Replacement Prospectus

Transcription

1 Replacement Prospectus ecargo Holdings Limited ARBN Hong Kong Company Registration Number Offer of 100,000,000 CHESS Depositary Interests at A$0.40 per CHESS Depositary Interest to raise a maximum of A$40,000,000 Important notice This Prospectus including each of the documents which are incorporated by reference are important documents and must be read in their entirety. If you do not understand their contents or are in doubt as to the course you should follow, you should consult your professional advisor.

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3 contents Important notice 4 Letter from the Chairman 7 Key information & investment overview 9 Details of the Offer 23 Our business 29 Industry overview 45 Financial information 51 Board, management and governance 59 Risk factors 77 Investigating Accountant s Report 91 Additional information 99 Glossary 119 Application Form 125 Corporate directory 129

4 Important notice Offer The Offer contained in this Prospectus is an invitation to acquire CDIs in ecargo Holdings Limited (ecargo). Lodgement and listing This is a replacement Prospectus dated 2 October It replaces the Original Prospectus dated 18 September A copy of this replacement Prospectus was lodged with ASIC on 2 October ecargo will apply to the ASX for admission of ecargo to the official list of the ASX and for quotation of the CDIs on the ASX within seven days after the date of this Prospectus. Neither ASIC nor the ASX or their officers take any responsibility for the contents of this Prospectus or for the merits of the investment to which this Prospectus relates. Expiry date No CDIs will be allotted or issued on the basis of this Prospectus later than 13 months after the date of this Prospectus. Notice to Applicants The information in this Prospectus is not financial product advice and does not take into account your investment objectives, financial situation or particular needs. This Prospectus should not be construed as financial, taxation, legal or other advice. This Prospectus is important and should, along with each of the documents incorporated by reference, be read in its entirety prior to deciding whether to invest in ecargo s CDIs. There are risks associated with an investment in the CDIs and the CDIs offered under this Prospectus must be regarded as a speculative investment. Some of the risks that should be considered are set out in Risk factors commencing on page 77 of this Prospectus. You should carefully consider these risks in light of your personal circumstances including financial and taxation issues. There may also be risks in addition to these that should be considered in light of your personal circumstances. If you do not fully understand this Prospectus or are in doubt as to how to deal with it, you should seek professional guidance from your stockbroker, lawyer, accountant or other professional advisor before deciding whether to invest in the CDIs. No person named in this Prospectus guarantees ecargo s performance or any return on investment or any return of capital, made pursuant to this Prospectus. No offer where Offer would be illegal This Offer does not constitute a public offer or invitation in any jurisdiction other than Australia. No action has been taken to register or qualify the CDIs or the Offer, or to otherwise permit a public offering of CDIs, in any jurisdiction outside Australia. The distribution of this Prospectus outside Australia may be restricted by law and therefore any person who resides outside Australia and who receives this Prospectus should seek advice on and observe any such restrictions. Any person who has a registered address in any other country who receives this Prospectus may only apply for Shares where that person is able to reasonably demonstrate to the satisfaction of ecargo that they may participate in the Offer relying on a relevant exception from, or are not otherwise subject to, the lodgement, filing, registration or other requirements of any applicable securities laws in the jurisdiction in which they have a registered address. ecargo will not offer to sell, nor solicit an offer to purchase, any securities in any jurisdiction where such offer, sale or solicitation may not lawfully be made. Any failure to comply with these restrictions may constitute violation of applicable securities laws. Notice to United States residents The securities being offered pursuant to this Prospectus have not been registered under the United States Securities Act of 1933, as amended (US Securities Act) and may not be offered or sold in the United States absent registration or an applicable exemption from registration under the US Securities Act and applicable United States securities laws. This Prospectus does not constitute an offer to sell, or the solicitation of an offer to buy, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful. In addition, any hedging transactions involving these securities may not be conducted unless in compliance with the US Securities Act. 4

5 Financial information and amounts The Historical Financial Information included in this Prospectus for the financial period ended 30 June 2014 has been prepared and presented in accordance with the Hong Kong Financial Reporting Standards, HKFRS (but do not comply in all respects with HKFRS as indicated in the notes to the Historical Financial Information) and is expressed in HK$ (the functional currency of ecargo) except where otherwise stated. Save as set out above, the financial amounts referred to in this Prospectus are expressed in A$ unless stated otherwise. Figures in this Prospectus are in HK$ and have been converted from HK$ to A$ using a Conversion Date of 12 September 2014, with the exception of the figures which specifically detail a different conversion date. Accordingly, investors should be aware that the amounts represented in the Prospectus may change as a result of fluctuations in the A$ to HK$ exchange rate. Some numerical figures included in this Prospectus have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that preceded them. Disclaimer Australian investors should not rely on any information which is not contained in this Prospectus in making a decision as to whether to acquire securities in ecargo under the Offer. No person is authorised by ecargo or the Lead Manager to give any information or make any representation in connection with the Offer that is not contained in the Prospectus. Any information or representation not contained in this Prospectus may not be relied on as having been authorised by ecargo, its Directors or any other person in connection with the Offer. ecargo s business, financial condition, results of operations and prospects may have changed since the date of this Prospectus. This Prospectus contains forward-looking statements concerning ecargo s business, operations, financial performance and condition as well as ecargo s plans, objectives and expectations for its business, operations and financial performance and condition. Any statements contained in this Prospectus that are not of historical facts may be deemed to be forward-looking statements. You can identify these statements by words such as aim, anticipate, assume, believe, could, due, estimate, expect, goal, intend, may, objective, plan, predict, potential, positioned, should, target, will, would and other similar expressions that are predictions of or indicate future events and future trends. These forward-looking statements are based on current expectations, estimates and projections about ecargo s business and the industry in which ecargo operates and management s beliefs and assumptions. These forward looking statements are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond ecargo s control. As a result, any or all of ecargo s forward-looking statements in this Prospectus may turn out to be inaccurate. Factors that may cause such differences include, but are not limited to, the risks described in Risk factors on page 77 of this Prospectus. Potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on the forward-looking statements. These forward-looking statements speak only as at the date of this Prospectus. Unless required by law, ecargo does not intend to publicly update or revise any forward-looking statements to reflect new information or future events or otherwise. You should, however, review the factors and risks ecargo describes in the reports to be filed from time to time with the ASX after the date of this Prospectus. This Prospectus contains market data and industry forecasts that were obtained from industry publications, third-party market research and publicly available information. These publications generally state that the information contained in them has been obtained from sources believed to be reliable, but ecargo has not independently verified the accuracy and completeness of such information. This Prospectus also includes trademarks, trade names and service marks that are the property of other organisations. Exposure Period In accordance with Chapter 6D of the Corporations Act, the Original Prospectus dated 18 September 2014 was subject to an Exposure Period of seven (7) days from the date of lodgement of the Original Prospectus with the ASIC. The purpose of providing an Exposure Period is to enable examination of the Original Prospectus by market participants prior to the raising of funds. This 7 day exposure period was extended by a further 7 days to 2 October This Prospectus was issued to address the concerns raised by the ASIC in respect to the form and or content of the Original Prospectus dated 18 September ASIC Class Order 00/169 means that there is no additional exposure period under the Corporations Act for this replacement Prospectus. Electronic Prospectus This Prospectus will also be made available in electronic form on the website The other information on does not form part of the Prospectus. The Offer constituted by this Prospectus in electronic form is available only to persons receiving this Prospectus in electronic form within Australia. Persons who access the electronic version of this Prospectus should ensure that they download and read the entire Prospectus. If unsure about the completeness of the Prospectus received electronically, or a print out of it, you should contact ecargo. A paper copy of the Prospectus will be available for Australian residents free of charge by contacting: 5

6 Link Market Services Limited Tel: (from within Australia) or (from outside Australia) (between 8:30 am to 5:00 pm, AEST) Or Investorlink Securities Limited (Lead Manager) Tel: (from within Australia) or (from outside Australia) Applications for CDIs under this Prospectus may only be made on a printed copy of the Application Form attached to or accompanying this Prospectus. The Corporations Act prohibits any person from passing the Application Form on to another person unless it is attached to a hard copy of the Prospectus, or the complete and unaltered electronic version of the Prospectus. If this Prospectus is found to be deficient, any Applications may need to be dealt with in accordance with section 724 of the Corporations Act. Privacy By completing an Application Form, you consent to the collection, use and disclosure of your personal information as summarised below. For full details please refer to our privacy policy at or contact the ecargo Privacy Officer on (from within Australia) or (from outside Australia) (between 8:30 am to 5:00 pm, AEST) for a copy of the ecargo privacy policy. Collection of your personal information - We collect personal information about you so that we can administer our dealings with you, provide you with ecargo information, products and services, service your needs as a Shareholder (if you become one), and carry out appropriate administration of your Application for investment and deal with any requests you may have. If we do not collect your personal information, we may be unable to deal with your request or provide you with services and benefits, and we may not be able to process your Application under this prospectus. Personal information we collect may include name, address, date of birth, credit card details and other details. Disclosure of your personal information - We may disclose your personal information to third parties, such as our Share Registry, Lead Manager, Corporate Advisor, auditors, management, legal and other professional advisors, service providers, suppliers, insurers, IT providers who run our IT services, payment processors who process payments, marketing providers who provide marketing and public relations services, and where we are required to by law (and in accordance with the requirements of the Hong Kong Companies Ordinance, documents filed with the Hong Kong Companies Registry are available for inspection by the public). We may send your personal information offshore for processing to servers or data centres located in Hong Kong and China. Our Privacy Policy - Our privacy policy sets out our approach to the management of personal information. Subject to the Privacy Act 1998 (Cth), you can have access to and seek correction of your personal and sensitive information. Our privacy policy contains information about how you can do this. Our privacy policy also contains information about how you can make a complaint about a breach of privacy. Direct Marketing By submitting an Application Form, you consent to us using your personal information to let you know about products and services that we think may be of interest to you, via direct marketing through electronic and other means. However, you may opt out of receiving marketing information at any time by using the contact details provided above. For more information, see our privacy policy. Website Any documents included on the website (and any reference to them) are provided for convenience only and none of the documents or other information on the website are incorporated by reference into this Prospectus, with the exception of the Corporate Governance Plan and Historical Financial Information. Definitions and abbreviations Defined terms and abbreviations used in this Prospectus are explained in the Glossary on page 119 of this Prospectus. Time All references to time in this Prospectus refer to Australian Eastern Standard Time unless stated otherwise. Photographs and diagrams Photographs used in this Prospectus should not be interpreted to mean that any person shown endorses this Prospectus or its contents or that the assets shown in them are owned by ecargo. Diagrams used in the Prospectus are illustrative only and may not be drawn to scale. Unless otherwise stated, all data contained in charts, graphs and tables is based on information available as at 1 September

7 Letter from the Chairman Dear Investor, On behalf of the Board of Directors, it is with great pleasure that we invite you to become a Shareholder of ecargo Holdings Limited (ecargo). ecargo operates in the ecommerce industry primarily in China and Hong Kong. Whilst ecommerce is a global phenomenon, the Chinese ecommerce industry is evolving rapidly due to the fast expansion of the Chinese Netizens community, the proliferation of payment technology, the growth of the Chinese consumer market, the preference of the Chinese for social media and the speed of technology adoption in the Chinese market. Historical growth exceeding 120% per annum over the past 10 years in the Chinese ecommerce industry has created a strong platform for ecommerce enablement service providers in an evolving consumer market 1. The ecommerce market in China exceeded the size of the market in the United States in The Board anticipates that this high growth will continue in the years to come. ecargo provides integrated online and offline supply chain operations for Merchants seeking to broaden their reach to Chinese consumers. The business is structured to provide a one-stop solution for Merchants seeking to incubate or strengthen their brands positioning and presence in the online market, particularly those international brands which have the desire and forward plan to enter the China and Hong Kong market. ecargo believes that at this stage of development of the online consumer market in China, international brands are becoming a major interest. Consumer preferences are showing signs of a shift towards better quality merchandise, particularly among the more affluent sector of the market. The shift of the major online marketplaces in China towards international brands is a reflection of this change in consumer behaviour. The key drivers for the ecargo business include the Chinese Government s objective to enhance the development of etailing in the Chinese market to accommodate China s burgeoning domestic consumption 3. Although investment in ecargo involves a number of risks and should be considered speculative, we believe the Offer represents an opportunity to participate in the growing ecommerce enablement industry enhanced by the key drivers of the Chinese consumer market. ecargo is seeking to raise A$40 million under the Offer to expand the ecargo business in China and internationally. Key initiatives include incubating and developing new technologies in mcommerce, big data analytics and offline-to online (O2O) solutions. The primary goal is to enhance a Merchant s ability to offer a greater variety of products to the consumer, thereby delivering a better consumer experience. On behalf of our fellow Directors, we look forward to welcoming you as a Shareholder of ecargo. Yours faithfully, John Lau Executive Chairman ecargo Holdings Limited 1 China s e-tail revolution: Online shopping as a catalyst for growth, McKinsey Global Institute, March KPMG analysis of US and Chinese ecommerce data from Statista, Bain & Company. 3 Policies released by the Ministry of Industry and Information Technology to drive ecommerce as part of the China s 12th Five-Year Plan ( ). 7

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9 Key information & investment overview

10 General The information set out on pages 10 to 22 is intended to be a summary only and should be read in conjunction with the more detailed information appearing elsewhere in this Prospectus. In deciding whether to apply for CDIs, you should read this Prospectus carefully and in its entirety. If you are in doubt as to the course you should follow, please consult your professional advisors. Key dates Event Date Prospectus lodged with ASIC 2 October 2014 Opening Date 7 October 2014 Closing Date 31 October 2014 Allotment and issue of CDIs under the Offer 10 November 2014 Expected date for despatch of holding statements 13 November 2014 CDIs commence trading on ASX on a normal T+3 basis 18 November 2014 The timetable above is indicative only. All times are AEST. ecargo, in consultation with the Lead Manager reserves the right to vary the dates and times set out above subject to the Corporations Act and other applicable laws. In particular, ecargo reserves the right to close the Offer early, extend the Closing Date, accept late Applications or cancel the Offer before settlement without notifying any recipients of this Prospectus or any Applicants. If the Offer is cancelled before the issue of CDIs, then all Application Monies will be refunded in full (without interest) as soon as practicable, in accordance with the requirements of the Corporations Act. Investors who wish to submit an Application are encouraged to do so as soon as practicable after the Offer opens. Key Offer statistics Offer price per CDI Total number of CDIs on issue as at the date of the Prospectus A$ ,000,000 (equivalent to 460,000,000 Shares) Number of CDIs available under the Offer 100,000,000 Gross proceeds of the Offer* Total number of CDIs on issue following the Offer* A$40,000, ,000,000 (equivalent to 560,000,000 Shares) * assuming the Maximum Subscription is raised 10

11 Key Offer information and frequently asked questions Set out below is a summary of the key Offer information and frequently asked questions. This information is intended to be a summary only and should be read in conjunction with the more detailed information contained in the Prospectus and as cross referenced in the third column of the table below. Item Summary Additional information General Who is the issuer of this Prospectus? What is the nature of the business of ecargo? What is the ecoreos ecommerce technology platform? ecargo Holdings Limited (ecargo, we, our or the Company), a company incorporated in Hong Kong. ecargo operates in the ecommerce industry, primarily in China and Hong Kong. ecargo provides integrated online and offline supply chain solutions and operations for Merchants, particularly international brands, seeking to strengthen their brand positioning and online presence in the Chinese and Hong Kong market. The business is structured as a one-stop etailing enabler providing five key service capabilities to Merchants who enter the China and Hong Kong etailing market, being efulfillment, eoperation, ecommerce IT, esupport and emarketing. These service capabilities are enabled by ecargo s proprietary ecoreos ecommerce technology platform. ecoreos is an ecommerce software platform developed for managing B2C ecommerce operations. The platform consists of three key operating modules: OCMS, OMS and WMS. When used together, the ecoreos ecommerce technology platform is able to manage complex etailing operations across multiple geographic regions and front-end transactional platforms, offering Merchants one efficient, integrated solution to manage their etailing businesses. ecargo developed and owns the ecoreos ecommerce technology platform. Refer to "Corporate structure of ecargo " on page 31. Refer to Overview on page 30. Refer to ecoreos ecommerce technology platform on page

12 Item Summary Additional information General Where are ecargo s operations located and where does it provide services? How does ecargo conduct its operations in Hong Kong, Australia and the United Kingdom? How does ecargo conduct its operations in China? ecargo s operations are primarily located in: Hong Kong, where its offices and employees are located; and China, where ecargo utilises offices, studios, warehouses and employees provided by entities within the CS Logistics Group and third party service providers. ecargo provides services to Merchants in Hong Kong. ecargo utilises the services of entities within the CS Logistics Group and third party service providers, pursuant to the terms of the Transitional Services Agreement, to provide services to Merchants in China. In the near future, the Board anticipates that ecargo will provide services to Merchants in Australia, the United Kingdom and Europe. In the longer term, the Board anticipates it will expand the ecargo footprint to other international markets and provide services to Merchants in South Africa, South-East Asia, Latin America and the Middle East. ecargo has a number of subsidiaries; namely, ecargo HK registered in Hong Kong, the principal operating subsidiary, ecargo Australia registered in Australia and ecargo UK registered in the United Kingdom. These entities were incorporated as the legal entities through which ecargo operates in Hong Kong, Australia and the United Kingdom. These entities may enter into employment contracts with local employees, commercial agreements with Merchants, and may carry out the ecargo Group s business in the respective jurisdictions. Some of the operations in Hong Kong are supported by the services arrangement with entities within the CS Logistics Group and third party service providers, pursuant to the terms of the Transitional Services Agreement. Until such time as ecargo incorporates a wholly owned Chinese subsidiary, and all relevant licences are obtained, ecargo cannot operate directly in China. As such, ecargo currently relies on a services arrangement for the provision of a number of services in China pursuant to the terms of the Transitional Services Agreement. Refer to Geographic presence on page 39. Refer to Corporate structure of ecargo on page 31 and The CS Logistics Services on page 33. Refer to Operations in China on page

13 Item Summary Additional information General Who is the CS Logistics Group and what services does it provide to ecargo? When will ecargo China be incorporated? For the purposes of this Prospectus, CS Logistics Group consists of CS Logistics and its wholly owned subsidiaries, CS HK Logistics and CS PRC Logistics. CS HK Logistics is a holder of 5.20% of the Shares as at the date of this Prospectus. CS HK Logistics is ultimately controlled by Mr John Lau who holds 86.73% of the issued share capital of CS Logistics, the parent company of CS HK Logistics, through an interposed entity. Under the Transitional Services Agreement, entities within the CS Logistics Group provide or procure to provide ecargo HK with the following services in China: The provision of technology development services; The provision of external system integration services; The provision of IT operation consultancy support services; The provision of import, import customs clearance and warehouse services; and The provision of digital imaging services. Once ecargo incorporates a Chinese wholly owned entity and all relevant licenses are obtained by ecargo, all services, with the exception of warehousing, labour and certain administrative services, currently provided by entities within the CS Logistics Group and third party service providers will be provided by the ecargo Group. It is anticipated that entities within the CS Logistics Group will continue to provide warehousing, labour and certain administrative services following the incorporation and licencing of ecargo s Chinese subsidiary. ecargo anticipates it will complete the incorporation of ecargo China and obtain all relevant licences to operate in China in early The incorporation of ecargo China is a matter of process only and the Board has been advised that the risk that ecargo China will not be incorporated, obtain all relevant licenses, and form part of the ecargo Group, is negligible. Refer to The CS Logistics Services on page 33. Refer to Operations in China on page

14 Item Summary Additional information General What are ecargo s key Material Contracts? Who are ecargo s Merchants? Who are the Chinese and global competitors of ecargo? ecargo s Material Contracts consist of: Transitional Services Agreement between ecargo HK and CS HK Logistics. Assignment of Rights in Software Agreement (OCMS and OMS) between ecargo and JL Enterprises. Assignment of Rights in Software Agreement (WMS) between ecargo, CS Logistics and CS HK Logistics. Deed of Non-Competition between John Lau, ecargo and ecargo HK. Personal Guarantee (Assignment of Rights in Software Agreements and Novation and Supplemental Agreement (Fixed Assets)) between John Lau and ecargo. Personal Guarantee (Transitional Services Agreement) between John Lau and ecargo HK. Original Fixed Asset Purchase Agreement (IT and Office Equipment) as novated and supplemented by the Novation and Supplemental Agreement (Fixed Assets) between ecargo, CS HK Logistics and CS Logistics. Merchant Services Agreements with various Merchants. ecargo s Merchants are best described as recognised international or national brands who retail online, and while the range of products can be broad, they are most likely to be engaged in the fashion or apparel segment of online retailing. In China, ecargo is not aware of any direct competitors with an expertise in fashion and apparel who offer the full spectrum of services currently offered by ecargo to Merchants who wish to enter the China online market. Globally, Yoox is an Italian internet mail order retailer of men s and women s multibrand clothing and accessories. Currently, its Chinese and Hong Kong operations are however relatively minor and contribute only a small amount of its revenue. Baozun is a Tmall operation outsourcing centric service provider, so are not considered to be a direct competitor. ebay Enterprise (previously known as GSI Commerce) offers similar service capabilities in the United States and Australia but its Chinese and Hong Kong operations are relatively small. Refer to Material Contracts on page 40. Refer to ecargo contracted Merchants on page

15 Item Summary Additional information General Why is ecargo seeking admission to the Official List of the ASX? ecargo is seeking admission to the Official List of the ASX: to broaden the shareholder base and provide a liquid market for CDIs in the Company; to provide the Company ongoing access to capital markets through a respected stock exchange in a similar time zone to pursue growth opportunities and improve capital management flexibility; to advance best practice corporate governance standards and procedures through the constitution of audit, risk, remuneration and nomination committees; to set standards of independence to management; to improve transparency to client partners and key stakeholders; and to raise funds for the purposes described in Use of proceeds of the Offer on page 20. Business model How does ecargo generate income? How does ecargo market its products and services? Financial information What are the key revenue drivers of ecargo s business? ecargo generates income from Merchants etailing their products by charging fees for the five key services of efulfillment, eoperation, ecommerce IT, esupport and emarketing provided to those Merchants. ecargo is able to market its services by: referrals made by founders and senior executives through established industry relationships; direct marketing to Merchants who have established successful brands internationally, especially in the fashion and apparel sector, but with limited or no presence in China and Asia; attendance at fairs and industry seminars; referrals made by existing Merchants of ecargo and the CS Logistics Group, who have a strong desire to expand into online B2C ecommerce or improve their existing infrastructure and supply chain; and introductions to Merchants through independent industry consultants. ecargo anticipates that the majority of its revenue will be derived from the provision of efulfillment and eoperation services to Merchants. efulfillment services are anticipated to be the largest source of revenue, and fees will be derived from inventory management and order fulfilment. eoperation services are anticipated to be the second largest source of revenue, and fees are derived from providing dedicated staff to manage the online store activities for Merchants. The other sources of revenue for ecargo are ecommerce IT, emarketing and esupport, where Merchants may engage ecargo in the developing and hosting of their ecommerce online stores, implementing search engine and social media marketing activities and provision of photography and videography services for product displays. Refer to ecargo s business scope and how it generates income on page 34. Refer to Merchant acquisition strategies on page 38. Refer to ecargo s business scope and how it generates income on page

16 Item Summary Additional information Financial information What is the operating history of ecargo? ecargo was incorporated on 22 April The founders and executive management team have been involved in various business aspects of ecommerce and digital agencies since The intellectual property of ecargo was created in April 2014 with the design of the ecoreos ecommerce technology platform. The development of certain core software assets, which have been incorporated into the ecoreos ecommerce technology platform, commenced in mid User acceptance testing was conducted early in calendar year The test results provided the current ecargo management team with the verification assurances necessary to support the decision to acquire the software modules and intellectual property known as OCMS, OMS and WMS. Refer to Historical Financial Information on page 54. The Offer What is the Offer? What is the Offer Price? What is the Maximum Subscription available under the Offer? What is the Minimum Subscription under the Offer? Is the Offer underwritten? This Prospectus provides investors with the opportunity to participate in the initial public offering of CHESS Depositary Interests (CDIs) in ecargo. A$0.40 per CDI (equivalent to A$0.40 per Share). ecargo is offering to the public a maximum of 100,000,000 CDIs (equivalent to 100,000,000 Shares) to raise A$40,000,000, before costs of the Offer. The Minimum Subscription is 75,000,000 CDIs (equivalent to 75,000,000 Shares) to raise A$30,000,000, before costs of the Offer. If the Minimum Subscription is not raised then ecargo will not proceed with the Offer and will repay all Application Monies received (without interest). No, the Offer is not underwritten. Refer to "Details of the Offer" on page 23. Refer to "How much is ecargo seeking to raise under the Offer?" on page 24. Refer to How much is ecargo seeking to raise under the Offer? on page 24. Capital structure What is the capital structure prior to completion of the Offer? What is the percentage of CDIs being offered based on the number of Shares/CDIs on issue post completion of the Offer? What is the capital structure after completion of the Offer (i.e. after allotment of the CDIs)? What is the ticker code? What are CDIs? Prior to completion of the Offer, at the date of this Prospectus, there are 460,000,000 CDIs on issue (equivalent to 460,000,000 Shares) % in the event the Maximum Subscription is raised, and 14.02% in the event the Minimum Subscription is raised. Following completion of the Offer: In the event the Minimum Subscription is raised, there will be 535,000,000 CDIs on issue (equivalent to 535,000,000 Shares). In the event the Maximum Subscription is raised, there will be 560,000,000 CDIs on issue (equivalent to 560,000,000 Shares). The CDIs will trade on ASX under the ticker "ECG". CDIs represent the beneficial interest in shares in a foreign company such as ecargo. Each CDI will be equivalent to one Share. Refer to "Share capital" on page 21. Refer to "Share capital" on page 21. Refer to Share capital on page 21. Refer to "What are the CDIs?" on page

17 Item Summary Additional information Use of funds How does ecargo intend to apply the monies raised from the IPO? The Board and its interests Who are the Board and management of ecargo and what experience do they have? Are there any benefits payable to Directors, other related parties and promoters? Do the Directors have any interests in the issued share capital of ecargo? Are the Directors or any Existing Holders selling Shares into this Offer? Related party transactions What are the related party transactions and who benefits from such transactions? Acquisition of complementary businesses and capabilities in China and international markets; Premises fit out and acquisition of equipment for business expansion; Investment in research and development of new technologies and the enhancement of the ecoreos ecommerce technology platform; Provision of general working capital for, amongst others, funding the expansion of ecargo s trading, and recruiting and retaining personnel with relevant talent and experience; and Paying the costs associated with the Offer, including obtaining a listing on the ASX. ecargo has established a well credentialed and balanced Board and management, with extensive experience in etailing, retailing, logistics, shipping, technology, finance and investment. ecargo has agreed to remunerate its Executive and Non-Executive Directors through a combination of an appropriate salary package and market based director fees respectively. ecargo has agreed to remunerate its promoters as detailed in under heading Interests of experts and advisors and remuneration on page 115. As at the date of this Prospectus, the Directors hold 89.36% of ecargo both directly and indirectly. In the event the Minimum Subscription is raised, Directors will together hold (directly and indirectly) 76.83% of ecargo and 73.40% in the event Maximum Subscription under the Offer is raised. No, the Directors and Existing Holders are not selling Shares into the Offer. In addition to the compensation arrangements with Directors and executive officers, ecargo and/or ecargo HK are a party to the following related party contracts. Each of these contracts is for the benefit of the ecargo Group: Transitional Services Agreement Assignment of Rights in Software Agreements Original Fixed Asset Purchase Agreement (IT and Office Equipment) as novated and supplemented by the Novation and Supplemental Agreement (Fixed Assets) Deed of Non-Competition Personal Guarantee (Assignment of Rights in Software Agreements and Novation and Supplemental Agreement (Fixed Assets)) Personal Guarantee (Transitional Services Agreement) Refer to Use of proceeds of the Offer on page 20. Refer to "Details of Directors" on page 61 and Details of management on page 65. Refer to Executive and Non-Executive Directors fees and remuneration on page 64 and Interests of experts and advisors and remuneration on page 115. Refer to Directors interests in securities on page 64. Refer to Related party interests on page

18 Item Summary Additional information Applications Am I eligible to participate in the Offer? How can I apply? What is the minimum application amount under the Offer? When will I receive confirmation that my Application has been successful? Dividends Will dividends be paid? When will I receive dividends? Tax and brokerage What are the taxation implications of investing in the CDIs? Is there any brokerage commission or stamp duty payable? The Offer is open to all investors who are resident in Australia, however any person who has a registered address in any other country who receives this Prospectus may apply for CDIs but may only apply where that Applicant is able to reasonably demonstrate to the satisfaction of ecargo that they may participate in the Offer. Instructions on how to complete the Application Form accompanying this Prospectus are set out in "How do I apply under the Offer?" on page 25 and on the Application Form itself. You may apply for a minimum parcel of 5,000 CDIs, for a minimum of A$2,000, and thereafter in multiples of 1,000 CDIs. Confirmation of successful Applications in the form of holding statements are expected to be despatched by post on or around 13 November Dividends will be paid subject to the financial performance of ecargo and in accordance with the dividend policy. The payment of any dividends will be in HK$ or A$ depending on the CDI holders dividend currency nomination. The payment of dividends will depend on the financial performance of the Company. The taxation implications of investing in the CDIs will depend on each investor's individual circumstances. You should seek your own tax advice prior to applying for CDIs under the Offer. You are not required to pay any brokerage commission or stamp duty for the acquisition of CDIs under the Offer. ecargo will however pay brokerage to stockbrokers or licenced investment advisors. Refer to "Overseas distribution" on page 27. Refer to "How do I apply under the Offer?" on page 25. Refer to "What is the minimum and maximum application under the Offer?" on page 25. Refer to "When will I receive confirmation whether my Application has been successful? on page 26. Refer to "Dividend policy" on page 112. Refer to "Dividend policy" on page 112. Refer to "Taxation implications of investing under the Offer" on page 114. Refer to Is there any brokerage, commission or stamp duty payable by Applicants? on page 26. Further information and documents incorporated by reference 18 How can I obtain further information? Documents incorporated by reference If you have queries about investing under the Offer, you should contact your stockbroker, financial advisor, accountant or other professional advisor. If you have queries about how to apply under the Offer or would like additional copies of this Prospectus, please call the below between 8:30 am and 5:00 pm AEST: ecargo s Offer Information Line on (from within Australia) or (from outside Australia) OR The Lead Manager on (from within Australia) or (from outside Australia) The Corporate Governance Plan and the Historical Financial Information are incorporated by reference into this Prospectus. If you would like to obtain a copy of any of the documents incorporated by reference into this Prospectus, copies may be obtained from the ecargo website ( or by contacting ecargo s Offer Information Line on the numbers detailed above.

19 Key risks summary You should read this entire Prospectus, including Risk factors on page 77 of this Prospectus before making any decision to invest. Investing in the CDIs should be considered as speculative, and the achievement of objectives should be considered high risk, and is not suitable as an investment for investors who require security of capital or income. You should consult your professional financial advisors before investing. The Risk factors on page 77 of this Prospectus and other general risks applicable to all investments in listed securities not specifically referred to, may in the future affect the value of the CDIs offered pursuant to this Prospectus. Set out below is a summary of the key risks in investing in ecargo and its CDIs. This information is intended to be a summary only and should be read in conjunction with the more detailed information on risks appearing in Risk factors on page 77 of this Prospectus. Key Risk Comments Additional information Risk that ecargo s marketing strategy to recruit Merchants is not effective. Risk that ecargo s management and key personnel may discontinue their services. Risk that defects in software, errors in systems integration or failure to perform professional services could result in a loss of Merchants and a decrease in revenues. Risk that ecargo may fail to improve the ecoreos ecommerce operating platform to keep up with Merchant demands. Risk that any significant failure in ecargo s information technology systems could subject it to contractual liabilities to Merchants, harm reputation and adversely affect its results of operations. There is a risk that ecargo's marketing strategy to engage Merchants is not successful. This would result in the ecargo Group failing to meet revenue targets and have a material and adverse effect on the operating results of the ecargo Group. ecargo relies on the expertise and experience of the Board of Directors and its management team to ensure its future success. There is a risk that if one or more of ecargo's management or Directors were unable or unwilling to continue in their present positions, ecargo's business, financial condition and results of operations may be materially adversely affected and employment costs may increase. ecargo s software solutions are complex and may contain defects and bugs. There is a risk that any such defects or bugs could interrupt or delay completion of projects or adversely affect sales of Merchants. In addition, ecargo s reputation may be damaged and it may fail to secure new projects from existing Merchants or new Merchants. This would result in the ecargo Group failing to meet revenue targets and have a material and adverse effect on the operating results of the ecargo Group. ecargo s business and future success heavily depends upon the continued improvement in the ecoreos ecommerce operating platform to keep up with Merchant demands. There is a risk that if ecargo does not continue to improve the ecoreos ecommerce operating platform, ecargo may fail to secure new projects from existing Merchants or new Merchants. This would result in the ecargo Group failing to meet revenue targets and have a material and adverse effect on the operating results of the ecargo Group. ecargo s business and operations are highly dependent on the ability of its information technology systems to timely process various transactions across different markets and solutions. There is a risk that ecargo s business activities may be materially disrupted in the event of a partial or complete failure of any of these primary information technology or communication systems. Loss of all or part of the systems for a period of time could have a material adverse effect on the business and business reputation of ecargo. Refer to "Risks related to ecargo's business and risks related to the industry in which ecargo operates" on page 78. Refer to "Risks related to ecargo's business and risks related to the industry in which ecargo operates" on page 78. Refer to "Risks related to ecargo's business and risks related to the industry in which ecargo operates" on page 79. Refer to "Risks related to ecargo's business and risks related to the industry in which ecargo operates" on page 80. Refer to "Risks related to ecargo's business and risks related to the industry in which ecargo operates" on page

20 Key Risk Comments Additional information Risk of loss of major Merchants. Risk associated with operating in foreign countries. Risk that the CS Logistics Group, its management or controlling shareholders may compete with ecargo Group's business. Risk that the business acquisition strategy of ecargo is not effective. Use of proceeds of the Offer There is a risk that for a number of reasons, ecargo may lose one or more major Merchants. There are various risks associated with operating in foreign countries such as China and Hong Kong, including political, exchange rate, economic, sovereign, and transfer risk. John Lau, who is and has been involved in the establishment and business of ecargo and ecargo HK, has direct or indirect control over CS Logistics, CS HK Logistics, CS PRC Logistics, JL Enterprises and various other affiliated companies. As such, there is a risk that the CS Logistics Group, its management or controlling shareholders may compete with ecargo Group's business. If ecargo cannot execute its strategy to acquire a number of businesses to complement and strengthen existing capabilities, the ecargo Group may fail to meet revenue targets, which could have a material and adverse effect on the operating results of the ecargo Group. Refer to Risks related to ecargo s business and risks related to the industry in which ecargo operates on page 79. Refer to Risks related to the Offer and an investment in CDIs and Shares on page 88. Refer to "Risks related to ecargo's business and risks related to the industry in which ecargo operates" on page 81. Refer to "Risks related to ecargo's business and risks related to the industry in which ecargo operates" on page 79. Based on the Maximum Subscription of A$40,000,000, ecargo expects to receive approximately A$36,500,000 of net proceeds from the Offer (after the costs of the Offer). The table below sets out the proposed use of funds from the Offer, in A$, for both Maximum and Minimum Subscriptions. Use of funds from the Offer Minimum Subscription A$ Maximum Subscription A$ Expenses of the Offer 1 2,889,275 3,493,257 Acquisition of complementary businesses and capabilities in China and international markets 2 20,400,000 27,200,000 Premises fit out and acquisition of equipment for business expansion 3 1,538,889 1,538,889 Investment in research and development of new technologies and enhancement of the ecoreos 2,583,333 2,583,333 ecommerce technology platform 4 Provision of general working capital 5 2,588,503 5,184,521 A$30,000,000 A$40,000,000 Notes: 1. Total cash expenses of the Offer will be funded from the proceeds of the Offer. Refer to Offer expenses at page 116 of this Prospectus for a breakdown of these expenses. 2. The ecargo Board has identified types of businesses with complementary skills and capabilities which when acquired are anticipated to enhance ecargo s offering to Merchants. Refer to Strategic business acquisitions at page 37 of this Prospectus for further details. 3. These funds will be applied towards the fit out and purchase of computers and office equipment for ecargo s new corporate headquarters in Hong Kong ($A500,000); fit out and purchase of computers and office equipment for ecargo s proposed new office in Shenzhen, China (A$694,444); and the purchase of computers and office equipment required to manage the anticipated expansion of business operations (A$344,445). 4. ecargo will continue a program of research and development on the ecoreos ecommerce technology platform and other new technologies in order to ensure that the services offered to Merchants are industry best practice. 5. Working capital expenditure is to be applied towards funds required to expand the business, and towards administration costs associated with ecargo. These costs include costs for wages and salaries, occupancy costs, professional consultant s fees, compliance and reporting costs associated with running an ASX listed company, as well as other typical administration costs. ecargo has chosen to use an indicative foreign exchange rate of A$1.00 = HK$ (which is the exchange rate on the Conversion Date) in the calculation of the figures in the table above. Accordingly, investors should be aware that the amounts represented in the tables on pages 20 and 21 may change as a result of fluctuations in the A$ to HK$ exchange rate. The use of funds set out above represents ecargo s current intentions based upon its present plans and business conditions. The amounts and timing of the actual expenditures may vary significantly and will depend upon numerous factors, including the timing and success of ecargo s development efforts. ecargo believes that the current cash balances, together with the net proceeds of the Offer and gross profit from anticipated sales, will be sufficient to satisfy ecargo s requirements for approximately the next two years and that ecargo will have sufficient working capital to carry out its stated business objectives. 20