VINYL GROUP LTD — Interim / Quarterly Report 2018

Feb 27, 2018

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 2017 Half-year ended 31 December 2016

2. Results for announcement to the market

			31	December	December	31 December
				2017		2016
				$A’000		$A’000
2.1	Revenue	down	14% to	$2,043		$2,367
2.2	Loss from ordinary activities after	down	13% to	($645)		($742)
	tax attributable to members
2.3	Net loss for the period attributable	down	13% to	($645)		($742)
	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

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Appendix 4D Preliminary final report

3.	Net tangible assets
		31 December	31 December
		2017	2016
		$/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 þ 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 2018 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 busy first half to the year. We had exciting news on our man overboard operations, with renewed interest from the Military segment, led by the Canadian Defence Ministry. We have also been busy looking at improving shareholder value, which is why we announced at the beginning of February our entry into binding agreements to sell our man overboard business in order to acquire 100% of Jaxsta.

We have been monitoring Jaxsta for over two and a half years, even before we invested in May 2016. We are very excited with the progress that Jaxsta has had since our original investment and we believe this represents a great opportunity for our shareholders. The Jaxsta platform will be going live in April/May 2018 and we are very encouraged by the reception it has gathered ahead of the launch from industry heavyweights.

The man overboard operation will continue operating under our team until the sale is completed in April. We will continue to maximise the business until completion and we have the team in place to make a smooth transition.

We will complete these two transactions in the second half of 2018, at which point Jaxsta will become the main undertaking moving forward.

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Ken Gaunt Chief Executive Officer

Perth, Western Australia 28 February 2018

MOBILARM LIMITED – FINANCIAL REPORT HY 2018

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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 2017.

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 Group 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 Group during the half year.

Dividends

No dividends were paid or declared for the half year.

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Results for Announcement to the Market

Operations of the Group

The Group received orders of $2,452,345 in the half year ended 31 December 2017 (2015: $2,337,270), a 5% increase. The orders were $1,670,129 (2016: $1,226,779) on direct purchases and $216,611 (2016: $241,740) on rentals. The Group was able to realise revenues of $2,042,629 in the period as compared to $2,367,286 in the half year ended 31 December 2016, a decrease of 14%. Orders were up for the period but that included orders that will ship in the second half of 2018, leading to the decrease. The Group’s rental order book balance is currently $1,659,142 which will be recognised as revenue over the next 60 months. The Group had a loss of $644,689 before providing for income tax for the half year ending 31 December 2017 (2016: Loss of $680,940). The deterioration in operating income resulted from decreased revenues, however, the Company focused in decreasing operating expenses thus offsetting the drop in revenues. The loss of the Group after providing for income tax for the half year ending 31 December 2017 was $644,689 (2016: Loss of $742,399). The income tax expense was due to recognising income tax expense and a deferred tax liability on its operations in the United Kingdom.

The Group’s operating expenses decreased to $2,139,309 in the half year ended 31 December 2017 as compared to $2,506,010 in the half year ended 31 December 2016, an decrease of 15%. The decrease came from a reduction in a mix of operational expenses, particularly employee benefits and external consultant costs due to cost reductions..

Financial Position of the Group

The Group ended December 2017 with net assets of $3,872,843, compared to net assets of $4,279,811 at June 2017. The decrease in financial position is mostly due to reduction in cash and trade receivables from lowered sales levels.

On the asset side, the Group has decreased its current assets by $223,479 from June 2017 to December 2017, mostly due to lower revenues resulting in the reduction in trade receivables. Non-current assets increased by $946,526 due to the investment in the Jaxsta business, partially offset by the amortisation of rental assets during the year.

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 until it divests the operation later in 2018. The Group has continued to deliver to key customers and develop new solutions to expand its offering in the years to come. The Group plans to increase market share through organic growth during the next financial year. The Group will move in a new direction as it acquires Jaxsta Holdings Pty Ltd later in 2018.

The Group’s focus is on expanding its rental and service offerings, in conjunction with developing new products and solutions to customers. The Company is looking to introduce new products in the 2019 financial year.

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

The Group had a net tangible assets of $91,097 (December 2016: $390,597). The net tangible asset backing per weighted average share is $0.00 (December 2016: $0.00).

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Changes in the State Of Affairs

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

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

The auditor’s independence declaration for the half year ended 31 December 2016 has been received and can be found on page 5.

Significant events subsequent to balance date

No events other than those listed below have arisen that would require disclosure in the financial report.

On 1 February 2018, the Company announced it had entered into a binding heads of agreement (HOA) for the proposed acquisition of Jaxsta Holdings Pty Ltd ACN 612 656 372 (Jaxsta) (Acquisition). Under the terms of the agreement, subject to satisfaction or waiver of conditions precedent to the Acquisition, as consideration for the Acquisition of all of Jaxsta’s securities not currently held by it, the Company has agreed to issue upon completion of the Acquisition, an aggregate of 82,915,022 fully paid ordinary shares (Shares) in the capital of the Company (Consideration Shares) to Jaxsta’s existing shareholders, on a postconsolidation and pro-rata basis. The Company will make Jaxsta its primary undertaking and apply to reinstate its listing upon completion of all the necessary approvals and a capital raise of $5,000,000. The expected close date for the transaction is 30 April 2018.

On 1 February 2018, the Company also announced it had entered into a binding heads of agreement (HOA) for the proposed sale of its current primary undertaking Marine Rescue Technologies Ltd and its subsidiaries (MRT)/(Disposal) to Secure2Go Group Ltd ACN 612 127 867. Under the terms of the agreement, the Company will be paid $6,000,000 in consideration for MRT, payable via a $2,000,000 deposit at completion and a deferred balance of $4,000,000 to be paid within 24 months from completion. The expected close date for the transaction is 30 April 2018.

Signed in accordance with a resolution of the Directors.

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Ken Gaunt Chief Executive Officer Perth, Western Australia 28 February 2018

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

I declare that, to the best of my knowledge and belief, during the half-year ended 31 December 2017 there have been no contraventions of:

(i) the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and

(ii) any applicable code of professional conduct in relation to the review.

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WALKER WAYLAND AUDIT (WA) PTY LTD

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Richard Gregson CA

Director

Level 2, 129 Melville Parade, COMO WA 6152

Dated this 28th day of February 2018.

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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 2017 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(c) 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 2018

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CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE HALF YEAR ENDED 31 December 2017

	31 December 2017 $	31 December 2016 $
Revenue Sale of goods Portion of rentals recognised as revenue Cost of units sold Depreciation of units under rental Interest income 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 Legal fees Telephone and internet charges Insurance Printing, postage and stationery Motor vehicles Finance costs Property letting fees Rates & land taxes Information technology costs Foreign exchange loss/(gain) Other expenses Operating expenses Profit/(Loss) before income tax	1,378,732 663,897 2,042,629 430,549 117,995 548,544 535 535 850,118 188,042 140,195 6,579 17,411 55,214 59,129 29,238 100,266 155,257 (1,337) 87,590 16,806 50,898 10,767 14,894 189,474 29,639 10,972 54,328 (41,569) 115,398 2,139,309 (644,689)	1,786,750 580,536
		2,367,286
		522,178 21,634
		543,812
		1,596
		1,596
		939,971 203,436 165,403 5,215 18,381 28,183 56,316 125,332 95,891 179,808 (5,521) 52,899 29,759 42,509 13,472 44,508 123,951 3,214 37,896 65,777 110,523 169,087
		2,506,010
		(680,940)

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CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME (CONTINUED)

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

	31 December 2017 $	31 December 2016 $
Loss before income tax brought forward Income tax expense Loss from operations after income tax Other comprehensive income Foreign currency translation reserve movement Total comprehensive loss for the period Basic earnings/(loss) per share (cents per share) Diluted earnings/(loss) per share (cents per share)	(644,689) - (644,689) 49,679 (595,010) (0.00) (0.00)	(680,940) 61,459
		(742,399)
		(113,930)
		(856,329)
		(0.00)
		(0.00)

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 December 2017

Note	31 December 2017 $	30 June 2017 $
CURRENT ASSETS Cash and cash equivalents Trade and other receivables 3 Inventories Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Plant and equipment 4 Intangible assets and goodwill 5 Investment in other businesses 6 TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables 7 Interest bearing loans and borrowings 8 Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Provisions TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity 9 Accumulated Losses 10 Reserves 11 TOTAL EQUITY	381,532 779,313 1,897,252 1,539,250 4,597,347 776,643 2,334,958 1,500,000 4,611,601 9,208,948 1,282,062 3,907,703 93,128 5,282,893 53,212 53,212 5,336,105 3,872,843 30,601,809 (28,385,380) 1,656,414 3,872,843	742,743 1,062,831 1,623,394 1,391,858
		4,820,826
		804,305 2,439,333 1,500,000
		4,743,638
		9,564,464
		1,550,565 3,599,719 84,250
		5,234,534
		50,119
		50,119
		5,284,653
		4,279,811
		30,601,809 (27,740,691) 1,418,693
		4,279,811

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

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CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE HALF YEAR ENDED 31 December 2016

	31 December 2017 $	31 December 2016 $
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 Payments for shares in other business Loans to other business Payment for research & development NET CASH FLOWS USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings Repayment of borrowings NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES NET DECREASE IN CASH HELD CASH AT THE BEGINNING OF THE PERIOD CASH AT THE END OF THE PERIOD	2,309,185 (2,542,424) 535 (70,773) (22,172) (325,649) - - (235,562) - (235,562) 200,000 - 200,000 (361,211) 742,743 381,532	2,576,964 (2,736,270) 1,596 (95,558) 101,561
		(151,707)
		(1,220) (1,000,000) - (95,677)
		(1,096,897)
		1,425,000 (2,000,000)
		575,000
		(1,823,604) 2,374,023
		550,419

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

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE HALF YEAR ENDED 31 December 2017

	Issued Capital $	Accumulated Losses $	Share Based Payment Reserve $	Foreign Currency Translation Reserve $	Total Equity $
At 1 July 2016 Net loss for the period Other comprehensive loss Total comprehensive loss for the period Transactions with owners in their capacity as owners Share based payments – Performance Shares Rights Share based payments – Employee Stock Options As at 31 December 2016 At 1 July 2017 Net loss for the period Other comprehensive loss Total comprehensive loss for the period Transactions with owners in their capacity as owners Share based payments – Performance Shares Rights Share based payments – Employee Stock Options As at 31 December 2017	30,601,809 - - - - - 30,601,809 30,601,809 - - - - - 30,601,809	(26,810,634) (742,399) - (742,399) - - (27,553,033) (27,740,691) (644,689) - (644,689) - - (28,385,380)	1,249,277 - - - 51,128 152,307 1,452,712 1,645,821 - - - 35,735 152,307 1,833,863	(71,545) - (113,930) (113,930) - - (185,475) (227,128) - 49,679 49,679 - - (177,449)
					4,968,907
					(742,399) (113,930)
					(856,329)
					51,128 152,307
					4,316,013
					4,279,811
					(644,689) 49,679
					(595,010)
					35,735 152,307
					3,872,843

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

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE HALF YEAR ENDED 31 December 2017

1 CORPORATE INFORMATION

The financial report of Mobilarm Limited (the “Company”) and its consolidated entities (“the Group”) for the half-year ended 31 December 2017 was authorised for issue in accordance with a resolution of directors on 28 February 2018.

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

(a) Basis of Preparation

This general purpose half-year financial report for the half year ended 31 December 2017 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 2017 and considered together with any public announcements made by the Company during the half year ended 31 December 2017 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 2017 that required implementation as of the beginning of the financial year that have not been by applied by the Group.

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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 2017 of $644,689 (31 December 2016: $742,399) and experienced net cash outflows from operating activities of $325,649 (31 December 2016: $151,707). As at 31 December 2017, the Group had net assets of $3,872,843 (30 June 2017: $4,279,811). As at 31 December 2017, the Group had net a current liability position of $5,282,893 (30 June 2017: $5,234,534). As at 31 December 2016, the Group had accumulated losses of $28,385,380 (30 June 2016: $27,740,691).

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

• completing the sale of its main undertaking MRT and acquiring 100% of the ordinary shares of Jaxsta Holdings Ltd, both transaction are dependent on shareholder approval, such approval to be sought at a general meeting of shareholders in April 2018;

• the Jaxsta sale is also dependent on the completion fo the sale of MRT;

• increased cash flows from operations, including the growth of its rental and service 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 Group 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 2017 30 June 2017 $ $	Consolidated 31 December 2017 30 June 2017 $ $
Trade debtors Less: allowance for impairment provision Sub-Total Goods and services tax Value added tax R & D Rebate Total	704,957 (4,304) 700,653 34,038 44,622 - 779,313	968,717 (4,207)
		964,510 7,088 - 91,233
		1,062,831

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4 PLANT AND EQUIPMENT

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	Consolidated 31 December 2017 30 June 2017 $ $	Consolidated 31 December 2017 30 June 2017 $ $
Units under customer rental 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: Units under Customer Rental: - Carrying amount at beginning of the reporting period - Additions - Disposals - Impairment of units under rental - Depreciation - Carrying amount at end of the reporting period Plant and Equipment: - Carrying amount at beginning of the reporting period - Additions - Disposals - Impairment of plant and equipment - Depreciation - Carrying amount at end of the reporting period Motor Vehicles: - Carrying amount at beginning of the reporting period - Additions - Disposals - Depreciation - Carrying amount at end of the reporting period TOTAL PLANT AND EQUIPMENT	1,301,565 (703,613) 597,952 958,014 (779,721) 178,293 15,318 (14,920) 398 776,643 622,022 93,925 - (117,995) 597,952 181,712 20,848 - - (24,267) 178,293 571 - - (173) 398 776,643	1,192,959 (570,937)
		622,022
		927,529 (745,816)
		181,712
		14,975 (14,404)
		571
		804,305
		540,548 196,548 - (6,449) (108,625)
		622,022
		235,635 25,572 - (1,260) (78,235)
		181,712
		2,287 - (463) (1,254)
		571
		804,305

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5 INTANGIBLE ASSETS AND GOODWILL

As at 31 December 2017 Cost Accumulated Amortisation Net Carrying Amount As at 30 June 2017 Cost Accumulated Amortisation Net Carrying Amount Half year ended 31 December 2017 At 1 July 2017, net of accumulated amortisation Additions Amortisation At 31 December 2017, net of accumulated amortisation	Development Costs Intellectual Property Goodwill Computer Software Total
	$ $ $ $ $ 4,130,934 923,919 1,924,068 4,797 6,983,718 (3,720,904) (923,919) - (3,937) (4,648,760)
	410,030 - 1,924,068 860 2,334,958
	$ $ $ $ $ 4,062,958 991,153 1,924,068 4,690 6,982,869 (3,548,662) (991,153) - (3,720) (4,543,536)
	514,295 - 1,924,068 970 2,439,333
	514,295 - 1,924,068 970 2,439,333 11,350 - - 20 11,370 (115,615) - - (130) (115,745)
	410,030 - 1,924,068 860 2,334,959

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.

6 INVESTMENT IN OTHER BUSINESSES

	Consolidated 31 December 2017 30 June 2017 $ $	Consolidated 31 December 2017 30 June 2017 $ $
Investment in Jaxsta Enterprise Pty Ltd Total	1,500,000 1,500,000	1,500,000
		1,500,000

In May 2016, the Company made a $500,000 investment in Jaxsta Holdings Pty Ltd (Jaxsta) for a 3.33% equity position. Mobilarm will also have the right to invest a further $2,500,000 directly for a further 16.67% equity. The Company has since invested a further $1,000,000, increasing its equity position to 10.00%.

If the above investment is completed within 18 months, Mobilarm will have the right to buy a further 20% of Jaxsta from an existing Jaxsta shareholder and associate of Melanie Verheggen, a major shareholder of MBO, for $5,000,000 being $2,200,000 in cash and $2,800,000 in Mobilarm shares at a deemed price of $0.007, being 400,000,000 shares with a free attaching option for four years at an exercise price of $0.007. This right has an exercise window of 18 months after the initial investment is complete.

On 1 February 2018, the Company announced it will be acquiring 100% of the issued capital of Jaxsta. Please see not 16 for full details.

7 TRADE AND OTHER PAYABLES

	Consolidated 31 December 2017 30 June 2017 $ $	Consolidated 31 December 2017 30 June 2017 $ $
Trade creditors Customer deposits Current tax liabilities Other creditors and accruals Total	638,804 131,300 437,527 74,431 1,282,062	769,836 131,300 529,576 119,853
		1,550,565

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

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8 INTEREST BEARING LOANS AND BORROWINGS

INTEREST BEARING LOANS AND BORROWINGS
	Consolidated 31 December 2017 30 June 2017 $ $
CURRENT Convertible Notes (i) Convertible Note (iii) Finance Leases Total	1,915,902 1,974,527 3,890,429 17,274 3,907,703	1,858,361 1,738,994
		3,597,355 2,364
		3,599,719

• (i) The Company entered into a convertible note, with an interest rate of 6%. 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, currently $0.007 per share. 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. The Company expanded this note with a second tranche of $700,000 in March 2017. These convertible notes originally were set to expire on 7 November 2017, but will be converted to equity as part of the acquisition of Jaxsta detailed on note 16.

• (ii) The Company entered into new convertible note for up to a total of $2,000,000 as of 30 September 2016. These notes carry an interest rate of 12% and a conversion price of the lower of 4 cents or any future capital transaction during the term of the note. The notes expire on 30 September 2017, with an option to extend to 31 March 2018. The convertible notes are secured by the assets of the Company.

9 CONTRIBUTED EQUITY

9 CONTRIBUTED EQUITY
	31 December 2017 $	30 June 2017 $
Issued and paid up capital 493,119,559 (30 June – 493,119,559) ordinary shares fully paid.	30,601,809 30,601,809 No. of shares	30,601,809
		30,601,809
		$
Reconciliation of Contributed Equity Opening balance at 1 July 2016 Closing balance at 31 December 2016 Opening balance at 1 January 2017 Closing balance at 30 June 2017 Opening balance at 1 July 2017 Closing balance at 31 December 2017	493,119,559 490,119,559 493,119,559 493,119,559 493,119,559 493,119,559	30,601,809
		30,601,809
		30,601,809
		30,601,809
		30,601,809
		30,601,809

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.

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10 ACCUMULATED LOSSES

	31 December 2017 $	30 June 2017 $
Accumulated losses at the beginning of the financial period Net loss for the period Accumulated losses at the end of the financial period	(27,740,691) (644,689) (28,385,380)	(26,810,634) (930,057)
		(27,740,691)

11 RESERVES

	Share based payment Reserve Currency revaluation Reserve Reserves	Share based payment Reserve Currency revaluation Reserve Reserves			31 December 2017 $ 31 December 2017 $ 1,833,863 (177,449) 1,656,414	31 December 2017 $ 31 December 2017 $ 1,833,863 (177,449) 1,656,414	31 December 2017 $ 31 December 2017 $ 1,833,863 (177,449) 1,656,414
									30
	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 2017 Options Number				1,645,821 35,734 152,307 1,833,863 June 2017 $ Number
					$
	Movement in options on issue Balance at beginning of year Options issued – Directors Compensation Balance at end of the year Performance share rights	29,670,487 - 29,670,487 December 2017 Number			1,264,471 152,307 1,416,778 $		29,670,487 - 29,670,487 June 2017 Number
	Movement in share rights on issue Balance at beginning of year Performance share rights issued Performance share rights converted Performance share rights forfeited Balance at end of the year	13,000,000 - - (500,000) 12,500,000			289,421 35,734 - - 325,155		16,000,000 - - (3,000,000) 13,000,000				289,421 91,929 - -
											381,350

12 COMMITMENTS AND CONTINGENCIES

Operating lease commitments

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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 31 December are as follows:

	31 December 2017 $	30 June 2017 $
Within one year After one year but not more than five years More than five years	216,682 567,147 - 783,829	173,607 565,006 34,106
		772,719

13 SEGMENT INFORMATION

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

14 CONTINGENT LIABILITIES

As at reporting date there were no contingent liabilities.

15 RELATED PARTY TRANSACTIONS

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

Sir Tim McClement received director fees of $51,920. 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 received a salary and directors fee of $137,500 for the six month period and is paid to himself and to Blazzed Pty Ltd, accordingly. Any other transactions throughout the year relate to reimbursements for expenses incurred by Mr. Gaunt or his related entities on behalf of the Group.

Jorge Nigaglioni received a salary of $100,000 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.

16 SUBSEQUENT EVENTS

Other than the events described below, there are no other events or circumstances have arisen that would require disclosure in the financial report.

On 1 February 2018, the Company announced it had entered into a binding heads of agreement (HOA) for the proposed acquisition of Jaxsta Holdings Pty Ltd ACN 612 656 372 (Jaxsta) (Acquisition). Under the

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terms of the agreement, subject to satisfaction or waiver of conditions precedent to the Acquisition, as consideration for the Acquisition of all of Jaxsta’s securities not currently held by it, the Company has agreed to issue upon completion of the Acquisition, an aggregate of 82,915,022 fully paid ordinary shares (Shares) in the capital of the Company (Consideration Shares) to Jaxsta’s existing shareholders, on a postconsolidation and pro-rata basis. The Company will make Jaxsta its primary undertaking and apply to reinstate its listing upon completion of all the necessary approvals and a capital raise of $5,000,000. The expected close date for the transaction is 30 April 2018.

On 1 February 2018, the Company also announced it had entered into a binding heads of agreement (HOA) for the proposed sale of its current primary undertaking Marine Rescue Technologies Ltd and its subsidiaries (MRT)/(Disposal) to Secure2Go Group Ltd ACN 612 127 867. Under the terms of the agreement, the Company will be paid $6,000,000 in consideration for MRT, payable via a $2,000,000 deposit at completion and a deferred balance of $4,000,000 to be paid within 24 months from completion. The expected close date for the transaction is 30 April 2018.

The MRT business as described in the agreement has total assets of $4,262,091 and total liabilities of $1,225,524 as at 31 December 2017. The MRT business yielded $2,218,202 in revenues during the six months ended 31 December 2017, which along its expenses of $1,713,056, yielded a profit before taxes of $505,146. The Company did not record a tax provision for the period due to expected tax credits. The MRT business had net operating cash inflows of $374,657 during the six months ended 31 December 2017, along with no investing cash outflows and no financing cash flows.

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INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS OF MOBILARM LIMITED FOR THE PERIOD ENDED 31 DECEMBER 2017

REPORT ON THE HALF-YEAR FINANCIAL REPORT

We have reviewed the accompanying half-year financial report of Mobilarm Limited, which comprises the consolidated condensed statement of financial position as at 31 December 2017, the consolidated condensed statement of profit or loss, the consolidated condensed statement of comprehensive income, the consolidated condensed statement of changes in equity and the consolidated condensed 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 Half-Year 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 halfyear 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-year 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 2017 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 the ethical requirements relevant to the audit of the annual financial report.

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INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS OF MOBILARM LIMITED FOR THE PERIOD ENDED 31 DECEMBER 2017

Auditor’s Responsibility (continued)

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 other 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 given to the directors as at the time of this auditor’s review report.

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 financial position as at 31 December 2017 and of its 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.

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INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS OF MOBILARM LIMITED FOR THE PERIOD ENDED 31 DECEMBER 2017

Emphasis of Matter - Going Concern

Without modifying our opinion, we draw attention to the following matter. As a result of the matters disclosed in Note 2 (c) ”Going Concern” of the financial report, there is a significant uncertainty whether the company can 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 ability of the company to continue as a going concern is dependent upon its ability to complete the sale of its main undertaking Marine Rescue Technology Limited, and acquiring 100% of the ordinary shares of Jaxsta Holdings Ltd, increased cash flows from operations, including the growth of its rental and service portfolio and/or an equity raising.

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WALKER WAYLAND AUDIT (WA) PTY LTD

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Richard Gregson CA Director Level 2, 129 Melville Parade, COMO WA 6152

Dated this 28th day of February 2018.

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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

2/33 Roberts Street Osborne Park WA 6017

PRINCIPLE PLACE OF BUSINESS

2/33 Roberts Street Osborne Park WA 6017

CONTACT DETAILS

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

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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