8
-
Andreas Hendrik De Wit
96 ,
8
-
Helmut Menhart
%
(UNDILUTED)
%
(FULLY DILUTED)
.6
9.97
6.
.99
. 6
8.
,
-
6.8
.
Delia Chua
8 ,6
-
. 6
.
Cosimo Trimigliozzi
8 ,6 6
-
. 6
.
Enzo Trimigliozzi
8 ,6
-
. 6
.
On compleion of the Ofers assuming minimum subscripion and no exising substanial
Shareholder subscribes and receives addiional Shares pursuant to the Public Ofer
SHAREHOLDER
SHARES
NA Singapore Early-Stage
Venture Fund I Pte Ltd , &
New Asia Investments Pte Ltd
OPTIONS
,79 , 68
&
,9
,6
%
(UNDILUTED)
%
(FULLY DILUTED)
-
6. 9
.67
-
.9
.9
. On compleion o’ the Ofers, the Major Shareholders will have a maximum combined relevant interest in ,7 6,779 Shares and a maximum
percentage o’ 9. %, assuming minimum subscripion under the Public Ofer. As a result o’ their shareholdings, the Major Shareholders are
considered to be related paries o’ the Company.
. NA Singapore Early-Stage Venture Fund I Pte Ltd is a separate venture capital ’und under the management o’ New Asia Investments. This
’und has invested in young technology start-ups headquartered in Singapore. New Asia Investments Pte Ltd has invested into this ’und
jointly with the Singapore government through the Naional Research Foundaion, an organizaion which spearheads the research and
development related aciviies as well as early stage commercializaion aciviies o’ the Singapore government. Mr Dautel is a director o’
NA Singapore Early-Stage Venture Fund I Pte Ltd.
. NA Singapore Early-Stage Venture Fund I Pte Ltd has advised the Company that it intends to subscribe ’or up to ,
,
Shares under
the Public Ofer. In addiion to the ,79 , 68 Consideraion Shares it will receive as a result o’ the Acquisiion, NA Singapore EarlyStage Venture Fund I Pte Ltd s maximum shareholding in the Company will there’ore be ,79 , 68 upon compleion o’ the Ofers, with a
maximum percentage holding o’ 6. %.
. New Asia Investments Pte Ltd is a Singapore based venture capital ’und which was established in
. Since its incorporaion, it has
invested in a number o’ technology companies ’rom the clean technology, water, medical and industrial sectors. New Asia Investments Pte
Ltd s shareholders include a number o’ high net worth individuals which are based in Asia and/or which have a strong background in doing
business in Asia and entrepreneurship. Mr Dautel is a director o’ New Asia Investments Pte Ltd.
The Company will announce to the ASX details o’ its top
Ofers prior to the Shares commencing trading on ASX.
8.3 RESTRICTED SECURITIES
Subject to the Company being admited to the
Oicial List, certain Securiies on issue prior to
the Public Ofer and Securiies to be issued under
the Consideraion Ofer will be classiied by ASX
as restricted securiies and will be required to
be held in escrow ’or up to
months ’rom the
date o’ Oicial Quotaion. During the period in
which these Securiies are prohibited ’rom being
trans’erred, trading in Shares may be less liquid
43
Shareholders ’ollowing compleion o’ the
which may impact on the ability o’ a Shareholder
to dispose o’ his or her Shares in a imely manner.
All o’ the Opions to be issued are likely to be
escrowed ’or
months ’rom the date o’ Oicial
Quotaion.
The Company will announce to the ASX ’ull details
quanity and duraion o’ the Shares and Opions
required to be held in escrow prior to the Shares
commencing trading on ASX.
D EM EM
08/18
COMPANY OVERVIEW
8.4 FINANCIAL INFORMATION
The Company was only recently incorporated on
September
6 and has no operaing history
and limited historical inancial per’ormance.
As a result, the Company is not in a posiion to
disclose any key inancial raios other than its
balance sheet which is included in the Invesigaing
Accountant s Report set out in Secion
o’ this
Prospectus.
Re’er to the Invesigaing Accountant s Report ’or
the historical inancial per’ormance o’ DMS.
8.5 TAXATION
The acquisiion and disposal o’ Shares will have
tax consequences, which will difer depending on
the individual inancial afairs o’ each investor.
All potenial investors in the Company are urged
to obtain independent inancial advice about the
consequences o’ acquiring Shares ’rom a taxaion
viewpoint and generally.
To the maximum extent permited by law, the
Company, its oicers and each o’ their respecive
advisors accept no liability and responsibility
with respect to the taxaion consequences o’
subscribing ’or Shares under this Prospectus.
8.6 DIVIDEND POLICY
We anicipate that signiicant expenditure will be
incurred in the evaluaion and development o’
the Company s projects. These aciviies, together
with the possible acquisiion o’ interests in other
projects, are expected to dominate the two year
period ’ollowing the date o’ this Prospectus.
Accordingly, the Company does not expect to
declare any dividends during that period.
Any ’uture determinaion as to the payment o’
dividends by the Company will be at the discreion
o’ the Directors and will depend on the availability
o’ distributable earnings and operaing results and
inancial condiion o’ the Company, ’uture capital
requirements and general business and other
’actors considered relevant by the Directors. No
assurance in relaion to the payment o’ dividends
or ’ranking credits ataching to dividends can be
given by the Company.
8.7 DIRECTORS
The Directors are:
• Mr Andreas Kroell
Chie’ Execuive Oicer and Director;
• Mr Cosimo Trimigliozzi
Non-Execuive Chairman;
PROSPECT U S
• Mr Bernd Dautel
Non-Execuive Director;
• Mr Stuart Carmichael
Non-Execuive Director; and
• Mr Michael Edwards
Non-Execuive Director.
In’ormaion about the experience, background,
independence and interests o’ each Director is set
out in Secions . and . .
8.8 CORPORATE GOVERNANCE
To the extent applicable, in light o’ the Company s
size and nature, the Company has adopted
The Corporate Governance Principles and
Recommendaions rd Ediion as published
by ASX Corporate Governance Council
(Recommendaions .
The Company s main corporate governance
policies and pracices as at the date o’ this
Prospectus are outlined in Secion . o’ this
Prospectus and the Company s compliance and
departures ’rom the Recommendaions are set out
in Secion . o’ this Prospectus.
In addiion, the Company s ’ull Corporate
Governance Plan is available ’rom the Company s
website www.demembranes.com.
8.9 AGREEMENTS WITH DIRECTORS
OR RELATED PARTIES
The Company s policy in respect o’ related party
arrangements is:
a a Director with a material personal interest in
a mater is required to give noice to the other
Directors be’ore such a mater is considered by
the Board; and
b ’or the Board to consider such a mater, the
Director who has a material personal interest
is not present while the mater is being
considered at the meeing and does not vote
on the mater.
Mr Andreas Kroell, a Director, is also a director and
shareholder o’ DMS and will receive Consideraion
Shares on compleion o’ the Consideraion Ofer
pursuant to the Implementaion Agreement.
Further details o’ Mr Kroell s shareholding in the
Company on Compleion is provided at Secion
. o’ the Prospectus.
Mr Stuart Carmichael, a Director, is also a director
and shareholder o’ Ventnor, the compliance
manager to the Company. Ventnor will receive the
’ees and securiies outlined in Secion . o’ the
Prospectus in relaion to the Ofers.
44
09/18
INDUSTRY OVERVIEW
09/18
INDUSTRY OVERVIEW
De.mem designs, builds, owns and operates
membrane-based, de-centralized water and
waste water treatment systems with a focus
on the Asia Pacific region.
The Company presents its product ofering in two industry segments:
a the industrial segment,
where De.mem provides
systems and soluions to
its customers mainly ’or
applicaions in industrial
waste water treatment; and
45
b the municipal & residenial
segment, where De.mem
ofers a range o’ membranebased water treatment
systems to customers such
as municipaliies, real estate
developers, hotels, resorts or
other private customers.
D EM EM
09/18
INDUSTRY OVERVIEW
9.2 OVERVIEW OF THE GLOBAL
WATER MARKET
The global water & waste water soluions and
service market is a large market with esimated
annual capital expenditure o’ 8 billion USD
in
. The water & waste water treatment
equipment market, De.mem s key target area, is an
important segment o’ this with an esimated total
global market size o’ .6 billion USD in
.
Membrane based technologies are emerging
as they have become more afordable, eicient
and efecive over recent years. The use o’
microiltraion MF , UF, Nanoiltraion NF and
RO processes is spreading .
9.3 TRENDS AND KEY DRIVERS
A number o’ trends and key drivers relevant to the
waste water and water treatment industry have
been ideniied, including the ’ollowing:
a Trend towards de-centralised units: The market
structure, including ’actors such as geography,
requires de-centralized soluions, in paricular
’or the Asia Paciic region with many areas
lacking ’rom in’rastructure connecion to the
urban centres.
b Membrane-based soluions emerging: One o’
the most signiicant enhancements in the water
industry is the advancement in membrane
technologies .
c Recycling of wastewater: Recycling o’ waste
water has become a key ’ocus in countries
with high water scarcity, such as Israel and
Singapore.
d Water essenial for agriculture: Agriculture is
currently the largest user o’ water, accouning
’or about 7 % o’ global water withdrawals.
However, this share is projected to decline ’rom
7 % to 6 % as the proporion o’ withdrawals
’rom industrial acivity is expected to grow.
This rising demand in industrial water use is
driven by growing energy needs in emerging
economies like China. [Source: GWI report]
e Industrial waste water as a key segment:
Industrial water is recognized as a key growth
segment in the water market – in general, doing
beter than the municipal market . Water plays
an integral part in the producion process o’
certain industries, such as energy, including the
power generaion, reining and cooling.
’ Polluion and climate change: The water
challenges ’aced by many developing naions
are compounded by the poor management o’
resources. Polluion is a major concern in many
emerging countries due to the lack o’ adequate
wastewater treatment ’aciliies. According
to the UN, roughly 9 % o’ all wastewater
in developing countries is discharged
untreated, directly into the sea or rivers. Rapid
urbanizaion in developing economies has
also contributed to polluion, as the growth
in the urban populaion has outpaced the
development o’ sanitaion ’aciliies.
[Source: GWI report]
9.4 COMPETITIVE LANDSCAPE
De.mem endeavours to cover all aspects o’ the
value chain and to provide end users with a cost
efecive, ’ull service soluion to manage their
waste water producion capacity.
Key compeitors include:
a Product and equipment specialist irms:
These irms operate manu’acturing ’aciliies
’or individual components o’ water treatment
systems, such as membranes or membrane
modules or pumps.
b Systems Integraion irms: Such companies
take the individual components and assemble
them into turn-key water treatment systems.
System integrators need to have a good
understanding o’ processes and system design
and engineering.
c Operaions and maintenance irms: Firms in
that area ’ocus on operaing water treatment
plants ’or its customers.
d Distribuion irms: These companies maintain
and run the distribuion network such as the
pipelines, and take care o’ customer invoicing.
Frost & Sullivan, Sustainable Water Treatment Technologies in
the
Global Water Market, May
Deloite, Water Tight . , The top trends in the total water
sector,
Deloite, Water Tight . , The Top Trends in the Water Sector,
page 9
PROSPECT U S
Global Water Intelligence GWI , Market Proile: Global Trends in
Water Spending, June
46
09/18
INDUSTRY OVERVIEW
Within each segment, there are both large
mulinaionals and local small and medium
enterprises. Those include ’or example companies
like General Electric GE , USA, which supplies a
range o’ equipment ’or membrane-based water
treatment including RO membranes and modules,
CH M Hill, USA, a leading project management
company, or Veolia Environement S.A., France, a
large mulinaional operator o’ water treatment
plants amongst other aciviies within the group .
De.mem posiions itsel’ uniquely within the
value chain, as it combines aspects o’ diferent
segments o’ the value chain. While the company
acts as a process designer and system integrator,
it makes use o’ licensed proprietary technologies.
Furthermore, the company also operates water
and waste water treatment plants, which provides
it with access to operaing data ’rom the plants
and the opportunity to validate its technologies
in-house. The combinaion o’ these ’actors can
enable De.mem to strengthen its market posiion
within a compeiive environment.
9.5 BARRIERS TO ENTRY
A number o’ barriers to entry relevant to the
global wastewater industry have been ideniied,
including the ’ollowing:
a Access to specialist technology: De.mem has a
unique relaionship to NTU, which has licensed
several o’ its technologies to the company.
NTU has been recognized as one o’ the leading
universiies worldwide in water research .
b Access to capital: Substanial capital is required
to develop technologies such as De.mem s low
pressure nanoiltraion membrane, which are
required in the decentralised water treatment
sector.
c First-mover advantage: De.mem is one o’
the irst companies with a specialized product
supply paricularly ’or de-centralized water
treatment.
d Market risk: The markets ’or ultrailtraion
and reverse osmosis treatment technologies
are large and well established which can make
the commercialisaion o’ new waste water
treatment technologies diicult, including
De.mem s low pressure nanoiltraion
membrane and any ’uture technology
developments.
Lux Research
47
D EM EM
09/18
INDUSTRY OVERVIEW
This page has been let blank intenionally
PROSPECT U S
48
10/18
FINANCIAL INFORMATION AND INVESTIGATING ACCOUNTANTS REPORT
10/18
FINANCIAL INFORMATION
AND INVESTIGATING
ACCOUNTANT’S REPORT
49
D EM EM
10/18
FINANCIAL INFORMATION AND INVESTIGATING ACCOUNTANTS REPORT
RSM Corporate Australia Pty Ltd
8 St Georges Terrace Perth WA 6000
GPO Box R 1253 Perth WA 6844
T +61 (0) 8 9261 9100
F +61 (0) 8 9261 9199
14 February 2017
www.rsm.com.au
The Directors
De.mem Limited
Ground Floor, 16 Ord Street
West Perth, WA, 6872
Dear Directors
Independent Limited Assurance Report (“Report”) on De.mem Limited Historical and Pro Forma
Historical Financial Information
Introduction
We have been engaged by De.mem Limited (“De.mem” or the “Company”) to report on the historical financial
information of De.mem for the six months ended 30 June 2016 and years ended 31 December 2015 and 31 December
2014 and pro forma financial information of the Company as at 30 June 2016 for inclusion in the prospectus
(“Prospectus”) of De.mem dated on or about 14 February 2017 in connection with De.mem’s proposed initial public
offering and listing on the Australian Securities Exchange (“ASX”), pursuant to which the Company is offering
18,750,000 ordinary De.mem shares at an issue price of $0.20 per share to raise $3.75 million before costs (the
“Offer”). Oversubscriptions of up to 3,750,000 additional shares may be accepted (to raise an additional $0.75 million
before costs).
Expressions and terms defined in the Prospectus have the same meaning in this Report.
The future prospects of the Company, other than the preparation of a Pro Forma Historical Financial Information,
assuming completion of the transactions summarised in Note 1 of the Appendix of this Report, are not addressed in
this Report. This Report also does not address the rights attaching to the shares to be issued pursuant to this
Prospectus, nor the risks associated with an investment in shares in the Company.
Background
De.mem was incorporated on 12 September 2016 in order to facilitate the initial public offering of De.mem Pte Ltd, a
Singapore company established in 2013 which designs, builds, owns and operates membrane-based, de-centralized
water and waste water treatment systems with a focus on the Asia Pacific region. De.mem Pte Ltd is headquartered
in Singapore and has a wholly owned subsidiary in Ho Chi Minh City, Vietnam.
PROSPECT U S
50
10/18 FINANCIAL
INFORMATION
AND
INVESTIGATING
ACCOUNTANTS
REPORT
The Company’s
product offering
is backed
by a
range of proprietary
products and
technologies developed for decentralised water treatment applications, aimed to reduce clients’ operating or capital expenditure for water or waste
water treatment.
The Company is seeking to raise funds in order to fund a research and development program of a nano-filtration
membrane, contract execution, geographic expansion and fund the investment into new build, own and operate
(“BOO”) water treatment plants.
Scope
Historical financial information
You have requested RSM Corporate Australia Pty Ltd (“RSM”) to review the following historical financial information
of the Company included in the Prospectus at the Appendix to this Report:
 The notionally consolidated statements of financial performance of the Company and its controlled entities for
the six months ended 30 June 2016 and the years ended 31 December 2015 and 31 December 2014;
 The notionally consolidated statements of cash flows of the Company and its controlled entities for the six
months ended 30 June 2016 and the years ended 31 December 2015 and 31 December 2014; and
 The notionally consolidated statement of financial position of the Company and its controlled entities as at 30
June 2016.
(together the “Historical Financial Information” attached at Appendix A for reference).
The Historical Financial Information has been prepared in accordance with the stated basis of preparation, being the
recognition and measurement principles of the International Financial Reporting Standards and the Company’s
adopted accounting policies.
The Historical Financial Information for the six months ended 30 June 2016 and the financial years ended 31
December 2015 and 31 December 2014 represents that of the controlled entity, De.mem Pte Ltd, which is to be
acquired by the Company pursuant to the Consideration Offer included in the Prospectus, with De.mem Pte Ltd to be
a wholly owned subsidiary of the Company on completion of the Consideration Offer.
The Historical Financial Information has been extracted from the financial statements of De.mem Pte Ltd for the six
months ended 30 June 2016 and the years ended 31 December 2015 and 31 December 2014, which were audited
by RSM Chio Lim LLP in accordance with International Auditing Standards. The audit reports issued for the six months
ended 30 June 2016 and years ended 31 December 2015 and 31 December 2014 were unqualified opinions.
The Historical Financial Information is presented in the Prospectus in an abbreviated form, insofar as it does not
include all of the presentation and disclosures required by International Financial Reporting Standards and other
mandatory professional reporting requirements applicable to general purpose financial reports prepared in
accordance with the Corporations Act 2001.
Pro forma historical financial information
You have requested RSM to review the pro forma historical consolidated statement of financial position as at 30 June
2016, referred to as “the Pro Forma Historical Financial Information”.
The Pro Forma Historical Financial Information has been derived from the Historical Financial Information of the
Company after adjusting for the effects of the subsequent events and pro forma adjustments described in Note 1 of
the Appendix to this Report. The stated basis of preparation is the recognition and measurement principles of the
International Financial Reporting Standards applied to the Historical Financial Information and the events or
transactions to which the subsequent events and pro forma adjustments relate, as described in Note 1 of the Appendix
to this Report, as if those events or transactions had occurred as at the date of the Historical Financial Information.
Due to its nature, the Pro Forma Historical Financial Information does not represent the Company’s actual or
prospective financial position or statement of financial performance.
51
D EM EM
2
/18
FINANCIAL INFORMATION AND INVESTIGATING ACCOUNTANTS REPORT
Directors’10responsibility
The Directors of the Company are responsible for the preparation of the Historical Financial Information and Pro
Forma Historical Financial Information, including the selection and determination of pro forma adjustments made to
the Historical Financial Information and included in the Pro Forma Historical Financial Information. This includes
responsibility for such internal controls as the Directors determine are necessary to enable the preparation of
Historical Financial Information and Pro Forma Historical Financial Information that are free from material
misstatement, whether due to fraud or error.
Our responsibility
Our responsibility is to express a limited assurance conclusion on the Historical Financial Information and Pro Forma
Historical Financial Information based on the procedures performed and the evidence we have obtained. We have
conducted our engagement in accordance with the Standard on Assurance Engagement ASAE 3450 Assurance
Engagements involving Corporate Fundraisings and/or Prospective Financial Information.
A review consists of making such enquiries, primarily of persons responsible for financial and accounting matters,
and applying analytical and other review procedures. Our procedures included:
 A consistency check of the application of the stated basis of preparation, to the Historical and Pro Forma
Historical Financial Information;
 A review of the Company’s and its auditors’ work papers, accounting records and other documents;
 Enquiry of directors, management personnel and advisors;
 Consideration of subsequent events and pro forma adjustments described in Note 1 of the Appendix to this
Report; and
 Performance of analytical procedures applied to the Pro Forma Historical Financial Information.
A review is substantially less in scope than an audit conducted in accordance with International Auditing Standards
and consequently does not enable us to obtain reasonable assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusions
Historical Financial Information
Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the
Historical Financial Information, as described in the Appendix to this Report, and comprising:
 The notionally consolidated statements of financial performance of the Company and its controlled entities for
the six months ended 30 June 2016 and the years ended 31 December 2015 and 31 December 2014;
 The notionally consolidated statements of cash flows of the Company and its controlled entities for the six
months ended 30 June 2016 and the years ended 31 December 2015 and 31 December 2014; and
 The notionally consolidated statement of financial position as at 30 June 2016 of the Company and its controlled
entities,
are not presented fairly, in all material respects, in accordance with the stated basis of preparation, as described in
Note 2 of the Appendix to this Report.
The Company did not trade in the period from incorporation to 30 June 2016 and as such no financial performance
was recorded.
PROSPECT U S
52
3
10/18Historical
FINANCIAL
INFORMATION
AND INVESTIGATING ACCOUNTANTS REPORT
Pro Forma
Financial
Information
Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the Pro
Forma Historical Financial Information, as described in the Appendix to this Report, and comprising the consolidated
statements of financial position as at 30 June 2016 of the Company and its controlled entities are not presented fairly
in all material respects, in accordance with the stated basis of preparation, as described in Note 1 of the Appendix of
this Report.
Restriction on Use
Without modifying our conclusions, we draw attention to the purpose of the financial information, being for inclusion
in the Prospectus. As a result, the financial information may not be suitable for use for another purpose.
Responsibility
RSM has consented to the inclusion of this assurance report in the Prospectus in the form and context in which it is
included. RSM has not authorised the issue of the Prospectus. Accordingly, RSM makes no representation regarding,
and takes no responsibility for, any other documents or material in, or omissions from, the Prospectus.
Disclosure of Interest
RSM does not have any pecuniary interest that could reasonably be regarded as being capable of affecting its ability
to give an unbiased conclusion in this matter. RSM will receive a professional fee for the preparation of this Report.
Yours faithfully
A J GILMOUR
Director
53
D EM EM
4
Appendix A – Historical and Pro Forma Financial Information
/18
10
DE.MEM LIMITED
STATEMENT OF FINANCIAL PERFORMANCE
FINANCIAL INFORMATION AND INVESTIGATING ACCOUNTANTS REPORT
FOR THE YEARS ENEDED 31 DECEMBER 2014, 31 DECEMBER 2015
AND THE SIX MONTHS ENDED 30 JUNE 2016
Revenue
Cost of sales
Gross profit / (loss)
Other gains
Administrative expenses
Other losses
Loss before income tax expense from continuing
operations
Income tax expense
Loss from continuing operations, net of tax
Other comprehensive (loss) / income
Exchange differences on translating foreign operations, net
of tax
Total comprehensive loss
6 months ended
30-Jun-16
Audited
S$
Year ended
31-Dec-15
Audited
S$
Year ended
31-Dec-14
Audited
S$
170,394
(128,890)
41,504
48,450
(616,505)
(515,382)
749,386
(918,044)
(168,658)
17,940
(734,139)
(13,558)
400,614
(110,231)
290,383
11,360
(389,936)
(148,699)
(1,041,933)
(898,415)
(236,892)
(1,041,933)
(898,415)
(236,892)
(14,137)
1,932
9,198
(1,056,070)
(896,483)
(227,694)
Investors should note that past results are not a guarantee of future performance.
PROSPECT U S
54
Appendix A – Historical and Pro Forma Financial Information
/18
10
DE.MEM LIMITED
STATEMENT OF CASH FLOWS
FINANCIAL INFORMATION AND INVESTIGATING ACCOUNTANTS REPORT
FOR THE YEARS ENEDED 31 DECEMBER 2014, 31 DECEMBER 2015
AND THE SIX MONTHS ENDED 30 JUNE 2016
Cash flows from operating activities
Loss before tax
Adjustments for:
Interest income
Goodwill written off
Loss on disposal of plant and equipment
Depreciation of plant and equipment
Net effect of exchange rate changes in consolidating foreign
operations
Operating cash flows before changes in working capital
Inventories
Trade and other receivables, current
Other assets
Trade and other payables, current
Other liabilities, current
Net cash flows used, in operating activities
Cash flows from investing activities
Acquisition of subsidiaries (net of cash acquired)
Purchase of plant and equipment
Net movements in amount due from related parties
Interest received
Net cash used in investing activities
Cash flows from financing activities
Issue of shares
Net movements in amount due to related parties/directors
Other liabilities, non-current
Net cash flows from financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents, statement of cash flows, beginning
balance
Cash and cash equivalents, statement of cash flows, ending
balance
6 months ended
30-Jun-16
Audited
S$
Year ended
31-Dec-15
Audited
S$
Year ended
31-Dec-14
Audited
S$
(1,041,933)
(898,415)
(236,892)
(313)
259,976
92,213
78,507
18,713
(29)
87,731
-
11,386
1,894
9,198
(600,164)
(64,161)
321,238
6,686
(209,421)
(5,062)
(550,884)
(877,808)
55,331
(375,233)
117,178
301,633
5,062
(773,837)
(139,992)
(60,219)
(61,782)
(205,693)
65,606
(402,080)
(216,859)
(100,559)
91,850
313
(225,255)
(98,322)
5,231
(93,091)
(40,289)
58,100
29
17,840
150
3,173
300,000
303,323
(472,816)
1,460,000
(90,212)
1,369,788
502,860
250,847
17,565
268,412
(115,828)
3,009
118,837
505,869
3,009
505,869
33,053
Investors should note that past results are not a guarantee of future performance.
55
D EM EM
Appendix A – Historical and Pro Forma Financial Information
/18
10
DE.MEM LIMITED
CONSOLIDATED PRO FORMA STATEMENT OF FINANCIAL POSITION
FINANCIAL INFORMATION AND INVESTIGATING ACCOUNTANTS REPORT
AS AT 30 JUNE 2016
Note
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Other assets
Total current assets
3
Non-current assets
Property, plant & equipment
Other assets
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Total current liabilities
Non-current liabilities
Other liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Equity attributable to owners of the
parent
Non-controlling interest
Total equity
5
6
7
De.mem
Audited
30-Jun-16
$
Subsequent
events
Unaudited
30-Jun-16
$
Pro forma
adjustments
Unaudited
30-Jun-16
$
Pro forma
Unaudited
30-Jun-16
$
32,952
413,352
84,450
160,108
690,862
950,000
950,000
3,250,000
3,250,000
4,232,952
413,352
84,450
160,108
4,890,862
683,931
12,568
696,499
1,387,361
950,000
3,250,000
683,931
12,568
696,499
5,587,361
518,319
518,319
-
-
518,319
518,319
299,088
299,088
817,407
569,954
950,000
3,250,000
299,088
299,088
817,407
4,769,954
3,092,760
(2,998)
(2,526,192)
950,000
361,250
(361,250)
2,927,000
323,000
-
6,969,760
681,252
(2,887,442)
563,570
950,000
3,250,000
4,763,570
6,384
569,954
950,000
3,250,000
6,384
4,769,954
The unaudited consolidated pro forma statement of financial position represents the notionally consolidated audited
statement of financial position of the Company as at 30 June 2016 adjusted for the pro forma transactions outlined in
Note 1 of this Appendix. It should be read in conjunction with the notes to the historical and pro forma financial
information.
PROSPECT U S
56
Appendix A – Historical and Pro Forma Financial Information
1. Introduction
10/18 FINANCIAL INFORMATION AND INVESTIGATING ACCOUNTANTS REPORT
The financial information set out in this Appendix consists of the notionally consolidated statement of financial position
as at 30 June 2016 and the notionally consolidated statement of financial performance for the years ended 31
December 2015 and 31 December 2014 and the six months ended 30 June 2016 (“Historical Financial Information”)
together with a pro forma consolidated statement of financial position as at 30 June 2016, reflecting the Directors’ pro
forma adjustments (“Pro Forma Historical Financial Information”).
The Pro Forma Historical Financial Information has been compiled by adjusting the consolidated statements of
financial position of the Company for the impact of the following subsequent events and pro forma adjustments.
Adjustments adopted in compiling the Pro Forma Historical Financial Information
The Pro Forma Historical Financial Information has been prepared by adjusting the Historical Financial Information
to reflect the financial effects of the following subsequent events which have occurred in the period since 30 June
2016 and the date of this Report:
(i)
The issue of 4,250,000 options to directors and management, exercisable at $0.30 each with a 3-year expiry
(“Management Options”);
(ii)
The issue of 7,307,692 ordinary De.mem shares at $0.13 each to raise $950,000, on 7 November 2016;
and the following pro forma transactions which are yet to occur, but are proposed to occur immediately before or
following completion of the Offer:
(iii) A restructure of the Company being completed whereby the Company acquires De.mem Pte Ltd via a common
control transaction through the issue of 65,000,000 ordinary shares in the Company to existing De.mem Pte Ltd
shareholders in accordance with the Consideration Offer;
(iv) The issue of 18,7500,000 ordinary De.mem shares at $0.20 each to raise $3,750,000 before costs pursuant to
the Offer;
(v) The payment of cash costs related to the Offer estimated to be $500,000; and
(vi) The issue of 1,000,000 shares to Alto Capital and 3,800,000 options to advisors and brokers (“Advisor Options”)
in relation to the Offer. The Advisor Options are exercisable at $0.30 each with a 3-year expiry;
The Pro Forma Historical Financial Information has been presented in abbreviated form and does not contain all the
disclosures usually provided in an Annual Report prepared in accordance with the Corporations Act 2001.
57
D EM EM
Appendix A – Historical and Pro Forma Financial Information
2. Statement of significant accounting policies
(a)
10/18 FINANCIAL INFORMATION AND INVESTIGATING ACCOUNTANTS REPORT
Basis of preparation
The Historical Financial Information has been prepared in accordance with the recognition and measurement
requirements of the International Financial Reporting Standards (“IFRS”), adopted by the International Accounting
Standards Board and the Corporations Act 2001.
The Company was incorporated on 12 September 2016 and has not undertaken any trading activities up until it
acquires De.mem Pte Ltd, which is to be acquired by the Company pursuant to the Consideration Offer included in
the Prospectus, with De.mem Pte Ltd to be a wholly owned subsidiary of the Company on completion of the
Consideration Offer.
The financial information presented in the Prospectus has been notionally consolidated for the six months ended 30
June 2016 and the financial years ended 31 December 2015 and 31 December 2014 to reflect the Company's
acquisition of De.mem Pte Ltd that occurred post 30 June 2016 (together, De.mem Pte Ltd and De.mem are referred
to as the “De.mem Group”). The acquisition of De.mem Pte Ltd has not resulted in a substantive change to the
operations of the De.mem Group or its assets and liabilities and accordingly the presentation of the notionally
consolidated financial information reflects the historical financial performance and financial position of the De.mem
Group.
This acquisition of De.mem Pte Ltd is considered a common control transaction with the Company being considered
the accounting acquirer and the transaction accounted for at book value rather than fair value. In adopting this
approach the Directors note that there is an alternate view that it could be accounted for as a business combination.
If this view is taken, the net assets of the group would have been uplifted to fair value, with consequential impacts on
the Income Statement and Statement of Financial Position. The Directors anticipate that the excess of fair value
compared to the book value of net assets would primarily be allocated to intangible assets and would be subject to
future amortisation expenses or impairment testing.
The significant accounting policies that have been adopted in the preparation and presentation of the historical and
the Pro forma Historical Financial Information are:
(b)
Basis of measurement
The historical and pro forma financial information has been prepared on the historical cost basis except for financial
instruments classified at fair value through profit or loss, which are measured at fair value.
(c)
Functional and presentation currency
These historical and pro forma financial information has been presented in Australian dollars which is the Group’s
functional currency. The historical and pro forma financial information of De.mem Pte Ltd have been translated from
Singapore dollars to Australian dollars in accordance with international financial reporting standards.
(d)
Principles of consolidation
The historical and pro forma financial information incorporates the assets, liabilities and results of entities controlled
by the Company at the end of the pro forma reporting period. A controlled entity is any entity over which the Company
has the ability and right to govern the financial and operating policies so as to obtain benefits from the entity’s
activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more than half
of the voting power of an entity. In assessing the power to govern, the existence and effect of holdings of actual and
potential voting rights are also considered.
Where controlled entities have entered or left the consolidated entity during the year, the financial performance of
those entities is included only for the period of the year that they were controlled.
In preparing the consolidated financial statements, all intragroup balances and transactions between entities in the
consolidated entity have been eliminated in full on consolidation. Accounting policies of subsidiaries have been
changed where necessary to ensure consistency with those adopted by the parent entity.
PROSPECT U S
58
Appendix A – Historical and Pro Forma Financial Information
(e)
Use of estimates and judgements
10/18 FINANCIAL
AND INVESTIGATING
ACCOUNTANTS
REPORT
The preparation
of financialINFORMATION
statements in conformity
with IFRS requires
management
to make judgements, estimates
and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and in any future periods affected.
(f)
Going concern
The historical and pro forma financial information has been prepared on a going concern basis, which contemplates
continuity of normal business activities and the realisation of assets and discharge of liabilities in the normal course
of business.
(g)
Revenue recognition
The revenue amount is the fair value of the consideration received or receivable from the gross inflow of economic
benefits during the reporting period arising from the course of the activities of the entity and it is shown net of any
related sales taxes and rebates. Revenue from the sale of goods is recognised when significant risks and rewards of
ownership are transferred to the buyer, there is neither continuing managerial involvement to the degree usually
associated with ownership nor effective control over the goods sold, and the amount of revenue and the costs incurred
or to be incurred in respect of the transaction can be measured reliably. Revenue from rendering of services that are
not significant transactions is recognised as the services are provided or when the significant acts have been
completed. Interest income is recognised using the effective interest method.
(h)
Translation of financial statements of other entities
Each entity in the group determines the appropriate functional currency as it reflects the primary economic
environment in which the relevant reporting entity operates. In translating the financial statements of such an entity
for incorporation in the consolidated financial statements in the presentation currency the assets and liabilities
denominated in other currencies are translated at end of the reporting period rates of exchange and the income and
expense items for each statement presenting profit or loss and other comprehensive income are translated at average
rates of exchange for the reporting period. The resulting translation adjustments (if any) are recognised in other
comprehensive income and accumulated in a separate component of equity until the disposal of that relevant
reporting entity
(i)
Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term,
highly liquid investments with original maturities of three months or less that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of changes in value.
(j)
Trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the
effective interest method, less any provision for impairment. Trade receivables are generally due for settlement within
30 days.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are
written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when
there is objective evidence that the company will not be able to collect all amounts due according to the original terms
of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or
financial reorganisation and default or delinquency in payments (more than 60 days overdue) are considered
indicators that the trade receivable may be impaired. The amount of the impairment allowance is the difference
between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original
effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is
immaterial.
Other receivables are recognised at amortised cost, less any provision for impairment
59
D EM EM
Appendix A – Historical and Pro Forma Financial Information
(k)
Trade and other payables
10/18 represent
FINANCIAL
INFORMATION
INVESTIGATING
These amounts
liabilities
for goods AND
and services
providedACCOUNTANTS
to the CompanyREPORT
prior to the end of the financial
year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not
discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
(l)
Plant and equipment
Depreciation is provided on a straight-line method to allocate the gross carrying amounts of the assets less their
residual values over their estimated useful lives of each part of an item of these assets. The annual rates of
depreciation are as follows:
Plant and equipment
- 10% to 33%.
Renovation
- 50%
An asset is depreciated when it is available for use until it is derecognised even if during that period the item is idle.
Fully depreciated assets still in use are retained in the financial statements.
Plant and equipment are carried at cost on initial recognition and after initial recognition at cost less any accumulated
depreciation and any accumulated impairment losses. The gain or loss arising from the derecognition of an item of
plant and equipment is measured as the difference between the net disposal proceeds, if any, and the carrying
amount of the item and is recognised in profit or loss. The residual value and the useful life of an asset is reviewed
at least at each end of the reporting period and, if expectations differ significantly from previous estimates, the
changes are accounted for as a change in an accounting estimate, and the depreciation charge for the current and
future periods are adjusted.
Cost also includes acquisition cost, borrowing cost capitalised and any cost directly attributable to bringing the asset
or component to the location and condition necessary for it to be capable of operating in the manner intended by
management. Subsequent costs are recognised as an asset only when it is probable that future economic benefits
associated with the item will flow to the entity and the cost of the item can be measured reliably. All other repairs and
maintenance are charged to profit or loss when they are incurred.
(m)
Share-based payment transactions
The Company provides benefits to employees and other parties in the form of share based payments, whereby the
employees and parties provide services in exchange for shares and other securities in the Company. The cost of the
equity settled share based payment transactions is determined by reference to the fair value of the equity instruments
granted.
The fair value of equity-settled transactions is recognised, together with a corresponding increase in equity, over the
period in which the performance/ and or service conditions are fulfilled (“vesting period”).
The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects:
(i) The grant date fair value;
(ii) The extent to which the vesting period has expired; and
(iii) The number of equity instruments that, in the opinion of the Directors of the Company, will ultimately vest.
This opinion is formed based on the best available information at reporting date. No adjustment is made for the
likelihood of market performance conditions being met as the effect of these conditions is included in the
determination of fair value at grant date.
No expense is recognised for equity instruments that do not ultimately vest, except for equity instruments where
vesting is conditional upon a market condition.
PROSPECT U S
60
Appendix A – Historical and Pro Forma Financial Information
(n)
Income tax
10/18 taxes
FINANCIAL
INFORMATION
INVESTIGATING
ACCOUNTANTS
REPORT
The income
are accounted
using theAND
liability
method that requires
the recognition
of taxes payable or refundable
for the current period and deferred tax liabilities and assets for the future tax consequence of events that have been
recognised in the financial statements or tax returns. The measurements of current and deferred tax liabilities and
assets are based on provisions of the enacted or substantially enacted tax laws; the effects of future changes in tax
laws or rates are not anticipated. Tax expense (tax income) is the aggregate amount included in the determination of
profit or loss for the reporting period in respect of current tax and deferred tax. Current and deferred income taxes
are recognised as income or as an expense in profit or loss unless the tax relates to items that are recognised in the
same or a different period outside profit or loss. For such items recognised outside profit or loss the current tax and
deferred tax are recognised (a) in other comprehensive income if the tax is related to an item recognised in other
comprehensive income and (b) directly in equity if the tax is related to an item recognised directly in equity. Deferred
tax assets and liabilities are offset when they relate to income taxes levied by the same income tax authority. The
carrying amount of deferred tax assets is reviewed at each end of the reporting period and is reduced, if necessary,
by the amount of any tax benefits that, based on available evidence, are not expected to be realised. A deferred tax
amount is recognised for all temporary differences, unless the deferred tax amount arises from the initial recognition
of an asset or liability in a transaction which (i) is not a business combination; and (ii) at the time of the transaction,
affects neither accounting profit nor taxable profit (tax loss). A deferred tax liability or asset is recognised for all taxable
temporary differences associated with investments in subsidiaries except where the reporting entity is able to control
the timing of the reversal of the taxable temporary difference and it is probable that the taxable temporary difference
will not reverse in the foreseeable future or for deductible temporary differences, they will not reverse in the
foreseeable future and they cannot be utilised against taxable profits.
(o)
Goods and services tax
Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred
is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost
of acquisition of the asset or as part of an item of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement
of financial position.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax
authority.
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Appendix A – Historical and Pro Forma Financial Information
3. Cash and cash equivalents
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Note
Audited
30-Jun-16
$
Cash and cash equivalents
32,952
De.mem cash and cash equivalents as at 30 June 2016
Subsequent events are summarised as follows:
Seed capital raising through the issue of 7,307,692 shares issued at
$0.13 per share
Unaudited
Pro-forma
30-Jun-16
$
4,232,952
32,952
1(ii)
950,000
1(iv)
1(v)
3,750,000
(500,000)
3,250,000
Adjustments arising in the preparation of the pro forma statement of
financial position are summarised as follows:
Proceeds from the Public Offer pursuant to the Prospectus
Capital raising costs
Pro-forma cash and cash equivalents
4,232,952
The Prospectus has provision for subscriptions of between 18,750,000 and 22,500,000 shares to raise between $3.75
million and $4.5 million (before costs) wherein the pro forma statement of financial position assumes the minimum
$3.75 million is raised. Should the maximum $4.5 million be raised, the share issue cash costs would increase to
$550,000 and the cash at bank balance would increase by $700,000 to $4,932,952.
4. Issued capital
Number of
shares
$
-
3,092,760
1(ii)
7,307,692
950,000
1(iii)
1(iv)
1(vi)
65,000,000
18,750,000
1,000,000
3,750,000
200,000
1(v)
1(vi)
1(vi)
92,057,692
(500,000)
(200,000)
(323,000)
3,877,000
92,057,692
6,969,760
Note
De.mem issued share capital as at 30 June 2016
Subsequent events are summarised as follows:
Seed capital raising through the issue of 7,307,692 shares issued at
$0.13 per share
Adjustments arising in the preparation of the pro forma statement of
financial position are summarised as follows:
Shares to be issued to shareholders of De.mem Pte Ltd pursuant to
the Vendor Offer
Fully paid ordinary shares issued at $0.20 pursuant to this Prospectus
Shares issued to Alto Capital
Cash costs associated with the share issue pursuant to this
Prospectus
Cost of shares issued to Alto Capital
Cost of options issued to in relation to the Vendor Offer
Pro-forma issued share capital
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Appendix A – Historical and Pro Forma Financial Information
4. Issued capital (cont.)
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INFORMATION
AND of
INVESTIGATING
ACCOUNTANTS
REPORT
The Prospectus
has provision
for subscriptions
between 18,750,000
and 22,500,000
shares to raise between $3.75
million and $4.5 million (before costs) wherein the pro forma statement of financial position assumes the minimum
$3.75 million is raised. Should the maximum $4.5 million be raised, the share issue cash costs would increase to
$550,000 and the issued capital would increase by $700,000 to $7,669,760.
(a)
Restructure
The Company was not incorporated until after 30 June 2016, however, pursuant to the Prospectus, the Restructure
will be treated as a common control transaction, and the pro forma opening share capital balance has been shown
as a continuation of the issued share capital of De.mem Pte Ltd as at 30 June 2016 whilst the number of shares on
issue is the number of shares on issue in the Company after completion of the Restructure.
5. Reserves
Note
Audited
30-Jun-16
$
Unaudited
Pro-forma
30-Jun-16
$
(2,998)
681,252
Reserves
De.Mem reserves as at 30 June 2016
(2,998)
Subsequent events are summarised as follows:
Cost of Management Options issued
1(i)
361,250
1(vi)
323,000
Adjustments arising in the preparation of the pro forma statement of
financial position are summarised as follows:
Advisor Options issued to in relation to the Offer
Pro-forma reserves
(a)
681,252
Options and Broker Options
On 21 November 2016, the Company issued 4,250,000 Management Options at a fair value of $0.36 million.
Pursuant to the Offer, the Company will issue 3,800,000 Advisor Options in relation to the Offer. The pro forma fair
value of the Advisor Options is $0.32 million.
All options have been valued using a standard binomial pricing model based on the fair value of a Company share at
the grant date, assuming minimum subscription of the Offer using the following assumptions:
Assumptions
Stock price
Exercise price
Expiry period
Expected future volatility
Risk free rate
Dividend yield
Management
Options
$ 0.20
$ 0.30
3 years
80%
1.86%
0%
Advisor
Options
$ 0.20
$ 0.30
3 years
80%
1.94%
0%
The terms and conditions for the Advisor Options are set out in sections 15.9 of the Prospectus.
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This page has been let blank intenionally
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TECHNOLOGY REPORT
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Technology Opinion
Report
February 2017
Prepared by
Wave Six Pty Ltd
ACN: 160 498 233
Contact: [email protected]
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The Directors
De.Mem Pte Ltd
14th February 2017
Dear Sirs
Independent Technical Report on De.Mem Nanofiltration technology
You have instructed Wave Six Pty Ltd to undertake a review of the technology and market conditions
for the technology of De.Mem Pte Ltd of Singapore for the purpose of undertaking a listing on the
Australian Stock Exchange in Early 2017. De.Mem Pte Ltd is a water and wastewater services
company that is in the process of commercialising nanofiltration technology licensed from Nanyang
Technological University Singapore.
De.Mem has instructed Wave Six to prepare this report for the purpose of inclusion as an
independent expert report (IER) for inclusion in the Prospectus for raising capital for further
development of and commercialisation of the Nanofiltration technology as well as ongoing
operations of the company including the working capital to deploy water and wastewater facilities
on behalf of clients.
Neil Prentice
Director
Wave Six Pty Ltd
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Executive Summary
De.Mem Pte Ltd (“De.Mem” or “the Company”) is a company whose business is focussed on the
development, deployment and operation of technology and facilities for water and wastewater
treatment. De.Mem has recently executed a license with Nanyang Technological University (“NTU”)
Singapore to commercialise a novel Nanofiltration technology aimed at the industrial wastewater
treatment market.
This technology has a range of unique feature which make it ideal for a range of applications and has
the potential to displace the use of combined Ultrafiltration and Reverse Osmosis systems in water
and wastewater treatment applications. While Nanofiltration technology is not suitable for the
desalination of water for potable water use, it has applications in water softening and treatment of
surface water as well as in the treatment of industrial effluent streams.
The De.Mem technology’s unique features allow it to perform its role at much lower operating
pressures than competing products and it can provide cost savings for the end user for both capital
and operational expenditure. The De.Mem technology’s features are a unique combination in the
market and while similar characteristics have been investigated in an academic environment, there
are no commercially available competitors which replicate all of the De.Mem technology’s key
features.
The original developer of the NF technology, NTU’s Singapore membrane Technology Centre (“SMTC”)
under Nanyang Environment and Water Research Institute (“NEWRI”) has an extensive track record
in the development of water and water treatment technologies. The key researchers in developing
the De.Mem technology are both globally recognised experts in the fields of filtration membrane
development for water treatment. Furthermore, NTU itself has been globally recognised by
independent industry researchers as the second rank research institution in the world for water
treatment research. The development of the technology therefore has been undertaken by credible
researchers with globally recognised expertise in the field of membrane development and water
treatment research.
The global water and wastewater treatment equipment market, which includes the supply of filtration
membranes, is estimated to exceed USD 19 billion per annum, of which the market for membranes
alone is over USD 2.8 billion per annum. As a part of this, the market value for Nanofiltration
membranes is projected to grow to above US$440 million per annum by 2019 and of this segment,
approximately 75% of this expenditure will be on water and wastewater treatment. De.Mem is
targeting both the market for Nanofiltration and to replace Ultrafiltration and Reverse Osmosis in
some applications to address this market segment. It will supply it Nanofiltration technology both to
its own projects on behalf of end users as well as to 3rd party system integrators in the water treatment
segment.
De.Mem’s business model will encompass not only the supply of filtration technology but will also
target design, build and operate projects for end users. This will initially target primarily industrial
water and wastewater treatment applications but this may also expand into processing applications
in a range of industry sectors in the future.
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Contents
Executive Summary ........................................................................................................................ ii
Declarations ...................................................................................................................................... 1
Statement of Independence ............................................................................................................... 1
Objective & Scope ............................................................................................................................ 2
De.mem Technology overview ................................................................................................... 3
Over view of Nanofiltration technology ............................................................................................. 3
The De.Mem NF technology ............................................................................................................... 4
Sensors & management software....................................................................................................... 8
NTU experience in water technology ................................................................................................. 9
Market opportunity ...................................................................................................................... 10
Market value chain & segments ....................................................................................................... 10
Market size and opportunity. ........................................................................................................... 11
Conclusions and Opinion ............................................................................................................ 14
.
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Declarations
Statement of Independence
Wave Six Pty Ltd is an independent consulting firm specialising in early stage technology commercialisation.
Apart from the preparation of this report, Wave Six does not have any business relationship with De.Mem,
Ventnor Capital, or any other company that could reasonably be regarded as being prejudicial to its ability
to give an unbiased and independent assessment.
Wave Six is remunerated for this report on a pre-agreed fixed fee basis, independently of the content of
the report and any outcome arising from its use.
Statement of Competence
This report was prepared by Neil Prentice of Wave Six Pty Ltd and a brief biography is set out below.
Neil Prentice has over 25 years’ commercial experience working with R&D and technology based
organisations. He holds degrees in multiple scientific disciplines as well as in Strategic Marketing and has
worked in operational and consulting roles with a broad range of organisations. He has worked as an
industrial chemist including dealing with membrane and membrane cleaning products as well as worked
with various organisations on the research and commercialisation of various water purification
technologies. In addition, Neil has worked extensively win the field of commercialisation of new
technologies in commercial and university environments as well as working with Due Diligence teams for
the acquisition of multiple companies.
Disclaimer
Wave Pty Ltd has prepared this report for the sole use of the Client and for the intended purposes as stated
in the agreement between the Client and Wave Six Pty Ltd under which this work was completed. The
report may not be relied upon by any other party without the express written agreement of Wave Six Pty
Ltd
This document has been prepared in good faith on the basis of information available at the date of
publication without any independent verification. Wave Six Pty Ltd does not guarantee or warrant the
accuracy, reliability, completeness or currency of the information in this and will not be liable for any loss,
damage, cost or expense incurred or arising by reason of any person using or relying on information in this
report.
No representation, warranty or undertaking, express or implied, is made as to the accuracy, currency,
reliability or completeness of any information contained in this Report or any further information supplied
by or on behalf of Wave Six Pty Ltd or its officers, employees, shareholders, advisers or consultants or any
other party involved in the preparation of or referred to in this Report
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Objective & Scope
The objective of this work os to express an independent opinion on a techncial and market of the
De.Mem technology and business opportunity as it currently stands. This opinion is specifically
requested to address the technology in respect of:
A. The characteristic of the De.Mem nanofiltration technology in the context of it capabilities
and performance against the current market competitors and whether it fits a unique
positioning in the market;
B. Research to date and future development requirements;
C. The context of the capabilities of Nanyang Technological University as a provider of the
technology; and
D. The market potential and identified applications for the De.Mem NF technology.
Methodology
This report is based on discussions and written communications with De.Mem staff as well as
documentation supplied by De.Mem in respect of their technology and business. Additional 3rd party
materials were also reviewed in respect of the technology and market information where required.
Documents provided by De.Mem include:





71
Laboratory test results and documentation;
Presentation on the technology;
Market research summaries;
Academic research papers; and
Engineering cost models.
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De.mem Technology overview
Over view of Nanofiltration technology
As a core part of the De.Mem business, the Company has licenced technology a nanofiltration (NF)
membrane from Nanyang Technological University’s Singapore Membrane Technology Centre. This
licensed technology has novel features not found in existing NF membrane separation technologies
including using a new material and manufacturing for the membrane construction.
NF membranes were originally developed in the 1980’s as part of the growing field of membrane
separation; the use of synthetic membranes to filter or purify liquids and reject unwanted materials
including dissolved solids, organic materials and microscopic biological materials. Membrane filtration
processes replaced older filtration technologies in many applications, particularly in water treatment
and chemical processing. The use of membrane separation has grown to create a significant global
market and these technologies are used in many industry sectors and constitute a multibillion dollar
a year global market.
There are several different types of membrane separation technologies, each suitable for the removal
(or retention) of different materials based on their physical size, molecular weight or chemical
properties. Typically, the effectiveness for separation of membranes is classified in order of decreasing
molecular size as microfiltration (MF), ultrafiltration (UF) nanofiltration (NF) and reverse osmosis (RO).
A comparison of the different materials retained or transmitted by the different types of membranes
can be seen below.
Source SMTC
While MF and UF are primarily physical barriers to passing particles through the membrane, NF and
RO are driven to a degree by pressure based diffusion processes across the membrane, with RO
exhibiting this diffusion effect to a greater degree than NF. However, all membrane separation
processes are about the separation of dissolved and suspended solids from a liquid stream, typically
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the liquid is water. Thus, the separation process in NF is a combination of selectively sieving and
diffusion of molecules across a membrane barrier.
Due to the types of molecules that are passed through NF membranes, it makes the technology ideal
for domestic and commercial water treatment processes, particularly the treatment of industrial
wastewater. However, the technology faces direct competition in this role from the combination of
UF and RO processes which are considered a standard set up in these situations. The use of UF
combined with RO in series is implemented to prevent excessive fouling (blockage) of RO membranes
due to the small particle size range rejected by RO.
NF falls between UF and RO in terms of the size of material that is rejected, making the technology
suitable for many applications where UF alone is unsuitable. However, NF is not applicable in
applications such as desalination, as it is unable to reject monovalent sodium and chloride ions.
Typically, NF and RO filtration operates at higher pressures than MF or UF due to the need to force
diffusion of water across the membrane. However, this increased pressure limits the configurations
of the membrane and its effective packing and surface area and this is discussed further below,
specifically in respect of the De.Mem technology.
The key characteristics of NF that make it advantageous includes:











Lower discharge volumes, lower retentate concentrations than RO for low value salts;
Lower operating pressures and energy consumption than comparably sized RO systems;
Reduction salt content and dissolved matter content (TDS) in brackish water;
Reduction in heavy metals;
Reduction in nitrates and sulphates;
Reduction in colour, tannins and turbidity;
Reduction of COD in permeate streams;
Softens hard water (reduces Ca2+ and Mg2+ ion concentrations);
Does not require chemical additives chemicals during operation;
pH of water after nano-filtration is normally non-aggressive;
Capable of disinfection of permeate streams.
The De.Mem NF technology
The De.Mem NF technology derives a competitive advantage over other NF membrane technologies
as well as potentially replacing combined UF and RO systems in several key application areas in the
treatment of wastewater. The key differences that De.Mem highlights for its competitive advantage
are:



73
The use of a novel polyethyleneimine (PEI) membrane;
The use of a hollow fibre (HF) configuration in place of spiral wound sheets which are used in
the majority of NF and RO filtration systems as well as a reversal of the normal flow process
(outside-in rather than inside-out); and
Lower energy consumption due to lower operating pressures than competing NF and
combined UF/RO systems.
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Each of these points of difference are further discussed below.
Membrane substrate
The use of PEI as the membrane for the material in an NF application is unusual in as much as most
other NF products on the market use different polymer materials such as polyamide (PA) or polyether
sulfone (PES) in fabricating the membrane. Previously, SMTC had developed a combines PEI / PES
membrane which was licensed to another commercial entity but the De.Mem technology has been
developed independently of this and is not an extension of this earlier technology. Furthermore, the
new pure PEI membrane licensed by De.Mem has superior performance characteristics to the earlier
PEI / PES membrane and is seen as a significant technological advancement by the Company.
One of the greatest differences in the use of PEI in the construction of the membrane is that the
membrane surface is positively charged under normal operating conditions. Conventional PES and PA
NF membranes hold a negative surface charge. A membrane with a positively charged surface assists
in the separation of some dissolved ionic species as part of the filtration process, particularly divalent
metal ions. Published research on positively charged NF membranes has also indicated that there is
also a beneficial effect on reducing scale formation during operation which has a significant impact on
operation and maintenance involving the membrane.
Membrane configuration
Membranes used in filtration processes are typically supplied as a cartridge unit which contains the
membrane. The configuration of the membrane within the cartridge unit can have a significant effect
on the efficiency of the filtration during operations, but there are operational requirements which
make some membrane configurations inappropriate.
Most commercially available NF membranes are configured in a spiral wound configuration, that is, a
flat membrane sheet wound into a spiral shape within a cylinder, using spacers to keep the sheet
separated and allowing flow of liquid across the membrane. De.Mem’s technology is based a hollow
fibre configuration where clusters of hollows fibres are held within closed cylinders and this
configuration is not normally used in commercially available NF products. Only one other NF
membrane supplier has been found that uses hollow fibre systems, the rest supply filtration system
in a spiral wound configuration.
Hollow fibre NF systems have one great advantage over spiral wound systems and that is that they
have a significantly greater surface are per filtration module. Hollow fibre membranes have a
significantly higher packing density than spiral wound units and therefore have a higher surface area
per unit volume. For example, a 20cm x 1m module with a spiral-wound configuration would contain
about 20 - 40 m2 of membrane area. The equivalent hollow-fibre module filled with fibres of 100 m
diameter, will contain approximately 600 m2 of membrane area. The higher the surface area, the
greater the flux volume that can cross the membrane and therefore has a greater overall efficiency
for the filtration process.
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Spiral wound membranes are the norm in NF systems and they are more robust in terms of pressure
as well as being typically less susceptible to physical damage than hollow fibre systems but spiral
wound membranes are less resilient against fouling from small particles and cannot be cleaned as
easily. This provides and operational advantage to the De.Mem system in the effluents that can be
treated with other pre-treatment as well as facilitation cleaning and de-fouling operations.
Although hollow fibres are more resilient to small particulates than spirals, hollow fibres may also
require pre-filtration where larger particulates or fibres are present in the feed material to prevent
blockage. This is the same for many filtration processes where some pre-treatment is required and
this is the typical function of the combination of the use of UF prior to RO treatment.
Hollow fibre filters have a higher packing density due to the fibres being flexible strands in parallel
bundles but this creates an issue in that hollow fibres cannot deal with high pressure environments.
That is, membranes with a hollow fibre configuration is not normally used in NF and RO applications
as the operating pressures used in these processes collapses the fibre preventing fluid flow. Thus, in
the normal high pressure NF applications, a spiral wound membrane is the only possible configuration
but it is less efficient than hollow fibre configurations. The low pressure at which the De.Mem
technology operates allows the use of the hollow fibre configuration which then allows lower energy
consumption. However, the system could theoretically be operated at higher pressures if required but
this is not likely to be applicable in most of its use cases.
Only one other commercially available NF membrane using hollow fibre configuration has been
identified as currently being available on the market at this time. Based on PES, the product is a
modified UF membrane with a lower molecular weight cut off. However, this membrane operates at
higher pressures than the De.Mem technology and therefore is more energy intensive. Several
research projects have been published in the academic literature using hollow fibre NF but none of
these projects has yet appeared to have been commercialized to any major extent.
Reduced energy consumption
The capacity for De.Mem’s NF technology to operate at a lower pressure than comparable NF
technologies means that the energy consumed in the process will be lower than that typically
consumed by competing NF and RO systems. The primary energy consumption for filtration processes
comes from the pumping required to transfer the mass and generate the operating pressures required
by the process to effect filtration. Essentially, the higher the pressure, the greater the energy
consumption required as an input to the process.
Most, if not all high pressure filtration systems such as NF and RO incorporate some form of energy
recovery system which reduces the system’s overall energy consumption. Energy recoveries in these
instances may be in the order of 40-50% of the total energy requirements. However, due to the
operating pressures involved, this energy consumptions is still likely to be higher than for the De.Mem
NF system, providing the De.Mem system an energy cost advantage during operations .The
comparison of operating pressures and typical energy consumption for these systems can be seen in
the following section.
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Comparison of De.Mem with other filtration technologies.
The table below outlines a comparison of the De.Mem technology against other membrane filtration
solutions.
Units
Membrane Material
Configuration
Flow direction
Operating pressure
Energy Consumption
Particle size rejection
MWCO
kPa
kWh/m3
nm
Da
UF
PS, PP, CA, PLA
SW, HF
Inside Out
200-700
0.3-1
10-100
>10,000
NF
PA, PES
SW
Inside out
600-1,000
1-3
1-10
200-1,000
DeMem NF
PEI
HF
Outside In
200
0.12
1-10
>200
RO
PA
SW
Inside Out
2,700-8,200
2.5-5*
<1
MWCO-Molecular weight cut off; SW- Spiral Wound; HF- Hollow fibre; PES- -Polyether sulfone; PP-Polypropylene; CA- Cellulose Acetate; PLA - Polylactic Acid;
PA- Polyamide; PEI- polyethyleneimine.
* - Energy consumption varies based on the osmotic pressure required by the process, water temperature and is net of energy recovery.
Based on the test results form laboratory scale trials, the De.Mem technology could provide significant
operating cost benefits compared to both conventional NF and combined UF / RO systems.
Furthermore, for applications where a combined UF/RO process is currently being used, there is the
potential for capital cost savings as well in implementation of the De.Mem technology.
Testing & Development of the De.Mem NF membrane
As part of the development, laboratory tests on the effectiveness of the NF membrane have been
undertaken using a range of membrane formulations and samples. Testing the effectiveness of the NF
membrane has been conducted using standardised laboratory solutions as well as actual water
samples from natural and wastewater sources. Tests have shown effective reduction in permeate
concentrations for a range of chemical species that are treated using the De.Mem NF process
including:




Divalent metal ions;
Sulphates;
Organic carbon (chemical oxygen demand);
Colour as measured using the APHA-Hazen Scale.
The testing has also indicated that while there is some reduction in the pass through of monovalent
sodium ions but this is minor compared to the level of removal of monovalent ions seen in RO
processes and is comparable with that seen in other NF technologies.
All testing to date has been undertaken at a laboratory scale and a test scale pilot plant has not yet
been built. Full pilot plant testing for extended periods has not yet been undertaken but is planned
for 2017 once the membrane manufacturing plant is operational and ‘plug and play’ type filter
cartridges can be produced. Pilot scale testing and use case examples for deployment will identify
the operational requirements and issues with regard to the up-scaling of the technology for larger
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commercial applications that have not been addressed at a laboratory scale. The De.Mem team has
a significant engineering and system integration background and experience and as such has the
skills and capabilities to undertake this work.
Sensors & management software
The Company has taken out licenses on two technologies for monitoring membrane integrity and
performance from SMTC which are separate from the NF membrane technology. The two
technologies are:


An Integrity Sensor which measures the membrane and pressure differential across the
membrane and compares this to a separate ‘ideal’ sample cell to assess its ongoing
performance in real time; and
An Acoustic Sensor which measures the fouling on membranes to determine if and when
cleaning operations are required.
The Integrity Sensor technology can be applied in any type of membrane filtration operations and is
currently in operation along with monitoring and reporting software which has been developed by
De.Mem for this specific application. The monitoring software and provides a real-time summary
dashboard for operators to monitor plant performance during operations. A view of the operational
dashboard can be seen in the picture below.
The monitoring software has been developed with the capability to manage the operations of
decentralised water facilities from a centralised location. While water production and utilities have
evolved to a highly-centralised model for urban locations in the past, as new markets evolve and
expand in Asia and Africa, there is a greater need for decentralised water production and treatment
and De.Mem is targeting this emerging market.
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The Acoustic Sensor technology has not yet been commercialised by De.Mem at this time but is merely
under assessment for its effectiveness in monitoring membrane fouling. As this technology is still
under assessment by De.Mem there is a possibility that it will not be commercialised by the Company
in the future.
NTU experience in water technology
The De.Mem technology has been licensed from NTU, Singapore, a noted leader in the development
of water technologies. In 2013, independent researcher Lux Research listed NTU as the #2 water
treatment research institution in the world after the National University of Singapore. Overall, NTU is
ranked at 54th in the world by the Times Higher Education Rankings and the centre which has
developed the technology, the Singapore Membrane Technology Centre (SMTC) has operated as a
part of NTU’s NEWRI institute since 2008.
De.Mem has engaged SMTC senior staff, Professors Wang Rong and Anthony Fane, as part of the team
for commercialisation of the NF membrane technology. Both Professors Fane and Wang have held
senior leadership positions in SMTC and both have been globally recognised as leading researchers in
water technologies. In November 2016, Professors Wang and Fane were awarded the Alternative
Water prize as part of the Prince Sultan Bin Abdulaziz International Prize for Water (PSIPW) for their
membrane research, at a ceremony in New York. While this was in relation to the creation of positively
charged NF membranes this award was not in relation to the De.Mem technology.
Both Professors’ Fane and Wang are listed as authors in multiple patents or patent applications
involved with membrane separation and water treatment technologies. Between them
Since its inception in 2008, SMTC’s publications list in the field of membrane separation technologies,
includes over 300 per reviewed journal articles and nearly 200 conference presentations. Review of a
sample of the journals where these articles have been published, they are almost exclusively Q1 (top
tier) journals with high impact factors. This is indicative of the quality of the research being undertake
at SMTC. Most these papers include either or both Professors Wang and Fane as contribution authors.
PROSPECT U S
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Market opportunity
Market value chain & segments
De.Mem plans to be both a manufacturer of filtration equipment as well as to design, build and
operate systems for water treatment. As such, De.Mem will operate across the full extent of the value
chain for waste water and water treatment.
The basic value chain can be seen below.
1. Product & Equipment manufacture - This covers the manufacture and distribution of
equipment for the construction of the plant. De.Mem will only be supplying its NF technology
and therefore will be acquiring or utilising other physical plant if it undertaken projects
involved in the design and building of water treatment systems.
2. Engineering Design & Integration– The engineering design, integration & construction of
turn-key systems
3. Operation& Maintenance – The ongoing operations and management of water treatment
facilities on a fee for service basis. These operations may be integrated with the infrastructure
and distribution business
4. Infrastructure & Distribution- Operation and management of the distribution infrastructure
and maintaining service levels and quality of end point consumers.
De.Mem is currently operating in across a number stages of the value chain and they plan to enter
into the Product & Equipment Manufacturing segment. The current De.Mem team has demonstrated
experience in these areas within De.Mem’s operations and in their roles prior to joining De.Mem.
De.Mem’s business model includes the design, building and operation of decentralised water
treatment processes/ facilities specifically industrial waste water, which is a different market than the
larger, centralised systems that are targeted by the existing major players in the market. This niche
market is one which is expected to grow in the future, particularly in the Asia / Pacific region. The
market context of this is further discussed in the following section.
The entry into the Product and Equipment manufacturing space is also a new market opportunity for
De.Mem as they can sell the NF modules as a separate product to 3rd party providers as well as applying
the NF products in their own projects. This will also provide an additional, non-project based revenue
stream for the Company.
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Market size and opportunity.
The majority of De.Mem’s business is targeting the market for the treatment of wastewater and
production of water. Globally this is a significant market worth hundreds of billions per annum which
is also anticipated to see continuing growth in the future. The key global area of interest is in the Asian
market with China and developing countries seen as the greatest potential opportunity in the future
as water limits becomes an increasingly important factor for many countries. It is almost universally
agreed that China’ has significant water problems, which will only increase in the future, making the
Chinese market a significant opportunity. However, other market opportunities in the East and South
Asian areas will also grow in the short to medium term.
The market for water and wastewater treatment can be segmented into multiple sub-segments, some
of which are the most critical to the De.Mem Business. Segmentation of the water treatment market
can be broken down into two main areas- water utilities and services and water and wastewater
solutions, which is of the most interest to De.Mem. Water and wastewater solution can further be
broken down into multiple areas as follows:

Water and wastewater solutions
o Build & maintenance
 Chemicals, treatment & process equipment (including membranes)
 Chemicals
o Maintenance and monitoring services
o Design and consulting
o Building and infrastructure
Most of the areas, except the supply of chemicals are addressed by De.Mem in their market strategy.
While an important part of the De.Mem business will be the manufacture and supply of its novel NF
membrane technology, it will have the opportunity to capture value across multiple segments of the
water and wastewater market based on its strategy. This arises from their role and designer,
consultants and systems integrators as well as their capabilities in the operation of such plants on
behalf of end users.
The global water treatment equipment market, which includes the supply of filtration membranes, is
estimated by Frost and Sullivan to be in excess of USD 19 billion per annum, of which the market for
membranes alone is over USD 2.8 billion per annum. Separately from this operational, maintenance
and monitoring services market exceeds USD 64.8 billion. Further estimates by Frost and Sullivan note
that by 2020 the design, build and operation market for water treatment in Asia will reach USD 65
billion through market growth of 8.6% per annum.
Industry research BCC research has forecast that the market value for NF membranes is projected to
grow to above US$440 million per annum by 2019 and of this segment, approximately 75% of the
expenditure on NF membranes will be on water and wastewater treatment. A review of other research
on the market value for NF has indicated that the market may be larger. Industry analysts Frost and
Sullivan estimated that in 2010, the worldwide value of NF system was $400 million and that it was
estimated to grow further at a rate of 5-8% per annum. It is unclear whether the amount cited by Frost
PROSPECT U S
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and Sullivan refers only to membranes or complete NF systems including infrastructure as well as
membranes. Regardless of this, both researchers indicate that there is significant global potential for
the future growth of NF membranes and equipment in the future.
Currently, the market value for UF and RO systems is significantly larger than that for NF membranes.
Capturing of part of the value of the UF and RO market share is part of the strategy for De.Mem.
Together both UF and RO markets are valued in the billions per annum with high levels of growth
predicted. De.Mem’s intent is to capture part of the value of this market growth in new systems as
well as the potential replacement of existing systems as they reach the end of their life expectancy.
The value of the segments other than for membranes in which De.Mem intends to operate is in the
regions of multiple billions per year, with the Asian market seen as one where the greatest growth in
opportunities will occur. Due to the nature of this market it is not possible to accurately quantify its
specific future value based on the available information.
Applications for the De.Mem technology
The applications for NF technology are primarily directed towards the treatment and recovery of
wastewater / effluent for reuse but can also potentially be used to concentrate process flows to
remove excess water or re-concentrate process liquors for recovery or re-use as part of a process. This
is due to NF’s key properties which includes its capabilities for:






Separation of divalent ions from monovalent ions in process streams (water softening);
Separation of natural and synthetic organic materials from aqueous streams;
Dewatering or concentration of process streams;
Separation of proteins, sugars or macromolecules from supernatant;
Purifying acids or bases for reuse; and
Potable water production.
Potential applications for the De.Mem technology includes any application where NF may be used and
in some instances it may displace some RO applications. Industry segments where the De.Mem
technology may be applicable includes but is not limited to:








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Food & beverage manufacture;
Oil & gas processing to clean produced water effluent;
Electronics manufacture;
Mining water treatment;
Industrial effluent including high organic effluents such as palm oil waste water;
Medical / pharmaceutical production for purification of process flows;
Textile /dying applications to remove dye chemicals from waste flows;
Municipal and domestics water production for surface and brackish water.
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This list should not be considered exhaustive as there are other potential applications as well where
the technology may be applicable. Specific applications however, would need to be tested separately
to ensure that the De.Mem membranes are suitable for the end use application. This is a part of the
normal testing process to determine operational parameters as part of the overall system design
process.
PROSPECT U S
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Conclusions and Opinion
Based on the scope of this report, the following conclusions can be drawn in respect of De.Mem’s
technology and the business opportunity.
A. The De.Mem NF technology has a unique position in the market place at this time and has
the potential to save end-users in capital and operating costs. The De.Mem technology’s
uniqueness is due to its properties and capabilities that do not appear to be replicated by
any other commercially available NF membrane systems. Other NF membrane systems may
exhibit one or two of the characteristics that are exhibited by the De.Mem membrane
technology but none exhibit all of the same properties. It is the combination of all of these
which De.Mem will use to position the technology in the market.
The most significant market place advantage if the capability of the membrane to operate at
lower pressures than competing systems providing a potential operating cost advantage in
respect of the energy requirements. This operational cost advantage comes for the
operational savings on energy use from the De.Mem NF system, where cost savings may be
up to 80% compared to combines UF/RO systems. Furthermore, the ability to reduce capital
cost in displacing combined UF / RO in some applications has the potential for commercial
advantage where capital may be constrained but effective performance is also an issue.
The additional technology licensed from NTU in the form of sensor monitoring systems, along
with monitoring software developed in house will provide internal capabilities for the
operation and management of water and wastewater treatment facilities. Furthermore, like
the NF technology, it may be separately commercialised as a product for use in 3 rd party
operated treatment facilities. However, one of these sensors is not yet at a commercial stage
and is still under assessment by the Company.
B. The technology that De.Mem has licensed from SMTC has been developed at a beech scale
and has been extensively laboratory tested with multiple environmental samples as well as
standardised test solutions to confirm membrane performance. Further development and
testing will be required as part of the commercialisation process which will include the
development of testing pilot plant capacity as well as the deployment of demonstration
projects which will provide data that is invaluable for future product development and
improvements.
The Company’s knowledgebase incorporates the skills, knowledge and capabilities for the
design, construction and operation of water and wastewater treatment facilities. This is due
to their prior experience before joining De.Mem as well as the demonstration of these
capabilities in a number of projects.
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C. NTU’s SMTC is a leading researcher in water and wastewater treatment processes and
technologies and it has been recognised globally for its work in these areas. The researchers
involved in the development of the NF membrane technology have creditable reputations in
the development of membrane technologies and each as multiple patent applications
credited to them as well as an extensive history of academic research publications in the
relevant areas. As such, the technology has a credible pedigree from a reputable source.
D. The market for NF technology has been forecast to grow significantly in the future with a focus
on the developing Asian market. The potential market for NF membranes is forecast to grow
to $440M per annum by 2019. The NF technology will be commercialised directly by the
Company as well as being sold as a standardised product for 3rd party system integrators.
The global market for water and wastewater treatment are growth areas, particularly in the
Asia Pacific region, with China as the greatest driver of this growth. With a focus on the sale
of products and the development, deployment and operation of turnkey projects for
operators, particularly in the industrial segment.
Along with the potential market for sales of NF membranes to system integrators, De.Mem
has the potential to address the broader segments of the water and waste water treatment
markets. This capability has already been demonstrated with the deployment of several
turnkey water treatment projects.
PROSPECT U S
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RISK FACTORS
12.1 INTRODUCTION
The Securiies ofered under this Prospectus are considered highly
speculaive. An investment in the Company is not risk ’ree and the
Directors strongly recommend potenial investors to consider the
risk ’actors described below, together with in’ormaion contained
elsewhere in this Prospectus, be’ore deciding whether to apply ’or
Shares and to consult their pro’essional advisers be’ore deciding
whether to apply ’or Shares pursuant to this Prospectus.
There are speciic risks which relate directly to the Company s
business. In addiion, there are other general risks, many o’ which
are largely beyond the control o’ the Company and the Directors.
The risks ideniied in this Secion, or other risk ’actors, may have a
material impact on the inancial per’ormance o’ the Company and
the market price o’ the Shares.
The ’ollowing is not intended to be an exhausive list o’ the risk
’actors to which the Company is exposed.
12.2 ACQUISITION RISK
In order ’or the Company to be able to achieve its objecives and
complete the Acquisiion, the Company is reliant on DMS and the
Major Shareholders complying with their respecive contractual
obligaions under the Implementaion Agreement. Should one o’
these paries ’ail to comply with the terms o’ the Implementaion
Agreement, the Acquisiion may not complete, meaning the
Company will not acquire a
% interest in DMS.
Further, as summarised in Secion . , the Implementaion
Agreement can be terminated by DMS in the event that DMS
receives a bona ide writen proposal or ofer to enter into a
transacion similar to the Acquisiion which the DMS board
determines in good ’aith is more ’avourable as a whole to
the Vendors.
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Addiionally, i’ a party de’aults in the per’ormance
o’ its contractual obligaions it may be necessary
’or the Company to approach a court to seek a
legal remedy. Legal acion can be costly and there
can be no guarantee that a legal remedy will be
ulimately granted on the appropriate terms. There
can be no guarantee that the Acquisiion will be
completed.
12.3 COMPANY SPECIFIC – UPON
COMPLETION
a Limited history
The Company is essenially a start-up company
with limited trading history. No assurance can be
given that the Company will achieve commercial
viability or proitability through its water treatment
products and its exising or to be developed
technology, through the success’ul implementaion
o’ its business plan or otherwise. Unil the
Company is able to realise value ’rom its projects,
it is likely to incur ongoing operaing losses.
b Product Quality Risks
Ater Compleion, the products and technology
supplied by the Company may not be ’uncional,
’aulty, or not meet customers expectaions. This
may lead to requirements ’or the Company to
repair or improve its products ater sale and/or
installaion, which may diminish operaing margins
or lead to losses.
For those systems which the Company retains
in ownership and operates on behal’ o’ the
customer under long term BOO agreements, or
which the Company maintains under long term
maintenance agreements, the Company may be
made responsible as well i’ such systems are not
’uncional or ’aulty. The Company may ’ace ines
’rom regulators or claims ’rom customers i’ the
product water does not meet regulatory discharge
standards, or the contractually agreed upon
per’ormance.
c Manufacturing Risks
Given the comparably short manu’acturing
experience, the Company s products may be
subject to product quality risks as described
above. Given the currently relaively small scale
o’ the Company s operaions, there might be a
dependency on single persons which could lead to
manu’acturing botlenecks or delays, in case such
people are leaving the company.
PROSPECT U S
d Supplier Risk
The Company sources certain key components ’or
its systems ’rom third party suppliers. The delivery
o’ such components may be delayed, or a speciic
supplier may not be able to deliver at all, which
may lead to a longer sales cycle or may ’orce the
Company to shit to another supplier.
e Key Personnel Risk
Given the sill relaively small scale o’ its
operaions, the Company depends on certain key
personnel. This applies to both the commercial as
well as the engineering / technology side. I’ such
key people are leaving the Company, this may lead
to disrupions o’ customer relaionships or delays
in the manu’acturing and product development
eforts.
’ Recruitment Risk
The Company has aggressive growth plans. This
will require the Company to recruit experienced
people. The Company s ability to execute the
growth plan may depend on its ability to hire
qualiied staf. There is no assurance that the
Company will be able to ind such qualiied staf
as required, or will be able to recruit such qualiied
staf at market-standard rates.
g Development Risks
The Company s new licensed proprietary
nanoiltraion membrane technology is sill at an
early stage o’ development and validaion. The
technology sill requires substanial work, to be
able to be used at a commercial scale.
As detailed in Secion 7. , once the pilot line o’
the nanoiltraion membrane is operaional, the
Company intends to undertake in-ield validaion
to test the applicaion o’ the technology. The
hollow iber nanoiltraion membrane has been
’ully developed and the Company does not expect
the design composiion to change materially during
the validaion tesing phase. However, the in-ield
validaion aims to provide ’urther operaing data
that is required ’or the opimisaion o’ operaions
and deployment o’ the membranes at a larger,
commercial scale, and operaional changes
relaing to the implementaion o’ the hollow
iber nanoiltraion membrane to water treatment
systems may be necessary.
While the Company is not presently aware o’ any
potenial problems that may result ’rom the in-ield
validaion tesing process and is unlikely to, unil
such ime as the in-ield valuaion tesing has been
completed, this process is subject to uncertainies
and there may be delays, or the project may be
unsuccess’ul as a whole.
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h New Product Technology Risk
The Company may be reliant upon certain
technologies and upon the success’ul
commercialisaion o’ these technologies. There is
a risk that as marketable technologies coninue
to develop in the waste water treatment industry
there may be certain product developments that
supersede, and render obsolete, the products and
services o’ the Company. This would adversely
afect the proitability o’ the Company and the
likely value o’ its Shares.
i
Intellectual Property Risks
The success o’ the Company s new licensed
proprietary nanoiltraion membrane technology
depends largely on the ability o’ the Company
to protect the underlying know how, while not
in’ringing the proprietary rights o’ others. The
invenion is protected based on a strategy o’
securing the underlying trade secrets – which
is the manu’acturing method and materials
composiion o’ the technology. There is no
assurance that others will not be able to copy the
technology. Re’er to the summary o’ the Exclusive
License Agreement in Secion . .
As summarised in Secion . , De.mem has also
entered into the Non-Exclusive License Agreement
under which it licenses technology ’rom NTUiive
which is protected by patents and a patent
applicaion. These patents and applicaion relate
to technology currently used by De.mem in the
water treatment plants which have already been
deployed and do not relate to the new hollow
iber nanoiltraion technology. Consequently, the
Company does not consider the non-exclusive
nature o’ the agreement to be a risk.
j Relaionship with NTU
The Company has a long standing relaionship
with NTU which has resulted in the licencing
o’ technology ’rom NTUiive. The ability o’ the
Company to commercialise the Company s licensed
proprietary technologies licensed ’rom NTUiive,
is reliant on the coninued support o’ NTU and its
scienists. There is a risk that without this support,
there may be delays in the commercializaion o’
these technologies or the commercial applicaion
o’ the technologies may not be possible at all.
12.4 INDUSTRY SPECIFIC
a Market Risk
The markets ’or ultrailtraion and reverse
osmosis treatment technologies are large
and well established which can make the
commercialisaion o’ new waste water treatment
technologies diicult and ulimately unsuccess’ul,
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including De.mem s low pressure nanoiltraion
membrane technology or other ’uture technology
developments.
b Sales Risks
As summarised in Secion . , the Company has
entered into the Givaudan Build, Own, Operate
Agreement, pursuant to which De.mem has agreed
to provide, install, commission and operate a waste
water treatment system and to provide waste
water treatment services to Givaudan.
De.mem has also entered into a number o’ other
agreements and purchase orders to provide waste
water treatment services to customers which,
given the monetary amounts o’ the agreements,
are not deemed to be material to the business.
Further, De.mem is currently in discussions
with both potenial new and exising customers
to secure addiional purchase orders. As such,
De.mem does not consider that the success o’ its
business is dependent upon its relaionship with
Givaudan.
While the Company already has secured a number
o’ iniial contracts and customer relaionships as
noted above, its ability to sell its products at a
larger scale sill needs to be proven. The ongoing
demand ’or the Company s products sill needs
to be established. It needs to grow ’urther by
atracing addiional customers, to be able to build
a sustainable business.
c Lead ime to sales
It may take considerable ime ’or the Company s
customers to evaluate, test and make a inal
decision about the purchase. The Company
mainly deals with large corporaions or municipal
organizaions, which are subject to certain ’ormal
administraive procedures and requirements
which increase the ime required ’or approval o’ a
transacion.
d Compeiion
The waste water treatment industry in which
the Company operates is subject to strong
compeiion. Compeitors may come up with
new, beter or cheaper products and soluions.
The Company s compeitors include both small
and medium enterprises and large, established
corporaions or mulinaionals. Those may decide
to enter the Company s target markets, and be
able to ’und aggressive markeing strategies. They
may also have stronger inancial capabiliies than
the Company. This may afect the operaing and
inancial per’ormance o’ the business.
Further, the Company is compeing with exising
technologies within the industry that are well
established which can make the commercialisaion
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RISK FACTORS
o’ new waste water treatment technologies
diicult and ulimately unsuccess’ul, including
De.mem s low pressure nanoiltraion membrane or
other ’uture technology developments.
e Price Risks
The price o’ the Company s products may be too
high compared to other products, in paricular
in emerging markets where there is a high price
pressure. This may lead to diiculies in the
market acceptance ’or the Company s products, as
customers may switch to cheaper products, which
may require the Company to decrease prices. As a
result, there could be lower operaing margins.
’ Debt Collecion Risk
Customers may be slow in making payment
to the Company, or may not make payment to
the Company at all. This applies in paricular to
customers ’rom certain o’ the target geographies,
where tradiionally the payment morale is bad or
where there is an insuicient legal environment
to en’orce the Company s claims. In addiion, the
Company may use local agents in certain regions,
which may lead to a gap between when the agent
is paid and when the Company is paid.
g Customer Default
For the long term BOO projects, where De.mem
retains the ownership in the water treatment
system and is paid recurring ’ees by the customer,
there may be a risk i’ the customer goes into
liquidaion or bankruptcy. In that case, although
De.mem is the owner o’ the water treatment
system, it may be diicult ’or the Company
to ind an alternaive customer to re-sell the
water treatment system, whether under a BOO
arrangement or as a one-of sale. It may also be
diicult to re-use the components o’ the water
treatment system in other projects. Consequently,
in such a situaion, De.mem may incur losses.
12.5 GENERAL RISKS
a Economic
General economic condiions, introducion o’ tax
re’orm, new legislaion, movements in interest and
inlaion rates and currency exchange rates may
have an adverse efect on the Company s research
and development programmes, as well as on its
ability to ’und those programmes.
b Market condiions
Share market condiions may afect the value o’
the Company s quoted securiies regardless o’ the
Company s operaing per’ormance. Share market
condiions are afected by many ’actors such as:
PROSPECT U S
• general economic outlook;
• introducion o’ tax re’orm or other new
legislaion;
• interest rates and inlaion rates;
• changes in investor seniment toward paricular
market sectors;
• the demand ’or, and supply o’, capital; and
• terrorism or other hosiliies.
The market price o’ securiies can ’all as
well as rise and may be subject to varied and
unpredictable inluences on the market ’or equiies
in general and technology stocks in paricular.
Neither the Company nor the Directors warrant
the ’uture per’ormance o’ the Company or any
return on an investment in the Company.
c Addiional requirements for capital
The Company s capital requirements depend on
numerous ’actors. Depending on the Company s
ability to generate income ’rom its operaions,
the Company may require ’urther inancing in
addiion to amounts raised under the capital
raising. Any addiional equity inancing will dilute
shareholdings, and debt inancing, i’ available, may
involve restricions on inancing and operaing
aciviies. I’ the Company is unable to obtain
addiional inancing as needed, it may be required
to reduce the scope o’ its operaions and scale
back its development and research programmes as
the case may be. There is however no guarantee
that the Company will be able to secure any
addiional ’unding or be able to secure ’unding on
terms ’avourable to the Company.
d Investment speculaive
The above list o’ risk ’actors ought not to be taken
as exhausive o’ the risks ’aced by the Company
or by investors in the Company. The above ’actors,
and others not speciically re’erred to above,
may in the ’uture materially afect the inancial
per’ormance o’ the Company and the value o’ the
Shares ofered under this Prospectus.
There’ore, the Shares to be issued pursuant to
this Prospectus carry no guarantee with respect to
the payment o’ dividends, returns o’ capital or the
market value o’ those Shares.
Potenial investors should consider that the
investment in the Company is highly speculaive
and should consult their pro’essional advisers
be’ore deciding whether to apply ’or Shares
pursuant to this Prospectus.
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BOARD, MANAGEMENT
AND INTERESTS
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13.1
BOARD, MANAGEMENT AND INTERESTS
DIRECTORS AND KEY PERSONNEL
Mr Andreas Kroell
Chief Execuive Oicer and Director
Mr Kroell has been the director and CFO o’
De.mem since the company was established, and
was appointed as the Chie’ Execuive Oicer in
6. Prior to that, Mr Kroell has been involved
in the venture capital and inance industries in
Germany and Singapore since
. Mr Kroell has
led investments and held board seats in numerous
companies within the water, environmental,
industrial and other technology related sectors and
has managed over
venture capital investments
throughout his career, including a number o’ exits
by trade sale and iniial public oferings. Mr Kroell
has worked with several porfolio companies in
management and inancial roles.
Mr Cosimo Trimigliozzi
Non-Execuive Chairman
Mr Trimigliozzi looks back at a success’ul,
almost -year long career in the ’eed and ’ood
ingredients / lavors & ’ragrances industry, one
o’ the key target sectors ’or De.mem. In his last
assignment, he was the COO o’ Wild Flavors
Internaional, Germany, responsible in paricular
’or the Asian and South American business
expansion. Mr Trimigliozzi was a member o’ the
key management team involved in the sale o’
Wild Flavors on behal’ o’ owner Mr. Wild and
private equity investor KKR to ADM Group ’or
approximately . billion USD. Prior to that, Mr.
Trimigliozzi had been in other senior management
roles, amongst others as Managing Director –
Asia ’or Givaudan, a mulinaional corporaion
headquartered in Switzerland.
Mr Bernd Dautel
Non-Execuive Director
Mr Stuart Carmichael
Non-Execuive Director
Mr Carmichael is a Chartered Accountant with
over
years o’ experience in the provision o’
corporate advisory services both within Australia
and internaionally. Mr Carmichael is a principal
and director o’ Ventnor Capital Pty Ltd and
Ventnor Securiies Pty Ltd which specialises in the
provision o’ corporate and inancial advice to small
cap ASX listed companies including capital raisings,
iniial public oferings, corporate restructures and
mergers and acquisiions. Mr Carmichael graduated
’rom the University o’ Western Australia with a
Bachelor o’ Commerce degree in 99 , gaining
experience with KPMG Corporate Finance in Perth
and London be’ore joining ASX listed property
services and engineering company UGL Limited
ASX:UGL .
Mr Michael Edwards
Non-Execuive Director
Mr Edwards is a Geologist and Economist with
over
years o’ experience in Senior Management
in both the private and public sector. He has a
Bachelor o’ Business Economics and Finance
’rom Curin University o’ Technology and a
Bachelor o’ Science Geology ’rom the University
o’ Western Australia. Mr Edwards spent three
years with Barclays Australia in their corporate
inance department and then eight years as an
exploraion and mine geologist with companies
such as Gold Mines o’ Australia, Eagle Mining and
Internaional Mineral Resources.
Mr Edwards also acts as a Non-Execuive Director
o’ ASX listed Norwood Systems Ltd ASX:NOR
and as Non-Execuive Chairman o’ Internaional
Goldields ASX:IGS .
Mr Dautel has been a Venture Capital expert with
New Asia Investments Pte Ltd in Singapore since
. In this ’uncion, he managed numerous
investments into companies ’rom the chemicals
and electronics sectors. Prior to this, Mr Dautel
was the Managing Director Asia/Paciic ’or
Wieland Metals, a large German manu’acturer
o’ semi-inished copper goods. He built the
company s business in the Asia/Paciic region ’rom
the early stage to approximately
million USD
in annual revenues over
years, with operaions
in Singapore, China, India and many other
countries in the Asia/Paciic region.
PROSPECT U S
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BOARD, MANAGEMENT AND INTERESTS
13.2 MANAGEMENT
Mr. Kian Lip Teo, Chief Operaions Oicer
The Company is aware o’ the need to have
suicient management to properly supervise its
development and research programmes and the
Board will coninually monitor the management
roles in the Company. As our projects require
an increased level o’ involvement the Board will
look to appoint addiional management and/or
consultants when and where appropriate to ensure
proper management o’ the Company s projects.
Mr. Teo is an experienced pro’essional who
looks back on a long career with companies in
the engineering sector. In his last role, Mr. Teo
managed the aciviies o’ a non-governmental
organisaion based in Singapore which ’unded and
built numerous water treatment plants in South
East Asia. He managed several projects ’or this
group, while overseeing the design, construcion
and operaions o’ the plants with the organizaion s
team o’ engineers.
Mr Nicanor Suarin, Chief Engineer
Mr. Suarin has extensive experience in the design,
construcion and operaions o’ diferent types o’
membrane-based water treatment systems. He
has been working in diferent leading engineering
and project management roles related to the water
sector ’or more than three decades. He joined
De.mem ’rom Hylux, a supplier ’or centralized
water treatment systems. Prior to that, he worked
with Doosan Hydro., a Florida-based company
providing de-centralized water treatment systems,
and other companies ’rom the sector. Mr. Suarin
has completed projects and assignments on
diferent coninents and brings in a vast network
among the industry.
DIRECTOR
Andreas Kroell
Cosimo Trimigliozzi
Bernd Dautel
Stuart Carmichael
Michael Edwards
EXISTING
SHARES
SHARES RECEIVED
PURSUANT TO THE
CONSIDERATION
OFFER
,6 6,
8 ,6 6
Nil
Nil
Nil
13.3 DIRECTORS’ SECURITY HOLDINGS
Directors are not required to hold any Shares
under the Consituion.
Set out in the table below are details o’ the
anicipated relevant interests o’ the Directors in
the Shares o’ the Company upon compleion o’
the Ofers.
SHARES AT
COMPLETION
OF THE
OFFERS1
% INTEREST AT
COMPLETION OF
THE OFFERS2
% INTEREST AT
COMPLETION OF
THE OFFERS3
,6 6,
8 ,6 6
Nil
Nil
Nil
.8 %
. %
Nil
Nil
Nil
.7 %
. %
Nil
Nil
Nil
9
Nil
Nil
Nil
Nil
. These igures assume that no Opions are exercised. None o’ the Directors intend to paricipate in the Public Ofer.
. These igures assume minimum subscripion under the Public Ofer and that no Opions are exercised.
. These igures assume maximum subscripion under the Public Ofer and that no Opions are exercised.
Set out in the table below are details o’ the anicipated relevant interests o’ the Directors in Opions
upon compleion o’ the Ofers.
DIRECTOR
Andreas Kroell
Cosimo Trimigliozzi
Bernd Dautel
Stuart Carmichael
Michael Edwards
OPTIONS
,
,
,
,
,
&
,
. The terms and condiions o’ the Opions are set out in Secion 6. .
. Mr Carmichael s relevant interest in Opions comprises the ’ollowing holdings:
a
b
91
,9 ,
Opions to be issued to Ventnor or its nominee s at an issue price o’ $ .
per Opion pursuant to the Advisor Ofer as
consideraion ’or corporate advisory services, as detailed in Secion .7 o’ this Prospectus. Mr Carmichael is a director and shareholder o’
Ventnor; and
,
Opions held directly by Mr Carmichael on the terms and condiions set out in Secion 6. .
D EM EM
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BOARD, MANAGEMENT AND INTERESTS
13.4 DIRECTORS' REMUNERATION
The Consituion provides that each Director is
enitled to such remuneraion ’rom the Company
as the Directors decide, but the total amount
provided to all non-execuive Directors must
not exceed in aggregate the amount ixed by
the Company in a general meeing. The current
maximum amount o’ remuneraion that may be
paid to all non-execuive Directors has been set at
$
,
per annum.
The Company has paid no remuneraion to its
Board since incorporaion to the date o’ this
Prospectus and no remuneraion will be paid or
accrue unil such ime as the Company is admited
to the Oicial List.
For each o’ the Directors, the proposed annual
remuneraion ’or the two inancial years ’ollowing
the Company being admited to the Oicial List is
set out in the table below.
DIRECTOR
Mr Andreas
Kroell
Mr Cosimo
Trimigliozzi
Mr Bernd
Dautel
Mr Stuart
Carmichael
Mr Michael
Edwards
PROPOSED
REMUNERATION
(2017)
$ 6 ,
PROPOSED
REMUNERATION
(2018)
$ 6 ,
13.5 RELATED PARTY AND
OTHER INTERESTED PARTY
TRANSACTIONS
. . Relaionship between Director,
Mr Andreas Kroell and De.mem
One o’ the Directors, Mr Andreas Kroell, is a
director and a shareholder o’ De.mem. The
Company proposes to acquire the shares
in De.mem held by Mr Kroell as part o’ the
Acquisiion. Following Compleion, Mr Kroell will
hold ,6 6, 9 Shares comprising voing power
o’ .8% o’ the Company assuming minimum
subscripion is reached and no Opions are
exercised .
. .
Service Agreements
The Company has entered into services
agreements with Ventnor, a company related to Mr
Carmichael.
Re’er to Secions .7 and .8 o’ this Prospectus
’or a summary o’ the service agreements.
. . Deeds of indemnity, insurance
and access
Nil
Nil
The Company has entered into deeds o’ indemnity,
insurance and access with each Director.
Nil
Nil
Re’er to Secion . o’ this Prospectus ’or
a summary o’ the deeds o’ indemnity, insurance
and access.
$
,
$
,
$
,
$
,
The remuneraion is payable in Singapore dollars at $ 68,
SGD per annum, and is converted to Australian dollars at an
assumed exchange rate o’ . SGD: AUD. A summary o’ Mr
Kroell s employment agreement is set out in Secion . o’
this Prospectus..
The remuneraion o’ the execuive Directors
will be determined by the Board. A summary o’
Mr Kroell s employment agreement is set out in
Secion . o’ this Prospectus.
PROSPECT U S
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CORPORATE GOVERNANCE
14/18
CORPORATE GOVERNANCE
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CORPORATE GOVERNANCE
14.1 ASX CORPORATE GOVERNANCE
COUNCIL PRINCIPLES AND
RECOMMENDATIONS
d ideni’ying business risks and implemening
acions to manage those risks and corporate
systems to assure quality.
Our Company has adopted comprehensive systems
o’ control and accountability as the basis ’or the
administraion o’ corporate governance. The
Board is commited to administering the policies
and procedures with openness and integrity,
pursuing the true spirit o’ corporate governance
commensurate with the Company's needs.
The Company is commited to the circulaion o’
relevant materials to Directors in a imely manner
to ’acilitate Directors paricipaion in the Board
discussions on a ’ully-in’ormed basis.
To the extent applicable, our Company has
adopted The Corporate Governance Principles
and Recommendaions rd Ediion as published
by ASX Corporate Governance Council
(Recommendaions .
In light o’ the Company s size and nature, the
Board considers that the current Board is a
cost efecive and pracical method o’ direcing
and managing the Company. As the Company s
aciviies develop in size, nature and scope, the
size o’ the Board and the implementaion o’
addiional corporate governance policies and
structures will be reviewed.
Composiion of the Board
Elecion o’ Board members is substanially the
province o’ the Shareholders in general meeing.
Ideniicaion and management of risk
The Board s collecive experience will enable
accurate ideniicaion o’ the principal risks
that may afect the Company s business. Key
operaional risks and their management will be
recurring items ’or deliberaion at Board meeings.
Ethical standards
The Board is commited to the establishment and
maintenance o’ appropriate ethical standards.
Independent professional advice
The Company s main corporate governance
policies and pracices as at the date o’ this
Prospectus are outlined below and the
Company s ’ull Corporate Governance Plan is
available ’or review at the Company s website
www.demembranes.com.
Subject to the Chairman s approval not to be
unreasonably withheld , the Directors, at the
Company s expense, may obtain independent
pro’essional advice on issues arising in the course
o’ their duies.
Board of directors
The remuneraion o’ an execuive Director will
be decided by the Board, without the afected
execuive Director paricipaing in that decisionmaking process.
The Board is responsible ’or corporate governance
o’ the Company. The Board develops strategies
’or the Company, reviews strategic objecives and
monitors per’ormance against those objecives.
The goals o’ the corporate governance processes
are to:
a maintain and increase Shareholder value;
b ensure a prudenial and ethical basis ’or the
Company s conduct and aciviies; and
c ensure compliance with the Company s legal
and regulatory objecives.
Consistent with these goals, the Board assumes
the ’ollowing responsibiliies:
a developing iniiaives ’or proit and asset
growth;
b reviewing the corporate, commercial and
inancial per’ormance o’ the Company on a
regular basis;
c acing on behal’ o’, and being accountable to,
the Shareholders; and
PROSPECT U S
Remuneraion arrangements
The total maximum remuneraion o’ non-execuive
Directors is iniially set by the Consituion and
subsequent variaion is by ordinary resoluion o’
Shareholders in general meeing in accordance
with the Consituion, the Corporaions Act
and the ASX Lising Rules, as applicable. The
determinaion o’ non-execuive Directors
remuneraion within that maximum will be made
by the Board having regard to the inputs and value
to the Company o’ the respecive contribuions
by each non-execuive Director. The current
amount has been set at an amount not to exceed
$
,
per annum.
In addiion, a Director may be paid ’ees or other
amounts i.e. subject to any necessary Shareholder
approval, non-cash per’ormance incenives such
as Opions as the Directors determine where
a Director per’orms special duies or otherwise
per’orms services outside the scope o’ the
ordinary duies o’ a Director.
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CORPORATE GOVERNANCE
Directors are also enitled to be paid reasonable
travelling, hotel and other expenses incurred by
them respecively in or about the per’ormance o’
their duies as Directors.
The Board reviews and approves the remuneraion
policy to enable the Company to atract and retain
execuives and Directors who will create value ’or
Shareholders having consideraion to the amount
considered to be commensurate ’or a company o’
its size and level o’ acivity as well as the relevant
Directors ime, commitment and responsibility.
The Board is also responsible ’or reviewing any
employee incenive and equity-based plans
including the appropriateness o’ per’ormance
hurdles and total payments proposed.
Trading policy
The Board has adopted a policy that sets out the
guidelines on the sale and purchase o’ securiies
in the Company by its key management personnel
i.e. Directors and, i’ applicable, any employees
reporing directly to the managing director .
The policy generally provides that the writen
acknowledgement o’ the Chair or the Board in
the case o’ the Chairman must be obtained prior
to trading.
Diversity policy
The Company has not adopted an express
policy speciically addressing the achievement
o’ gender diversity. Due to the current limited
size o’ the Board, the Board does not consider it
necessary to have a gender diversity policy, but
will consider adoping a gender diversity policy in
the ’uture ’ollowing an increase in the size o’ the
organisaion.
14.2 DEPARTURES FROM
RECOMMENDATIONS
Following admission to the Oicial List o’ ASX,
the Company will be required to report any
departures ’rom the Recommendaions in its
annual inancial report.
The Company s compliance and departures ’rom
the Recommendaions as at the date o’ this
Prospectus are set out on the ’ollowing pages.
External audit
The Company in general meeings is responsible
’or the appointment o’ the external auditors o’ the
Company, and the Board ’rom ime to ime will
review the scope, per’ormance and ’ees o’ those
external auditors.
Audit commitee
The Company will not have a separate audit
commitee unil such ime as the Board is o’ a
suicient size and structure, and the Company s
operaions are o’ a suicient magnitude ’or
a separate commitee to be o’ beneit to the
Company. In the meanime, the ’ull Board will carry
out the duies that would ordinarily be assigned
to that commitee under the writen terms o’
re’erence ’or that commitee, including but not
limited to, monitoring and reviewing any maters
o’ signiicance afecing inancial reporing and
compliance, the integrity o’ the inancial reporing
o’ the Company, the Company s internal inancial
control system and risk management systems and
the external audit ’uncion.
95
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CORPORATE GOVERNANCE
PRINCIPLES AND RECOMMENDATIONS
COMMENT
1. LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
. .
A listed enity should disclose the respecive
roles and responsibiliies o’ its board and
management; and those maters expressly
reserved to the board and those delegated to
management.
The Board is ulimately accountable ’or the
per’ormance o’ the Company and provides
leadership and sets the strategic objecives
o’ the Company. It appoints all senior
execuives and assesses their per’ormance on
at least an annual basis. It is responsible ’or
overseeing all corporate reporing systems,
remuneraion ’rameworks, governance issues,
and stakeholder communicaions. Decisions
reserved ’or the Board relate to those that have
a ’undamental impact on the Company, such as
material acquisiions and takeovers, dividends
and buybacks, material proits upgrades and
downgrades, and signiicant closures.
The Company has developed a Board Charter
which sets out the roles and responsibiliies o’
the Board, a copy o’ which is available on the
Company's website.
. .
A listed enity should undertake appropriate
checks be’ore appoining a person, or puing
’orward to security holders a candidate ’or
elecion as a director and provide security
holders with all material in’ormaion in its
possession relevant to a decision on whether or
not to elect or re-elect a director.
As Board members are appointed to represent
the interests o’ Shareholders, appropriate
checks are undertaken by management
be’ore nominaing or appoining candidates
to the Board. Shareholders are provided with
all material in’ormaion in the Company's
possession relevant to a decision on whether
or not to elect or re-elect a director.
Full details o’ the Company's policy and
procedure ’or selecion and appointment o’
new directors is available on the Company's
website.
. .
A listed enity should have a writen agreement
with each director and senior execuive seing
out the terms o’ their appointment.
The Company maintains writen agreements
with each o’ its Directors and senior execuives
seing out their roles and responsibiliies.
. .
The company secretary o’ a listed enity should
be accountable directly to the board, through
the chair, on all maters to do with the proper
’uncioning o’ the board.
The Company Secretary is engaged by the
Company to manage the proper ’uncion o’ the
Board. The Company Secretary reports directly
to the Chair and is accountable to the Board.
PROSPECT U S
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CORPORATE GOVERNANCE
PRINCIPLES AND RECOMMENDATIONS
. .
COMMENT
The Company has not adopted an express
policy speciically addressing the achievement
a have a diversity policy which includes
o’ gender diversity. Due to the current limited
requirements ’or the board or a relevant
size o’ the Board, the Board does not consider
commitee o’ the board to set measurable
it necessary to have a gender diversity policy,
objecives ’or achieving gender diversity and
but will consider adoping a policy in the
to assess annually both the objecives and the
’uture. Furthermore, the Company has not set
enity s progress in achieving them;
any objecives ’or achieving gender diversity.
Should a gender diversity policy be considered
b disclose that policy or a summary o’ it; and
appropriate ’or the Company in the ’uture due
c disclose as at the end o’ each reporing
to increases in size o’ the organisaion, the
period the measurable objecives ’or
policy will speciically deal with the objecives
achieving gender diversity set by the board
’or achieving diversity.
or a relevant commitee o’ the board in
The Company's corporate code o’ conduct
accordance with the enity s diversity policy
provides a ’ramework ’or undertaking ethical
and its progress towards achieving them and
conduct in employment. Under the corporate
either:
code o’ conduct, the Company will not tolerate
i. the respecive proporions o’ men
any ’orm o’ discriminaion or harassment in the
and women on the board, in senior
workplace.
execuive posiions and across the whole
The Group currently has no ’emale board
organisaion including how the enity
members or senior execuives.
has deined senior execuive ’or these
purposes ; or
A listed enity should:
ii. i’ the enity is a relevant employer under
the Workplace Gender Equality Act, the
enity s most recent Gender Equality
Indicators , as deined in and published
under that Act.
.6.
A listed enity should:
a have and disclose a process ’or periodically
evaluaing the per’ormance o’ the board, its
commitees and individual directors; and
b disclose, in relaion to each reporing
period, whether a per’ormance evaluaion
was undertaken in the reporing period in
accordance with that process.
.7.
A listed enity should:
a have and disclose a process ’or periodically
evaluaing the per’ormance o’ its senior
execuives; and
b disclose, in relaion to each reporing
period, whether a per’ormance evaluaion
was undertaken in the reporing period in
accordance with that process.
97
The Board reviews its per’ormance annually,
as well as the per’ormance o’ individual
Commitees and individual directors including
the per’ormance o’ the Chairman as Chairman
o’ the Board .
Full details o’ the process ’or per’ormance
evaluaion o’ the Board, Board commitees,
individual Directors and key execuives are
available on the Company's website.
Unil Compleion, the Company will not have
had any senior execuives and as such a policy
’or their per’ormance evaluaion has not been
developed.
The Company intends to develop its senior
execuive per’ormance evaluaion procedures
in order to ’acilitate an evaluaion to be
undertaken within the irst
months o’ the
acquisiion against the key objecives.
D EM EM
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CORPORATE GOVERNANCE
PRINCIPLES AND RECOMMENDATIONS
COMMENT
2. STRUCTURE THE BOARD TO ADD VALUE
. .
The board o’ a listed enity should:
a have a nominaion commitee which:
i.
has at least three members, a majority o’
whom are independent directors; and
ii. is chaired by an independent director,
and disclose:
iii. the charter o’ the commitee;
In view o’ the size and resources available
to the Company, it is not considered that a
separate nominaion commitee would add any
substance to this process, as such the Board as
a whole will act in regards to the responsibiliies
o’ the nominaion commitee. Those
responsibiliies are outlined in the Nominaion
and Remuneraion Commitee Charter which is
available on the Company's website.
iv. the members o’ the commitee; and
v. as at the end o’ each reporing period,
the number o’ imes the commitee met
throughout the period and the individual
atendances o’ the members at those
meeings; or
b i’ it does not have a nominaion commitee,
disclose that ’act and the processes it
employs to address board succession
issues and to ensure that the board has the
appropriate balance o’ skills, knowledge,
experience, independence and diversity
to enable it to discharge its duies and
responsibiliies efecively.
. .
A listed enity should have and disclose a
board skills matrix seing out the mix o’ skills
and diversity that the board currently has or is
looking to achieve in its membership.
The Board's skills matrix indicates the mix
o’ skills, experience and experise that are
considered necessary at Board level ’or
opimal per’ormance o’ the Board. The matrix
relects the Board's objecive to have an
appropriate mix o’ industry and pro’essional
experience including skills such as leadership,
governance, strategy, inance, risk, IT, HR,
policy development, internaional business and
customer relaionship. External consultants
may be brought it with specialist knowledge
to address areas where this is an atribute
deiciency in the Board.
. .
A listed enity should disclose:
The Company will disclose in its Annual Report
those Directors it considers independent
Directors and the consideraions given in
determining independence. The Annual Report
also includes the length o’ service o’ each
Director.
a the names o’ the directors considered by the
board to be independent directors;
b i’ a director has an interest, posiion,
associaion or relaionship o’ the type
described in Box . but the board is o’ the
opinion that it does not compromise the
independence o’ the director, the nature
o’ the interest, posiion, associaion or
relaionship in quesion and an explanaion o’
why the board is o’ that opinion; and
c the length o’ service o’ each director.
PROSPECT U S
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CORPORATE GOVERNANCE
PRINCIPLES AND RECOMMENDATIONS
COMMENT
. .
A majority o’ the board o’ a listed enity should
be independent directors.
Given the Company's present size and scope,
it is currently not the Company's policy to have
a majority o’ independent Directors. Directors
have been selected to bring speciic skills and
industry experience to the Company. The Board
has an expansive range o’ relevant industry
experience, inancial, legal and other skills and
experise to meet its objecives.
. .
The chair o’ the board o’ a listed enity should be Following Compleion the Chairman, Mr
an independent director and, in paricular, should Cosimo Trimigliozzi will be considered
not be the same person as the CEO o’ the enity. independent.
.6.
A listed enity should have a program ’or
inducing new directors and provide appropriate
pro’essional development opportuniies ’or
directors to develop and maintain the skills and
knowledge needed to per’orm their role as
directors efecively.
Upon appointment to the Board new Directors
are provided with Company policies and
procedures and are provided an opportunity to
discuss the Company's operaions with senior
management and the Board.
The Company encourages its Directors to
paricipate in pro’essional development
opportuniies presented to the Company and
provides appropriate industry in’ormaion to its
Board members on a regular basis.
3. ACT ETHICALLY AND RESPONSIBLY
. .
A listed enity should have a code o’ conduct ’or
its directors, senior execuives and employees
and disclose that code or a summary o’ it.
The Company has adopted a Code o’ Conduct
’or Company execuives that promote the
highest standards o’ ethics and integrity in
carrying out their duies to the Company.
The Code o’ Conduct can be ’ound on the
Company's website.
99
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CORPORATE GOVERNANCE
PRINCIPLES AND RECOMMENDATIONS
COMMENT
4. SAFEGUARD INTEGRITY IN FINANCIAL REPORTING
. .
In view o’ the size and resources available
to the Company, it is not considered that
a have an audit commitee which:
a separate audit commitee would add any
substance to this process, as such the board as
i. has at least three members, all o’ whom
are non-execuive directors and a majority a whole acts in regards to the responsibiliies o’
the Audit Commitee. Those responsibiliies are
o’ whom are independent directors; and
outlined in the Audit Commitee Charter which
ii. is chaired by an independent director, who
is available on the Company's website.
is not the chair o’ the board,
The board o’ a listed enity should:
and disclose:
iii. the charter o’ the commitee;
iv. the relevant qualiicaions and experience
o’ the members o’ the commitee; and
v. in relaion to each reporing period, the
number o’ imes the commitee met
throughout the period and the individual
atendances o’ the members at those
meeings; or
b i’ it does not have an audit commitee,
disclose that ’act and the processes it
employs that independently veri’y and
sa’eguard the integrity o’ its corporate
reporing, including the processes ’or the
appointment and removal o’ the external
auditor and the rotaion o’ the audit
engagement partner.
. .
The board o’ a listed enity should, be’ore it
approves the enity s inancial statements ’or
a inancial period, receive ’rom its CEO and
CFO a declaraion that, in their opinion, the
inancial records o’ the enity have been properly
maintained and that the inancial statements
comply with the appropriate accouning
standards and give a true and ’air view o’ the
inancial posiion and per’ormance o’ the enity
and that the opinion has been ’ormed on the
basis o’ a sound system o’ risk management and
internal control which is operaing efecively.
Consistent with the requirements o’
the Corporaions Act and best pracice
recommendaions, the person or persons
’ulilling the ’uncions o’ chie’ execuive oicer
and chie’ inancial oicer are required to make
a statement to the Board that the Company's
inancial reports present a true and ’air view in
all material respects o’ the Company's inancial
condiion and operaional results and are in
accordance with relevant accouning standards.
. .
A listed enity that has an AGM should ensure
that its external auditor atends its AGM and
is available to answer quesions ’rom security
holders relevant to the audit.
The Board encourages the external auditor to
atend the annual general meeing to address
any shareholder quesions that may arise.
5. MAKE TIMELY AND BALANCED DISCLOSURE
. .
A listed enity should have a writen policy
’or complying with its coninuous disclosure
obligaions under the Lising Rules and disclose
that policy or a summary o’ it.
PROSPECT U S
The Company has a speciic policy and
procedures regime in order to comply with
its coninuous disclosure obligaions under
the Lising Rules. A copy o’ the Coninuous
Disclosure Policy is available on the Company's
website.
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CORPORATE GOVERNANCE
PRINCIPLES AND RECOMMENDATIONS
COMMENT
6. RESPECT THE RIGHTS OF SECURITY HOLDERS
6. .
A listed enity should provide in’ormaion about
itsel’ and its governance to investors via its
website.
The Company maintains a website which
includes in’ormaion about the operaions o’
the Company and its governance policies and
procedures.
6. .
A listed enity should design and implement an
investor relaions program to ’acilitate efecive
two-way communicaion with investors.
The Company has a Shareholder
Communicaion Policy to ’acilitate efecive
shareholder communicaion.
6. .
A listed enity should disclose the policies
and processes it has in place to ’acilitate and
encourage paricipaion at meeings o’ security
holders.
The Company provides appropriate noiicaion
o’ and allocates scheduled quesion ime
at meeings o’ Shareholders to ’acilitate
paricipaion at those meeings.
6. .
A listed enity should give security holders the
opion to receive communicaions ’rom, and send
communicaions to, the enity and its security
registry electronically.
Investors may inspect the Company's
governance and Shareholder Communicaions
policies via the website which lay out the
opions to receive communicaions ’rom, and
send communicaions to, the enity and its
security registry electronically.
7. RECOGNISE AND MANAGE RISK
7. .
The board o’ a listed enity should:
a have a commitee or commitees to oversee
risk, each o’ which:
i.
has at least three members, a majority o’
whom are independent directors; and
ii. is chaired by an independent director,
and disclose:
iii. the charter o’ the commitee;
iv. the members o’ the commitee; and
v. as at the end o’ each reporing period,
the number o’ imes the commitee met
throughout the period and the individual
atendances o’ the members at those
meeings; or
b i’ it does not have a risk commitee or
commitees that sais’y a above, disclose
that ’act and the processes it employs ’or
overseeing the enity s risk management
’ramework.
7. .
101
The board or a commitee o’ the board should
review the enity s risk management ’ramework
at least annually to sais’y itsel’ that it coninues
to be sound and disclose, in relaion to each
reporing period, whether such a review has
taken place.
The ideniicaion and management o’ risk,
including calculated risk-taking acivity is
viewed by management as an essenial
component in creaing shareholder value.
Whilst there is currently no risk commitee, the
Board as a whole is employed to oversee the
Company's risk management ’ramework.
Management is responsible ’or developing,
maintaining and improving the Company's risk
management and internal control system. A
register o’ material business risks has been
established, risks have been analysed and
evaluated, risk management processes and
controls are in place and reporing schedules
developed. Management provides the Board
with periodic reports ideni’ying areas o’
potenial risks and the sa’eguards in place to
eiciently manage material business risks.
The Risk Management Program o’ the Company
is available on the Company's website.
Strategic and operaional risks are reviewed at
least annually as part o’ the ’orecasing and
budgeing process. The Company has ideniied
and acively monitors risks inherent in the
industry in which the Company operates.
D EM EM
14/18
7. .
CORPORATE GOVERNANCE
PRINCIPLES AND RECOMMENDATIONS
COMMENT
A listed enity should disclose:
The Board has established a ’ramework ’or the
management o’ the Group including a system
o’ internal controls, a business risk management
process and the establishment o’ appropriate
ethical standards. This ’orms part o’ the overall
Risk Management Program employed by the
Company and available on the Company's
website.
a I’ it has an internal audit ’uncion, how
the ’uncion is structured and what role it
per’orms; or
b i’ it does not have an internal audit ’uncion,
that ’act and the processes it employs ’or
evaluaing and coninually improving the
efeciveness o’ its risk management and
internal control processes.
7. .
A listed enity should disclose whether it has any
material exposure to economic, environmental
and social sustainability risks and, i’ it does, how
it manages or intends to manage those risks.
As a public listed company operaing in the
industrial and bio-technology industry, the
Company has exposures to various risks which
may include economic, environmental and
social sustainability risks. The Risk Management
Program employed by the Company is designed
to ideni’y and manage these risks accordingly.
8. REMUNERATE FAIRLY AND RESPONSIBLY
8. .
The board o’ a listed enity should:
a have a remuneraion commitee which:
i.
has at least three members, a majority o’
whom are independent directors; and
ii. is chaired by an independent director,
and disclose:
iii. the charter o’ the commitee;
iv. the members o’ the commitee; and
v. as at the end o’ each reporing period,
the number o’ imes the commitee met
throughout the period and the individual
atendances o’ the members at those
meeings; or
In view o’ the size and resources available
to the Company, it is not considered that
a separate remuneraion commitee would
add any substance to this process, as such
the Board as a whole acts in regards to
the responsibiliies o’ the Remuneraion
Commitee. Those responsibiliies are
outlined in the Nominaion and Remuneraion
Commitee Charter which is available on the
Company's website.
The Nominaion and Remuneraion Commitee
may obtain independent advice on the
appropriateness o’ remuneraion packages.
b i’ it does not have a remuneraion
commitee, disclose that ’act and the
processes it employs ’or seing the level and
composiion o’ remuneraion ’or directors
and senior execuives and ensuring that such
remuneraion is appropriate and not excessive.
8. .
A listed enity should separately disclose its
policies and pracices regarding the remuneraion
o’ non-execuive directors and the remuneraion
o’ execuive directors and other senior execuives.
The Company separately disinguishes the
remuneraion o’ execuives and non-execuive
directors. Disclosure o’ the remuneraion
arrangements ’or Directors and senior
execuives are disclosed in the Annual Reports o’
the Company.
8. .
A listed enity which has an equity-based
remuneraion scheme should have a policy on
whether paricipants are permited to enter
into transacions whether through the use
o’ derivaives or otherwise which limit the
economic risk o’ paricipaing in the scheme and
disclose that policy or a summary o’ it.
The Company maintains a Securiies Trading
Policy which restricts the permission ’or
employees and directors to enter transacions
which limit the economic risks associated with
the paricipaion in the Company's equity based
incenive scheme. A copy o’ the Share Trading
Policy is available on the Company's website.
PROSPECT U S
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MATERIAL CONTRACTS
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MATERIAL CONTRACTS
103
D EM EM
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MATERIAL CONTRACTS
15.1 IMPLEMENTATION AGREEMENT
On
October
6, the Company, DMS
and the Major Shareholders entered into the
Implementaion Agreement, pursuant to which
the Company proposes to acquire all o’ the issued
capital o’ DMS by making ofers to the Vendors.
A summary o’ the key terms and condiions o’ the
Implementaion Agreement is set out below:
a (Transacion : Pursuant to the Implementaion
Agreement:
i.
the Company shall make ofers to acquire
the DMS shares ’rom the Vendors ’or the
consideraion Shareholder Ofers on
the terms and condiions set out in the
Implementaion Agreement;
vii. the Company preparing the Prospectus,
lodging the Prospectus with the ASIC
and receiving suicient applicaions to
meet the minimum subscripion under the
Prospectus;
viii. the Company receiving a leter ’rom ASX
conirming that ASX will grant condiional
quotaion o’ the Company s Shares on the
Oicial List, on terms acceptable to the
Company;
ix. the Company receiving the ’ollowing
documents ’rom each o’ the Vendors, to
be held in escrow by the Company unil
Setlement:
A. share ceriicates in respect o’
the DMS Shares;
ii. the Shareholder Ofers will be made under
this Prospectus; and
B. undated separate instruments o’ trans’er
in registrable ’orm ’or
% o’ the
DMS Shares in ’avour o’ the Company
as trans’eree which have been duly
executed by each o’ the Vendors or their
duly authorised atorneys as trans’erors
in relaion to their respecive DMS
Shares;
iii. the consideraion ’or the Shareholder Ofers
will be the issue o’ 6 ,
,
Shares to be
apporioned amongst the Vendors according
to the respecive number o’ DMS Shares
held by them.
b (Condiions Precedent : Compleion is
condiional upon the sais’acion or waiver o’
the ’ollowing condiions precedent:
i.
C. completed applicaion ’orms under
the Prospectus ’or the issue o’ the
Consideraion Shares signed by each
o’ the Vendors in respect o’ the
Consideraion Shares to be issued to
them; and
the Company compleing a legal, inancial
and operaional due diligence on DMS and
its assets and the Company being saisied
with the results o’ that due diligence in its
sole and absolute discreion ;
D. signed restricion agreements pursuant
to Chapter 9 o’ the ASX Lising Rules in
respect o’ any escrow applied by ASX
and or any voluntary escrow agreements
pursuant to clause
’rom each o’ the
Vendors in respect o’ the Consideraion
Shares to be issued to them; and
ii. DMS compleing a legal, inancial and
operaional due diligence on the Company
and its assets and DMS being saisied with
the results o’ that due diligence in its sole
and absolute discreion ;
iii. the Company obtaining all necessary
regulatory and shareholder approvals
required to complete the Acquisiion;
iv. the Company making the Shareholder
Ofers and the Shareholder Ofers becoming
uncondiional;
v. all o’ the Shareholder Ofers being
accepted, either by a Vendor or a duly
authorised atorney ’or and on behal’ o’ a
Vendor;
vi. the Company complying with the
requirements o’ Chapters and o’ the
ASX Lising Rules;
x. DMS obtaining any necessary third
party consents or waivers i’ any to any
o’ the material contracts set out in the
Implementaion Agreement.
c (Consideraion : The consideraion to be
ofered by the Company to the Vendors
pursuant to the terms o’ the Shareholder
Ofers shall be 6 ,
,
Shares to be
apporioned amongst the Vendors according to
the respecive number o’ DMS Shares held by
them.
d (Opion to subscribe : I’ the Implementaion
Agreement is terminated prior to
April
7
(End Date :
i.
PROSPECT U S
% o’
DMS grants to the Company an opion to
subscribe ’or up to that number o’ ’ully paid
104
15/18
MATERIAL CONTRACTS
any transacion similar to the Acquisiion or
any part o’ it received ater the date o’ this
Agreement which the DMS board:
ordinary shares in the capital o’ DMS which
will equal a holding o’ 9. 67% in DMS prior
to the exercise o’ the opion DMS Opion
Shares at an issue price o’ $ . per share
(Exercise Price Subscripion Opion ; and
A. acing in good ’aith and reasonably; and
B. in order to sais’y what the DMS board
reasonably considers to be its iduciary
or statutory duies ater, i’ necessary,
consultaion with external advisers,
ii. the Subscripion Opion is exercisable at
the Company s sole elecion ’or a period
o’
months ’rom the End Date. I’
exercised, DMS will cause the issue o’ the
DMS Opion Shares, in consideraion o’
the payment o’ the Exercise Price by the
Company to DMS.
determines is more ’avourable to the
DMS shareholders as a whole than the
Acquisiion taking into account, among
other things, all legal, inancial, regulatory,
condiionality, certainty, iming and other
aspects o’ the third party proposal and the
idenity o’ the oferor Superior Proposal ;
and
e (Terminaion : The Implementaion Agreement
may be terminated by DMS i’:
i.
the DMS board has received a bona
ide writen proposal or ofer by any
person other than ’rom a party to the
Implementaion Agreement to enter into
ii. the DMS Board approves or recommends
the implementaion o’ a Superior Proposal.
15.2 NON-EXCLUSIVE LICENCE AGREEMENT
On
January
6, DMS and NTUiive entered
into the Non-Exclusive Licence Agreement.
Pursuant to the Non-Exclusive Licence Agreement:
a DMS is granted a non-exclusive licence
during the term to develop, make, have made,
important into, export ’rom, ofer ’or sale, sell
and have sold licensed products, being any
product or service the making, using, selling
TITLE
COUNTRY
Detecion Apparatus and Method
Uilizing Membranes and Raio o’
Transmembrane Pressures
Singapore
Detecion Apparatus and Method
Uilizing Membranes and Raio o’
Transmembrane Pressures
U.S.A
A Membrane Sensor and Method o’
Detecing Fouling In A Fluid
Singapore
A Membrane Sensor and Method
o’ Detecing Fouling In A Fluid
(Applicaion
U.S.A
or import o’ which is covered by any claim o’
any patent under the licensed patents detailed
below NEL Licensed Products ; and
b DMS may use the licensed patents covered
by the Non-Exclusive Licence Agreement,
being the ’ollowing patents and applicaion
(Licensed Patents :
GRANT NO.
FILING DATE
7
8,
,
89
7B
8
/88 ,78
GRANT DATE
.
. 7
8.
.
. 7
.
.
.
.
.
. 8
.
.
.
Each o’ the patents listed above has an expiry date
years ’rom the iling date listed above. As such,
the Company considers that this ime ’rame provides the Company with suicient ime to coninue its
business operaions.
The patents and applicaion listed above relate to technology currently used by De.mem in the
water treatment plants which have already been deployed and do not relate to the new hollow iber
nanoiltraion technology. Consequently, the Company does not consider the non-exclusive nature o’ the
agreement to be a risk.
105
D EM EM
15/18
MATERIAL CONTRACTS
A summary o’ the key terms and condiions o’ the
Non-Exclusive Licence Agreement is set out below:
a (Term : The Non-Exclusive Licence Agreement
commenced on
January
6 and coninues
unil the date o’ expiraion o’ the last to expire
o’ any patents under the Licensed Patents,
unless terminated earlier.
b (Fees and Royalies : DMS is required to pay
NTUiive the ’ollowing ’ees and royalies:
i.
S$8,
exclusive o’ Singapore Goods
and Services Tax Singapore GST to be
paid upon the signing o’ the Non-Exclusive
Licence Agreement; and
ii. royalies on net sales o’ NEL Licensed
Products.
c (Royalty Payments : DMS will pay to NTUiive
royalies on net Sales o’ Licensed Products as
’ollows, exclusive o’ Singapore GST:
i.
S$
per unit ’or cumulaive net Sales o’
up to
units o’ sensor; and
ii. S$7 per unit ’or cumulaive net Sales o’
above
units o’ sensor,
where sensor re’ers to NEL Licensed Products
in the ’orm o’ a transmembrane pressure sensor
derived ’rom any o’ the Licensed Patents.
d (Intellectual Property and Licensed Patents :
Pursuant to the Non-Exclusive Licence
Agreement:
i.
DMS acknowledges that all intellectual
property rights in and relaing to the
Licensed Patents belong to NTU;
ii. DMS agrees not to do anything which might
bring into quesion NTU s ownership o’ the
intellectual property rights or their validity;
and
iii. DMS will noi’y NTUiive o’ any
in’ringement, or suspected or threatened
in’ringement, o’ any o’ the Licensed
Patents.
e (Terminaion : The Non-Exclusive Licence
Agreement may be terminated:
i.
by DMS, by giving ninety 9
writen noice; and
days advance
ii. by NTUiive, at its opion, i’:
A. DMS or any o’ its ailiates have
commited a breach which is incapable
o’ reciicaion or which is not reciied
within sixty 6 days o’ writen noice;
PROSPECT U S
B. DMS asserts a patent or any other
intellectual property right against
NTUiive;
C. DMS ceases, or announces its intenion
to cease to carry on its business;
D. DMS becomes insolvent or is unable
to pay its debts as they ’all due, or
suspends or threatens to suspend
making payments with respect to all or
any class o’ its debts or enters into any
composiion or arrangements with its
creditors or makes a general assignment
’or the beneit o’ its creditors;
E. DMS goes into liquidaion or an order
is made or a resoluion is passed ’or the
winding up o’ DMS; or
F. DMS has a receiver or receiver and
manager or judicial manager appointed.
The Non-Exclusive Licence Agreement otherwise
contains terms and condiions which are
considered standard ’or an agreement o’ its
nature, including those relaing to acions upon
terminaion, conideniality, indemniies and
warranies.
15.3 EXCLUSIVE LICENCE AGREEMENT
On
June
6, DMS and NTUiive entered into
the Exclusive Licence Agreement. Pursuant to the
Exclusive Licence Agreement:
a DMS is granted an exclusive licence during the
term to develop, make, have made, important
into, export ’rom, ofer ’or sale, sell and have
sold licensed products, being any product or
service that incorporates or that is or was
developed in whole or in part through the
use or applicaion o’ any o’ the EL Licensed
Proprietary Materials EL Licensed Products ;
and
b DMS may use the licensed proprietary
materials, being any unpublished research
and development in’ormaion, technical
in’ormaion, manu’acturing techniques,
’ormulae, data, designs and other in’ormaion
in relaion to the invenion in possession
o’ NTUiive as o’ the Efecive Date to be
trans’erred to DMS pursuant to the Exclusive
License Agreement, ’or such purpose
(EL Licensed Proprietary Materials .
106
15/18
MATERIAL CONTRACTS
B. DMS asserts a patent or any other
intellectual property right against
NTUiive;
A summary o’ the key terms and condiions o’ the
Exclusive Licence Agreement is set out below:
a (Term : The -Exclusive Licence Agreement
commenced on
June
6 Efecive Date
and coninues ’or a period o’ twenty
years.
C. DMS ceases, or announces its intenion
to cease to carry on its business;
D. DMS becomes insolvent or is unable
to pay its debts as they ’all due, or
suspends or threatens to suspend
making payments with respect to all or
any class o’ its debts or enters into any
composiion or arrangements with its
creditors or makes a general assignment
’or the beneit o’ its creditors;
b (Sub-Licence : DMS is enitled to grant
sub-licenses o’ the EL Licensed Proprietary
Materials under the Exclusive License
Agreement.
c (Milestone Payments : DMS is required to pay
NTUiive the ’ollowing Milestone Payments:
i.
S$ ,
exclusive o’ Singapore GST to
be paid upon the signing o’ the Exclusive
Licence Agreement; and
ii. S$ ,
exclusive o’ Singapore GST to
be paid on the second nd anniversary o’
the Efecive Date o’ the Exclusive License
Agreement.
d (Royalty Payments : In addiion to any
Milestone Payments, DMS will pay to NTUiive
royalies in respect o’ all sales, leases or other
trans’ers o’ EL Licensed Products during
the Term, exclusive o’ Singapore GST, at the
’ollowing rates:
i.
three percent
Products; and
% o’ net sales o’ Licensed
ii. twenty-ive percent
consideraion.
% o’ all Sub-Licence
e (Infringement of Licensed Proprietary
Materials : Pursuant to the Exclusive Licence
Agreement:
i.
DMS will noi’y NTUiive o’ any
in’ringement, or suspected or threatened
in’ringement, o’ any o’ the EL Licensed
Proprietary Materials; and
ii. DMS will be responsible ’or, ater
consultaion with NTUiive, taking all
appropriate steps as may be necessary
to prevent or restrain any in’ringement
by a third party o’ any o’ the EL Licensed
Proprietary Materials.
’ (Terminaion : The Exclusive Licence Agreement
may be terminated:
i.
by DMS, by giving ninety 9
writen noice; and
days advance
ii. by NTUiive, at its opion, i’:
A. DMS has commited a breach which is
incapable o’ reciicaion or which is not
reciied within sixty 6 days o’ writen
noice;
107
E. DMS goes into liquidaion or an order
is made or a resoluion is passed ’or the
winding up o’ DMS; or
F. DMS has a receiver or receiver and
manager or judicial manager appointed.
The Exclusive Licence Agreement otherwise
contains terms and condiions which are
considered standard ’or an agreement o’ its
nature, including those relaing to acions upon
terminaion, conideniality, indemniies and
warranies.
15.4 EQUIPMENT SALE AGREEMENT
On
October
6, De.mem entered into the
Equipment Sale Agreement with FCA ’or the
purchase o’ equipment to be used by De.mem ’or
membrane producion by De.mem.
Under the Equipment Sale Agreement, FCA has
agreed to provide hollow iber spinning producion
line equipment to De.mem ’or total consideraion
o’ ,
,
RMB, to be paid in the ’ollowing
instalments:
a
,
RMB to be paid upon execuion o’ the
Equipment Sale Agreement;
b
7 ,
RMB to be paid upon the submission
and acknowledgment o’ technical drawing;
c
7 ,
RMB to be paid upon system
compleion and FAT; and
d
,
RMB to be paid upon compleion
o’ shipment, installaion, tesing and
commissioning o’ the system to De.mem.
The ownership in the equipment will pass to
De.mem ater compleion o’ all o’ the payment
instalments set out above. The consideraion ’ee
payable under the Equipment Sale Agreement
also includes the costs payable ’or shipment,
installaion, tesing and commissioning o’ the
equipment.
D EM EM
15/18
MATERIAL CONTRACTS
15.5 GIVAUDAN BUILD, OWN, OPERATE
AGREEMENT
On
November
6, De.mem entered into
the build, own, operate agreement with Givaudan
Singapore Pte Ltd Givaudan Givaudan Build
Own Operate Agreement , pursuant to which
De.mem has agreed to provide, install, commission
and operate a waste water treatment system
(WWTS and to provide waste water treatment
services to Givaudan the Services . The objecive
is to treat the waste water ’rom Givaudan s
manu’acturing plant, so that the waste water can
be law’ully discharged.
A summary o’ the key terms and condiions o’ the
Build Own Operate Agreement is set out below:
a (Term : The Services to be per’ormed under
the Givaudan Build Own Operate Agreement
commence on the commencement date,
which shall be no later than 6 weeks ’rom
November
6. The Givaudan Build Own
Operate Agreement then coninues ’or a period
o’ two
years Iniial Term . Following the
Iniial Term, it will be automaically renewed
’or subsequent periods o’ twelve
months
(Further Term unless either party provides
writen noice o’ terminaion at least three
months prior to expiraion o’ the current term.
b (Payment : Givaudan is required to pay De.mem
a ixed lump sum ’ee o’ S$ ,
excluding
GST per month Monthly Fee .
c (Financial Guarantee : De.mem will indemni’y
Givaudan ’rom and against all claims, demands,
acions, proceedings, costs, losses and damages
insituted or made against Givaudan or incurred
or sufered by Givaudan should the treated
water not meeing the quality service levels
and/or any equipment or services provided by
De.mem pursuant to the Givaudan Build Own
Operate Agreement in’ringes or is alleged to
in’ringe any intellectual property rights o’ any
third party.
d (Terminaion : The Givaudan Build Own
Operate Agreement may be terminated:
i.
by Givaudan:
A. by giving three
months advance
writen noice, i’ De.mem receives
a contractually deined terminaion
payment; or
B. immediately by giving noice in wriing,
i’:
i.
De.mem abandons, or shows an
intenion to abandon, its obligaions
under the Givaudan Build Own
Operate Agreement;
PROSPECT U S
ii. the liability cap o’ S$
,
’or the
Iniial Term or S$ 6,
’or each
Further Term has been reached or
exceeded;
iii. the waste water treatment services
do not commence on or be’ore
three
months ’rom the scheduled
compleion date; or
iv. De.mem is in material breach o’ any
o’ the terms o’ the Givaudan Build
Own Operate Agreement which are
not capable o’ remedy, or i’ they
are capable o’ remedy, De.mem has
’ailed to remedy that breach within
thirty
working days o’ being
noiied in wriing o’ it; or
ii. by De.mem:
A. by giving three
months writen noice
prior to the end o’ the Iniial Term or any
Further Term that it does not intend to
renew;
B. by giving ’our
weeks prior writen
noice i’ Givaudan does not make
payment o’ the Monthly Fee and ’ails
to make payment o’ the Monthly Fee
within thirty
calendar days; or
C. immediately by giving noice in wriing i’:
i.
the liability cap o’ S$
,
’or the
Iniial Term or S$ 6,
’or each
Further Term has been reached or
exceeded; or
ii. Givaudan is in material breach o’ any
o’ the terms o’ the Givaudan Build
Own Operate Agreement which are
not capable o’ remedy, or i’ they are
capable o’ remedy, Givaudan has
’ailed to remedy that breach within
thirty
working days o’ being
noiied in wriing o’ it.
e (Ownership : During the Iniial Term and any
Further Term the WWTS remains the property
o’ De.mem. Upon expiry or terminaion o’
the Givaudan Build Own Operate Agreement,
De.mem will dismantle and remove the WWTS.
15.6 INTERCOMPANY LOAN AGREEMENT
On
January
7, the Company and DMS
entered into an intercompany loan agreement
pursuant to which the Company has agreed to
provide a loan o’ S$
,
to DMS.
The Company has subsequently provided a loan o’
S$
,
to DMS.
The loan will accrue interest at a rate o’ 6% per
annum as ’rom the date o’ disbursement and is
repayable on demand.
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15.7 VENTNOR LISTING MANDATE
On
February
6, DMS and Ventnor entered
into a corporate advisory mandate, as varied on
November
6 Ventnor Lising Mandate ,
pursuant to which Ventnor agreed to be appointed
as DMS corporate advisor in relaion to the
proposed iniial public ofering o’ DMS on the ASX.
15.8 VENTNOR COMPANY SECRETARIAL
MANDATE
On
November
6, the Company and Ventnor
entered into a mandate under which Ventnor
agreed to provide on-going company secretarial
services to the Company.
A summary o’ the key terms o’ the Ventnor Lising
Mandate is set out below:
The Company has agreed to pay Ventnor a monthly
’ee o’ $7,
in consideraion ’or the provision o’
these services.
a (Term : DMS will engage Ventnor as a corporate
advisor ’or a period o’
months efecive
’rom 6 February
6 , or unil DMS lists on
the ASX, whichever occurs earlier.
Either party may terminate the mandate by giving
the other party three months noice, providing all
outstanding ’ees have been paid.
b (Capital Raising Fees : Services to be provided
by Ventnor are to be provided in three stages.
DMS will pay the ’ollowing ’ees, exclusive o’
GST, to Ventnor:
15.9 ALTO CAPITAL MANDATE
i.
a monthly ’ee o’ A$ ,
in arrears
efecive ’rom the date o’ the Ventnor
Lising Mandate unil compleion o’ the
stage services;
The Company has appointed Alto Capital as the
exclusive lead manager in relaion to the proposed
iniial public ofering o’ the Company on the ASX.
A summary o’ the key terms o’ the mandate is set
out below:
a (Capital Raising Fees : The Company will pay the
’ollowing ’ees to Alto Capital, exclusive o’ GST:
ii. a monthly ’ee o’ $ ,
in arrears upon
commencement o’ the stage services and
unil compleion o’ the stage services;
i.
iii. a monthly ’ee o’ $ ,
in arrears upon
commencement o’ the stage services
and ’or a term o’ ’our
months or
unil compleion o’ the stage services,
whichever occurs earlier; and
ii. a capital raising ’ee equal o’ % o’ the total
amount raised by Alto Capital;
iv. a success ’ee o’ $ ,
payable upon
DMS lising on the ASX.
c (Advisor Opions : Prior to the lising o’ DMS
on the ASX, Ventnor or its nominees have the
right to subscribe ’or up to ,9 ,
Advisor
Opions in DMS upon lising on the ASX, on
the ’ollowing terms:
i.
the Advisor Opions will be issued ’or
$ .
per Opion;
ii. the Advisor Opions will be exercisable at
$ . per share; and
iii. the Advisor Opions will have a term o’
three
years ’rom the date o’ issue.
d (Terminaion : The Ventnor Lising Mandate
may be terminated by both Ventnor and
DMS with one month s noice, providing all
outstanding ’ees and expenses have been paid.
a management ’ee o’ . % o’ the total
amount raised under the iniial public
ofering;
iii. a success ’ee o’ ,
,
Shares to be
issued to Alto Capital or its nominees at a
deemed price o’ $ .
per Share and a
cash payment o’ $ ,
ex GST upon the
Company being success’ully admited to the
Oicial List; and
iv. ’ollowing compleion o’ the iniial public
ofering, the Company will pay Alto Capital
a monthly ’ee o’ $ ,
ex GST per month
’or a period o’
consecuive months.
b (Advisor Opions : Alto Capital have the right
to subscribe ’or up to ,9 ,
Advisor
Opions upon lising on the ASX, on the
’ollowing terms:
i.
the Advisor Opions will be issued ’or
$ .
per Opion;
ii. the Advisor Opions will be exercisable at
$ . per Share; and
iii. the Advisor Opions will have a term o’
three
years ’rom the date o’ issue.
c (Exclusivity : The Company agrees to
exclusively retain Alto Capital ’or a minimum
o’ two
months with respect to the services
to be provided under the Alto Capital Mandate
Exclusivity Period . Following the Exclusivity
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MATERIAL CONTRACTS
Period, the Company agrees to ofer Alto
Capital a ’urther exclusivity period.
d (Terminaion : The Alto Capital Mandate may
be terminated by either party without cause at
any ime, by providing the other party with two
months writen noice. The capital raising
’ees re’erred to in Secion .9 a :
i.
i.
will remain payable on terminaion o’ the
Alto Capital Mandate; and
ii. i’, within six 6 months o’ terminaion o’
the Alto Capital Mandate, the Company or
the shareholders o’ the Company enter into
a transacion with any third party purchaser
introduced by Alto Capital or any party
assising Alto Capital during the course o’
the Alto Capital Mandate, the ’ees re’erred
to in Secion .9 a will remain payable to
Alto Capital.
e (Ongoing services : The Company will engage
Alto Capital as its corporate advisor ’or a period
o’
months efecive ’rom the Company
lising on the ASX.
15.10 ANDREAS KROELL –
CEO AGREEMENT
DMS has entered into a service agreement with
Andreas Kroell, pursuant to which Mr Kroell is
engaged as the chie’ execuive oicer CEO o’
DMS on and ’rom
September
6 CEO
Agreement .
A summary o’ the key terms o’ the CEO
Agreement is set out below:
a (Term : The CEO Agreement commenced on
September
6 and coninues unless
terminated by the CEO or DMS.
b (Compensaion : A monthly ’ee o’ SGD
$ ,
is payable to the CEO. A per’ormance
based bonus plan ’or the senior management
o’ DMS will be implemented ’rom the year
7 onwards and the CEO will be eligible to
paricipate in that plan.
c (Terminaion : The CEO Agreement may be
terminated:
i.
d (Invenion Assignment Rights : The CEO
agrees:
by either party by giving two
months
prior writen noice or the equivalent o’ two
months salary in lieu o’ noice; or
ii. by DMS immediately ’or breach o’ the
CEO Agreement, such as where the CEO is
guilty o’ dishonesty or serious or persistent
misconduct, where the CEO becomes
bankrupt or where the CEO becomes o’
unsound mind.
PROSPECT U S
to make ’ull and prompt disclosure to DMS
o’ all invenions, improvements, discoveries,
methods, developments, sotware, and
works o’ authorship whether patentable
or not, which are created whether directly
or indirectly , made, conceived, received
or reduced to pracice by him or under his
direcion or jointly with others during the
employment, whether or not during normal
working hours or on the premises o’ DMS
(Developments ; and
ii. that all Developments will be the exclusive
property o’ DMS and the CEO s right, itle
and interest in and to all Developments
and all related intellectual property rights
are hereby irrevocably and uncondiionally
assigned to DMS.
e (Trade Secrets : The CEO agrees that he shall
keep conidenial, and not disclose to others,
or take or use ’or his own purposes except
in connecion with his rights and obligaions
under the CEO Agreement any trade secrets o’
any group company.
The CEO Agreement otherwise contains terms
and condiions which are considered standard ’or
agreements o’ this nature, including those relaing
to conideniality, non-disclosure and assignment.
15.11 EXECUTIVE SERVICE AGREEMENTS
DMS has entered into execuive service
agreements with the ’ollowing execuives
(Execuive Service Agreements :
a Nicanor Tan Suarin: Director –
System Design and Engineering; and
b David Chua: Director – Membrane
Manu’acturing; and
c Kian Lip Teo: Director Operaions,
together, the Execuives .
The Execuive Service Agreements have
been entered into on the ’ollowing terms and
condiions:
a (Term : The Execuive Service Agreements
coninue unless terminated by the Execuive
or DMS, by either party giving two
months
noice o’ terminaion to the other.
b (Invenion Assignment Rights : The Execuives
have agreed:
i.
to make ’ull and prompt disclosure to DMS
o’ all developments; and
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MATERIAL CONTRACTS
ii. that all developments will be the exclusive
property o’ DMS and the Execuive s right,
itle and interest in and to all Developments
and all related intellectual property rights
are hereby irrevocably and uncondiionally
assigned to DMS.
c (Trade Secrets : The Execuives agree that they
shall keep conidenial, and not disclose to
others, or take or use ’or their own purposes
except in connecion with their rights and
obligaions under the Execuive Service
Agreements any trade secrets o’ any group
company.
The Execuive Service Agreements otherwise
contains terms and condiions which are
considered standard ’or agreements o’ their
nature, including those relaing to conideniality,
non-disclosure and assignment.
15.12 DEEDS OF INDEMNITY, INSURANCE
AND ACCESS
The Company is party to deeds o’ indemnity,
insurance and access with each Director.
Under these deeds, the Company indemniies
each Director to the extent permited by the
Corporaions Act against any liability arising as
a result o’ the Director acing as a Director o’
the Company. The Company is also required to
maintain insurance policies ’or the beneit o’ the
relevant Director and must also allow the Directors
to inspect board papers in certain circumstances.
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PROSPECT U S
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16.1 LITIGATION
c Dividend rights
As at the date o’ this Prospectus, the Company
is not involved in any legal proceedings and the
Directors are not aware o’ any legal proceedings
pending or threatened against the Company.
Subject to the rights o’ any pre’erence
Shareholders and to the rights o’ the holders o’
any shares created or raised under any special
arrangement as to dividend, the Directors may
’rom ime to ime declare a dividend to be paid to
the Shareholders enitled to the dividend which
shall be payable on all Shares according to the
proporion that the amount paid not credited is
o’ the total amounts paid and payable excluding
amounts credited in respect o’ such Shares.
16.2 RIGHTS ATTACHING TO SHARES
The ’ollowing is a summary o’ the more signiicant
rights ataching to Shares. This summary is not
exhausive and does not consitute a deiniive
statement o’ the rights and liabiliies o’
Shareholders. To obtain such a statement, persons
should seek independent legal advice.
Full details o’ the rights ataching to Shares are set
out in the Consituion, a copy o’ which is available
’or inspecion at the Company s registered oice
during normal business hours.
a General meeings
Shareholders are enitled to be present in person,
or by proxy, atorney or representaive to atend
and vote at general meeings o’ the Company.
Shareholders may requisiion meeings in
accordance with Secion 9D o’ the Corporaions
Act and the Consituion.
b Voing rights
Subject to any rights or restricions ’or the ime
being atached to any class or classes o’ Shares,
at general meeings o’ Shareholders or classes o’
Shareholders:
i.
each Shareholder enitled to vote may
vote in person or by proxy, atorney or
representaive;
ii. on a show o’ hands, every person present
who is a Shareholder or a proxy, atorney
or representaive o’ a Shareholder has one
vote; and
iii. on a poll, every person present who is
a Shareholder or a proxy, atorney or
representaive o’ a Shareholder shall, in
respect o’ each ’ully paid Share held by him,
or in respect o’ which he is appointed a
proxy, atorney or representaive, have one
vote ’or the Share, but in respect o’ partly
paid Shares shall have such number o’ votes
as bears the same proporion to the total o’
such Shares registered in the Shareholder s
name as the amount paid not credited
bears to the total amounts paid and payable
excluding amounts credited .
PROSPECT U S
The Directors may ’rom ime to ime pay to the
Shareholders any interim dividends as they may
determine. No dividend shall carry interest as
against the Company. The Directors may set aside
out o’ the proits o’ the Company any amounts
that they may determine as reserves, to be applied
at the discreion o’ the Directors, ’or any purpose
’or which the proits o’ the Company may be
properly applied.
Subject to the ASX Lising Rules and the
Corporaions Act, the Company may, by
resoluion o’ the Directors, implement a dividend
reinvestment plan on such terms and condiions
as the Directors think it and which provides ’or
any dividend which the Directors may declare
’rom ime to ime payable on Shares which are
paricipaing Shares in the dividend reinvestment
plan, less any amount which the Company shall
either pursuant to the Consituion or any law
be enitled or obliged to retain, be applied by the
Company to the payment o’ the subscripion price
o’ Shares.
d Winding-up
I’ the Company is wound up, the liquidator may,
with the authority o’ a special resoluion o’ the
Company, divide among the shareholders in kind
the whole or any part o’ the property o’ the
Company, and may ’or that purpose set such value
as he considers ’air upon any property to be so
divided, and may determine how the division is
to be carried out as between the Shareholders or
diferent classes o’ Shareholders.
The liquidator may, with the authority o’ a special
resoluion o’ the Company, vest the whole or any
part o’ any such property in trustees upon such
trusts ’or the beneit o’ the contributories as the
liquidator thinks it, but so that no Shareholder is
compelled to accept any Shares or other securiies
in respect o’ which there is any liability.
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ADDITIONAL INFORMATION
e Shareholder liability
d Exercise Period
As the Shares under the Prospectus are ’ully paid
shares, they are not subject to any calls ’or money
by the Directors and will there’ore not become
liable ’or ’or’eiture.
The Opions are exercisable at any ime on or prior
to the Expiry Date Exercise Period .
’ Transfer of Shares
Generally, Shares are ’reely trans’erable, subject
to ’ormal requirements, the registraion o’ the
trans’er not resuling in a contravenion o’ or
’ailure to observe the provisions o’ a law o’
Australia and the trans’er not being in breach o’
the Corporaions Act or the ASX Lising Rules.
g Variaion of rights
Pursuant to Secion 6B o’ the Corporaions Act,
the Company may, with the sancion o’ a special
resoluion passed at a meeing o’ Shareholders
vary or abrogate the rights ataching to Shares.
I’ at any ime the share capital is divided into
diferent classes o’ Shares, the rights atached to
any class unless otherwise provided by the terms
o’ issue o’ the shares o’ that class , whether or not
the Company is being wound up, may be varied
or abrogated with the consent in wriing o’ the
holders o’ three-quarters o’ the issued shares o’
that class, or i’ authorised by a special resoluion
passed at a separate meeing o’ the holders o’ the
shares o’ that class.
h Alteraion of Consituion
The Consituion can only be amended by a special
resoluion passed by at least three quarters o’
Shareholders present and voing at the general
meeing. In addiion, at least 8 days writen noice
speci’ying the intenion to propose the resoluion
as a special resoluion must be given.
16.3 ADVISOR OPTIONS
a Enitlement
Each Opion enitles the holder to subscribe ’or
one Share upon exercise o’ the Opion.
b Exercise Price
Subject to paragraph i , the amount payable upon
exercise o’ each Opion will be $ .
Exercise
Price .
c Expiry Date
Each Opion will expire at : pm WST on the
date that is three years ater the date o’ issue o’
the Opions Expiry Date . An Opion not exercised
be’ore the Expiry Date will automaically lapse on
the Expiry Date.
115
e Noice of Exercise
The Opions may be exercised during the Exercise
Period by noice in wriing to the Company in the
manner speciied on the Opion ceriicate Noice
of Exercise and payment o’ the Exercise Price ’or
each Opion being exercised in Australian currency
by electronic ’unds trans’er or other means o’
payment acceptable to the Company.
’ Exercise Date
A Noice o’ Exercise is only efecive on and ’rom
the later o’ the date o’ receipt o’ the Noice o’
Exercise and the date o’ receipt o’ the payment o’
the Exercise Price ’or each Opion being exercised
in cleared ’unds Exercise Date .
g Timing of issue of Shares on exercise
Within
Business Days ater the later o’ the
’ollowing:
i.
the Exercise Date; and
ii. when excluded in’ormaion in respect to the
Company as deined in secion 7 8A 7 o’
the Corporaions Act i’ any ceases to be
excluded in’ormaion,
but in any case no later than
Business Days
ater the Exercise Date, the Company will:
iii. issue the number o’ Shares required under
these terms and condiions in respect o’ the
number o’ Opions speciied in the Noice
o’ Exercise and ’or which cleared ’unds
have been received by the Company;
iv. i’ required, give ASX a noice that complies
with secion 7 8A e o’ the Corporaions
Act, or, i’ the Company is unable to
issue such a noice, lodge with ASIC a
prospectus prepared in accordance with
the Corporaions Act and do all such things
necessary to sais’y secion 7 8A
o’
the Corporaions Act to ensure that an
ofer ’or sale o’ the Shares does not require
disclosure to investors; and
v. i’ admited to the Oicial List at the ime,
apply ’or oicial quotaion on ASX o’ Shares
issued pursuant to the exercise o’ the
Opions.
I’ a noice delivered under g iv ’or any reason
is not efecive to ensure that an ofer ’or sale
o’ the Shares does not require disclosure to
investors, the Company must, no later than
Business Days ater becoming aware o’
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ADDITIONAL INFORMATION
such noice being inefecive, lodge with ASIC
a prospectus prepared in accordance with
the Corporaions Act and do all such things
necessary to sais’y secion 7 8A
o’ the
Corporaions Act to ensure that an ofer ’or
sale o’ the Shares does not require disclosure
to investors.
h Shares issued on exercise
Shares issued on exercise o’ the Opions rank
equally with the then issued shares o’ the
Company.
i
Reconstrucion of capital
I’ at any ime the issued capital o’ the Company
is reconstructed, all rights o’ an Opionholder are
to be changed in a manner consistent with the
Corporaions Act and the ASX Lising Rules at the
ime o’ the reconstrucion.
j Paricipaion in new issues
There are no paricipaion rights or enitlements
inherent in the Opions and holders will not be
enitled to paricipate in new issues o’ capital
ofered to Shareholders during the currency o’ the
Opions without exercising the Opions.
Expiry Date will automaically lapse on the Expiry
Date.
d Exercise Period
The Opions are exercisable at any ime on or prior
to the Expiry Date Exercise Period .
e Noice of Exercise
The Opions may be exercised during the Exercise
Period by noice in wriing to the Company in the
manner speciied on the Opion ceriicate Noice
of Exercise and payment o’ the Exercise Price ’or
each Opion being exercised in Australian currency
by electronic ’unds trans’er or other means o’
payment acceptable to the Company.
’ Exercise Date
A Noice o’ Exercise is only efecive on and ’rom
the later o’ the date o’ receipt o’ the Noice o’
Exercise and the date o’ receipt o’ the payment o’
the Exercise Price ’or each Opion being exercised
in cleared ’unds Exercise Date .
g Timing of issue of Shares on exercise
Within
Business Days ater the later o’ the
’ollowing:
k Change in exercise price
i.
the Exercise Date; and
An Opion does not con’er the right to a change
in Exercise Price or a change in the number o’
underlying securiies over which the Opion can be
exercised.
ii.
when excluded in’ormaion in respect to
the Company as deined in secion 7 8A 7
o’ the Corporaions Act i’ any ceases to
be excluded in’ormaion,
l
Transferability
The Opions are trans’erable subject to any
restricion or escrow arrangements imposed by
ASX or under applicable Australian securiies laws.
16.4 DIRECTOR OPTIONS
The terms and condiions o’ the exising Opions
on issue as at the date o’ this Prospectus, held by
Directors and unrelated consultants, are set out
below.
a Enitlement
Each Opion enitles the holder to subscribe ’or
one Share upon exercise o’ the Opion.
b Exercise Price
Subject to paragraph 6. i , the amount payable
upon exercise o’ each Opion will be $ .
(Exercise Price .
c Expiry Date
Each Opion will expire at : pm WST on the
date which is three years ’rom the date o’ issue
(Expiry Date . An Opion not exercised be’ore the
PROSPECT U S
but in any case no later than
Business Days
ater the Exercise Date, the Company will:
iii. issue the number o’ Shares required under
these terms and condiions in respect o’ the
number o’ Opions speciied in the Noice
o’ Exercise and ’or which cleared ’unds
have been received by the Company;
iv. i’ required, give ASX a noice that complies
with secion 7 8A e o’ the Corporaions
Act, or, i’ the Company is unable to
issue such a noice, lodge with ASIC a
prospectus prepared in accordance with
the Corporaions Act and do all such things
necessary to sais’y secion 7 8A
o’
the Corporaions Act to ensure that an
ofer ’or sale o’ the Shares does not require
disclosure to investors; and
v. i’ admited to the Oicial List at the ime,
apply ’or oicial quotaion on ASX o’ Shares
issued pursuant to the exercise o’ the
Opions.
I’ a noice delivered under 6. 6. g iv ’or
any reason is not efecive to ensure that an
ofer ’or sale o’ the Shares does not require
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ADDITIONAL INFORMATION
disclosure to investors, the Company must, no
later than
Business Days ater becoming
aware o’ such noice being inefecive, lodge
with ASIC a prospectus prepared in accordance
with the Corporaions Act and do all such
things necessary to sais’y secion 7 8A
o’
the Corporaions Act to ensure that an ofer ’or
sale o’ the Shares does not require disclosure
to investors.
h Lapse of Opions
In the event that the Company has not been
admited to the Oicial List on or be’ore
June
7 the Opions will automaically lapse.
i
Shares issued on exercise
Shares issued on exercise o’ the Opions rank
equally with the then issued shares o’ the
Company.
j Reconstrucion of capital
I’ at any ime the issued capital o’ the Company
is reconstructed, all rights o’ an Opionholder are
to be changed in a manner consistent with the
Corporaions Act and the ASX Lising Rules at the
ime o’ the reconstrucion.
k Paricipaion in new issues
There are no paricipaion rights or enitlements
inherent in the Opions and holders will not be
enitled to paricipate in new issues o’ capital
ofered to Shareholders during the currency o’ the
Opions without exercising the Opions.
l
Change in exercise price
An Opion does not con’er the right to a change
in Exercise Price or a change in the number o’
underlying securiies over which the Opion can be
exercised.
m Transferability
Subject to the ASX Lising Rules, an Opion
granted under the Plan is only trans’erable,
assignable or able to be otherwise disposed or
encumbered in special circumstances with the
consent o’ the Board which may be withheld in its
absolute discreion or by ’orce o’ law upon death
to the Paricipant s legal personal representaive
or upon bankruptcy to the Paricipant s trustee in
bankruptcy.
16.5 EMPLOYEE OPTION PLAN
a Eligibility: Paricipants in the Opion Plan may be:
i.
117
a Director whether execuive or nonexecuive o’ the Company and any
associated body corporate o’ the Company
(each a Group Company ;
ii. a ’ull or part ime employee o’ any Group
Company;
iii. a casual employee or contractor o’ a Group
Company to the extent permited by ASIC
Class Order /
as amended or
replaced Class Order ; or
iv. a prospecive paricipant, being a person to
whom the ofer is made but who can only
accept the ofer i’ an arrangement has been
entered into that will result in the person
becoming a paricipant under subparagraphs
i , ii , or iii above,
who is declared by the Board to be eligible to
receive grants o’ Opions under the Opion
Plan Eligible Paricipants .
b Ofer: The Board may, ’rom ime to ime, in
its absolute discreion, make a writen ofer to
any Eligible Paricipant including an Eligible
Paricipant who has previously received an
ofer to apply ’or up to a speciied number o’
Opions, upon the terms set out in the Opion
Plan and upon such addiional terms and
condiions as the Board determines.
c Plan limit: The Company must have reasonable
grounds to believe, when making an ofer,
that the number o’ Shares to be received
on exercise o’ Opions ofered under an
ofer, when aggregated with the number
o’ Shares issued or that may be issued as a
result o’ ofers made in reliance on the Class
Order at any ime during the previous year
period under an employee incenive scheme
covered by the Class Order or an ASIC exempt
arrangement o’ a similar kind to an employee
incenive scheme, will not exceed % o’ the
total number o’ Shares on issue at the date o’
the ofer.
d Issue price: Unless the Opions are quoted on
the ASX, Opions issued under the Opion Plan
will be issued ’or no more than nominal cash
consideraion.
e Vesing Condiions: An Opion may be made
subject to vesing condiions as determined by
the Board in its discreion and as speciied in
the ofer ’or the Opion.
’ Vesing: The Board may in its absolute
discreion except in respect o’ a change o’
control occurring where vesing condiions
are deemed to be automaically waived by
writen noice to a Paricipant being an Eligible
Paricipant to whom Opions have been
granted under the Opion Plan or their nominee
where the Opions have been granted to the
nominee o’ the Eligible Paricipant
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(Relevant Person , resolve to waive any o’ the
Vesing Condiions applying to Opions due to:
i.
unvested ater the Relevant Person ceases
to be an Eligible Paricipant;
iv. in respect o’ vested Opions only, a relevant
person ceases to be an Eligible Paricipant
and the Opion granted in respect o’ that
person is not exercised within one
month
or such later date as the Board determines
o’ the date that person ceases to be an
Eligible Paricipant;
special circumstances arising in relaion
to a Relevant Person in respect o’ those
Opions, being:
A. a Relevant Person ceasing to be an
Eligible Paricipant due to:
I. death or total or permanent disability
o’ a Relevant Person; or
v. the Board deems that an Opion lapses
due to ’raud, dishonesty or other improper
behaviour o’ the Eligible Paricipant;
II. reirement or redundancy o’ a
Relevant Person;
vi. the Company undergoes a Change o’
Control or a winding up resoluion or order
is made and the Board does not exercise its
discreion to vest the Opion;
B. a Relevant Person sufering severe
inancial hardship;
C. any other circumstance stated to
consitute special circumstances in the
terms o’ the relevant ofer made to and
accepted by the Paricipant; or
D. any other circumstances determined by
the Board at any ime whether be’ore
or ater the ofer and noiied to the
relevant Paricipant which circumstances
may relate to the Paricipant, a class o’
Paricipant, including the Paricipant
or paricular circumstances or class
o’ circumstances applying to the
Paricipant; or
vii. the expiry date o’ the Opion.
h Shares: Shares resuling ’rom the exercise
o’ the Opions shall, subject to any Sale
Restricions re’er paragraph i ’rom the date
o’ issue, rank on equal terms with all other
Shares on issue.
i
ii. a change o’ control occurring; or
iii. the Company passing a resoluion ’or
voluntary winding up, or an order is made
’or the compulsory winding up o’ the
Company.
g Lapse of an Opion: An Opion will lapse upon
the earlier to occur o’:
i.
an unauthorised dealing in the Opion;
ii. a Vesing Condiion in relaion to the Opion
is not saisied by its due date, or becomes
incapable o’ sais’acion, unless the Board
exercises its discreion to waive the Vesing
Condiions and vest the Opion in the
circumstances set out in paragraph ’ or the
Board resolves, in its absolute discreion,
to allow the unvested Opions to remain
unvested ater the Relevant Person ceases
to be an Eligible Paricipant;
iii. in respect o’ unvested Opion only, an
Eligible Paricipant ceases to be an Eligible
Paricipant, unless the Board exercises
its discreion to vest the Opion in the
circumstances set out in paragraph ’ or the
Board resolves, in its absolute discreion,
to allow the unvested Opions to remain
PROSPECT U S
Sale Restricions: The Board may, in its
discreion, determine at any ime up unil
exercise o’ Opions, that a restricion period
will apply to some or all o’ the Shares issued to
an Eligible Paricipant or their eligible nominee
on exercise o’ those Opions up to a maximum
o’ seven 7 years ’rom the grant date o’ the
Opions. In addiion, the Board may, in its sole
discreion, having regard to the circumstances
at the ime, waive any such restricion period
determined.
j No Paricipaion Rights: There are no
paricipaing rights or enitlements inherent in
the Opions and holders will not be enitled
to paricipate in new issues o’ capital ofered
to Shareholders during the currency o’ the
Opions.
k Change in exercise price of number of
underlying securiies: Unless speciied in the
ofer o’ the Opions and subject to compliance
with the ASX Lising Rules, an Opion does not
con’er the right to a change in exercise price or
in the number o’ underlying Shares over which
the Opion can be exercised.
l
Reorganisaion: I’, at any ime, the issued
capital o’ the Company is reorganised including
consolidaion, subdivision, reducion or return ,
all rights o’ a holder o’ an Opion are to be
changed in a manner consistent with the
Corporaions Act and the ASX Lising Rules at
the ime o’ the reorganisaion.
118
16/18
ADDITIONAL INFORMATION
m Trust: The Board may, at any ime, establish
a trust ’or the sole purpose o’ acquiring and
holding Shares in respect o’ which a Paricipant
may exercise, or has exercised, vested Opions,
including ’or the purpose o’ en’orcing the
disposal restricions and appoint a trustee to
act as trustee o’ the trust. The trustee will hold
the Shares as trustee ’or and on behal’ o’ a
Paricipant as beneicial owner upon the terms
o’ the trust. The Board may at any ime amend
all or any o’ the provisions o’ the Opion Plan
to efect the establishment o’ such a trust and
the appointment o’ such a trustee.
16.6 INTERESTS OF DIRECTORS
Other than as set out in this Prospectus, no
Director or proposed Director holds, or has held
within the years preceding lodgement o’ this
Prospectus with the ASIC, any interest in:
a the ’ormaion or promoion o’ the Company;
b any property acquired or proposed to be
acquired by the Company in connecion with:
i.
its ’ormaion or promoion; or
ii. the Ofers; or
c the Ofers,
and no amounts have been paid or agreed to be
paid and no beneits have been given or agreed to
be given to a Director or proposed Director:
d as an inducement to become, or to quali’y as, a
Director; or
e ’or services provided in connecion with:
i.
the ’ormaion or promoion o’ the
Company; or
ii. the Ofers.
16.7 INTERESTS OF EXPERTS AND
ADVISERS
Other than as set out below or elsewhere in this
Prospectus, no:
a person named in this Prospectus as per’orming
a ’uncion in a pro’essional, advisory or other
capacity in connecion with the preparaion or
distribuion o’ this Prospectus;
b promoter o’ the Company; or
c underwriter but not a sub-underwriter to the
issue or a inancial services licensee named in
this Prospectus as a inancial services licensee
involved in the issue,
119
holds, or has held within the years preceding
lodgement o’ this Prospectus with the ASIC, any
interest in:
a the ’ormaion or promoion o’ the Company;
b any property acquired or proposed to be
acquired by the Company in connecion with:
i.
its ’ormaion or promoion; or
ii. the Ofers; or
c the Ofers,
and no amounts have been paid or agreed to be
paid and no beneits have been given or agreed
to be given to any o’ these persons ’or services
provided in connecion with:
d the ’ormaion or promoion o’ the Company; or
e the Ofers.
RSM Corporate Australia Pty Ltd has acted as
Invesigaing Accountant and has prepared the
Invesigaing Accountant s Report which is included
in Secion
o’ this Prospectus. The Company
esimates it will pay RSM Corporate Australia
Pty Ltd a total o’ $ 6,
excluding GST ’or
these services. During the
months preceding
lodgement o’ this Prospectus with the ASIC, RSM
Corporate Australia Pty Ltd has not received any
’ees ’rom the Company ’or any other services.
The Company has engaged RSM Australia Partners,
who are associated with RSM Corporate, but
determined to be independent ’or audit purposes,
to provide audit and assurance services to the
Company ’ollowing the Company lising on the
ASX. RSM Singapore acts as the auditor in relaion
to the audit o’ De.mem Pte Ltd. During the
months preceding lodgement o’ this Prospectus
with the ASIC, RSM Singapore has received SGD
$ 8, 8 in ’ees ’rom De.mem Pte Ltd ’or audit
and assurance services in relaion to the audit o’
the De.mem Pte Ltd ’or the years commencing
’rom January
to the hal’ year period
inishing on
June
6.
Wave Six Pty Ltd is acing as Independent
Technical Expert and has prepared the Technology
Report which is included in Secion
o’ this
Prospectus. The Company esimates it will pay
Wave Six Pty Ltd a total o’ $8,
excluding
GST ’or these services. During the
months
preceding lodgement o’ this Prospectus with the
ASIC, Wave Six Pty Ltd has not received any ’ees
’rom the Company ’or any other services.
Ventnor has acted as the corporate advisor to the
Company in relaion to the Ofers and will be paid
’or these services on standard industry terms and
condiions. In addiion, Ventnor or its nominee will
D EM EM
16/18
ADDITIONAL INFORMATION
receive ,9 ,
Advisor Opions as detailed
in Secion .7 o’ this Prospectus. Ventnor will
receive a ’ee o’ $ ,
upon the Company
success’ully lising on the ASX. Subsequently,
’ees will be charged in accordance with normal
commercial rates. Ventnor will also be paid ’ees
’or on-going company secretarial services, as
set out in Secion .8. During the
months
preceding lodgement o’ this Prospectus with the
ASIC, Ventnor has received $6 ,
excluding
GST in ’ees ’rom the Company ’or corporate
advisory services. Further Ventnor Securiies Pty
Ltd, a company associated with Director Stuart
Carmichael was paid a ’ee o’ $ ,
plus GST
in as brokerage in respect o’ a prior capital raising
by the Company. Following the Company lising
on the ASX, Ventnor will be engaged on standard
industry terms and condiions to provide Company
Secretarial, registered oice and accountancy
services to the Company. Mr Stuart Carmichael
is a director and shareholder o’ Ventnor. Mr Bret
Tucker is an employee o’ Ventnor.
Alto Capital is acing as Lead Manager to the
Company in relaion to the Ofers. Alto Capital
will receive ,9 ,
Advisor Opions as detailed
in Secion .9 o’ this Prospectus. Following
the Company s success’ul lising on the ASX,
the Company will pay Alto Capital a success ’ee
o’ $ ,
and issue ,
,
Shares to Alto
Capital or its nominees. Addiionally, ’ollowing
the Company lising on the ASX, the Company
will pay Alto Capital an ongoing Lead Manager
’ee o’ $ ,
per month exclusive o’ GST ’or
consecuive months, ’ollowing the Company being
admited to the Oicial List. During the
months
preceding lodgement o’ this Prospectus with the
ASIC, Alto Capital has not received any ’ees ’rom
the Company.
Steinepreis Paganin has acted as the solicitors
to the Company in relaion to the Ofers. The
Company esimates it will pay Steinepreis Paganin
$7 ,
excluding GST ’or these services.
Subsequently, ’ees will be charged in accordance
with normal charge out rates. During the
months preceding lodgement o’ this Prospectus
with the ASIC, Steinepreis Paganin has not
received ’ees ’rom the Company ’or any other
services.
16.8 CONSENTS
Chapter 6D o’ the Corporaions Act imposes a
liability regime on the Company as the oferor o’
the Securiies , the Directors, the persons named
in the Prospectus with their consent as Proposed
Directors, any underwriters, persons named in
the Prospectus with their consent having made a
statement in the Prospectus and persons involved
PROSPECT U S
in a contravenion in relaion to the Prospectus,
with regard to misleading and decepive
statements made in the Prospectus.
Although the Company bears primary responsibility
’or the Prospectus, the other paries involved in
the preparaion o’ the Prospectus can also be
responsible ’or certain statements made in it.
Each o’ the paries re’erred to in this Secion:
a does not make, or purport to make, any
statement in this Prospectus other than those
re’erred to in this Secion; and
b in light o’ the above, only to the maximum
extent permited by law, expressly disclaim
and take no responsibility ’or any part o’ this
Prospectus other than a re’erence to its name
and a statement included in this Prospectus
with the consent o’ that party as speciied in
this Secion.
RSM Corporate Australia Pty Ltd has given its
writen consent to being named as Invesigaing
Accountant in this Prospectus and to the inclusion
o’ the Invesigaing Accountant s Report in Secion
o’ this Prospectus in the ’orm and context in
which the in’ormaion and report is included. RSM
Corporate Australia Pty Ltd has not withdrawn its
consent prior to lodgement o’ this Prospectus with
the ASIC.
RSM Australia Partners, who are associated with
RSM Corporate Australia Pty Ltd, has given its
writen consent to being named as Auditor in
this Prospectus. RSM Australia Partners has not
withdrawn its consent prior to lodgement o’ this
Prospectus with the ASIC.
RSM Singapore has given its writen consent to
being named as auditor to DMS in this Prospectus.
RSM Singapore has not withdrawn its consent
prior to lodgment o’ this Prospectus with the ASIC.
Wave Six Pty Ltd has given its writen consent
to being named as Independent Technical Expert
in this Prospectus and to the inclusion o’ the
Technical Report in Secion
o’ this Prospectus
in the ’orm and context in which the in’ormaion
and report is included. Wave Six Pty Ltd has not
withdrawn its consent prior to lodgement o’ this
Prospectus with the ASIC.
Ventnor has given its writen consent to being
named as the Compliance Manager to the
Company in this Prospectus. Ventnor has not
withdrawn its consent prior to the lodgement o’
this Prospectus with the ASIC.
Alto Capital has given its writen consent to being
named as Lead Manager in this Prospectus. Alto
Capital has not withdrawn its consent prior to
lodgement o’ this Prospectus with the ASIC.
120
16/18
ADDITIONAL INFORMATION
Steinepreis Paganin has given its writen consent
to being named as the solicitors to the Company
in this Prospectus. Steinepreis Paganin has not
withdrawn its consent prior to the lodgement o’
this Prospectus with the ASIC.
Link Market Services Limited has given its writen
consent to being named as the share registry
to the Company in this Prospectus. Link Market
Services Limited has not withdrawn its consent
prior to the lodgement o’ this Prospectus with
the ASIC.
16.9 EXPENSES OF THE OFFERS
The total expenses o’ the Ofers excluding GST
are esimated to be approximately $
,
’or minimum subscripion or $
,
’or ’ull
subscripion and are expected to be applied
towards the items set out in the table below:
ITEM OF
EXPENDITURE
ASIC ’ees
ASX ’ees
Broker
Commissions*
Legal Fees
Advisor Fees
Independent
Technical Report
Invesigaing
Accountant s
Fees
Prining and
Distribuion
Miscellaneous
TOTAL
MINIMUM
SUBSCRIPTION
($)
OVER
SUBSCRIPTION
($)
,
,
78,
,
78,96
9 ,
7 ,
6 ,
8,
7 ,
6 ,
8,
,
,
,
,
6,
,
8
,688
,
* Broker commissions will only be paid on applicaions made through
a licensed securiies dealers or Australian inancial services
licensee and accepted by the Company re’er to Secion 6. o’
this Prospectus ’or ’urther in’ormaion . The amount calculated
is based on
% o’ applicaions being made in this manner.
For those applicaions made directly to and accepted by the
Company no broker commissions will be payable, except ’or a %
management ’ee, and the expenses o’ the Ofers will be reduced
and the addiional ’unds will be put towards working capital.
The Broker commissions includes a ’ee o’ $ ,
payable upon
success’ul lising o’ the Company on the ASX.
16.10 CONTINUOUS DISCLOSURE
OBLIGATIONS
Following admission o’ the Company to the Oicial
List, the Company will be a disclosing enity as
deined in Secion
AC o’ the Corporaions Act
and, as such, will be subject to regular reporing
and disclosure obligaions. Speciically, like all
listed companies, the Company will be required to
121
coninuously disclose any in’ormaion it has to the
market which a reasonable person would expect to
have a material efect on the price or the value o’
the Company s securiies.
Price sensiive in’ormaion will be publicly
released through ASX be’ore it is disclosed to
shareholders and market paricipants. Distribuion
o’ other in’ormaion to shareholders and market
paricipants will also be managed through
disclosure to the ASX. In addiion, the Company
will post this in’ormaion on its website ater the
ASX conirms an announcement has been made,
with the aim o’ making the in’ormaion readily
accessible to the widest audience.
16.11 ELECTRONIC PROSPECTUS
I’ you have received this Prospectus as an
electronic Prospectus, please ensure that you have
received the enire Prospectus accompanied by the
Applicaion Form. I’ you have not, please contact
the Company and the Company will send you, ’or
’ree, either a hard copy or a ’urther electronic copy
o’ this Prospectus or both. Alternaively, you may
obtain a copy o’ this Prospectus ’rom the website
o’ the Company at www.demembranes.com.
The Company reserves the right not to accept an
Applicaion Form ’rom a person i’ it has reason to
believe that when that person was given access
to the electronic Applicaion Form, it was not
provided together with the electronic Prospectus
and any relevant supplementary or replacement
prospectus or any o’ those documents were
incomplete or altered.
16.12 FINANCIAL FORECASTS
The Directors have considered the maters set out
in ASIC Regulatory Guide 7 and believe that
they do not have a reasonable basis to ’orecast
’uture earnings on the basis that the operaions o’
the Company are inherently uncertain. Accordingly,
any ’orecast or projecion in’ormaion would
contain such a broad range o’ potenial outcomes
and possibiliies that it is not possible to prepare a
reliable best esimate ’orecast or projecion.
16.13 CLEARING HOUSE ELECTRONIC
SUB-REGISTER SYSTEM (CHESS)
AND ISSUER SPONSORSHIP
The Company will apply to paricipate in CHESS,
’or those investors who have, or wish to have,
a sponsoring stockbroker. Investors who do not
wish to paricipate through CHESS will be issuer
sponsored by the Company.
Electronic sub-registers mean that the Company
will not be issuing ceriicates to investors. Instead,
D EM EM
16/18
ADDITIONAL INFORMATION
investors will be provided with statements similar
to a bank account statement that set out the
number o’ Shares issued to them under this
Prospectus. The noice will also advise holders
o’ their Holder Ideniicaion Number or Security
Holder Re’erence Number and explain, ’or ’uture
re’erence, the sale and purchase procedures under
CHESS and issuer sponsorship.
Electronic sub-registers also mean ownership o’
securiies can be trans’erred without having to
rely upon paper documentaion. Further monthly
statements will be provided to holders i’ there
have been any changes in their security holding in
the Company during the preceding month.
16.14 PRIVACY STATEMENT
I’ you complete an Applicaion Form, you will be
providing personal in’ormaion to the Company.
The Company collects, holds and will use that
in’ormaion to assess your applicaion, service your
needs as a Shareholder and to ’acilitate distribuion
payments and corporate communicaions to you as
a Shareholder.
The in’ormaion may also be used ’rom ime to
ime and disclosed to persons inspecing the
register, including bidders ’or your securiies in the
context o’ takeovers, regulatory bodies including
the Australian Taxaion Oice, authorised securiies
brokers, print service providers, mail houses and
the share registry.
You can access, correct and update the personal
in’ormaion that we hold about you. I’ you wish
to do so, please contact the share registry at the
relevant contact number set out in this Prospectus.
Collecion, maintenance and disclosure o’ certain
personal in’ormaion is governed by legislaion
including the Privacy Act 988 as amended , the
Corporaions Act and certain rules such as the ASX
Setlement Operaing Rules. You should note that
i’ you do not provide the in’ormaion required on
the applicaion ’or Securiies, the Company may
not be able to accept or process your applicaion.
PROSPECT U S
122
17/18
DIRECTORS’ AUTHORISATION
17/18
DIRECTORS' AUTHORISATION
123
D EM EM
17/18
DIRECTORS’ AUTHORISATION
This Prospectus is issued by the Company and its issue has been authorised by a resoluion o’ the
Directors.
In accordance with Secion 7 o’ the Corporaions Act, each Director has consented to the lodgement
o’ this Prospectus with the ASIC.
Mr Andreas Kroell
Chief Execuive Oicer and Director
For and on behalf of
De.mem Limited
PROSPECT U S
124
18/18
GLOSSARY
18/18
GLOSSARY
Where the following terms are used in this
Prospectus they have the following meanings:
$ or AUD means an Australian
dollar.
Acquisiion means the acquisiion
o’
% o’ the issued capital o’
DMS ’rom the Vendors.
Advisor Ofer means the ofer o’
,8 ,
Opions to Ventnor and
Alto Capital in consideraion ’or
the provision o’ corporate advisory
services and lead manager
services.
Advisor Opions means the
,8 ,
Opions to be issued to
Ventnor and Alto Capital under the
Advisor Ofer.
Alto Capital means ACNS Capital
Markets Pty Ltd T/A Alto Capital
ACN
6 9 AFSL
79 99 .
Alto Capital Mandate means the
lead manager mandate entered
into by the Company and Alto
Capital as summarised in secion
.9.
Applicant means an applicant ’or
Securiies under this Prospectus.
Applicaion Form means the
applicaion ’orm atached to or
accompanying this Prospectus
relaing to the Public Ofer, the
Consideraion Ofer or the Advisor
Ofer, as applicable.
ASIC means Australian Securiies
& Investments Commission.
125
ASX means ASX Limited ACN 8
6 69 or the inancial market
operated by it as the context
requires.
ASX Lising Rules means the
oicial lising rules o’ ASX.
Board means the board o’
Directors as consituted ’rom ime
to ime.
BOO means a build, own, operate
model o’ producion.
Closing Date means the closing
date o’ the Ofers as set out in
the indicaive imetable in the
Investment Overview in Secion
o’ this Prospectus subject to the
Company reserving the right to
extend the Closing Date or close
the Ofers early .
Company or DMA means De.mem
Limited ACN 6 7 6 6 .
Compleion means compleion o’
the Acquisiion in accordance with
the Implementaion Agreement.
Condiions has the meaning given
in Secion . .
Consideraion Ofer means the
private ofer o’ the Consideraion
Shares to the Vendors or their
nominee s in consideraion ’or the
Acquisiion.
Consideraion Shares means the
6 ,
,
Shares ofered to the
Vendors or their nominee s in
consideraion ’or the Acquisiion.
D EM EM
18/18
GLOSSARY
Consituion means the consituion o’ the
Company.
Corporaions Act means the Corporaions Act
Cth .
De.mem Group means DMS and each o’ the
companies o’ which it is the ulimate holding
company o’, including De.mem Viet Nam Ltd, GD
Wasser Pte Ltd, GD Wasser Viet Nam Ltd, GD
Wasser Long An Ltd and GD Wasser Nghe An Ltd,
as set out in Secion 7. .
Directors means the directors o’ the Company at
the date o’ this Prospectus.
DMA or the Company means De.mem Limited
ACN 6 7 6 6 .
DMS or De.mem means De.mem Private Limited,
a company incorporated in Singapore UEN No.
7
R.
Equipment Sale Agreement means the equipment
sale agreement entered into by De.mem and FCA
on
October
6, as summarised in Secion
. .
ESOP means the Company s employee opion plan.
Exclusive Licence Agreement means the exclusive
licence agreement entered into by DMS and
Ntuiive on
June
6, as summarised in
Secion . .
Exposure Period means the period o’ 7 days ater
the date o’ lodgement o’ this Prospectus, which
period may be extended by the ASIC by not more
than 7 days pursuant to Secion 7 7 o’ the
Corporaions Act.
FCA means Foshan Chinese Academy o’ Science
Membrane Technology Co. Ltd, Guangdong, China.
Givaudan means Givaudan Singapore Pte Ltd o’
Woodlands Avenue 8, Singapore 7 897 .
Givaudan Build Own Operate Agreement means
the agreement between De.mem and Givaudan
dated
November
6, as summarised in
Secion . .
Implementaion Agreement means the agreement
entered into by the Company, DMS and the Major
Shareholders on
October
6 to complete the
Acquisiion, as summarised in Secion . .
Independent Technical Expert means Wave Six Pty
Ltd ACN 6 98
.
Major Shareholders means the major shareholders
o’ DMS, New Asia Investments Pte Ltd and NA
Singapore Early Stage Venture Fund I Pte Ltd.
Membrane Integrity Sensor has the meaning given
in Secion 7.6
PROSPECT U S
Non-Exclusive Licence Agreement means the nonexclusive licence agreement entered into by DMS
and Ntuiive on
January
, as summarised
in Secion . .
Ntuiive means Nanyang Technological University
– Ntuiive Pte Ltd a wholly owned subsidiary o’
NTU .
Ofers means the Public Ofer, the Consideraion
Ofer and the Advisor Ofer.
Oicial List means the oicial list o’ ASX.
Oicial Quotaion means oicial quotaion by ASX
in accordance with the ASX Lising Rules.
Original Prospectus means the prospectus dated
January
7 relaing to Securiies o’ the
Company.
Opion means an opion to acquire a Share.
Opionholder means a holder o’ an Opion.
Prospectus means this prospectus.
Public Ofer means the public ofer o’ 8,7 ,
Shares to raise a minimum o’ $ ,7 ,
pursuant
to this Prospectus as set out in Secion 6. o’ this
prospectus.
RO means reverse osmosis.
Secondary Ofers means the Consideraion Ofer
and the Advisor Ofer.
Secion means a secion o’ this Prospectus.
Securiies means the Shares and Opions ofered
pursuant to this Prospectus.
SGD means a Singapore dollar.
Share means a ’ully paid ordinary share in the
capital o’ the Company.
Shareholder means a holder o’ Shares.
Subscripion Opion has the meaning given in
Secion . d .
UF means an ultrailtraion membrane.
UF-RO means an ultrailtraion – reverse osmosis
membrane process.
Vendors means the holders o’ ’ully paid ordinary
shares, series a pre’erence shares or series b
pre’erence shares DMS.
Ventnor means Ventnor Capital Pty Ltd ACN
7 .
Ventnor Lising Mandate means the mandate
entered into by DMS and Ventnor, as summarised
in Secion .7.
WST means Western Standard Time as observed
in Perth, Western Australia.
126
18/18
GLOSSARY
WWW.DEMEMBRANES.COM
127
D EM EM
DE.MEM LIMITED
Broker Code
ACN 614 756 642
Adviser Code
Public Offer Application Form – Replacement Prospectus
This is an application form for Shares in De.mem Limited under the Public Offer on the terms set out in the Replacement Prospectus dated 16
February 2017, which replaces the Prospectus dated 31 January 2017 (Prospectus). You may apply for a minimum of 10,000 Shares and
multiples of 1,000 thereafter. This Application Form and your cheque or bank draft must be received by 5:00pm (AEDT) on 2 March 2017.
If you are in doubt as to how to deal with this Application Form, please contact your accountant, lawyer, stockbroker or other
professional adviser. The Prospectus contains information relevant to a decision to invest in Shares and you should read the entire
Prospectus carefully before applying for Shares.
Shares applied for
A
,
Price per Share
,
Application Monies
B
A$0.20
at
A$
,
,
.
(minimum 10,000, thereafter in multiples of 1,000)
+
PLEASE COMPLETE YOUR DETAILS BELOW (refer overleaf for correct forms of registrable names)
Applicant #1
Surname/Company Name
C
Title
First Name
Middle Name
Joint Applicant #2
Surname
Title
First Name
Middle Name
Designated account e.g. <Super Fund> (or Joint Applicant #3)
TFN/ABN/Exemption Code
First Applicant
Joint Applicant #2
Joint Applicant #3
D
TFN/ABN type – if NOT an individual, please mark the appropriate box
Company
Partnership
Trust
Super Fund
PLEASE COMPLETE ADDRESS DETAILS
PO Box/RMB/Locked Bag/Care of (c/-)/Property name/Building name (if applicable)
E
Unit Number/Level
Street Number
Street Name
Suburb/City or Town
State
Postcode
Email address (only for purpose of electronic communication of shareholder information)
CHESS HIN (if you want to add this holding to a speciic CHESS holder, write the number here)
+
F X
Telephone Number where you can be contacted during Business Hours
G
(
Contact Name (PRINT)
)
Cheques or bank drafts should be made payable to “De.mem Limited” in Australian currency and crossed “Not Negotiable”.
Cheque or Bank Draft Number
H
BSB
Account Number
Total Amount
A$
,
LODGEMENT INSTRUCTIONS
You must return your application so it is received before 5:00pm (AEDT) on 2 March 2017 to:
De.mem Limited, PO Box 248, West Perth WA 6872.
,
.
DEM IPO001
*DEM IPO001*
Please note: that if you supply a CHESS HIN but the name and address details on your Application Form do not correspond exactly
with the registration details held at CHESS, your Application will be deemed to be made without the CHESS HIN and any Shares
issued as a result of the Offer will be held on the issuer sponsored sub-register.
I
Direct Deposit BSB: 036 011
Account number: 560761
Account Name: De.mem Limited
Reference: [Please use your registration name above]
IMPORTANT: YOU MUST PROVIDE A COPY OF A DIRECT DEPOSIT RECEIPT TO THE COMPANY IF YOU ARE PAYING
VIA DIRECT DEPOSIT
Email your receipt and completed application to: [email protected] OR Fax to: (+61) 8 9221 0488
Your Guide to the Application Form
Please complete all relevant white sections of the Application Form in BLOCK LETTERS, using black or blue ink. These instructions are cross-referenced
to each section of the form.
The Shares to which this Application Form relates are De.mem Limited (“De.mem”) Shares. Further details about the shares are contained in the Prospectus
dated 16 February 2017 issued by De.mem Limited. The Prospectus will expire on 18 March 2017. While the Prospectus is current, De.mem Limited will send
paper copies of the Prospectus, any supplementary document and the Application Form, free of charge on request.
The Australian Securities and Investments Commission requires that a person who provides access to an electronic application form must provide access,
by the same means and at the same time, to the relevant Prospectus. This Application Form is included in the Prospectus.
The Prospectus contains important information about investing in the Shares. You should read the Prospectus before applying for Shares.
A Insert the number of Shares you wish to apply for. The Application must
be for a minimum of 10,000 Shares and thereafter in multiples of 1,000.
You may be issued all of the Shares applied for or a lesser number.
B Insert the relevant amount of Application Monies. To calculate your
Application Monies, multiply the number of Shares applied for by the
issue price. Amounts should be in Australian dollars. Please make sure
the amount of your cheque or bank draft equals this amount.
C Write the full name you wish to appear on the register of Shares. This
must be either your own name or the name of a company. Up to three
joint Applicants may register. You should refer to the table below for the
correct registrable title.
D Enter your Tax File Number (TFN) or exemption category. Business
enterprises may alternatively quote their Australian Business Number
(ABN). Where applicable, please enter the TFN or ABN for each joint
Applicant. Collection of TFN(s) and ABN(s) is authorised by taxation
laws. Quotation of TFN(s) and ABN(s) is not compulsory and will not
affect your Application. However, if these are not provided, De.mem
Limited will be required to deduct tax at the highest marginal rate of tax
(including the Medicare Levy) from payments.
E Please enter your postal address for all correspondence. All communications
to you from De.mem Limited and the Share Registry will be mailed to
the person(s) and address as shown. For joint Applicants, only one
address can be entered.
F If you are already a CHESS participant or sponsored by a CHESS
participant, write your Holder Identiication Number (HIN) here. If the
name or address recorded on CHESS for this HIN is different to the
details given on this form, your Shares will be issued to De.mem Limited’s
issuer sponsored subregister.
G Please enter your telephone number(s), area code and contact name in
case we need to contact you in relation to your Application.
H Please complete the details of your cheque or bank draft in this section.
The total amount of your cheque or bank draft should agree with the
amount shown in section B.
Make your cheque or bank draft payable to “De.mem Limited” in
Australian currency and cross it “Not Negotiable”. Your cheque or bank
draft must be drawn on an Australian bank. Suficient cleared funds
should be held in your account, as cheques returned unpaid are likely
to result in your Application being rejected.
If you receive a irm allocation of Shares from your Broker make your
cheque payable to your Broker in accordance with their instructions.
I 8 Payment Details
By making your payment, you conirm that you agree to all of the terms
and conditions of the De.mem Limited Public Offer as outlined on this
Application Form and within the Prospectus.
Electronic funds transfer should be made to the account details listed
on the application form. If paying by EFT you must include a reference
that is the same as the name of the person or entity on the application
form. You must also attach a copy of your EFT bank conirmation showing
this reference to the completed application form. The application form
with the EFT confirmation attached can be emailed to andrea@
altocapital.com.au
If paying by cheque your cheque should be made payable to “DE.MEM
LIMITED” in Australian currency, crossed “Not Negotiable” and drawn
on an Australian branch of a inancial institution. Please complete your
cheque with the details overleaf and ensure that you submit the correct
amount as incorrect payments may result in your Application being
rejected.
Cheques will be processed on the day of receipt and as such, suficient
cleared funds must be held in your account as cheques returned unpaid
may not be re-presented and may result in your Application being
rejected. Paperclip (do not staple) your cheque(s) to the Application
Form. Cash will not be accepted. A receipt for payment will not be
forwarded.
If the amount you pay is insuficient to pay for the number of New Shares
you apply for, you will be taken to have applied for such lower number
of New Shares as that amount will pay for, or your Application will be
rejected.
LODGEMENT INSTRUCTIONS
This Application Form and your cheque or bank draft must be mailed or delivered so that it is received before 5:00pm (AEDT) on 2 March 2017 at:
Mailing Address
De.mem Limited
PO Box 248
West Perth WA 6872
Hand Delivery
De.mem Limited
Ground Floor
16 Ord Street
West Perth WA 6005
(do not use this address for mailing purposes)
PERSONAL INFORMATION COLLECTION NOTIFICATION STATEMENT
Personal information about you is held on the public register in accordance with Chapter 2C of the Corporations Act 2001. For details about Link Group’s
personal information handling practices including collection, use and disclosure, how you may access and correct your personal information and raise
privacy concerns, visit our website at www.linkmarketservices.com.au for a copy of the Link Group condensed privacy statement, or contact us by phone on
+61 1800 502 355 (free call within Australia) 9am–5pm (Sydney time) Monday to Friday (excluding public holidays) to request a copy of our complete privacy
policy.
CORRECT FORMS OF REGISTRABLE NAMES
Note that ONLY legal entities are allowed to hold Shares. Applications must be in the name(s) of natural persons or companies. At least one full given name
and the surname is required for each natural person. The name of the beneiciary or any other non-registrable name may be included by way of an account
designation if completed exactly as described in the examples of correct forms below.
Type of Investor
Correct Form of Registration
Incorrect Form of Registration
Mrs Katherine Clare Edwards
K C Edwards
Liz Biz Pty Ltd
Mr Peter Paul Tranche &
Ms Mary Orlando Tranche
Mrs Alessandra Herbert Smith
<Alessandra Smith A/C>
Ms Sophia Garnet Post &
Mr Alexander Traverse Post
<Est Harold Post A/C>
Mrs Sally Hamilton
<Henry Hamilton>
Liz Biz P/L or Liz Biz Co.
Peter Paul &
Mary Tranche
Alessandra Smith
Family Trust
Estate of late Harold Post
or
Harold Post Deceased
Master Henry Hamilton
Fred Smith & Son
Long Names
Mr Frederick Samuel Smith &
Mr Samuel Lawrence Smith
<Fred Smith & Son A/C>
Mr Hugh Adrian John Smith-Jones
Clubs/Unincorporated Bodies/Business Names
Use ofice bearer(s) personal name(s)
Superannuation Funds
Use the name of the trustee of the fund
Mr Alistair Edward Lilley
<Vintage Wine Club A/C>
XYZ Pty Ltd
<Super Fund A/C>
Vintage Wine Club
Individual
Use given names in full, not initials
Company
Use Company’s full title, not abbreviations
Joint Holdings
Use full and complete names
Trusts
Use the trustee(s) personal name(s)
Deceased Estates
Use the executor(s) personal name(s)
Minor (a person under the age of 18 years)
Use the name of a responsible adult with an appropriate designation
Partnerships
Use the partners’ personal names
Mr Hugh A J Smith Jones
XYZ Pty Ltd
Superannuation Fund
Put the name(s) of any joint Applicant(s) and/or account description using < > as indicated above in designated spaces at section C on the Application Form.