Datagate Investor Update – 23 November 2021

November 23, 2021
Attn: Datagate Shareholders

Dear Datagate Shareholders,
On behalf of the Datagate Board, I would like to thank you for your ongoing support of our business, and
hope that you and your families are safe and well during this time of Covid-19 related challenges.
I’m pleased to report that Datagate is continuing to prosper internationally, particularly in our primary
market, the United States. Total ARR reached NZ $2M at the end of October 2021 and the US now makes
up 63% of our total recurring revenue.
In my previous letter to you, in March this year, we asked you for approval to appoint our new American
director, Eric Hernaez and allow us to issue new shares for him to purchase. We also asked you to approve
a new policy for staff share options. You approved all three of these requests and the company has since
benefitted significantly by having Eric Hernaez join our board, where he has provided the benefit of his
experience and knowledge of the America Wholesale Telecom industry as well as his valuable contacts
and general American business expertise.
Datagate in America
Our year-on-year revenue growth within the United States is tracking at 117% and has been on a
particularly strong upward trajectory since the start of 2021, as shown in this graph of international ARR
revenue in US dollars.
Datagate’s revenue growth stepped up significantly in April 2019 when we set up our North American
branch in Vancouver, Canada and became more American focused.
Since then, we’ve established strong
US in-market partnerships with
wholesale VOIP/UCaaS providers
including SkySwitch and OITVOIP;
with MSP industry software solution
providers ConnectWise and Datto;
and with telecom tax specialists
Wolters Kluwer, Avalara,
Compliance Solutions, CLA, FasTek
and RTC Associates.
The graph on the left shows the
uplift in our ARR following our move
to Vancouver and focus on the
American market.

The graph on the top left illustrates
customer acquisition progress across the six
countries we operate in (US, Canada, UK,
EU, Australia, NZ). Growth is strongest in
the US. At the end of October we had over
258 customers in total, with over 170 in
North America.
Our sales and support teams have been
predominantly located in Canada and New
Zealand, but we have recently transferred
two sales and marketing staff members to
Florida and are now in the process of
transferring one senior salesperson to the
UK to cover the UK and European region.
We believe we can grow faster by having
key staff closer to where our customers are,
as we experienced with our shift into North
America.
The second graph shows the comparison
between direct and indirect customer
acquisition. Indirect sales are sold,
implemented, and supported by our
distribution partners in the US, Canada, UK
and Australia. The growth of our indirect
channel is helping us scale the business
faster and more efficiently.
The third graph on the left shows our
international revenue trend in NZD. The
international (non-NZ) year-on-year growth
is tracking at 123% which is being driven by
US year-on-year growth of 117%. Our
objective in 2022 is to get the UK and
Europe contributing substantially to our
revenue growth, as well as continuing
accelerating our North American growth.
The New Zealand revenue line (in black)
took a hit in August this year, when NTT
New Zealand (formerly Dimension Data)
decided to cut back their telecom services
within New Zealand. However, we have
another large NZ telecom provider being
implemented at present, and this will make up for the NZ revenue hit of losing NTT.

Datagate Product Development
This year in product development, we increased Datagate’s overall scalability, processing power and its
applicability for a wider range of sales opportunities by adding two new major product integrations.
Our new product integrations are as follows:
1. Datto AutoTask integration. Our API integration with ConnectWise Manage is a very strong driver
of Datagate sales, given that around 30,000 MSPs worldwide use that PSA product. This year we
added an integration with Datto AutoTask, which is the main competitor to ConnectWise Manage
and has an installed base that is nearly as big. This almost doubles Datagate’s addressable market
within the global MSP community and is already giving us a boost in sales opportunities.
2. QuickBooks Desktop integration. Our API integrations with Xero and QuickBooks Online are very
popular with our MSP customers, so we are in the process of adding a QuickBooks Desktop
integration, which is widely used by MSPs in the United States.

Datagate Team Updates
Shifting Datagate salespeople to England and Florida will bring us closer to larger numbers of sales
opportunities in the UK, Europe and the East Coast of America. In America, we now have salespeople
operating on both the East and West coasts, and I’m confident that this will increase our sales success in
2022. To keep up with the extra sales, and the larger customer base we are in the process of hiring new
support consultants and another senior implementation consultant.
We’ve also promoted our senior implementation consultant, to the position of Product Manager, where
she is guiding the direction of our product to ensure it is totally in line with market demand and is more
efficient to implement.

The Competition
Datagate continues to lead the market in new sales within the segment of MSPs selling telecom services,
including VoIP and UCaaS – which in turn is a market growing by 25% per year. Our much larger
competitors are beginning to copy us by announcing integrations to ConnectWise, but we have a
significant head-start on them and have already moved on to integrations with ConnectWise’s
competitors Datto AutoTask and Kaseya (which we are developing next).
A large competitor has indicated that they would like to acquire Datagate, however we do not believe it
is the right time to sell the business, with the high level of growth it is now experiencing.

2021 Capital Raise
We have started our capital raising process in America, which is being supported by Rich Tehrani of RT
Advisors, who are affiliated with Four Points Capital Partners. We are engaging with investors to test their
appetite for a fast-growing international SaaS business in the MSP billing and telecom space. Ideally, we
want to find a lead investor in the US, UK, Europe, Canada, Australia or New Zealand, that will go on to
lead and participate in future investment rounds.
The process in America is more complicated and regulated than what we’ve been used to in the past, and
we have completed the following steps:
1. Selection of investment adviser to support the process
2. Population of the data room, to enable compliance checks of all pitch material and enable due
diligence to be performed by interested institutional investors.
3. Production of a pitch deck, which has been compliance-checked against the data room.
4. Investor outreach has started.
We are aiming to raise approximately NZ $4M and seeking market feedback to determine the valuation.
Use of New Funds
The funds raised will be used to build a platform for accelerated international growth, with the following
specific actions:
1. Establish a United States branch (with staff in Florida)
2. Establish a United Kingdom branch (with staff in England)
3. Establish a Global Support Centre (with staff in the Philippines)
4. Accelerate product development (new integrations and more scalability)
5. Accelerate growth of Indirect and Direct sales channels.
How will Datagate look in two years’ time from now
Following the use of these new funds and the above actions, we project that Datagate will have achieved
the following milestones by the end of 2023.
• ARR exceeding US $5M
• Datagate sales & support centres in
o Florida, USA
o Vancouver, Canada
o London, UK
o Auckland, New Zealand
o The Philippines (Global Support)
• 50/50 split between Direct and Indirect new sales
• Product partnerships with PSA providers: ConnectWise, Datto AutoTask, Kaseya, Halo and others.
• Distribution partnerships in USA, Canada, UK, Australia, and New Zealand

Convertible Note Issue
The American capital raising process is taking longer to set up than we had previously anticipated, so we
propose to issue convertible notes to Datagate shareholders that wish to participate. Our largest
shareholder, Enprise Group Ltd, has offered to underwrite the offer. The convertible note issue will raise
a total of NZ $500K, at a 20% discount to the value established in this capital round.
We will distribute information to you shortly that will explain the convertible note issue in more detail
and give you the opportunity to participate.
If you are interested in participating in the convertible note and/or have questions about anything
discussed in this letter, please don’t hesitate to contact me at mark.loveys@datagate-i.com
Thanks & Regards

Mark Loveys, CEO
Datagate Innovation Limited
mark.loveys@datagate-i.com