VINYL GROUP LTD - Annual Report 2011

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ABN 15 106 513 580

MOBILARM LIMITED

ANNUAL REPORT Year ending 30 June 2011

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INDEX
REVIEW OF OPERATIONS	3
DIRECTOR‘S REPORT	5
AUDITOR‘S INDEPENDENCE DECLARATION	14
DIRECTOR‘S DECLARATION	15
REMUNERATION REPORT	16
CORPORATE GOVERNANCE STATEMENT	33
STATEMENT OF COMPREHENSIVE INCOME	47
STATEMENT OF FINANCIAL POSITION	49
STATEMENT OF CASH FLOWS	50
STATEMENT OF CHANGES IN EQUITY	51
NOTES TO THE FINANCIAL STATEMENT	52
INDEPENDENT AUDITOR‘S REPORT	107
TOP 20 SHAREHOLDERS	109
CORPORATE DIRECTORY	110

MOBILARM LIMITED – FINANCIAL REPORT 2011

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REVIEW OF OPERATIONS

The last year has been a very exciting period for the Mobilarm group of companies (―the Group‖) with the Group significantly growing its overall presence in key global markets. Following a successful Initial Public Offering and subsequent listing on the Australian Securities Exchange in September 2010, a number of operational and corporate milestones have been achieved. One of the most significant was the successful acquisition of Marine Rescue Technologies Ltd (―MRT‖) in the United Kingdom that saw the Group become the world‘s largest man overboard technology company.

The Group continued to increase overall sales with a number of key contract wins in the defence, Oil & Gas, and commercial marine sectors and continues to strengthen its pipeline of contract opportunities as our Crewsafe brand of beacons is quickly becoming the recognised leader in next generation man overboard prevention technology.

The Group has strengthened its presence in high growth international markets, which provides a strong foundation for continued growth. Our acquisition of MRT has delivered a large customer base in Europe, especially in the critical North Sea and Spanish markets.

The changes proposed by regulatory bodies during the year are helping to pave the way for the acceptance of our Digital Selective Calling (―DSC‖) based solutions to be adopted worldwide. The adoption of standards to allow the use of DSC is the next step in improving the efficiency of man overboard rescue worldwide.

During the year, the continued focus on further strengthening the Group‘s presence in key market segments has delivered significant revenue opportunities, a robust sales pipeline, and increased visibility amongst a global blue chip customer base. The Group is managed to achieve the best results in the Man Overboard Electronic Safety Device segment.

Defence

The Group was awarded with a Foreign Comparative Testing (FCT) funding in April 2010 to assist with the modification of Mobilarm‘s current V100 product to meet their requirements for a Maritime Survivor Locating Device for submarine escape and abandonment.

Following this, the Group has focussed on progressing the Sole Source contract with the United States Navy in which our V200 submarine survival beacon is being evaluated for use. During the year, the Group has undertaken significant testing to meet the criteria specified by the United States Naval Sea Systems Command (―NAVSEA‖) for procurement.

Subsequent to the year, the V200 was launched at the NATO Submarine Escape and Rescue Group in Amsterdam, where the product generated strong interest from a range of NATO countries.

The Group expects that on completion of successful testing, the US Navy and other NATO countries will move to volume procurement, expected during FY2012. As a result of this, the Group is now in advanced discussions with a number of Navies for Man Overboard solutions on surface vessels, an international market significantly larger than the submarine market.

Offshore Oil & Gas

The offshore Oil & Gas industry continued to be a high growth market for the Group, and the sustained investment in personnel safety equipment and technologies buoyed the sales performance. The Group secured a number of significant contracts during the year including a maiden order from Bristow Helicopters Australia, the sole contractor to BHP Billiton Petroleum‘s North West Shelf operations.

The Group also secured a contract with Apache Energy for the initial supply of 35 VHF Locator Beacons to be used by Apache personnel for scheduled maintenance on the Reindeer Wellhead Platform located on the North West Shelf.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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The Group also achieved a number of early successes in this segment including a $258,366 order of 250 x V100 beacon products to the BMA Haypoint loading facility in the fourth quarter of 2010. Other Oil & Gas customers placing small pilot orders in this segment include Bhagwan Marine, Neptune Geomatics, Saipem, FMG and Transocean to name a few.

Commercial Marine

In August 2010, the government of Western Australia formally released to industry its code of practice regarding Man Overboard for commercial fishing. These actions follow in the steps of other countries such as Spain which mandated the use of Man Overboard technology for commercial fishing vessels.

The Spanish mandate resulted in the purchase and implementation of 38,000 emergency beacons for Spanish fishing fleet in the 2008/2009 period and MRT had secured the contract to supply the leading Sea Marshall devices. Following the successful acquisition of the business, the Group now has a platform to derive greater earnings from this existing contract and grow its footprint in the commercial marine sector.

This was demonstrated subsequent to the year by a contract awarded by Portugal‘s National Fisherman‘s Association for 140 Crewsafe V100 VHF DSC Maritime Survivor Locating Devices (MSLD).

Government & Regulatory

Emerging product category marketing is about focusing on segments where the value proposition resonates strongly and here the Group has successfully found strong interest from maritime pilots. As maritime pilots transfer to and from their vessels to ships, the risk of a Man Overboard event is high.

Mobilarm‘s solutions remove or significantly mitigate this risk and have now been adopted to date by the Port of Portland, Port Phillip Sea Pilots and Tasmanian Ports, with a very full sales pipeline resulting from these early successes.

Summary

The investment in the business and efforts of our team over the last three years have created a strong foundation to accelerate growth in FY2012 and the Group is well positioned to continue to grow its market position as an international leader in Man Overboard and emergency beacon solutions. The sales pipeline and growing global presence is expected to culminate in a stronger financial position for the Group in the current year as we build our recurring revenue base and move towards cash flow positivity.

I‘d like to take this opportunity on behalf of the Mobilarm Board of Directors to thank our employees and our shareholders for their commitment. We look forward to continuing the transformation the Group has undertaken to deliver greater value to shareholders in financial year 2012 and beyond.

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Brenton Scott Managing Director

Perth, Western Australia 30 September 2011

MOBILARM LIMITED – FINANCIAL REPORT 2011

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DIRECTORS’ REPORT

The Directors present their report together with the financial report of Mobilarm Limited (―the Company‖) and controlled entities (―the Group‖) for the year ended 30 June 2011 and the auditor‘s report thereon.

Directors

The directors of Mobilarm Limited in office during or since the end of the financial year are:

Mr. Richard Allen - Independent Chairman Mr. Brenton Scott - Managing Director Mr.Lindsay Lyon - Chief Executive Officer Mr. Christian Lange** - Non Executive Director Mr. Rick Parish - Non Executive Director Mr. Ken Gaunt** - Non Executive Director

Resigned as Director on 31 August 2011, continues as Chief Executive Officer in the Group.

**Resigned as Director on 31 August 2011.

***Resigned as Director on 30 November 2010.

**** Appointed to the board on 1 September 2011.

Mr Richard Allen

Mr Allen has extensive experience in the international offshore marine oil and gas industries. He held a range of technical and management positions over 20 years with Baroid Drilling Fluids Inc (acquired by Halliburton), culminating in Manager for the Asia/Pacific region with responsibility for operations in 16 countries.

Previously Managing Director of Tox Free Solutions Ltd (ASX: TOX) and Plantation Energy Australia Pty Ltd, Richard remains on both boards as Non-Executive Director. Tox Free Solutions is one of Australia's largest integrated industrial service and waste management businesses with a market capitalisation of approximately $216M. The founder of Plantation Energy Australia, Richard built the company into one of the world's largest producers of biomass fuel pellets, used as carbon-neutral fuel in some of Europe's largest coal-fired power stations. Mr. Allen is also a Non-Executive Director of Renewable Heat & Power Limited.

Mr Brenton Scott

Mr Scott holds a Bachelor of Business degree and is a member of the Institute of Chartered Accountants in Australia. Mr. Scott spent 14 years in the accounting profession. He spent 10 of these as a partner of firstly Walker Wayland, Perth then Scott Partners, in which he was the Managing Partner. Mr Scott then became the Chief Financial Officer of Electronic Banking Solutions Limited (EBS) which was a large independent deployer of ATM machines in Australia. A few years later, EBS merged with Cashcard Australia Limited who in turn was recently acquired by the US company First Data International. Mr Scott is currently the Managing Director of Cruisers Yachts Australia.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Mr Lindsay Lyon (resigned as director on 31 August 2011)

Mr Lyon has over 25 years of experience as an entrepreneur and executive in the technology and marine industries. Mr. Lyon‘s career includes 13 years with Hewlett-Packard, where he was responsible for the Australian commercial business, Asia Pacific consulting Partner at Siebel Systems, co-founder of Opdicom Pty Ltd and previous to Mobilarm, the founder and Executive Chairman of Datacatch Pty Ltd, a software storage company. Mr Lyon holds a Masters of Marketing from Melbourne University, a Diploma in Electronic Engineering, an Electrical Trade Certificate, and has attended the Hewlett-Packard INSEAD Executive Management Program in France.

Mr Christian Lange (resigned 31 August 2011)

Mr Lange was formerly Vice President for the global oilfield services group, Schlumberger Limited. In a 16 year career with Schlumberger, Mr Lange held a range of senior executive positions responsible for operations, capital markets, marketing, business strategy and general management. In his most recent Vice President's position in New York and Paris with Schlumberger, Mr Lange was responsible for the group's key capital markets, investor relations and merger and acquisitions advice. Mr Lange has also held senior management positions in operations, marketing and business strategy for the Middle East, North Africa and South America. As a former Managing Director and Chief Executive Officer of SDS Corporation Limited, Mr Lange successfully executed company restructure and turnaround strategies. Mr Lange was Director and Chief Executive Officer for the ASX-listed company Neptune Marine Services (ASX: NMS) from 28 February 2006 to 24 November 2010 and was a non executive director of Surtron Technologies until he resigned on 27 June 2010.

Mr Rick Parish (resigned 30 November 2010)

Mr Parish founded Marine and Offshore Group Pty Ltd in 1997 after a successful career in safety training, spanning more than 20 years in a variety of specialist areas including the military, maritime industries, emergency services and offshore oil and gas. He is responsible for all aspects of corporate strategy development, strategic alliance and joint venture development and has been instrumental in developing the global safety training company that is M&O today. Mr Parish's experience in safety training started when he was a training specialist with the Special Air Services Regiment (SAS) of the Australian Army which led to his appointment as Manager of Pararescue Training with the National Safety Council of Australia, a position that he held for 5 years. Mr Parish then established his own safety training consultancy business in 1990, which operated profitably until it was sold in 1995. During this time Mr Parish gained valuable international experience which was built upon when Tidewater Port Jackson Marine contracted him as their Safety and Training Manager in 1995.

Mr Robert Kenneth (Ken) Gaunt

Mr Gaunt founded Electronic Banking Solutions Pty Ltd in 1998 and as its managing director grew it into a successful business right up to the merger with Cash Card Australia Limited in 2003 where he served as a director. Ken was a board member and Australia‘s representative of the ATM industry association and was a member of the customer advisory board of National Cash Register Group Limited. Mr. Gaunt is a nonexecutive director of K2 Energy Ltd (ASX: KTE).

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Directors Meetings

The number of directors‘ meetings (including meetings of committees of directors) and number of meetings attended by each of the directors of the Group during the financial year are:

Director	Number of Meetings Attended	Number of meetings held during the time the Director held office.	Number of audit committee meetings held during the time the Director held office.	Number of remuneration committee meetings held during the time the Director held office.	Number of nomination committee meetings held during the time the Director held office.



Mr. Richard Allen	7	7	-	-	-
Mr. Brenton Scott	9	9	-	-	-
Mr. Christian Lange*	7	9	-	-	-
Mr. Rick Parish**	1	4	-	-	-
Mr. Ken Gaunt***	-	-	-	-	-
Mr. Lindsay Lyon	9	9	-	-	-

Resigned 31 August 2011

** Resigned 30 November 2010

*** Appointed 31 August 2011

The company formed its committees, but due to size and changes of the board, it has managed the activities of the committees at the board level.

Committee Membership

As at the date of this report, the Group had an audit committee, a remuneration committee, a nomination committee of the board of directors. Members acting on the committees of the board during the year were:

Director	Audit Committee	Remuneration Committee	Nomination Committee

Mr. Richard Allen	X	X	X
Mr. Brenton Scott	X	X	X
Mr. Christian Lange	X	X	X
Mr. Rick Parish	X	-	-
Mr. Ken Gaunt	-	-	-
Mr. Lindsay Lyon	-	-	-

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Interest in the shares of the Group and related corporations

As at the date of this report, the interests of the directors in the shares of the Group and related corporations were:

Director	Ordinary Shares	Performance Class B	Performance Class C	Stock Options

Mr. Richard Allen	Nil	Nil	Nil	Nil
Mr. Brenton Scott	30,839,176	500,000	500,000	100,000
Mr. Christian Lange	200,000	Nil	Nil	Nil
Mr. Rick Parish	676,190	Nil	Nil	Nil
Mr. Ken Gaunt	20,788,835	Nil	Nil	684,000
Mr. Lindsay Lyon	4,800,000	1,666,667	1,666,667	Nil

Company Secretary

The following person held the position of company secretary at the end of the financial year:

Mr. David McArthur

Mr. McArthur is a chartered accountant with over 30 years of experience in the corporate management of publicly listed companies. Mr McArthur holds a Bachelor of Commerce Degree from the University of Western Australia.

Principal Activities

The principal activities of the Group during the financial year were the development, manufacturing and sale of a Man Overboard Safety Systems.

There were no other significant changes in the nature of the activities of the Group during the financial year.

Dividends

No dividends were paid or declared for the financial year.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Operating Results for the Year

Operations of the Group

The loss of the group after providing for income tax amounted to ($4,234,955) (2010: Loss of $6,208,022). The Group increased sales to $941,701 in 2011 as compared to $530,704 in 2010, an increase of 77%. The increase is due to increased sales from our Crewsafe V100 product and our Sea Marshall products. Had we included the results from our Sea Marshall products since the start of the year, the revenues would have been $3,170,965 for the year.

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The Group‘s operating expenses decreased to $5,874,044 in 2011 as compared to $7,180,708 in 2010, a decrease of 20%. This resulted in a net loss for the year of $4,234,955 as compared to a loss of $6,208,022 in 2010, a decrease of 34%. The Group had various one time and non-cash transactions in 2011 that decreased the net loss.

The Group put in place its performance share plan in 2010 which resulted in the recognition of $356,519 in 2011 (2010 $1,205,555) of amortised costs. The plan was approved by shareholders on 28 August 2009.

The Group also issued share options to employees under its Employee Share Option Plan, which resulted in the recognition of $72,405 of amortised costs.

The Group also incurred a further $170,333 in 2010 of share based payments to employees and suppliers.

The Group incurred a share based expense of $140,000 for the recognition of value of the option in the convertible loan from our director Brenton Scott.

The Group also completed the acquisition of Marine Rescue Technologies Ltd in 2011. The Group incurred legal, accounting and broker fees of $276,674.

The Group entered into various term debt and convertible loan arrangements in 2011 for working capital purposes during its Entitlements Offer. The Group incurred $42,790 of finance costs from these arrangements, compared to $198,550 in 2010. In 2010 the Group carried convertible notes which were converted to ordinary shares. In order to convert, the Group amended the terms of various convertible notes and recognised an expense of $298,179.

Lastly, the Group engaged consultants and legal assistance in the United States, the United Kingdom and Europe in order to obtain regulatory approvals for the use of the V100 in those markets. Once all approvals are obtained the V100 will be sold without barriers in those markets.

After the elimination of the items above, the ongoing loss from the Group improved by $600,149 in 2011 mostly due to its increased sales.

Financial Position of the Group

The Group ended 2011 with net assets of $3,165,167, compared to $685,379 in 2010. The improvement in financial condition is mostly due to the acquisition of MRT and the associated Entitlements Offer.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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On the asset side, the Group has improved its current assets by $2,581,173 from 2011 to 2010, mostly due to an increase in receivables from the Entitlements Offer. The Group has a receivable from the Entitlements Offer of $1,815,420 which was paid to the Group on 22 July 2011. The other increases are a result of the acquisition of MRT. Non-current assets increased by $2,465,166 due to recognition of goodwill on the acquisition of MRT.

On the liability front, the Group increased its current liability position by $2,335,906 from its term debt and Entitlements Offer commitments. The acquisition of MRT also increased its current liability position.

Business strategy for future financial years

The Group will continue to pursue its growth strategy of becoming the world‘s largest provider of Man Overboard solutions and emergency beacons. The Group plans to increase market share through organic growth during the next financial year. The addition of MRT during 2011 has provided the Group with a large customer base in Europe. The Group will focus its efforts to grow its business in the North American market, as well as grow its presence in Europe and Australasia. Additional operational and market penetration information has been included in the operations report.

Further information on likely developments in the operations of the Group and the expected results of those operations in future financial years has not been included in this report because disclosure of the information would likely result in unreasonable prejudice to the Group.

Net Tangible Asset/(Liability)

The Group had a net tangible asset of $242,140 (2010: Liability of $30,860).The net tangible liability per weighted average share is $0.002 (2010: Liability of $0.000).

Changes in the State Of Affairs

The Group acquired Marine Rescue Technologies Ltd during the 2011 financial year. The details of the transaction are disclosed in footnote 26 to the financial statements.

Other than the items listed above, there were no other changes to the state of affairs of the Group.

Likely Developments and Expected Results

The directors have excluded from this report information on likely developments in the operations of the entity and the expected results of those operations in future financial years, since, in the opinion of the directors, it would prejudice the interests of the Group if this information were included.

Environmental Regulation and Performance

The Group‘s operations are not regulated by any significant environmental regulations under a law of the Commonwealth or of a State or Territory in Australia.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Directors' Benefits

Disclosure of benefits provided to directors during the financial year is made in notes 21 and 23 of the financial statements.

6,666,666 Performance Shares Class A converted to ordinary shares for certain directors and officers of the Group as part of their compensations during the financial year. Please refer to the Remuneration Report for details on the Performance Share plan and grants.

1,099,999 options were granted over unissued shares or interests during or since the financial year by the Group to directors or any of the five most highly remunerated officers as part of their remuneration.

Share Options and Unissued Shares

As at the date of this report, there were 24,924,333 options issued (9,924,333 as at the reporting date).

Option holders do not have any right, by virtue of the option, to participate in any share issue of the Group or any related body corporate.

No options have been exercised during the year or as of the date of this report.

As at the date of this report, there were 3,666,666 Performance Shares Class B and 3,666,668 Performance Shares Class C on issue. Refer to the remuneration report for further details of the Performance Shares outstanding.

Indemnification and Insurance of Directors and Officers

The Group has entered into Deeds of Indemnity with Directors and Officers against all liabilities to another person (other than the Group or related body corporate) that may arise from their position with the Group , except:

any liability expressly excluded under section 199A(2) of the Corporations Act;
any legal cost expressly excluded under section 199A(3) of the Corporations Act;
any other liability or cost otherwise excluded by law;
any liability arising out of conduct involving a lack of good faith.

The agreement indicates that the Group will meet the full amount of any such liabilities, including legal expenses, up to the maximum amount permitted by law.

The Group paid a premium during the year in respect to a directors‘ and officers‘ liability insurance policy. The policy insures the directors of the Group, the Group secretary and executive officers against a liability incurred while acting in the capacity of directors, secretary or executive officer to the extent permitted under the Corporations Act 2001. The Directors have not included the amount of premiums paid or the nature of liabilities covered in respect to the directors‘ and officers‘ liability insurance policy; as such disclosure is prohibited under the terms of the contract.

Auditor’s Independence Declaration

The auditor‘s independence declaration is set out on page 14 and forms part of the Directors‘ report for the year ended 30 June 2011.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Non-Audit Services

The following non-audit services were provided by the entity‘s auditor, Ernst & Young. The directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act. The nature and scope of each type of non-audit service provided means that auditor independence was not compromised.

Ernst & Young received or are due to receive the following amounts for the provision of non-audit services:

Tax compliance services $10,300 Due Diligence services $22,680 Other Services $nil

Significant events subsequent to balance date

Since the end of the financial year, the following events have occurred;

a) The Group completed its shortfall offer related to its Entitlements Offer for $1,815,420 on 25 July 2011. The Group issued 36,308,406 ordinary shares as part of this transaction. The Group also issued 15,000,000 share options as part of this transaction. The options have a three year expiry and the exercise price is as follows:

Date of Exercise	Exercise Price
Within 365 days of issue	$0.10
Within 366-730 days of issue	$0.15
Within 731-1095 days of issue	$0.20

b) The Group also completed a private placement 10,000,000 shares for $500,000 on 15 August 2011.
c) The Group also issued 1,250,000 shares as part of its borrowing agreements for a total of $62,500. The transaction was completed on 1 July 2011.Other than the transactions listed above, the Directors are not aware of any matter or circumstance that has significantly or may significantly affect the operations of the Group or the results of those operations, or the state of affairs of the Group in subsequent financial years.
d) The Company also placed 5,000,000 shares at 5 cents each, to raise $ 250,000 in working capital as part of a private placement. The placement also included 2,500,000 options exercisable at 10 cents each within 2 years from the date of issue.
i) The placement is part of a placement of up to 40,000,000 shares at 5 cents each to raise up to $2,000,000 in working capital and a total of up to 20,000,000 options will be issued if the placement is fully subscribed. The options are exercisable at 10 cents each within 2 years from the date of issue.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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ii) Shareholder approval for the placement of the balance of up to 35,000,000 shares (and 17,500,000 options) will be sought at the upcoming Annual General Meeting of the Company. Participation in the proposed placement by Ken Gaunt and Brenton Scott, directors of the Company, will also be sought at the meeting. The Company has commitments for the full balance of 35,000,000 shares should it need to place these shares (and attaching options).
iii) The placement will be made in progressive tranches on an as required basis. Based on the current business plan for the Company, the directors believe that a maximum of $ 2,000,000 in working capital will be required to carry the company through to the position where it is cash flow positive from operations in Australia and overseas.

Signed in accordance with a resolution of the Directors.

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Richard Allen Independent Chairman

Perth, Western Australia 30 September 2011

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Auditor's Independence Declaration to the Directors of Mobilarm Limited

In relation to our audit of the financial report of Mobilarm Limited for the financial year ended 30 June 2011, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

Ernst & Young

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P McIver Partner Perth 30 September 2011

Liability limited by a scheme approved under Professional Standards Legislation

PM:MB:MOBILARM:008

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DIRECTORS’ DECLARATION

In accordance with a resolution of the directors of Mobilarm Limited (the ―Group‖), I state that:

In the opinion of the directors:

(a) the financial statements and notes of the consolidated entity are in accordance with the Corporations Act 2001, including:

(i) giving a true and fair view of the consolidated entity‘s financial position as at 30 June 2011 and of its performance for the year ended on that date; and

(ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001;

(b) the financial statements and notes also comply with International Financial Reporting Standards as disclosed in note 1;

(c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

(d) this declaration has been made after receiving the declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for the financial year ending 30 June 2011.

On behalf of the Board

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Richard Allen Independent Chairman

Perth, Western Australia 30 September 2011

MOBILARM LIMITED – FINANCIAL REPORT 2011

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REMUNERATION REPORT (AUDITED)

This remuneration report for the year ended 30 June 2011 outlines the remuneration arrangements of the Group.

The remuneration report details the remuneration arrangements for key management personnel (KMP) who are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and Group, directly or indirectly, including any director (whether executive or otherwise) of the Company, and includes the five executives in the Company and Group receiving the highest remuneration.

For the purposes of this report, the term ―executive‖ includes the Chief Executive Officer (CEO), executive directors, senior executives, general managers and company secretary and the term ―director‖ refers to nonexecutive directors only.

The remuneration report is presented under the following sections:

1 Individual key management personnel disclosures
2 Remuneration at a glance
3 Board oversight of remuneration
4 Non-executive director remuneration arrangements
5 Executive remuneration arrangements
6 Group performance and the link to remuneration
7 Executive contractual arrangements
8 Equity instruments disclosures

1 Individual key management personnel disclosures

Details of KMP including the top five remunerated executives of the Group are set out below.

Key Management Personnel

Directors

Independent Chairman

Mr. Richard Allen

Mr. Brenton Scott Executive Director / Executive Chairman until 31 October 2010 Mr. Lindsay Lyon Chief Executive Officer resigned as Director on 31 August 2011

Chief Executive Officer resigned as Director on 31 August 2011 remains as Chief Executive Officer

Mr. Christian Lange Director (non-executive) resigned on 31 August 2011 Mr. Rick Parish Director (non-executive) resigned on 30 November 2011 Mr. Ken Gaunt Director (non-executive) appointed on 31 August 2011

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Executives

Mr. Andrew Hill

Chief Operations Officer – resigned as Director on 31 August 2009, but remained as General Manager Professional Services

Mr. Jorge Nigaglioni Chief Financial Officer

Other KMPs

Mr. Patrick Cleary VP Sales Mr. Peter Bettonvil R&D Manager Mrs. Amanda Wilson Senior Marketing Manager

There have been no other changes to Key Management Personnel after reporting date and before the date the financial report was authorised for issue.

2 Remuneration at a glance

Executive packages restructured during FY 2010 for realignment in FY 2011

The board assessed its remuneration policy as part of the preparation for the Group‘s IPO and entered into new employment agreements with its key executives in August 2009. This resulted in a more consistent pay structure and benefits for executives. The Group created the Performance Share Compensation plan to align performance to both company and shareholder metrics (see further discussion in the Variable remuneration — long-term incentives (LTI) section).

Remuneration strategy under review

The Group completed its listing on the Australian Stock Exchange on 21 September 2010, and as part of this change, the Group will be undertaking a review of its executive remuneration strategy to ensure the approach balances the needs from the business, shareholders and other stakeholders. The Group has restructured the remuneration of its Chief Executive Officer as part of this review commencing on 1 September 2011.

3 Board oversight of remuneration

Remuneration committee

During Financial Year 2011, the Board in its entirety acted as the remuneration committee. The remuneration committee is responsible for making recommendations to the board on the remuneration arrangements for non-executive directors and executives. The Board appointed a chairman for its remuneration committee in the previous financial year.

The remuneration committee has the responsibility to assess the amount and composition of remuneration of non-executive directors and executives. The board is seeking to attract and retain top director and executive talent to deliver maximum shareholder value.

Further information on the committee‘s role, responsibilities and membership can be seen at http://www.mobilarm.com .

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Remuneration approval process

The board approves the remuneration arrangements of the CEO and executives and all awards made under the long-term incentive (LTI) plans. The board also sets the aggregate remuneration of non-executive directors which is then subject to shareholder approval.

Remuneration strategy

Mobilarm Limited‘s remuneration strategy is designed to attract, motivate and retain employees and nonexecutive directors by identifying and rewarding high performers and recognising the contribution of each employee to the continued growth and success of the Group and shareholder return.

To this end, key objectives of the Group‘s reward framework are to ensure that remuneration practices:

are aligned to the Group‘s business strategy, both short and long term;
offer competitive remuneration benchmarked against the external market; and
are aligned with shareholder return

Remuneration structure

In accordance with best practice corporate governance, the structure of non-executive directors and executive remuneration is separate and distinct.

4 Non-executive director remuneration arrangements

Remuneration policy

The board manages remuneration in order to balance the ability to have the best talent at its board and executive levels, the ability to provide the necessary levels of corporate governance for the Group and be able to do it at a cost that is within the means of the Group and the acceptance of shareholders.

The amount of aggregate remuneration sought to be approved by shareholders and the fee structure will be reviewed annually against fees paid by comparable companies.

The Company‘s constitution and the ASX listing rules specifies that the non-executive directors‘ fee pool shall be determined from time to time by a general meeting.

The board approved an aggregate fee pool of $200,000 per year for the Non Executive Director pool in September 2009 which was ratified by shareholders at the 2010 AGM. The increase was set to accommodate any corporate governance requirements as part of the Group‘s listing on the ASX.

Structure

The remuneration of Non Executive Directors consists of directors‘ fees only. Non-executive directors do not receive retirement benefits, nor do they participate in any incentive programs.

Each non-executive director receives a base fee of $30,000 per annum for being a director of the Group.

The remuneration of non-executive directors for the year ended 30 June 2011 and 30 June 2010 is detailed in table 1 and 2 respectively of this report.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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5 Executive remuneration arrangements

Remuneration levels and mix

The Group‘s goal is to incentivise executives with a remuneration package that addresses their position and responsibilities within the Group and is also aligned with market practice. The Group is looking to ensure that total employment cost (TEC) is within the range of offerings for the position in the market.

The CEO‘s remuneration mix comprises 55% fixed remuneration as a proportion of total remuneration, 0% short term incentives (―STI‖) on target and 45% LTI. This mix was changed as of 1 September 2011 to be 34% fixed, 34% STI and 32% LTI. Executives‘ remuneration mix ranges from 43%-87% fixed remuneration as a proportion of total remuneration, 0%-10% STI on target, and 11%-50% LTI.

Structure

In the 2011 financial year, the executive remuneration framework consisted of the following components:

Fixed remuneration; and
Variable remuneration

The table below illustrates the structure of Mobilarm Limited‘s executive remuneration arrangements:

Remuneration Component	Vehicle	Purpose	Link to Performance

Fixed remuneration	Represented by total employment cost (TEC) Comprises base salary, superannuation contributions and other benefits	Set with reference to role, market and experience Executives are given the opportunity to receive their fixed remuneration in a variety of forms including cash and fringe benefits such as motor vehicles. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Group.	No link to company performance
STI component	None	None	None
LTI component	Awards are made in the form of performance shares or stock options	Rewards executives for their contribution to the creation of shareholder value over the longer term	Vesting of awards is dependent on Mobilarm Limited‘s targeted performance goal

Fixed remuneration

Executive contracts of employment do not include any guaranteed base pay increases.

The fixed component of executives‘ remuneration is detailed in table 1.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Variable remuneration — short-term incentive (STI)

The Group does not currently operate an STI program. The board has discussed the potential for such a program to drive Group performance in key performance factors, but no program has been put in place. During the year, discretionary bonuses were paid to P. Cleary and P. Bettonvil.

Variable remuneration — long-term incentives (LTI)

LTI awards are made annually to executives in order to align remuneration with the creation of shareholder value over the long-term. As such, LTI awards are only made to executives and other key talent who have an impact on the Group's performance against the relevant long-term performance measure.

LTI – Share Options

Structure

LTI awards are made under the performance share plan (PSP) and/or the employee stock option plan (ESOP).

LTI awards to executives are made under the performance share plan and are delivered in the form of performance shares. Each performance share entitles the holder to one fully paid ordinary share in the Group. The number of performance shares issued is based on the executive‘s target LTI. The performance shares will vest prior to the three year expiry date subject to meeting performance measures (see below), with no opportunity to retest. The performance criteria was selected as a direct measure of results of operations during its first three years of operation since listing on the stock exchange.

LTI awards made under the Group‘s ESOP are delivered in the form of share options. Each share option entitles the holder to one fully paid ordinary share in the Group. The number of share options issued is based on the KMP‘s or executive‘s target LTI. The share options issued to date have multiple time based vesting dates and expire five years from the date of issue. The Group will consider specific performance criteria for other awards under the ESOP. No share options have been exercised as of the date of this report. The Company does not currently have a policy prohibiting executives from entering into agreements to protect the value of unvested LTI awards under its option plan by hedging their exposure to options awarded. No executive contract contains any hedging agreement against awards issued.

Performance measure to determine vesting

The Group uses specific milestone or market capitalisation as the performance measure for the performance share plan. This criteria was selected to align compensation with growth to move the Group from an early stage development business to a large commercial entity in a short time period.

The milestone for each class of performance shares is as follows:

Performance Share Class	Performance Share Milestone	Performance Shares Awarded Since Inception

A	ASX conditional listing	6,666,666
B	$65 million market capitalisation	3,166,666
C	$100 million market capitalisation	3,166,668

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Share options issued under the ESOP have vesting dates as follows:

Date of Issue	Number of Options	Vesting Date	Expiry Date

22-Dec-2010	908,328	22-Dec-2010	22-Dec-2015
22-Dec-2010	908,334	22-Dec-2011	22-Dec-2015
22-Dec-2010	908,338	22-Dec-2012	22-Dec-2015
20-Jan-2011	83,333	20-Jan-2011	15-Oct-2015
09-Jun-2011	500,000	09-Jun-2011	09-Jun-2016

Table 3 in section 8 provides details of performance shares awarded during the year and Table 4 in section 8 provides details of the value of the performance shares awarded, vested and lapsed during the year.

Termination and change of control provisions

Where a participant ceases employment prior to the vesting of their award, the performance share and/or options are forfeited unless the board applies its discretion to allow vesting at or post cessation of employment in appropriate circumstances.

In the event of a change of control of the Group, the performance period end date will generally be brought forward to the date of the change of control and awards will vest subject to performance over this shortened period, subject to ultimate board discretion.

LTI awards for 2011 financial year

The Group issued 3,308,333 share options through its ESOP during 2011 to employees of the Company. No performance conditions were set as the grants were issued on time based vesting schedules for retention of key employees.

LTI awards for 2010 financial year

The Group issued 13,000,000 performance shares during Financial Year 2010 under its performance share plan. The awards were made by class as indicated in the table above.

No options or shares were granted under the employee share option plan during Financial Year 2010.

6 Group performance and the link to remuneration

Group performance and its link to long-term incentives

The financial performance measure driving LTI is the Group‘s ASX listing and market capitalisation. The Group did complete its IPO capital raising before the end of 2011 as such, the performance criteria for class A was met and converted to ordinary shares. The Group listed on the ASX on 22 September 2010 and will track performance against the class B & C metrics from that point onwards. The Group is in the initial stages of revenue, with revenues of $941,741 and $530,704 in 2011 and 2010, respectively. The measure of market capitalisation was used as it correlates with overall business performance. The Group expects to see an increase in its revenues upon large scale adoption of its products, which will yield profits that correlate to its market capitalisation.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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	2011	2010	2009	2008	2007
Total comprehensive loss for the year	(4,234,955)	(6,208,022)	(4,359,404)	(3,037,569)	(1,813,363)

7 Executive contractual arrangements

Remuneration arrangements for KMP are formalised in employment agreements. Details of these contracts are provided below.

Chief Executive Officer

The CEO, Mr. Lyon, is employed under a rolling contract.

Under the terms of the contract in place during the 2011 year, the CEO received a fixed remuneration of $285,000. Under the terms of the new contract as approved by the Board on 1 September 2011, which is subsequent to the end of the year:

The CEO will receive a fixed remuneration of $220,000 per annum.
The CEO will be entitled to a bonus of $110,000 per annum paid in quarterly instalments on the achievement of Quarterly Revenue Targets as agreed and stated in the Budget adopted by the Board on 31st August 2011.
The CEO will be entitled to an additional bonus of one hundred and ten thousand dollars ($110,000) paid on the Group achieving a positive EBITDA for the full 2012 Financial Year.

The CEO is also eligible to participate in Mobilarm Limited‘s ESOP and is a participant in the Performance Share plan on terms determined by the board.

The CEO‘s termination provisions are as follows:


		Payment in lieu of notice	Treatment of STI on termination	Treatment of LTI on termination
	Notice period
Employer-initiated termination	None	6 months	None	Board discretion
Termination for serious misconduct	None	None	None	Unvested awards forfeited
Employee-initiated termination	1 month	None	None	Unvested awards forfeited

As at the end of the financial year, the liability for an employer termination of the CEO would be $142,798.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Other KMP

All other KMP have rolling contracts.

Standard KMP termination provisions are as follows:


		Payment in lieu of notice	Treatment of STI on termination	Treatment of LTI on termination
	Notice period
Employer-initiated termination	None	3 months	None	Board discretion
Termination for serious misconduct	None	None	None	Unvested awards forfeited
Employee-initiated termination	1 month	None	None	Unvested awards forfeited

As at the end of the financial year, the liability for an employer termination of the Executives would be $90,000.

Remuneration of key management personnel and the five highest paid executives of the Group and Company:

MOBILARM LIMITED – FINANCIAL REPORT 2011

Table 1: Remuneration for the year ended 30 June 2011

NON-EXECUTIVE DIRECTORS R. Allen C. Lange (i) R. Parish (ii) Total non-executive directors EXECUTIVE DIRECTORS B. Scott (iii) (iv) L. Lyon (v) Total executive directors OTHER EXECUTIVE KEY MANAGEMENT PERSONNEL A. Hill P. Cleary J. Nigaglioni P. Bettonvil A. Wilson Total executive KMP TOTALS	Salary and fees $	Short-term benefits Cash bonus Non- monetary benefits Other $ $ $	Short-term benefits Cash bonus Non- monetary benefits Other $ $ $	Short-term benefits Cash bonus Non- monetary benefits Other $ $ $	Post employment Super- annuation Retirement benefits $ $	Post employment Super- annuation Retirement benefits $ $	Long-term benefits Cash incentives Long service leave $ $	Long-term benefits Cash incentives Long service leave $ $	Share-based payments Options Shares $ $	Share-based payments Options Shares $ $	Termination payments $	Total Performance related $ %
		Cash bonus $	Non- monetary benefits $		Super- annuation $		Cash incentives $		Options $
	50,000 30,000 12,500 92,500 180,000 285,596 465,596 174,062 149,332 180,000 142,208 145,289 790,891 1,348,987	- - - - - - - - 10,000 - 10,000 - 20,000 20,000	- - - - - - - - - - - - - -	- - - - 31,550 - 31,550 - 8,616 - - - 8,616 40,166*	- - - - 16,200 25,704 41,904 15,666 14,506 16,200 13,699 13,076 73,147 115,051	- - - - - - - - - - - - - -	- - - - - - - - - - - - - -	- - - - - 4,565 4,565 2,821 227 1,666 942 842 6,498 11,063	- - - - 140,000 - 140,000 - 5,172 - 5,172 8,620 18,964 158,964	- - - - 54,889 200,741 255,630 73,185 - 27,704 - - 100,889 356,519	- - - - - - - - - - - - - -	50,000 - 30,000 - 12,500 - 92,500 422,639 43 516,606 39 939,245 265,734 28 187,853 10 225,570 31 172,021 6 167,827 - 1,019,005 2,050,750

See footnotes in next page

MOBILARM LIMITED – FINANCIAL REPORT 2011

(i) Mr. Lange resigned as of 31 August 2011.
(ii) Mr. Parish resigned as of 30 November 2010
(iii) Mr. Scott earned additional fees as part of his fundraising activities.
(iv) Mr. Scott entered into a convertible loan agreement with the company during the year. The Company has recognised a share based payment expense of $140,000 representing the difference between the estimated fair value of the compound instrument at the measurement date and the consideration paid. In terms of the arrangement, the face value of the note amounting to $350 000 is convertible into 7,000,000 ordinary shares of the company at the option of Mr Scott. Conversion is not subject to performance conditions. The convertible note has a 2 year term.
(v) Mr. Lyon‘s entered into a new employment contract after the end of the financial year. Please refer to section 7 of the Remuneration Report.

MOBILARM LIMITED – FINANCIAL REPORT 2011

Table 2: Remuneration for the year ended 30 June 2010

NON-EXECUTIVE DIRECTORS C. Lange (i) R. Parish (ii) K. Spence (iii) Total non-executive directors EXECUTIVE DIRECTORS B. Scott (iv) L. Lyon Total executive directors OTHER EXECUTIVE KEY MANAGEMENT PERSONNEL A. Hill G. Chiappini (v) J. Nigaglioni P. Bettonvil A. Borger (vi) Total executive KMP TOTALS	Salary and fees $	Short-term benefits Cash bonus Non- monetary benefits Other $ $ $	Short-term benefits Cash bonus Non- monetary benefits Other $ $ $	Short-term benefits Cash bonus Non- monetary benefits Other $ $ $	Post employment Super- annuation Retirement benefits $ $	Post employment Super- annuation Retirement benefits $ $	Long-term benefits Cash incentives Long service leave $ $	Long-term benefits Cash incentives Long service leave $ $	Share-based payments Options Shares $ $	Share-based payments Options Shares $ $	Termination payments $	Total Performance related $ %
		Cash bonus $	Non- monetary benefits $		Super- annuation $		Cash incentives $		Options $
	30,000 30,000 5,000 65,000 165,000 285,596 450,596 167,615 13,999 160,731 129,808 100,000 572,153 1,087,749	- - - - - - - - - - - - - -	- - - - - - - - - - - - - -	- - - - 42,750 - 42,750 - - - - - - 42,750*	- - - - 74,443 25,704 100,147 15,085 - 14,466 11,683 9,000 50,234 150,381	- - - - - - - - - - - - - -	- - - - - - - - - - - - - -	- - - - - 3,440 3,440 9,564 - 1,346 227 - 11,137 14,577	- - - - - - - - - - - - - -	- - - - 183,333 700,000 883,333 244,444 - 77,778 - - 322,222 1,205,555	- - - - - - - - - - - - - -	30,000 - 30,000 - 5,000 - 65,000 465,526 49 1,014,740 69 1,480,266 436,708 56 13,999 - 254,321 31 141,718 - 109,000 - 955,746 2,501,012

See footnotes in next page

MOBILARM LIMITED – FINANCIAL REPORT 2011

(i) Mr. Lange resigned as of 31 August 2011.
(ii) Mr. Parish resigned as of 30 November 2010
(iii) Mr. Spence resigned as of 31 August 2009
(iv) Mr. Scott earned additional fees as part of his fundraising activities.
(v) Mr. Chiappini resigned as of 31 January 2011
(vi) Mr. Borger resigned as of 4 July 2010

MOBILARM LIMITED – FINANCIAL REPORT 2011

8 Equity instruments

Table 3: Performance shares vested during the year

Awarded Award date Number Performance Shares Class A EXECUTIVE DIRECTORS B. Scott 1,000,000 28-Aug-09 L. Lyon 4,000,000 28-Aug-09 OTHER KEY MANAGEMENT PERSONNEL A. Hill 1,333,333 28-Aug-09 A. Wilson - - J. Nigaglioni 333,333 28-Aug-09 P. Bettonvil - - P. Cleary - - TOTAL 6,666,666	Awarded Award date Number	Fair value per share at award (note 22)	Terms and Conditions for each Grant Milestone Expiry Date First conversio n date Last conversio n date	Vested
				Number %
		0.16 0.16 0.16 - 0.16 - - -	ASX conditional listing 27-Aug-12 25-Aug-10 27-Aug-12 ASX conditional listing 27-Aug-12 25-Aug-10 27-Aug-12 ASX conditional listing 27-Aug-12 25-Aug-10 27-Aug-12 - - - - ASX conditional listing 27-Aug-12 25-Aug-10 27-Aug-12 - - - - - - - -	1,000,000 100% 4,000,000 100% 1,333,333 100% - - 333,333 100% - - - - 6,666,666

MOBILARM LIMITED – FINANCIAL REPORT 2011

MOBILARM LIMITED – FINANCIAL REPORT 2011 Terms and Conditions for each Grant Awarded Award date Fair value per share at award (note 22) Milestone Expiry Date First conversio n date Last conversio n date Number Performance Shares Class B EXECUTIVE DIRECTORS B. Scott - - - $65 million market 27-Sep-13 27-Sep-10 27-Sep-13 L. Lyon - - - $65 million market 27-Sep-13 27-Sep-10 27-Sep-13 OTHER KEY MANAGEMENT PERSONNEL A. Hill $65 million market 27-Sep-13 27-Sep-10 27-Sep-13 A. Wilson - - - - - - - J. Nigaglioni - - - $65 million market 27-Sep-13 27-Sep-10 27-Sep-13 P. Bettonvil - - - - - - - P. Cleary - - - - - - - TOTAL - - Performance Shares Class C EXECUTIVE DIRECTORS B. Scott - - - $100 million market 27-Sep-15 27-Sep-10 27-Sep-15 L. Lyon - - - $100 million market 27-Sep-15 27-Sep-10 27-Sep-15 OTHER KEY MANAGEMENT PERSONNEL A. Hill $100 million market 27-Sep-15 27-Sep-10 27-Sep-15 A. Wilson - - - - - - - J. Nigaglioni - - - $100 million market 27-Sep-15 27-Sep-10 27-Sep-15 P. Bettonvil - - - - - - - P. Cleary - - - - - - - TOTAL - -	Awarded Award date Number	Fair value per share at award (note 22)	Terms and Conditions for each Grant Milestone Expiry Date First conversio n date Last conversio n date	29 Vested Number % - 0% - 0% - 0% - - - 0% - - - - - - 0% - 0% - 0% - - - 0% - - - - -

Table 4: Share options awarded and vested during the year

EXECUTIVE DIRECTORS B. Scott L. Lyon OTHER KEY MANAGEMENT PERSONNEL A. Hill A. Wilson J. Nigaglioni P. Bettonvil P. Cleary TOTAL	Awarded Award date Number	Fair value per share at award (note 22)	Terms and Conditions for each Grant Milestone Vesting Date Exercise Price Expiry Date	Vested
				Number %
	- - - - - - 166,666 22-Dec-10 166,666 22-Dec-10 166,667 22-Dec-10 - - 100,000 22-Dec-10 100,000 22-Dec-10 100,000 22-Dec-10 100,000 22-Dec-10 100,000 22-Dec-10 100,000 22-Dec-10 1,099,999	- - - $0.025 $0.029 $0.034 - $0.025 $0.029 $0.034 $0.025 $0.029 $0.034 -	- - - - - - - - - - - - At grant 22-Dec-10 $0.193 22-Dec-15 One year for grant 22-Dec-11 $0.193 22-Dec-15 Two years from grant 22-Dec-12 $0.193 22-Dec-15 - - - - At grant 22-Dec-10 $0.193 22-Dec-15 One year for grant 22-Dec-11 $0.193 22-Dec-15 Two years from grant 22-Dec-12 $0.193 22-Dec-15 At grant 22-Dec-10 $0.193 22-Dec-15 One year for grant 22-Dec-11 $0.193 22-Dec-15 Two years from grant 22-Dec-12 $0.193 22-Dec-15	- - - - - - 166,666 100% - - - - - - 100,000 100% - - - - 100,000 100% - - - - 366,666

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Table 5: Value of performance shares awarded, exercised and lapsed during the year


	Value of performance shares granted during the year^	Value of performance shares converted during the year		Remuneration consisting of performance shares during the year
			Value of performance shares lapsed during the year
	$	$	$	%
B. Scott	-	160,000	-	19
L. Lyon	-	640,000	-	38
A. Hill	-	213,333	-	26
P. Cleary	-	-	-	-
J. Nigaglioni	-	53,333	-	12
P. Bettonvil	-	-	-	-
A. Wilson	-	-	-	-

^ For details on the valuation of the performance shares, including models and assumptions used, please refer to note 22.

The Performance Class A Shares have converted into ordinary shares as at 25 August 2010 when the Group received ASX conditional listing. No amount was paid or is payable on conversion. There were no alterations to the terms and conditions of the performance shares awarded as remuneration since their award date.

Table 6: Value of share options awarded, exercised and lapsed during the year


	Value of share options granted during the year^^	Value of share options exercised during the year		Remuneration consisting of share options during the year
			Value of share options lapsed during the year
	$	$	$	%
B. Scott	-	-	-	-
L. Lyon	-	-	-	-
A. Hill	-	-	-	-
P. Cleary	7,440	-	-	3
J. Nigaglioni	-	-	-	-
P. Bettonvil	7,440	-	-	3
A. Wilson	12,400	-	-	5

^^ For details on the valuation of the share options, including models and assumptions used, please refer to note 22.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Signed in accordance with a resolution of the Directors.

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Richard Allen Independent Chairman

Perth, Western Australia 30 September 2011

MOBILARM LIMITED – FINANCIAL REPORT 2011

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CORPORATE GOVERNANCE STATEMENT

The board of directors of Mobilarm Limited is responsible for establishing the corporate governance framework of the Group having regard to the ASX Corporate Governance Council (CGC) published guidelines as well as its corporate governance principles and recommendations. The board guides and monitors the business and affairs of Mobilarm Limited on behalf of the shareholders by whom they are elected and to whom they are accountable.

The table below summarises the Group's compliance with the CGC's recommendations.

Principle	Corporate Governance Best Practice Recommendation	Compliance	How We Comply



Principle 1 - Lay solid foundations for management and oversight
1.1	Companies should establish and disclose the respective roles and responsibilities of board and management.	Y	All functions are formalised and documented by the board and executives. The Board is responsible for; - • Setting and reviewing strategic direction and planning; • Reviewing financial and operational performance; • Identifying principal risks and reviewing risk management strategies; and • Considering and reviewing significant capital investments and material transactions. In exercising its responsibilities, the Board recognises that there are many stakeholders in the operations of the Group, including employees, Shareholders, co-ventures, the government and the community. The Board has delegated responsibility for the business operations of the Group to the Chief Executive Officer and the management team. The management team, led by the Chief Executive Officer, is accountable to the Board.

1.2	Companies should disclose the process for evaluating the performance of senior executives	Y	Documented in HR policy and employment contracts.

1.3	Provide the information indicated in Guide to Reporting on Principle 1
1.3.1	An explanation of any departure from recommendations 1.1, 1.2 and 1.3		Not applicable

1.3.2	Whether a performance evaluation for senior executives has taken place in the reporting period and whether it was in accordance with the process disclosed.	Y	Refer above to 1.2.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Principle	Corporate Governance Best Practice Recommendation	Compliance	How We Comply



Principle 2 - Structure the Board to add value
2.1	A majority of the board should be independent directors	-	The current board is 33% independent. The Group‘s chairman is independent and the board has one non executive director and one executive director.

2.2	The chairperson should be an independent director	Y	The Chairman, Mr. Allen meets the Governance Council's independence criteria.

2.3	The roles of the chairperson and CEO should be separate.	Y	They are separate, Richard Allen Chairman and Lindsay Lyon CEO

2.4	The board should establish a nomination committee	Y	Mr. Ken Gaunt has been appointed to form and establish the nomination committee and act as its chair.

2.5	Companies should disclose the process for evaluating the performance of the board, its committees and its individual directors	Y	Documented in HR policy and employment contracts

2.6	Provide the information indicated in Guide to Reporting on Principle 2
2.6.1	The skills, expertise and experience relevant to the position of director held by each director in office at the date of the annual report	Y	Provided in the annual report

2.6.2	The names of the directors considered by the Board to be independent directors and the Group's materially thresholds	Y	Provided in the annual report

2.6.3	A statement as to whether there is a procedure agreed by the Board of directors to take independent professional advice at the expense of the Group	Y	Individual directors have the right in connection with their duties and responsibilities as directors to seek independent professional advice at the Group‘s expense. The engagement of an outside adviser is subject to prior approval of the Chairman and this will not be withheld unnecessarily. If appropriate, any advice so received will be made available to all Board members.

2.6.4	The Board should state its reasons if it considers a director to be independent notwithstanding that the director does not meet the definition of independence contained in the ASX Guidelines	Y	Refer above at 2.2

2.6.5	The period of office held by each director in office at the date of the annual report	Y	Provided in the annual report

2.6.6	The names of members of the nomination committee and their attendance at meetings of the committee	Y	Provided in the annual report

2.6.7	Whether a performance evaluation for the Board, its committees and directors has taken place in the reporting period and whether it was in accordance with the process disclosed	Y	An evaluation of the Board, its committees and directors was undertaken and was in accordance with the process disclosed at 2.5.

2.6.8	An explanation of any departure from		Refer to comments at 2.1 and 2.2

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Principle	Principle	Corporate Governance Best Practice Recommendation	Compliance	How We Comply


		recommendations 2.1, 2.2, 2.3, 2.4 and 2.5 The following material should be made publicly available, ideally on the Group's website in a clearly marked corporate governance section: A description of the procedure for the selection and appointment of new directors to the board; The charter of the nomination committee, or a summary of the role, rights and responsibilities and membership requirements for the committee; and The nomination committee‘s policy for the appointment of directors.	N N N	Refer 2.4 - The Board informally reviews the skill set of and market expectations for its directors on a regular basis and considers these factors when appointing / re-electing directors. The Board invites persons with relevant industry experience and financial experience to assist it in its appointment of directors.


Principle 3 - Promote ethical and responsible decision making
3.1	Establish a code of conduct to guide the directors, the chief executive officer (or equivalent), the chief financial officer (or equivalent) and any other key executives as to:		Y	All Directors, managers and employees are expected to act with the utmost integrity and objectivity, striving at all times to enhance the reputation and performance of the Group. The Board has established a Code of Conduct to guide the Directors, the Chief Executive Officer and other key executives. The Group‘s share trading policies are included in the Group‘s Code of Conduct, which is available on the Group's website.

3.1.1	the practices necessary to maintain confidence in the company's integrity		Y

3.1.2	the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders		Y

3.1.3	the responsibility and accountability of individuals for reporting and investigating reports of unethical practices		Y

3.2	Companies should establish a policy concerning trading company securities by directors, officers and employees and disclose that policy or a summary of that policy.		Y	The Group has established a policy concerning trading company securities by directors, officers and employees.


3.3	Provide the information indicated in Guide to Reporting on Principle 3
3.3.1	An explanation of any departure from recommendations 3.1, 3.2 and 3.3			Not applicable

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Principle	Corporate Governance Best Practice Recommendation	Compliance	How We Comply


	The following material should be made publicly available, ideally on the Group's website in a clearly marked corporate governance section: a) any applicable code of conduct or a summary of its main provisions b) the trading policy or summary of its main provisions	Y Y Y	The Code of Conduct is available on the Group's website. The Share Trading Policy is available on the Group‘s website.


Principle 4 - Safeguard integrity in financial reporting
4.1	The Board should establish an audit committee.	Y	The Board has established an Audit Committee which operates under a charter approved by the Board. The committee provides the Board with additional assurances regarding the reliability of financial information for inclusion in financial reports.

4.2	Structure the audit committee so that it consists of: only non-executive directors, a majority of independent directors, an independent chairperson who is not the chairperson of the board and at least three members	N	The Board is of the view that given the size of the Group and its Board, it is not practical to have a majority of independent directors managing the Audit Committee with all Directors being committee members of the Audit and Risk Committee. The members of the audit committee are Richard Allen (committee chairman) Ken Gaunt and Brenton Scott.

4.3	The audit committee should have a formal charter	Y	The audit committee has a formal charter. This will be made available on the Group‘s website.

4.4	Provide the information in the annual report: a) Details of the names and qualifications of those appointed to the audit committee and their attendance at meetings of the committee b) The number of meetings of the audit committee The following material should be made publicly available, ideally on the Group's website in a clearly marked corporate governance section: The audit committee charter b) Information on procedures for the selection and appointment of the external auditor, and for the rotation of external audit engagement partners	Y Y	Refer to director‘s report Refer to director‘s report. The audit committee charter will be made available on the Group‘s website The committee manages the relationship between the Group and external auditors on behalf of the Board. It recommends to the Board potential auditors for appointment, re- appointment or replacement, the terms of engagement and remuneration of the external auditor.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Principle	Corporate Governance Best Practice Recommendation	Compliance	How We Comply



Principle 5 - Make timely and balanced disclosure
5.1	Companies should establish written policies and procedures designed to ensure compliance of ASX listing rule disclosure requirements and to ensure accountability at a senior management level for that compliance and disclose these policies or a summary of these policies.	Y	The Directors are committed to keeping the market fully informed of material developments to ensure compliance with ASX Listing Rules and the Corporations Act. The Directors have established written policies and procedures to ensure compliance with the disclosure requirements of ASX Listing Rules and to ensure accountability at a senior management level.

5.2	Provide the information indicated in Guide to Reporting on Principle 5
5.2.1	An explanation of any departures from recommendations 5.1and 5.2 and reasons for the departure		Not applicable

5.2.2	The following material should be publicly available, ideally on the Group's website in a clearly marked corporate governance section: A summary of the policies and procedures designed to guide compliance with Listing Rule disclosure requirements	Y	A summary of corporate governance compliance is available on the Group‘s website.


Principle 6 - Respect the rights of shareholders
6.1	Design and disclose a communication strategy to promote effective communication with shareholders and encourage effective participation at general meetings and disclose these policies or a summary of these policies.	Y	The Directors intend to establish a communications strategy to promote effective communication with Shareholders and encourage effective participation at general meetings. As well as ensuring timely and appropriate access to information for all investors via announcements to ASX, the Group will ensure that all relevant documents are released on the Group‘s website.

6.2	Provide the information indicated in Guide to Reporting on Principle 6
6.2.1	An explanation of any departures from recommendation and reasons for the departure		Not applicable

6.2.2	The Group should describe how it will communicate with its shareholders publically, ideally by posting this information on the company's website in a clearly marked corporate governance section.	N	Refer above to 6.1

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Principle	Corporate Governance Best Practice Recommendation	Compliance	How We Comply



Principle 7 - Recognise and manage risk
7.1	Companies should establish policies on risk oversight and management of material risks and disclose a summary of these policies.	Y	Formal policies being drafted. To be reviewed at next board meeting.

7.2	The board should require management to design and implement the risk management and internal control system to manage the company's material business risks and report whether those risks are being managed effectively. The board should disclose that management has reported to it as to the effectiveness of the Group's management of its material business risks.	Y	As part of the reporting process the Managing Director and Chief Financial Officer provide to the Board prior to the Board approving the annual and half-yearly accounts, a written statement that the integrity of the financial statements (as per ASX Recommendation 4.1) are founded on a system of risk management and internal compliance and control which implements the Board's policies and the Group's risk management and internal control system is operating efficiently and effectively in all material matters.

7.3	The board should disclose whether it has received assurance from the chief executive officer and chief financial officer that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.	Y	The Board will receive assurance from the Chief Executive Officer and Chief Financial Officer that the s295A declaration is founded on a sound system of risk management and internal control and the system is operating effectively in all material respects in relation to financial risks.

7.4	Provide the information indicated in Guide to Reporting on Principle 7
7.4.1	An explanation of any departures from recommendations 7.1, 7.2, 7.3 and 7.4 and reasons for the departure		Not applicable

7.4.2	Whether the Board has received the report from management under recommendation 7.2	Y	The board has received the report

7.4.3	Whether the Board has received assurance from the Chief Executive Officer and Chief Financial Officer under recommendation 7.3 The following material should be made publicly available, ideally on the Group's website in a clearly marked corporate governance section: A summary of the Group's policies on risk oversight and management of material business risks	Y	The Board has received the assurance in accordance with recommendation 7.3 The charter of the Audit and Risk Committee will be made available on the Group's website in the Corporate Governance section.


Principle 8 - Remunerate fairly and responsibly
8.1	The board should establish a remuneration committee	Y	Mr. Ken Gaunt has been appointed to form and establish the remuneration committee and act as its chair.

8.2	Clearly distinguish the structure of non- executive directors' remuneration from that of executive directors and senior executives	Y	All functions formalised and documented in the employment agreement and board engagement.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Principle	Corporate Governance Best Practice Recommendation	Compliance	How We Comply


8.3	Provide the information indicated in Guide to Reporting on Principle 8
8.3.1	The names of the members of the remuneration committee, their attendance at meetings of the committee and how the functions of the remunerations committee are carried out	Y	Refer above to 8.1 and the remuneration report contained in the Director‘s report.

8.3.2	The existence and terms of any schemes for retirement benefits, other than superannuation, for non-executive directors	Y	Refer to the remuneration report

8.3.3	An explanation of any departures from recommendation 8.1, 8.2 and 8.3 and reasons for the departure. The following material should be made publicly available, ideally on the Group's website in a clearly marked corporate governance section: a) The charter of the remuneration committee or a summary of the role, rights, responsibilities and membership requirements for that committee; b) A summary of the company's policy on prohibiting entering into transactions in associated products which limit the economic risk of participating in unvested entitlements under any equity-based remuneration schemes.	Y Y	Not applicable This charter will be made available on the Group‘s website. The Group does not enter into transactions in associated products which limit the economic risk of participating in unvested entitlements under any equity-based remuneration schemes.

Mobilarm Limited's corporate governance practices were in place throughout the year ended 30 June 2011.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Board Functions

The board of directors is established to direct the Group to meet the expectations of the shareholders, as well as other stakeholders. As part of meeting those expectations, the board has a responsibility to identify the areas of corporate governance to effectively manage the Group. To ensure that the board is well equipped to discharge its responsibilities it has established guidelines for the nomination and selection of directors and for the operation of the board.

The responsibility for the operation and administration of the Group is delegated, by the board, to the CEO and the executive management team. The board ensures that this team is appropriately qualified and experienced to discharge their responsibilities and has in place procedures to assess the performance of the CEO and the executive management team.

Whilst at all times the board retains full responsibility for guiding and monitoring the Group, in discharging its stewardship it makes use of sub-committees. Specialist committees are able to focus on a particular responsibility and provide informed feedback to the board.

To this end the board has established the following committees:

Audit and Risk
Nomination
Remuneration

The Group has commenced the process to establish the roles and responsibilities of these committees.

The board is responsible for ensuring that management's objectives and activities are aligned with the expectations and risks identified by the board. The board has a number of mechanisms in place to ensure this is achieved including:

Board approval and monitoring of a strategic plan designed to meet stakeholders' needs and manage business risk.
Implementation of budgets by management and monitoring progress against budget - via the establishment and reporting of both financial and non-financial key performance indicators.

Other functions reserved to the board include:

Approval of the annual and half-yearly financial reports.
Approving and monitoring the progress of major capital expenditure, capital management, and acquisitions and divestitures.
Ensuring that any significant risks that arise are identified, assessed, appropriately managed and monitored.
Reporting to shareholders.

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Structure of the Board

The skills, experience and expertise relevant to the position of director held by each director in office at the date of the annual report are included in the directors‘ report. Directors of Mobilarm Limited are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with – or could reasonably be perceived to materially interfere with – the exercise of their unfettered and independent judgement.

In the context of director independence, ―materiality‖ is considered from both the Group and individual director perspective. The determination of materiality requires consideration of both quantitative and qualitative elements. An item is presumed to be quantitatively immaterial if it is equal to or less than 5% of the appropriate base amount. It is presumed to be material (unless there is qualitative evidence to the contrary) if it is equal to or greater than 10% of the appropriate base amount.

Qualitative factors considered include whether a relationship is strategically important, the competitive landscape, the nature of the relationship and the contractual or other arrangements governing it and other factors that point to the actual ability of the director in question to shape the direction of the Group's loyalty.

In accordance with the definition of independence above, and the materiality thresholds set, the following directors of Mobilarm Limited are considered to be independent:

Name Position

Mr Richard Allen Independent chairman

The board recognises the Corporate Governance Council‘s recommendation that the Chair should be an independent director.

The term in office held by each director in office at the date of this report is as follows:

Name Term in office Mr. Brenton Scott 8 years Mr. Richard Allen 1 year Mr. Ken Gaunt 0 years

For additional details regarding board appointments, please refer to our website.

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Performance

The performance of the board and key executives is reviewed against both measurable and qualitative indicators.

The performance criteria against which directors and executives are assessed are aligned with the financial and non-financial objectives of Mobilarm Limited.

Directors whose performance is consistently unsatisfactory may be asked to retire.

Trading policy

Under the Group's securities trading policy, an executive or director must not trade in any securities of the Group at any time when they are in possession of unpublished, price-sensitive information in relation to those securities.

Before commencing to trade, an executive must first obtain the approval of the Group Secretary or a Director to do so and a director must first obtain approval of the Chairman.

As required by the ASX listing rules, the Group notifies the ASX of any transaction conducted by directors in the securities of the Group.

Nomination committee

The board has established a nomination committee and a chair person to establish its role and responsibility. The committee has not met as of the date of this report. The board of directors as a whole acted as the Nomination committee during the period. The nomination committee comprises a non-executive director and the chairman of the board. The nomination committee comprised the following members throughout the year:

Mr. Ken Gaunt (Committee Chairman)
Mr. Brenton Scott
Mr. Richard Allen

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Audit and Risk committee

The board has established an Audit and Risk committee, which operates under a charter approved by the board. The committee has not met as of the date of this report. The board of directors as a whole acted as the Audit and Risk committee during the period. It is the board's responsibility to ensure that an effective internal control framework exists within the entity. This includes internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial information as well as non-financial.

The committee also provides the board with additional assurance regarding the reliability of financial information for inclusion in the financial reports. The committee is comprised of a non-executive director and the chairman of the board.

The members of the Audit and Risk committee during the year were:

Mr. Richard Allen (Committee Chairman)
Mr. Brenton Scott
Mr. Ken Gaunt

Qualifications of audit committee members

Mr. Richard Allen is a director in Tox Free Solutions Limited (ASX: TOX) since its listing in 2001 overseeing all aspects of the operation.

Mr. Brenton Scott has been a Chartered Accountant for 22 years and has served as an executive of the Group. Mr. Scott spent 14 years in the accounting profession. He spent 10 of these as a partner of firstly Walker Wayland, Perth then Scott Partners, in which he was the Managing Partner. Mr. Scott then became the Chief Financial Officer of Electronic Banking Solutions Limited (EBS) which was a large independent deployer of ATM machines in Australia.

Mr. Ken Gaunt has been a director in Electronic Banking Solutions Pty Ltd and Cash Card Australia Limited. He was the managing director at Electronic Banking Solutions Pty Ltd overseeing all aspects of the operation.

Risk

The Group sells products and services aimed at mitigating risk in the workplace. As such, the board takes a proactive approach to risk management. The identification and effective management of risk, including calculated risk-taking is viewed as an essential part of the Group‘s approach to creating long-term shareholder value.

In recognition of this, the board determines the company's risk profile and is responsible for overseeing and approving risk management strategy and policies, internal compliance and internal control. In doing so the board has taken the view that it is crucial for all board members to be a part of this process and as such, has not established a separate risk management committee.

The board oversees an annual assessment of risks affecting the Group and the effectiveness of management‘s plans to mitigate the risks. The tasks of undertaking and assessing risk management and internal control effectiveness are delegated to management through the CEO, including responsibility for the day to day design and implementation of the company's risk management and internal control system.

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The board has a number of mechanisms in place to ensure that management's objectives and activities are aligned with the risks identified by the board. These include the following:

Board approval of a strategic plan, which encompasses the company's vision, mission and strategy statements, designed to meet stakeholders' needs and manage business risk. The strategic plan includes the identified risks and strategies to mitigate them.
Implementation of board approved operating plans and budgets and board monitoring of progress against these budgets, including the establishment and monitoring of KPIs of both a financial and nonfinancial nature.

For the purposes of assisting investors to understand better the nature of the risks faced by Mobilarm Limited, the board has prepared a list of operational risks as part of the Principle 7 disclosures. However the board notes that this does not necessarily represent an exhaustive list and that it may be subject to change based on underlying market events.

Fluctuations in component prices, exchange rates & demand volumes.
Political instability/sovereignty risk in our manufacturing site.
The occurrence of force majeure events by significant suppliers.
Increasing costs of operations, including labour costs.
Increased regulatory barriers around the implementation of devices using regulated radio frequencies in various countries.
Increased competition from established and new companies

The Group does not currently operate an internal audit/control team.

Underpinning these efforts is a comprehensive set of policies and procedures directed towards achieving the following objectives in relation to the requirements of Principle 7:

Effectiveness and efficiency in the use of the Group's resources;
Compliance with applicable laws and regulations; and
Preparation of reliable published financial information.

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CEO and CFO certification

In accordance with section 295A of the Corporations Act, the CEO and CFO have provided a written statement to the board that:

Their view provided on the Group's financial report is founded on a sound system of risk management and internal compliance and control which implements the financial policies adopted by the board.
The Group's risk management and internal compliance and control system is operating effectively in all material respects.

The board agrees with the views of the ASX on this matter and notes that due to its nature, internal control assurance from the CEO and CFO can only be reasonable rather than absolute. This is due to such factors as the need for judgement, the use of testing on a sample basis, the inherent limitations in internal control and because much of the evidence available is persuasive rather than conclusive and therefore is not and cannot be designed to detect all weaknesses in control procedures.

In response to this, internal control questions are required to be completed by the key management personnel of all significant business units, including finance managers, in support of these written statements.

Remuneration

The expected outcomes of the remuneration goals of the Group are:

Attract, retain and incentivise key executives.
Performance incentives that allow executives to be rewarded for delivering results to the Group and its shareholders.

To assist in achieving these goals, the Group formed a remuneration committee to devise and monitor the amount of executive directors' and officers' remuneration to ensure it is closely tied to the Group's financial and operational performance. The committee has not met as of the date of this report. The board of directors as a whole acted as the Audit committee during the period.

For a full discussion of the Group's remuneration philosophy and framework and the remuneration received by directors and executives in the current period please refer to the remuneration report, which is contained within the directors‘ report.

There is no scheme to provide retirement benefits to non-executive directors.

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The board is responsible for determining and reviewing compensation arrangements for the directors themselves, the CEO and executive team. The board has established a remuneration committee, comprising two directors. Members of the remuneration committee throughout the year were:

Mr. Ken Gaunt (Committee Chairman)
Mr. Brenton Scott
Mr. Richard Allen

For additional details regarding the remuneration committee, including a copy of its charter, please refer to our website.

Shareholder communication policy

Pursuant to Principle 6, Mobilarm‘s objective is to promote effective communication with its shareholders at all times.

Mobilarm Limited is committed to:

Ensuring that shareholders and the financial markets are provided with full and timely information about Mobilarm Limited‘s activities in a balanced and understandable way.
Complying with continuous disclosure obligations contained in applicable the ASX listing rules and the Corporations Act in Australia.
Communicating effectively with its shareholders and making it easier for shareholders to communicate with Mobilarm Limited.

To promote effective communication with shareholders and encourage effective participation at general meetings, information is communicated to shareholders:

Through the release of information to the market via the ASX.
Through the distribution of the annual report and notices of annual general meeting.
Through shareholder meetings and investor relations presentations.
Through letters and other forms of communications directly to shareholders.
By posting relevant information on Mobilarm Limited‘s website: www.mobilarm.com

The Group‘s website www.mobilarm.com has a dedicated investor relations section for the purpose of publishing all important company information and relevant announcements made to the market.

The external auditors are required to attend the annual general meeting and are available to answer any shareholder questions about the conduct of the audit and preparation of the audit report.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2011

Note	Consolidated 2011 2010 $ $	Consolidated 2011 2010 $ $
Revenue Sale of goods Interest Rental income Other income 3(a) Changes in inventories of finished goods and work in progress Raw materials and consumables purchased Employee benefits 3(d) Share based compensation expense 3(d) Depreciation and amortisation 3(c) Advertising Audit and tax 3(f) Accountancy Freight and cartage External consultants and contractors Rental Travel and accommodation Allowance for doubtful debts 7 Payroll tax Legal fees Telephone and internet charges Insurance Printing, postage and stationery Motor vehicles expenses Finance costs 3(b) Foreign exchange (loss)/gain Impairment of capitalised development costs Writedown of other short term assets Variation of convertible note terms Other expenses Loss before income tax Income tax benefit 4(a) Loss from continuing operations after income tax (carried forward) 15	941,701 21,414 76,922 1,040,037 22,847 544,639 (867,214) (2,523,379) (568,923) (303,118) (4,211) (98,621) (7,215) (20,599) (579,034) (285,609) (168,159) (1,782) (90,391) (240,913) (29,702) (36,027) (24,673) (3,828) (42,790) 237,482 (185,129) (39,556) - (535,292) (4,811,160) 576,205 (4,234,955)	530,704 13,642 66,556
		610,902
		4,108 62,965 (322,605) (2,264,724) (1,363,888) (415,562) (114,340) (140,479) (12,919) (16,768) (608,178) (207,426) (261,001) (10,659) (56,151) (385,010) (31,594) (67,661) (39,784) (651) (198,550) 69,534 (59,511) - (298,179) (437,567)
		(6,565,698) 357,676
		(6,208,022)

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Note	2011 $	2010 $
Loss from continuing operations after income tax (brought forward) Other comprehensive income Total comprehensive loss for the period Basic earnings per share (cents per share) 19 Diluted earnings per share (cents per share) 19	(4,234,955) - (4,234,955) (0.03) (0.03)	(6,208,022) -
		(6,208,022)
		(0.05)
		(0.05)

The statement of comprehensive income should be read in conjunction with the notes to the financial statements.

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STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2011

Note	Consolidated 2011 2010 $ $	Consolidated 2011 2010 $ $
CURRENT ASSETS Cash and cash equivalents 18 Restricted cash 6 Trade and other receivables 7 Inventories 8 Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Plant and equipment 9 Intangible assets and Goodwill 10 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 11 Other payable – shares to be issued for IPO 6 Financial liability – Contingent Consideration 26 Other payable Interest bearing loans and borrowings 12 Provisions 13 TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Provisions 13 Interest bearing loans and borrowings 12 Financial liability – Contingent Consideration 26 Deferred tax liability 4(c) TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 14 Accumulated Losses 15 Reserves 16 TOTAL EQUITY	92,470 201,087 3,526,744 589,291 44,899 4,454,491 340,375 2,923,028 3,263,403 7,717,894 2,018,000 - 599,721 62,500 1,236,446 319,861 4,236,528 57,971 29,833 199,907 28,488 316,199 4,552,727 3,165,167 24,990,901 (22,038,139) 212,405 3,165,167	106,411 1,024,400 609,741 34,049 52,485
		1,827,086
		81,997 716,239
		798,236
		2,625,322
		655,252 1,024,400 - - 3,501 217,469
		1,900,622
		33,741 5,580 - -
		39,321
		1,939,943
		685,379
		18,488,563 (17,803,184) -
		685,379

The statement of financial position should be read in conjunction with the notes to the financial statements.

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STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2011

Note	Consolidated 2011 2010 $ $	Consolidated 2011 2010 $ $
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Payment for research & development R&D tax rebate Rental income & recoveries Interest and other borrowing costs paid NET CASH FLOWS USED IN OPERATING ACTIVITIES 18 CASH FLOWS FROM INVESTING ACTIVITIES Payments for plant and equipment Purchase of intangible assets 10 Acquisition of business 26 Term Deposit NET CASH FLOWS USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings – related parties Lease and hire purchase repayments Proceeds from return of deposit on equipment lease Proceeds from issue of convertible notes Proceeds from share issue Costs of share issue NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH HELD CASH AT THE BEGINNING OF THE FINANCIAL YEAR CASH AT THE END OF THE FINANCIAL YEAR 18	919,915 (4,070,011) 21,378 (401,012) 312,158 90,714 (17,306) (3,144,164) (8,113) - (1,674,390) (201,087) (1,883,590) 540,000 - 510,000 - 4,062,512 (98,699) 5,013,813 (13,941) 106,411 92,470	257,100 (4,256,288) 13,642 (680,496) 288,098 66,556 (198,550)
		(4,509,938)
		(21,042) (5,808) - -
		(26,850)
		266,667 (39,556) - 808,000 3,546,500 (42,675)
		4,538,936
		2,148
		104,263
		106,411

The statement of cash flows should be read in conjunction with the notes to the financial statements.

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STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 June 2011

Consolidated

		Consolidated	Consolidated	Consolidated
	Issued Capital $	Attributable to equity holders of Mobilarm Limited Accumulate d Losses Share based payment Reserve( Convertib le Note Reserve (Note 16) $ $ $			Total Equity $
COMPANY At 1 July 2009 Net loss for the year Other comprehensive income Total comprehensive loss for the period Transactions with owners in their capacity as owners Issue of equity Costs of share issues Issuance of Shares in lieu of director fees payable Share based payments – Ordinary Shares Share based payments – Performance Shares Equity portion of convertible notes issued Conversion of convertible notes As at 30 June 2010 Net loss for the period Other comprehensive income Total comprehensive loss for the period Transactions with owners in their capacity as owners Issue of equity Costs of share issues Share based payments – Ordinary Shares Share based payments – Performance Shares Share based payments – Stock Options Share based payments – Convertible Note Shares to be issued for Entitlements Offer As at 30 June 2011	9,192,597 - - - 3,546,502 (42,675) 80,657 170,333 1,205,555 - 4,335,594 18,488,563 - - - 4,232,622 (98,699) 196,477 356,518 - - 1,815,420 24,990,901	(11,595,162) (6,208,022) - (6,208,022) - - - - - - - (17,803,184) (4,234,955) - (4,234,955) - - - - - - - (22,038,139)	- - - - - - - - - - - - - - - - - - - 72,405 140,000 - 212,405	153,291 - - 153,291 - - - - - 230,001 (383,292) - - - - - - - - - - -
					(2,249,274)
					(6,208,022) -
					(6,208,022)
					3,546,502 (42,675) 80,657 170,333 1,205,555 230,001 3,952,302
					685,379
					(4,094,955) -
					(4,094,955)
					4,232,622 (98,699) 196,477 356,518 72,405 140,000 1,815,420
					3,165,167

The statement of changes in equity should be read in conjunction with the notes to the financial statements.

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2011

1 CORPORATE INFORMATION

The financial report of Mobilarm Limited (the ―Company‖) and its consolidated entities (the ―Group‖) for the year ended 30 June 2011 was authorised for issue in accordance with a resolution of directors on 30 September 2011.

Mobilarm Limited is a company limited by shares incorporated and domiciled in Australia. The nature of the operations and principal activities of the Group are described in the Director‘s Report.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Preparation

The financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board. The financial report has also been prepared on a historical cost basis, except for contingent consideration which has been measured at fair value.

The financial report is presented in Australian Dollars and all values are rounded to the nearest dollar.

Going Concern

This report has been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and settlement of liabilities in the normal course of business.

The Group has incurred a net loss after tax for the year ended 30 June 2011 of $4,234,955 (2010: $6,208,022) and experienced net cash outflows from operating activities of $3,144,164 (2010: $4,509,938). As 30 June 2011, the Group had net assets of $3,165,167 (2010: $685,379).

Subsequent to year end the Group has undertaken the following:

The Group collected a receivable arising from the shortfall offer related to its Entitlements Offer of $1,815,420 on 25 July 2011.
The Group also completed a private placement for $500,000 on 15 August 2011 and issued 10,000,000 shares for this transaction.
The Group also completed a private placement for $250,000 on 26 September 2011 and issued 5,000,000 shares and 2,500,000 share options with an exercise price of $0.10 per share for this transaction.

Not withstanding the above, the ability of the Group to continue as a going concern is reliant on:

increased cash flows from operations, and/ or
the raising of funds through a debt or equity issue.

The Directors have reviewed the business outlook and plans of the company and believe that both of the above can be achieved. The recent acquisition of Marine Rescue Technologies Ltd as well as the continued work with the United States Navy on the Crewsafe V200 device is part of the continued growth strategy.

Should the consolidated entity not achieve the matters set out above there is significant uncertainty whether the consolidated entity will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at amounts stated in the financial report.

The financial report does not include any adjustments that may be necessary if the consolidated entity is unable to continue as a going concern.

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(a) Compliance Statement

The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (‗IFRS‘) as issued by the International Accounting Standards Board.

The accounting policies adopted are consistent with those of the previous financial year. The Group has adopted all new and amended Australian Accounting Standards and Interpretations effective from 1 July 2010. The adoption of these Standards and Interpretations did not have a significant impact on the accounting policies of the Group.

(b) New Accounting Standards and Interpretations Issued but not yet effective

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 2011. These are outlined in the table below:


Reference	Title	Summary	Application date of standard*	Impact on Group financial report	Application date for Group*




AASB 13	Fair Value Measurement	AASB 13 establishes a single source of guidance under Australian Accounting Standards for determining the fair value of assets and liabilities. AASB 13 does not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value under Australian Accounting Standards when fair value is required or permitted by Australian Accounting Standards. Application of this definition may result in different fair values being determined for the relevant assets. AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This includes information about the assumptions made and the qualitative impact of those assumptions on the fair value determined.	1 January 2013	The group is yet to determine the impact from the implementation of this standard	1 July 2013





AASB 2011- 7	Amendments to Australian Accounting Standards arising from the Fair Value Measurement Standard	Consequential amendments to existing Australian Accounting Standards as a result of the adoption of AASB 13 Fair Value Measurement.	1 January 2013	The group is yet to determine the impact from the implementation of this standard	1 July 2013

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Reference	Title	Summary	Application date of standard*	Impact on Group financial report	Application date for Group*



AASB 2011- 9	Amendments to Australian Accounting Standards - Presentation of Items of Other Comprehensive Income [AASB 1, 5, 7, 101, 112, 120, 121, 132, 133, 134, 1039 & 1049]	The main change resulting from the amendments relates to the Statement of Comprehensive Income and the requirement for entities to group items presented in other comprehensive income on the basis of whether they are potentially reclassifiable to profit or loss subsequently (reclassification adjustments). The amendments do not remove the option to present profit or loss and other comprehensive income in two statements. The amendments do not change the option to present items of OCI either before tax or net of tax. However, if the items are presented before tax then the tax related to each of the two groups of OCI items (those that might be reclassified to profit or loss and those that will not be reclassified) must be shown separately.	1 July 2012	The group is yet to determine the impact from the implementation of this standard	1 July 2012

AASB 119 (Revised)	Employee Benefits	The main amendments to the standard relating to defined benefit plans are as follows :- • Elimination of the option to defer the recognition of actuarial gains and losses (the ‗corridor method‘); • Remeasurements (essentially actuarial gains and losses) to be presented in other comprehensive income; • Past service cost will be expensed when the plan amendments occur regardless of whether or not they are vested; and • Enhanced disclosures for Tier 1 entities. The distinction between short-term and other long-term employee benefits under the revised standard is now based on expected timing of settlement rather than employee entitlement. The revised standard also requires termination benefits (outside of a wider restructuring) to be recognised only when the offer becomes legally binding and cannot be withdrawn.	1 January 2013	The group is yet to determine the impact from the implementation of this standard	1 July 2013

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Reference	Title	Summary	Application date of standard*	Impact on Group financial report	Application date for Group*




AASB 9	Financial Instruments	AASB 9 includes requirements for the classification and measurement of financial assets resulting from the first part of Phase 1 of the IASB‘s project to replace IAS 39 Financial Instruments: Recognition and Measurement (AASB 139 Financial Instruments: Recognition and Measurement). These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of AASB 139. The main changes from AASB 139 are described below. Financial assets are classified based on (1) the objective of the entity‘s business model for managing the financial assets; (2) the characteristics of the contractual cash flows. This replaces the numerous categories of financial assets in AASB 139, each of which had its own classification criteria. AASB 9 allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument. Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases.	1 January 2013	The Group has not assessed the impact of this statement at this time	1 July 2013

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Reference	Title	Summary	Application date of standard*	Impact on Group financial report	Application date for Group*



AASB 2009- 11	Amendments to Australian Accounting Standards arising from AASB 9 [AASB 1, 3, 4, 5, 7, 101, 102, 108, 112, 118, 121, 127, 128, 131, 132, 136, 139, 1023 & 1038 and Interpretations 10 & 12]	The revised Standard introduces a number of changes to the accounting for financial assets, the most significant of which includes: two categories for financial assets being amortised cost or fair value removal of the requirement to separate embedded derivatives in financial assets strict requirements to determine which financial assets can be classified as amortised cost or fair value, Financial assets can only be classified as amortised cost if (a) the contractual cash flows from the instrument represent principal and interest and (b) the entity‘s purpose for holding the instrument is to collect the contractual cash flows an option for investments in equity instruments which are not held for trading to recognise fair value changes through other comprehensive income with no impairment testing and no recycling through profit or loss on derecognition reclassifications between amortised cost and fair value no longer permitted unless the entity‘s business model for holding the asset changes changes to the accounting and additional disclosures for equity instruments classified as fair value through other comprehensive income	1 January 2013	The Group has not assessed the impact of this statement at this time	1 July 2013

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Reference	Title	Summary	Application date of standard*	Impact on Group financial report	Application date for Group*




AASB 124 (Revised)	Related Party Disclosures (December 2009)	The revised AASB 124 simplifies the definition of a related party, clarifying its intended meaning and eliminating inconsistencies from the definition, including: the definition now identifies a subsidiary and an associate with the same investor as related parties of each other; entities significantly influenced by one person and entities significantly influenced by a close member of the family of that person are no longer related parties of each other; and the definition now identifies that, whenever a person or entity has both joint control over a second entity and joint control or significant influence over a third party, the second and third entities are related to each other. A partial exemption is also provided from the disclosure requirements for government-related entities. Entities that are related by virtue of being controlled by the same government can provide reduced related party disclosures.	1 January 2011	The Group has not assessed the impact of this statement at this time	1 July 2011




AASB 2009- 12	Amendments to Australian Accounting Standards [AASBs 5, 8, 108, 110, 112, 119, 133, 137, 139, 1023 & 1031 and Interpretations 2, 4, 16, 1039 & 1052]	This amendment makes numerous editorial changes to a range of Australian Accounting Standards and Interpretations. In particular, it amends AASB 8 Operating Segments to require an entity to exercise judgement in assessing whether a government and entities known to be under the control of that government are considered a single customer for the purposes of certain operating segment disclosures. It also makes numerous editorial amendments to a range of Australian Accounting Standards and Interpretations, including amendments to reflect changes made to the text of IFRSs by the IASB.	1 January 2011	The Group has not assessed the impact of this statement at this time	1 July 2011

AASB 2009- 13	Amendments to Australian Accounting Standards arising from Interpretation 19 [AASB 1]	This amendment to AASB 1 allows a first-time adopter may apply the transitional provisions in Interpretation 19 as identified in AASB 1048.	1 July 2010	This standard is not applicable	1 July 2010

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Reference	Title	Summary	Application date of standard*	Impact on Group financial report	Application date for Group*



AASB 2009- 14	Amendments to Australian Interpretation – Prepayments of a Minimum Funding Requirement	These amendments arise from the issuance of Prepayments of a Minimum Funding Requirement (Amendments to IFRIC 14). The requirements of IFRIC 14 meant that some entities that were subject to minimum funding requirements could not treat any surplus in a defined benefit pension plan as an economic benefit. The amendment requires entities to treat the benefit of such an early payment as a pension asset. Subsequently, the remaining surplus in the plan, if any, is subject to the same analysis as if no prepayment had been made.	1 January 2011	The group is yet to determine the impact from the implementation of this standard	1 July 2011

AASB 2010- 1	Amendments to Australian Accounting Standards- Limited Exemption from Comparative AASB 7 Disclosures for First-time Adopters	First-time adopters of Australian Accounting Standards are permitted to use the same transition provisions permitted for existing preparers of financial statements prepared in accordance with Australian Accounting Standards that are included in AASB 2009-2.	1 July 2010	The Group has not assessed the impact of this statement at this time	1 July 2010

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Reference	Title	Summary	Application date of standard*	Impact on Group financial report	Application date for Group*



AASB 1053	Application of Tiers of Australian Accounting Standards	This Standard establishes a differential financial reporting framework consisting of two Tiers of reporting requirements for preparing general purpose financial statements: Tier 1: Australian Accounting Standards; and Tier 2: Australian Accounting Standards – Reduced Disclosure Requirements. Tier 2 comprises the recognition, measurement and presentation requirements of Tier 1 and substantially reduced disclosures corresponding to those requirements. The following entities apply Tier 1 requirements in preparing general purpose financial statements: for-profit entities in the private sector that have public accountability (as defined in this Standard); and the Australian Government and State, Territory and Local Governments. The following entities apply either Tier 2 or Tier 1 requirements in preparing general purpose financial statements: for-profit private sector entities that do not have public accountability; all not-for-profit private sector entities; and public sector entities other than the Australian Government and State, Territory and Local Governments.	1 July 2013	The Group has not assessed the impact of this statement at this time	1 July 2013

AASB 2010- 2	Amendments to Australian Accounting Standards arising from reduced disclosure requirements	This Standard gives effect to Australian Accounting Standards – Reduced Disclosure Requirements. AASB 1053 provides further information regarding the differential reporting framework and the two tiers of reporting requirements for preparing general purpose financial statements.	1 July 2013	The Group has not assessed the impact of this statement at this time	1 July 2013

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Reference	Title	Summary	Application date of standard*	Impact on Group financial report	Application date for Group*




AASB 2010- 4	Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project [AASB 1, AASB 7, AASB 101, AASB 134 and Interpretation 13]	Emphasises the interaction between quantitative and qualitative AASB 7 disclosures and the nature and extent of risks associated with financial instruments. Clarifies that an entity will present an analysis of other comprehensive income for each component of equity, either in the statement of changes in equity or in the notes to the financial statements. Provides guidance to illustrate how to apply disclosure principles in AASB 134 for significant events and transactions Clarify that when the fair value of award credits is measured based on the value of the awards for which they could be redeemed, the amount of discounts or incentives otherwise granted to customers not participating in the award credit scheme, is to be taken into account.	1 January 2011	The Group has not assessed the impact of this statement at this time	1 July 2011

(c) Basis of consolidation

A controlled entity is any entity that Mobilarm Limited has the power to control the financial and operating policies so as to obtain benefits from its activities.

A list of controlled entities is located below. All controlled entities except for Marine Rescue Technologies Ltd have a June financial year end. It is the intention of the Company to change the year end of MRT to a June year end. For purposes of this report, the operations of MRT are reported as if it had a June financial year end.

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

Where controlled entities have entered the consolidate group during the year, their operating results have been included from the date control was obtained.

Controlled entities

lled entities
		Percentage Owned (%)
	Country of Incorporation	2011	2010
Parent Entity
Mobilarm Limited	Australia
Subsidiaries of Mobilarm Limited
Marine Rescue Technologies Ltd	United Kingdom	100%	-
Mobilarm, Inc.	United States of America	100%	-

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(d) Significant accounting judgments, estimates and assumptions

Management has identified the following critical accounting policies for which significant judgements, estimates and assumptions are made. Actual results may differ from these estimates under different assumptions and conditions and may materially affect the financial results or the financial position reported in future periods.

(i) Amortisation of intangibles with finite useful lives

In relation to the amortisation of intangibles with finite useful lives, management‘s judgements are used to determine the estimate useful life. Management‘s judgements are based on historical information relating to specific assets. Details of the useful lives are detailed below.

(ii) Capitalised development costs

Development costs are only capitalised by the Group when it can demonstrate the technical feasibility of completing the asset so that the asset will be available for use or sale, how the asset will generate future economic benefits and the ability to measure reliably the expenditure attributed to the intangible asset during its development.

(iii) Taxation

The Group‘s accounting policy for taxation requires management‘s judgements as to the types of arrangements considered to be a tax on income in contrast to an operating cost. Judgements are also required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised on the Statement of Financial Position. Deferred tax assets, including those arising from un-recouped tax losses, capital losses and temporary differences, are recognised only where it is considered more likely than not that they will be recovered, which is dependent on the generation of sufficient future taxable profits.

Judgements about the generation of future taxable profits and repatriation on retained earnings depend on management‘s estimates of future cash flows. These depend on estimates of future cash sales, cost of sales, operating costs, capital expenditure, dividends and other capital management transactions. Judgements are also required about the application of income legislation. These judgements bad assumptions are subject to risk and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets and deferred tax liabilities recognised on the Statement of Financial Position and the amount of other tax losses and temporary differences not yet recognised. In such circumstances, some or all of the carrying amount of recognised deferred tax assets and liabilities may require adjustment, resulting in a corresponding credit or charge to the Statement of Comprehensive Income.

(e) Business combinations

Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination shall be measured at fair value, which shall be calculated as the sum of the acquisition date fair values of the assets transferred by the acquirer, the liabilities incurred by the acquirer to former owners of the acquiree and the equity issued by the acquirer, and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree either at fair value or at the proportionate share of the acquiree's identifiable net assets. Acquisition-related costs are expensed as incurred.

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When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic conditions, the Group‘s operating or accounting policies and other pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

If the business combination is achieved in stages, the acquisition date fair value of the acquirer's previously held equity interest in the acquiree is remeasured to fair value at the acquisition date through profit or loss.

(f) Operating segments

An operating segment is a component of an entity that engages in business activities from which it may earn revenues and incur expenses (including revenues and expenses relating to transactions with other components of the same entity), whose operating results are regularly reviewed by the Group's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance and for which discrete financial information is available. This includes start up operations which are yet to earn revenues. Management will also consider other factors in determining operating segments such as the existence of a line manager and the level of segment information presented to the board of directors.

Operating segments that meet the quantitative criteria as prescribed by AASB 8 are reported separately. However, an operating segment that does not meet the quantitative criteria is still reported separately where information about the segment would be useful to users of the financial statements.

Information about other business activities and operating segments that are below the quantitative criteria are combined and disclosed in a separate category for ―all other segments‖.

The Group does not currently have multiple segments, but will identify segments that meet the quantitative criteria if and when present. The Chief Executive Officer is the Group's chief operating decision maker.

(g) Revenue recognition

Revenue is recognised and measured at the fair value of the consideration received and receivable to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

(i) Sale of goods

Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are considered passed to the buyer at the time of delivery of the goods to the customer.

(ii) Interest income

Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

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(iii) Rental income

Rental income from the sub-lease of the Group‘s rented premises is accounted for on a straight-line basis over the lease term. Contingent rental income is recognised as income in the periods in which it is earned.

(h) Leases

The determination of whether an arrangement is or contains a lease is based on the substance of the arrangement and requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset.

Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are recognised as an expense in profit or loss.

Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset and the lease term if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term.

Operating lease payments are recognised as an expense in the Statement of Comprehensive Income on a straight-line basis over the lease term. Lease incentives are recognised in the Statement of Comprehensive Income as an integral part of the total lease expense.

(i) Cash and cash equivalents

Cash and short-term deposits in the Statement of Financial Position comprise cash at bank and in hand and short term deposits with an original maturity of three months or less.

For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

(j) Trade and other receivables

Trade receivables, which generally have 30-90 day terms, are recognised and carried at the original invoice amount less an allowance for any uncollectible amounts.

An allowance for doubtful debts is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified.

(k) Inventories

Inventories including raw materials, work in progress and finished goods are valued at the lower of cost and net realisable value.

Costs incurred in bringing each product to its present location and condition is accounted for as follows:

a) Raw materials – purchase cost on a first-in, first-out basis; and

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b) Finished goods and work-in-progress – cost of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs. Costs are assigned on the basis of weighted average costs.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

(l) Derecognition of financial assets and financial liabilities

(i) Financial assets

A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised when:

The rights to receive cash flows from the asset have expired;
The Group retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‗pass-through‘ arrangement; or
The Group has transferred its rights to receive cash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

(ii) Financial liabilities

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

(m) Foreign currency

Items included in the financial statements of each entity within the Group are measured using the currency of the primary economic environment in which it operates (―functional currency‖). The functional and presentation currency of Mobilarm Limited is Australian dollars (―A$‖). The functional currency of our overseas subsidiaries are as follows:

Marine Rescue Technologies Ltd Mobilarm, Inc.

British Pound (GBP ₤ United States Dollar (US$)

Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the reporting date.

All exchange differences in the financial report are taken to profit or loss.

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Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined.

The results of the foreign subsidiaries are translated into Australian Dollars (presentation currency) as at the date of each transaction. Assets and liabilities are translated at exchange rates prevailing at reporting date. Exchange variations resulting from translation are recognised in the foreign currency translation reserve.

(n) Income tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

(o) Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except;-

When the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
Receivables and payables, which are stated with the amount of GST included.

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The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position.

Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(p) Plant and equipment

Plant and equipment is stated at historical cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred..

Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows; -

 Plant and equipment – 2.5 to 20 years

The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.

(i) Impairment

The carrying values of plant and equipment are reviewed for impairment at each reporting date, with the recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired.

The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash-generating unit to which the asset belongs, unless the asset's value in use can be estimated to be close to its fair value.

An impairment exists when the carrying value of an asset or cash-generating units exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount.

For plant and equipment, impairment losses are recognised in the Statement of Comprehensive.

(ii) Derecognition and disposal

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.

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(q) Investments and other financial assets

Financial assets are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-for-sale investments, as appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transactions costs. The Group determines the classification of its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial year-end.

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are carried at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the loans and receivables are derecognised or impaired, as well as through the amortisation process.

(ii) Available-for-sale investments

Available-for-sale investments are those non-derivative financial assets that are designated as available-forsale or are not classified as any of the three preceding categories. After initial recognition available-for sale investments are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profit or loss.

The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the Statement of Financial Position date. For investments with no active market, fair value is determined using valuation techniques. Such techniques include using recent arm‘s length market transactions; reference to the current market value of another instrument that is substantially the same; discounted cash flow analysis and option pricing models.

(r) Intangible assets

Intangible assets acquired are initially measured at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets, excluding capitalised development costs, are not capitalised and expenditure is charged against profits in the year in which the expenditure is incurred.

The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised over the useful life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life is reviewed at least at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method, as appropriate, which is a change in accounting estimate. The amortisation expense on intangible assets with finite lives is recognised in profit or loss in the expense category consistent with the function of the intangible asset.

(i) Research costs are expensed as incurred. An intangible asset arising from development expenditure on an internal project is recognised only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of

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resources to complete the development and the ability to measure reliably the expenditure attributable to the intangible asset during its development. Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses. Any expenditure so capitalised is amortised over the period of expected benefits from the related project.

The carrying value of an intangible asset arising from development expenditure is tested for impairment annually when the asset is not yet available for use or more frequently when an indication of impairment arises during the reporting period.

A summary of the policies applied to the Group‘s intangible assets is as follows:

Patents and Licences

Useful lives: 5 years

Amortisation method used: Straight Line

Internally generated or acquired: Acquired

Impairment testing: Annually and more frequently when an indication of impairment exists.

Development Costs

Useful lives: Finite

Amortisation method used: Amortised over the period of expected future sales from the related project on a straight-line basis.

Internally generated or acquired: Internally generated

Impairment testing: Annually for assets not yet available for use and more frequently when an indication of impairment exists. The amortisation method is reviewed at each financial year-end.

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.

(s) Goodwill

Goodwill acquired in a business combination is initially measured at cost of the business combination being the excess of the consideration transferred over the fair value of the company‘s net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of the net identifiable assets of the subsidiary acquired, the difference is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purposes of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the Group as a whole. This represent the lowest level at which goodwill is monitored for internal management purposes, and is not larger than an operating segment determined in accordance with AASB8.

Impairment testing is performed at 30 June each year. If the recoverable amount of the Group is less than the carrying amount, an impairment loss is recognised.

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(t) Impairment of non-financial assets

The Group assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Group makes an estimate of the asset‘s recoverable amount. An asset‘s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset.

An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset‘s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset‘s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

(u) Trade and other payables

Trade payables and other payables are carried at amortised costs and due to their short-term nature they are not discounted. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition.

(v) Interest-bearing loans and borrowings

All loans and borrowings are initially recognised at the fair value of the consideration received less directly attributable transaction costs.

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method.

Gains and losses are recognised in profit or loss when the liabilities are derecognised.

Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

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(i) Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (i.e. an asset that necessarily takes a substantial period of time to get ready for its intended use or sale) are capitalised as part of the cost of that asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Mobilarm Limited does not currently hold qualifying assets but, if it did, the borrowing costs directly associated with this asset would be capitalised (including any other associated costs directly attributable to the borrowing and temporary investment income earned on the borrowing).

(w) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

When the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the Statement of Comprehensive Income net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability.

When discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.

(i) Warranty provisions

Provisions for warranty-related costs are recognised when the product is sold or service provided. Initial recognition is based on historical experience. The initial estimate of warranty-related costs is revised annually.

(x) Employee leave benefits

(i) Wages, salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave due to be settled within 12 months of the reporting date are recognised in other payables in respect of employees' services up to the reporting date. They are measured at the amounts due to be paid when the liabilities are settled. Liabilities for non accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.

(ii) Long service leave

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

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(y) Contributed equity

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(z) Earnings per Share

Basic earnings/(loss) per share are calculated by dividing the net profit/(loss) for the year attributable to ordinary equity holders by the weighted average number of ordinary shares outstanding during the year.

Diluted earnings/(loss) per share are calculated by dividing the net profit/(loss) for the year attributable to ordinary equity holders (after deducting interest on convertible notes) by the weighted average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares that would be issued on the conversion of all the dilutive potential ordinary shares into ordinary shares.

(aa) Shared based payments

(i) Equity settled transactions

The Group at times provides benefits to its employees (including KMP) in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).

There are currently two plans in place to provide these benefits:

The Employee Share Option Plan (ESOP), which provides benefits to all employees, including KMP.
The Performance Share Plan, which provide benefits to KMP.

The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using the Black Sholes model and reviewed by an external valuer.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled (the vesting period), ending on the date on which the relevant employees become fully entitled to the award (the vesting date).

At each subsequent reporting date until vesting, the cumulative charge to the Statement of Comprehensive Income is the product of:

i. The grant date fair value of the award.
ii. The current best estimate of the number of awards that will vest, taking into account such factors as the likelihood of employee turnover during the vesting period and the likelihood of non-market performance conditions being met.
iii. The expired portion of the vesting period.

The charge to the Statement of Comprehensive Income for the period is the cumulative amount as calculated above less the amounts already charged in previous periods. There is a corresponding entry to equity.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Until an award has vested, any amounts recorded are contingent and will be adjusted if more or fewer awards vest than were originally anticipated to do so. Any award subject to a market condition is considered to vest irrespective of whether or not that market condition is fulfilled, provided that all other conditions are satisfied.

If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. An additional expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.

If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

(bb) Convertible notes

The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the Statement of Financial Position, net of transaction costs.

On issuance of the convertible notes, the fair value of the liability component is determined using a market rate for an equivalent non-convertible bond and this amount is carried as a long-term liability on the amortised cost basis until extinguished on conversion or redemption. The increase in the liability due to the passage of time is recognised as a finance cost.

The remainder of the proceeds is allocated to the conversion option that is recognised and included in shareholders' equity, net of transaction costs. The carrying amount of the conversion option is not remeasured in subsequent years.

Interest on the liability component of the instruments is recognised as an expense in profit or loss.

Transaction costs are apportioned between the liability and equity components of the convertible noncumulative redeemable preference shares based on the allocation of proceeds to the liability and equity components when the instruments are first recognised.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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3 REVENUE AND EXPENSES

3 REVENUE AND EXPENSES
	Consolidated 2011 2010 $ $
3(a) Other income Other 3(b) Finance costs Interest – other parties Interest – related parties Hire purchase charges 3(c) Operating expenses Depreciation and amortisation Depreciation and amortisation of plant and equipment Amortisation of intangible assets Inventory written off during the year Doubtful debts Minimum lease payments – operating leases Provision for employee entitlements 3(d) Employee benefits expense Wages and salaries and on-costs Director fees Superannuation costs Share based payments Total 3(e) Research and development costs Research and development costs charged directly to the Statement of Comprehensive Income Amortisation of capitalised development costs 3(f) Auditors‘ remuneration Amounts received or due and receivable by Ernst & Young Australia for: An audit of the financial report of the entity (including MRT) Other services: - Due Diligence Services - Independent Accountants report - Other services – Tax (R & D Rebate)	22,847 22,847 27,024 8,419 7,347 42,790 33,354 269,764 303,118 116,583 3,009 285,609 403,024 2,064,897 272,500 185,982 2,523,379 568,923 3,092,302 264,212 65,641 22,680 - 10,300 98,621	4,108
		4,108
		122,024 76,526
		198,550
		77,746 337,816
		415,562
		934 10,659 207,426 357,306 1,801,262 230,000 233,462
		2,264,724 1,363,888
		3,628,612
		337,816
		46,000 - 79,450 15,029
		140,479

MOBILARM LIMITED – FINANCIAL REPORT 2011

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4 INCOME TAX

4 INCOME TAX
	Consolidated 2011 2010 $ $
4(a) The major components of the current income tax benefit are: Current income tax benefit Current income tax change/(benefit) irrespective of prior year Deferred tax 4(b) A reconciliation between the income tax benefit and the product of accounting loss before income tax multiplied by the Group‘s applicable income tax rate is as follows: Prima facie income tax benefit calculated @ 30% (2009: 30%) on loss from ordinary activities Add tax effect of: Non-deductible items Share-based payments R&D uplift Prior year adjustment Current year income tax expenses/(benefit) Deferred tax assets not brought to account Income tax benefit 4(c) Deferred income tax Equity component of convertible notes R&D expenditure Computer software Deferred tax liabilities offset by deferred tax assets Net deferred tax liabilities 4(d) Deferred tax asset Provision for employee entitlements Provision for doubtful debts Accrued superannuation Provision for warranty Depreciable assets Capital raising costs expensed Tax losses Deferred tax assets not brought to account Deferred tax assets offset against deferred tax liabilities Net deferred tax assets	(576,205) - - (576,205) (1,443,348) 232,104 231,055 (90,997) - (1,071,186) 494,981 (576,205) - 93,878 2,215 96,093 (96,093) - 81,564 1,618 16,496 8,667 100,950 195,815 3,712,643 4,114,753 (4,018,660) 96,093 (96,093) -	(1,648,290) (32,991) 1,323,605
		(357,676)
		(1,969,709) 22 409,166 (54,778) (32,991)
		(1,648,290 1,290,614
		(357,676)
		- 210,474 -
		210,474 (210,474)
		-
		58,570 2,733 13,912 229,596 101,794 3,540,690
		3,947,295 (3,736,821)
		210,474 (210,474)
		-

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4(e) Income tax losses Future income tax benefit arising from tax losses not recognised at reporting date 5 DIVIDENDS PAID AND PROPOSED	3,712,643 3,540,690 3,712,643 3,540,690 Consolidated 2011 2010 $ $	3,540,690
		3,540,690
There were no dividends paid or declared for the financial year ended 30 June 2011 (30 June 2010: nil). 6 RESTRICTED CASH	- - - - Consolidated 2011 2010 $ $	-
		-
IPO proceeds received through 30 June * Term Deposit securing standby letter of credit facility	- - 201,087 201,087	1,024,400
		1,024,400
		-
		1,024,400

In the prior year, the IPO proceeds were received under an offer with a minimum subscription. The Company recognised the restricted funds and liability until the funds met the minimum subscription. The Company met the minimum subscription after the reporting date in the prior year.

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7 TRADE AND OTHER RECEIVABLES

7 TRADE AND OTHER RECEIVABLES
	Consolidated 2011 2010 $ $
Trade debtors Less: allowance for impairment loss (a) Goods and services tax Value added tax Related party receivable (b) Sundry receivables Receivable from investor (i) R & D Rebate (see footnote 4)	1,032,848 (10,892) 1,021,956 66,931 46,232 0 0 1,815,420 576,205 3,526,744	288,739 (9,109)
		279,630 6,192 - - - - 323,919
		609,741

(i) The company recorded a receivable from investor as at 30 June 2011 in relation to the Entitlements Offer. The Group received shares as security towards the performance of this receivable. The receivable was settled on 22 July 2011.
a) Allowance for impairment loss

Trade receivables are non-interest bearing and are generally on 30-60 day terms. An allowance account for impairment losses is recognised when there is objective evidence that an individual trade receivable is impaired. The company has recognised $1,782 of impairment loss for the year ended 30 June 2011.

	Consolidated 2011 2010 $ $	Consolidated 2011 2010 $ $
Movement in allowance for impairment loss -balance at beginning of year -amounts written off -charge for the year -balance at end of year	9,109 - 1,783 10,892	2,131 (3,681) 10,659
		9,109

b) At 30 June 2011, the ageing analysis of trade receivables is as follows:

				61-90 days PDNI*	61-90 days CI**	+91 days *PDNI	+91 days CI**
	Total	0-30 days	31-60 days

2011	$1,032,848	$666,663	$92,804	$127,119	$-	$146,261	$5,394
2010	$288,739	$202,076	$78,965	$7,698	$-	$-	$-

Past due not impaired (PDNI)

**Considered impaired (CI)

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i. Allowance for impairment loss

Receivables past due but not considered impaired are: $273,380 (2010: $7,698).Payment terms on these amounts have not been re-negotiated however credit has been stopped until full payment is made. Each operating unit has been in direct contact with the relevant debtor and is satisfied that payment will be received in full.

Other balances within trade and other receivables do not contain impaired assets and are not past due. It is expected that these other balances will be received when due.

ii. Related party receivables

There are no related party receivables as of 30 June 2011 (2010: $nil). For terms and conditions of related party transactions refer to note 24.

iii. Fair value and credit risk

Due to the short term nature of these receivables, their carrying value is assumed to approximate their value.

The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security for trade debtors, nor is it the company‘s policy to transfer (on-sell) receivables to special purpose entities.

iv. Foreign exchange risk

Detail regarding foreign exchange and interest rate risk exposure is disclosed in note 25.

8 INVENTORIES

	Consolidated 2011 2010	Consolidated 2011 2010
At cost Raw materials and stores at net realisable value Finished goods Total inventories at lower of cost and net realisable value	575,888 13,403 589,291	31,249 2,800
		34,049

Inventories recognised as an expense for the year ended 30 June 2011 totalled $322,575 (2010: $259,640) for the Group. The inventory write-downs were due to the discontinuance of the Crewsafe Wireless system and MRT inventories whose future benefit is beyond 12 months.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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9 PLANT AND EQUIPMENT

9 PLANT AND EQUIPMENT
	Consolidated 2011 2010 $ $
Leasehold improvements At cost Accumulated amortisation Plant and equipment At cost Less: Accumulated depreciation Motor vehicles At cost Accumulated amortisation TOTAL PLANT AND EQUIPMENT Reconciliation Reconciliation of carrying values for each class of plant and equipment are set out below: Leasehold improvements: - Carrying amount at beginning of financial year - Additions - Amortisation - Carrying amount at end of financial year Plant and Equipment: - Carrying amount at beginning of financial year - Additions - Disposals - Depreciation - Carrying amount at end of financial year Motor Vehicles: - Carrying amount at beginning of financial year - Disposals - Additions - Depreciation - Carrying amount at end of financial year	109,362 (107,936) 1,426 1,261,839 (923,250)) 338,589 17,273 (16,913) 360 340,375 3,690 - (2,264) 1,426 73,989 291,732 - (27,132) 338,589 4,318 - - (3,958) 360	109,362 (105,672)
		3,690
		843,140 (769,151)
		73,989
		17,273 (12,955)
		4,318
		81,997
		5,990 - (2,300)
		3,690
		121,064 21,042 - (68,117)
		73,989
		8,637 - - (4,319)
		4,318

Assets are encumbered to the extent set out in note 12

MOBILARM LIMITED – FINANCIAL REPORT 2011

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10 INTANGIBLE ASSETS AND GOODWILL

	Developm ent Costs $	Intellectual Property $	Consolidated Goodwill Patents & Licenses $ $	Consolidated Goodwill Patents & Licenses $ $	Comput er S f $	Total $
At 30 June 2011 Cost (gross carrying amount) Accumulated amortisation Net carrying amount Other Year ended 30 June 2011 At 1 July 2010, net of accumulated amortisation Additions Impairment Amortisation At 30 June 2011, net of accumulated amortisation Other At 30 June 2010 Cost (gross carrying amount) Accumulated amortisation Net carrying amount Other At 1 July 2009, net of accumulated amortisation Additions Impairment Amortisation At 30 June 2010, net of accumulated amortisation Other	2,520,297 (1,529,880 ~~)~~ 990,417 701,581 738,177 (185,129) (264,212) 990,417 1,893,865 (1,192,284 ~~)~~ 701,581 417,692 681,216 (59,511) (337,816) 701,581	923,919 (923,919) - - - - - - 923,919 (923,919) - - - - - -	1,924,068 - 1,924,068 - 1,924,068 - - 1,924,068 - - - - - - - -	67,235 (67,235) - - - - - - 67,235 (67,235) - - - - - -	77,516 (70,133) 7,383 12,935 - - (5,552) 7,383 77,516 (64,581) 12,935 10,138 5,807 - (3,010) 12,935	5,513,035 (2,591,167)
						2,921,868
						1,160
						2,923,028
						714,516 2,662,245 (185,129) (269,764)
						2,921,868
						1,160
						2,923,028
						2,962,535 (2,248,019)
						714,516
						1,723
						716,239
						427,830 687,023 (59,511) (340,826)
						714,516
						1,723
						716,239

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Development costs

Development costs have been capitalised at cost. The intangible asset has been assessed as having a finite life and is amortised using the straight line method over a period of 5 years. If an impairment indication arises, the recoverable amount is estimated and an impairment loss is recognised to the extent that the recoverable amount is lower than the carrying value.

Intellectual property

Intellectual property costs have been capitalised at cost. The intangible asset was assessed as having a finite life and is fully amortised.

Patents and licenses costs

Patents and licenses costs have been capitalised at cost. These patent and licenses have been granted for a minimum of 5 years by the relevant government agency and have accordingly been amortised using the straight line method over this finite life. It was determined that the Patents and Licences which were being carried had no future economic benefit to the Group. Therefore, these amounts were fully amortised.

Goodwill

Goodwill has been capitalised at cost of the business combination being the excess of the consideration transferred over the fair value of the company‘s net identifiable assets acquired and liabilities assumed. The goodwill recognised in the current year arose on the acquisition of MRT. Refer to note 26 for further details. The acquisition of MRT occurred on 9 June 2011 and the initial accounting for the acquisition is only provisional at the balance sheet date. Accordingly the allocation of goodwill to cash generating units is also incomplete.

Impairment losses recognised

The Group impaired its Crewsafe Wireless development in the 2011 financial year for $185,129 (2010: $59,511).The impairment loss has been recognised in the statement of comprehensive income in the line item ―Impairment of capitalised development costs‖. The Group continues to sell its Crewsafe products, but the sales have not achieved the forecasted levels. The development costs relating to the Crewsafe Wireless product have been written off in full.

There were no reversals of impairment losses recognisedin the 2011 and 2010 financial year.

11 TRADE AND OTHER PAYABLES

11 TRADE AND OTHER PAYABLES
	Consolidated 2011 2010 $ $
Trade creditors Other creditors and accruals	1,441,947 576,053 2,018,000	431,916 223,336
		655,252

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Trade Payables

Trade payables are non-interest bearing and are normally settled on 30-day terms.

Other Payables

Other payables are non-trade payables, are non-interest bearing and have an average term of six (6) months. Due to the short term nature of accounts payable and other payables, their carrying amount is approximate to their fair value.

See note 25 for interest rate, foreign exchange and liquidity risk.

12 INTEREST BEARING LOANS AND BORROWINGS

12 INTEREST BEARING LOANS AND BORROWINGS
	Consolidated 2011 2010 $ $
CURRENT Term debt (i) Term debt from related party (ii) (vi) Term debt from related party (iii) (vi) Convertible note from related party (iv) (v) (vi) (a) Finance Leases Total (a) Convertible Notes Balance as at 1 July Issue of convertible notes during the year Amendment of convertible note terms from $0.21 to $0.165 Interest on convertible notes Conversion of Convertible notes Balance as at 30 June	541,979 121,115 207,074 362,777 1,232,945 3,501 1,236,446 - 350,000 - 12,777 - 362,777	- - - -
		- 3,501
		3,501
		2,652,097 1,074,667 298,179 195,053 (4,219,996)
		-

(i) The Group entered into two term loans for $400,000 and
$100,000, respectively. The loans carry an interest rate of 15% per annum and a borrowing fee of 7.50% ($30,000 and $7,500, respectively) and 2.5 ordinary shares of the Group per dollar borrowed (1,000,000 and 250,000, respectively). The shares appear on the balance sheet as shares to be issued at 5 cents for a value of $62,500. These loans were repaid on 25 July 2011
(ii) The Group entered into a GBP₤74,067 (approximately AUD $111,994) term loan with the sellers of MRT. The loan carries an interest rate of 10% per annum if paid in 30 day, 15% if paid in 60 days and 20% if paid beyond 60 days. This loan was repaid on 5 August 2011.
(iii) The Group entered into a $200,000 term loan with its Chairman. The loan carries an interest rate of 15% per annum if paid within 30 days and 18% if paid after 30 days. The loan also has a borrowing fee of $4,500. This loan was repaid on 25 July 2011.

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(iv) The Group entered into a convertible note agreement with an executive director for $350,000. The loan carries an interest rate of 15% per annum and a borrowing fee of 2.5%. The conversion is at the option of the note holder and converts into equity at 5 cents per ordinary share.

The Group recognised an associated share based expense of $140,000 representing the difference between the estimated fair value of the compound instrument at the measurement date and the consideration paid. In terms of the arrangement, the face value of the note amounting to $350 000 is convertible into 7,000,000 ordinary shares of the company at the option of Mr Scott. Conversion is not subject to performance conditions. The convertible note has a 2 year term. See note 16.

(v) At 30 June 2010, there were 27 convertible notes on issue. The Group issued a further $1,074,667 in convertible notes in financial year 2010 with a conversion price of $0.15 per Share, convertible at the earlier of the Group receiving ASX conditional listing or a voluntary conversion by the noteholder.

Of the proceeds received, $230,001 was allocated to the Convertible Note Reserve in equity representing the holders‘ conversion option.

The Group amended the terms of $1,067,063 worth of convertible notes on issue at 30 June 2010 to change the conversion price from $0.21 to $0.165 (post consolidation) per Share in exchange for an automatic conversion to equity at the time the Group received conditional ASX listing approval. The Group recognised an expense of $298,179 for this modification to the terms

Additionally the terms of the convertible notes with a conversion price of $0.15 (post consolidation) per Share were amended to an automatic conversion to equity at the time the Group received conditional ASX listing approval.

The Group incurred $195,053 of interest on all the convertible notes during the period.

All outstanding notes were converted on 31 December 2009 in exchange for 26,915,999 ordinary shares.

(vi) These notes were on the same terms as the notes to nonrelated parties, as described above.

vi) These notes were on the same terms as the notes to non- related parties, as described above.
NON CURRENT Finance Leases	2011 29,833	2010
		5,580

Non current interest bearing borrowings are finance leases for vehicles and equipment. All amounts disclosed on the balance sheet approximate their fair market values.

MOBILARM LIMITED – FINANCIAL REPORT 2011

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13 PROVISIONS

13 PROVISIONS
		Consolidated 2011 2010 $ $
CURRENT Employee entitlements Warranty provision Other NON-CURRENT Employee entitlements (a) Movement in employee entitlement provisions At 1 July 2010 Additions Utilised At 30 June 2011 At 1 July 2009 Additions Utilised At 30 June 2010	(a) (a) Current 217,469 378,794 (324,702 ) 271,561 Current 133,661 337,668 (253,860) 217,469	271,561 36,089 12,211 319,861 57,971 Non-Current 33,741 24,230 - 57,971 Non-Current 14,102 19,639 - 33,741	217,469 - -
			217,469
			33,741
			Total 251,210 403,024 (324,702)
			329,532
			Total 147,763 357,307 (253,860)
			251,210

MOBILARM LIMITED – FINANCIAL REPORT 2011

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14 CONTRIBUTED EQUITY

			Consolidated 2011 2010 $ $	Consolidated 2011 2010 $ $
Issued and paid up capital: a) 193,581,712 (2010 – 134,108,744) ordinary shares fully paid. 36 308 406 ordinary shares to be issued under the entitlement offer b) 6,333,334 performance shares	2011 No. of shares	2010 No. of shares	22,680,074 1,815,420 495,407 24,990,901 2011 $	17,283,008 1,205,555
				18,488,563
				2010 $
a) Reconciliation of Contributed Equity Equity at beginning of year Consolidation of Capital Issue of ordinary shares Cost of share issue Issuance of Shares in lieu of director fees payable Share based payments - Ordinary Shares Conversion of Convertible Notes Conversion of performance shares class A subtotal Shares to be issued for Entitlements Offer Equity at end of the year	134,108,744 - 48,901,446 - - 3,904,856 - 6,666,666 193,581,712 193,581,712	264,425,398 (176,283,599) 17,641,568 - 537,712 871,666 26,915,999 - 134,108,744 - 134,108,744	17,283,008 - 4,232,622 (98,699) - 196,477 - 1,066,666 22,680,074 1,815,420 24,495,494	9,192,597 3,546,502 (42,675) 80,657 170,333 4,335,594 -
				17,283,008
				-
				17,283,008

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholder meetings.

	June 2011 Number $	June 2011 Number $	June 2010 Number $	June 2010 Number $
b) Performance Shares Movement in performance shares class A on issue Balance at beginning of year Share issue Share based payment expense for the year Conversion of performance shares class A Balance at end of the year Movement in performance shares class B on issue Balance at beginning of year Share issue Share based payment expense for the year Balance at end of the year Movement in performance shares class C on issue Balance at beginning of year Share issue Share based payment expense for the year Balance at end of the year Total performance shares	6,666,666 - - (6,666,666) - 3,166,666 - - 3,166,666 3,166,668 - - 3,166,668 6,333,334	$888,889 - 177,777 (1,066,666) - $211,111 - 98,517 $309,628 $105,555 - 80,222 $185,777 $495,405	- 6,666,666 - - 6,666,666 - 3,166,666 - 3,166,666 - 3,166,668 - 3,166,668 13,000,000	- - $888,889 -
				$888,889 - - $211,111
				$211,111 - - $105,555
				$105,555
				$1,205,555

Performance shares class A convert to ordinary shares on a 1 for 1 basis upon obtaining ASX conditional listing. The Group obtained conditional listing on 25 August 2010. The Group amortised the shares from their issuance date through the milestone date.

Performance shares class B convert to ordinary shares on a 1 for 1 basis upon the Group reaching a market capitalisation of $65 million dollars based on the five day weighted average share price on the ASX. The Group has amortised the Performance shares class B based upon the Group‘s financial plans to reach that milestone.

Performance shares class C convert to ordinary shares on a 1 for 1 basis upon the Group reaching a market capitalisation of $100 million dollars based on the five day weighted average share price on the ASX. The Group has amortised the Performance shares class B based upon the Group‘s financial plans to reach that milestone.

c) Options	June 2011 Number	$	June 2010 Number	$
Movement in options on issue Balance at beginning of period Options issued – Capital Raising (i) Options issued – Employee Stock Option Plan (ii) Balance at end of the period	3,448,000 3,168,000 3,308,333 9,924,333	- - 72,405 72,405	- 3,448,000 - 3,448,000	- - -
				-

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All options were issued as a free attaching option as part of the Group‘s capital raises in 2011 and 2010 or as part of the employee stock option plan. All options issued from capital raising are exercisable at $0.20 per share and expire in three years.

The options issued under the employee stock option plan are detailed as follows:

Grant Date Expiry Date Strike Price 22-Dec-2010 22-Dec-2015 $0.193(i) 20-Jan-2011 15-Oct-2015 $0.193(i) 09-Jun-2011 09-Jun-2016 $0.072 Balance at end of the year	Amount 2,725,000 83,333 500,000
	3,308,333

(i) The original strike price for these options was $0.20. The terms of these employee options provide for the exercise price of the options to be adjusted in accordance with the formula set out in ASX Listing Rule 6.22.2 following an Entitlement Offer. The Group adjusted the strike price as part of the Entitlements Offer completed.

The Group settled three capital raising fees related to its IPO, its Equity drawdown facility and the acquisition of MRT with ordinary shares. The fees were settled at the current market price. The Group recognised the amount as an adjustment to its issued capital.

15 ACCUMULATED LOSSES

15 ACCUMULATED LOSSES
	Consolidated 2011 2010 $ $
Accumulated losses at the beginning of the financial year Net loss for the year Accumulated losses at the end of the financial year	(17,803,184) (4,234,955) (22,038,139)	(11,595,162) (6,208,022)
		(17,803,184)

16 RESERVES

16 RESERVES
	Consolidated 2011 2010 $ $
Share based payment Reserve Balance at the beginning of the financial year Difference in fair value of option component of convertible loan Issuance and amortisation of share options issued Balance at the end of the financial year Convertible notes Reserve Balance at the beginning of the financial year Equity portion of convertible notes issued Conversion of notes into ordinary shares Balance at the end of the financial year	- 140,000 72,405 212,405 - - - -	- - -
		-
		153,291 230,001 (383,292)
		-

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Nature and purpose of reserve

(i) Share based payment reserve

This reserve records movement in the fair value of share based payments..

(ii) Convertible note reserve

This reserve is used to record the equity portion of the convertible notes.

17 COMMITMENTS AND CONTINGENCIES

Operating lease commitments

The Group has entered into commercial leases as follows.

There are no restrictions placed upon the lessee by entering into these leases.

Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:

	Consolidated 2011 2010 $ $	Consolidated 2011 2010 $ $
Within one year After one year but not more than five years More than five years	5,873 - - 5,873	251,433 - -
		251,433

The Group has entered into financial lease commitments on certain motor vehicles with a carrying amount of $33,684 (2010:$9,081). These leases expire within 1 to 5 years. These leases have an option to purchase at the end of their term. There are no restrictions placed on the lessee by entering into these leases.

Future minimum amounts payable under non-cancellable finance leases as at 30 June are as follows:

	Consolidated 2011 2010 $ $	Consolidated 2011 2010 $ $
Within one year Unexpired interest After one year but not more than five years Unexpired interest More than five years	5,176 -349 30,182 -1,325 - 33,684	5,176 (1,276) 6,506 (1,325) -
		9,081

The Group has termination benefits relating to the termination payments to KMPs if their contracts are terminated under certain conditions. The gross commitment is $232,798.

The Group has no other commitments or contingencies.

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18 NOTES TO STATEMENT OF CASH FLOWS

18 NOTES TO STATEMENT OF CASH FLOWS
	Consolidated 2011 2010 $ $
18(a) Reconciliation of cash Cash balance comprises: - cash on hand - Cash at bank Closing cash balance 18(b) Reconciliation of loss from ordinary activities after tax to the net cash flows from activities Operating loss after tax Amortisation Depreciation Share based compensation Impairment of capitalised development costs Write-down of other assets Write-down of inventories Variation of convertible note terms Interest converted into equity Other Changes in Assets and Liabilities (Increase)/Decrease in Trade and other receivables (Increase)/Decrease in Inventories (Increase)/Decrease in Prepayments (Increase)/Decrease in Development costs Increase/(Decrease) in Trade and other payables Increase/(Decrease) in Provision for employee entitlements Increase/(Decrease) in Provision for warranty Net cash flows used in operating activities.	149 92,321 92,470 (4,234,955) 269,764 33,354 568,923 185,129 39,556 116,583 - - (20,859) (742,326) (555,242) 7,586 (288,836) 1,362,748 78,322 36,089 (3,144,164)	201 106,210 106,411
		(6,208,022) 337,816 77,746 1,383,888 59,511 - - 298,179 140,358 33,261 (229,522) 62,965 (33,922) (621,704) 86,061 103,447 -
		(4,509,938)

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19 EARNINGS PER SHARE

The following reflects the income and share data used in the basic and diluted loss per share computations:

	Consolidated 2011 2010 $ $	Consolidated 2011 2010 $ $
Losses used in calculating loss per share For basic loss per share Net loss attributable to ordinary equity holders Weighted average number of shares Weighted average number of ordinary shares outstanding during the year for basic earnings/(loss) per share Weighted average number of ordinary shares adjusted for the effect of dilution	(4,234,955) Number 160,466,226 160,466,226	(6,208,022) Number 116,899,114
		123,565,780

The Group completed its IPO and listed on the ASX on 21 September 2010. As part of that transaction the Group issued a total of 11,917,000 shares and 3,168,000 share options. The Group also converted 6,666,666 Performance Shares Class A into ordinary shares.

The number of potential ordinary shares not considered dilutive is 16,924,333. Refer to note 28 Subsequent Events for shares issued post year end.

20 SEGMENT INFORMATION

The company operates solely in the development, manufacturing and sale of Man Overboard safety systems as one segment under the management of the CEO. The Group operates in three geographical locations being Australia, the United Kingdom and the United States.

Major customers

The Group has a number of customers to which it provides both products and services. The following identifies the individual customer accounts that amounted to more than five percent of sales.

	Consolidated
	2011	2010
	%	%
Highest volume customer for the year	26.6	49.7
Second Highest volume customer for the year	6.1	16.3
Third Highest volume customer for the year	4.7	5.2
Fourth Highest volume customer for the year	-	5.1
All customers above 5% of sales	37.4	76.3
Total sales for customers under 5%	62.6	23.7

Revenue by geographic area

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Revenue from external customers by geographical locations based on the location of the customers is as follows:

follows:
	Consolidated 2011 2010 $ $
Australia North America Europe Other foreign countries Total revenue	308,478 380,769 197,125 55,329 941,701	406,120 96,516 24,187 3,881
		530,704

Non-current assets by geographic area

Non-current assets held by the Group based on the geographical locations of the assets is as follows:

	Consolidated 2011 2010 $ $	Consolidated 2011 2010 $ $
Australia United Kingdom United States Total non-current assets	615,199 2,647,471 733 3,263,403	798,236 - -
		798,236

21 KEY MANAGEMENT PERSONNEL COMPENSATION

Key management personnel during the year were:

Name Title

Mr. Brenton Scott

Mr. Richard Allen

Executive Chairman / Executive Director

Independent Director

Mr. Christian Lange Non-Executive Director

Mr. Rick Parish Non-Executive Director

Mr. Lindsay Lyon Chief Executive Officer

Mr. Jorge Nigaglioni Chief Financial Officer

Mr. Andrew Hill General Manager Professional Services

Mr. Patrick Cleary

VP Sales

Mrs. Amanda Wilson Senior Marketing Manager

Mr. Peter Bettonvil R&D Manager

MOBILARM LIMITED – FINANCIAL REPORT 2011

Directors and Executives		Primary	Non Monetary benefits $	Post Employment Superan- nuation Retirement benefits $ $	Post Employment Superan- nuation Retirement benefits $ $	Equity Shares/opti ons $	Other $	TOTAL
	Salary & fees $	Cash Bonus $		Superan- nuation $				$
30 June 2011 Total compensation 30 June 2010 Total compensation	1,348,987 1,087,749	20,000 -	- -	115,050 150,391	11,064 14,577	515,483 1,205,555	33,401 42,750
								2,050,751

								2,501,022

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Shareholdings

Number of Shares held by Directors and Specified Executives:

				Conversion of Performance Shares		Balance 30 June 2011
	Balance 1 July 2010	Issued as remuneration	Options exercised		Net change other(i)


Directors
Brenton Scott	29,839,179	-	-	1,000,000	-	30,839,179
Christian Lange	200,000	-	-	-	-	200,000
Rick Parish	676,190	-	-	-	-	676,190
Lindsay Lyon	-	-	-	4,000,000	800,000	4,800,000
Richard Allen	-	-	-	-	-	-

Specified Executives
Jorge Nigaglioni	-	-	-	333,333	223,530	556,863
Andrew Hill	666,666	-	-	1,333,333	-	1,999,999
Peter Bettonvil	-	-	-	-	-	-
Patrick Cleary	-	-	-	-	-	-
Amanda Wilson	-	-	-	-	-	-

				Conversion of Performance Shares		Balance 30 June 2010
	Balance 1 July 2009	Issued as remuneration	Options exercised		Net change other(ii)


Directors
Brenton Scott	40,827,003	-	-	-	(10,987,824)	29,839,179
Christian Lange	-	200,000	-	-	-	200,000
Rick Parish	1,428,571	200,000	-	-	(952,381)	676,190
Kathal Spence (iii)	13,827,960	137,712	-	-	(8,418,643)	5,547,029
Lindsay Lyon	-	-	-	-	-	-

Specified Executives
Jorge Nigaglioni	-	-	-	-	-	-
Andrew Hill	2,000,000	-	-	-	(1,333,334)	666,666
Peter Bettonvil	-	-	-	-	-	-
Anthony Borger (iv)	-	-	-	-	-	-
Gabriel Chiappini (v)	-	-	-	-	-	-

(i) The Company had an Entitlements Issue that closed on 4 May 2011 in which existing executive shareholders participated.
(ii) The Company consolidated its capital on a 1 for 3 basis in accordance with a shareholder resolution dated 28 August 2009.
(iii) Mr. Spence resigned on 31 August 2009.
(iv) Mr. Borger resigned on 6 July 2010
(v) Mr. Chiappini resigned on 31 January 2011

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Number of Performance Shares held by Directors and Specified Executives:

	Balance 1 July 2010							Balance 30 June 2011
		Received as remuneration			Converted to ordinary shares
		Performance Shares			Performance Shares
		Class A	Class B	Class C	Class A*	Class B	Class C

Directors
Brenton Scott	2,000,000	-	-	-	(1,000,000)	-	-	1,000,000
Christian Lange	-	-	-	-	-	-	-	-
Rick Parish	-	-	-	-	-	-	-	-
Richard Allen	-	-	-	-	-	-	-	-

Specified Executives
Lindsay Lyon	7,333,334	-	-	-	(4,000,000)	-	-	3,333,334
Jorge Nigaglioni	1,000,000	-	-	-	(333,333)	-	-	666,667
Andrew Hill	2,666,666	-	-	-	(1,333,333)	-	-	1,333,333
Peter Bettonvil	-	-	-	-	-	-	-	-
Pat Cleary	-	-	-	-	-	-	-	-
Amanda Wilson	-	-	-	-	-	-	-	-

*The Company converted the Performance Shares Class A to ordinary shares upon receipt of conditional listing on 25 August 2010.

	Balance 1 July 2009							Balance 30 June 2010
		Received as remuneration			Converted to ordinary shares
		Performance Shares			Performance Shares
		Class A	Class B	Class C	Class A	Class B	Class C

Directors
Brenton Scott	-	1,000,000	500,000	500,000	-	-	-	2,000,000
Christian Lange	-	-	-	-	-	-	-	-
Rick Parish	-	-	-	-	-	-	-	-
Kathal Spence	-	-	-	-	-	-	-	-

Specified Executives
Lindsay Lyon	-	4,000,000	1,666,667	1,666,667	-	-	-	7,333,334
Jorge Nigaglioni	-	333,333	333,333	333,334	-	-	-	1,000,000
Andrew Hill	-	1,333,333	666,666	666,667	-	-	-	2,666,666
Peter Bettonvil	-	-	-	-	-	-	-	-
Anthony Borger (i)	-	-	-	-	-	-	-	-
Gabriel Chiappini	-	-	-	-	-	-	-	-

~~(ii)~~ (i) Mr. Borger resigned on 6 July 2010

(ii) Mr. Chiappini resigned on 31 January 2011

MOBILARM LIMITED – FINANCIAL REPORT 2011

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Number of Share Options held by Directors and Specified Executives:

				Balance 30 June 2011
	Balance 1 July 2010					Not Vested	Balance 30 June 2011
		Awarded	Exercised		Vested


Directors
Brenton Scott	-	-	-	-	-	-	-
Christian Lange	-	-	-	-	-	-	-
Rick Parish	-	-	-	-	-	-	-
Richard Allen	-	-	-	-	-	-	-

Specified Executives
Lindsay Lyon	-	-	-	-	-	-	-
Jorge Nigaglioni	-	-	-	-	-	-	-
Andrew Hill	-	-	-	-	-	-	-
Peter Bettonvil	-	300,000	-	300,000	100,000	200,000	300,000
Pat Cleary	-	300,000	-	300,000	100,000	200,000	300,000
Amanda Wilson	-	499,999	-	499,999	166,666	333,333	499,999

				Balance 30 June 2010
	Balance 1 July 2009					Not Vested	Balance 30 June 2010
		Awarded	Exercised		Vested


Directors
Brenton Scott	-	-	-	-	-	-	-
Christian Lange	-	-	-	-	-	-	-
Rick Parish	-	-	-	-	-	-	-
Richard Allen	-	-	-	-	-	-	-

Specified Executives
Lindsay Lyon	-	-	-	-	-	-	-
Jorge Nigaglioni	-	-	-	-	-	-	-
Andrew Hill	-	-	-	-	-	-	-
Peter Bettonvil	-	-	-	-	-	-	-
Pat Cleary	-	-	-	-	-	-	-
Amanda Wilson	-	-	-	-	-	-	-

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Other

Brenton Scott entered into a convertible loan agreement with the Group for $350,000. The loan carries an interest rate of 15% per annum and a borrowing fee of 2.5%. The conversion is at the option of the lender and converts into equity at 5 cents per ordinary share (7,000,000 shares). Richard Allen provided a $200,000 term loan to the Group. The loan carries an interest rate of 15% per annum if paid within 30 days and 18% if paid after 30 days. The loan also has a borrowing fee of $4,500. This loan was repaid on 25 July 2011.

22 SHARE-BASED PAYMENT PLANS

Recognised share-based payment expenses

The expense recognised for employee services received during the year is shown in the table below:

	2011 $	2010 $
Expense arising from equity-settled share- based payment transactions Expense arising from cash-settled share-based payment transactions Total expense arising from share-based payment transactions	428,923 - 428,923	1,363,888 -
		1,363,888

The share-based payment plans are described below. There have been no cancellations or modifications to any of the plans during 2011 and 2010.

Employee share option plan (ESOP)

Share options are granted to employees. The ESOP is designed to align participants' interests with those of shareholders by increasing the value of the Group's shares. Under the ESOP, the exercise price of the options is set at the market price of the shares on the date of grant. Options have been granted under the plan set out as indicated below:

Grant Date Expiry Date Exercise Price 22-Dec-2010 22-Dec-2015 $0.193(i) 20-Jan-2011 15-Oct-2015 $0.193(i) 09-Jun-2011 09-Jun-2016 $0.072 Balance at end of the year	Amount 2,725,000 83,333 500,000
	3,308,333

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(i) The original strike price for these options was $0.20. The terms of these employee options provide for the exercise price of the options to be adjusted in accordance with the formula set out in ASX Listing Rule 6.22.2 following an Entitlement Offer. The Company adjusted the strike price as part of the Entitlements Offer completed.

The Company uses a binomial model to calculate the value of options that it recognises in its financial statements. The Company used the following factors to value the options.

Grant Date 22-Dec-2010 20-Jan-2011 09-Jun-2011 20-Jan-2011 09-Jun-2011	Amount Exercise Price Share Price of the Underlying Equity Risk Free Interest Rate Expected Volatility Expected Life Value per Option 908,328 $0.200 $0.076 5.47% 90% 2.5 years $0.0248 908,334 $0.200 $0.076 5.56% 90% 2.5 years $0.0294 908,338 $0.200 $0.076 5.65% 90% 2.5 years $0.0335 83,333 $0.200 $0.076 5.47% 90% 2.5 years $0.0248 500,000 $0.072 $0.072 5.75% 90% 5 years $0.0509 3,308,333

The fair value of share options issued during the year is as follows:

Grant Date Amount Exercise Price 22-Dec-2010 908,328 $0.200 20-Jan-2011 908,334 $0.200 09-Jun-2011 908,338 $0.200 20-Jan-2011 83,333 $0.200 09-Jun-2011 500,000 $0.071 Weighted Average value	Value per Option $0.0248 $0.0294 $0.0335 $0.0248 $0.0509
	$0.0324

Performance share plan (PSP)

Performance shares are granted to senior executive to align the long term the participants to the long term interests of shareholders. The plan is milestone based with the milestones set out as indicated below:

Performance Shares	Performance Share Milestone	Expiry
Class A	ASX conditional listing	Two years from grant
Class B	$65 million market capitalisation	Three years from ASX listing
Class C	$100 million market capitalisation	Five years from ASX listing

When a participant ceases employment prior to the vesting of their share options or reaching the performance share milestone, the share options or performance shares are forfeited unless cessation of employment is due to termination initiated by the Group. In the event of a change of control the performance period end date will be brought forward to the date of the change of control and awards will vest subject to performance over this shortened period.

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The contractual life of each option is five years. The expiry date of Performance Shares are listed in the table above.

Summaries of shares granted under performance share plan arrangements:

The following table illustrates the number movements in performance shares issued during the year.

	2011 Number	2010 Number
Outstanding at the beginning of the year Granted during the year Forfeited during the year Exercised during the year Expired during the year Outstanding at the end of the year Convertible at the end of the year	- 13,000,000 - (6,666,666) - 6,333,334 -	- 13,000,000 - - - 13,000,000 -

*The Group converted the all 6,666,666 Performance Shares Class A to ordinary shares upon receipt of conditional listing on 25 August 2010.

The fair value of the Performance Shares Class A, B and C has been recognised at $0.16. The valuation was based on the price of the IPO of $0.20 and discounted 20% to account for the risk and the escrow period of two years. There are no dividends incorporated into the measurement of fair value and the Performance Shares have no other feature to affect the measurement of fair value.

Other share based payments

23 EMPLOYEE ENTITLEMENTS AND SUPERANNUATION COMMITMENTS

	2011 $	2010 $
Employee Entitlements The aggregate employee entitlement liability is comprised of : Accrued wages, salaries and on costs Provisions (current) Provisions ( non- current ) No. of Employees: 18 (2010: 16)	66,106 271,561 57,971 395,637	- 217,469 33,741
		251,210

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Superannuation Commitments

No specific superannuation fund has been established for staff. As per the requirements of Superannuation Legislation Amendment (Choice of Superannuation Funds) Act 2005, we provide our staff with full choice of fund.

The company contributes on behalf of the employees at the superannuation guarantee levels of employee's salaries and wages. The company does not contribute over and above these amounts other than contracted amounts under service contracts of relevant employees.

24 RELATED PARTY DISCLOSURES

(a) The following related party transactions occurred during the financial period:

Brenton Scott did not receive a salary but a chairman/director fee of $180,000 was paid to Jayden Investment Trust. Mr Scott provided a convertible loan agreement with the Group for $350,000. The loan carries an interest rate of 15% per annum and a borrowing fee of 2.5%. The conversion is at the option of the lender and converts into equity at 5 cents per ordinary share. Mr. Scott also received $31,550 in finder‘s fees for capital raising efforts. Any other transactions throughout the year relate to reimbursements for expenses incurred by Mr. Scott or his related entities on behalf of the Group.

Christian Lange earned director‘s fees of $30,000 during 2011, of which $22,500 were paid and $7,500 were accrued as of 30 June 2011. Mr. Lange resigned from the board as of 31 August 2011.

Rick Parish earned director‘s fees of $12,500 during 2011, of which $10,000 were paid and $2,500 were accrued as of 30 June 2011. Mr. Parish resigned from the board as of 30 November 2010.

Richard Allen earned chairman‘s fees of $50,000 during 2011, of which $18,750 were accrued as of 30 June 2011. Mr. Allen provided a $200,000 term loan to the Group. The loan carries an interest rate of 15% per annum if paid within 30 days and 18% if paid after 30 days. The loan also has a borrowing fee of $4,500. This loan was repaid on 25 July 2011.

Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

25 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The company's principal financial instruments comprise receivables, payables, bank loans, finance leases and hire purchase contracts, cash, short-term deposits and derivatives.

The company is exposed to financial risks which arise directly from its operations. The company has policies and measures in place to manage financial risks encountered by the business.

Primary responsibility for the identification of financial risks rests with the Board. The Board determines policies for the management of financial risks. It is the responsibility of the Chief Financial Officer and senior management to implement the policies set by the Board and for the constant day to day management of the Group's financial risks. The Board reviews these policies on a regular basis to ensure that they continue to address the risks faced by the company.

The main risks arising from the company's financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk. The company's policy to minimise risk from fluctuations in interest rates is to utilise fixed interest rates in its bank loans, finance leases and hire purchase contracts. Cash and short term deposits are exposed to floating interest rate risks.. Analysis is performed on customers' credit rating prior to signing contracts and analysis is performed regularly of credit exposures and aged debt to manage credit and liquidity risk.

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The policies in place for managing the financial risks encountered by the company are summarised below.

a) Risk Exposures and Responses

Interest rate risk

The company's exposure to variable interest rates is as follows

	2011 $	2010 $
Financial Assets Cash and cash equivalents	92,470 92,470	106,411
		106,411

The company's policy is to manage its exposure to movements in interest rates by fixing the interest rate on financial instruments, including bank loans, finance leases and hire purchase liabilities, where possible. In addition, the company utilises a number of financial institutions to obtain the best interest rate possible and to manage its risk. The company does not enter into interest rate hedges.

The following sensitivity analysis is based on the variable interest rate risk exposures in existence at the reporting date:

At 30 June 2011, if interest rates had moved, as illustrated in the table below, with all other variables held constant, post tax profit and other comprehensive income would have been affected as follows:

Judgements of reasonably possible movements relating to financial assets and liabilities of floating rates based on management‘s expectations:

	Post-Tax Profit	Higher/(Lower)	Equity Higher/(Lower)	Equity Higher/(Lower)
	Higher/	Higher/	Higher/	Higher/
	(Lower)	(Lower)	(Lower)	(Lower)
	2011	2010	2011	2010
	$	$	$	$
Financial Assets
+0.5% (50 basis points)	462	532	-	-
-0.5% (50 basis points)	(462)	(532)	-	-

The periodic effects are determined by relating the hypothetical changes in the floating interest rates to the balance of financial instruments at reporting date. It is assumed that the balance at the reporting date is representative for the year as a whole.

Foreign currency risk

As a result of operations internationally the company's Statement of Financial Position can be affected by movements in the various exchange rates.

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The company also has transactional currency exposures. Such exposure arises from sales or purchases in currencies other than the functional currency. The company's policy is to naturally manage foreign exchange exposure by contracting with customers to receive sales revenue in the currency that the expenses have been incurred.

At 30 June 2011, the company had the following exposure to foreign currency

	2011 $	2010 $
Financial Assets Cash and cash equivalents Trade and other receivables Financial Liabilities Trade and other payables Net Exposure	46,981 895,972 942,953 913,045 913,045 29,908	422 10,335
		10,757
		190,616
		190,616

		(179,859)

The Group is primarily exposed to foreign currency risk against the US Dollar and the British Pound. The wholly owned subsidiary Marine Rescue Technologies Ltd operates in British Pounds. The Group has small exposures against the Euro. A sensitivity analysis has been performed based on the foreign currency risk exposures in existence at the Statement of Financial Position date and the impact on post tax profit is not material due to the short term nature of the position and the foreign exchange rate between the Australian and US dollars and the Australian dollar and British Pound since the Statement of Financial Position date and the date of this report.

	Post-Tax Profit	Higher/(Lower)	Equity	Higher/(Lower)
	Higher/	Higher/	Higher/	Higher/
	(Lower)	(Lower)	(Lower)	(Lower)
	2011	2010	2011	2010
	$	$	$	$
Net Exposure
5% increase in FX rate	1,424	8,565	-	-
5% decrease in FX rate	(1,574)	9,466	-	-

Credit risk

The company trades only with recognised, creditworthy third parties. It is the company's policy that all customers who wish to trade on credit terms are subject to credit verification procedures. Publicly available credit information from recognised providers is utilised for this purpose where available.

In addition, receivable balances are monitored on an ongoing basis with the result that the company's exposure to bad debts is not significant.

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The Group has been exposed to credit risk as the top four customers accounted for 38% (2010: 76%) The Group has commenced selling its products and aims to minimise concentrations of credit risk in relation to accounts receivable by undertaking transactions with a large number of customers within the resources, energy and infrastructure industries.

For transactions that are not denominated in the functional currency of the relevant operating unit, the company does not offer credit terms without the specific approval of the Chief Financial Officer.

With respect to credit risk arising from the other financial assets of the company, which comprises cash and cash equivalents, the company's exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. Since the company only trades with recognised third parties, there is no requirement for collateral.

Liquidity risk

The Group objective is to manage the liquidity of the business by monitoring project cash flows and through the use of financing facilities. The company currently utilises financing facilities in the form of bank loans and hire purchase liabilities. The liquidity of the company is managed by the company's Finance and Accounting department.

The table below reflects all contractually fixed pay-offs, repayments and interest resulting from financial liabilities as of 30 June 2011.

The remaining contractual maturities of the company's financial liabilities are:

	6 months or less $	6 months to 1 year $	1 year to 5 years $	Total Contractual Cash Flow $	Total Carrying Amount $
					2,057,377 1,232,945 33,684
					3,324,006
					576,287 - 9,081

Contingent consideration has not been included in the table as it will be settled in shares.

Equity price risk

Equity price risk arises from the Group‘s contingent consideration payable as the fair value reported on the statement of financial position is impacted by the Group‘s share price on the Australian Stock Exchange.

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This has been measured based on the maximum number of shares to be issued at the Group‘s share price at the date of acquisition. Over the term of the contingent consideration, the amount will be fair valued at each balance date and the movement in fair value recorded through the statement of comprehensive income. For example, if the share price in the Group increases, the value of the contingent consideration will increase, resulting in an increase to the liability reported in the statement of financial position and expense in the statement of comprehensive income.

At 30 June 2011, the fair value of the contingent consideration was $799,628.

The table below discloses the sensitivities in relation to the impact of a share price movement on the valuation of the embedded derivative. The 3 cent sensitivity is based on a reasonably possible change over a financial year using an observed range of the actual historical share prices of the Group since its listing date.

	Post-Tax Profit	Higher/(Lower)	Equity	Higher/(Lower)
	Higher/	Higher/	Higher/	Higher/
	(Lower)	(Lower)	(Lower)	(Lower)
	2011	2010	2011	2010
	$	$	$	$
Net Exposure
3 cent increase in share price	342,698	-	-	-
3 cent decrease in share price	(342,698)	-	-	-

Fair values

The Group‘s contingent consideration is recorded at its fair value, using the Level 2 basis as described in the Fair Value Hierarchy below.

The Fair Value Hierarchy assigns rankings to the level of judgment which is applied in deriving inputs for valuation techniques used to measure fair value. The three levels of the Fair Value Hierarchy are as follows:

Level 1 is the preferred input for valuation and reflects unadjusted quoted prices in active markets for identical assets or liabilities which the economic entity can access at the end of the reporting period. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm's length basis.

Level 2 is the valuation of assets and liabilities either directly or indirectly based upon market observables other than quoted prices. For example: financial assets with fair values based on broker quotes; investments in private equity funds with fair values obtained via fund managers; and assets that are valued using the economic entities' own models whereby the majority of assumptions are market observable.

Level 3 relates to inputs that are unobservable. Unobservable inputs means that fair values are determined in whole or in part using a valuation technique (model) based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

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26 BUSINESS COMBINATIONS

Acquisition of Marine Rescue Technologies Ltd

On 9 June 2011, Mobilarm Limited acquired Marine Rescue Technologies Ltd (MRT), as they are a leader in the design and manufacture of man overboard technology in Europe. Mobilarm acquired 100% of the issued capital of MRT for GBP £1,723,000 (approximately AUD $2,653,790).The purchase price was split into an initial cash payment of GBP £1,189,000 (approximately AUD $1,831,316) and a contingent consideration initially fair valued at GBP £534,000 (approximately AUD $822,475). The contingent consideration will be granted via the issue of up to 11,423,261 ordinary shares subject to the following:

75% of the maximum number of shares will be issued if 2012 gross revenue achieved is
GBP£1,600,000 (approximately AUD $2,464,000), and
25% of the maximum number of shares will be issued if 2013 gross revenue achieved is
GBP£2,000,000 (approximately AUD $3,080,000).
Any excess over the target in each year can be applied to a shortfall in the other year.
Any shortfall against the target is a reduction in the number of shares to be issued. The minimum
target needed to earn any deferred shares is approximately GBP£3,066,000 (approximately AUD $4,722,000).

The foreign exchange rate as at 9 June 2011 was $1.5402 for 1 GBP.

The fair value of assets acquired and liabilities assumed are disclosed at their provisional fair value at acquisition date. The initial accounting for the combination is incomplete due to the proximity of the transaction to the year-end reporting date.

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Marine Rescue Technologies Limited

ASSETS Cash assets Trade and other receivables Inventories Plant and equipment Intangible assets Other assets TOTAL ASSETS LIABILITIES Trade and other payables Tax liabilities Intercompany account TOTAL CURRENT LIABILITIES Provisional fair value of net assets acquired Goodwill arising in transaction Cash compensation Deferred cash compensation Contingent consideration (current) Contingent consideration (non current)	Provisional fair value at acquisition date on acquisition $ 16,178 576,523 477,434 336,532 245,138 33,733 1,685,538 785,265 115,009 55,542 955,816 729,722 1,924,068 2,653,790 1,674,390 156,925 616,856 205,619 2,653,790	Carrying value $ 16,178 467,144 477,434 336,532 245,138 33,732
		1,576,159
		785,265 115,009 55,542
		955,816

From the date of acquisition on 9 June 2011, MRT has contributed revenue and a loss before tax (excluding corporate overheads) of $204,674 and $30,489, respectively. Mobilarm Limited wrote down the value of inventories subsequent to the acquisition date as the future benefit of the stock is beyond 12 months. The total impact of these adjustments was $111,038. If those adjustments were not made, MRT would have had a net profit before tax of $80,549 from the date of acquisition.

Had the acquisition of MRT occurred at the beginning of the reporting period, the consolidated statement of comprehensive income would have included revenue and loss of $3,170,965 and $3,632,920, respectively. The costs of acquisition have been expensed and are included in the consolidated statement of comprehensive income.

Included in the business acquired were receivables with a gross contractual and fair value of $576,523 resulting from trade sales with customers. Management expects these amounts to be collected in full and converted to cash consistent with customer terms, which call for the payment within 30 days of the initial sale.

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Management believes the goodwill reflects the synergies between Mobilarm and MRT. Management believes that it is probable that MRT will reach the deferred milestones and as such has recognised the liability for the contingent consideration as at the completion date. The fair value on initial recognition has been measured based on the maximum number of shares to be issued as at the date of acquisition valued at the quoted price of the Company‘s shares at the date of acquisition. The fair value of the contingent consideration was adjusted as at 30 June 2011 to reflect the current value of the Company‘s share price. The resulting fair value adjustment of $22,847 is recognised as other income and reduces the value of the contingent consideration to $799,628 (current portion: $599,721; non-current portion: $199,907).

The Group incurred $276,674 in costs from the acquisition. The costs are included in the Statement of Comprehensive Income as follows:

External consultants and contractors Legal fees Travel and accommodation Telephone and internet charges TOTAL COSTS Reconciliation of Goodwill Carrying amount at beginning of financial year Provisional goodwill recognised on business combination Carrying amount at end of financial year	Costs related to the acquisition $ 123,062 136,435 17,114 63
	276,674
	$ - 1,924,068
	1,924,068

27 CONTINGENT LIABILITIES

As at reporting date there were no contingent liabilities.

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28 SUBSEQUENT EVENTS

i) The Company completed its shortfall offer related to its Entitlements Offer for $1,815,420 on 25 July 2011. The Group issued 36,308,406 ordinary shares as part of this transaction. The Group also issued 15,000,000 share options as part of this transaction. The options have a three year expiry and the exercise price is as follows:


Date of Exercise	Exercise Price
Within 365 days of issue	$0.10
Within 366-730 days of issue	$0.15
Within 731-1095 days of issue	$0.20

ii) The Company also completed a private placement of 10,000,000 ordinary shares for $500,000 on 15 August 2011.

iii) The Company also issued 1,250,000 ordinary shares as part of its borrowing agreements for a total of $62,500. The transaction was completed on 1 July 2011.
iv) The Company also placed 5,000,000 shares at 5 cents each, to raise $ 250,000 in working capital as part of a private placement. The placement also included 2,500,000 options exercisable at 10 cents each within 2 years from the date of issue.
a. The placement is part of a placement of up to 40,000,000 shares at 5 cents each to raise up to $2,000,000 in working capital and a total of up to 20,000,000 options will be issued if the placement is fully subscribed. The options are exercisable at 10 cents each within 2 years from the date of issue.
b. Shareholder approval for the placement of the balance of up to 35,000,000 shares (and 17,500,000 options) will be sought at the upcoming Annual General Meeting of the Company. Participation in the proposed placement by Ken Gaunt and Brenton Scott, directors of the Company, will also be sought at the meeting. The Company has commitments for the full balance of 35,000,000 shares should it need to place these shares (and attaching options).
c. The placement will be made in progressive tranches on an as required basis. Based on the current business plan for the Company, the directors believe that a maximum of $ 2,000,000 in working capital will be required to carry the company through to the position where it is cash flow positive from operations in Australia and overseas.

Other than the transactions listed above, the Directors are not aware of any matter or circumstance that has significantly or may significantly affect the operations of the company or the results of those operations, or the state of affairs of the company in subsequent financial years.

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Independent auditor's report to the members of Mobilarm Limited

Report on the financial report

We have audited the accompanying financial report of Mobilarm Limited, which comprises the consolidated statement of financial position as at 30 June 2011, the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the company and the entities it controlled at the year's end or from time to time during the financial year.

Directors' responsibility for the financial report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements , that the financial statements comply with International Financial Reporting Standards .

Auditor's responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the entity's preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit we have complied with the independence requirements of the Corporations Act 2001 . We have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the directors’ report.

Liability limited by a scheme approved under Professional Standards Legislation

PM:MB:MOBILARM:007

Opinion

In our opinion:

a. the financial report of Mobilarm Limited is in accordance with the Corporations Act 2001 , including:
i giving a true and fair view of the consolidated entity's financial position as at 30 June 2011 and of its performance for the year ended on that date; and
ii complying with Australian Accounting Standards and the Corporations Regulations 2001 ; and
b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 2.

Inherent Uncertainty Regarding Continuation as a Going Concern

Without qualification to the audit opinion expressed above, attention is drawn to the following matter. As a result of matters described in Note 2 – Going Concern to the financial report, there is significant uncertainty whether the group will be able be able to pay its debts as and when they fall due and payable and realise its assets and extinguish its liabilities in the normal course of operations and at the amounts stated in the financial report. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the group not continue as a going concern.

Report on the remuneration report

We have audited the Remuneration Report included in directors' report for the year period ended 30 June 2011. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001 . Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Opinion

In our opinion, the Remuneration Report of Mobilarm Limited for the year ended 30 June 2011, complies with section 300A of the Corporations Act 2001 .

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Ernst & Young

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P McIver Partner Perth 30 September 2011

PM:MB:MOBILARM:007

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TOP 20 SHAREHOLDERS

Shareholder BLAZZED PL BOND STREET CUSTS LTD JAYDEN HLDGS PL JAYDEN INV PL CRUISERS YACHTS AUST PL ONA INV PL ASIANA PROPS LTD BOND STREET CUSTS LTD FMM AUST PL SCOTT KURTIS ADAM BRIDGELANE CAP PL PINE VALLEY ENTPS PL COLLINS RUSSELL NEIL GAUNTSWOOD PL HOWSON BRONTE COLLINS RUSSELL MCNEIL NOM PL SPC EQUITY PTNRS FUND HILL ANDREW HERNSTADT WILLIAM HENRY Top 20 Total	Ordinary Shares Held 20,788,835 15,682,286 14,608,018 9,231,158 7,000,000 4,800,000 3,984,365 3,940,496 3,933,333 3,500,000 3,000,000 2,784,314 2,752,776 2,500,000 2,416,666 2,380,952 2,065,525 2,000,000 1,999,999 1,868,888 111,237,611 193,581,712	% Ownership 10.7% 8.1% 7.5% 4.8% 3.6% 2.5% 2.1% 2.0% 2.0% 1.8% 1.5% 1.4% 1.4% 1.3% 1.2% 1.2% 1.1% 1.0% 1.0% 1.0%
		57.2%
		100.0%

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CORPORATE DIRECTORY

DIRECTORS

Mr. Richard Allen Independent Chairman Mr. Brenton Scott Executive Director Mr. Ken Gaunt Non Executive Director

COMPANY SECRETARY

Mr. David McArthur Company Secretary

KEY EXECUTIVES

Mr. Lindsay Lyon Chief Executive Officer Mr. Jorge Nigaglioni Chief Financial Officer

REGISTERED OFFICE

768 Canning Highway Applecross WA 6153

PRINCIPLE PLACE OF BUSINESS

768 Canning Highway Applecross WA 6153

CONTACT DETAILS

Web: www.mobilarm.com Tel: (08) 9315-3511 Fax: (08) 9315-3611

SHARE REGISTRY

Security Transfer Registrars Pty Ltd 770 Canning Highway Applecross WA 6153

LAWYERS TO THE COMPANY

Cowell Clarke

Level 5, 63 Pirie Street Adelaide SA 5000

AUDITORS

Ernst and Young 11 Mounts Bay Road Perth WA 6000

BANKERS

National Australia Bank

Mobilarm Limited ordinary shares are listed on the Australian Stock Exchange (ASX) under the ticker MBO.

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AI assistant

VINYL GROUP LTD — Annual Report 2011

66014_rns_2011-10-02_a2781c99-6487-4ff9-bc62-7037c2fb6bbd.pdf

MOBILARM LIMITED

REVIEW OF OPERATIONS

Defence

Offshore Oil & Gas

Commercial Marine

Government & Regulatory

Summary

Brenton Scott Managing Director

DIRECTORS’ REPORT

Directors

Mr Richard Allen

Mr Brenton Scott

Mr Lindsay Lyon (resigned as director on 31 August 2011)

Mr Christian Lange (resigned 31 August 2011)

Mr Rick Parish (resigned 30 November 2010)

Mr Robert Kenneth (Ken) Gaunt

Directors Meetings

Committee Membership

Interest in the shares of the Group and related corporations

Company Secretary

Mr. David McArthur

Principal Activities

Dividends

Operating Results for the Year

Operations of the Group

Financial Position of the Group

Business strategy for future financial years

Net Tangible Asset/(Liability)

Changes in the State Of Affairs

Likely Developments and Expected Results

Environmental Regulation and Performance

Directors' Benefits

Share Options and Unissued Shares

Indemnification and Insurance of Directors and Officers

Auditor’s Independence Declaration

Non-Audit Services

Significant events subsequent to balance date

Auditor's Independence Declaration to the Directors of Mobilarm Limited

DIRECTORS’ DECLARATION

REMUNERATION REPORT (AUDITED)

1 Individual key management personnel disclosures

Key Management Personnel

Directors

Executives

Other KMPs

2 Remuneration at a glance

Executive packages restructured during FY 2010 for realignment in FY 2011

Remuneration strategy under review

3 Board oversight of remuneration

Remuneration committee

Remuneration approval process

Remuneration strategy

Remuneration structure

4 Non-executive director remuneration arrangements

Remuneration policy

Structure

5 Executive remuneration arrangements

Remuneration levels and mix

Structure

Fixed remuneration

Variable remuneration — short-term incentive (STI)

Variable remuneration — long-term incentives (LTI)

LTI – Share Options

Structure

Performance measure to determine vesting

Termination and change of control provisions

LTI awards for 2011 financial year

LTI awards for 2010 financial year

6 Group performance and the link to remuneration

Group performance and its link to long-term incentives

7 Executive contractual arrangements

Chief Executive Officer

Other KMP

Table 1: Remuneration for the year ended 30 June 2011

Table 2: Remuneration for the year ended 30 June 2010

Table 3: Performance shares vested during the year

Table 4: Share options awarded and vested during the year

VINYL GROUP LTD Annual Report 2011