NEXTED GROUP LIMITED — Annual Report 2009

Sep 29, 2009

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Annual Report 2009

Contents

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	Chairman’s Letter 1 About us 3 CEO’s Report 4 Directors’ Report 7 Auditor’s Independence Declaration 14 Corporate Governance Statement 15 Financial Information 19 Directors’ Declaration 37 Independent Audit Report 38 Corporate Directory & Glossary 41

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XBOX 360® COMPANION PROJECTOR
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XRay™ companion projector and audio dock for Microsoft’s XBox 360™

“to excel in the design and m manufacture of innovat i ve i digital convergence technologies s and capture a significant share s of global markets, through the i careful management of our o inventors’ dreams, investors’ n assets and employees’ futures”

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es”s”
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Wii™ companion projector
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WeSii® companion projector and audio dock for Nintendo’s Wii™

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Chairman’s Letter

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In my Chairman’s Letter, October last year, I wrote about the “recent gyrations in world financial markets” – little did any of us know that those “gyrations” would spin out of control, knocking the world of its commercial axis, in a way not seen since the 1930’s.

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Fortunately, Digislide has survived and progressed through the Global Financial Crisis; and we have done so by taking a conservative approach in the statement of our financial position, the management of our operations and the formulation of our strategic directions - and we shall continue to do so in the foreseeable future.

Over the past year the Board met frequently to consider the impact of the Global Financial Crisis on the Company cash resources and IPO process.

As part of our strategic initiatives, we modified our Research and Development plans – postponing all “research goals” and focusing only on the “development goals”; goals that are realistically achievable and would bring product most quickly to market. Thus, the Digishow™ hand held projector and three prototypes targeted at the games console markets, XRay™, WeSii® and StingRay™, were released to Australian markets late in May, at CeBIT (Sydney).

Since March, 2009, Digislide has reduced staff numbers, both through natural attrition and retrenchments. Mr John English (Finance Manager) and his associate, Mr Jose Mendoza both retired at the end of March. The Board appreciates their tireless efforts in the discharge of their duties and responsibilities and the contributions they have made to the Company.

Digislide’s Assistant Marketing Manager moved interstate in May, and by June two Software Engineers had left.

As part of our corporate re-organisation, the Rochester office in the US was closed and our US Business Development Manager was retrenched. However, we remain represented in the US through the retention of a registered office for Digislide Americas, in California.

Together with the Managing Director, the Board continues to assess the human resources requirements of the Company and the balance between personnel required to drive the business forward and cost control. As such, Digislide has recently appointed two Sales representatives, and the Company expects to announce further appointments: including the appointment of a Business Development Manager for Europe, Africa and South Pacific; the appointment of a Chief Financial Officer; and a Marketing Assistant in the near future.

Our “new” focus to bring product to market meant that our original plan to enter markets in several regions simultaneously was modified. The newly defined targets for first half, FY2010, are to penetrate and expand in the Australian consumer markets; to focus on licensing opportunities in the Greater Asia Region and North America. Digislide will consider moving into European and US consumer markets later in 2010.

As additional funding becomes available from both product sales and accessing further funding those wider markets will be pursued vigorously. The market launch of Digishow™, the imminent release of miniPRO® hand held projectors, together with the pre-Christmas release of the gaming companion projectors should see the Company benefiting from these sales.

The XRay™ and WeSii® projectors and audio docking stations designed specifically as companions for Microsoft’s XBox 360™ and Nintendo’s Wii™ are sure to capture interest. The StingRay™, a companion projector and audio docking station targeted at Sony Playstation2™, Playstation Slimline™, Playstation3™ and PSP™ fans, will follow through in Q1, 2010.

Development of the DigiPRO™ SVGA Pocket Projector and the development of the Digivision™ docking station for Portable Media Players which had both been put on hold, have now been recommenced, and we anticipate market release in March and July 2010 respectively. We believe, at this stage, we still retain our market lead with an SVGA pocket projector.

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miniPRO® USB projector

‘to be the global pioneer of innovative display technologies’

v i s i o n

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DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Chairman’s Letter

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Research and development of pico and embedded optical engines has now recommenced, with the goal of completing a satisfactory design of 15-20 cc and ultimately, 8-10cc modules. These tiny optical engines will be eminently suitable for embedding in laptops, MP4 players, GPS, PDA, mobile phones and cameras, as covered by our patents.

Digislide not only has a highly specialised research and development team, but has developed close alliances with other audio-visual designers and manufacturers, and are now working to bring about maximum efficiencies in design, development and commercialisation timeframes and costings.

Despite the economic traumas of the last year, our Managing Director, has steered the Company through to achieve what I listed last year as “the key measures for success”:

• a) listing on the ASX – which occurred later than anticipated, on 24th August;

• b) the commercially successful launch and marketing of the Pocket Projector – which occurred at CeBIT, Sydney in May and has continued to make in-roads to the market;

• c) the commercially successful launch and marketing of the StingRay™ gaming projector – which occurred at CeBIT, Sydney in May. Our goal, however, was exceeded, with the launching of not one, but three gaming projectors, as we also launched two other gaming projectors and audio docking stations, the WeSii© and the XRay™.

2010 is promising to be very exciting, and our key targets will be:

• successful retail take up of the three gaming projectors

• expansion of the Digislide brand in Asia through product takeup

• commercialisation of the SVGA DigiPRO™ projector

• expansion of the Digislide brand in Europe through product takeup

• attaining Stage IV licence status with the DigiVision™ projection docking system for a Portable Media Player with a major brand

• expansion of the Digislide brand in USA through product entry

Again, I wish to thank our shareholders, employees and other stakeholders in supporting the continued growth of the Company.

Sincerely,

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Mr Ian Mutton Non-Executive Chairman

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2

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

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About us

Digislide has grown from an opto-electronics research and development company to a global award winning leader in miniature projection technologies.

Digislide is headquartered in Adelaide, South Australia, and has invested approximately AUD20M, including government grants received, in building an Intellectual Property ‘war chest’, which will stand us in good stead as we move into global markets.

We have now commenced commercialising our projection technologies, with products aimed at general consumer markets, professional users and the niche targeted games console markets.

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Our Premises

Digislide’s Corporate Office, Technical Research and Development and Production facilities are located at 100-102 Cavan Road, Dry Creek in South Australia.

The premises have been customised for Digislide’s optoelectronic and clean technologies research and development, and are leased for 5 years with an 8 year renewable option.

The facilities consist of three buildings. The main brick building of 750m2 contains Research and Development, Commercialisation, Marketing, Finance and Executive Management and a small warehousing area. The other two colour bond buildings are currently sub-leased, but will allow for further expansion of Digislide operations in the future.

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Singapore
office building
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Digislide Americas was incorporated in 2003, to provide a presence in that market and to prepare for off-shore expansion. This company was incorporated in Delaware, USA, to take advantage of the beneficial corporate and tax laws in that State.

In 2006 we had commenced a Registered Office of Digislide Americas in California, and in May 2007 we opened an Operations Office in Rochester, NY, with the appointment of Bruce Newell, Business Development Manager (The Americas). In June, 2009 we pulled back to the Registered Office in California, as part of the essential cost cutting required.

The Board

Digislide’s Board has significant experience in ASX, NYSE and NASDQ and Global 1000 companies. It includes specialists in corporate law, compliance, technology development, manufacturing, commercialisation and international finance.

Paths to Market

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Offshore Operations

Mr Joseph Tan, Business Development Manager (Greater Asia Region), is based in a serviced office on the 21st floor, 111 North Bridge Road, Peninsula Plaza, Singapore (see top right).

Digislide is entering global markets with its own branded products, and with white labelling of synergistic products.

We also intend to license our technologies, products and patents to gain leverage from global brands and their established distribution channels.

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DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

CEO’s Report

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Ms Luceille Outhred

Synopsis

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The Directors of Digislide are pleased to announce that following our listing Monday 24th August, the company announced an unaudited loss of $314,000 for the year ended 30th June 2009.

During the year the company has continued to develop its intellectual property and has capitalised $2.5M in development costs relating to products which are ready for imminent sale.

Subsequent to balance date, the company has listed with its IPO of $3,008,000 and have raised in excess of $2.4M to assist in its commercialisation of products.

The company expects to make some significant announcements in the near future.

Overview 2008-2009 – aligning Stated Goals with Performance

As outlined earlier, for many corporations around the world 2008-2009 was nothing short of an annus horribilis. It has gone down in history as the Global Financial Crisis.

Despite the Wall Street announcements of 15th September 2008, and the shock waves that swept around the globe for months after, Digislide’s Board of Directors decided that Digislide would not succumb to the fear that was seizing the world, but would go ahead with its plans to list on the ASX.

The reason?

The Board and Executive Management decided it was better to be positioned on the crest of the first wave in when the tide turned, than to drift backwards into a trough that might be difficult to survive or to recover from.

With our Underwriter, Martin Place Securities, and the subunderwriter our largest shareholder, who had never failed to carry us in difficult times, the Board had a degree of comfort as it decided to work hard to stay on the wave that would propel us forward when the crisis was over.

With the sub-underwriter holding a “No Conditions Contract of Sale” executed by an international company for the purchase of his retirement village, no-one could have imagined that the sale would be postponed – several times – before finally falling through.

This protraction saw Digislide’s financial reserves disappearing quickly, halting the last stages of development of three products, and cutting off expectation of revenue generation.

Whilst for Digislide the Global Financial Crisis did not cause its demise, it did place considerable strain on the limited finances and limited staff that we had to work with.

Several of Digislide’s major shareholders worked together to find ways to inject $1.5M into operations, as listing was delayed several times from 20th February to 24th August. Others invested in off-market transactions, at the list price, to ensure we would remain compliant with ASX and ASIC requirements. Much of these funds were by way of transactions arranged through related parties, but we moved forward confident that shareholders would ratify those decisions – the alternatives all being far too unpalatable.

I want to thank all staff, shareholders, suppliers, contractors and related parties who made our listing possible.

Digislide’s Prospectus was lodged 11th December 2008, but it was not until three Supplementary Prospectuses had been lodged, and a resultant change to corporate law, that Digislide was finally listed on the ASX on 24th August, 2009.

Despite those significant difficulties, our Financial Statements reflect that we have emerged a much stronger company than we were in June 2008. Our Intellectual Property Portfolio shows a broader range of patents and a deepening strength, and commercially we are much stronger as products with the Digislide brand have now entered the market.

We have not achieved all the goals that we set last year, but we have achieved most and none of them has fallen to the ground.

And we are poised on the top of the wave that threatened to sink us.

Digislide finalised its AusIndustry Commercial Ready contract on time and to budget in January, 2009. We received high commendation from the AusIndustry representatives who had managed our project.

Mr Joseph Tan not only focused on his key role of Business Development Manager (Greater Asia Region) but also assisted Head Office by liaising between Digislide and its key suppliers, contract manufacturers, existing and potential development partners in China, Taiwan and HongKong.

Mr Mark Gafner, our Chief Strategy Officer, led the PanPacific SWAT Team for enhancing our optical engines and provided direction for Research and Development organisation wide.

Mark and Joseph travelled into China in February to negotiate a licence for a “docking station for a portable media player” with a global brand, and to continue development discussions with Haier, regarding the Digislide Inside® a laptop. They also finalised the evaluation of the two manufacturing contract houses we had selected, and negotiated the licence arrangements.

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DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

CEO’s Report

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Mr Tim English (Chief Marketing Officer) had a particularly busy year. Apart from providing significant assistance throughout the protracted IPO and ASX listing period, Tim took on the responsibilities of Acting CEO, for a total of 10 weeks during the year.

In his more traditional role, he oversaw the design, development and maintenance of Digislide’s three websites, including the on-line shopping facility, developed all branding and marketing collateral of all products, and managed a number of expos including:-

• SINOCES, Qingdao, July 2008 (Tim and Mr William Zha,

• Senior Hardware Engineer, representing Digislide)

• Shenzhen, Hi Tech Fair, October 2008 (William in attendance).

• CommunicAsia, Singapore, June 2009

• CeBIT, Sydney, May 2009

Set out below is what we had aimed for, and what we have achieved. I think you will agree that in view of the economic environment that we were in, we have done well.

Goals Result Quarter 1 To undertake beta trials with one major brand Satisfactory completion of AusIndustry Commercial Ready contract Market entry of Digismart® Pocket Projector (VGA and SVGA) - Q1 2009 Finalise optical engine for embedding in laptop Licence telco chain to bundle Pocket Projector with mobile phones with TV out (composite video) Finalise optical engine for embedding in mobile phones Generate over $4M revenues and reflect a break even position Trials have been undertaken with three global brands (pharmaceuticals, laptop and mobile phones). Further trials and development planned with each group for 2010. The contract with AusIndustry was completed satisfactorily with all major milestones met on time and to budget. Funding difficulties delayed the entry of the VGA projector by two months, and Digishow™ (note brand name change) entered Australian markets in May. Development of the SVGA was put on hold, and has recently recommenced. Development and trialling continues with major brand Digishow™Pocket Projector was released to Australian market at CeBIT in May, and several telco chains expressed an interest in bundling. Discussions ongoing. Development was halted through lack of funding. Development recommenced on listing. Ongoing joint development activities with major mobile phone designer/ manufacturer. From the moment the Global Financial Crisis hit, we knew this Goal could not be achieved. Delayed access to funding meant delayed ability to order from our licensed manufacturers.

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DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

CEO’s Report

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When our operations were restricted through the delayed listing, which meant minimal available funding, we focused on what could be done with available personnel and limited funds.

In addition to the above stated goals, we also achieved the following:

• 1) worked with the global brand, Haier, to jointly develop a laptop with an embedded projector (Digislide Inside™) and provided a joint demonstration at the SINOCES Expo (Qingdao, Shandong, China) – the largest consumer electronics show in China.

• 2) further strengthened our Intellectual Property portfolio lodging 9 additional patents, 4 design applications and 32 trademarks

• 3) developed and implemented LED and Laser Compliance Policy and Procedures across all staff and consultants

• 4) undertook Market Research on 5 additional Peak Sporting Associations towards the commercialisation of Digismart Swap™

• 5) designed and developed to beta prototype standard, three companion projector and audio docking stations (XRay™, WeSii®) and StingRay™ for the world’s most popular gaming consoles (Microsoft’s XBox 360™, Nintendo’s Wii™, and Sony’s Playstation 2™, Playstation Slimline™ and PSP™s)

• 6) attended the CeBIT (Sydney) expo and demonstrated Digishow™ and the three gaming companion projectors and audio docking stations mentioned above

• 7) created the Digishow™ website, www.digishow.com.au with its on-line shopping capabilities and finalised all packaging and marketing collateral

• 8) created the Digislide Gaming website; www.digislidegaming.com

• 9) gained considerable exposure in national media

Future Directions - Goals for 2009-2010

Our future directions are in line with our 5 year plan, and include enhancing and further reducing the size of our optical engines, for embedding in laptops, mobile phones, PDA, GPS and other display devices.

We need to bolster our staff in the Research and Development, Commercialisation, Finance and Administration areas, as we move towards national and global expansion.

Digislide, in conjunction with Workright Centre for Entrepreneurship, has applied for a government grant which, if successful would see the provision of significant funds for the expansion of our opto-electronic and clean technology research and development facilities.

Key Goals are:-

• Appoint a Chief Finance Officer and support staff

• Appoint additional Marketing and Sales personnel

• Secure several retail chains and smaller retail outlets for Digishow™

• Commercialise miniPro®, and utilise existing retail channels

• Finalise development and commercialse XRay™, WeSii®, StingRay™, DigiPro™ projectors and audio docking stations for gaming consoles and utilise existing retail channels and additional gamers retailers

• Finalise development of docking station for Digivision™ - the Portable Media Player being designed under licence with a global brand – goal of 50 ansilumens and satisfy all requirements to gain Stage IV of the licence agreement

• Pursue field sequential colour optical engine design for pico and embedded optical engines to satisfactory design of 15-20cc and 8-10cc modules

• Finalise embedding optical engines in laptops with joint development partners

• Finalise embedding optical engine for Smartphone devices

• Generate over $5M revenues and reflect a break even position

• Obtain additional financing to enable rapid penetration of global markets

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DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Directors’ Report

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Your directors present their report on the company and its controlled entities (the consolidated entity) for the financial year ended 30 June 2009.

Directors

The names of the directors in office at any time during, or since the end of, the year are:

Directors	Appointed
Ms Luceille Outhred	(appointed 6 June 2003)
	(appointed Digislide Americas Ltd
	6 February 2006)
Mr Malcolm Leahy	(appointed 1 July 2007)
Mr Ian Mutton	(appointed 11 May 2008)
Mr Leon Milford	(appointed 18 August 2008)
Ms Lin Chan	(appointed Digislide Holdings Limited
	1 September 2007) (appointed Digislide
	Americas Ltd 1 July 2007 resigned 15th
	November 2008)
Mr Christian Outhred	(appointed Digislide Americas Ltd
	6 February 2006 )
Mr Bruce Newell	(appointed Digislide Americas Ltd
	1 July 2007 ceased 24th May 2009)

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

Company Secretary

Mr John English held the position of company secretary from 1st August 2007 to 1 September 2008. This role was taken over by Mr Hean Siew from 1 September 2008 whose qualifications and experience are outlined below.

Information on Directors

Directors’ meetings held and attended by each director during the financial year:

Director	Meetings Available to Attend	Attended
Mr Ian Mutton	15	15
Ms Luceille Outhred	15	15
Mr Leon Milford	14	14
Ms Lin Chan	15	13
Mr Malcolm Leahy	15	15

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DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Directors’ Report

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Information on Directors’

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Mr Ian Mutton Ms Luceille Outhred Mr Malcolm Leahy Non-Executive CEO -Digislide Group Non-Executive Director Chairman

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Ms Lin Chan Mr Leon Milford Mr Hean Siew Non-Executive Director Non-Executive Director Company Sectary

Mr Ian Mutton

LLB

Non-Executive Chairman

Experience - Ian has considerable experience in corporate governance. He sits on a number of boards of emerging listed and unlisted Australian and UK companies engaged in the energy, recycling and minerals, finance, technology and resource exploration sectors in Australia, Chile and China. Ian is a lawyer with a background in competition and product liability laws. He spent 10 years with the Commonwealth Crown Solicitor on continuous secondment to the (then) Trade Practices Commission with occasional secondment to an inter-department committee responsible for containing product liability exposure. Ian also spent fifteen years with CSR Limited devising and implementing product liability defence and asset protection strategies in Australia, New Zealand and USA. Ian spent five years managing relations for a Northern Ireland based energy start-up company with governments and regulators based in Belfast, Westminster and Brussels. He spent 10 years devising and implementing competition law and product liability related governance and training programs for companies in Australia, New Zealand and Europe. Ian also has experience in the building and recycling sectors including a Government trading venture in Australia.

Special Responsibilities

• Chairman

Ms Luceille Outhred

M Ed St; M Dist Ed; Ad Dip HRD Mgt; Dip T; Dip Trg & Ass Sys; Cert TEFOL

Chief Executive Officer (Managing Director)

Experience - Luceille has led Digislide since incorporation, and is a designated inventor on many of the patents held by Digislide. She has been responsible for establishing the corporation, capital raising, technical risk management for research and development and product design and development of MantaRay™, Digiscope™ and the Digismart™ Miniature Projection Technologies. Luceille is Designated Inventor of Digislide’s Digismart Swap™, Digismart™ and Digivision™ and optical engine patents. She has had extensive start up and business development experience with education

and technology companies. Her strategic leadership in Digislide has resulted in the receipt of a number of national, international and global awards, and the establishment of a number of global relationships.

Luceille is Corporate Leader of the Workright Group and provides strategic direction for a number of technology start ups under incubation with the Workright Centre for Entrepreneurship. Luceille was designated as a member of the Southern Area Sports Complex Management Team by the South Australian Parliament in 2000, and was selected as a finalist in the Telstra Business Woman of the Year (SA) award; and, again in 2007, was selected as a finalist in the Telstra awards in two categories, the Hudson Private and Corporate Sector Award and the Australian Government Business Innovation Award.

Mr Malcolm Leahy

Dip Bus (FLM)

Non-Executive Director

Experience - Malcolm’s experience is in the engineering and plastics industries in South Australia. He has had significant manufacturing experience for and on behalf of major brand owners and has business relationships with engineering firms (toolmakers) and plastics manufacturers in China. Malcolm brings to the board practical engineering insights and provides engineering, tool-making and manufacturing advice to executive management on a “needs basis”.

Malcolm is a Member of TEC Group and holds directorships with Creative Moulding Pty Ltd, Arkidelo Pty Ltd, The Fitness & Leisure Business Pty Ltd, Sharksafe Pty Ltd and Is That So Pty Ltd.

Special Responsibilities

• Advice on International Manufacturing, Chairman Rewards and Remuneration Committee

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DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Directors’ Report

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Ms Lin Chan

MBA B Comm

Non-Executive Director

Experience - Lin has over 25 years of corporate finance experience in early-stage start-ups as well as large multinationals, including public and private financings, mergers and acquisitions, commodity transactions, licensing transactions, overseas outsourcing and manufacturing, legal and IP, systems implementation, accounting, financial planning and analysis, international tax planning, SEC issues and reporting, HR, board governance and investor relations. Her industry experience includes commodities, manufacturing, cleantech, nanotechnology, internet, communications, storage, semiconductor and consumer electronics.

Lin heads up a consulting practice since 2001 and a partial list of her clients include: Aperto Networks (www.apertonet.com), Pacific Investors (www.pi888.com), a late stage private equity investment company, American IDC Corp., a digital streaming internet company, Pictopia, (www.pictopia.com) a photo ecommerce provider, Optiva Inc., a nanomaterials company, GeoCOM International Ltd., a South American wireless carrier company, and Emergency Filtration Products, a medical products manufacturer.

Lin was the CFO and EVP for Crystal Technology Inc. (www. crystaltechnology.com, a spin-off from Siemens AG), the world’s largest producer of Lithium Niobate crystals for the multimedia industry from 2006 to 2008 (featured on KRON4 news as one of “Silicon Valley’s Best Run Companies”). From 2002 to 2005, she served as the CFO and VP of Administration for BitMicro Network Inc. (www.bitmicro.com). From 2000 to 2001, Lin served as the CFO for MeetWorldTrade, Inc. (dba MeetChina.com), a privately held Internet B2B startup company. Lin also served as Corporate Controller for PC-Tel, Inc. (www.pctel.com) from 1997 to 2000, where she established the infrastructure that enabled it to become the fastest growing company in Silicon Valley, while managing the company’s IPO and secondary offering, raising a total of $200 million, and creating a market capitalization exceeding $2 billion.

Her career also includes stints as Controller for SOLA International (www.sola.com), a $500 million global medical device manufacturer, where she was involved in SOLA’s listing on the NYSE, as well as Controller for Pilkington plc (www.pilkington.com), a $4 billion UK multinational.

Mr Leon Milford

Dip Bus (FLM); Ad Dip Bus Mgt; Ad Dip Business

Company Secretary

Experience - Leon has extensive experience encompassing the areas of finance, marketing, distribution, and manufacturing. Having held the position of Victorian Secretary and Accountant for global organization, Hills Industries Ltd, Leon brings to the Board sound financial management expertise.

Responsible for a diversified product base including exporting and global budgeting, Leon’s broad knowledge combines a thorough understanding of the product manufacturing process right through to the distribution level.

In later years, Leon held management positions in finance and sales, combined with directorships held in the Automotive, Real Estate and Aged Care industries.

Leon sits on a number of boards, including holding Directorships with Sharksafe Pty Ltd, Sharksafe International Pty Ltd, AU Pacific Limited, Outback Marble Pty Ltd and Spinergy Pty Ltd.

Leon is currently involved with the development of various mining activities both in South Australia and in Papua New Guinea, and currently oversees an investment portfolio involving Manufacture, Mining and Development companies including international operations.

Special Responsibilities

• Chairman of Audit Committee,

• Member of Rewards and Remuneration Committee

Mr Hean Siew

B Ec / LLB

Company Secretary

Experience - Hean Siew has had 25 years in the financial services industry and four years in management accounting, during which time he has held senior appointments with two fund management companies, a specialist investment bank and two global investment banks.

He currently provides specialist corporate finance and corporate affairs services to a number of private and public companies.

Hean holds Bachelor of Laws and Bachelor of Economics degrees from Sydney University. He has been admitted as a solicitor to the NSW Supreme Court and was a former associate member of the Australian Society of Accountants.

All non-executive directors are remunerated at the rate of $50,000 per annum, however this remuneration is not paid in cash but either as an allocation of shares or trade dollars.

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DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES ABN 75 105 012 066

Directors’ Report

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Ms Luceille Outhred Mr Christian Outhred Ms Lin Chan President Vice President

Board of Directors

Digislide Americas

The Board comprises of:

• Ms Luceille Outhred (President)

• Mr Christian Outhred (Vice President)

• Ms Lin Chan

Mr Christian Outhred

Qualifications

• Bachelor of International Business

• Advanced Diploma of Business Development Management

• Diploma of Business (Frontline Management)

• Certified Practising Manager

Experience

• Associate Director of Brewer Morris – Global Taxation

• Involved with the Digislide Group since incorporation, representing the Company in trade and investment forums in Sydney (Australia), Xi’an (China) and Singapore and presentations to global icons in Europe and USA

• Early stage commercialisation of Digislide products toward market entry in Europe and USA

• 7 years of international business development experience, on four continents

• Gained awards with Michael Page International for business development in UK and USA

• Business Development with Pure Recruitment Group (London)

Principal Activities

The principal activities of the consolidated entity during the course of the financial year were:

• Ongoing Research and Development of Miniaturised Projection Technologies

• Forging joint development relationships with synergistic developers

• Late Stage Commercialisation of Digishow® Handheld

• Projector and demonstrations in major expos

• Product launch of Digishow® in Australia and Asia

• Mid Stage Commercialisation of Digipro® USB Projector and demonstrations in major expos

• Mid Stage Commercialisation of Digivision® SVGA projector

• Early Stage Commercialisation of XRay™, WeSii™ and StingRay® gaming companion projectors and demonstrations in major expos

Review of Operations

The consolidated loss of the consolidated entity after providing for income tax and eliminating minority interests amounted to $260,044 compared to a loss of $6,531,946 in the previous year.

The group continued its work on development of technologies towards commercialisation of products and as a result capitalised expenditure totalling $ 2,501,605 during the year.

The prior year results also incorporated total asset impairment charges of $2,171,922.

Due to delays in the listing of the company the group reduced its overheads and operating costs to carefully manage its cash flows and generated a small surplus from operating activities of $2,530.

The expenditure on development of its intellectual property and products was funded by issuing share capital of $1,613,544 and borrowings of $1,628,735.

• Awarded first prize by the Financial Times in a highly competitive UK-wide B2B business development contest

• formerly Business Development Manager of Workright Group

10

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES ABN 75 105 012 066

Directors’ Report

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Financial Position

The net assets of the consolidated entity have increased by $1,353,500 from 30 June 2008 to $1,621,337 as at 30 June 2009.

This increase is mainly the result of the issuing of additional capital during the year of $1,613,544.

As at 30 June 2009 the group had a deficiency of working capital of $2,231,163. However this position has been rectified since balance date as a result of the proceeds of the prospectus and listing of the company on the ASX on 24 August 2009.

Principal Activities

The principal activities of the consolidated entity during the financial year was the ongoing research and development of miniature projection technologies.

Additional activities spinning off from the above, were licensing two manufacturing contractors in Shenzhen, China, for the manufacture of hand held projectors and our gaming companion projectors.

Digislide has executed two Licence Agreements with manufacturers in Shenzhen, for the production of handheld projectors and audio docking stations.

Having two manufacturers is a risk management decision which will allow for rapid expansion, and should mitigate problems that could occur through difficulties within the commercial operations of either, or with supply chain difficulties.

Thus, the nature of these activities has not changed, but the momentum has increased significantly as Digislide moved into development and commercialisation of several products.

Future Developments, Prospects and Business Strategies

Digislide has continued to demonstrate its miniaturised projection technologies to industry leaders in Australia, USA, Hong Kong, China and Europe.

In August 2009, Digislide gained additional acknowledgement from the industry, with the conferral of the ‘Asia Pacific Technology Innovator of the Year - Hand Held Projectors’ Award by Frost & Sullivan in Singapore.

Digislide continues to work with several global brands, towards embedding Digislide Inside™ laptop/notebook, mobile phone and PDA/GPS devices. GE edgelab (Connecticut) is trialling Digislide prototypes and demonstrating them to departments within General Electric and to other potentially interested parties. Trialling of Digislide prototypes is in progress for executives and sales personnel of a global pharmaceuticals group, with a view to volume purchases. A licence has been signed with an undisclosed global brand for the development of a bespoke docking station for a Portable Media Player. Other global brands are evaluating Digislide Inside™ for use in mobile phones and laptops/notebooks.

To maximise returns from the various distribution channels we are establishing, Digislide is currently negotiating with manufacturers of synergistic audio visual consumer products, for which we could either obtain exclusivity or could commercialise under the Digislide brand.

Evaluation and selection of manufacturers in the Asia Region has now occurred, to expeditiously bring XRay®, WeSii® and StingRay® gaming companion projectors and audio docking stations to market in Q4 2009 and Q1 2010.

After Balance Date Events

Subsequent to balance date, the company has listed on the ASX with its IPO of $3,008,000 and has raised in excess of $2.4M to assist in its commercialisation of products.

No other matters or circumstances have arisen since the end of the financial year which would significantly or negatively affect the operations of the consolidated entity.

Environmental Issues

The consolidated entity’s operations are not regulated by any significant environmental regulation under the law of the Commonwealth or of a State or Territory.

The company continues to focus on sustainability, as well as social and ecological sensitivities in the production of its products.

Dividends

No dividends were paid or declared for payment since the start of the financial year.

Digislide has continued to receive regular national media exposure, has executed a distribution agreement with one retailer and is now receiving interest from individual retailers and retail chains regarding distribution of Digislide’s products throughout Australia and Singapore.

11

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Directors’ Report

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Information

As at the date of this report, the interests of the directors or any of the 5 most highly remunerated officers (other than directors), in the shares and options of the company were:

Note: Shares held includes the equity holding of all related entities to each party.

Number	Position	Number of Ordinary	Number of options	Number of Shares
		Shares Held	over ordinary shares	issued as a result of
				exercise of Options
Ms Luceille Outhred	Chief Executive Officer
(*see below)	(Digislide Holdings Limited) -
	President (Digislide Americas Ltd)	7,231,499	350,000	Nil
Mr Peter Rubinshtein	Chief Technologist	100,000	Nil	Nil
Mr Christian Outhred	(related party included above)*	included above*	Nil	Nil
Mr Kevin Soper	Chief Innovator	3,580,872	Nil	Nil
and related parties
Mr Tim English	Marketing Manager	262,333	Nil	Nil
Mr Ian Mutton	Non-Executive Chairman	25,536	Nil	Nil
Ms Lin Chan	Non-Executive Director	50,000	Nil	Nil
Mr C. Outhred	Non Executive Director	-	Nil	Nil
(see above related party)	(Digislide Americas Ltd)
Mr Leon Milford	Non-Executive Director	61,600	Nil	Nil
Mr Malcolm Leahy	Non-Executive Director	662,378	Nil	Nil

Insurance Premiums

Since the end of the financial year the company has paid or agreed to pay insurance premiums as follows:

The company has paid premiums to insure directors and officers against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of a director or officer of the company, other than conduct involving a wilful breach of duty in relation to the company. The total amount of the premium is $32,090 per annum.

Auditor’s Independence Declaration

A copy of the auditor’s independence declaration for the year ended 30 June 2009 has been received and can be found on page 14 of the annual report.

The company has also paid premiums for public liability, product liability, Prospectus insurance and travel insurance for its officers, and building contents.

12

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Directors’ Report

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Remuneration report

Remuneration details for the year ended 30 June 2009

The following table of benefits and payments details, in respect of the financial year, the components of remuneration for each member of the key management personnel of the consolidated group:

Name	Year	Primary	Post Employment	Total
		Salary/ contract payments	Superannuation
L Outhred	2009	170,000	14,400	184,400
	2008	170,000	14,400	184,400
T English	2009	89,615	8,081	97,696
	2008	101,154	9,104	110,258
P Rubinshtein	2009	91,385	8,225	99,610
	2008	105,923	9,533	115,456
K Soper	2009	90,385	8,135	98,520
	2008	100,000	9,000	109,000
M Gafner	2009	122,851	0	122,851
	2008	110,891	0	110,891

Remuneration Policy

The company listed on the ASX on 24 August 2009 and is in the process of establishing a remuneration program to help reward performance of key management personnel in line with the future performance of the group. During the year ended 30 June 2009 none of the remuneration of key personnel was based on key performance areas related to the operating performance of the group. However, since that time, key personnel who met criteria previously established by the Board, have received bonus payments – paid in BBX trade dollars - as per individual contracts. Key performance indicators for 2010 are under review as the company is still in the process of development and commercialisation of its products.

With the exception of Mark Gafner who is paid based on a separate contract all personnel receive superannuation guarantee contributions required by the government which is currently 9% of their salary, and do not receive any other compensation benefits.

Signed in accordance with a resolution of the Board of Directors:

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Ms Luceille Outhred CEO (Managing Director)

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• Mr Ian Mutton Non-Executive Director

• Dated this 30th day of September 2009

13

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Auditor’s Independence Declaration

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14

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Corporate Governance Statements

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Unless disclosed below, all the best practice recommendations of the ASX Corporate Governance Council have been applied for the period since May 2008.

A copy of the Company’s Corporate Governance Policies and its Code of Conduct may be found on the Company’s website, at www.digislide.com.au

Board Charter

This Charter sets out the functions and responsibilities of the Board and management of the Company, recognising that it is accountable to shareholders for the performance of the Company. It oversees the strategic direction, policies and practices of the Company, including activities and performance of management and provides an independent and objective view to the Company’s decisions.

Directors’ deeds

The Company has entered into a Deed of Indemnity, Insurance and Access with each of the Directors to regulate certain matters between Digislide and each Director, both during the time the Directors hold office and after the Director ceases to be an Officer of Digislide (or wholly owned subsidiaries).

Board Composition

Three of five Directors of the Company are independent to the operations.

The names of the independent and non-executive Directors are:

• Ian Mutton (Chairman)

• Lin Chan

In addition it is responsible for establishing goals for management and ensuring the business is managed in a manner consistent with the agreed strategic direction, policies and practices. The Board is also responsible for the overall corporate governance of Digislide, and recognises the need for the highest standards of behaviour and accountability in acting in the best interests of Digislide as a whole. The Board ensures that Digislide complies with all of its contractual, statutory and any other legal or regulatory obligations. The Board has the final responsibility for the successful operations of Digislide.

The Board will comprise five Directors. If Digislide’s activities increase in size, nature and scope, the size of the Board and the optimum number of Directors required for the Board to properly perform its responsibilities and functions will be reviewed and, if appropriate, enlarged accordingly.

Independent Directors

The majority of Directors of the Company will be independent, non-executive Directors and the Chair shall be an independent, non-executive Director.

The Board may decide that it considers a Director to be independent, notwithstanding the existence of relationships listed above. If the Board does so decide, it will state its reasons in the annual report for making such a decision.

If the independent status of a Director is lost, this will be disclosed to the market immediately.

Directors remuneration

The fees and emoluments paid to Directors will be approved in advance by Shareholders.

• Leon Milford

When determining whether a non-executive Director is independent the Director must not fail any of the following materiality thresholds:

• Less that 10% of Company shares are held by the Director and any entity or individual directly or indirectly associated with the Director

• No sales are made to or purchases made from any entity or individual directly or indirectly associated with the Director

• None of the Directors’ income or the income of an individual or entity directly or indirectly associated with the Director is derived from a contract with any member of the economic group other than income derived as a Director of the entity

Independent Directors have the right to seek independent professional advice in the furtherance of their duties as Directors at the Company’s expense.

Reasonable expenses incurred on behalf of the Company are reimbursed upon production of receipts or similar evidence. Written approval must be obtained from the Chairman prior to incurring any additional expense on behalf of the Company.

The entire policy is set down on Digislide’s website, www.digislide.com.au

Securities Trading Policy

The Company’s policy regarding Directors and employees trading in its securities is set by the Board.

The policy restricts Directors and employees from acting on material information until it has been released to the market and adequate time has been given for this to be reflected in the securities’ prices.

The entire policy is set down on Digislide’s website, www.digislide.com.au

15

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES ABN 75 105 012 066

Corporate Governance Statements

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Audit Committee

The Company has a separate audit committee, it is comprised of:

• Leon Milford (Chairman)

• Lin Chan

• Ian Mutton

The Board as a whole has responsibility for recommendations coming out of the Audit Committee. The Audit Committee reports to the Board at its monthly Board Meetings, and the Board carries out any necessary functions as required.

Risk Management Committee

The Board has not established a Risk Management Committee as it is envisaged that the Board, as a whole, would undertake the role of such a Committee.

Due Diligence Committee

The Board has not established a Due Diligence Committee, but may, from time to time, establish a Due Diligence Committee if circumstances arise such that this Committee is required.

Nomination Committee

The Company does not have a separate Nomination Committee due to the current size of the Company and its operations. The Board as a whole has responsibility for the functions of a Nomination Committee, and Board composition and skills are considered as part of the annual Board performance evaluation to ascertain whether any additional skills are required.

Performance Evaluation of the Board

An annual performance evaluation of the Board and all Board members will be conducted by the Board. The first such evaluation occurred mid 2009.

Remuneration Policies and Rewards and Remuneration Committee

The Company has a separate Rewards and Remuneration Committee. The Committee shall comprise a majority of independent Directors, be chaired by an independent Director and have at least three members. A quorum shall be two members.

The present members are:

• Malcolm Leahy (Chairman)

• Leon Milford

• Ian Mutton

Questions arising at Committee meetings are to be decided by a majority of votes.

The Rewards and Remuneration Committee makes recommendations to the Board regarding honoraria for Directors, recommends the terms and conditions for the CEO and Officers, reviews CEO’s performance and sets goals, with the CEO and reviews progress of those goals, and develops and facilitates a process for Board and Director evaluation.

The Board has negotiated a contract with the Executive Director (Chief Executive Officer) which includes a base salary, superannuation, bonuses and Options. This contract allows for annual performance and remuneration reviews. The Executive Director’s performance and remuneration was reviewed by the Board in July 2009.

The Executive Director is also entitled to participate in the employee share and option plan, but to date no grants under this scheme have been made.

The amount of remuneration for all Directors and executives, including all monetary and non-monetary components, is detailed in the Directors’ report. All remuneration is valued at the cost to the company and expensed. There are no schemes for retirement benefits for non-executive Directors other than statutory superannuation.

The Committee will meet at least twice annually. The entire policy is set down on Digislide’s website: www.digislide.com.au

Risk Management Policy

The primary objective of risk management is to ensure that Digislide appropriately manages its business and operating risks. This promotes stakeholder confidence in dealing with or investing in Digislide.

The Board and Officers of Digislide are committed to managing its risks but ultimately it is the responsibility of the Board for risk management and control. The Board is charged with examining and considering areas of significant business risk on an ongoing basis and implement policy to minimise exposure to these risks.

The CEO and the CFO are required to report in writing to the Board that to the best of their knowledge:

• the financial statements of the Company for each half and full year present a true and fair view, in all material aspects, of the Company’s financial condition and operational results and are in accordance with accounting standards

• the above statement is founded on a sound system of risk management and internal compliance and control which implements the policies adopted by the Board

• Digislide’s risk management and internal compliance and control framework is operating efficiently and effectively in all material aspects.

16

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Corporate Governance Statements

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Internal compliance and control framework

The objective of Digislide’s internal compliance and control framework is to ensure that areas of risk have been identified and that the appropriate internal controls have been implemented and are operating efficiently in all material respects.

Digislide shall:

• manage risks continuously using a step-by-step process involving the identification, analysis, evaluation, treatment, monitoring and review of risks. It shall be applied to decision making through all levels of Digislide and in relation to any function or activity

enhance the reputation and performance of Digislide.

Responsibilities of Directors and Staff are set down within this Policy and include observing all applicable laws and regulations, recognising their primary business loyalty is to the Company, ensuring confidentiality is maintained and that any possible conflict of interest is disclosed to the Chief Executive Officer and the Company Secretary.

The Policy sets out the Company’s position on gifts, loans and fair trading and may be viewed on the Company’s website, www.digislide.com.au

• apply the process in planning and when making significant decisions in expenditure of large amounts of money, new strategies and procedures, managing projects, introducing significant change and the management of sensitive issues

• all staff members of Digislide shall practice principles of risk management and comply with all policies, procedures and practices relating to risk management

Specifically, the CEO and the CFO are responsible for preparing Digislide’s risk profile and the identification of the various risks - what the risks are, why they happen(ed) and how they occur(red) - for assessment by the Board on a periodic basis.

The Risk Management Policy is set down in Digislide’s website, www.digislide.com.au

Code of Conduct

The Company expects that the actions of its staff reflect the ethical standards of the Company. Staff members are under an obligation to the Company not to place themselves or allow themselves to be placed directly or indirectly in a position where their private interests conflict or could conflict with their responsibilities to the Company. Accordingly, staff members may not use their positions, the Company’s assets or confidential information gained in connection with their employment for personal gain or for the benefit of a family member or any outside party.

The Code sets out Digislide’s minimum standards of conduct and integrity to be observed by all staff members. The Code’s focus is to ensure that all Directors, executives, and employees act with the utmost integrity and objectivity in carrying out their duties and responsibilities, striving at all times to

17

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

Financial Information

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ABN 75 105 012 066

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----- Start of picture text -----

DIGISLIDE HOLDINGS LIMITED
ANNUAL REPORT 2009
----- End of picture text -----

18

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Financial Information

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Income Statement

For The Year Ended 30 June 2009

Note Revenue 2 Cost of sales Gross profit (loss) Other income 2 Marketing expenses Occupancy expenses Administrative expenses Employment expenses Depreciation and amortisation expense Impairment of assets Finance costs Other expenses Profit before income tax Income tax expense Profit/ (loss) attributable to members of the company	Note Revenue 2 Cost of sales Gross profit (loss) Other income 2 Marketing expenses Occupancy expenses Administrative expenses Employment expenses Depreciation and amortisation expense Impairment of assets Finance costs Other expenses Profit before income tax Income tax expense Profit/ (loss) attributable to members of the company	Consolidated GroupParent Entity 2009 2008 2009 2008 $ $ $ $
	2 2	42,869 73,364 42,869 108,267 (34,503) (660) (34,503) (660)
		8,366 72,704 8,366 107,607 1,690,647 1,942,953 1,690,647 1,940,857 (144,771) (70,231) (144,771) (70,231) (72,461) (106,749) (72,461) (100,881) (686,647) (618,928) (686,647) (418,823) (679,421) (1,101,118) (616,920) (1,101,118) (41,241) (556,272) (41,241) (556,272) (63,578) (2,171,922) (251,603) (2,171,922) (213,751) (801,795) (213,751) (801,368) (57,187) (3,120,588) (57,187) (5,660,114)
		(260,044) (6,531,946) (385,568) (8,832,265)
		- - - -
		(260,044) (6,531,946) (385,568) (8,832,265)

The accompanying notes form part of the fi nancial statements.

19

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Financial Information

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Balance Sheet

As at 30 June 2009

Note ASSETS Current assets Cash and cash equivalents 7 Trade and other receivables 8 Inventories 9 Other current assets 10 Total current assets Noncurrent assets Investments accounted for using the equity method 11 Other non-current assets 10 Property, plant and equipment 12 Other financial assets 13 Intangible assets 14 Total non-current assets TOTAL ASSETS LIABILITIES Current liabilities Trade and other payables 15 Financial liabilities 16 Borrowings 16 Provisions 17 Total current liabilities Non-current liabilities Provisions 17 Borrowings 16 Total non-current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 18 Retained earnings TOTAL EQUITY	Note ASSETS Current assets Cash and cash equivalents 7 Trade and other receivables 8 Inventories 9 Other current assets 10 Total current assets Noncurrent assets Investments accounted for using the equity method 11 Other non-current assets 10 Property, plant and equipment 12 Other financial assets 13 Intangible assets 14 Total non-current assets TOTAL ASSETS LIABILITIES Current liabilities Trade and other payables 15 Financial liabilities 16 Borrowings 16 Provisions 17 Total current liabilities Non-current liabilities Provisions 17 Borrowings 16 Total non-current liabilities TOTAL LIABILITIES NET ASSETS EQUITY Issued capital 18 Retained earnings TOTAL EQUITY	Consolidated GroupParent Entity 2009 2008 2009 2008 $ $ $ $
	7 8 9 10 11 10 12 13 14 15 16 16 17 17 16 18	441,694 23,593 434,840 3,270 806,457 48,558 804,353 290,365 334,024 300,000 334,024 300,000 364,519 776,890 364,519 776,890 1,946,694 1,149,041 1,937,736 1,370,525 - - - 10,000 917,921 1,060,147 917,921 1,060,147 236,074 250,000 236,074 250,000 292,500 - 292,500 - 2,501,605 - 2,638,020 - 3,948,100 1,310,147 4,084,515 1,320,147 5,894,794 2,459,188 6,022,251 2,690,672 2,025,274 1,456,927 2,194,785 1,500,91_5_ - 5,288 - 5,288 1,894,888 - 1,834,888 - 57,695 178,585 57,695 178,585 3,977,857 1,640,800 4,087,368 1,684,788 95,600 84,398 95,600 84,398 200,000 466,153 200,000 510,179 295,600 550,551 295,600 594,577 4,273,457 2,191,351 4,382,968 2,279,365 1,621,337 267,837 1,639,283 411,307 15,677,980 14,064,436 15,677,980 14,064,436 (14,056,643) (13,796,599) (14,038,697) (13,653,129) 1,621,337 267,837 1,639,283 411,307

The accompanying notes form part of the fi nancial statements.

20

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Financial Information

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Statement of Changes in Equity

For The Year Ended 30 June 2009

Issued Capital Consolidated Opening balance 1 July 2007 6,764,561 Minority Interest acquired by parent - Shares issued during the year 7,299,875 Loss attributable to members of the company - Closing balance 30 June 2008 14,064,436 Opening balance 1 July 2008 14,064,436 Shares issued during the year 2,138,222 Cost of shares issued (524,678) Loss attributable to members of the company - Closing balance 30 June 2009 15,677,980 Parent Opening balance 1 July 2007 Minority Interest acquired by parent Shares issued during the year Loss attributable to members of the company Closing balance 30 June 2008 Opening balance 1 July 2008 Shares issued during the year Cost of shares issued Loss attributable to members of the company Closing balance 30 June 2009

DIGISLIDE HOLDINGS LI Accumulated Minority (losses) Interests Total $ $ $ (7,264,653) 236,567 (263,525) - (236,567) (236,567) - - 7,299,875 (6,531,946) - (6,531,946) (13,796,599) - 267,837 (13,796,599) - 267,837 - - 2,138,222 - - (524,678) (260,044) - (260,044) (14,056,643) - 1,621,337 Issued Accumulated Capital (losses) Total $ $ $ 6,764,561 (4,820,864) 1,943,697 - - - 7,299,875 - 7,299,875 - (8,832,265) (8,832,265) 14,064,436 (13,653,129) 411,307 14,064,436 (13,653,129) 411,307 2,138,222 - 2,138,222 (524,678) - (524,678) - (385,568) (385,568) 15,677,980 (14,038,697) 1,639,283

The accompanying notes form part of the fi nancial statements.

21

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Financial Information

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Cash Flow Statement

For The Year Ended 30 June 2009

Notes Cash from operating activities: Receipts from customers Payments to suppliers and employees Borrowing costs Net cash provided by (used in) operating activities 20 Cash flows from investing activities: Proceeds from sale of property, plant and equipment Payments for property, plant and equipment Expenditure on intangible assets Payments for investments Net cash provided by (used in) investing activities Cash flows from financing activities: Proceeds from issue of shares Proceeds from (repayment) of borrowings Net cash provided by (used in) financing activities Net increase (decreases) in cash held Cash at beginning of the financial year Cash at end of the financial year 7

Consolidated GroupParent Entity 2009 2008 2009 2008 $ $ $ $

975,617 1,724,618 1,215,008 1,534,737 (759,336) (7,356,739) (744,817) (9,954,164) (213,751) (785,109) (213,751) (790,871) 2,530 (6,417,230) 256,440 (9,210,298) - - - 2,590,002 (27,315) (187,693) (27,315) (187,693) (2,501,605) - (2,638,020) - (292,500) (236,567) (292,500) - (2,821,420) (424,260) (2,957,835) 2,402,309 1,613,544 7,299,875 1,613,544 7,299,875 1,628,735 (224,631) 1,530,709 (273,389) 3,242,279 7,075,244 3,144,253 7,026,486 423,389 233,754 442,858 218,497 18,305 (215,449) (8,018) (226,515) 441,694 18,305 434,840 (8,018)

The accompanying notes form part of the fi nancial statements.

22

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Financial Information

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Notes to the Financial Statements

For The Year Ended 30 June 2009

NOTE 1 - Statement Of Significant

Accounting Policies

The financial report includes the consolidated financial statements and notes of Digislide Holdings Limited and controlled entities (consolidated group) and the separate financial statements and notes of Digislide Holdings Limited as an individual parent entity (parent entity).

The following is a summary of the material accounting policies adopted by the consolidated group in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

Basis of Preparation

Reporting Basis and Conventions

The financial report has been prepared on an accruals basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

Note 1 Statement of Significant Accounting Policies

Basis of Preparation

The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, event and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied unless otherwise stated.

a) Principles of Consolidation

A controlled entity is any entity that Digislide Holdings Limited has the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are considered.

A list of controlled entities is contained in Note 11 to the financial statements. All controlled entities have a June financial year end.

As at balance date, the assets and liabilities of all controlled entities have been incorporated into the consolidated financial statements as well as their results for the year then ended.

Where controlled entities have entered or left the consolidated group during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased.

Minority equity interests in the equity and results of the entities that are controlled are shown as a separate item in the consolidated financial report.

b) Income Tax

Digislide Holdings Limited has no income tax expense as it made no profit for the year and has significant accumulated tax losses

Deferred tax assets relating to temporary differences and unused tax losses are only recognised to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilisied. The amount of unused tax tax losses for which no deferred tax asset is recognised in the balance sheet was $8,251,720 as at 30 June 2009.

c) Inventories

Inventories are measured at the lower of cost and net realisable value. The cost of manufactured products includes direct materials and direct labour.

d) Property, Plant and Equipment

Each class of property, plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment loss.

Plant and equipment

Plant and equipment are measured on the cost basis less depreciation and impairment losses.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the assets’ employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

All inter-group balances and transactions between entities in the consolidated group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.

23

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Financial Information

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Depreciation

The depreciable amount of all fixed assets including building and capitalised lease assets, but excluding freehold land, is depreciated on a straight line basis over their useful lives to the consolidated group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable assets are:

ets are:
Class of Fixed Asset	Depreciation Rate
Plant and equipment	7.5 - 40%
Leased plant and equipment	2.5 - 20%
Tooling	10%

The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposal are determined by comparing proceeds with the carrying amount. These gains or losses are included in the income statement. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

e) Impairment of Assets

At each reporting date, the group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed in the income statement.

f) Intangibles

Research and development

Expenditure during the research phase of a project is recognised as an expense when incurred.

Development costs are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably. Because the group believes that they are in a position where commercial production of its key products are imminent, costs of development have been capitalised since 1 July 2008. These costs are recorded net of any AusIndustry Grants.

Development costs capitalised are reviewed for impairment on a six monthly basis by the directors.

g) Employee Benefits

Provision is made for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to paid when

the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

h) Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheet.

i) Revenue

Revenue from the sale of goods is recognised upon the delivery of goods to customers.

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

Revenue from the rendering of services is recognised upon delivery of the service to the customer.

j) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax Office. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.

Cash flows are presented in the cash flow statement on a gross basis.

(k) Government Grants

Government grants are recognised at fair value where there is reasonable assurance that the grant will be received and all grant conditions will be met.

l) Comparative Figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

m) Critical Accounting Estimates and Judgements

The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information.

Key estimates and judgements

1) Impairment of trade dollars and inventory

The directors have impaired the carrying value of trade dollars held in BBX and Empire from face value to reflect the lack of liquidity of these assets and the expected period over which the assets will be realised. Impairment of trade dollars totalled $494,388 (2008 $434,163) at balance date.

The directors have also impaired inventory to reflect the realisable value of components on hand at balance date.

24

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES ABN 75 105 012 066

Financial Information

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n) Going Concern

The business operated by Digislide Holdings is of a research and development nature, therefore highly speculative by nature and as such the going concern nature is significantly uncertain.

• the business currently does not generate sufficient revenue to meet its current cost structure and is reliant on share subscriptions to fund cash flow

• current liabilities of the company exceed the current assets by $2,031,163

However, there are certain factors which mitigate the above as follows:

Subsequent to balance date the company listed on the Australian Stock exchange and has raiseed an addtional $3,694,400 in share capital

The going concern basis has been adopted on the basis that there is a reasonable expectation that the funds raised subsequent to balance date will be sufficient to bring the group to a position of generating sufficent cash from the commercialisation of its products in the near future.

o) Subsequent event

The company was listed on the Australian Stock Exchange on 24 August 2009 and has raised $3,694,400 by way of share capital to fund the commercialisation and development of its products and its working capital requirements.

p) New Accounting Standards for Application in Future Period

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the group for the annual reporting period ended 30 June 2009. These are outlined in the table below:

Reference	Title	Summary	Impact on Group f nancial report	Application date for Group
AASB 8	Operating Segments	New standard replacing AASB 114 Segment	AASB 8 is a disclosure standard so will have	1-Jul-09
		Reporting, which adopts a management	no direct impact on the amounts included in
		approach to segment reporting.	the groups f nancial statements. However the
			amendments may have an impact on the groups
			segment disclosure.
AASB 101	Presentation of Financial	Introduces a statement of comprehensive	The amendments are expected to only affect	1-Jul-09
	Statements (revised)	income. Other reviews include impacts of the	the presentation of the Groups f nancial report
		presentation of items in the statement of changes	and will not have a direct impact on the
		in equity, new presentation requirements for	measurement and recognition of amounts under
		restatements or reclassif cations of items in the	AASB 101.
		f nancial statements, changes in the presentation
		requirements for dividends and changes to the
		titles of the f nancial statements.
AASB 123	Borrowing Costs (revised)	Removes referencing to expensing borrowing	The amendments are not expected to have a	1-Jul-09
		costs on qualifying assets, as AASB 123 was	direct impact on the Groups treatment of its
		revised to require such borrowing costs be	borrowing costs in the f nancial report.
		capitalised.	The amendments are not expected to have any	1-Jul-09
AASB 3	Business Combinations (revised)	AASB 3 will replace AAS 18/AASB 1013	direct impact on the Groups f nancial report.
		‘Accounting for Goodwill’ and AAS 21/AASB
		1015 ‘Acquisition of entities and operations.
		AASB 3 adopts the provisions of IFRS 3 ‘Business
		Combinations’.
AASB 127	Consolidated and Separate	Amendment issued to include IASB’s amendment	The amendments are expected to affect the	1-Jul-09
	Financial Statement (amended)	to IAS 27. The purpose of the amendment	presentation of the Groups f nancial reports and
		is to enhance the relevance, reliability and	to increase the extent of some disclosures in the
AASB 2008-1 AASB 2008-2 AASB 2008-5 AASB 2008-6	Amendments to Australian Accounting Standards - Share- Based Payments: Vesting Conditions and Cancellations Amendments to Australian Accounting Standards - Puttable Financial Instruments and Obligations arising on Liquidation. Amendments to Australian Accounting Standards arising from the Annual Improvements Project. Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project.	comparability of the information that a parent entity provides in its separate f nancial statements and its consolidated f nancial statements for a group of entities under its own control. Amendments arising as a result of the decision by the AASB to add material detailing the scope and applicability of a standard in the Australian environment to sectors of a purely domestic nature and to broaden content to cover sectors not addressed by an IASB Standard and domestic, regulatory or other issues. Amendments arising from the issue by IASB of amendments to IAS 32 - Financial Instruments: Presentation; and IAS 1 - Presentation of Financial Statements. The amendments to some Standards result in accounting changes for presentation, recognition or measurement purposes, while some amendments that relate to terminology and editorial changes are expected to have no or minimal effect on accounting. AASC 2008-6 amends AASB 1 and AASB 5 to include requirements relating to a sale plan involving the loss of control of a subsidiary. The loss of control of a subsidiary. The amendments	Groups f nancial report. The amendments are not expected to have a direct impact on the Groups f nancial report. The amendments are not expected to have any direct impact on the Groups f nancial report. The amendments are not expected to affect the presentation of the Groups f nancial report. The amendments are not expected to have any direct impact on the Groups f nancial report.	1-Jul-09 1-Jul-09 1-Jul-09 1-Jul-09
		require all the assets and liabilities of such
		a subsidiary to be classif ed as held for sale
		and clarify the disclosures required when the
		subsidiary is part of a disposal group that meets the def nition of a discontinued operation.

25

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES ABN 75 105 012 066

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Reference	Title	Summary	Impact on Group f nancial report	Application date for Group
AASB 2008-7	Amendments to Australian	Amends AASB 1 to allow f rst-time adopters,	The amendments are not expected to have any	1-Jul-09
	Accounting Standards - Cost of	in their separate f nancial statements, to use a	direct impact on the Groups f nancial report.
	an Investment in a Subsidiary,	deemed cost option for determining the cost of
	Jointly Controlled Entity or	an investment in a subsidiary, jointly controlled
	Associate.	entity or associate.
AASB 2008-8	Amendments to Australian	Amends the application guidance of AASB	The amendments are not expected to have any	1-Jul-09
	Accounting Standards - Eligible	139: Financial Instruments: Recognition and	direct impact on the Groups f nancial report.
	Hedged Items.	Measurement. The amendment clarif es how
		the principles that determine whether a hedged
		risk or portion of cash f ows is eligible for
		designation should be applied in particular
		situations.
AASB 2008-9	Amendments to AASB 1049 for	This Standard amends AASB 1049 and the	The amendments are not expected to have any	1-Jul-09
	Consistency with AASB 101.	accompanying illustrative examples, where	direct impact on the Groups f nancial report.
		appropriate and relates only to government
		sector entities.
AASB 2008-11	Amendments to Australian	This standard addresses the requirements of	The amendments are not expected to have any	1-Jul-09
	Accounting Standard - Business	business combinations among not-for-prof t	direct impact on the Groups f nancial report.
	Combinations Among not-for-	entities that are not commonly controlled.
	prof t entities.
AASB 2009-1	Amendments to Australian	This standard applies to not for prof t public	The amendments are not expected to have any	1-Jul-09
	Accounting Standards -	sector entities and reintroduces the option	direct impact on the Groups f nancial report.
	Borrowing costs for not-for-	to expense borrowing costs that are directly
	prof t Public Sector Entities.	attributable to the acquisition, construction or
		production of a qualifying asset.
AASB 2009-2	Amendments to Australian	This is an amendment to AASB 7 and	The amendments are expected to impact the	1-Jul-09
	Accounting Standards -	requires enhanced disclosures about fair	groups disclosure of fair value measurements
	Improving Disclosures about	value measurements and liquidity risk.	and liquidity risk required under AASB 7.
	Financial Instruments.	In particular, the amendments:
		a)clarify that the existing fair value disclosure
		requirements in AASB 7 must be made separ-
		ately for each class of f nancial instrument;
		b) require disclosure of any change in a method
		for determining fair value and the reasons
		for the change.
		c) introduce a three-level hierarchy for making
		fair value measurements, into quoted prices;
		and inputs, other than quoted prices; and
		inputs for the asset or liability that are not
		based on observable market data;
		d) require disclosure about the relative
		reliability of each fair value measurement in
		the statement of f nancial position;
		e) clarify that the current maturity analysis for
		non-derivative f nancial liabilities.
AASB 2009-4	Amendments to Australian	The standard is part of the annual	The amendments are not expected to have any	1-Jul-09
	Accounting Standards arising	improvements project and clarif es the	direct impact on the Groups f nancial report.
	from the Annual Improvements	interpretation of the standards list.
	Project (AASB2 and AASB138
	and AASB Interpretations 9
	& 16).
AASB 2009-5	Further Amendments to	AASB 2009-5 results from the International	The amendments to some Standards result in	1-Jan-10
	Australian Accounting	Accounting Standards Board’s annual	accounting changes for presentation, recognition
	Standards arising from the	improvements project. The annual	or measurement purposes, while some amendments
	Annual Improvements Project	improvements project provides a vehicle for	that relate to terminology and editorial changes
	[AASB 5, 6, 101, 107, 117, 118,	making non-urgent but necessary amendments	are expected to have no or minimal effect on the
	136 & 139].	to accounting standards.	measurement and recognition of amounts in the
			f nancial report.
AASB	Agreements for the	This Interpretation applies to agreements for	The amendments are not expected to have any	1-Jul-09
Interpretation 15	Construction of Real Estate.	the construction of residential real estate arising	direct impact on the Groups f nancial report.
		from marketing individual units ‘off plan’
		before construction is complete. It also applies
		to any other agreement for the construction
		of real estate (whether residential or non-
		residential).
AASB	Hedges of a Net Investment in a	This Interpretation provides guidance on	The amendments are not expected to have any	1-Jul-09
Interpretation 16	Foreign Option.	accounting for the hedge of a net investment on	direct impact on the Groups f nancial report.
		a foreign operation in an entity’s consolidated
		f nancial statements.
AASB	Distributions of Non-Cash	This Interpretation clarif es the treatment	The amendments are not expected to have any	1-Jul-09
Interpretation 17	Assets to Owners.	of non-cash distributions of dividends and	direct impact on the Groups f nancial report.
		requires an entity to provide additional
		disclosures if the net assets being held for
		distribution to owners meet the def nition of a
		discontinued operation.
AASB	Transfer of Assets from	This Interpretation requires an entity to	The amendments are not expected to have any	1-Jul-09
Interpretation 18	Customers.	recognise revenue on respect of transfers of	direct impact on the Groups f nancial report.
		property, plant and equipment or transfers of
		cash that it receives from customers.

26

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Financial Information

==> picture [33 x 33] intentionally omitted <==

Note 2 - Revenue And Expenses Sales Revenue - sale of goods Other Revenue - grants received - sundry income Total revenue Expenses Interest expense - external - related parties Depreciation and amortisation Rental expenses on operating leases Note 3 - Interests of Key Management Personnel (KMP) Refer to the Remuneration Report contained in the Report of the Directors for details of the remuneration paid or payable to each member of the group’s key management personnel for the year ended 30 June 2009. The totals of remuneration paid to key management personnel of the company and the group during the year are as follows: - Short term employee benefits - Post-employment benefits Total		Consolidated GroupParent Entity 2009 2008 2009 2008 $ $ $ $
		42,869 73,364 42,869 108,267 1,610,056 1,547,746 1,610,056 1,547,746 80,591 395,207 80,591 393,111 1,690,647 1,942,953 1,690,647 1,940,857 1,733,516 2,016,317 1,733,516 2,049,124 84,343 96,166 84,343 96,166 128,227 17,262 128,227 17,262 41,241 89,666 41,241 89,666 38,875 38,875 38,875 38,875 564,236 560,968 564,236 560,968 38,841 42,037 27,588 42,037 603,077 603,005 591,824 603,005

Note 4 - Income Tax

The group has tax losses estimated at approximately $8,251,700 as at 30 June 2009.

Because of the size of these losses and the limited likelihood of realising the benefits of these losses in the short term, the group has not recognised the benefit of any deferred tax assets as at 30 June 2009. The benefits of these losses and any temporary differences between accounting and taxable income will only arise if sufficient taxable income is earned by the group in future years.

27

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Financial Information

==> picture [33 x 33] intentionally omitted <==

Note 5 - Auditors’ Remuneration Remuneration of auditor of the parent entity for: - auditing or reviewing the financial report - other services Note 6 - Earnings Per Share Earnings used to calculate basic EPS Weighted average number of ordinary shares outstanding Note 7 - Cash And Cash Equivalents Cash on hand Cash at bank Shareholder deposits held in trust Reconciliation of Cash Cash at balance date as shown in the cash flow statement is reconciled to items in the balance sheet as follows: Cash and cash equivalents Bank overdraft Note 8 - Trade And Other Receivables CURRENT - Trade receivables - Other receivables - Other related parties Note 9 - Inventories CURRENT At cost - Stock on hand At net realisable value - Componentry stock on hand		Consolidated GroupParent Entity 2009 2008 2009 2008 $ $ $ $
		44,000 70,120 44,000 70,120 10,150 - 10,150 - (260,044) (6,531,946) - - 41,018,225 37,294,868 - - - 8,510 - 3,270 16,541 15,083 9,687 - 425,153 - 425,153 - 441,694 23,593 434,840 3,270 441,694 23,593 434,840 3,270 - (5,288) - (5,288) 441,694 18,305 434,840 (2,018) 7,770 2,698 7,770 2,698 798,687 4,415 796,583 4,415 - 41,445 - 283,252 806,457 48,558 804,353 290,365 - - - - - - - - 334,024 300,000 334,024 300,000 334,024 300,000 334,024 300,000

28

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Financial Information

==> picture [33 x 33] intentionally omitted <==

Note 10 - Other Assets CURRENT Borrowing costs Prepayments Trade dollars - provision for impairment NON-CURRENT Trade dollars - provision for impairment The recoverable amount of the trade dollars has been determined based on value-in-use calculations. The value-in- use has been calculated based on the present value of cash flow projections over the time to recovery. The cashflows are discounted using the estimated borrowing rate at balance date. The calculations take into account the 5% cost of commission on the Empire trade dollars. Note 11 - Controlled Entities Investments in controlled entities Less: impairment of investment Investments are held in the following companies		Consolidated GroupParent Entity 2009 2008 2009 2008 $ $ $ $
		- 88 - 88 4,519 37,355 4,519 37,355 450,000 924,309 450,000 924,309 (90,000) (184,862) (90,000) (184,862) 364,519 776,890 364,519 776,890 1,322,309 1,309,448 1,322,309 1,309,448 (404,388) (249,301) (404,388) (249,301) 917,921 1,060,147 917,921 1,060,147 - - 10,000 10,000 - - (10,000) - - - - 10,000

Controlled Entities Consolidated

Country of Incorporation Parent Entity: Digislide Holdings Limited Australia Controlled entities of Digislide Holdings Limited: Electronics Extraordinaire Australia Digislide Americas USA	Percentage Owned (%) Carrying Value 2009 2008 2009 2008
	100 100 - 10,000 100 100 - -
	- 10,000

29

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Financial Information

==> picture [33 x 33] intentionally omitted <==

Note 12 - Property, Plant And Equipment PLANT AND EQUIPMENT Plant and equipment: - at directors valuation - at cost - accumulated depreciation Manufacturing plant - at directors valuation - accumulated depreciation AusIndustry project plant: - at directors valuation - at cost - accumulated depreciation Tooling: - at directors valuation - accumulated depreciation Artwork: - at cost Total property plant and equipment before impairment a) Movements in Carrying Amounts Movement in the carrying amounts for each class of property, plant and equipment between the beginning and the end of the financial year Consolidated Group and Parent Entity Balance at 1 July 2008 Additions Disposals Depreciation expense Balance as at 30 June 2009		Consolidated Group Parent Entity 2009 2008 2009 2008 $ $ $ $
		22,734 23,711 22,734 23,711 24,605 - 24,605 - (13,336) (2,111) (13,336) (2,111) 34,003 21,600 34,003 21,600 147,775 147,775 147,775 147,775 (60,569) (50,880) (60,569) (50,880) 87,206 96,895 87,206 96,895 83,354 83,354 83,354 83,354 2,710 - 2,710 - (52,534) (38,143) (52,534) (38,143) 33,530 45,211 33,530 45,211 104,278 104,278 104,278 104,278 (59,652) (54,693) (59,652) (54,693) 44,626 49,585 44,626 49,585 36,709 36,709 36,709 36,709 36,709 36,709 36,709 36,709 236,074 250,000 236,074 250,000 Plant & Tooling Artwork Total equipment $ 163,706 49,585 36,709 250,000 27,315 - - 27,315 - - - - (36,282) (4,959) - (41,241) 154,739 44,626 36,709 236,074

30

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Financial Information

==> picture [33 x 33] intentionally omitted <==

Note 13 -Other Financial Assets Unlisted investments at cost Note 14 - Intangible Assets Product development costs, patents and trademarks Patents and trademarks Accumulated impairment losses Accumulated amortisation and impairment		Consolidated GroupParent Entity 2009 2008 2009 2008 $ $ $ $
		292,500 - 292,500 - 292,500 - 292,500 - 2,501,605 - 2,638,020 - - - - - - - - - 2,501,605 - 2,638,020 -

Development costs are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably. Because the group believes that they are now in a position where commercial production of its key products are imminent, costs of development have been capitalised since 1 July 2008. These costs are capitalised net of any Ausindustry Grants.

The value of the patents and trademarks have been recognised at cost subject to the going concern criteria that the recoverable amounts of these intangible assets, as determined by value in use exceed their carrying amount.

The recoverability of the intangible assets is dependent on the successful development and exploitation of the intellectual property and no impairment losses have been brought to account.

Amortisation of development costs has not commenced as development has not reached final completion and current sales levels have not yet reached commerical quantities.

Note 15 - Trade And Other Payables CURRENT Unsecured liabilities - trade payables - sundry payables and accrued expenses - employee benefits - amounts payable to other related parties - shareholder deposits held in trust - PAYG withholding tax - GST Note 16 - Financial Liabilities And Borrowings Financial liabilities - Bank overdraft Current borrowings Unsecured - Director related entities - Other Convertible notes Bill of exchange Total borrowings NON-CURRENT Unsecured borrowings Convertible notes Total borrowings	802,828 550,296 741,516 609,890 414,572 247,744 415,267 246,861 311,117 368,602 247,793 357,764 - 203,000 293,452 203,000 476,250 - 476,250 - 126,082 79,875 126,082 78,325 (105,575) 7,410 (105,575) 5,075
	2,025,274 1,456,927 2,194,785 1,500,915
	- 5,288 - 5,288 1,316,236 - 1,256,236 - 324,304 - 324,304 - 238,348 - 238,348 - 16,000 - 16,000 -
	1,894,888 - 1,834,888 -
	- 466,153 - 510,179 200,000 - 200,000 -
	200,000 466,153 200,000 510,179

31

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Financial Information

==> picture [33 x 33] intentionally omitted <==

Note 17 - Provisions Provision for annual leave Provision for long service leave Analysis of Total Provisions Current Non-Current Movements in provisions Opening balances Additional provisions Amounts used Balance at end of year Note 18 - Issued Capital a. Number of fully paid shares on issue Number of shares on issue at beginning of the year Shares issued during the year Number of shares on issue at end of the year Issued capital At the beginning of the reporting period Shares issued during the year Cost of shares issued At reporting date Ordinary shares participate in dividends and the proceeds on winding up of the company in proportion to the number of shares held. At the shareholder’s meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on show of hands. Note 19 - Leasing Commitments The only lease commitments relate to rental of the property at Cavan at an annual rate of $74,760 expiring in February 2011 payable monthly in advance. Payable - minimum lease payments - not later than 12 months - between 12 months and 5 years - greater than 5 years		Consolidated GroupParent Entity 2009 2008 2009 2008 $ $ $ $
		57,695 178,585 57,695 178,585 95,600 84,398 95,600 84,398 153,295 262,983 153,295 262,983 57,695 178,585 57,695 178,585 95,600 84,398 95,600 84,398 153,295 262,983 153,295 262,983 262,983 194,749 262,983 194,749 11,202 68,234 11,202 68,234 (120,890) - (120,890) - 153,295 262,983 153,295 262,983 42,011,199 40,311,222 42,011,199 40,311,222 42,011,199 40,311,222 42,011,199 40,311,222 40,311,222 33,820,987 40,311,222 33,820,987 1,699,977 6,490,235 1,699,977 6,490,235 42,011,199 40,311,222 42,011,199 40,311,222 14,064,436 6,764,561 14,064,436 6,764,561 2,138,222 7,299,875 2,138,222 7,299,875 (524,678) - (524,678) - 15,677,980 14,064,436 15,677,980 14,064,436 74,760 74,760 74,760 74,760 49,840 124,600 49,840 124,600 - - - -

32

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Financial Information

==> picture [33 x 33] intentionally omitted <==

Note 20 - Cash Flow Information a) Reconciliation of Cash Flows from Operations with Profit after Income Tax Profit after Income Tax Non-cash flows in profit: - Depreciation - (Reduction in)/ impairment of receivables -Net gain on disposal of property, plant and equipment Changes in assets and liabilities, net of the effects of purchases and disposal of subsidiaries: - (Increase)/ decrease in trade debtors - (Increase)/ decrease in other assets - (Increase)/ decrease in inventories - Increase/ (decrease) in payables - Increase/ (decrease) in provisions Net cash used in operating activities b) The company has no credit stand-by or financing facilities		Consolidated GroupParent Entity 2009 2008 2009 2008 $ $ $ $
		(260,044) (6,531,946) (385,568) (8,832,265) 41,241 556,272 41,241 556,272 (63,578) 1,971,536 10,000 1,700,000 - - - - (757,899) (44,969) (513,988) (267,845) 618,175 (463,438) 554,597 (463,438) (34,024) 233,394 (34,024) 233,394 568,347 (2,206,313) 693,870 (2,204,650) (109,688) 68,234 (109,688) 68,234 2,530 (6,417,230) 256,440 (9,210,298) in place

b) The company has no credit stand-by or financing facilities in place

Note 21 - Contingent Liabilities

As at the date of signing the report, there were no contingent liabilities that required disclosing in this financial report.

Note 22 - Segment Reporting

The group has no material operations outside Australia and operates wholly in the market for the development and commercialisation of miniaturised projection technologies.

Note 23 - Going Concern

The group made an operating loss of $260,044 and generated a minor cash surplus from operations for the year ended 30 June 2009.

Development and commercialisation of its key products during the year has been funded by the issue of share capital which totalled $1,613,144 and borrowings of $1,628,735.

The holding company listed on the Australian Stock Exchange on 24 August 2009.

As a result of this listing and the issuing of further shares subsequent to balance date the groups equity and net assets have improved by $3,694,400 since balance date.

The directors believe that this funding is sufficient to meet its current needs and enable the group to proceed to commercialisation of some of its key products within the next 12 months.

Note 24 - Subsequent Events

The holding company listed on the Australian Stock Exchange on 24 August 2009. As a result of this listing and the issuing of further shares subsequent to balance date the groups equity and net assets have improved by $3,694,400 since balance date.

No other matters or circumstances have arisen since the end of the financial year which would significantly or negatively affect the operations of the consolidated entity.

33

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Financial Information

==> picture [33 x 33] intentionally omitted <==

Note 25 - Financial Instruments

The group’s financial instruments consist mainly of deposits with banks accounts receivable and payable and loans from related parties.

The main risks the group is exposed to through its financial instruments are interest rate risk and liquidity risk.

Until the group completes the commercialisation of its product range it is not significantly exposed to any currency or credit risk.

Interest rate risk

Exposure to interest rate risk arises on financial assets and financial liabilities recognised at reporting date whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The group is also exposed to earnings volatility due to its level of relatively short borrowings from various parties.

Liquidity risk

Liquidity risk arises from the possibility that the group may encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The group manages this risk through the following mechanisms:

• preparing forward looking cash flow analysis in relation to operating, investing and financing activities

• obtaining funding from a variety of sources

• raising additional share capital

The table below reflects the undiscounted contractual analysis for financial liabilities.

Cash flows realised from financial assets reflect management’s expectation as to the timing of realisation. Actual timing may therefore differ from that disclosed.

Timing of cash flows presented in the table to settled financial liabilities reflects the earliest contractual settlement dates and does not reflect management’s expectations that facilities will be rolled forward.

Effective average interest rate Financial liabilities due for payment Convertible notes 15.74 Bill of exchange 15 Trade and other payables 0.00 Amounts payable to related parties 0.00 Total expected outflows Financial assets - cash flows realisable Cash and cash equivalents 0.00 Trade and other receivables 0.00 Total anticipated inflows Net (outflow) on financial instruments	Within 1 year 1 to 5 Years Over 5 years $ $ $ 238,348 200,000 - 16,000 - - 2,349,578 - - 1,316,236 - -	Total $
		438,348 16,000 2,349,578 1,316,236 4,120,162 441,694 806,457 1,248,151 (2,872,011)
	3,920,162 200,000 -
	441,694 - - 806,457 - -
	1,248,151 0 0
	(2,672,011) (200,000) 0

The directors consider that the net fair values of financial assets and liabilities are the same as the amounts shown as their carrying values in the financial statements and as outlined in the table above.

Most of the borrowings and financial liabilities are based on agreed interest rates to maturity and therefore not sensitive to movements in interest rates.

If the interest rates on all interest bearing assets and liabilites were to increase by 1% for the full year to June 2010 there would be a net charge against profit of approximately $11,300.

34

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Financial Information

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	Consolidated Group	Consolidated Group	Parent Entity	Parent Entity
	2009	2008	2009	2008
	$	$	$	$
Note 26 - Related Party Transactions
Transactions with related parties
Companies directed by Luceille Outhred provided financial
assistance by way of interest free loans
Balance outstanding as at balance date	395,782	35,820	395,782	35,820
Companies and superannuation funds associated with
Luceille Outhred provided funding by way of borrowings
and promissory notes at rates of between 15 and 20%
Balance outstanding as at balance date	920,145	538,660	920,145	538,660
Note 27 - Company Details
The principal place of business of the company is:
100-102 Cavan Road
Dry Creek SA 5094
The company had 11 employees at balance date.

Note 28 - Shareholding

Distribution of shareholding Distribution of shareholders Number of shareholders 1 - 1,000 shares 1 1,001 - 5,000 shares 241 5,001 - 10,000 shares 50 10,001 - 100,000 shares 126 100,001 shares and over 67 Total shareholders 485 20 Largest Shareholders Fully paid shares Fully paid Fully paid Number Percentage of 12 months escrow 24 months escrow of shares issued capital	Distribution of shareholding Distribution of shareholders Number of shareholders 1 - 1,000 shares 1 1,001 - 5,000 shares 241 5,001 - 10,000 shares 50 10,001 - 100,000 shares 126 100,001 shares and over 67 Total shareholders 485 20 Largest Shareholders Fully paid shares Fully paid Fully paid Number Percentage of 12 months escrow 24 months escrow of shares issued capital
International Equities Pty Ltd 41,834 - KJ & I J Soper 3,568,134 12,738 Projected Investments Pty Ltd - - B & S G McCaig 2,382,354 - P B Banks 2,141,815 - Brains Incorporated Pty Ltd 13,277 - Fraserview Investment Ltd 1,150,000 - WHI Securities Pty Ltd 1,129,666 - AV Extraordinaire Pty Ltd - - Jolu Super Fund 1,900 - G Kurzer 136,000 880,000 Martin Place Securities Nominees 846,330 - K A Banks 801,516 - DGS Securities Pty Ltd 700,000 - Tuxedo Investments Pty Ltd 189,000 - Australian Distributed Incubator Pty Ltd670,000 - M F Leahy 23,376 - HR Global Solutions Pty Ltd - - Multi Vendor Support Services Pty Ltd 500,000 - Barter Bonus Points Pty Ltd - -	8,023,836 8,065,670 17.31 - 3,580,872 7.69 2,440,566 2,440,566 5.24 - 2,382,354 5.11 - 2,141,815 4.60 1,646,393 1,659,670 3.56 - 1,150,000 2.47 - 1,129,666 2.42 1,121,903 1,121,903 2.41 1,119,269 1,121,169 2.41 - 1,016,000 2.18 150,000 996,330 2.14 - 801,516 1.72 - 700,000 1.50 484,438 673,438 1.45 - 670,000 1.44 601,802 625,178 1.34 615,426 615,426 1.32 - 500,000 1.07 410,000 410,000 0.88
14,295,202 892,738	16,613,633 31,801,573 68.25

As at the date of listing (24th August 2009) there were 46,595,599 shares on issue, of which 1,481,804 shares were subject to escrow for a period of 12 months from listing and a further 16,784,167 were subject to 24 months escrow.

35

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES ABN 75 105 012 066

Financial Information

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Options

As at 30 June 2009 the following options existed.

Opton Holder	Nunber of Options	Date issued	Exercisable	Expiry	Release
			price		from Escrow
L Outhred	350,000	1 January 2008	1.00	24 August 2014	24 August 2011
B Newell	100,000	1 May 2007	1.00	1 May 2017	not escrowed
Martin Place Securities	3,500,000	11 December 2008	1.25	24 August 2013	24 August 2011
International Equities Pty Ltd	2,500,000	11 December 2008	1.25	24 August 2013	24 August 2011

36

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Directors’ Declaration

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The directors of the company declare that:

1. the financial statements and notes, as set out on pages 19 to 36:

2. a) comply with Accounting Standard AASB 134 Interim

3. Financial Reporting and the Corporations Regulations; and

4. b) give a true and fair view of the economic entity’s financial position as at 30 June 2009 and of its performance for the year ended on that date of the company.

5. in the director’s opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of

the Board of Directors

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Ms Luceille Outhred Director

Mr Ian Mutton Director

Dated this 30th day of September 2009

37

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Independent Audit Report

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38

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Independent Audit Report

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39

DIGISLIDE HOLDINGS LIMITED AND CONTROLLED ENTITIES

ABN 75 105 012 066

Independent Audit Report

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40

Corporate Directory

Holding Company

Digislide Holdings Limited ABN 75 105 012 066

Registered Office

100-102 Cavan Road Dry Creek, SA 5094 Australia Phone: +61 8 8262 3115 Facsimile +61 8 8262 8490 Email admin@digislide.com.au Website www.digislide.com.au

ASX Code DGI

Directors Ian Mutton Chairman and Non-Executive Director

Luceille Outhred Executive Director

Lin Chan Non-Executive Director

Leon Milford Non-Executive Director

Malcolm Leahy Non-Executive Director

Company Secretary Hean Siew

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Share Registry

Registries Limited Level 7, 207 Kent Street Sydney, NSW 2000 Australia Phone: 02 9290 9600 Facsimile: 02 9279 0664

Auditors

Hayes Knight (SA) Pty Ltd 269 Pulteney Street Adelaide, SA 5000 Australia

Investigative Accountant

PKF Pty Ltd Level 2, 139 Frome Street Adelaide, SA 5000 Australia

Legal Counsel – Corporate (Australia) HWL Ebsworth Lawyers Level 14, Australia Square 264-278 George Street Sydney NSW 2000 Australia

Legal Counsel - Corporate and sunsidiary (USA)

Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. 1400 Pagemill Road Palo Alto, CA 94304 USA

Patent Attorney (Australia) Lesicar Perrin 49 Wright Street Adelaide, SA 5000 Australia

Glossary

ASIC Australian Securities & Investments Commission

Auditor Hayes Knight (SA) Pty Ltd

Board or Board of Directors the Board of Directors of Digislide for the time being

CEO Chief Executive Officer

Chairman the Chairman of the Board

Corporations Act the Corporations Act 2001 (Cwlth)

Constitution the constitution of Digislide dated 24 August 2007

CTO Chief Technical Officer

Inventor

the person named on a patent as being the inventor, or one of the inventors, responsible for the idea generation and/or technology development of a novel and inventive concept

Digislide or the Company Digislide Holdings Limited ABN 75 105 012 066

Dollar, $ all monetary amounts stated in the Annual Report are in Australian Dollars, the legal currency of Australia, unless otherwise stated

Director a Director of Digislide

Existing Shareholders Shareholders who were listed on the Register as at 30th September 2008

GPS Global Positioning System

Investigating Accountant PKF Pty Ltd

Intellectual Property or IP Intellectual Property relating to a range of core technologies in video projection and projection peripheral products owned by Digislide, including patents, trademarks, registered designs, software codes, drawings, specifications etc

NASDQ

Intellectual Property Attorney

(Australia)

Julian Gyngell Solicitor & Attorney Kepdowrie Chambers PO Box 881 Wahroonga, NSW 2076 Australia

Intellectual Property Attorney

(USA) Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. 5355 Mira Sorrento Place – Suite 600 San Diego, CA 92121 USA

Principal Bankers Commonwealth Bank O’Connell Street North Adelaide, SA 5006 Australia

National Association of Securities Dealers Automated Quotations’ system (an alternative US stock exchange)

NYSE

New York Stock Exchange

OEM Original Equipment Manufacturer

PDA Personal Digital Assistant

PMP Portable Media Player

Register the register of Shareholders of Digislide

Option

a Series 1 Option, Series 2 Option, Series 3 Option, Series 4 Option or Series 5 Option, as the case may be

Share an ordinary fully paid share in the capital of Digislide

Shareholder a shareholder of Digislide from time to time

UMPC Ultra Mobile Personal Computer

VGA 640 x 480 pixels

SVGA 800 x 600 resolution, or 480,000 pixels

41

Digislide Holdings Limited ABN 75 105 012 066

Registered office: 100-102 Cavan Road Dry Creek, SA 5094 Australia Phone: +61 8 8262 3115 Facsimile +61 8 8262 8490 Email admin@digislide.com.au Website www.digislide.com.au

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