ParaZero Limited

(To be renamed Delta Drone International Ltd)

Capital Raise

Capital Raising

Offer type

$5m

Round size

Key Offer Details

Days left

CLOSED

Raising Target

$5M

Price per share

4 cents

Post-money valuation

$20m

Indicative Timetable

Key Statistics of the Offer

Letter from the Chairman

Dear Investor,

I am pleased to present to you this opportunity to become a Shareholder of ParaZero Ltd (to be renamed Delta Drone International Ltd) (the ‘Company’), formed from the merger of Delta Drone South Africa (‘DDSA’) and ParaZero Technologies Ltd (‘ParaZero Israel’).

DDSA is a proven and profitable provider of commercial Drone Data Services and has demonstrated its expertise in growing its core Rocketmine business, focused on the mining sector, into new combinations of industries and verticals while maintaining strong profit ratios. These new verticals include its innovative Rocketfarm agriculture-focused expansion and Drone Aviation Training Services business, which is a leading provider of commercial drone training services in South Africa.

The Company has demonstrated its ability to research, develop and commercialise drone technologies and products. The Company intends to leverage its existing technology expertise in order to deepen and complement DDSA’s suite of services for current and future target markets. The Company’s technologies allow the realisation of regular commercial drone services in urban and populated environments, which until now have been either banned or highly restricted by aviation regulators.

By combining these businesses, the Directors believe that the Company has an opportunity to develop a truly international drone services company, capable of operating in both urban and rural environments. This is expected to enable new services to be provided to a broad range of industrial and commercial markets that are currently finding it difficult to overcome the regulatory and operational burdens of flying drones in populated environments.

The Directors believe that the provision of Drones as a Service (the provision of labour, software and hardware related
to the collection, processing and analysis of data gathered from unmanned operations) presents itself as a significant economic opportunity, as the combined DDSA and ParaZero Israel businesses (‘Merged Group’) have already generated A$5.94m in revenue in Calendar Year 2019 alone (on a pro-forma basis). In addition, the Company has proven itself capable of recognising adjacent opportunities and creating new businesses.

Under this Prospectus, the Company is seeking to raise up to $5.0m by the issue of up to 125,000,000 Shares at an offer price of $0.04 per Share. Upon re-listing on the ASX, the Company is expected to have a market capitalisation at the Offer issue price of $20m.

The Company intends to use the proceeds of the Offer as follows:

    • Costs to establish an Australian Head Office: A$0.57m

    • Expenditure on Australian sales and marketing activities: A$0.86m

    • Costs associated with expansion of South African operations: A$0.41m

    • R&D expenses: A$1.81m

    • Working capital: A$0.60m

    • Fees and expenses associated with the re-listing: A$0.75m

At the completion of the Offer, the company will have a strong balance sheet that is able to fund the intended establishment of Australian operations while maintaining sufficient working capital to fund the execution of management’s growth plan. This Prospectus contains detailed information about the Company and the Merged Group, its combined business operations, the markets in which it presently operates and those in which it expects to operate in the future, its Board and management team. This Prospectus also outlines a range of potential risks associated with an investment in the Company. The Directors believe the opportunity set in front of the Company is substantial due to the Company’s industry position,
its value proposition, and the opportunities for growth in its target markets, which all combine to give the Company the potential to create significant shareholder value over time.

Potential investors should consider an investment in the Company as speculative, contains risks, and should consult their professional advisers before deciding whether to apply for Shares pursuant to this Prospectus.

I, and the team at the Merged Group, are excited by the challenge of growing our business as outlined in this Prospectus. I encourage you to read this document carefully and in its entirety before making your investment decision. I look forward to welcoming you as a Shareholder.

Yours faithfully,

Chairman
ParaZero Ltd (to be renamed Delta Drone International Ltd)

 

Company Overview

Who is the Company?

ParaZero Limited (ASX:PRZ), to be renamed Delta Drone International Limited (‘Company’) is an Australian public company that is listed on the Official List of ASX. The Company was incorporated on 21 April 2017 and was admitted to the Official List of ASX on 14 June 2018. The Company specialises in enabling drone operations in urban or populated areas. The Company uses state of the art technologies developed and owned by the Company. On 12 March 2020, the Company announced its intention to acquire Delta Drone South Africa (Pty) Ltd (‘DDSA’) from Delta Drone SA. DDSA is headquartered in Johannesburg and specialises in the provision of drone services for commercial use. DDSA is a market leader in the provision of these services to mining and agricultural companies in Southern Africa. The combination of DDSA’s operating know-how and the technology developed by ParaZero Israel is expected to provide the Merged Group with a competitive advantage from an operational, safety and regulatory perspective over its existing competitors.

What is the Proposed Transaction?

ParaZero executes agreement to merge with Delta Drone South Africa, ParaZer

On 7 October 2020, the Company entered into a share sale agreement (‘Share Sale Agreement’) with Delta Drone SA to acquire, subject to the satisfaction of a number of conditions precedent, 100% of the issued capital in DDSA (‘Proposed Transaction’).

    • ParaZero Limited (“ParaZero”) has agreed to acquire 100% of the issued share capital of Delta Drone South Africa (“DDSA”).

    • DDSA is a leading international player in the field of drones for professional and commercial use, with revenue in CY19 of approximately US$2.12m1 (A$2.98m2).

    • The merged entity plans to expand DDSA’s “drones-as-a-service” business model initially into Australia and then grow globally.

    • The combination of DDSA’s operating experience and ParaZero’s world leading safety technology will provide the merged entity with a significant competitive advantage.

    • The merged entity will have a pro forma combined revenue in CY19 of approximately US$4.13m (A$5.79m3) and historical revenue growth exceeding 40%4 per annum.

    • ParaZero will seek ASX relisting in conjunction with the merger and a proposed capital raising of between A$3.5m and A$5.0m at an issue price of $0.04 cents per share.

    • A notice of meeting will be issued to shareholders in the coming weeks for an extraordinary general meeting to approve the transactions.

    • To reflect the change in focus ParaZero proposes to change its name to Delta Drone International Limited.

Who is DDSA?

  • DDSA, headquartered in Johannesburg is wholly owned by Delta Drone SA (“Delta Drone Group”). DDSA owns 74% of South Africa’s Rocketmine Pty Ltd.

  • DDSA is a multinational group which aims to remove the compliance obstacles in relation to the provision of drone services to the mining, agricultural and engineering industries. The business is built to meet the demand for fast and accurate survey data, as well as to support all the regulatory, insurance and maintenance requirements needed to run these services safely and consistently.

  • DDSA is a market leader in the provision of these services to mining and agricultural companies, particularly in Southern Africa

  • DDSA operates through multiple trading companies, including Rocketmine South Africa, Rocketmine Ghana and Drone Safety and Legal. These allow the business to be scalable and meet the demands of fast-moving enterprise customers across multiple countries while maintaining the same levels of consistency and quality.

  • Under the Rocketmine brand, DDSA offers a range of services including aerial surveying and mapping, security and surveillance and blast monitoring and fragment analysis.

  • DDSA derives the majority of its revenue from providing drone services and technology solutions to mining and agricultural companies.

  • Over the past six years, the Rocketmine division of DDSA has built strong and enduring relationships with its mining customers. These customers utilise Rocketmine’s services to conduct aerial survey data collection and analysis

  • DDSA’s clients include listed companies such as South 32 and Newmont Mining.

  • DDSA’s business model is dependent on DDSA receiving governmental licenses, permits and other regulatory approvals in order to operate its services in Southern Africa.

  • DDSA is currently expanding its offering into new markets including Australia, where it is targeting the mining industry.

Corporate Structure

Merged Group

As part of the Proposed Transaction, DDSA and the Company propose to merge, following which the Company will be renamed Delta Drone International Limited (subject to shareholder approval at the EGM).

The combination of DDSA’s operating knowhow and the technology developed by ParaZero Israel is expected to provide the Merged Group with a competitive advantage from an operational, safety and regulatory perspective over its existing competitors.

The Company intends to leverage DDSA’s existing relationships from Africa into the mining and agriculture sectors in both the African and Australian markets to target new operations with these customers, as well as launching a local marketing team in Australia to target new opportunities.

The Company expects to launch an Australian operation in early 2021, initially to target local mining and agricultural businesses, before expanding to a more comprehensive service offering into industries that require drone services in urban or populated areas – where the Directors believe ParaZero Israel’s technology will provide the Merged Group with a competitive advantage.

The Proposed Transaction will strengthen the short and long-term prospects of the Company. With combined pro-forma revenue in CY19 of approximately US$4.2 million (A$5.94 million), the Company expects that it will be able to grow significantly as industries open up post COVID-19, and as the market becomes increasingly aware of the Company’s ability to offer drone services in instances where regulation has to date made flying a drone an unviable option.

The Offer is expected to significantly bolster the Company’s balance sheet and allow it to build the marketing team and operational infrastructure to go out and win new business in Southern Africa and Australia, as mining, agricultural and other industrial sectors discover the significant benefits of using drones as part of their operations.

Board of Directors

Mr Christopher Clark – Chief Executive Officer

Mr Christopher Clark will be the Chief Executive Officer (‘CEO’) of the Company. Mr Clark has been involved in the mining services sector for over 10 years in South Africa, beginning with technology and communication projects for mining giant Anglo American. Mr Clark is currently the Group Managing Director of DDSA. Mr Clark has spearheaded the development of the DDSA business across Africa, including in Ghana and Namibia, and has set up new business verticals in agriculture and executive training. Mr Clark holds a Bachelor of Accounting from the University of Johannesburg, as well as a Master of Business Administration from the University of Pretoria (Gordons Institute of Business Science).

Mr Eden Attias – Executive Chairman

Mr Eden Attias will be Executive Chairperson of the Company and is currently the Managing Director of the Company. Mr Attias has extensive experience and knowledge in the development of the Company’s existing products and markets. Prior to joining the Company in 2015, Israel nominated Mr Attias as its first Ministry of Defence attaché to Ottawa, Canada. In this role, Mr Attias spearheaded the defence relationship between the two nations and greatly enhanced cooperation for military and security organisations. Under his command, the office created new trade opportunities for firms and facilitated long lasting international cooperation between the military and defence industries in both countries. Mr Attias has a distinguished military resume, having served in Israel’s Air Force (‘IAF’) as a pilot and as a leader in numerous positions for over 30 years, achieving the rank of Brigadier General. During his tenure, he oversaw the move of the IAF’s airlift base in Lod to the Nevatim air base in the Negev. He then commanded the Nevatim airbase from 2008 to 2011. Mr Attias holds a Bachelor of Computer Science and Philosophy from Tel Aviv University and a Master in Public Administration from the University of Haifa.

Mr Chris Singleton – Independant Non-Executive Director

Mr Chris Singleton is a current independent non-executive Director of the Company. Mr Singleton has extensive international experience in oil and gas, manufacturing, technology, telecommunications and service industries. He is currently the Managing Director of Minaret Capital, a provider of corporate advisory and growth strategies to Australian businesses. Mr Singleton has held numerous directorship roles with public and private companies and has successfully founded and sold businesses including Votel (a service provider acquired by Vodafone), B Digital (funded by Australian Capital Equity and later acquired by Soul Pattinson), Impress Energy (acquired by Beach Petroleum and recruitment solutions) and Total Staffing Solutions and Ultimate Skills (both of which were acquired by Humanis Group).

Mr Stephen Gorenstein – Independant Non-Executive Chairman

Mr Stephen Gorenstein is a current independent non-executive Director of the Company. Mr Gorenstein has over 16 years’ experience in capital markets including analyst roles at both Goldman Sachs and Merrill Lynch. He was formerly the Regional Head of Asia Pacific Metals and Mining at Bank of America Merrill Lynch. Mr Gorenstein has extensive networks in the Australian capital markets industry and is active in cross border transactions, particularly sourcing high-quality technology companies from Israel looking to establish themselves in Australia. Mr Gorenstein holds a Bachelor (Hons) of Science majoring in Geology and Geophysics from Monash University and a Master in Accounting and Finance from Monash University. Mr Gorenstein is a non-executive director at White Rock Minerals Limited (ASX: WRM), and a director of Jindalee Partners.

Mr Dan Arazi – Independant Non-Executive Chairman

Mr Dan Arazi is a current independent non-executive Director of the Company. Mr Arazi is a serial entrepreneur and has been involved in a number of start-ups in Israel, particularly in the telecommunications and internet space. He was a leading film producer in Israel and has been a member of the Board of Israeli Film Council. He is currently the Chairman of the Israel AeroClub Gliding Association and the President of the Keiretsu Forum, the Israeli Chapter of the 100+ Angels Club. Mr Arazi is also a co-founder and executive at Orckit Communications (NASDAQ: ORCT).

Important Information

This presentation is not part of the Prospectus.

Applicants should read the Prospectus in its entirety before deciding to apply for Shares. The Prospectus does not take into account your individual investment objectives, financial situation or any of your particular needs. You should seek independent legal, financial and taxation advice before making a decision whether to invest in the Company.

An investment in this Company carries risks. An outline of some of the risks that apply to an investment in the Company is set out in the relevant section of the Prospectus. Applicants are urged to consider this Section of the Prospectus carefully before deciding to apply for Securities.

No person is authorised to give any information or make any representation in connection with the Offer which is not contained in the Prospectus. Any information or representation not so contained or taken to be contained may not be relied on as having been authorised by the Company or any other person in connection with the Offer.

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