VINYL GROUP LTD — Annual Report 2012

Aug 30, 2012

ASX ANNOUNCEMENT ASX AND MEDIA RELEASE CODE: MBO Date: 31 August 2012

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MBO swings to profit for last six months of FY2012

• Full year loss reduced by $0.238M from 31 December 2011 to 30 June 2012

• FY2012 revenues increased 481% over the previous year

• Significant restructuring during the 6 month period ended 30 June 2012

Perth, Western Australia : Global marine safety equipment provider, Mobilarm Limited (ASX: MBO) (“The Company”) today reported full year results for the year ended 30 June 2012. Mobilarm reported an overall increase in revenues to $5.5 million during the year, representing a 481% increase over the prior corresponding period. The Company decreased its operating loss by 65% to $1.475 million, including a profit of approximately $238,000 during the last six months.

The Company has been

focused on increasing its worldwide sales while significantly reducing its cost base since the January 2012.

Ken Gaunt, Mobilarm’s Chief Executive Officer, commented: “The directors and management set an aggressive plan to move the Company to profitability. The results for the last six months are a clear measure of the substantial changes that have occurred within the operation. We are focused on increasing our sales and achieving our goals. In order to keep growing, the Company will be launching two additional products in the next three months to expand the technology offerings in our man overboard portfolio.”

Mobilarm’s Chief Financial Officer, Jorge Nigaglioni, commented: “We considerably reduced our operating losses over the last six months. The results for the last six months included a significant amount of expenses relating to redundancies and other restructuring activities. These expenses will not be a part of the operations in our coming financial year and we will realise the full benefit of

TEL. +61 8 9315 3511 MOBILARM LIMITED (ABN 15 106 513 580)

those savings. We have, and continue to look at every facet of the operation to maximize our performance. We are focused on increasing our gross margins through improvements in our distribution network and supply chain. This has resulted in a stronger balance sheet position to assist our growth in 2013.”

---

Ken Gaunt Chief Executive Officer

Perth, Western Australia 31 August 2012

Further details

Ken Gaunt Email: keng@mobilarm.com Chief Executive Officer Tel.: +61 (0)417 961 770 Tel.: +44 (0)7432 526 599 www.mobilarm.com

Notes for editors

Headquartered in Perth, Western Australia, Mobilarm (ASX: MBO ) is one of the world’s leading suppliers of marine safety products.

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APPENDIX 4E

Full Year Report 30 June 2012

MOBILARM LIMITED

ACN 106 513 580

Results for announcement to the market

		June 2012	June 2012	June 2011
Financial Results	Movement	$		$
Revenue from ordinaryactivities	481%	5,469,184		941,701
Profit/(loss) from ordinary activities after tax attributable to members	65%	(1,474,638)		(4,094,956)
Netprofit/(loss)for theperiod attributable to members	63%	(1,474,638)		(4,094,956)
Dividends	Amount per OrdinarySecurity		Franked amount per security
2012 dividend	Nil		‐
2011 dividend	Nil		‐
Record date for determiningentitlements to interim dividends	N/A
**Net Tangible Asset/(Liability) Backing **	June 2012		June 2011
Net tangible asset/(liability) backing per ordinary security – cents per share	0.6		(0.2)

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MOBILARM LIMITED

PRELIMINARY STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2012

Note Revenue Sale of goods Interest Rental income Other income (10) Changes in inventories of finished goods and work in progress Raw materials and consumables purchased Employee benefits Share based compensation expense (5) Depreciation and amortisation Advertising Audit and tax Accountancy Freight and cartage External consultants and contractors Rental Travel and accommodation Allowance for doubtful debts Payroll tax Legal fees Telephone and internet charges Insurance Printing, postage and stationery Motor vehicles Finance costs Foreign exchange (loss)/gain Writedown of capitalised R&D costs Writedown of fixed assets Redundancy costs Provision for unused leased facilities Other expenses Loss before income tax Income tax benefit Loss after income tax from continuing operations	Mobilarm 2012 $ 5,473,269 22,681 19,466 5,515,416 336,086 (1,646,902) (103,378) (2,843,570) 283,497 (389,209) (9,179) (71,473) (68,620) (41,489) (391,116) (200,999) (343,096) 731 (104,267) (140,442) (61,010) (79,092) (111,903) (36,854) (230,644) (76,439) ‐ ‐ (275,503) (187,235) (734,602) (2,011,292) 536,654 (1,474,638)	Limited 2011 $ 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)

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Other comprehensive income Changes in value of available‐for‐sale investments, net of tax Total comprehensive loss for the period Basic earnings per share (cents per share) (6) Diluted earnings per share (cents per share) (6)	‐ (1,474,638) (0.6) (0.6)	‐
		(4,234,955)
		(2.7)
		(2.7)

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MOBILARM LIMITED

PRELIMINARY STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2012

Note CURRENT ASSETS Cash assets Restricted cash Trade and other receivables Inventories Prepayments TOTAL CURRENT ASSETS NON‐CURRENT ASSETS Plant and equipment Intangible assets (3) TOTAL NON‐CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Financial liability – Contingent Consideration (10) Other payable Interest bearing loans and borrowings (4) Provisions TOTAL CURRENT LIABILITIES NON‐CURRENT LIABILITIES Provisions Interest Bearing loans and borrowings (4) Financial liability – Contingent Consideration (10) Deferred tax liability TOTAL NON‐CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity (5) Accumulated Losses Reserves (5) TOTAL EQUITY	Mobilarm Limited 2012 2011 $ $ 1,091,190 92,470 265,174 201,087 1,398,518 3,526,744 293,587 589,291 93,770 44,899 3,142,239 4,454,491 320,717 340,375 2,959,544 2,923,028 3,280,261 3,263,403 6,422,500 7,717,894 1,447,757 2,018,000 114,233 599,721 ‐ 62,500 4,420 1,236,446 405,822 319,861 1,972,232 6,005,716 9,802 57,971 19,681 29,833 ‐ 199,907 ‐ 28,488 29,483 316,199 2,001,715 4,552,727 4,420,785 3,165,167 27,710,729 24,990,901 (23,512,777) (22,038,139) 222,833 212,405 4,420,785 3,165,167	Mobilarm Limited 2012 2011 $ $ 1,091,190 92,470 265,174 201,087 1,398,518 3,526,744 293,587 589,291 93,770 44,899 3,142,239 4,454,491 320,717 340,375 2,959,544 2,923,028 3,280,261 3,263,403 6,422,500 7,717,894 1,447,757 2,018,000 114,233 599,721 ‐ 62,500 4,420 1,236,446 405,822 319,861 1,972,232 6,005,716 9,802 57,971 19,681 29,833 ‐ 199,907 ‐ 28,488 29,483 316,199 2,001,715 4,552,727 4,420,785 3,165,167 27,710,729 24,990,901 (23,512,777) (22,038,139) 222,833 212,405 4,420,785 3,165,167
		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
		6,005,716
		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

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MOBILARM LIMITED

PRELIMINARY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2012

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 Cost of share issues Share based payments Ordinary Shares Share based payments Performance Shares Share based payments Convertible Note Share based payments – Stock Options Shares to be issued for Entitlements Offer As at 30 June 2011 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 Cost of share issues Conversion of convertible notes into ordinary shares Issue of deferred ordinary share compensation from MRT acquisition Share based payments Ordinary Shares Share based payments Performance Shares Forfeiture of Performance Shares Share based payments – Stock Options Forfeiture of Stock Options As at 30 June 2012	Issued Capital $ 18,488,563 ‐ ‐ ‐ 4,232,622 (98,699) 196,477 356,518 ‐ ‐ 1,815,420 24,990,901 ‐ ‐ 4,458,334 (208,345) 350,000 351,265 62,500 184,889 (478,815) ‐ ‐ 27,710,729	Accumulated Losses $ (17,803,184) (4,234,955) ‐ (4,234,955) ‐ ‐ ‐ ‐ ‐ ‐ ‐ (22,038,139) (1,474,638) (1,474,638) ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ (23,512,777)	Stock Option Reserve $ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 140,000 72,405 ‐ 212,405 ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ 22,549 (12,121) 222,834	Total Equity $ 685,379
				(4,234,955) ‐
				(4,234,955)
				4,232,622 (98,699) 196,477 356,518 140,000 72,405 1,815,420
				3,165,167
				(1,474,638)
				(1,474,638)
				4,458,334 (208,345) 350,000 351,265 62,500 184,889 (478,815) 22,549 (12,121)
				4,420,785

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MOBILARM LIMITED PRELIMINARY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2012

Note 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 CASH FLOWS FROM INVESTING ACTIVITIES Payments for plant and equipment Purchase of intangible assets Acquisition of business (10) Term Deposit NET CASH FLOWS USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings – related parties Proceeds from issue of term loan Repayment of borrowings Lease and hire purchase repayments Proceeds from share issues 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	2012 $ 5,876,388 (8,108,878) 22,681 (453,577) 576,205 21,412 (23,516) (2,089,285) (12,851) ‐ (156,925) (48,217) (217,993) ‐ ‐ (734,422) ‐ 4,248,765 (208,345) 3,305,998 998,720 92,470 1,091,190	2011 $ 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

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NOTES TO THE PRELIMINARY FINAL REPORT (UNAUDITED) FOR THE YEAR ENDED 30 JUNE 2012

1 CORPORATE INFORMATION

The financial report of Mobilarm Limited (the “Company”) for the year ended 30 June 2012 was authorised for issue in accordance with a resolution of directors on 31 August 2012.

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

The Company owns two subsidiary companies as follows:

Name	Country of Incorporation
Marine Rescue Technologies Ltd	United Kingdom
Mobilarm, Inc.	United States of America

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Preparation

The preliminary final report has been prepared in accordance with the Australian Securities Exchange Listing Rules as set out in Appendix 4E and in accordance with the measurement and recognition (but not disclosure) requirements of the Australian Accounting Standards, Corporations Act 2001 and other pronouncements of the Australian Accounting Standards.

As such, this preliminary final report does not include all the notes of the type included in an annual financial report and accordingly, should be read in conjunction with the annual report for the year ended 30 June 2011 and with any public announcement made by Mobilarm Limited during the reporting period in accordance with the disclosure requirements of the Corporations Act 2001.

The accounting policies and methods of computation are the same as those adopted in the most recent annual financial report.

Apart from the changes in accounting policies below, the accounting policies and methods of computation are the same as those adopted in the annual financial report for the year ended 30 June 2011.

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

(b) New and amending Accounting Standards and Interpretations

Since 1 July 2011, the Group has adopted all the amending Standards and Interpretations, mandatory for annual periods beginning on or after 1 July 2011 including:

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Reference	Title	Application date of standard	Application date for Group
AASB 124 (Revised)	The revised AASB 124_Related Party Disclosures (December 2009)_ simplifies the definition of a related party, clarifying its intended meaning and eliminating inconsistencies from the definition, including: (a) The definition now identifies a subsidiary and an associate with the same investor as related parties of each other (b) 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 (c) 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	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] 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 IFRS by the IASB.	1 January 2011	1 July 2011
AASB 2010‐4	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. Clarifies 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	1 July 2011

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Reference	Title	Application date of standard	Application date for Group
AASB 2010‐5	Amendments to Australian Accounting Standards [AASB 1, 3, 4, 5, 101, 107, 112, 118, 119, 121, 132, 133, 134, 137, 139, 140, 1023 & 1038 and Interpretations 112, 115, 127, 132 & 1042] This Standard makes numerous editorial amendments to a range of Australian Accounting Standards and Interpretations, including amendments to reflect changes made to the text of IFRS by the IASB. These amendments have no major impact on the requirements of the amended pronouncements.	1 January 2011	1 July 2011
AASB 1054	Australian Additional Disclosures This standard is as a consequence of phase 1 of the joint Trans‐ Tasman Convergence project of the AASB and FRSB. This standard, with AASB 2011‐1 relocates all Australian specific disclosures from other standards to one place and revises disclosures in the following areas: (a) Compliance with Australian Accounting Standards (b) The statutory basis or reporting framework for financial statements (c) Whether the entity is a for‐profit or not‐for‐profit entity (d) Whether the financial statements are general purpose or special purpose (e) Audit fees (f) Imputation credits	1 July 2011	1 July 2011
AASB 2010‐6	Amendments to Australian Accounting Standards – Disclosures on Transfers of Financial Assets [AASB 1 & AASB 7] The amendments increase the disclosure requirements for transactions involving transfers of financial assets but which are not derecognised and introduce new disclosures for assets that are derecognised but the entity continues to have a continuing exposure to the asset after the sale.	1 July 2011	1 July 2011
AASB 2011‐5	Amendments to Australian Accounting Standards – Extending Relief from Consolidation, the Equity Method and Proportionate Consolidation [AASB 127, AASB 128 & AASB 131] This Standard makes amendments to: ►AASB 127Consolidated and Separate Financial Statements ►AASB 128Investments in Associates ►AASB 131Interests in Joint Ventures to extend the circumstances in which an entity can obtain relief from consolidation, the equity method or proportionate consolidation, and relates primarily to those applying the reduced disclosure regime or not‐for‐profit entities.	1 July 2011	1 July 2011

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Reference	Title	Application date of standard	Application date for Group
AASB 1048	Interpretation of Standards AASB 1048 identifies the Australian Interpretations and classifies them into two groups: those that correspond to an IASB Interpretation and those that do not. Entities are required to apply each relevant Australian Interpretation in preparing financial statements that are within the scope of the Standard. The revised version of AASB 1048 updates the lists of Interpretations for new and amended Interpretations issued since the June 2010 version of AASB 1048.	1 July 2011	1 July 2011

Adoption of these Standards and Interpretations did not have any material effect on the financial position or performance of the Company.

The Company has not early adopted any standards or interpretations.

(c) 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 Company has incurred a net loss after tax for the year ended 30 June 2012 of $1,474,638 (2011: $4,234,956) and experienced net cash outflows from operating activities of $2,089,285 (2011: $3,144,164). As 30 June 2012, the Company had net assets of $4,420,785 (2011: $3,165,167).

Notwithstanding the above, the ability of the Company 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 issues.

The Directors have reviewed the business outlook and plans of the company and believe that the Company will achieve increased cash flows from operations to sustain its ability to continue as a going concern, which will also make the raising of funds more achievable if needed. The Company grew its revenues by 481% and has reduced its losses by 63% compared to the previous year following the successful integration of the Marine Rescue Technologies Ltd acquisition.

Should the entity not achieve the matters set out above, there is significant uncertainty whether the 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 Company is unable to continue as a going concern.

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3 INTANGIBLE ASSETS

INTANGIBLE ASSETS
Intangible assets net of amortisation Development Cost Goodwill Computer Software Incorporation Cost Intangible assets net of amortisation	June 2012 June 2011 $ $ 1,034,879 990,417 1,924,068 1,924,068 ‐ 7,383 597 1,160
	2,959,544 2,923,028

4 INTEREST BEARING LOANS AND BORROWINGS

INTEREST BEARING LOANS AND BORROWINGS
CURRENT Intangible assets net of amortisation Term debt (1) Term debt from related party (2) Term debt from related party (3) Convertible note from related party (4) Finance leases NON CURRENT Finance leases	June 2012 June 2011 $ $ ‐ 541,979 ‐ 121,115 ‐ 207,074 ‐ 362,777
	‐ 1,232,945
	4,420 3,501
	4,420 1,236,446
	19,681 29 833

The Company entered into various interest bearing loans for working capital purposes. The terms of each loan are described below.

• (1) The Company 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 Company per dollar borrowed (1,000,000 and 250,000, respectively). These loans were repaid on 25 July 2011.

• (2) The Company 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.

• (3) The Company 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.

• (4) The Company 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. This convertible note agreement was converted into 7,000,000 ordinary shares on 29 November 2011.

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5 CONTRIBUTED EQUITY

Ordinary shares (a) Ordinary shares to be issued under the Entitlements Offer Performance shares (b) Contributed equity (a) Ordinary Shares Movement in ordinary shares on issue Balance at beginning of year Consolidation of capital Issuance of equity Cost of share issues Issue of deferred ordinary share compensation from MRT acquisition Share based payments ‐ Ordinary Shares Conversion of Convertible Notes Conversion of performance shares class A Subtotal Shares to be issued for Entitlements Offer Balance at end of the year	June 2012 June 2011 $ $ 27,509,247 22,680,074 1,815,420 201,482 495,407 27,710,729 24,990,901 June 2012 June 2011 Number $ Number $ 193,581,712 24,495,494 134,108,744 17,283,008 ‐ ‐ ‐ ‐ 86,305,708 2,453,080 48,901,446 4,232,622 ‐ (208,345) ‐ (98,699) 8,567,446 356,518 ‐ ‐ 1,250,000 62,500 3,904,856 196,477 7,000,000 350,000 ‐ ‐ ‐ ‐ 6,666,666 1,066,666
	296,704,866 27,509,247 193,581,712 22,680,074
	‐ ‐ ‐ 1,815,420
	27,509,247 24,495,494

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.

(b) Performance Shares (i) Movement in Performance Shares Class A 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	June 2012 June 2011 Number $ Number $ ‐ ‐ 6,666,666 888,889 ‐ ‐ ‐ ‐ ‐ ‐ ‐ 177,777 ‐ ‐ ‐6,666,666 (1,066,666)
	‐ ‐ ‐ ‐

(ii) Movement in Performance Shares Class B Balance at beginning of year Share issue Forfeiture of shares during the year Share based payment expense for the year Balance at end of the year	June 2012 June 2011 Number $ Number $ 3,166,666 309,630 3,166,666 211,111 ‐ ‐ ‐ ‐ (2,333,333) (299,259) ‐ ‐ ‐ 115,556 ‐ 98,519
	833,333 125,927 3,166,666 309,630

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(iii) Movement in Performance Shares Class C Balance at beginning of year Share issue Forfeiture of shares during the year Share based payment expense for the year Balance at end of the year Total Performance Shares	June 2012 June 2011 Number $ Number $ 3,166,668 185,778 3,166,668 105,556 ‐ ‐ ‐ ‐ (2,333,334) (179,556) ‐ ‐ ‐ 69,333 ‐ 80,222
	833,334 75,555 3,166,668 185,778
	1,666,667 201,482 6,333,334 495,408

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

Performance class B shares convert to ordinary shares on a 1 for 1 basis upon the Company reaching a market capitalisation of $65 million dollars based on the five day weighted average share price on the ASX. The Company has amortised the Performance shares class B based upon the Company’s financial plans to reach that milestone. 2,333,333 Performance shares class B were forfeited during the year as the employees did not meet the service condition as part of the grant due to their departure from the Company. The Company offset $299,259 of previously expensed share based payments as part of the forfeiture.

Performance class C shares convert to ordinary shares on a 1 for 1 basis upon the Company reaching a market capitalisation of $100 million dollars based on the five day weighted average share price on the ASX. The Company has amortised the Performance shares class C based upon the Company’s financial plans to reach that milestone. 2,333,334 Performance shares class B were forfeited during the year as the employees did not meet the service condition as part of the grant due to their departure from the Company. The Company offset $179,556 of previously expensed share based payments as part of the forfeiture.

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(c) Options Movement in options on issue Balance at beginning of year (i) Options issued – Capital Raising (ii) Options issued – Capital Raising (iii) Options issued – Employee Stock Option Plan (iv) Options forfeited – Employee Stock Option Plan (iv) Options cancelled – Employee Stock Option Plan (iv) Subtotal Compensation recorded on issue of convertible loan to director Balance at end of the year	June 2012 June 2011 Number $ Number $ 9,924,333 72,405 3,448,000 ‐ 15,000,000 ‐ 3,168,000 ‐ 19,998,651 ‐ ‐ ‐ ‐ 22,549 3,308,333 72,405 (600,004) (12,121) ‐ ‐ (316,666)
	44,006,314 82,833 9,924,333 72,405
	140,000 140,000
	222,833 212,405

• (i) All options were issued as a free attaching option as part of the Company’s capital raises in 2011 and 2010 or as part of the employee stock option plan.

• (ii) The Company issued 15,000,000 share options on 28 July 2011 as part of its Entitlements Offer. The options have a three year expiry and the exercise price is as follows:

The options have a three yea	r expiry and the exercise
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

• (iii) The Company issued 19,998,651 share options during the year as part of its capital raising. The options have a three year expiry and the exercise price is $0.10.

• (iv) The outstanding 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 22‐Dec‐2010 4‐Jan‐2013 $0.193 22‐Dec‐2010 13‐Apr‐2013 $0.193* 22‐Dec‐2010 20‐Apr‐2013 $0.193 20‐Jan‐2011 15‐Oct‐2015 $0.193 09‐Jun‐2011 09‐Jun‐2016 $0.072 Balance at end of the year	Amount 925,000 633,332 116,666 133,332 83,333 500,000
	2,391,663

• 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 original expiry date for these options was 22‐Dec‐2015. The terms of these employee options provide for the expiry date to be extended to one year after the cessation of employment in the case of redundancy. The Company adjusted the expiry date as part of the redundancies completed.

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6 EARNINGS PER SHARE

EARNINGS PER SHARE
EARNINGS PER SHARE Weighted average number of ordinary shares outstanding during the year used in the calculation of basic earnings per share Weighted average number of ordinary shares outstanding during the year used in the calculation of diluted earnings per share Basic earnings/(loss) per share (cents per share) Diluted earnings/(loss) per share (cents per share)	June 2012 June 2011 Number Number 260,204,642 155,392,998
	260,204,642 162,892,998
	(0.6) (2.7)
	(0.6) (2.7)

7 SEGMENT INFORMATION

The company operates solely in the development, manufacturing and sale of Man Overboard safety systems. The Company operates in three geographical locations being Australia, the United Kingdom and the United States of America. The Company manages its operations internally as one segment under the management of the CEO. The accounting policies applied for internal reports are consistent with the policies used to prepare the financial statements.

8 CONTINGENT LIABILITIES

As at reporting date there were no contingent liabilities.

9 SUBSEQUENT EVENTS

On the 8[th] of August 2012 the Board (excluding Mr Ken Gaunt who did not wish to make any recommendation) has proposed the issue of 29,670,487 share options to Director/Chief Executive Officer Ken Gaunt. Each option entitles the holder to exercise the option in exchange for one ordinary share in the Company. The options are exercisable at an exercise price of per option A$0.021. The Options vest when the Share Price is equal to or greater than A$0.10 (subject to adjustment under the terms of the grant). In addition, upon a Change of Control Event (i), the Options automatically vest.

• (i) Change of Control Event means:

• a. a person acquires voting power in at least 50.1% or more of the issued Shares;

• b. a person acquires the power to direct or cause the direction of management or policies of theCompany;

• c. a person directly or indirectly acquires all or substantially all of the business and assets of the Group; or

• d. (d) a person otherwise acquires or merges with the Group,

including by way of a takeover bid, scheme of arrangement, amalgamation, merger, capital reconstruction, consolidation, share acquisition, securities issuance, share buyback or repurchase, reverse takeover, dual listed company structure, establishment of a new holding entity for the Group or any other comparable transaction or arrangement.

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In association with the grant above, the Company has also proposed that the Company enter into an interest‐free loan agreement with Mr. Gaunt of an amount equal to the total Grant Price payable for the 29,670,487 Options, being a total loan amount of $267,034.

A general meeting of shareholders is scheduled for the 7[th] of September to vote on the above resolutions.

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.

10 BUSINESS COMBINATIONS

Acquisition of Marine Rescue Technologies Ltd

On 9 June 2011, Mobilarm Limited acquired Marine Rescue Technologies Ltd (MRT), 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 deferred share based compensation of GBP £534,000 (approximately AUD $822,475). The deferred share compensation 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 at the time of acquisition), 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 at the time of acquisition).

• 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 at the time of acquisition).

MRT achieved 2012 gross revenue of £2,724,138, exceeding its deferred compensation target of £1,600,000. The Company issued 8,567,446 ordinary shares in accordance with the terms of the Share Purchase Agreement.

The excess 2012 gross revenue of £1,124,138 can be applied to a shortfall in the 2013 year. The shortfall would only require 2013 gross revenue of £875,862 for the remaining deferred compensation of 2,855,815 ordinary shares to be issued.

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

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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 Fair value of identified assets Goodwill arising in transaction Cash paid Deferred share compensation (current) Deferred share compensation (non current)	Final 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 $1,831,315 $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

Had the acquisition of MRT occurred at the beginning of the 30 June 2011 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.

Management believes the goodwill reflects the synergies between Mobilarm and MRT. Management believes that it is probable that it MRT will reach the deferred milestone and as such has recognized the liability for the deferred compensation as at the completion date. The fair value of the deferred compensation was adjusted as at each reporting period to reflect the current value of the Company’s share price. The resulting fair value adjustment of $334,130 (2011: $22,847) is recognized as other income and reduces the value of the deferred compensation to $465,498, $351,265 which was issued and $114,233 which remains as a liability as at 30 June 2012.

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ANNUAL MEETING

The annual meeting will be held as follows: Place To be advised Date To be advised Time To be advised Approximate date the +annual report will be 31 October 2012 available

COMPLIANCE ESTATEMENT

• 1 This report has been prepared in accordance with AASB Standards, other AASB authoritative

pronouncements and Urgent Issues Group Consensus Views or other standards acceptable to ASX

(see note 12).

Identify other standards used

• 2 This report, and the +accounts upon which the report is based (if separate), use the same accounting policies.

• 3 This report does give a true and fair view of the matters disclosed

• 4 This report is based on +accounts to which one of the following applies.

(Tick one)

� The +accounts have been � The +accounts have been audited. subject to review.

� The[+] accounts are in the � The[+] accounts have not yet process of being audited or been audited or reviewed. subject to review.

• 5 The entity has formally constituted audit committee.

Sign here:

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Date: 31 August 2012

Print name: David McArthur Company Secretary