VINYL GROUP LTD — Interim / Quarterly Report 2014

Feb 27, 2014

Appendix 4D Preliminary final report

Rule 4.2A.3

Appendix 4D

Half-year report

Introduced 010/1/2003 Amended 17/12/10

Name of entity: Mobilarm Limited

ABN: 15 106 513 580

1. Reporting period (“current period”): Previous corresponding period

Half-year ended 31 December 2013 Half-year ended 31 December 2012

2. Results for announcement to the market

				31 December	31 December
				2013	2012
				$A’000	$A’000
2.1	Revenue	down	22% to	$2,209	$2,830
2.2	Loss from ordinary activities after	down	45% to	($330)	($227)
	tax attributable to members
2.3	Net loss for the period attributable	down	45% to	($227)	($227)
	to members

		Amount per	Franked amount
		share cents	per share cents
2.4	Dividends
	Final	nil	nil
	Interim	nil	nil

• 2.5 Record date for determining entitlement to dividends: N/A

• 2.6 Brief explanation of figures (if necessary):

• See chapter 19 for defined terms.

17/12/10 – Appendix 4D

Page 1

Appendix 4D Preliminary final report

3.	Net tangible assets
		31 December	31 December
		2013	2012
		$/cents	$/cents
	Net tangible asset backing per	$0.00	$0.00
	ordinary share

4. Details of entities over which control has been gained or lost

• 4.1 Name of the entity

N/A

• 4.2 Date of the gain or loss of control

N/A

• 4.3 Contribution to the reporting entity’s profit (where applicable)

N/A

5. Dividends

Amount per security Nil

Total dividends paid on all securities during the financial year

Nil

• See chapter 19 for defined terms.

17/12/10 – Appendix 4D

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Appendix 4D Preliminary final report

7. Auditor’s review report

Note: The audit report or review must be provided as part of the report.

For all entities, if the accounts are subject to audit dispute or qualification, a description of the dispute or qualification.

This report is based on accounts to which one of the following applies:

� 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.

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Sign here: Date: 28 February 2014 Director Print name: Ken Gaunt

• See chapter 19 for defined terms.

17/12/10 – Appendix 4D

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REVIEW OF OPERATIONS

Mobilarm Limited (“the Company”) and its consolidated entities (“the Group”) had a milestone half year that should enable it to achieve its growth and path to long term profitability. These milestone include:

• The launch of the Group’s premier next generation man-overboard solutions. The sMRT AU10 replaces the AU9 family of products, adding AIS to its capabilities to enhance the rescue of survivors. The sMRT V100 also adds AIS to its capabilities, as well as complying with the stringent RTCM standard. These new standards are a key as various countries and regions are adopting the RTCM standard or are looking to establish modifications of it in their region. These standards are very comprehensive to make sure solutions not only deliver the best chance of rescue, but also work in the best manner with existing infrastructure.

• The Group entered the PFD market with its own brand of sMRT Jacket. The PFD was designed to work with the sMRT AU10 and sMRT V100 giving the user the best combination of floatation, detection and tracking available.

• The Company has launched its sMRT Rental program to give customers the flexibility to roll out their safety requirements. The sMRT Rental program is comprehensive, including annual service to ensure that your device is operating against our high standards and making sure you have the latest enhancements during the life of your rental. This was key as we signed approximately $1,500,000 in rentals during the second quarter.

• MRT have introduced mandatory annual recertification on all of our products which ensures that all equipment is certified for use at all times. This has been exceptionally well received by both customers and regulators as a progressive and responsible safety initiative. We have commitment for many units under service agreements and this is growing on a daily basis.

These changes allowed us to have a strong first half, with orders of $3,826,831. Our revenue for the period was only $2,205,147 as we recognise the revenue of the rentals over the life of the rental. Our goal is to grow both our purchase order book and our rental order book, and our annual service book thus growing our total business and securing cash flows for future periods.

We are very excited about the coming half and look forward to delivering strong results in the periods ahead.

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Ken Gaunt Chief Executive Officer

Perth, Western Australia 28 February 2014

MOBILARM LIMITED – FINANCIAL REPORT HY 2013

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DIRECTORS’ REPORT

The Directors present their half year report of the Group, being Mobilarm Limited and it’s consolidated entities, for the half year ended 31 December 2013.

Directors

The directors of Mobilarm Limited in office at any time during the period and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

Sir Tim McClement - Chairman

Mr. Ken Gaunt - Chief Executive Officer

Mr. Jorge Nigaglioni - Chief Financial Officer

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

Principal Activities

The principal activities of the company during the half year were the development, manufacture, service and sale or rental of Man Overboard Safety Systems.

There were no other significant changes in the nature of the activities of the company during the half year.

Dividends

No dividends were paid or declared for the half year.

MOBILARM LIMITED – FINANCIAL REPORT HY 2013

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Operations of the Company

The Group received orders of $3,826,831 in the half year ended 31 December 2013 (2012: $2,991,510), a 28% increase. This is the first period in which the Group has recorded rentals as part of its results. The orders were $2,019,552 on direct purchases and $1,807,279 on rentals. The Company was able to realise revenues of $2,205,147 in the period as compared to $2,830,590 in the half year ended 31 December 2012, a decrease of 22%. The Company does however have $1,790,665 in rentals to recognise as revenue

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over the next 62 months. The loss of the company after providing for income tax for the half year ending 31 December 2013 was $330,290 (2012: Loss of $226,788). The increase in the loss was due to the impact of starting the rental model which shifted some short term purchases to longer term rentals.

The Company’s operating expenses decreased to $2,170,344 in the half year ended 31 December 2013 as compared to $1,903,946 in the half year ended 31 December 2012, an increase of 14%. The increase came from increases in our sales team and an increased capacity for service in our Beverley facility.

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Financial Position of the Company

The Company ended December 2013 with net assets of $4,365,214, compared to net assets of $3,314,940 at June 2013. The improvement in financial condition is mostly due to the entitlements issue that the Group used to build-up of inventory to satisfy our rental program.

On the asset side, the Company has increased its current assets by $682,133 from June 2013 to December 2013, mostly due to the aforementioned Entitlements offer and subsequent rental inventory build up. Noncurrent assets increased by $404,210 due to continued development expenditure of our next generation sMRT products and the ownership of products under rental agreements.

Business strategy for future financial years

The Company will continue to pursue its growth strategy of becoming the world’s largest provider of Man Overboard solutions and emergency beacons. The Company plans to increase market share through organic growth during the next financial year.

Further information on likely developments in the operations of the Company 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 Company.

MOBILARM LIMITED – FINANCIAL REPORT HY 2013

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Net Tangible Asset

The Company had a net tangible asset of $1,052,922 (December 2012: $1,132,950).The net tangible asset backing per weighted average share is $0.00 (December 2012: $0.00).

Changes in the State Of Affairs

There were no changes to the state of affairs of the company.

Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

The auditor’s independence declaration is set out on page 5 and forms part of the directors’ report for the half year ended 31 December 2013.

Significant events subsequent to balance date

• The Company entered into a convertible note agreement for the excess proceeds from the sale of short term securities held by the Company. The short term securities are a security against a debt of $421,929 to the Company. The value of the short term securities as of the 25[th] of February was $1,092,000, or $670,071 over the value of the debt recognised by the Company. The final realised value is to be determined at the time of the sale. The convertible note expires on the 7[th] of March 2015 and carries an interest rate of 6.0%. The note is convertible by the noteholder upon giving the Company thirty days notice at the lower of $0.04 per share or the price of any new Entitlements Issue. The note can be converted by the Company at the expiration date at a price that equals 80% of the trailing 30 day VWAP at the time of expiry.

Other than the event stated above, no other events or circumstances have arisen that would require disclosure in the financial report.

Signed in accordance with a resolution of the Directors.

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Ken Gaunt Chief Executive Officer Perth, Western Australia 28 February 2014

MOBILARM LIMITED – FINANCIAL REPORT HY 2013

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MOBILARM LIMITED ACN 106 513 580

AUDITOR’S INDEPENDENCE DECLARATION UNDER S 307C OF THE CORPORATION ACT 2001 TO THE DIRECTORS OF MOBILARM LIMITED

• 31 December 2013 there has been no contraventions of;

• a. the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and

• b. any applicable code of professional conduct in relation to the review.

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JOHN DORAZIO FCA For and on behalf of Walker Wayland Audit (WA) Pty Ltd Chartered Accountants Level 2, 129 Melville Parade COMO WA 6152

Dated this 28[th] day of February 2014

www.walkerwaylandwa.com.au Tel: +61 8 9364 9988 Liability limited by a scheme approved info@ww-wa.com.au Fax: +61 8 9364 9922 under Professional Standards Legislation.

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DIRECTORS’ DECLARATION

In the opinion of the directors of Mobilarm Limited (“the Company”):

• (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 financial position of the consolidated entity as at 31 December 2013 and the performance for the half year ended on that date; and

• (ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and

• (b) Subject to the matter disclosed in Note 2 to the financial statements, there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Signed in accordance with a resolution of the Directors

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Ken Gaunt Director

Perth, Western Australia 28 February 2014

MOBILARM LIMITED – FINANCIAL REPORT HY 2013

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STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE HALF YEAR ENDED 31 DECEMBER 2013

	Consolidated 31 December 2013 31 December 2012 $ $	Consolidated 31 December 2013 31 December 2012 $ $
Revenue Sale of goods Interest Rental income Changes in inventories of finished goods and work in progress Raw materials and consumables purchased Employee benefits Share based compensation expense Depreciation and amortisation Advertising Accountancy Audit and tax 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 Rates & land taxes Repairs and maintenance Foreign exchange loss/(gain) Other expenses Loss before income tax Income tax expense/(benefit) Loss for the period after tax expense	2,188,533 3,975 16,614 2,209,122 389,760 - 1,012,763 90,564 179,617 27,757 16,725 26,100 (267) 129,846 75,387 190,380 (3,103) 2,720 47,689 40,491 41,025 65,238 43,500 83,738 35,466 25,678 (232,381) 250,719 (330,290) - (330,290)	2,830,410 8,207 180
		2,838,797
		869,440 4,521 953,740 (6,967) 183,604 19,067 6,553 47,186 (6,497) 143,283 27,934 107,241 90 12,040 48,400 47,843 42,217 56,170 30,387 79,263 22,423 15,353 105,617 256,677
		(226,788) -
		(226,788)

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STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME (CONTINUED) FOR THE HALF YEAR ENDED 31 DECEMBER 2013

	31 December 2013 $	31 December 2012 $
Loss for the period brought forward Other comprehensive income Total comprehensive loss for the period Basic earnings/(loss) per share (cents per share) Diluted earnings/(loss) per share (cents per share)	(330,290) - (330,290) (0.00) (0.00)	(226,788) -
		(226,788)
		(0.00)
		(0.00)

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

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STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2013

Note	Consolidated 31 December 2013 30 June 2013 $ $	Consolidated 31 December 2013 30 June 2013 $ $
CURRENT ASSETS Cash and cash equivalents Restricted cash Short-term investments Trade and other receivables 3 Inventories Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Plant and equipment Intangible assets and goodwill 4 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 5 Deferred revenue 5 Interest bearing loans and borrowings 6 Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Provisions Interest Bearing loans and borrowings 6 TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 7 Accumulated Losses 8 Reserves 9 TOTAL EQUITY	556,117 48,217 421,939 661,635 1,011,678 172,171 2,871,757 409,517 3,312,292 3,721,809 6,593,566 1,101,529 169,224 719,664 198,977 2,189,394 26,878 12,080 38,958 2,228,352 4,365,214 29,085,628 (25,140,832) 420,418 4,365,214	589,072 48,217 - 981,729 482,739 105,867
		2,207,624
		229,167 3,088,432
		3,317,599
		5,525,223
		1,222,939 1,920 723,954 226,307
		2,175,120
		17,425 17,738
		35,163
		2,210,283
		3,314,940
		27,790,295 (24,810,542) 335,187
		3,314,940

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

MOBILARM LIMITED – FINANCIAL REPORT HY 2013

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STATEMENT OF CASH FLOWS

FOR THE HALF YEAR ENDED 31 DECEMBER 2013

	Consolidated 31 December 2013 31 December 2012 $ $	Consolidated 31 December 2013 31 December 2012 $ $
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Interest costs R&D tax rebate NET CASH FLOWS USED IN OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES Payments for plant and equipment Payment for research & development NET CASH FLOWS USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from share issues Costs of share issues NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH HELD CASH AT THE BEGINNING OF THE PERIOD CASH AT THE END OF THE PERIOD	2,556,754 (3,493,201) 3,895 (8,317) 319,423 (621,446) (40,753) (287,034) (327,787) 878,061 (10,000) 868,061 (81,172) 637,289 556,117	2,142,085 (3,324,533) 8,207 (5,148) 584,645
		(594,744)
		(7,578) (101,645)
		(109,223)
		- -
		-
		(703,967)
		1,091,190
		387,223

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

MOBILARM LIMITED – FINANCIAL REPORT HY 2013

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STATEMENT OF CHANGES IN EQUITY

FOR THE HALF YEAR ENDED 31 DECEMBER 2013

	Issued Capital $	Accumulated Losses $	Share Based Payment Reserve $	Foreign Currency Translation Reserve $	Total Equity $
At 1 July 2012 Net loss for the period Other comprehensive income Total comprehensive loss for the period Transactions with owners in their capacity as owners Issue of director options Forfeiture of Performance Shares Share based payments – Performance Shares Share based payments – Employee Stock Options As at 31 December 2012 At 1 July 2013 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 equity issue Share based payments – Performance Shares Rights Share based payments – Performance Shares Share based payments – Employee Stock Options As at 31 December 2013	27,710,729 - - - - (50,667) 10,667 - 27,670,729 27,790,295 - - - 1,300,000 (10,000) - 5,333 - 29,085,628	(23,512,777) (226,788) - (226,788) - - - - (23,739,565) (24,810,542) (330,290) - (330,290) - - - - - (25,140,832)	222,833 - - - 30,881 - - 2,153 255,867 335,187 - - - - - 35,459 - 49,772 420,418	- - - - - - - - - - - - - - - - - - -
					4,420,785
					(226,788) -
					(226,788)
					30,881 (50,667) 10,667 2,153
					4,187,031
					3,314,940
					(330,290) -
					(330,290)
					1,300,000 (10,000) 35,459 5,333 49,772
					4,365,214

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

MOBILARM LIMITED – FINANCIAL REPORT HY 2013

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NOTES TO THE FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 DECEMBER 2013

1 CORPORATE INFORMATION

The financial report of Mobilarm Limited (the “Company”) and its consolidated entities (“the Group”) for the half year ended 31 December 2013 was authorised for issue in accordance with a resolution of directors on 28 February 2014.

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.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Preparation

This general purpose half year financial report for the half year ended 31 December 2013 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards.

The half year report does not include all of the notes normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the entity as the full financial report.

It is recommended that the half year financial report be read in conjunction with the annual financial report for the year ended 30 June 2013 and considered together with any public announcements made by the Company during the half year ended 31 December 2013 in accordance with the continuous disclosure obligations of the ASX listing rules.

The half year report financial report has been prepared on a historical cost basis.

For the purpose of preparing the half year financial report, the half year has been treated as a discrete reporting period.

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

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

There have been no new standards issued since 30 June 2013 that required implementation as of the beginning of the financial year that have not been by applied by the Company.

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(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 Group has incurred a net loss after tax for the half year ended 31 December 2013 of $330,290 (31 December 2012: $226,788) and experienced net cash outflows from operating activities of $621,496 (31 December 2012: $594,744). As at 31 December 2013, the Group had net assets of $4,365,214 (30 June 2013: $3,314,940). As at 31 December 2013, the Group had accumulated losses of $25,140,832 (30 June 2013: $24,810,542).

Notwithstanding the above, the ability of the Group to continue as a going concern is reliant on:

• increased cash flows from operations, including the growth of its rental portfolio; and/ or

• the raising of funds through a debt or equity issue.

The directors have reviewed the business outlook and plans of the Group and believe that both of the above can be achieved.

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 Group is unable to continue as a going concern.

3 TRADE AND OTHER RECEIVABLES

	Consolidated 31 December 2013 30 June 2013 $ $	Consolidated 31 December 2013 30 June 2013 $ $
Trade debtors Less: allowance for impairment provision Sub-Total Goods and services tax Value added tax Sundry receivables R & D Rebate Total	1,242,055 (603,666) 638,389 4,934 313 17,999 - 661,635	1,257,473 (603,255)
		654,218 6,780 - 22,370 298,361
		981,729

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4 INTANGIBLE ASSETS AND GOODWILL

As at 31 December 2013 Cost Accumulated Amortisation Net Carrying Amount As at 30 June 2013 Cost Accumulated Amortisation Net Carrying Amount Half year ended 31 December 2013 At 1 July 2013, net of accumulated amortisation Additions Amortisation At 31 December 2013, net of accumulated amortisation	Development Costs Intellectual Property Goodwill Patents & Licenses Total
	$ $ $ $ $ 3,697,124 923,919 1,924,068 67,235 6,612,346 (2,308,900) (923,919) - (67,235) (3,300,054)
	1,388,224 - 1,924,068 - 3,312,292
	$ $ $ $ $ 3,301,112 923,919 1,924,068 67,235 6,216,334 (2,136,748) (923,919) - (67,235) (3,127,902)
	1,164,364 - 1,924,068 - 3,088,432
	1,164,364 - 1,924,068 - 3,088,432 364,939 - - - 364,939 (141,079) - - - (141,079)
	1,388,224 - 1,924,068 - 3,312,292

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 5-10 years. If an impairment indicator 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 has been fully amortised.

Patents and licenses costs

Patents and licenses costs have been capitalised at cost. These patents 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 licenses which were being carried had no future economic benefit to the Group. Therefore, these amounts have been fully amortised.

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Goodwill

Goodwill has been capitalised at the amount of excess consideration paid over Marine Rescue Technology Limited’s (“MRT”) fair value of identifiable net assets acquired and liabilities assumed. The acquisition of MRT occurred on 9 June 2011.

5 TRADE AND OTHER PAYABLES

	Consolidated 31 December 2013 30 June 2013 $ $	Consolidated 31 December 2013 30 June 2013 $ $
Trade creditors Customer deposits Other creditors and accruals Deferred revenue Total	750,762 152,225 198,542 1,101,529 169,224 1,270,753	966,544 152,225 104,170
		1,222,939 1,920
		1,224,859

Customer deposits represent prepayments from customers for orders that have not shipped as of the reporting date.

6 INTEREST BEARING LOANS AND BORROWINGS

INTEREST BEARING LOANS AND BORROWINGS
	Consolidated 31 December 2013 30 June 2013 $ $
CURRENT Credit facility Finance Leases Total NON-CURRENT Finance Leases Total	720,989 (1,325) 719,664 31 December 2013 $ 12,080 12,080	720,989 2,965
		723,954
		30 June 2013 $ 17,738
		17,738

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7 CONTRIBUTED EQUITY

7 CONTRIBUTED EQUITY
	31 December 2013 $		30 June 2013 $ 27,623,480 166,815 27,790,295 $
Issued and paid up capital 332,060,681 (30 June – 299,560,681) ordinary shares fully paid. 333,334 (30 June – 333,334) performance shares	29,039,406 46,222 29,085,628 No. of shares
Reconciliation of Contributed Equity Opening balance at 1 July 2012 Issue of ordinary shares Closing balance at 31 December 2012 Opening balance at 1 January 2013 Issue of deferred ordinary share compensation from MRT acquisition Closing balance at 30 June 2013 Opening balance at 1 July 2013 Issue of ordinary shares (1) Performance shares class B Cost of share issue Closing balance at 31 December 2013	296,704,866 -	-	27,509,247 -
	296,704,866		27,509,247
	296,704,866 2,855,815		27,509,247 114,233
	299,560,681		27,623,480
	299,560,681 32,500,000 - -		27,623,480 1,300,000 125,927 (10,000)
	332,060,681		29,039,406

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.

(1) The Company completed an entitlements issue in September 2013 for 32,500,000 ordinary shares at a price of $0.04 per share.

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7 CONTRIBUTED EQUITY (continued)

7 CONTRIBUTED EQUITY (continued)
	31 December 2013 Number $		30 June 2013 Number $
Performance Shares Movement in performance shares class C on issue Balance at beginning of period Share based payment expense for the period Forfeiture of shares during the year Balance at end of the period	333,334 - - 333,334	$40,888 5,333 - $46,221	833,334 - (500,000) 333,334	$75,555 16,000 (50,667)
				$40,888

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. 500,000 Performance shares class C were forfeited during the period as the employees did not meet the service condition as part of the grant due to their departure from the Group. The Group offset $50,667 of previously expensed share based payments as part of the forfeiture.

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8 ACCUMULATED LOSSES

ACCUMULATED LOSSES
	31 December 2013 $	30 June 2013 $
Accumulated losses at the beginning of the financial period Net loss for the year Accumulated losses at the end of the financial period	(24,810,542) (330,290) (25,140,832)	(23,512,777) (1,297,765)
		(24,810,542)

9 RESERVES

Share based payment reserve Balance at the beginning of the financial year Issuance and amortisation of performance share rights Issuance and amortisation of share options issued Balance at the end of the financial year December 2013 Options Number Stock options Performance share rights Reserves	Share based payment reserve Balance at the beginning of the financial year Issuance and amortisation of performance share rights Issuance and amortisation of share options issued Balance at the end of the financial year December 2013 Options Number Stock options Performance share rights Reserves		31 December 2013 $ 31 December 2013 $ 355,410 65,008 420,418	31 December 2013 $ 31 December 2013 $ 355,410 65,008 420,418	31 December 2013 $ 31 December 2013 $ 355,410 65,008 420,418	31 December 2013 $ 31 December 2013 $ 355,410 65,008 420,418
			335,187 35,459 49,772 420,418 June 2013 $ Number
			$
Movement in options on issue Balance at beginning of year Options issued – Employee Stock Option Plan Options cancelled – Employee Stock Option Plan Options issued – Directors Compensation Options cancelled – Capital Raising Balance at end of the year Performance share rights	71,345,471 - - - (23,166,651) 48,178,820 December 2013 Number		305,638 - - 49,772 - 355,410 $	44,006,314 - (883,330) 31,670,487 (3,448,000) 71,345,471 June 2013 Number		222,833 2,152 - 80,653 -
						305,638
						$
Movement in options on issue Balance at beginning of year Share rights issue Balance at end of the year	11,000,000 - 11,000,000		29,549 35,459 65,008	- 11,000,000 11,000,000		- 29,549
						29,549

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10 COMMITMENTS AND CONTINGENCIES

Operating lease commitments

The Company 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 31 December are as follows:

	31 December 2013 $	30 June 2013 $
Within one year After one year but not more than five years More than five years	283,736 642,309 539,006 1,465,051	239,020 394,055 309,355
		942,430

The Company increased its premises and associated lease agreement in Beverley, UK. The lease agreement is for a term of 10 years, with an option to exit after five years in exchange for a two year lease fee. The lease has rental payment of ₤25,333 per annum.

11 SEGMENT INFORMATION

The company operates solely in the development, manufacturing and sale of Man Overboard safety systems. The Company operates in two geographical locations being Australia and the United Kingdom. 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.

12 CONTINGENT LIABILITIES

As at reporting date there were no contingent liabilities.

13 RELATED PARTY TRANSACTIONS

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

Sir Tim McClement received director fees of $62,955. Any other transactions throughout the year relate to reimbursements for expenses incurred by Sir Tim McClement or his related entities on behalf of the Group.

Ken Gaunt did not receive a salary but a director fee of $120,000 was paid to Blazzed Pty Ltd. Any other transactions throughout the year relate to reimbursements for expenses incurred by Mr. Gaunt or his related entities on behalf of the Group. In addition, Mr. Gaunt received interest payments of $18,489 for the debt facility he provided the Group.

Jorge Nigaglioni received a salary of $90,000 for the six month period. Any other transactions throughout the period relate to reimbursements for expenses incurred by Mr. Nigaglioni or his related entities on behalf of the Group.

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

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14 SUBSEQUENT EVENTS

• The Company entered into a convertible note agreement for the excess proceeds from the sale of short term securities held by the Company. The short term securities are a security against a debt of $421,929 to the Company. The value of the short term securities as of the 25[th] of February was $1,092,000, or $670,071 over the value of the debt recognised by the Company. The final realised value is to be determined at the time of the sale. The convertible note expires on the 7[th] of March 2015 and carries an interest rate of 6.0%. The note is convertible by the noteholder upon giving the Company thirty days notice at the lower of $0.04 per share or the price of any new Entitlements Issue. The note can be converted by the Company at the expiration date at a price that equals 80% of the trailing 30 day VWAP at the time of expiry.

Other than the event stated above, no other events or circumstances have arisen that would require disclosure in the financial report.

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MOBILARM LIMITED ACN 106 513 580 INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF MOBILARM LIMITED

Report on the Half-year Financial Report

We have reviewed the accompanying half-year financial report of Mobilarm Limited, which comprises the consolidated statement of financial position as at 31 December 2013, the consolidated statement of profit and loss and other comprehensive income, the consolidated statement of changes in equity, and consolidated statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration.

Directors’ Responsibility for the Financial Report

The directors of Mobilarm Limited are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including Australian Accounting Interpretations) and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express a conclusion on the half-yearly financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410: Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including : giving a true and fair view of Mobilarm Limited’s financial position as at 31 December 2013 and its performance for the half-year ended on that date, and complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Mobilarm Limited, ASRE 2410 requires that we comply with ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 . We confirm that the independence declaration required by the Corporations Act 2001 , which has been given to the directors of Mobilarm Limited, would be in the same terms if provided to the directors as at the time of this auditor’s review report.

www.walkerwaylandwa.com.au Tel: +61 8 9364 9988 Liability limited by a scheme approved info@ww-wa.com.au Fax: +61 8 9364 9922 under Professional Standards Legislation.

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MOBILARM LIMITED ACN 106 513 580 INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF MOBILARM LIMITED

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Mobilarm Limited is not in accordance with the Corporations Act 2001 including:

• (i) giving a true and fair view of Mobilarm Limited’s financial position as at 31 December 2013 and of its performance for the half-year ended on that date; and

• (ii) complying with AASB 134: Interim Financial Reporting and the Corporations Regulations 2001.

Inherent Uncertainty Regarding Continuation as a Going Concern

Without qualification to the conclusion expressed above, attention is drawn to the following matter. As a result of matters described in Note 2(c) – Going Concern to the financial report, there is significant uncertainty whether the consolidated entity will 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 consolidated entity not continue as a going concern.

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JOHN DORAZIO FCA For and on behalf of Walker Wayland Audit (WA) Pty Ltd Chartered Accountants Level 2, 129 Melville Parade COMO WA 6152

Dated this 28th day of February 2014

www.walkerwaylandwa.com.au Tel: +61 8 9364 9988 Liability limited by a scheme approved info@ww-wa.com.au Fax: +61 8 9364 9922 under Professional Standards Legislation.

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CORPORATE DIRECTORY

DIRECTORS

Sir Tim McClement Chairman Mr. Jorge Nigaglioni Executive Director Mr. Ken Gaunt Executive Director

COMPANY SECRETARY

Mr. David McArthur Company Secretary

KEY EXECUTIVES

Mr. Ken Gaunt Chief Executive Officer Mr. Jorge Nigaglioni Chief Financial Officer

REGISTERED OFFICE

38 Guthrie Street Osborne Park WA 6017

PRINCIPLE PLACE OF BUSINESS

38 Guthrie Street Osborne Park WA 6017

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

Steinepreis Paganin Level 4, The Reads Building 16 Milligan Street Perth WA 6000

AUDITORS

Walker Wayland Audit (WA) Pty Ltd

Level 2, 129 Melville Parade Como WA 6152

BANKERS

National Australia Bank

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

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