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1 A.C.N Level 1, 10 Queens Lane Melbourne, VIC 3004 Telephone: (03) Quarterly Report for the period ended 30 th September 2014

2 Achievements SmartTrans books record total revenue for Quarter of over $1 million Company enters Q2 well placed with cash at bank circa $1 million SmartTrans billings platform reach extended to an additional 470 million subscribers of China Unicom and China Telecom Total collective direct-to-phone billing with 1.26 billion subscribers of China Mobile, China Unicom & China Telecom Agreements for SmartTrans mobile billing to be integrated into apps with four Chinese smartphone game developers Agreement to distribute KNeoWORLD educational games Apps throughout China integrated with SmartTrans mobile billing Payments received from over 162,000 mobile transactions in September OVERVIEW SmartTrans is pleased to report that for the Quarter ended 30 September it achieved total revenue of $1,008,000, a record for the Company. The Company is encouraged by this result, as this period is the first in which it has reported after the divestment of its final legacy mining assets, and after a sustained effort to reduce operating costs and focus on its two core business divisions during FY SmartTrans is also pleased that this result includes sustainable and recurring revenue from its logistics software services business in Australia combined with growing revenues from its online and mobile payments platform in China along with collection of outstanding fees owed to the company. During the Quarter the company significantly strengthened its payments platform after signing agreements providing billing functionality with two of China s largest state-run telecommunications companies China Unicom and China Telecom. SmartTrans now has direct-to-phone billing agreements with all three state-run telcos in China, China Mobile, China Unicom and China Telecom, which report that they collectively have 1.26 billion subscribers. In addition, SmartTrans has billing functionality available via AliPay, UnionPay, and ChinaPay providing third parties wanting to transact in China access to a wide consumer base. In the last week of July, SmartTrans launched new marketing campaigns for products focussed on achieving sustainable revenue streams via monthly in-app and recurring purchases by consumers. 1

3 SmartTrans signed product and billing agreements with four Chinese smartphone game developers and also ASX listed company, Entellect (ASX: ESN), to distribute its educational game apps in China. The value of transactions and the revenue earned by SmartTrans in China has grown throughout the Quarter, with SmartTrans receiving payments from in excess of 162,000 mobile transactions in the month of September alone. In Australia, SmartTrans continued to roll out its proprietary mobile and internet logistics software systems and services to a growing customer base, underpinning this stable and recurrent revenue source as the platform which enables the Company to further promote and develop its offerings in China. ONLINE & MOBILE PAYMENTS PLATFORM AND SOFTWARE SOLUTIONS BUSINESS IN CHINA SmartTrans has continued to build its China business unit and widen its product range, adding new partnerships for App distribution and mobile payment integration while expanding the Company s reach in the biggest mobile market in the world. The company integrated the billing functionality of all telcos in China and moved its product focus to in-app purchases (rather than an up-front purchase model) in a move expected to provide the Company with an ongoing and growing revenue steam from its customers, which is supported by revenue growth seen from July through to September. In September, agreements were signed for SmartTrans mobile billing to be integrated into apps with four Chinese smartphone game developers. The company also entered into an agreement with ASX listed company, Entellect (ASX: ESN), to distribute its KNeoWORLD educational games Apps throughout China integrated with SmartTrans mobile billing. Under the arrangement SmartTrans will collect payments in China for all sales. SmartTrans is witnessing significant growth in the mobile games market with a number of new Apps becoming popular among Chinese smartphone users. SmartTrans is working with a number of these game developers where it can earn revenue in two ways by embedding the company s payments platform into a games App and earning transaction revenue, or by licensing and marketing these Apps to Chinese consumers and earning a percentage of the purchase price of the game. In the month of September alone, SmartTrans received payments from in excess of 162,000 mobile transactions, which supports the Company s previously communicated strategy of being well established in this market with key partnerships and agreements. 2

4 SmartTrans believes its positioning within the market will allow it to grow with the expanding penetration and use of smartphones in China, which is highlighted below. China is expected to have 520 million smartphone users this year, up 16% from the prior year and covering about 55% of the total population. There is still huge potential for growth in China's mobile market due to relatively low penetration levels compared with the U.S., Europe and other countries. Smartphone users in China could rise 17% to 610 million in 2015, covering 60% of the population, according to data compiled by Rosenblatt Securities. 1 In China, SmartTrans mobile and online payment gateway allows its customers to purchase its products and make payment through the following billing channels: Direct-to-phone billing and In-App billing with telcos China Mobile, China Unicom, China Telecom Internet and mobile phone billing with China Mobile CMPay Internet and mobile phone billing with UnionPay Internet and mobile phone billing with Alipay SmartTrans utilises its mobile and online payment gateway in China to collect payment for its software and services marketed and distributed online. SmartTrans also provides its payment gateway as a service for any application or software provider operating outside China to distribute and bill for its products in China, for which the company receives a royalty based upon transaction value. 1 Source: 3

5 SmartTrans customer acquisition strategy is to acquire customers by direct download of applications with in-app billing and to charge purchases directly to the customer s mobile phone account. Cross promotion and provision of quality Apps and content leads to the introduction and endorsement of the Company s MyLife portal. SmartTrans is focussed on immediate revenue generation whilst building a sustainable and recurring revenue stream through customer reengagement. SmartTrans is in the process of integrating functionality allowing App Developers and Content Providers to bill directly to users telephone accounts in a number of countries around the world, in addition to the three telecommunications companies in China. The Company expects this offering to be highly attractive to many App and Content Providers from China as they look to expand into markets outside China. LOGISTICS SOFTWARE & SERVICE BUSINESS In Australia, SmartTrans online and mobile software is used by businesses to manage and increase productivity and improve efficiencies in mobile workforces, predominantly in the area of logistics, where the Company is engaged by a number of blue-chip businesses. SmartTrans Australian business operations include online web-based and mobile phone-based software for businesses with its customers operating in the following sectors: Construction & Building Newspapers/Magazines Pharmaceuticals Food & Beverages Field Services Computer & Electronics Transportation During the Quarter, SmartTrans continued to roll out its mobile and online software and services, maintaining and building on its existing customer base. 4