FINANCIAL PERIOD EVENTS

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1 ASX ANNOUNCEMENT DRAGONTAIL SYSTEMS SUCCESSFULY CONTINUES TO POSITION ITSELF AS THE UNIQUE TECHNOLOGY FOR STREAMLINING RESTAURANT AND DELIVERY OPERATIONS WITH LEADING GLOBAL QSR CORPORATIONS 31 August 2018 (Melbourne): Dragontail Systems Limited (ASX: DTS) ( Dragontail or Company ) is pleased to announce its results for the six months ended 30 June 2018 (H1 2018). Over the period, Dragontail has penetrated new markets, established strategic alliances, widened its team and has achieved significant milestones. Dragontail holds two flagship products - the Algo Platform, an optimization algorithm that streamlines, enhances and manages the entire restaurant order and delivery process; and the artificial intelligence (AI) QT Camera system sensor that instantly checks the quality of the food preparation. Over the past six months, the Company has ratified its status as the only company in its field to offer such a comprehensive technology suit, built from the Company's flag ship products, which can significantly upgrade the performance of the QSR (Quick Service Restaurants) operations. Some of the Company's strengths that were demonstrated during the last 6 months, are penetration into new markets, the ability to install its systems in an efficient and satisfactory manner, and cooperation with leading global QSR companies to integrate and meet their specific requirements. HIGHLIGHTS During H1 2018, generated USD 310K (AUD 404K) revenue, a growth of 41% compared to H revenue, and of 259% compared to H revenue, USD 220K (AUD 282K) and USD 86K (AUD 114K), respectively. Completion of a nationwide roll out of the Algo Dispatching Platform in all Pizza Hut stores in Singapore. Launching the Dispatching Platform and the Driver Tracking Module at Recipe Unlimited Corporation (formerly Cara Operations Limited), Canada's largest full service restaurant operator. Penetrating India by signing an agreement with Jubilant FoodWorks Limited ( Jubilant ), the master franchise for Domino s Pizza in India, with 1,134 self-owned stores, for both the Algo Dispatching system and QT Camera. Finalizing the development and preparation for a nationwide installation of the QT quality control camera at Domino's Australia and New Zealand. Completing the Total Technology product that provides a comprehensive and full-service technological solution to every QSR, which has the potential to more than double Dragontail s revenue per store for those installations. Installation of the first stores in North America begins already this month. Maintaining global deployment and expanding the Australian based R&D team. Partnering with VisionMAX, a leading ordering platform in North America SUBSEQUENT FINANCIAL PERIOD EVENTS Accelerating US market potential penetration by signing a Referral agreement with Restaurant Revolution Technologies Inc. Allying with Weezmo Technologies Ltd. simplifying integration, leveraging Dragontail's products and offering additional technology solutions. 1

2 Commenting on the Company s activities over H1 2017, Dragontail's CEO Ido Levanon said: "Over the past six months, we have witnessed our efforts and the seeds we planted yield fruit. The good relations we forged with our customers, and the successful exposure to our products has led to several significant achievements. For example, our nationwide deployment in less than a month in PH Singapore, our penetration into the Indian market through the agreement signed with Jubilant FoodWorks Limited and more. We continue to cultivate our technology and our exclusive capabilities that contains artificial intelligence [AI], machine learning and cutting edge technologies. We made the decision to to expand our R&D department in order to meet the market demand for our products and to demonstrate our ability to provide a suitable and unique solution to the each customer's needs. As of today, Dragontail is being used by some of the largest QSR businesses globally like Pizza Hut, KFC, Cara Canada and Domino s. It is expected that in the next few months there will be a significant deployment of the Company's products, including the rollout of the QT camera at Domino's in Australia and later in New Zealand and other strategic projects that will be implemented after a period of considerable amount of investment by the company. In addition, we are focusing on further expansion of the total technology solution that significantly increases our revenue per store. The Dragontail family keeps devoting its talent and expertise to continue our leadership position as the only true total technology solution for the QSR industry as well as other segments". Financial overview Dragontail Systems continues to grow and extend its activity, and during H1 2018, generated USD 310K (AUD 404K) revenue, a growth of 41% compared to H revenue, and of 259% compared to H revenue, USD 220K (AUD 282K)and USD 86K (AUD 114K), respectively. The Company expects revenue to continue growing through the remainder of the financial year. Though the growth in revenue is high, the Company maintains a conservative cash flow policy and its total operating expenses growth was only 27% compared to H and 93% compared to H Dragontail finished the first half of 2018 with a cash balance of USD 2.7 million (AUD 3.6 million). The cash balance is in line with the Company's budget and growth expectations. Operating overview During the period, the company demonstrated impressive operational capabilities through the ability to manage teams around the world, to install quickly and efficiently, providing management tools to its customers which bring real savings and efficiency measured in a tangible return on investment and the ability to have "tailor made" solutions in order to achieve maximum customers' satisfaction. The Company is growing into new countries, signing agreements with new strategic customers like Domino s India and KFC Asia, establishing new collaborations and expanding its staff in order to meet its increasing demand. The results of Dragontail s activities are clearly reflected in some of the Company's outstanding achievements over the past six months as seen below. 2

3 Completion of a nationwide roll out of the Algo Dispatching Platform in all Pizza Hut stores in Singapore Dragontail has successfully completed a nationwide roll out of its Algo Dispatching Platform in 38 locations across Singapore within less than a month, and only 3 months from the date of signing the agreement in April earlier this year. The installation process carried out by specially flown in field personnel was completed efficiently and effectively in the fastest time the Company has achieved. As part of the implementation of the system, Dragontail was required to integrate with two POS (Point Of Sale) systems. In addition, Dragontail has integrated with PH's tracker and online platform, Glite, in order to create one holistic system. Another core capability is the ability of the various stores to share delivery drivers. This ability leads to a significant increase in the efficiency of the stores, leading to a higher profitability. Launching the Dispatching Platform and the Driver Tracking Module at Recipe Unlimited Corporation (formerly Cara Operations Limited), Canada's largest full service restaurant operator As planned, Dragontail together with Recipe Unlimited Corporation (formerly Cara Operations Limited), ( Recipe ) are working together in order to launch the Dispatching Platform and the Driver tracking Module at Recipe Unlimited Corporation in Q With the goal of improving the guest delivery experience, Dragontail was tasked with developing a wide range of specific features related to Recipe's store environments. Throughout the process, Dragontail leveraged its capabilities and advanced technology to deliver on the customer's service vision. In a unique and dedicated manner, Dragontail added specific capabilities to the Algo platform that will enable Recipe to achieve its ambitious goals, including a white label Recipe Driver Application. The "tailor made" Application can be downloaded directly from the App store to the driver's own mobile device, with specific brand designs and unique user security features. The Application allows drivers to receive payment directly from the end customer, "on the spot", when the food is being delivered. This capability, as with some others, was made possible by the ability of Dragontail to meet the most stringent requirements in terms of information security, thus fulfilling the client's goals and characterizing the system according to its specific needs. Adding this module contributes to operational efficiency and facilitates the interaction with the customer as well as streamlining the internal process that take place within the store. In addition, Dragontail's world class tracker has also been embedded in all Recipe brand native ordering apps, allowing customers to track their deliveries from one platform. Penetrating India with Jubilant FoodWorks Limited, the master franchise for Domino s Pizza in India Dragontail has signed an agreement with Jubilant FoodWorks Limited ( Jubilant ), the master franchise for Domino s Pizza in India, with 1,134 self-owned stores across 266 Indian cities, as well as the master franchise holder for Domino s Pizza in Sri Lanka, Nepal and Bangladesh, and Dunkin Donuts in India. The fact that all stores are owned by Jubilant is an advantage, as it will contribute to the speed and ease with which the roll out will take place. Jubilant and Dragontail have agreed to partner in a strategic alliance in order to maximize Jubilant's operational efficiency and food quality. Under the agreement, Dragontail will provide Jubilant the full suite of its technology solutions the Algo optimisation and analytics platform with the driver sharing 3

4 module, and QT quality control camera as well as future artificial intelligence [AI] technologies developed by DTS. Jubilant and Dragontail have entered the strategic alliance in order to maximize Julilant's operational efficiency and food quality. Dragontail s products' added values will be reflected in the reduction in manpower and labour cost, delivery optimization, minimizing food waste, optimizing the food preparation processes, integrating quality control as part of the kitchen work process and much more. The Company leverages its ability to provide its total and full-service technological solution During the first half year of 2018 the Company has signed a number of contracts for the supply of the total and full-service solution. The full-service technology, more than double Dragontail s revenue per store for those installations, which are gaining pace in North America with the agreement signing by Salvatoré (Canada), Top Tomato s Inc (US), Georgio s Pizza (US). The full-service technology solution leverages the strategic partnership between Dragontail, Point-of- Sale (POS) company Novasero, and online ordering company OrderUP. These new agreements more than double revenue generation for Dragontail on a per-store basis for these installed stores to over US$400 per month. KFC Philippines will be piloting the Algo platform, with the potential to be rolled out across more than 230 stores KFC Philippines will complete a proof of concept of Dragontail s Algo platform in three stores and potentially roll out the Algo platform across more than 230 KFC Philippines stores by early Maintaining global deployment and expanding the Australian based R&D team Dragontail continues to manage its resources and grow its global deployment in order to strengthen its operations with large multi-country QSR chains, like KFC, PH and Domino's. In order to support the existing operations and those to come, the Company operates its offices in Singapore and Melbourne (Australia) to provide R&D and operational support to the customers, in the field, providing immediate and effective service. In addition, Dragontail has expanded its global R&D team to enable the Company to deliver on the growing number of exciting opportunities it has and sees going forward. The Company has identified projects and strategic initiatives, and the need to adapt its existing resources in terms of personnel and technical capacity to meet these opportunities. As a result of the growing R&D activities being conducted mostly from Australia, the Company appointed a Chief Technology Officer to manage Dragontail s global R&D team, based in Melbourne, Australia. Dragontail s Australian based R&D team has been expanded with the addition of several highly experienced data scientists and additional programmers / QA & System architects. The R&D team now contains approximately 20 team members globally. 4

5 Execution of the strategic project for the installation of the QT quality control camera at Domino's Australia and New Zealand The Company continues to move forward with the engagement between Domino's Australia and Dragontail, and according to the schedule, during the first half of 2019 the installation of hundreds of QT cameras in Australia and New Zealand will be completed. Dragontail's unique patent pending - the QT is a computer-vision artificial intelligence [AI] machine learning quality system for pizza and other QSR chains. The QT is the world s first food preparation system that utilizes machine learning to constantly improve its diagnostics. It monitors key elements in the kitchen during the preparation and cooking process to improve the quality and consistency of pizzas and other meals being produced. Partnering with VisionMAX, a leading ordering platform in North America Dragontail and VisionMAX have partnered in a Mutual Referral Agreement in order to expand the customer base of both companies and create new business opportunities, through the ability to offer an integrated solution of both companies leading technology platforms. VisionMAX offers a wide range of cloud-hosted browser-based solutions that works across all IT infrastructure and manages among other things, Point of Sale (POS) and mobile / online ordering. Some of VisionMAX s current enterprise clients include Pizza Pizza, Swiss Chalet, East Side Mario's, Montana's, Harvey's, Quiznos, Sears, and many more. This partnership further strengthens Dragontail s channel strategy, particularly into the North American market. Events subsequent to 30 June 2018 Post the reporting period end, Dragontail Systems continues to make significant progress developing and commercialising the Algo System and QT platform. The Company has signed several new agreements as outlined below. Allying with Weezmo Technologies Ltd. simplifying integration, leveraging Dragontail's products and offering additional technology solutions The strategic agreement signed establishes a mutual marketing platform for both parties, to introduce their respective products and services to each other's existing customers as well as new customers. Weezmo Technologies Ltd. (Weezmo), is a unique company in its field, that holds the exclusive proprietary software for issuance of digital invoices and the provision of remarketing and customer behaviour analyses services to increase its customers' conversion. The most significant strength of the collaboration for Dragontail, will be the significant reduction of resources and time needed for the integration process with its customers' infrastructure. Thus, deploying Dragontail's products will be even, simpler and less costly. The collaboration will enable Dragontail to leverage its two flagship products 5

6 Accelerating US market potential penetration by signing a Referral agreement with Restaurant Revolution Technologies Inc. The mutual referral agreement with Restaurant Revolution Technologies Inc. ( Revolution ) further extends Dragontail s channel strategy, and will accelerate penetration into the US market. Revolution is a Washington based corporation that provides a revolutionary platform of off-premise solutions for restaurants called Order One. Revolution currently engages and promotes over 2,000 restaurants throughout North America. Revolution's focusing is on growing the direct off-premise business and brand of its restaurant partners, by using its technology which allows the integration with existing systems to deliver the best experience to its customers. Both Dragontail's Algo platform and Revolution s "Order One" product, will improve operational efficiency, reduce costs, increase revenue, enhance management control and bring a higher ratio of ROI. - ENDS - For further information please contact: Corporate: Ido Levanon, CEO Stephen Hewitt-Dutton, Company Secretary P: P: About Dragontail Systems Dragontail is revolutionising the Quick Service Restaurant (QSR) industry with its Algo System and computer-vision QT quality system that uses artificial intelligence (AI) machine learning. The Algo System uses a sophisticated patented algorithm to optimise and manage the entire food preparation process from order to delivery. It is the first system in the world to fully automate and streamline the kitchen flow to deliver an immediate and significant return on investment to fast food and quick service restaurants. The QT system s sensor and camera automatically monitor the preparation and cooking process in the kitchen to improve the quality and consistency of meals. Using proprietary advanced AI machinelearning technology, the system keeps improving its diagnostics, becoming even more efficient. For more information, visit 6