1. INTRODUCTION
Reference is made to the Company’s announcement dated 13 May 2016.
The Board of Directors of XOX Bhd (“XOX” or “the Company”) wishes to announce that the Company had subscribed for additional 60,000,000 ordinary shares of RM0.10 each in M3 Technologies (Asia) Berhad (“M3 Technologies”) (“M3 Shares”) for a total cash consideration of approximately RM6,000,000 through the subscription of Right Shares and excess Right Shares pursuant to the Right Issue with Warrants exercise undertaken by M3 Technologies (“Subscription”). The Right Shares of M3 Technologies was listed and quoted on ACE Market of Bursa Malaysia Securities Berhad on 25 August 2016.
Further to the Subscription, the total shareholdings held by XOX in M3 Technologies increased from 11,690,000 ordinary shares of RM0.10 each to 71,690,000 ordinary shares of RM0.10 each, representing approximately 12.27% of the total and issued paid up capital of M3 Technologies. The total cost of investment of XOX in M3 Technologies has increased from RM2,400,554 to RM8,400,554.
The Subscription was funded via internally generated funds.
2. INFORMATION OF M3 TECHNOLOGIES
M3 Technologies was incorporated in Malaysia in 1999, and listed on the ACE Market of Bursa Malaysia Securities Berhad (formerly MESDAQ) since 2003.
M3 Technologies is principally engaged in the provision of mobile solutions and the business encompasses a wide range of mobile solutions and platforms such as Multimedia products, WAP and J2ME applications catering to all channels of its business (i.e. B2C, B2B and B2O).
3. CONSIDERATION FOR THE SUBSCRIPTION
The cash consideration of RM6,000,000 for the Subscription was based on the issue price of RM0.10 per Right Shares fixed by M3 Technologies pursuant to its Right Issue with Warrants exercise.
4. RATIONALE
The acquisition is part of the business synegry as M3 Technologies core competence has been in Mobile Value Services & sofeware development especially in Mobile space, which may give XOX the flexibility to quicken the time to market for APP and enhance the services to be provided by XOX. And the M3 Technologies’ new Product, i3Display and also i3TeamWorks, has great potential for connected media display as well as mobile workers, which will use mobile internet as the core communication transport where is XOX’s business.
5. PROSPECTS OF M3 TECHNOLOGIES
M3 Technologies is principally involved in the provision of mobile solution services with mobile value added services and the development of mobile based applications, particularly within the mobile phone industry.
Considering the outlook, prospects and demand for mobile solutions services, which M3 Technologies is focusing on; and given the positive outlook of the Information Communication Technology Industry supported by the rapid growth of smartphone and tablet subscribers/users, the business strategies of M3 Technologies augurs well for the growth of M3 Technologies.
6. RISKS FACTORS
6.1 Business risk
M3 Technologies is subject to certain risks inherent in its industry. This may include changes in general economic conditions and political conditions, taxation, interest rates, foreign exchange and changes in business conditions such as but not limited to deterioration in prevailing market conditions, labour shortages, increase in costs of labour and materials.
6.2 Political, economic and regulatory risks
Like all other business entities, changes in political economic and regulatory conditions in Malaysia, could materially and adversely affect the financial and business prospects of M3 Technologies. Amongst the political, economic and regulatory uncertainties are the changes in political leadership, nationalisation, re-negotiation or nullification of existing contracts. While M3 Technologies will seek to limit the impact of such risks to its business by focusing on its core competencies, there is no assurance that any change in the above factors will not have a material adverse effect on the business and operations of M3 Technologies.
6.3 Risks of investment
Investment in quoted company like M3 Technologies is exposed to share market volatility and it is difficult to determine the risks.
7. LIABILITIES TO BE ASSUMED
The XOX Group will not be assuming any liabilities, including contingent liabilities and guarantees arising from the Subscription.
8. FINANCIAL EFFECTS OF THE SUBCRIPTION
The Subscription will not have any effect on the share capital and substantial shareholders' shareholdings of the Company as the Subscription will be fully satisfied in cash. In addition, the Subscription is not expected to have a material effect on the earnings per share, Net Assets (“NA”), NA per share and gearing of the Group for the financial year ending 30 June 2017.
9. APPROVALS REQUIRED
The Subscription is not subject to the approval of the shareholders of the Company or from any relevant authorities.
10. PERCENTAGE RATIO
The highest percentage ratio applicable to the Subscription pursuant to Rule 10.02(g) of the ACE Market Listing Requirements of Bursa Malaysia Securities Berhad is 7.70%.
As at the date of this announcement, the aggregate percentage ratio applicable to the M3 Shares acquired by the Company within the period of twelve (12) months immediately preceeding from 25 August 2016 is 10.78%.
11. INTEREST OF DIRECTORS, SUBSTANTIAL / MAJOR SHAREHOLDERS AND PERSONS CONNECTED
None of the directors and/ or the major shareholders of XOX and/or persons connected with them have any interest, direct or indirect, in the Subscription.
12. STATEMENT BY DIRECTORS
The Directors of XOX, after taking into consideration of all financial and other factors, is of the opinion that the Subscription is in the best interest of the Company.
This announcement is dated 25 August 2016.
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