VINYL GROUP LTD — Interim / Quarterly Report 2011

Feb 27, 2011

==> picture [175 x 37] intentionally omitted <==

==> picture [175 x 37] intentionally omitted <==

==> picture [175 x 37] intentionally omitted <==

ASX Announcement and Media Release

ASX CODE: MBO

Date: 28 February 2011

Mobilarm Delivers Robust HY2011 Performance

• Significant revenue growth in HY2011 of 395% over the prior corresponding period – company remains in early stage of accelerating growth

• HY2011 orders of $608,000 - exceeding FY2010 full year orders of $603,000

• Continued to build presence in Oil & Gas sector following contract for BHP Billiton – a range of projects currently under consideration

• Performance reflects rapid initial growth and an ongoing focus on minimising general operating expenses

• Strengthening project pipeline - MBO pursuing a number of growth opportunities in the oil and gas, commercial fishing and defence sectors

• Extension of contract with US Navy in current half – exercised option for additional $300,000 of test VHF locator beacon units in anticipation of field trials in mid-2011

• Agreed to acquire Mobile Rescue Technologies in current half – owner of Europe’s leading man overboard safety brand Sea Marshall

Perth, Western Australia: Global marine safety equipment provider, Mobilarm Limited (ASX: MBO) today announced its results for the Half Year ended 31 December 2010. The company remains well placed for growth with solid first half performance, including HY2011 orders of $608,000 (exceeding FY2010 full year orders of $603,000), the second phase of contract with US Navy successfully taking up their option to acquire additional VHF Locator Beacon test units, strengthened presence in the oil & gas sector with a new project for BHP Billiton, and continued focus on managing overhead cost base whilst in initial growth phase.

Mobilarm is also assessing a number of growth opportunities, both organic and potential acquisitions that is illustrated by the company’s announcement of its agreement to acquire leading European man overboard (“MOB”) technology company, Marine Rescue Technologies Ltd for approximately £1.8m as announced on 28 February 2011.

-Ends-

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 2010 Half-year ended 31 December 2009

2. Results for announcement to the market

			31	December	December	31 December
				2010		2009
				$A’000		$A’000
2.1	Revenue	up	243% to	$260.1		$75.8
2.2	Profit from ordinary activities after	up	40% to	($2,429)		($4,040)
	tax attributable to members
2.3	Net profit for the period attributable	up	40% to	($2,429)		($4,040)
	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 2009 2010 $/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

Page 2

Appendix 4D Preliminary final report

7. Auditor’s review report Not e : The audit report or re v iew must b e provided a s part of the r eport.

For all entities, i f the accou n ts are subje c t to audit di s pute or qua l ification, a d escription o f the dis p ute or quali f ication.

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

� The accounts have b e en � The accounts h a ve been audited. subject to revie w . � The accounts are in t h e � The accounts h a ve not yetbe e n process of being audi t ed or aud i ted or revie w ed. subject t o review.

==> picture [44 x 16] intentionally omitted <==

==> picture [45 x 6] intentionally omitted <==

Sig n here: Date: 2 8 February 2011 Di r ector Pri n t name: Li n dsay Lyon

• See chap t er 19 for defi n ed terms.

17/12/10 – A ppendix 4D

Page 3

==> picture [175 x 37] intentionally omitted <==

==> picture [175 x 37] intentionally omitted <==

==> picture [175 x 37] intentionally omitted <==

HALF YEAR 2011 FINANCIAL REPORT 31 December 2010

==> picture [172 x 48] intentionally omitted <==

REVIEW OF OPERATIONS

The company remains well placed for growth with solid first half performance which included orders of $608,000 for the period ended 31 December 2010 (exceeding FY2010 full year orders of $603,000), the second phase of contract with US Navy successfully completed, strengthened presence in the oil & gas sector with a new project for BHP Billiton, and we have continued our focus on managing the overhead cost base whilst in initial ramp-up phase.

The Company is also assessing a number of growth opportunities, both organic and potential acquisitions that is illustrated by the company’s announcement of its agreement to acquire leading European man overboard (“MOB”) technology company, Marine Rescue Technologies Ltd for ₤ 1.9 million as announced on 28 February 2011.

The half year orders of $608,000 represent a 395% increase over the prior corresponding period in FY2010. While revenue growth is still in the very early stages, we have secured an increasing number of new orders during the period ended 31 December 2010 that will continue to fast-track growth in FY2011. Revenues for the period ended 31 December 2010 increased by 441% over the prior corresponding period in FY2010. Operationally, MBO performed strongly during the first half and is well placed to continue to grow the overall revenue base and strengthen its sales pipeline across a number of target sectors.

As reported on 5 January 2011, the United States Naval Sea Systems Command (NAVSEA) confirmed its support for MBO’s V200 Submariner VHF Locator Beacon development project by exercising its option to purchase an additional US$300,000 worth of test units and engineering services. Sea trials are planned to take place in June 2011 when NAVSEA will undertake a large scale sea and air demonstration involving multiple vessels and aircraft from the US Navy fleet and US Coast Guard.

The Company also secured a new contract to supply its VHF Locator Beacons to Bristow Helicopters Australia, the sole contractor to BHP Billiton Petroleum for offshore personnel transfers by helicopter in Australia. Mobilarm will initially supply 50 of its innovative V100 VHF Locator Beacons to Bristow Helicopters for integration into the RFD Beaufort Mark 28 life jackets to be worn by all BHP Billiton Petroleum personnel during transfers to offshore platforms.

Whilst first half order performance is very encouraging, and is a testament to the strong foundations Mobilarm has established since listing. It is, however, important to recognise that we are still in the very early stages of growth with our sales and marketing efforts now progressing in line with the accelerated growth objectives previously announced to the market.

MOBILARM LIMITED – FINANCIAL REPORT HY 2011

1

==> picture [9 x 48] intentionally omitted <==

==> picture [55 x 48] intentionally omitted <==

==> picture [54 x 48] intentionally omitted <==

==> picture [55 x 48] intentionally omitted <==

We have h a d three key developme n ts during th e first half w h ich position us well for t h e year ahe a d and our outlook is s t rong. We n o w have mu c h greater vi s ibility and growth poten t ial in the oil and gas se c tor through our new co n tract with Bristow, regulatory appro v al of man o v erboard be a cons is taki n g place in a growing number of m arkets, an d we have b e en success f ul in moving to a critical phase in ou r ongoing pa r tnership with the US Navy’s NA V SEA division. We have a lso continu e d to focus o n managin g overhead c o sts where possible, a n d this will r e main an on g oing focus for MBO’s te a m as we e x pand our o p erations, pr o duct portfolio an d geographi c al footprint.

We are als o currently p u rsuing a number of gro w th opportu n ities in the o il and gas, commercial fishing and defence se c tors. The s a les team continues to b u ild our pipeline of order s and new b u siness opp o rtunities in a number of markets. W e have sev e ral tenders p ending in t h e oil and gas sector an d expect to u p date the market im m inently on k e y contract w ins that furt h er substan t iate our pri m ary product offering.In addition to MBO’s acq u isition ann o uncement t o day, we are currently assessing furt h er acquisiti o n opportuni t ies that will strengthen o ur market p resence an d expand ou r operations globally.

==> picture [32 x 11] intentionally omitted <==

==> picture [49 x 10] intentionally omitted <==

==> picture [36 x 18] intentionally omitted <==

==> picture [56 x 9] intentionally omitted <==

==> picture [49 x 18] intentionally omitted <==

___ _ __ _ ___

Lindsay Ly o n Chief Executive Office

Perth, Wes t ern Australi a 28 Februar y 2011

MOBI L ARM LIMITED – FINA N CIAL REP O RT HY 201 1

2

==> picture [172 x 48] intentionally omitted <==

DIRECTORS’ REPORT

The Directors present their half year report of Mobilarm Limited (“the Company”) for the half year ended 31December 2010.

Directors

The directors of Mobilarm Limited in office at any time during or since the end of the half year are:

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

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

• Appointed Chairman on 29 October 2010

• ** Served as Chairman until 29 October 2010, continues as Executive Director

• *** Resigned as Director on 30 November 2010

Principal Activities

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

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

Dividends

No dividends were paid or declared for the half year.

MOBILARM LIMITED – FINANCIAL REPORT HY 2011

3

==> picture [9 x 48] intentionally omitted <==

==> picture [55 x 48] intentionally omitted <==

==> picture [54 x 48] intentionally omitted <==

==> picture [55 x 48] intentionally omitted <==

Operating Results for the Year

Operations of the Company

The Comp a ny received orders of $ 6 08,338 in the half ye a r ended 31 D ecember 2 0 10 (2009: $122,946), a 395% incr e ase. That h elped the Company i n crease rev e nue to $260,142 in the periodas c o mpared to $ 75,872 in th e half year ended 31 D ecember 2009, an incre a se of 241%.The loss of the c o mpany afte r providing for income t ax amounted for the hal f year ending 31 D ecember 2 0 10to $2,42 8 ,891 (2009: Los s of $4,040, 2 57). Thedecrease in the loss wa s due to the increased s a les and the reducti o n of expens e s related t o unsuccessf u l capital rai s ing project s , the impact of the perfo r mance clas s A shares o nthe share b ased payment e x pense, the i m pact of int e rest expense on conver s ion of its c o nvertible no t es and reduced regulatory c ertification e xpenditure. This is the e ffect of the t ransition from the busin e ss from the recreational Mobilert pr o duct line to t he Crewsaf e and V100 c ommercial product line s .

The Comp a ny’s operati n g expense s decreased to $2,737,6 2 2 in the half year ended 31 Decemb e r2010 as compared t o $4,149,74 9 in the year ended 30 J u ne 2010, a decrease of 52%. This r esulted in a net loss for the half ye a r of $2,428, 8 91 as com p ared to a lo s s of $4,040 , 257 in the h a lf year end e d 31 Dece m ber 2009, a decrease o f 66%. The C ompany h a d various o n e time and n on-cash transactions in the half year periods ended 31 D ecember 2010 and 200 9 that increa s ed the net l o ss.

Financial Position of the Company

The Comp a ny ended D e cember 20 1 0 with net a ssets of $9 4 7,786, com p ared to net a ssets of $6 8 5,379at June 2010. The impro v ement in fin a ncial condi t ion is mostl y due to the c onversion o f the conver t ible notes in the perio d ended 31 D ecember 2 0 09, which r e moved the offsetting liability.

On the ass e t side, the C ompany ha s improved i t s non restri c tedcurrent a ssets by $7 3 ,485 from June 2010 to December 2 010, mostl y due to an i n crease in c a sh from the IPO and inventories. N o n-current a s sets decreased b y $17,931 d ue to a dec r ease in the level of exp e nditure on t h e US Navy developme n t as the Company completed m a jor delivera b les in May 2 010.

Business strategy for future financial years

The Comp a ny will conti n ue to pursue its growth strategy of b ecoming th e world’s lar g est provide r of Man Overboard s olutions an d emergenc y beacons. T he Compan y plans to in c rease mar k et share thr o ugh organi c growth and acquisitions during the n ext financia l year. The C ompany ha s recently si g ned a shar e purchase agreement t o acquire M arine Rescue Technolo g ies Limited i n the UK to increase its position as a supplier of MOB beac o ns worldwide. Addition a l operation a l and marke t penetratio n information has been included in the operati o ns report.

Further information on l i kely develo p ments in th e operations of the Com p any and th e expected r e sults of those oper a tions in future financial y ears has not been inclu d ed in this r e port because disclosure of the information would likely result in un r easonable p rejudice to t h e Compan y .

Net Tangible Asset

The Comp a ny had a net tangible asset of $250, 9 76 (June 2 0 10: deficit o f $30,860). T he net tangi b le asset per weight e d average share is $0.0 0 (2010: Asset of $0.00).

MOBI L ARM LIMITED – FINA N CIAL REP O RT HY 201 1

4

==> picture [9 x 48] intentionally omitted <==

==> picture [55 x 48] intentionally omitted <==

==> picture [54 x 48] intentionally omitted <==

==> picture [55 x 48] intentionally omitted <==

Changes in the State Of Affairs

There were no change s to the state of affairs of the compan y

Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 The auditor’s independ e nce declar a tion is set o u t on page 8 and forms p art of the di r ectors’ report for the year ended 31Decemb e r 2010.

Significant events subsequent to balance date

Since the end of the half year;

• The C ompany si g ned a shar e purchase agreement for the acquisi t ion of Mari n e Rescue T e chnologies Limit e d (“MRT”) o n 25 Febru a ry 2011. T h e Company will acquire MRT for ca s h considera t ion of appr o ximately $2,200,000 an d deferred s h are based c ompensati o n. The maximum numb e r of shares will equate to 1.5 times the a v erage EBIT D A of MRT for the 2008- 2011 (inclu s ive) financi a l years, divid e d by the av e rage weigh t ed share price of Mobil a rm 5 tradin g days prior to completio n of the transaction. MR T ’s financial y ear finishe s on 30 April. The amou n t of deferre d equity con s ideration is appr o ximately $900,000.

Havi n g establish e d the maxi m um numbe r of shares t h at can be is s ued, the ac t ual number issued will depend upon the 2012 and 2 0 13 gross re v enue of M R T.

• 75% of t h e maximum number of s hares will b e issued if 2 0 12 gross re v enue exce e ds GBP£1. 6 million, and

• 25% of t h e maximum number of s hares will b e issued if 2 0 13 gross re v enue exce e ds GBP£2.0 million.

• • If gross r e venue is le s s that thes e minimum li m its, the nu m ber of shar e s issued wi l l be adjusted downward a ccordingly.

• The a cquisition i s subject to f u nds raised u pon the co m pletion of: • A private placement for up to $1, 0 00,000 to s o phisticated investors o p ened on 28 February 2011 an d estimated t o be completed on 3 March 2011

• A 1 for 2.5 entitleme n ts offer for u p to approximately $3,5 0 0,000 at $0 . 05 per shar e . The entitlem e nts offer is e xpected to b e complete d by 7 April 2 011.

• • The Co m pany intend s the offer t o be underwritten and wil l advise the o utcome as s oon as possible.

Signed in a c cordance w ith a resolution of the Di r ectors.

==> picture [55 x 18] intentionally omitted <==

==> picture [51 x 23] intentionally omitted <==

==> picture [46 x 8] intentionally omitted <==

___ _ __ _ ___

Richard All e n Independent Chairman

Perth, Wes t ern Australi a 28 Februar y 2011

MOBI L ARM LIMITED – FINA N CIAL REP O RT HY 201 1

5

==> picture [103 x 62] intentionally omitted <==

Auditor’s Independence Declaration to the Directors of Mobilarm Limited

In relation to our audit of the financial report of Mobilarm Limited for the half-year ended 31 December 2010, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.

==> picture [111 x 15] intentionally omitted <==

==> picture [111 x 14] intentionally omitted <==

==> picture [111 x 15] intentionally omitted <==

Ernst & Young P McIver Partner Perth 28 February 2011

Liability limited by a scheme approved under Professional Standards Legislation

PM:MJ:MOBILARM:003

==> picture [9 x 48] intentionally omitted <==

==> picture [55 x 48] intentionally omitted <==

==> picture [54 x 48] intentionally omitted <==

==> picture [55 x 48] intentionally omitted <==

DIRECTORS’ DECLARATION

In the opini o n of the dir e ctors of Mo b ilarm Limit e d (“the Company”):

In the opini o n of the Dir e ctors:

• (a) T he financial statements a nd notes o f the consoli d ated entity a re in accor d ance with t h e C orporations Act 2001, i n cluding:

• (i) giving a true and fair view of f inancial po s ition of the c onsolidated entity as at 3 1 Dec e mber 2010 and the performance for the half year ended on that date; an d

• (ii) com p lying with A ccounting S t andard AA S B 134 Interim Financial Reporting a n d the Cor p orations Re g ulations 20 0 1; and

• (b) S ubject to th e matter dis c losed in Note 2 to the fi n ancial state m ents, there are reason a ble ground s t o believe th a t the company will be a b le to pay its debts as an d when they become du e and p ayable.

Signed in a c cordance w ith a resolution of the Di r ectors

==> picture [55 x 18] intentionally omitted <==

==> picture [46 x 12] intentionally omitted <==

==> picture [29 x 5] intentionally omitted <==

___ _ __ _ ___

Richard All e n Independent Chairman

Perth, Wes t ern Australi a 28 Februar y 2011

MOBI L ARM LIMITED – FINA N CIAL REP O RT HY 201 1

7

==> picture [172 x 48] intentionally omitted <==

STATEMENT OF COMPREHENSIVE INCOME

FOR THE HALF YEAR ENDED 31DECEMBER 2010

	31 December 2010 $	31 December 2009 $
Revenue Sale of goods Interest Rental income Other income Changes in inventories of finished goods and work in progress Employee benefits Share based compensation expense Share option expense Depreciation and amortisation Advertising Audit and tax Accountancy Freight and cartage External consultants and contractors Rental Travel and accommodation Payroll tax Legal fees Telephone and internet charges Insurance Printing, postage and stationery Motor vehicles Finance costs Foreign exchange loss/(gain) Variation of convertible note terms Other expenses Loss before income tax Income tax expense/(benefit) Loss after income tax	260,141 10,599 37,990 308,730 - 60,817 1,194,802 367,778 26,020 221,956 2,454 16,380 16,094 9,223 289,920 146,707 63,161 47,753 36,563 14,295 11,986 13,234 2,681 3,320 (15,991) - 208,468 (2,428,891) - (2,428,891)	75,872 340 33,278
		109,490
		- 41,014 1,060,422 1,185,952 - 197,657 58,150 45,000 26,145 8,370 266,208 102,599 148,625 29,265 159,230 16,836 58,818 31,604 561 197,814 3,159 298,179 214,139
		(4,040,257) -
		(4,040,257)

MOBILARM LIMITED – FINANCIAL REPORT HY 2011

8

==> picture [172 x 48] intentionally omitted <==

STATEMENT OF COMPREHENSIVE INCOME (CONTINUED)

FOR THE HALF YEAR ENDED 31 DECEMBER 2010

	31 Dec 2010 $	31 Dec 2009 $
Other comprehensive income Total comprehensive loss for the period Basic earnings per share (cents per share) Diluted earnings per share (cents per share)	- (2,428,891) (0.02) (0.02)	-
		(4,040,257)
		(0.04)
		(0.04)

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

MOBILARM LIMITED – FINANCIAL REPORT HY 2011

9

==> picture [172 x 48] intentionally omitted <==

STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2010

Note	31 Dec 2010 $	30 June 2010 $
CURRENT ASSETS Cash and cash equivalents Trade and other receivables Inventories Other current assets TOTAL CURRENT ASSETS NON-CURRENT ASSETS Plant and equipment Intangible assets TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables Other payable Interest bearing loans and borrowings Provisions TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Provisions Interest Bearing loans and borrowings Deferred tax liability TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS/(LIABILITIES) EQUITY (SHAREHOLDERS DEFICIT) Contributed equity 3 Accumulated Losses 4 Reserves 5 TOTAL EQUITY/(SHAREHOLDER DEFICIT)	589,250 87,749 227,289 58,684 962,972 83,495 696,810 780,305 1,743,277 372,311 - 3,206 373,031 748,548 43,124 3,819 - 46,943 795,491 947,786 21,153,841 (20,232,075) 26,020 947,786	1,130,811 609,741 34,049 52,485
		1,827,086
		81,997 716,239
		798,236
		2,625,322
		655,252 1,024,400 3,501 217,469
		1,900,622
		33,741 5,580 -
		39,321
		1,939,943
		685,379
		18,488,563 (17,803,184) -
		685,379

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

MOBILARM LIMITED – FINANCIAL REPORT HY 2011

10

==> picture [172 x 48] intentionally omitted <==

STATEMENT OF CASH FLOWS

FOR THE HALF YEAR ENDED 31 DECEMBER 2010

	31 Dec 2010 $	31 Dec 2009 $
CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers Payments to suppliers and employees Interest received Rental income & recoveries 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 Purchase of intangible assets NET CASH FLOWS USED IN INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from / (Repayment of) borrowings – related parties Lease and hire purchase repayments Proceeds from return of deposit on equipment lease Proceeds from issue of convertible notes Proceeds from share issue Costs of share issue NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES NET INCREASE/(DECREASE) IN CASH HELD CASH AT THE BEGINNING OF THE FINANCIAL YEAR CASH AT THE END OF THE FINANCIAL YEAR	547,426 (2,385,242) 10,593 47,889 (3,304) 324,685 (1,457,953) (1,596) (256,727) - (258,323) - - - - 2,383,400 (184,285) 2,199,115 482,839 106,411 589,250	118,283 (1,066,394) 340 36,606 (197,814) 288,098
		(820,881)
		(10,683) (372,009) (1,818)
		(384,510)
		266,667 (17,550) - 5,486,782 98,500 (42,675)
		5,791,724
		4,586,333
		104,263
		4,690,596

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

MOBILARM LIMITED – FINANCIAL REPORT HY 2011

11

==> picture [172 x 48] intentionally omitted <==

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2010

	Issued Capital $	Attributable to equity holders of Mobilarm Limited Accumulated Losses Stock Option Reserve Convertible Note Reserve $ $ $	Attributable to equity holders of Mobilarm Limited Accumulated Losses Stock Option Reserve Convertible Note Reserve $ $ $	Attributable to equity holders of Mobilarm Limited Accumulated Losses Stock Option Reserve Convertible Note Reserve $ $ $	Total Equity $
COMPANY At 1 July 2009 Net loss for the period Other comprehensive income Total comprehensive loss for the period Transactions with owners in their capacity as owners Issue of equity Costs of share issues Issuance of Shares in lieu of director fees payable Share based payments – Ordinary Shares Share based payments – Performance Shares Equity portion of convertible notes issued Conversion of convertible notes As at 31 December 2009 At 1 July 2010 Net loss for the period Other comprehensive income Total comprehensive loss for the period Transactions with owners in their capacity as owners Issue of equity Costs of share issues Share based payments – Performance Shares Share based payments – Employee Stock Options As at 31 December 2010	9,192,597 - - - 136,193 (42,675) 80,657 157,000 1,040,952 - 4,335,594 14,900,318 18,488,563 - - - 2,383,400 (85,900) 367,778 - 21,153,841	(11,595,162) (4,040,259) - (4,040,259) - - - - - - - (15,635,421) (17,803,184) (2,428,891) - (2,428,891) - - - - (20,232,075)	- - - - - - - - - - - - - - - - - - - 26,020 26,020	153,291 - - - - - - - - 230,001 (383,292) - - - - - - - - - -
					(2,249,274)
					(4,040,257) -
					(4,040,257)
					136,193 (42,675) 80,657 157,000 1,040,952 230,001 3,952,302
					(735,101)
					685,379
					(2,428,891) -
					(2,428,891)
					2,383,400 (85,900) 367,778 26,020
					947,786

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

MOBILARM LIMITED – FINANCIAL REPORT HY 2011

12

==> picture [172 x 48] intentionally omitted <==

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2010

1 CORPORATE INFORMATION

The financial report of Mobilarm Limited (the “Company”) for the half year ended 31 December 2010 was authorised for issue in accordance with a resolution of directors on 28 February 2011.

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 condensed financial report for the half year ended 31 December 2010 has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001.

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 2010, the prospectus dated 15 April 2010 and the supplementary prospectus dated 14 July 2010 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.

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 2010.

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 2010, the Group has adopted all the amending Standards and Interpretations, mandatory for annual periods beginning on or after 1 July 2010 including:

AASB 101 Presentation of Financial Statements

The revised standard stipulates that the terms of a liability that could at any time result in its settlement by the issuance of equity instruments at the option of the counterparty do not affect its classification as current or non-current.

AASB 107 Statement of Cash Flows

The revised standard states that only expenditures that result in a recognised asset can be classified as a cash flow from investing activities. This has resulted in a reclassification of capitalised research and development from operating to investing activities, for the periods presented.

MOBILARM LIMITED – FINANCIAL REPORT HY 2011

13

==> picture [172 x 48] intentionally omitted <==

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

AASB 117 Leases

The revised standard removes specific guidance on classifying land as a lease so that only the general guidance remains.

AASB 132 Financial Instruments: Presentation

The revised standard amends the definition of a financial liability to classify certain rights (and certain options or warrants) as equity instruments if they satisfy certain conditions.

AASB 136 Impairment

The revised standard clarifies that the largest unit permitted for allocating goodwill acquired in a business combination is the operating segment defined in AASB 8 before aggregation for reporting purposes.

Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments

The interpretation clarifies that equity instruments issued to a creditor to extinguish a financial liability are “consideration paid”. As a result, the financial liability is derecognised and the equity instruments issued are treated as consideration paid to extinguish that liability.

AASB 2010-3 Amendments to Australian Accounting Standards Arising from the Annual improvements Project

This amendment affected the following standards:

AASB 3 Business Combinations;

AASB 7 Financial Instruments: Disclosures;

AASB 121 The Effects of Changes in Foreign Exchange Rates;

AASB 128 Investments in Associates;

AASB 131 Investments in Joint Ventures;

AASB 132 Financial Instruments: Presentation; and

AASB 139 Financial Instruments: Recognition and Measurement.

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 half year ended 31 December 2010 of $2,428,891 (December 2009: $4,040,257) and experienced net cash outflows from operating activities of $1,712,180 (December 2009: $1,912,890). As 31 December 2010, the Company had net assets of $947,786 (June 2010: net liability $735,101).

Subsequent to half year end the Company has undertaken the following:

• The Company signed a share purchase agreement for the acquisition of Marine Rescue Technologies Limited (“MRT”) on 25 February 2011. The Company will acquire MRT for cash consideration of approximately $2,200,000 and deferred share based compensation. The maximum number of shares will equate to 1.5 times the average EBITDA of MRT for the 2008- 2011 (inclusive) financial years,

MOBILARM LIMITED – FINANCIAL REPORT HY 2011

14

==> picture [172 x 48] intentionally omitted <==

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

divided by the average weighted share price of Mobilarm 5 trading days prior to completion of the transaction. MRT’s financial year finishes on 30 April. The amount of deferred equity consideration is approximately $900,000.

Having established the maximum number of shares that can be issued, the actual number issued will depend upon the 2012 and 2013 gross revenue of MRT.

• 75% of the maximum number of shares will be issued if 2012 gross revenue exceeds GBP£1.6 million, and

• 25% of the maximum number of shares will be issued if 2013 gross revenue exceeds GBP£2.0 million.

• If gross revenue is less that these minimum limits, the number of shares issued will be adjusted downward accordingly.

The acquisition is subject to funds raised upon the completion of:

• A private placement for up to $1,000,000 to sophisticated investors opened on 28 February 2011 and estimated to be completed on 3 March 2011

• A 1 for 2.5 entitlements offer for up to approximately $3,500,000 at $0.05 per share. The entitlements offer is expected to be completed by 7 April 2011.

• The Company intends the offer to be underwritten and will advise the outcome as soon as possible.

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 issue.

The directors have reviewed the business outlook and plans of the company 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 Company is unable to continue as a going concern.

MOBILARM LIMITED – FINANCIAL REPORT HY 2011

15

==> picture [172 x 48] intentionally omitted <==

3 CONTRIBUTED EQUITY

			31 Dec 2010 $	31 Dec 2009 $
Issued and paid up capital: 152,692,410 (2010 – 117,120,823) ordinary Ordinary shares fully paid. 6,333,334 (2010 – 13,000,000) Performance shares	31 Dec 2010 No. of shares	31 Dec 2009 No. of shares	20,647,174 506,667 21,153,841 31 Dec 2010 $	13,859,366 1,040,952
				14,900,318
				31 Dec 2009 $
Reconciliation of Contributed Equity Equity at beginning of the period Consolidation of Capital Issue of ordinary shares Cost of share issue Issuance of Shares in lieu of director fees payable Conversion of Performance Shares Class A Share based payments - Ordinary Shares Conversion of Convertible Notes Equity at end of the period	134,108,744 - 11,917,000 - - 6,666,666 - - 152,692,410	264,425,398 (176,283,599) 653,647 - 537,712 - 871,666 26,915,999 117,120,823	17,283,008 2,383,400 (85,900) - 1,066,666 - - 20,647,174	9,192,597 136,193 (42,675) 80,657 - 157,000 4,335,594
				13,859,366

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.

MOBILARM LIMITED – FINANCIAL REPORT HY 2011

16

==> picture [172 x 48] intentionally omitted <==

3 CONTRIBUTED EQUITY (continued)

	31 Dec Number	2010 $	31 Dec Number	2009 $
Performance Shares Movement in performance shares class A on issue Balance at beginning of period Share issue Share based payment expense for the period Conversion into ordinary shares Balance at end of the period Movement in performance shares class B on issue Balance at beginning of period Share issue Share based payment expense for the period Balance at end of the period Movement in performance shares class C on issue Balance at beginning of period Share issue Share based payment expense for the period Balance at end of the period Total performance shares	6,666,666 - - (6,666,666) - 3,166,666 - - 3,166,666 3,166,668 - - 3,166,668 6,333,334	$888,889 - $177,777 (1,066,666) - $211,111- - $126,667 $337,778 $105,555 - $63,334 $168,889 506,667	- 6,666,666 - 6,666,666 - 3,166,666 - 3,166,666 - 3,166,668 - 3,166,668 13,000,000	- - 914,286
				$914,286 - - $84,444
				$84,444 - - $42,222
				$42,222
				1,040,952

Performance class Ashares convert to ordinary shares on a 1 for 1 basis upon obtaining ASX conditional listing. The Company obtained conditional listing on 25 August 2010. 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.

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.

MOBILARM LIMITED – FINANCIAL REPORT HY 2011

17

==> picture [172 x 48] intentionally omitted <==

4 ACCUMULATED LOSSES

4 ACCUMULATED LOSSES
	31 Dec 2010 $	30 Jun 2010 $
Accumulated losses at the beginning of the financial period Net loss for the year Accumulated losses at the end of the financial period	(17,803,184) (2,428,891) (20,232,075)	(11,595,162) (6,208,022)
		(17,803,184)

5 RESERVES

5 RESERVES
	31 Dec 2010 $	31 Dec 2009 $
Convertible notes Reserve Balance at the beginning of the financial period Equity portion of convertible notes issued Conversion of notes into ordinary shares Balance at the end of the financial period Share Option Reserve Balance at the beginning of the financial period Share option expense amortised Balance at the end of the financial period	- - - - - 26,020 26,020	153,291 230,001 (383,292)
		-
		- - -

6 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 31December are as follows:

	31 Dec 2010 $	30 June 2010 $
Within one year After one year but not more than five years More than five years	100,573 - - 100,573	251,433 - -
		251,433

7 SEGMENT INFORMATION

The company operates solely in the development, manufacturing and sale of Man Overboard safety systems. The Company operates in one geographical location being Australia. 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.

MOBILARM LIMITED – FINANCIAL REPORT HY 2011

18

==> picture [172 x 48] intentionally omitted <==

8 CONTINGENT LIABILITIES

As at reporting date there were no contingent liabilities.

9 SUBSEQUENT EVENTS

Since the end of the half year the Company:

• The Company signed a share purchase agreement for the acquisition of Marine Rescue Technologies Limited (“MRT”) on 25 February 2011. The Company will acquire MRT for cash consideration of approximately $2,200,000 and deferred share based compensation. The maximum number of shares will equate to 1.5 times the average EBITDA of MRT for the 2008- 2011 (inclusive) financial years, divided by the average weighted share price of Mobilarm 5 trading days prior to completion of the transaction. MRT’s financial year finishes on 30 April. The amount of deferred equity consideration is approximately $900,000.

Having established the maximum number of shares that can be issued, the actual number issued will depend upon the 2012 and 2013 gross revenue of MRT.

• 75% of the maximum number of shares will be issued if 2012 gross revenue exceeds GBP£1.6 million, and

• 25% of the maximum number of shares will be issued if 2013 gross revenue exceeds GBP£2.0 million.

• If gross revenue is less that these minimum limits, the number of shares issued will be adjusted downward accordingly.

The acquisition is subject to funds raised upon the completion of:

• A private placement for up to $1,000,000 to sophisticated investors opened on 28 February 2011 and estimated to be completed on 3 March 2011

• A 1 for 2.5 entitlements offer for up to approximately $3,500,000 at $0.05 per share. The entitlements offer is expected to be completed by 7 April 2011.

• The Company intends the offer to be underwritten and will advise the outcome as soon as possible.

MOBILARM LIMITED – FINANCIAL REPORT HY 2011

19

==> picture [103 x 61] intentionally omitted <==

Independent Auditor’s Report to the members of Mobilarm Limited

Report on the 31 December 2010 Half Year Financial Report

We have reviewed the accompanying 31 December 2010 Half Year financial report of Mobilarm Limited which comprises the statement of financial position as at 31 December 2010, statement of comprehensive income, statement of changes in equity and 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 31 December 2010 Financial Report

The directors of the company are responsible for the preparation of the Half Year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine are necessary to enable the preparation of the Half Year financial report that 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 Interim and Other Financial Reports 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 financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity’s financial position as at 31 December 2010 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.

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 have given to the directors of the company a written Auditor’s Independence Declaration, a copy of which is included in the Directors’ Report.

Liability limited by a scheme approved under Professional Standards Legislation

PM:MJ:MOBILARM:002

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:

• a) giving a true and fair view of the company’s financial position as at 31 December 2010 and of its performance for the Half Year ended on that date; and

• b) complying with Accounting Standard 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 – Going Concern to the financial report, there is significant uncertainty whether the company will be able be able to pay its debts as and when they fall due and payable and realise its assets and extinguish its liabilities in the normal course of operations and at the amounts stated in the financial report. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the company not continue as a going concern.

==> picture [111 x 14] intentionally omitted <==

==> picture [111 x 14] intentionally omitted <==

Ernst & Young P McIver Partner Perth 28 February 2011

PM:MJ:MOBILARM:002

==> picture [172 x 48] intentionally omitted <==

CORPORATE DIRECTORY

DIRECTORS

Mr. Richard Allen Independent Chairman Mr. Brenton Scott Executive Director Mr. Lindsay Lyon Chief Executive Officer Mr. Christian Lange Non Executive Director

COMPANY SECRETARY

Mr. David McArthur Company Secretary

REGISTERED OFFICE

768 Canning Highway Applecross WA 6153

PRINCIPLE PLACE OF BUSINESS

768 Canning Highway Applecross WA 6153

CONTACT DETAILS

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

SHARE REGISTRY

Security Transfer Registrars Pty Ltd 770 Canning Highway Applecross WA 6153

LAWYERS TO THE COMPANY

Cowell Clarke Level 5, 63 Pirie Street, Adelaide SA 5000 Australia

AUDITORS

Ernst and Young 11 Mounts Bay Road Perth WA 6000

BANKERS

National Australia Bank

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

MOBILARM LIMITED – FINANCIAL REPORT HY 2011

22