Ann: Appendix 4C - March 2017 Quarterly Report, page-2

Key corporate highlights include:

+ 62% increase in receipts vs March 2016 Quarter and 12% increase in receipts from customers vs December 2016 Quarter. This quarter on quarter increase reverses the trend usually seen following the seasonally strong December Quarter.
+ Receipt of R&D Tax Incentive Rebate of $183,178, which was approximately $12,000 more than originally estimated.
+ Secured $1.26m underwriting of CL8O options with an advance on underwriting provided of $500,000 which enabled further drawdowns on the flexible equity facility to be ceased.
+ Two senior appointments - Robert Rattray appointed as General Manager for Mobilise and Katherine Cole, former Regional Marketing Director for Hotels.com appointed to enhance Collaborate’s marketing strategies and customer acquisition capability.

Key DriveMyCar highlights include:

+ 108% increase in Net Rental Days Booked versus December 2016 Quarter and 112% growth from February 2017 to March 2017 reflecting the rapid growth experienced in the latter weeks of March. The majority of the revenue benefit from these booked days will be realised in the June 2017 Quarter.

+ 100% of the 101 Subaru Impreza vehicles booked within 13 days of launch. + 286% increase in Net Booked Days for UberX rentals versus previous record December 2016 Quarter.

+ 89% increase in Gross Revenue from UberX rentals versus previous record December 2016 Quarter, reaching 29% of total Gross Revenue, up from 18% in December 2016 Quarter. + Rental Transaction Value for March 2017 reached a new record of $243,000, 35% growth from February 2017. 14% increase in Rental Transaction Value for a new record Quarter versus previous record December 2016 Quarter and 51% increase vs March 2016 Quarter. Growth accelerated in the final two weeks of the March Quarter with the launch of the 101 Subaru Impreza’s and continues into the June Quarter.

+ 62% increase in Gross Revenue versus March 2016 Quarter and 15% increase versus previous record December 2016 Quarter. Forward Booking Rental Days at the end of March 2017 were 91% higher than February 2017, reflecting the high booking growth that will translate to revenue in the June 2017 Quarter. As at 19 April, Gross Revenue for April 2017 is tracking at more than 100% above the Gross Revenue for April 2016.

+ 59% increase in Net Rental Days versus March 2016 Quarter and 19% increase versus previous record December 2016 Quarter. Net Rental Days Realised in March were 28% higher than the previous record month of December 2016.

+ 99% increase in Net Booked Days for vehicles supplied by corporate owners versus December 2016 Quarter.

+ 35% reduction in insurance related costs for the new DriveMyCar motor fleet insurance policy secured in March 2017 for the forward year and is expected to deliver more than a 10% increase in Gross Profit in the June 2017 Quarter and beyond.

Consolidated Cash Flows

Going against seasonal trends, Receipts from Customers increased to a new record following the December Quarter which is historically a very strong quarter. Notably, the record bookings experienced in the last two weeks of the March 2017 Quarter had a limited impact on cash receipts and realised revenue, with the majority of the benefit to be seen in the June 2017 Quarter.

Product Manufacturing and Operating Costs increased during the March 2017 Quarter versus the December 2016 Quarter. A large proportion of these costs are made up of payments to owners for the rental of their assets and as rental transaction cash receipts increase, so do the payments to owners. Given the strong preceding December Quarter, payments to owners, which occur after receipt of rental income, were paid at an increased level in the March 2017 Quarter. R&D costs increased due to the addition of more development resources as Collaborate expands capability for the development of the technology platform and the launch of Mobilise.

Advertising and marketing expenditure increased due to investment in marketing strategy work during the March 2017 Quarter the benefits of which will be seen from the June 2017 Quarter onward. In line with the rapidly expanding vehicle fleet, online advertising was increased however, due to the strong uptake of the Subaru Impreza fleet and other vehicles, marketing expenditure has returned to normal levels. Staff costs increased due to staff recruitment and timing of payroll payments and staff incentives associated with the busier holiday period at the start of the quarter.

Administration and Corporate costs were mainly lower than the previous quarter except for investor PR expenses which increased in line with additional activity in the lead up to CL8O option expiry and costs associated with half year audit and reporting and 2016 year-end tax and R&D compliance. Overall, even after the group made investments for future growth of the business, Net Cash Used in Operating Activities declined by 2% compared to the December 2016 Quarter and 30% compared to the March 2016 Quarter.

Corporate:

During the March 2017 Quarter Collaborate entered into agreements with existing sophisticated investors (Underwriters) to underwrite the exercise of 63 million of the Company’s quoted options (ASX:CL8O), which represents $1.26 million of options (Underwritten Amounts).

These options represent approximately 37% of CL8O options on issue. $500,000 of these funds were advanced by the shareholders and as of 31 March 2017 were classified as borrowings as per Section 3.5 of the Appendix 4C. As of 19 April 2017, $455,000 of these funds have been used for the exercise of options and the remaining $45,000 is expected to be used to exercise CL8O options, returning the Company to a nil debt position.

Cash Balance at Quarter End and Funding Available

At the end of the March 2017 Quarter, the Company maintained a cash balance of $239,000, an increase of $124,000 from the December 2016 Quarter. On 16 January 2017, the Company received an R&D Tax Incentive Rebate of $183,178, which was approximately $12,000 more than originally estimated. The Company has $1.76 million capacity remaining under the Flexible Equity Facility.

The Company retains discretion as to the quantum and timing of each drawdown and may also raise funds from alternative sources. The Company has announced its intention to pause drawdowns from this facility in favour of raising capital via the exercise of CL8O options. Furthermore, the Company had 172,089,484 CL8O listed options expiring on 30 April 2017 at the end of the March Quarter. Between 1 April and 19 April 2017 $716,364 was raised from the exercise of CL8O options, including the conversion of $455,000 of advances made by the underwriters. If all remaining options are exercised, the Company will receive approximately $2.73 million in total (inclusive of the Underwritten Amounts), before costs.

Exercise of all or a significant proportion of the Options is expected to provide sufficient funding to take the existing business units to profitability and allow the Company to cease drawdowns on the Flexible Equity Facility, unless the Company pursues additional investment opportunities