Kobay Technology Bhd

KOBAY TECHNOLOGY BHD. (308279-A)

Subject:

Proposed acquisition of additional 15% equity interests in Polytool Integration Sdn. Bhd.

1.Introduction

The Board of Directors of Kobay Technology Bhd. ("Kobay") wishes to announce that on 16April 2012, Kobayhad acquired the remaining 15% of equity interests in Polytool Integration Sdn. Bhd. (“PIN) from Mr Ong Eng Sengconsisting of 50,001 ordinary shares of RM1.00 each and Mr.Yee San Khien(the “Vendors”) consisting of 24,999 ordinary shares of RM1.00 each collectively for a total consideration of RM225,000 (Ringgit Malaysia : Two Hundred and Twenty Five Thousand Only)(“the Proposed Acquisition”). Upon completion of the Proposed Acquisition, PIN will become a 100% wholly-owned subsidiary of Kobay.

2.Background Information

Information onPIN

PINis a private limited company incorporated in Malaysia and having its registered office at Plot 30, Hilir Sungai Kluang Satu, BayanLepasIndustrial Park, Phase 4, 11900 Bayan Lepas, Penang.

The principal activities of PIN are design and manufacture sawing machines, vision and inspection machine/systems, fluid/epoxy dispensing machines, test handling machines and production machinery for solar industry.

PINwas incorporated on 13 day of September, 2001 and as the date of this Agreement has an authorized capital of Ringgit Malaysia One Million only divided into One Million ordinary shares of RM1.00 each of which Five Hundred Thousand (500,000) ordinary shares have been issued and paid up or credited as fully paid in the following structure:

Name of shareholder

/ Number of Shares / % of shareholding
Kobay Technology Bhd / 425,000 / 85.00
Ong Eng Seng / 50,001 / 10.00
Yee San Khien / 24,999 / 5.00
500,000 / 100.00

Information on the Vendors

Mr. Ong Eng Seng and Mr. Yee San Khien are both Malaysian citizens with each currently holding 10% and 5% shareholdings in PIN. They have offered to dispose off their shares in entirety.

Effects After the Proposed Acquisition

The shareholding structure of PINafter the Proposed Acquisition is:

Name of shareholder

/ % of shareholding
Kobay Technology Bhd / 100.00

Both the Vendors have made total cash advancement of RM60,000 (Ringgit Malaysia : Sixty Thousand Only) to PIN and both have given their undertaking to waive the cash advances made to PIN upon completion of the Proposed Acquisition.

3.Rationale and Prospect of the Proposed Acquisition

The Proposed Acquisition would enable Kobay to have full management and operational control in PIN to better strategize its future business direction. The future prospect of PIN will depend on its ability to penetrate the markets and the outlook of the semiconductors and electronic sector where the Company operates.

4. Basis of Valuation, Risk and Liabilities assumed by Kobay

For the financial year ended 30 June 2011, PINrecorded audited loss before taxation amounted to RM2,495,274 with its net assets recorded at RM3,777,185. As at 29 February 2012 based on the management account, PIN’s net asset stood at RM1,522,678.

The total consideration of RM225,000.00 (Ringgit Malaysia : Two Hundred and Twenty Five Thousand Only) for the 15% equity interest in PIN was arrived atPIN’s net tangible assetsper the management account as at 29 February2012which approximately RM3.00 per share.The total consideration shall be fully satisfied by way of cash.

The Shares acquired are free from all liens, charges, pledges, mortgages and any encumbrances whatsoever and with all rights and advantages attaching thereto or accruing thereon including all dividends and distributions declared, paid or made in respect thereof.

The Board does not envisage any specific risk associated with the Proposed Acquisition apart from the general business risks faced by PINafter acquisition.

5.Source of Funds

The Proposed Acquisition will be funded from Kobay’s internally generated fund.

6.Financial Effects

The Proposed Acquisition is not expected tohave any materialeffect on the earning and earnings per share, net assets per share, gearing, share capital,substantial shareholder’s shareholding of Kobayfor the financial year ending 2012.

1. Salient Terms/Features

There are no salient terms/features of the agreement and valuation report for the Proposed Acquisition, except that the Vendors shall waive their outstanding advances of RM60,000 in PIN upon completion of the transaction.

1. Completion Date

The Proposed Acquisition shall be completed within 7 days from the date of announcement.

8.Approval Sought

The Proposed Acquisition is not subject to any approval of the shareholders of Kobay or any relevant governmental authorities.

9.Departures from the Policies and Guidelines on issue/offer of securities issued by the Securities Commission ("SC")
The Proposed Acquisition has not departed from the SC's Policies and Guidelines on Issue/Offer of Securities.

10. Percentage ratio

The highest percentage ratio applicable to the Proposed Acquisition pursuant to Paragraph 10.02 (g) of Main Market Listing Requirements of Bursa Securities is 0.32%.

11.Directors’ and Major Shareholders’ interest in the transaction

None of the directors and major shareholders of Kobay group and/or any persons connected to them (as defined in Section 122A of the Companies Act, 1965) have any direct or indirect interests in the Proposed Acquisition.

12.Directors’ Statement

The Board, after due consideration of all aspects of the Proposed Acquisition, is of the opinion that the purchase consideration is reasonable and is in the best interest of the Company and Kobay Group.

This announcement is dated 16 April 2012.

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