Mobilicom Limited
ABN 26 617 155 978
Annual Report - 31 December 2017
Mobilicom Limited | 31 December 2017
Contents
Corporate directory
Letter to shareholders
Directors' report
Auditor's independence declaration
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
Directors' declaration
Independent auditor's report to the members of Mobilicom Limited
Shareholder information
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Mobilicom Limited | 31 December 2017
Corporate directory
Directors
Oren Elkayam (Chairman and Managing Director)
Yossi Segal (Executive Director)
Campbell McComb (Non-executive Director)
Mark Licciardo (Non-executive Director)
Company secretary
Kate Goland
Registered office
Share register
Auditor
Suite 1, Level 6, 50 Queen Street
Melbourne, Victoria, 3000
Ph: 03 8692 9000
Boardroom Pty Limited
Level 12, 225 George Street
Sydney, NSW, 2000
Ph: 1300 737 760 (within Australia)
Ph: +61 2 9290 9600
BDO East Coast Partnership
Collins Square, Tower 4
Level 18, 727 Collins Street
Melbourne, Victoria, 3008
Stock exchange listing
Mobilicom Limited shares are listed on the Australian Securities Exchange (ASX
code: MOB)
Website
https://mobilicom-ltd.com.au
Corporate Governance Statement
https://mobilicom-ltd.com.au/charters/
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Mobilicom Limited | 31 December 2017
Letter to shareholders
Oren Elkayam (Chairman and Managing Director)
1. Company Introduction
Mobilicom Limited is a hi-tech company that designs, develops and delivers communication solutions for mission critical
and remote mobile private networks without the need for any infrastructure. Mobilicom’s products and technologies are
based on an innovative approach that merges 4G and Mobile MESH technologies. With versatile network topologies and
a large product portfolio, Mobilicom offers a number of product families that have been commercially deployed.
Mobilicom has developed proprietary technology for a product portfolio that is fully designed and developed in-house with
the utmost flexibility and scalability to optimise to customer needs.
Mobilicom Limited is comprised of two entities:
• The Mobilicom entity offers solutions that cater to mission-critical communication in the Government & Enterprise
sector, with applications in Unmanned Vehicles; Offshore Oil, Gas & Energy; and Homeland Security & Public
Safety
• The SkyHopper entity targets the commercial & industrial drones & robotics market. SkyHopper leverages
Mobilicom’s field-proven experience and technology to offer a holistic approach that consists of an end-to-end
hardware portfolio, software tools, integration services and onsite support.
This holistic approach enables commercial and industrial drone manufacturers and service providers to focus on their
own business objectives by reducing time-to-market, minimizing resource expenditures and increasing their chances for
success.
2. Significant Company Milestones
This year was pivotal in terms of Mobilicom’s activities and achievements. Mobilicom became a public company, grew its
operations, penetrated new markets and secured key contracts with a new and existing customer base.
Mobilicom is traded on the Australian Securities Exchange
In May 2017, Mobilicom Limited listed on the Australian Securities Exchange (ASX). Completion of a $7.5 million Initial
Public Offering (IPO) has enabled Mobilicom to grow its activities in both Government & Enterprise and Commercial &
Industrial market verticals, with solutions from both the Mobilicom and SkyHopper entities.
Mobilicom Grows as a Company
Throughout 2017, Mobilicom increased its workforce significantly to support its growing operations and sales, and in turn
has increased its presence on a global level. The Company increased personnel at its local headquarters in sales,
marketing, research and development (R&D), and finance functions to support its business goals. It increased its
worldwide marketing, sales and support presence in its key markets of Asia Pacific, the US and Western Europe,
building infrastructure for business success and future growth. The retention and growth of its employee base is enabling
Mobilicom to execute new strategies the company has established in 2017 and carry them into 2018.
Mobilicom Wins Two International Grants
In 2017, Mobilicom won two major grants – a Smart Money grant valued up to $450,000 for building infrastructure for
sales success in China; and an R&D grant for influencing the 5G standard and building future technology, the project
scope of which is valued $650,000.
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Mobilicom Limited | 31 December 2017
Letter to shareholders
The Smart Money program is highly competitive, attracting qualified companies with a certain level of export activity and
significant potential in China. The grant boosts Mobilicom’s marketing and sales efforts in the region, driving the growth
of its market presence, building upon its strategic partnerships and expanding its team on the ground.
Mobilicom also received a government grant for its involvement in the Heron 5G International Research Consortium,
which will place Mobilicom at the forefront of 5G development, and which is expected to have an extremely positive
impact on wireless technology.
3. Successes of Mobilicom’s Core Business
Mobilicom has continued to drive success with its core business. In 2017, Mobilicom reached a base of more than 40
customers across 15 countries. The Mobilicom entity continues to be the primary revenue generator with its core MCU
business in the Government & Enterprise sector.
The Company has driven sales in the unmanned vehicle and autonomous platform market, the offshore oil, gas & energy
market and with several Homeland Security (HLS) integrators.
Looking forward to 2018, the Mobilicom entity is expected to continue as the key revenue driver for the Company.
Unmanned Vehicles & Robotics
This year, Mobilicom ramped up sales with a strong base of Government & Enterprise unmanned vehicles customers
that show year-over-year growth, and with whom Mobilicom has grown as a result. Within this realm, with the increase in
autonomous UAV platforms, Mobilicom has been supplying its solutions to a few market leaders of autonomous drone
platforms, and these companies have begun initial deployments in resource industry, enterprise security and inspection
applications, driving recurrent sales for Mobilicom in 2017.
Maritime – Offshore Oil, Gas & Energy
Mobilicom has garnered success with top offshore oil & gas integrators that will lead the Company to expand its
presence in the Offshore Oil, Gas & Energy market vertical with existing and new customers. Projects included:
1. ExxonMobil: ExxonMobil expanded the use of Mobilicom’s technology, with an additional sale that comes after an
initial deployment of the Mobilicom solution. Mobilicom also collaborated with ExxonMobil to increase security and
elevate the customer’s protection against cyber threats. Most recently, ExxonMobil conducted successful fleet tests
by using Mobilicom’s MESH capabilities with its own platforms and vessels to receive continuous video and data at
long ranges.
2. Mediterranean Gas Project: Mobilicom secured its second expansion of the Mediterranean Gas Project, bringing
total sales-to-date with this customer to more than $1,100,000 for this project. Mobilicom recently completed
successful maritime field testing by this integrator, resulting in the integrator’s plans to sell our solution to its
customers globally. This expansion is a testament to Mobilicom exceeding the expectations of the customer in the
testing and deployment performance of its solutions.
Public Safety, Security & Surveillance
Mobilicom conducted successful integration campaigns of its MCU solutions including field trials in the Czech Republic
with a leading HLS system integrator and a customer demo in Sri Lanka involving helicopters and ground personnel in
MESH scenarios. Mobilicom drove recurrent sales from a leading autonomous drone manufacturer as well as several
Israeli HLS integrators. Mobilicom has also seen recurrent sales with various customers in Japan, Europe and other
regions of the world, growing potential for further deployment expansions of Mobilicom’s solutions.
4. SkyHopper Entity Successes
Mobilicom made a strategic decision to expand its operations into the Commercial & Industrial sector with the SkyHopper
entity, beginning with the Drone & Robotics market. It has done so by leveraging its core technologies in the Government
& Enterprise sector to provide a solution that caters to the unmet needs of this new market. With the objective of
shortening Mobilicom’s sales cycle and driving mass quantities of the Company’s products, as the commercial drone
market ramps up, Mobilicom expects to enjoy an increase in revenue, as its SkyHopper products will be integrated with
established manufacturers in the sector.
SkyHopper by Mobilicom employs a holistic approach that offers an end-to-end hardware portfolio, software tools,
integration services and onsite support.
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Mobilicom Limited | 31 December 2017
Letter to shareholders
In Q2 2017, Mobilicom launched an aggressive SkyHopper strategy for winning in the commercial drone & robotics
market. Mobilicom is in Phase I of this strategy, which includes building infrastructure to establish market share and a
leading market position. It is based on three pillars:
1. Releasing a broad portfolio of solutions and obtaining key worldwide certifications
2. Securing 8 design wins with worldwide drone manufacturers
3. Guaranteeing Compatibility or Partnership with 10 Ecosystem Partners.
Despite the aggressive goals set by the Company, Mobilicom has so far outperformed its plan which is to run through Q2
2018. In summary, the Company has achieved:
• 7 out of 8 design wins to-date
• 3 key worldwide certifications, surpassing its goal of 2
• 3 out of 4 products launched
• 5 out of 10 ecosystem compatibilities or partnerships.
Design Wins
To date, SkyHopper has secured seven design wins with key professional commercial drone manufacturers in
geographic markets including France, S. Korea, Japan, Singapore and Israel. These design wins prove the market
traction and strong foothold that the SkyHopper brand has made since its recent launch, and place Mobilicom in a strong
sales position as the commercial drone market continues to ramp up. Furthermore, through its design wins, Mobilicom
has secured contracts that have translated into initial commercial purchases for 2018.
Solutions & Certifications
SkyHopper has released three product solutions since its launch, with a fourth due to launch in Q1 2018. This places
SkyHopper on track with its product roadmap. SkyHopper released its first two solutions, SkyHopper PRO and
SkyHopper ONE, in Q2 & Q3 respectively. These offer communication solutions for professional commercial drones &
robotics. Mobilicom released SkyHopper PRO V in Q4, which offers video processing & analytics in addition to
communication.
Additionally, SkyHopper has exceeded its goal of receiving two certifications in 2017, with the receipt of a third
certification, enabling the solutions to be sold to an additional, unplanned market. To date, SkyHopper has received US
(FCC) certification, European (CE) certification, as well as Japanese (TELEC) certification.
Ecosystem Compatibility & Partnership
Mobilicom has established compatibility and partnership with five key drone components within the commercial drone
ecosystem to lock in market share and broaden its market positioning. This is achieved by leveraging ecosystem
compatibilities and partnerships to provide a more complete solution and accelerated integration process for SkyHopper
customers. Mobilicom has established compatibility with five best-of-breed companies within the commercial drone
market, including those providing flight controllers, payloads and software for various services.
Overall, the achievements Mobilicom has made in executing its SkyHopper strategy have brought the entity significant
success, which will position the Company strongly for future growth.
5. Financial Position
In 2017, Mobilicom Limited secured several contracts with customers across both its Mobilicom and SkyHopper entities.
The Purchase Orders (POs) that were received resulting from these contracts were significantly backlogged, placing
Mobilicom in a positive position for 2018 as the backlogged POs translate into significant revenue generation in 2018.
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Mobilicom Limited
Directors' report
31 December 2017
The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as
the 'consolidated entity') consisting of Mobilicom Limited (referred to hereafter as the 'Company', 'Mobilicom Australia' or
'parent entity') and the entities it controlled at the end of, or during, the year ended 31 December 2017.
Directors
The following persons were directors of Mobilicom Limited during the whole of the financial year and up to the date of this
report, unless otherwise stated:
Oren Elkayam (Chairman and Managing Director) - appointed 2 February 2017
Yossi Segal (Executive Director) - appointed 27 April 2017
Campbell McComb (Non-executive Director) - appointed 2 February 2017
Mark Licciardo (Non-executive Director) - appointed 28 February 2017
Alexander Fabbri (Non-executive Director) - appointed 2 February 2017 and resigned 28 February 2017
Principal activities
On 27 April 2017, the Company (‘Mobilicom (Australia) Ltd’ ABN 26617155978) acquired 100% of the issued capital in
Mobilicom Ltd (Company no. 513891753) ('Mobilicom Israel'), a company incorporated in Israel, in exchange for
174,626,715 fully paid ordinary shares.
For accounting purposes, Mobilicom Israel has been identified as the controlling entity of the consolidated group. The
accompanying consolidated financial statements represent a continuation of Mobilicom Israel's financial statements. The
consolidated results reflect the financial year of Mobilicom Israel plus Mobilicom Australia from the date of incorporation, 2
February 2017 to 31 December 2017. The comparative period results reflect Mobilicom Israel only.
The consolidated entity's principal activity is seeking to further commercialise solutions for mission critical and remote
mobile private communications networks without the need to rely upon or utilise existing infrastructure. The Company's
product portfolio is fully designed and developed in-house and relies on extensive know how and experience gained by
leading mission- critical-communication systems development worldwide.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Review of operations
The loss for the consolidated entity after providing for income tax amounted to $6,089,936 (31 December 2016: $443,355).
Revenues
During the year, the Company completed its Initial Public Offering (IPO) on the Australian Securities Exchange. A total of
$7.5m was raised before costs. The use of funds enable Mobilicom to grow its activities in both Government & Enterprise
with solutions from Mobilicom business entity. The funds are proposed to build on existing customers and develop new
ones in a number of sectors including Unmanned Vehicles; Offshore Oil, Gas & Energy; and Homeland Security & Public
Safety. As well as supporting the company’s expansion into the commercial and industrial market, with focus on Drones
and Robotics, with research and development of new products and solutions from SkyHopper business entities. This
market is expected to grow over the next two years adding a significant additional revenue line for the Company. Sales for
2016 were high thanks to projects (including modification NRE revenues) that were initiated in 2015 and were recognised
in 2016 as revenue was generated. Mobilicom has continued to drive successful sales in 2017 with its core business to
existing and new customers, although reduced due to timing in the awarding of government contracts.
The Mobilicom entity continues to be the primary revenue generator with its core MCU business in the Government &
Enterprise sector. The Company has driven sales in the unmanned vehicle and autonomous platform market, the offshore
oil, gas & energy market and with several Homeland Security (HLS) integrators. Looking forward to 2018, the Mobilicom
entity is expected to continue as the key revenue driver for the Company.
The SkyHopper business has the objective of shortening Mobilicom’s sales cycle and driving mass quantities of the
Company’s products, as the commercial drone market ramps up, Mobilicom expects to enjoy an increase in revenue, as its
SkyHopper products will be integrated with established manufacturers in the sector.
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Mobilicom Limited
Directors' report
31 December 2017
Expenses
During the year, as indicated above, the Company completed its IPO leading to an increase in expenses. A significant
portion of these costs are either non-recurring or non-cash. For example, amount of approximately $1,704,088 has been
accounted for during the year in relation to advisor, Director and employee shares and options issued.
Additional costs amounting to approximately $1,100,000 relating to the Company's IPO have been expensed during the
period and will not recur in future financial periods.
As part of the company’s strategy to expand into the commercial and industrial market utilizing its proven technology, the
company grew its sales and marketing team, increased its R&D expenses to develop a new brand of products (SkyHopper)
and increased its manufacturing expenses for initial introduction of the new product family.
The company received CE Certification for SkyHopper product to enable to sell and marketed in the European Union.
Telec certification enable the SkyHopper family of products to be sold , marketed and operated in Japan
The company passes FCC lab testing for SkyHopper which enable commencement of sales and marketing in US, with
other regions recognising FCC certification.
During the financial year there was increased international expenditure in order to secure design win with drones and
robotics manufactures, as well as eco-system partnerships.
Statement of financial position
As a result of the capital raising, the Company has increased its cash reserves to $8,077,472 at 31 December 2017. The
Company had a net asset position of $7,338,414 (compared to a net deficit at 31 December 2016 of $85,760). This leaves
Mobilicom in a very sound position to implement the Company's plan over coming periods.
The Company received government grant from the Israel Innovation Authority for its project, the scope of which is valued at
$650,000 for 2018.
Mobilicom is in a positive position for 2018 as the backlogged POs translate into significant revenue generation in 2018.
The Company closed the year with positive cash in the bank in excess of what was raised through the initial public offering.
Based on the last quarter Net Burn Rate the company has more than 8 quarters forward. Although the company plans to
increase its burn rate to support faster growth in its activities and business results.
Significant changes in the state of affairs
On 23 February 2017 the Company, being the Australian entity, changed its name from A.C.N. 617 155 978 Pty Ltd to
Mobilicom Limited.
In order to IPO on the ASX, Mobilicom Ltd (Company no. 513891753) ('Mobilicom Israel') underwent a restructure involving
the insertion of an Australian holding Company Mobilicom Limited. A total 174,626,715 fully paid ordinary shares were
issued to the shareholders in Mobilicom Israel in relation to the restructure.
In accordance with the Company's Replacement Prospectus dated 21 March 2017, the following securities were issued:
Public Offer - 37,500,000 fully paid ordinary shares issued at $0.20 (20 cents) per share, raising $7,500,000 (before costs);
Vendor Offer - 174,626,715 fully paid ordinary shares to the vendors of Mobilicom Israel;
Advisor and Director Offer - 5,250,000 fully paid ordinary shares and 5,250,000 unlisted options; and
Exchange Option Offer - 5,373,284 unlisted options.
Mobilicom Australia was admitted to the official list on the Australian Securities Exchange (ASX) on 28 April 2017 under the
new ASX Code "MOB". The Company's securities commenced trading on 2 May 2017.
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Mobilicom Limited
Directors' report
31 December 2017
On 3 August 2017 the Company announced the release of SkyHopper ONE, a UAV data link targeting the high-end DIY
drone market segment.
The product is the second to be release from the SkyHopper family of products and is available via Amazon and Ebay in
selected countries, as well as on the SkyHopper website.
There were no other significant changes in the state of affairs of the consolidated entity during the financial year.
Matters subsequent to the end of the financial year
In addition to six design wins in 2017, the Company achieved an additional 1 design win in February 2018. Currently the
Company has achieved 7 design wins from a target of 8 through 18/Q2.
At the end of 2017, the Company received a significant backlog of purchase orders which will translate into 2018 revenues.
The company is establishing new R&D activities in Europe which focus on software development.
No other matter or circumstance has arisen since 31 December 2017 that has significantly affected, or may significantly
affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in
future financial years.
Likely developments and expected results of operations
Information on likely developments in the operations of the consolidated entity and the expected results of operations have
not been included in this report because the directors believe it would be likely to result in unreasonable prejudice to the
consolidated entity.
Environmental regulation
The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State
law.
Information on directors
Name:
Title:
Qualifications:
Experience and expertise:
Mr Oren Elkayam
Chairman and Managing Director (appointed 2 February 2017)
B.Sc, MBA
Mr Elkayam (CEO and Co-Founder of Mobilicom Israel) has worked at both business
development and CEO levels with leading companies in the wireless communications
space (including as VP Business Development at Runcom Ltd and CEO of Sortech
Ltd). Mr Elkayam has initiated and negotiated contracts with top global carrier
companies such as Alcatel-Lucent, Nortel, Mitsubishi and Motorola. He has also led a
number of investment rounds with US venture capital funds. He has been a voting
member on both the Institute of Electrical and Electronic Engineers (IEEE) and
WiMAX international committees, and served as an officer in the Israeli Air Force in
an elite research and development unit.
No other current directorships of listed companies
No special responsibilities
170,000 Fully paid ordinary shares held in the name of Elkayam 101 Ltd – Director.
the name of Oren Elkayam.
925,000 Fully paid ordinary shares held
36,404,774 Fully paid ordinary shares held in the name of IBI Trust Management
which acts as custodian/bare trustee of the shares.
462,500 Options to acquire fully paid ordinary shares exercisable at $0.20, vesting 6
issue date.
months
462,500 Options to acquire fully paid ordinary shares exercisable at $0.20, vesting 12
months from the issue date, and expiring 5 years from the issue date.
issue date, and expiring 5 years
from
from
the
the
in
Other current directorships:
Former directorships (last 3 years): No other directorships of listed companies
Special responsibilities:
Interests in shares:
Interests in options:
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Mobilicom Limited
Directors' report
31 December 2017
Name:
Title:
Qualifications:
Experience and expertise:
Interests in options:
Name:
Title:
Qualifications:
Experience and expertise:
Other current directorships:
Former directorships (last 3 years): No other directorships of listed companies
Special responsibilities:
Interests in shares:
Mr Yossi Segal
Executive Director (appointed 27 April 2017)
B.Sc, M.Sc, MBA
Mr Segal (Vice President of R&D and Co-Founder of Mobilicom Israel) was the former
CTO and a founding member of Runcom Ltd. Mr Segal is a worldwide expert in
OFDM/A and has written essential patents for OFDM/A technology, being the first to
implement OFDM/A in a working product. He has also previously led the design and
development groups of three mobile integrated circuits (IC chip) and eight wireless
broadband systems which are currently in operation and sold worldwide. Mr Segal
has taken a leading role in several international wireless standards (IEEE and ETSI)
as a committee voting member, and served in the Israeli Army as an officer in an elite
electronic warfare research and development unit.
No other current directorships of listed companies
No special responsibilities
925,000 ordinary fully paid shares
30,167,158 Fully paid ordinary shares held in the name of IBI Trust Management
which acts as custodian/bare trustee of the shares
462,500 Options to acquire fully paid ordinary shares exercisable at $0.20, vesting 6
months
issue date.
462,500 Options to acquire fully paid ordinary shares exercisable at $0.20, vesting 12
months from the issue date, and expiring 5 years from the issue date.
issue date, and expiring 5 years
from
from
the
the
Mr Campbell McComb
Non-executive Director (appointed 2 February 2017)
BEc, GAICD, FINSIA
Mr McComb has over 20 years’ experience in funds management and investment
banking, and has overseen the development of numerous businesses. Over his
career, Mr McComb has gained significant investment experience across equity
securities, venture capital and private equity. Mr McComb currently runs the Venture
Capital and Funds business of Greenwich Capital Partners, an alternative investment
management firm with offices in Melbourne and Sydney, and is an adviser to a
Singapore based Alternatives Fund. Most recently Mr McComb served as Chief
Investment Officer of The Adcock Group, a single family office, and prior to that as
Managing Director of Easton Investments, an ASX listed Investment Company, where
he was responsible for overseeing the growth of the business to approximately A$1bn
of funds under management and advice.
No other current directorships of listed companies
No special responsibilities
100,000 Fully paid ordinary shares held in the name of CM2 Investments Pty Ltd
(McComb Super Fund A/C) – Director.
2,130,000 Fully paid ordinary shares held in the name of Camac Investments Pty Ltd
– Director and Shareholder.
2,500,000 Options to acquire fully paid ordinary shares exercisable at $0.20 and
expiring 3 years from the issue date.
Other current directorships:
Former directorships (last 3 years): DirectMoney Ltd
Special responsibilities:
Interests in shares:
Interests in options:
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Mobilicom Limited
Directors' report
31 December 2017
Name:
Title:
Qualifications:
Experience and expertise:
Mr Mark Licciardo
Non-executive Director (appointed 28 February 2017)
B Bus(Acc), GradDip CSP, FGIA, FCIS, FAICD
Mark Licciardo is the founder and Managing Director of Mertons Corporate Services.
A former company secretary of Top 50 ASX listed companies Transurban Group and
Australian Foundation Investment Company Limited, his expertise includes working
with boards of directors in the areas of corporate governance, administration and
company secretarial. Mark is also the current Chairman of the Academy of Design
Australia Limited and a former Chairman of the Governance Institute of Australia
Victoria division and Melbourne Fringe Festival. Mark is also a director of a number
of public and private companies. Current ASX listed company directorships are
shown below.
Frontier Digital Ventures Limited, Ensogo Limited
No special responsibilities
100,000 Fully paid ordinary shares held in the name of Loire Investments Pty Ltd
(Loire Investment A/C) - Director
Other current directorships:
Former directorships (last 3 years): iCar Asia Limited
Special responsibilities:
Interests in shares:
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of all
other types of entities, unless otherwise stated.
'Former directorships (last 3 years)' quoted above are directorships held in the last 3 years for listed entities only and
excludes directorships of all other types of entities, unless otherwise stated.
Company secretary
Kate Goland (appointed 28 February 2017)
Kate Goland CPA, GIA (Cert) Mertons Corporate Services, is an experienced accounting and company secretarial
professional. She has demonstrated expertise in supporting clients in meeting their corporate obligations and ASIC
compliance requirements. She joined Mertons from BDO where she assisted clients within the company secretarial
division. Kate is a current Company Secretary of various public and private companies and has held the role of Company
Secretary for a not for profit organisation. She has a strong understanding of corporate compliance matters.
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') held during the year ended 31 December 2017,
and the number of meetings attended by each director were:
Mr O Elkayam
Mr Y Segal
Mr C McComb
Mr M Licciardo
Mr A Fabbri
Full Board
Attended
Held
8
7
7
8
-
8
7
8
8
-
Held: represents the number of meetings held during the time the director held office.
Remuneration report (audited)
The remuneration report details the key management personnel remuneration arrangements for the consolidated entity, in
accordance with the requirements of the Corporations Act 2001 and its Regulations.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including all directors.
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Mobilicom Limited
Directors' report
31 December 2017
The remuneration report is set out under the following main headings:
●
●
●
●
●
Principles used to determine the nature and amount of remuneration
Details of remuneration
Service agreements
Share-based compensation
Additional disclosures relating to key management personnel
Principles used to determine the nature and amount of remuneration
The objective of the consolidated entity's executive reward framework is to ensure reward for performance is competitive
and appropriate for the results delivered. The framework aligns executive reward with the achievement of strategic
objectives and the creation of value for shareholders, and it is considered to conform to the market best practice for the
delivery of reward. The Board of Directors ('the Board') ensures that executive reward satisfies the following key criteria for
good reward governance practices:
●
●
●
●
competitiveness and reasonableness
acceptability to shareholders
performance linkage / alignment of executive compensation
transparency
The Board is responsible for determining and reviewing remuneration arrangements for its directors and executives. The
performance of the consolidated entity depends on the quality of its directors and executives. The remuneration philosophy
is to attract, motivate and retain high performance and high quality personnel.
The reward framework is designed to align executive reward to shareholders' interests. The Board have considered that it
should seek to enhance shareholders' interests by:
●
●
having economic profit as a core component of plan design
focusing on sustained growth in shareholder wealth, consisting of dividends and growth in share price, and delivering
constant or increasing return on assets as well as focusing the executive on key non-financial drivers of value
attracting and retaining high calibre executives
●
Additionally, the reward framework should seek to enhance executives' interests by:
●
●
●
rewarding capability and experience
reflecting competitive reward for contribution to growth in shareholder wealth
providing a clear structure for earning rewards
In accordance with best practice corporate governance, the structure of non-executive director and executive director
remuneration is separate.
Non-executive directors remuneration
Fees and payments to non-executive directors reflect the demands and responsibilities of their role. Non-executive
directors' fees and payments are reviewed annually by the Board. The Board may, from time to time, receive advice from
independent remuneration consultants to ensure non-executive directors' fees and payments are appropriate and in line
with the market.
ASX listing rules require the aggregate non-executive directors' remuneration be determined periodically by a general
meeting. The most recent determination was at the Annual General Meeting held in February 2017, where the
shareholders approved a maximum annual aggregate remuneration of $250,000.
Executive remuneration
The consolidated entity aims to reward executives based on their position and responsibility, with a level and mix of
remuneration which has both fixed and variable components.
The executive remuneration and reward framework has four components:
●
●
●
●
base pay and non-monetary benefits
short-term performance incentives
share-based payments
other remuneration such as superannuation and long service leave
The combination of these comprises the executive's total remuneration.
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Mobilicom Limited
Directors' report
31 December 2017
Fixed remuneration, consisting of base salary, superannuation and non-monetary benefits, are reviewed annually by the
Board based on individual and business unit performance, the overall performance of the consolidated entity and
comparable market remunerations.
Executives may receive their fixed remuneration in the form of cash or other fringe benefits (for example motor vehicle
benefits) where it does not create any additional costs to the consolidated entity and provides additional value to the
executive.
The short-term incentives ('STI') program is designed to align the targets of the business units with the performance
hurdles of executives. STI payments are granted to executives based on specific annual targets and key performance
indicators ('KPI's') being achieved. KPI's include profit contribution, customer satisfaction, leadership contribution and
product management.
The long-term incentives ('LTI') include long service leave and share-based payments. Shares may be awarded to
executives over a period of three years based on long-term incentive measures. These include increase in shareholders
value relative to the entire market and the increase compared to the consolidated entity's direct competitors.
Details of remuneration
Amounts of remuneration
Details of the remuneration of key management personnel of the consolidated entity are set out in the following tables.
The key management personnel of the consolidated entity consisted of the following directors of Mobilicom Limited :
●
●
●
●
●
Oren Elkayam (Chairman and Managing Director) - appointed 2 February 2017
Yossi Segal (Executive Director) - appointed 27 April 2017
Campbell McComb (Non-executive Director) - appointed 2 February 2017
Mark Licciardo (Non-executive Director) - appointed 28 February 2017
Alexander Fabbri (Non-executive Director) - appointed 2 February 2017 and resigned 28 February 2017
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
Cash salary
and fees
$
Cash
bonus
$
Non-
Super-
monetary annuation
$
$
Long
service
leave
$
Equity-
settled
$
Total
$
36,663
33,330
-
-
-
-
-
-
293,630
293,630
657,253
250,000
250,000
500,000
13,726
13,726
27,452
91,642
91,642
183,284
-
-
-
-
-
-
-
36,663
33,330
947,556
298,558
298,558
947,556
597,116 1,965,105
2017
Non-Executive Directors:
Mr C McComb*
Mr M Licciardo**
Executive Directors:
Mr O Elkayam***
Mr Y Segal***
Mr McComb received his remuneration through Camac Investments Pty Ltd (an entity associated with him).
*
**
Mr Licciardo received his remuneration through Mertons Corporate Services Pty Ltd (an entity associated with him).
*** Mr Elkayam and Mr Yossi each received a payment of $250,000 awarded by Mobilicom Israel as part of the Initial
Public Offer process.
12
Mobilicom Limited
Directors' report
31 December 2017
2016
Executive Directors:
Mr O Elkayam
Mr Y Segal
Short-term benefits
Post-
employment
benefits
Long-term
benefits
Share-
based
payments
Cash salary
and fees
$
Cash
bonus
$
Non-
Super-
monetary annuation
$
$
Long
service
leave
$
Equity-
settled
$
Total
$
169,234
169,234
338,468
-
-
-
12,882
12,882
25,764
54,284
54,284
108,568
-
-
-
-
-
-
236,400
236,400
472,800
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Mr C McComb
Mr M Licciardo
Executive Directors:
Mr O Elkayam
Mr Y Segal
Fixed remuneration
2016
2017
At risk - STI
At risk - LTI
2017
2016
2017
2016
100%
100%
-
-
68%
68%
100%
100%
-
-
-
-
-
-
-
-
-
-
32%
32%
-
-
-
-
Service agreements
Remuneration and other terms of employment for key management personnel are formalised in service agreements.
Details of these agreements are as follows:
Name:
Title:
Agreement commenced:
Details:
Name:
Title:
Agreement commenced:
Details:
Oren Elkayam
Chairman and Managing Director
28 February 2017
$250,000 USD per annum.
Mr Elkayam's employment with Mobilicom Israel may be terminated upon 60 days’
written notice, or immediately by Mobilicom Israel for cause which include a breach of
trust or fiduciary duty (for example, theft), conviction of a criminal offense and
negligence causing harm to Mobilicom’s business or reputation. If terminated for any
reason other than for cause, Mr Elkayam will be entitled to a paid salary, together with
other benefits detailed in the employment agreements, for a period of 6 months
following termination.
Yossi Segal
Executive Director
28 February 2017
$250,000 USD per annum.
Mr Segal’s employment with Mobilicom Israel may be terminated upon 60 days’
written notice, or immediately by Mobilicom Israel for cause which include a breach of
trust or fiduciary duty (for example, theft), conviction of a criminal offense and
negligence causing harm to Mobilicom Israel’s business or reputation. If terminated
for any reason other than for cause, Mr Segal will be entitled to a paid salary, together
with other benefits detailed in the employment agreements, for a period of 6 months
following termination.
Key management personnel have no entitlement to termination payments in the event of removal for misconduct.
13
Mobilicom Limited
Directors' report
31 December 2017
Share-based compensation
Issue of shares
Details of shares issued to directors and other key management personnel as part of compensation during the year ended
31 December 2017 are set out below:
Name
Mr O Elkayam
My Y Segal
Date
27/04/2017
27/04/2017
Shares
Issue price
$
925,000
925,000
$0.2000
$0.2000
185,000
185,000
Options
The terms and conditions of each grant of options over ordinary shares affecting remuneration of directors and other key
management personnel in this financial year or future reporting years are as follows:
Grant date
28/04/2017
28/04/2017
Vesting date and
exercisable date
28/10/2017
28/04/2018
Expiry date
28/04/2022
28/04/2022
Options granted carry no dividend or voting rights.
Additional disclosures relating to key management personnel
Fair value
per option
Exercise price at grant date
$0.2000
$0.2000
$0.1473
$0.1473
Shareholding
The number of shares in the Company held during the financial year by each director and other members of key
management personnel of the consolidated entity, including their personally related parties, is set out below:
Balance at Received
as part of
the start of
the year
remuneration Additions
Disposals/
other
Balance at
the end of
the year
Ordinary shares*
Mr O Elkayam
Mr Y Segal
Mr C McComb
Mr M Licciardo
-
-
-
-
-
925,000 36,574,774
925,000 30,167,158
2,230,000
100,000
1,850,000 69,071,932
-
-
- 37,499,774
- 31,092,158
2,230,000
-
-
100,000
- 70,921,932
*
The above disclosures are in relation to the listed entity
Option holding
The number of options over ordinary shares in the Company held during the financial year by each director and other
members of key management personnel of the consolidated entity, including their personally related parties, is set out
below:
Options over ordinary shares*
Mr O Elkayam
Mr Y Segal
Mr C McComb
Balance at
Granted
the start of Granted as as part of the
Expired/
forfeited/
Balance at
the end of
the year
remuneration
Advisor and
Director offer
other
the year
-
-
-
-
925,000
925,000
-
1,850,000
-
-
2,500,000
2,500,000
-
-
-
-
925,000
925,000
2,500,000
4,350,000
*
The above disclosures are in relation to the listed entity
14
Mobilicom Limited
Directors' report
31 December 2017
Other transactions with key management personnel and their related parties
During the year the Company repaid payables and loans amounting to $128,717 to Mr Elkayam.
During the year the Company repaid payables and loans amounting to $127,632 to Mr Segal.
As part of the Company's initial public offering, Camac Investments Pty Ltd (a director related entity to Mr McComb)
received 2,130,000 shares with a fair value of $426,000, and 2,500,000 options with a fair value of $312,068 for corporate
advisory fees.
An amount of $40,000 was paid to Mertons Corporate Services Pty Ltd (a director related entity to Mr Licciardo) for
provision of corporate secretarial services.
Payables to key management personnel and their related parties
The Company has director fees payable to a director related entity (Camac Investments Pty Ltd) of $6,666.
The Company has director fees payable to a director related entity (Mertons Corporate Services Pty Ltd) of $16,154.
This concludes the remuneration report, which has been audited.
Shares under option
Unissued ordinary shares of Mobilicom Limited under option at the date of this report are as follows:
Grant date
27/04/2017
27/04/2017
27/04/2017
27/04/2017
27/04/2017
27/04/2017
27/04/2017
27/04/2017
Expiry date
27/04/2020
27/04/2022
20/03/2020
21/09/2021
25/11/2025
20/10/2026
25/09/2021
05/11/2025
Exercise
price
Number
under option
$0.2000
$0.2000
$0.0472
$0.0472
$0.1233
$0.1233
$0.0472
$0.1233
3,400,000
1,850,000
460,568
460,568
307,044
614,090
1,919,030
1,151,417
10,162,717
No person entitled to exercise the options had or has any right by virtue of the option to participate in any share issue of
the Company or of any other body corporate.
Shares issued on the exercise of options
There were no ordinary shares of Mobilicom Limited issued on the exercise of options during the year ended 31 December
2017 and up to the date of this report.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a
director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of
the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits
disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the
Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the
Company or any related entity.
15
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
Collins Square, Tower Four
Level 18, 727 Collins Street
Melbourne VIC 3008
GPO Box 5099 Melbourne VIC 3001
Australia
DECLARATION OF INDEPENDENCE BY TIM FAIRCLOUGH TO THE DIRECTORS OF MOBILICOM LIMITED
As lead auditor of Mobilicom Limited for the year ended 31 December 2017, I declare that, to the best
of my knowledge and belief, there have been:
1. No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
2. No contraventions of any applicable code of professional conduct in relation to the audit.
This declaration is in respect of Mobilicom Limited and the entities it controlled during the period.
Tim Fairclough
Partner
BDO East Coast Partnership
Melbourne, 16 February 2018
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
17
Mobilicom Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 31 December 2017
Revenue
Cost of sales
Government grants
Interest received
Other income
Expenses
Selling and marketing expenses
Research and development
General and administration expenses
Listing fees
Share based payments
Finance costs
Loss before income tax expense
Consolidated
Note
2017
$
2016
$
6
7
1,519,719
2,232,653
(384,598)
(431,868)
230,673
25,590
256,263
422,784
-
422,784
8
9
10
11
34
(1,076,372)
(2,063,294)
(1,109,584)
(1,103,425)
(1,701,529)
(427,116)
(275,948)
(1,761,226)
(576,794)
-
-
(52,956)
(6,089,936)
(443,355)
Income tax expense
12
-
-
Loss after income tax expense for the year attributable to the owners of
Mobilicom Limited
(6,089,936)
(443,355)
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Remeasurement of defined benefit plans
Items that may be reclassified subsequently to profit or loss
Foreign currency translation
Other comprehensive income for the year, net of tax
Total comprehensive income for the year attributable to the owners of
Mobilicom Limited
-
(153,537)
(168,595)
(68,332)
(168,595)
(221,869)
(6,258,531)
(665,224)
Cents
Cents
Basic earnings per share
Diluted earnings per share
33
33
(4.12)
(4.12)
(4.43)
(4.43)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
18
Mobilicom Limited
Consolidated statement of financial position
As at 31 December 2017
Assets
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Total current assets
Non-current assets
Property, plant and equipment
Total non-current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Borrowings
Total current liabilities
Non-current liabilities
Employee benefits
Governmental liabilities on grants received
Total non-current liabilities
Total liabilities
Net assets/(liabilities)
Equity
Issued capital
Reserves
Accumulated losses
Total equity/(deficiency)
Consolidated
Note
2017
$
2016
$
13
14
15
8,077,472
423,644
303,936
8,805,052
4,127,057
390,658
170,007
4,687,722
42,440
42,440
37,871
37,871
8,847,492
4,725,593
16
17
18
19
888,732
-
888,732
901,511
3,530,790
4,432,301
456,959
163,387
620,346
216,541
162,511
379,052
1,509,078
4,811,353
7,338,414
(85,760)
20
21
19,055,915
763,412
(12,480,913)
4,577,223
1,727,994
(6,390,977)
7,338,414
(85,760)
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
19
Mobilicom Limited
Consolidated statement of changes in equity
For the year ended 31 December 2017
Consolidated
Issued
capital
$
Share based
payments
reserve
$
Foreign
currency
reserve
$
Accumulated
losses
$
Total equity
$
Balance at 1 January 2016
4,960,233
1,709,078
Loss after income tax expense for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Share-based payments (note 34)
Payments for shareholders in exchange for
waiver on equity rights
-
-
-
-
-
-
-
-
(5,794,085)
875,226
(443,355)
(443,355)
(68,332)
(153,537)
(221,869)
(68,332)
(596,892)
(665,224)
-
87,248
(383,010)
-
-
-
-
-
87,248
(383,010)
Balance at 31 December 2016
4,577,223
1,796,326
(68,332)
(6,390,977)
(85,760)
Consolidated
Issued
capital
$
Share based
payments
reserve
$
Foreign
currency
reserves
$
Accumulated
losses
$
Total equity
$
Balance at 1 January 2017
4,577,223
1,796,326
(68,332)
(6,390,977)
(85,760)
Loss after income tax expense for the year
Other comprehensive income for the year, net
of tax
Total comprehensive income for the year
Transactions with owners in their capacity as
owners:
Share-based payments (note 34)
Conversion of convertible notes
Proceeds from completion of Initial Price
Offering (IPO)
Transfer from Share based payments reserve
Warrants exercised
Capital raising costs
-
-
-
-
-
-
-
(6,089,936)
(6,089,936)
(168,595)
-
(168,595)
(168,595)
(6,089,936)
(6,258,531)
1,050,000
4,774,885
693,171
-
7,500,000
1,039,568
748,301
(634,062)
-
(1,039,568)
(449,590)
-
-
-
-
-
-
-
-
-
-
-
-
-
1,743,171
4,774,885
7,500,000
-
298,711
(634,062)
Balance at 31 December 2017
19,055,915
1,000,339
(236,927)
(12,480,913)
7,338,414
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
20
Mobilicom Limited
Consolidated statement of cash flows
For the year ended 31 December 2017
Cash flows from operating activities
Receipts from customers (inclusive of GST)
Interest received
Payments to suppliers and employees (inclusive of GST)
Interest and other finance costs paid
Consolidated
Note
2017
$
2016
$
1,541,780
25,590
(5,162,466)
(285,116)
1,992,217
-
(2,674,075)
(52,956)
Net cash used in operating activities
32
(3,880,212)
(734,814)
Cash flows from investing activities
Payments for property, plant and equipment
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of shares
Proceed from issue of convertible notes, net of costs
Proceeds from exercise of share options
Payments for shareholders in exchange for waiver on equity rights
Proceeds from loan from related parties
Repayment of borrowings
Payment of transaction costs related to issues of shares, convertible notes, options
20
Net cash from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
(24,046)
(13,197)
(24,046)
(13,197)
7,500,000
1,147,461
298,711
-
-
(270,625)
(634,062)
-
3,316,331
-
(383,010)
5,753
-
-
8,041,485
2,939,074
4,137,227
4,127,057
(186,812)
2,191,063
1,935,994
-
Cash and cash equivalents at the end of the financial year
13
8,077,472
4,127,057
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
21
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 1. General information
The financial statements cover Mobilicom Limited as a Group consisting of Mobilicom Limited and the entities it controlled
at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Mobilicom Limited's
functional and presentation currency.
Mobilicom Limited is a listed public company limited by shares, incorporated and domiciled in Australia. Its registered office
and principal place of business are:
Registered office
Principal place of business
Suite 1, Level 6, 50 Queen Street
Melbourne, Victoria, 3000
Australia
Suite 1, Level 6, 50 Queen Street
Melbourne, Victoria, 3000
Australia
A description of the nature of the consolidated entity's operations and its principal activities are included in the directors'
report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 16 February 2018. The
directors have the power to amend and reissue the financial statements.
Note 2. Background
These financial statements include the financial statements of Mobilicom Limited (the “Company”), and its legal
subsidiaries (the “Consolidated entity”). Material accounting policies adopted in the preparation of these financial
statements are presented below and have been consistently applied unless otherwise stated.
The consolidated entity has elected to present the statement of comprehensive income using the function of expense
method.
In order to IPO on the ASX, Mobilicom Israel underwent a restructure in the reporting period involving the insertion of an
Australian holding company Mobilicom Limited.
On 27 April 2017 Mobilicom Limited ("Mobilicom Australia") completed a capital reorganisation transaction with the
shareholders of Mobilicom Israel.
In accordance with the Australian Accounting Standards, the transaction does not constitute a business combination and
the financial report has been prepared as a continuation of Mobilicom Israel.
The comparative financial information included in the Company's financial information is that of Mobilicom Israel, not the
Company.
The accounting policies adopted are consistent with the accounting policies of Mobilicom Israel's last annual financial
report for the year ended 31 December 2016.
These financial statements are presented in Australian dollars and the controlling entity, Mobilicom Australia, has a
functional currency of the Australian Dollar (AUD).
The functional currency of Mobilicom Israel is the New Israeli Shekel.
The following significant accounting policies have been adopted in the preparation and presentation of the financial report:
Note 3. Significant accounting policies
The principal accounting policies adopted in the preparation of the financial statements are set out either in the respective
notes or below. These policies have been consistently applied to all the years presented, unless otherwise stated.
New or amended Accounting Standards and Interpretations adopted
The consolidated entity has adopted all of the new or amended Accounting Standards and Interpretations issued by the
Australian Accounting Standards Board ('AASB') that are mandatory for the current reporting period.
22
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 3. Significant accounting policies (continued)
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.
Basis of preparation
These general purpose financial statements have been prepared in accordance with Australian Accounting Standards and
Interpretations issued by the Australian Accounting Standards Board ('AASB') and the Corporations Act 2001, as
appropriate for for-profit oriented entities. These financial statements also comply with International Financial Reporting
Standards as issued by the International Accounting Standards Board ('IASB').
Historical cost convention
The financial statements have been prepared under the historical cost convention, except for, where applicable, the
revaluation of financial assets and liabilities at fair value through profit or loss, investment properties, certain classes of
property, plant and equipment and derivative financial instruments.
Critical accounting estimates
The preparation of the financial statements requires the use of certain critical accounting estimates. It also requires
management to exercise its judgement in the process of applying the consolidated entity's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the
financial statements, are disclosed in note 4.
Parent entity information
In accordance with the Corporations Act 2001, these financial statements present the results of the consolidated entity
only. Supplementary information about the parent entity is disclosed in note 29.
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Mobilicom Limited
('Company' or 'parent entity') as at 31 December 2017 and the results of all subsidiaries for the year then ended. Mobilicom
Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity
when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control
ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are
eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset
transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the
policies adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest,
without the loss of control, is accounted for as an equity transaction, where the difference between the consideration
transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity
attributable to the parent.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and
non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The
consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained
together with any gain or loss in profit or loss.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Mobilicom Limited 's presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are
recognised in profit or loss.
23
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 3. Significant accounting policies (continued)
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the
reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average
exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange
differences are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Current and non-current classification
Assets and liabilities are presented in the statement of financial position based on current and non-current classification.
An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the
consolidated entity's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised
within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged
or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.
Research and development
Expenditure during the research phase of a project is recognised as an expense when incurred.
Development costs are capitalised only when technical feasibility studies identify that the project will develop an intangible
asset that will be completed and available for use or sale, that there are adequate technical, financial and other resources
to complete the development, that it will deliver future economic benefits and these benefits can be measured reliably.
Impairment of financial assets
The consolidated entity assesses at the end of each reporting period whether there is any objective evidence of impairment
of financial assets carried at amortized cost.
Impairment of non-financial assets
Goodwill and other intangible assets that have an indefinite useful life are not subject to amortisation and are tested
annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.
Other non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the
present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or
cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to
form a cash-generating unit.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in
the period in which they are incurred.
24
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 3. Significant accounting policies (continued)
Defined benefit plans
The Company operates a defined benefit plan in respect of severance pay pursuant to the Severance Pay Law. According
to the Law, employees are entitled to severance pay upon dismissal retirement and several other events prescribed by that
Law. The liability for termination of employee-employer relationship is measured using the projected unit credit method.
The actuarial assumptions include rates of employee turnover and future salary increases based on the estimated timing of
payment. The amounts are presented based on discounted expected future cash flows using a discount rate determined by
reference to yields on corporate bonds with a term that matches the estimated term of the benefit plan. In respect of its
severance pay obligation to certain of its employees, the Company makes current deposits in pension funds and insurance
companies ("plan assets").
Plan assets comprise assets held by a Long-term employee benefits fund or qualifying insurance policies. Plan assets are
not available to the Company's own creditors and cannot be returned directly to the Company. The liability for employee
benefits presented in the statement of financial position presents the present value of the defined benefit obligation less the
fair value of the plan assets.
Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in
net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on
the net defined benefit liability), are recognized immediately in the statement of financial position with a corresponding debit
or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit
or loss in subsequent periods. Past service costs are recognised in profit or loss.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not
recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part
of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST
recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of
financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing
activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the tax authority.
New Accounting Standards and Interpretations not yet mandatory or early adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
mandatory, have not been early adopted by the consolidated entity for the half-year reporting period ended 31 December
2017. The consolidated entity's assessment of the impact of these new or amended Accounting Standards and
Interpretations, most relevant to the consolidated entity, are set out below.
AASB 9 Financial Instruments
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard replaces all
previous versions of AASB 9 and completes the project to replace IAS 39 'Financial Instruments: Recognition and
Measurement'. AASB 9 introduces new classification and measurement models for financial assets. A financial asset shall
be measured at amortised cost, if it is held within a business model whose objective is to hold assets in order to collect
contractual cash flows, which arise on specified dates and solely principal and interest. All other financial instrument assets
are to be classified and measured at fair value through profit or loss unless the entity makes an irrevocable election on
initial recognition to present gains and losses on equity instruments (that are not held-for-trading) in other comprehensive
income ('OCI'). For financial liabilities, the standard requires the portion of the change in fair value that relates to the
entity's own credit risk to be presented in OCI (unless it would create an accounting mismatch). New simpler hedge
accounting requirements are intended to more closely align the accounting treatment with the risk management activities of
the entity. New impairment requirements will use an 'expected credit loss' ('ECL') model to recognise an allowance.
Impairment will be measured under a 12-month ECL method unless the credit risk on a financial instrument has increased
significantly since initial recognition in which case the lifetime ECL method is adopted. The standard introduces additional
new disclosures. The consolidated entity is currently in the process of evaluating the impact of AASB 9 in future reporting
periods.
25
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 3. Significant accounting policies (continued)
AASB 15 Revenue from Contracts with Customers
This standard is applicable to annual reporting periods beginning on or after 1 January 2018. The standard provides a
single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict
the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or
implied) to be identified, together with the separate performance obligations within the contract; determine the transaction
price, adjusted for the time value of money excluding credit risk; allocation of the transaction price to the separate
performance obligations on a basis of relative stand-alone selling price of each distinct good or service, or estimation
approach if no distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied.
Credit risk will be presented separately as an expense rather than adjusted to revenue. For goods, the performance
obligation would be satisfied when the customer obtains control of the goods. For services, the performance obligation is
satisfied when the service has been provided, typically for promises to transfer services to customers. For performance
obligations satisfied over time, an entity would select an appropriate measure of progress to determine how much revenue
should be recognised as the performance obligation is satisfied. Contracts with customers will be presented in an entity's
statement of financial position as a contract liability, a contract asset, or a receivable, depending on the relationship
between the entity's performance and the customer's payment. Sufficient quantitative and qualitative disclosure is required
to enable users to understand the contracts with customers; the significant judgements made in applying the guidance to
those contracts; and any assets recognised from the costs to obtain or fulfil a contract with a customer. The standard
introduces additional new disclosures. The consolidated entity is currently in the process of evaluating the impact of AASB
15 in future reporting periods.
AASB 16 Leases
This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces AASB
117 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions,
a 'right-of-use' asset will be capitalised in the statement of financial position, measured at the present value of the
unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12
months or less and leases of low-value assets (such as personal computers and small office furniture) where an
accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit
or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease
prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or
dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for the
leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance
costs). In the earlier periods of the lease, the expenses associated with the lease under AASB 16 will be higher when
compared to lease expenses under AASB 117. However EBITDA (Earnings Before Interest, Tax, Depreciation and
Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in profit
or loss under AASB 16. For classification within the statement of cash flows, the lease payments will be separated into
both a principal (financing activities) and interest (either operating or financing activities) component. For lessor accounting,
the standard does not substantially change how a lessor accounts for leases. The standard introduces additional new
disclosures. The consolidated entity is currently in the process of evaluating the impact of AASB 16 in future reporting
periods.
Note 4. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that
affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in
relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates
and assumptions on historical experience and on other various factors, including expectations of future events,
management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will
seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next
financial year are discussed below.
26
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 4. Critical accounting judgements, estimates and assumptions (continued)
Share-based payments
The consolidated entity has a share based remuneration scheme for employees. The fair value of share options is
estimated by using the Black-Scholes option pricing model, on the date of grant based on certain assumptions. Those
assumptions are described in the share based payments note and include, among others, the dividend growth rate,
expected share price volatility and expected life of the options. The fair value of the equity settled options granted is
charged to statement of comprehensive income over the vesting period of each tranche and the credit is taken to equity,
based on the consolidated entity's estimate of shares that will eventually vest.
Revenue from services according to construction contracts
Revenues from services according to construction contracts are reported by the “percentage of completion” method. The
percentage of completion is determined by dividing actual completion costs incurred to date by the total completion costs
anticipated.
Note 5. Operating segments
An operating segment is a component of an entity that engages in business activities from which it may earn revenues and
incur expenses (including revenues and expenses relating to transactions with other components of the same entity),
whose operating results are regularly reviewed by the entity's chief operating decision maker to make decisions about
resources to be allocated to the segment and assess its performance and for which discrete financial information is
available. This includes start-up operations which are yet to earn revenues. Management will also consider other factors in
determining operating segments such as the existence of a line manager and the level of segment information presented to
the board of directors. During the year the Company only operated in one segment, which is to further commercialise
solutions for mission critical and remote mobile private communications networks without the need to reply upon or utilise
existing infrastructure.
Note 6. Revenue
Sale of goods
Consolidated
2017
$
2016
$
1,519,719
2,232,653
Sales were reduced due to long sales cycle and timing in the awarding of government contracts. As a small management
team the IPO process also affected the sales results. The Mobilicom entity continues to be the primary revenue generator
with its core MCU business in the Government & Enterprise sector. Looking forward to 2018, the Mobilicom entity is
expected to continue as the key revenue driver for the Company. In addition as the commercial drone market ramps up,
Mobilicom expects to enjoy an increase in revenue, as its SkyHopper products will be integrated with established
manufacturers in the sector.
Accounting policy for revenue recognition
Revenues are measured at the fair value of the consideration received or receivables less any trade discounts, volume
rebates and returns.
Sale of goods
Revenues from the sale of goods are recognised when the significant risks and rewards of ownership of the goods have
passed to the buyer and the seller no longer retains continuing managerial involvement. The delivery date is usually the
date on which risks and rewards pass. Revenues are recognised in profit or loss when the revenues can be measured
reliably, it is probable that the economic benefits associated with the transaction will flow to the company and the costs
incurred or to be incurred in respect of the transaction can be measured reliably.
Revenue from the sale of goods shall be recognised when all the following conditions have been satisfied:
(a) the entity has transferred to the buyer the significant risks and rewards of ownership of the goods;
(b) the entity retains neither continuing managerial involvement to the degree usually associated with ownership nor
effective control over the goods sold;
(c) the amount of revenue can be measured reliably;
(d) it is probable that the economic benefits associated with the transaction will flow to the entity; and
(e) the costs incurred or to be incurred in respect of the transaction can be measured reliably.
27
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 6. Revenue (continued)
Rendering of services
Provided the amount of revenue can be measured reliably and it is probable that the company will receive any
consideration. Revenue from services rendered is recognised in proportion to the stage of completion of the transaction at
the reporting date
When the outcome of a transaction involving the rendering of services can be estimated reliably, revenue associated with
the transaction shall be recognised by reference to the stage of completion of the transaction at the end of the reporting
period.
The outcome of a transaction can be estimated reliably when all the following conditions are satisfied:
(a) the amount of revenue can be measured reliably;
(b) it is probable that the economic benefits associated with the transaction will flow to the entity;
(c) the stage of completion of the transaction at the end of the reporting period can be measured reliably; and
(d) the costs incurred for the transaction and the costs to complete the transaction can be measured reliably.
Stage of completion is measured by reference to labour hours incurred to date as a percentage of total estimated labour
hours for each contract. Where the contract outcome cannot be reliably estimated, revenue is only recognised to the extent
of the recoverable costs incurred to date.
In fixed fee contracts - according to AASB 111 “Construction Contracts" pursuant to which revenues are reported by the
“percentage of completion” method. The percentage of completion is determined by dividing actual completion costs
incurred to date by the total completion costs anticipated. When a loss from a project is anticipated, a provision is made in
the period in which it first becomes evident, for the entire loss anticipated, as assessed by the company’s management.
Government Grant income
The Company receives government grant income from the Israeli Innovation Authority (formerly the Office of the Chief
Scientist) (Innovation Authority). Grant revenue is accounted for during the period in which it is received.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the
amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest
rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset
to the net carrying amount of the financial asset.
Note 7. Cost of sales
Salaries and benefits
Cost of materials
Rental and office expenses
Other
Consolidated
2017
$
2016
$
159,425
193,470
21,143
10,560
189,941
141,389
55,065
45,473
384,598
431,868
28
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 8. Selling and marketing expenses
Salaries and benefits
Marketing services
Travel expenses
Rental and office expenses
Other
Note 9. Research and development
Salaries and benefits
Materials
Royalties to the OCS
Subcontractors
Depreciation
Other
Note 10. General and administration expenses
Salaries and benefits
Professional fees
Insurance
Travel expenses
Depreciation
Rental and office expenses
Other
Note 11. Listing fees
Professional fees
Travel
Bonuses
Other
29
Consolidated
2017
$
2016
$
792,846
94,780
95,666
26,355
66,725
153,279
59,108
30,911
14,020
18,630
1,076,372
275,948
Consolidated
2017
$
2016
$
1,676,512
40,344
27,686
157,923
19,476
141,353
1,203,386
35,649
96,413
294,664
12,200
118,914
2,063,294
1,761,226
Consolidated
2017
$
2016
$
402,121
201,654
30,875
61,468
12,680
19,348
381,438
269,792
219,576
9,223
22,908
7,454
14,907
32,934
1,109,584
576,794
Consolidated
2017
$
2016
$
115,081
38,547
500,000
449,797
1,103,425
-
-
-
-
-
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 12. Income tax expense
Numerical reconciliation of income tax expense and tax at the statutory rate
Loss before income tax expense
Tax at the statutory tax rate of 27.5%
Tax effect amounts which are not deductible/(taxable) in calculating taxable income:
Share-based payments
Other temporary differences not recognised
Income tax expense
Consolidated
2017
$
2016
$
(6,089,936)
(443,355)
(1,674,732)
(121,923)
179,170
1,495,562
-
121,923
-
-
Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that is it
probable that future taxable profits will be available against which the benefits of the deferred tax asset can be utilised
Note 13. Current assets - cash and cash equivalents
Cash at bank
Cash on deposit
Consolidated
2017
$
2016
$
2,053,562
6,023,910
4,127,057
-
8,077,472
4,127,057
Accounting policy for cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly
liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
Restricted cash is considered by Mobilicom to be deposits with banks which are used mainly as a security for guarantees
provided against customer payments in advance.
Note 14. Current assets - trade and other receivables
Trade receivables
Other receivables
Consolidated
2017
$
2016
$
308,783
114,861
357,168
33,490
423,644
390,658
30
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 14. Current assets - trade and other receivables (continued)
Accounting policy for trade and other receivables
Trade and other receivables are recognised at amortised cost, less any provision for impairment.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written
off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is
objective evidence that the consolidated entity will not be able to collect all amounts due according to the original terms of
the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial
reorganisation and default or delinquency in payments are considered indicators that the trade receivable may be impaired.
The amount of the impairment allowance is the difference between the asset's carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables
are not discounted if the effect of discounting is immaterial.
Note 15. Current assets - inventories
Finished goods - at cost
Accounting policy for inventories
Inventories are recognised at the lower of cost and net realisable value.
Note 16. Current liabilities - trade and other payables
Trade payables
Other payables
Consolidated
2017
$
2016
$
303,936
170,007
Consolidated
2017
$
2016
$
214,745
673,987
114,475
787,036
888,732
901,511
Refer to note 23 for further information on financial instruments.
Amounts noted above in other payables include amounts payable to Directors for wages payable.
Accounting policy for trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the
financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not
discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
Note 17. Current liabilities - borrowings
Loans from related parties
Convertible notes payable
Refer to note 23 for further information on financial instruments.
31
Consolidated
2017
$
2016
$
-
-
-
214,459
3,316,331
3,530,790
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 17. Current liabilities - borrowings (continued)
Accounting policy for borrowings
Loans and borrowings are initially recognised at the fair value of the consideration received, net of transaction costs. They
are subsequently measured at amortised cost using the effective interest method.
Where there is an unconditional right to defer settlement of the liability for at least 12 months after the reporting date, the
loans or borrowings are classified as non-current.
The component of the convertible notes that exhibits characteristics of a liability is recognised as a liability in the statement
of financial position, net of transaction costs.
On the issue of the convertible notes the fair value of the liability component is determined using a market rate for an
equivalent non-convertible bond and this amount is carried as a non-current liability on the amortised cost basis until
extinguished on conversion or redemption. The increase in the liability due to the passage of time is recognised as a
finance cost. The remainder of the proceeds are allocated to the conversion option that is recognised and included in
shareholders equity as a convertible note reserve, net of transaction costs. The carrying amount of the conversion option is
not remeasured in the subsequent years. The corresponding interest on convertible notes is expensed to profit or loss.
Note 18. Non-current liabilities - employee benefits
Employee benefits
Consolidated
2017
$
2016
$
456,959
216,541
Accounting policy for employee benefits
The company's liabilities for severance pay retirement and pension pursuant to Israeli law and employment agreements
are recognized by full - in part by managers' insurance policies, for which the company makes monthly payments and
accrued amounts in severance pay funds and the rest by the liabilities which are included in the financial statements.
The amounts funded displayed above include amounts deposited in severance pay funds with the addition of accrued
income. According to the Severance Pay Law, the aforementioned amounts may not be withdrawn or mortgaged as long
as the employer’s obligations have not been fulfilled in compliance with Israeli law.
Note 19. Non-current liabilities - Governmental liabilities on grants received
Governmental liabilities on grants received
Consolidated
2017
$
2016
$
163,387
162,511
Accounting policy for Government liabilities on grants received
The Company measured the value of its governmental liabilities on grants received, each period, based on discounted
cash flows derived from Company's future anticipated revenues.
The Company participates in programs sponsored by the Chief Scientist ("OCS"), for the support of research and
development projects. Several programs are subjected to royalties, while others are not (the company is committed to pay
royalties for the R&D programs, while the research programs does not required repayment). In exchange for the Chief
Scientist's participation in the programs, the Company is required to pay royalties to the Chief Scientist at a rate between
3% and 3.5% of sales of developed products linked to U.S dollars, until repayment of 100% of the amount of grants
received, plus annual interest at the LIBOR rate. The company is required to pay royalties, to the OCS, of sales to end
customers of products developed with funds provided by the Chief Scientist, if and when such sales are recognized.
The obligation to pay these royalties is contingent on actual sales of the products. Changes in the liability are recognized in
research and development expenses. The exceptions of the Company to pay the grants are based on its estimation at the
end of the each year.
32
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 20. Equity - issued capital
Consolidated
2017
Shares
2016
Shares
2017
$
2016
$
Ordinary shares - fully paid
217,376,715 10,000,000 19,055,915
4,577,223
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
Balance
Payments for shareholders in exchange for waiver on
equity rights
1 January 2016
10,000,000
-
31 December 2016
10,000,000
(10,000,000)
132,090,972
-
11,814,243
4,960,233
(383,010)
4,577,223
-
-
-
-
-
$0.06
-
1,039,568
748,301
Balance
Mobilicom Israel shares exchanged for Mobilicom
Australia shares under Vendor Offer
Mobilicom Israel shares exchanged for Mobilicom
Australia shares under Vendor Offer
Transfer from share based payment reserve
Mobilicom Israel warrants exercised
Conversion of Mobilicom Israel Convertible notes to
Mobilicom Australia shares
Proceeds from shares issued under the Offer
Issue of advisor shares under Advisor and Director
Offer
Issue of shares to Directors under Advisor and
Director Offer
Capital raising costs
30,721,500
37,500,000
$0.15
$0.20
4,774,885
7,500,000
3,400,000
$0.20
680,000
1,850,000
-
$0.20
-
370,000
(634,062)
Balance
31 December 2017
217,376,715
19,055,915
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in
proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the
Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote.
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so
that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure
to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated
as total borrowings less cash and cash equivalents.
In order to maintain or adjust the capital structure, the consolidated entity may adjust the amount of dividends paid to
shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.
The consolidated entity would look to raise capital when an opportunity to invest in a business or company was seen as
value adding relative to the current Company's share price at the time of the investment. The consolidated entity is not
actively pursuing additional investments in the short term as it continues to integrate and grow its existing businesses in
order to maximise synergies.
33
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 20. Equity - issued capital (continued)
The consolidated entity is subject to certain financing arrangements covenants and meeting these is given priority in all
capital risk management decisions. There have been no events of default on the financing arrangements during the
financial year.
Accounting policy for issued capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Note 21. Equity - reserves
Foreign currency reserve
Share-based payments reserve
Consolidated
2017
$
2016
$
(236,927)
1,000,339
(68,332)
1,796,326
763,412
1,727,994
Foreign currency reserve
The reserve is used to recognise exchange differences arising from the translation of the financial statements of foreign
operations to Australian dollars. It is also used to recognise gains and losses on hedges of the net investments in foreign
operations.
Share-based payments reserve
The reserve is used to recognise the value of equity benefits provided to employees and directors as part of their
remuneration, and other parties as part of their compensation for services.
Movements in reserves
Movements in each class of reserve during the current and previous financial year are set out below:
Consolidated
Balance at 1 January 2016
Balance at 31 December 2016
Foreign currency translation
Share based payments
Conversion of warrants during the year
Share based
payments
$
Foreign
currency
reserve
$
Total
$
1,796,326
(68,332)
1,727,994
1,796,326
-
693,171
(1,489,158)
(68,332)
(168,595)
-
-
1,727,994
(168,595)
693,171
(1,489,158)
Balance at 31 December 2017
1,000,339
(236,927)
763,412
Note 22. Equity - dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
34
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 23. Financial instruments
Financial risk management objectives
The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price
risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses
on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of
the consolidated entity. The consolidated entity uses different methods to measure different types of risk to which it is
exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks,
ageing analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk.
Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors
('the Board'). These policies include identification and analysis of the risk exposure of the consolidated entity and
appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the
consolidated entity's operating units. Finance reports to the Board on a monthly basis.
Market risk
Foreign currency risk
The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign
currency risk through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and
cash flow forecasting.
The carrying amount of the consolidated entity's foreign currency denominated financial assets and financial liabilities at
the reporting date were as follows (holdings are shown in AUD equivalents):
Consolidated
US dollars
Euros
Israeli New Shekel
Assets
2017
$
2016
$
Liabilities
2017
$
2016
$
1,564,000
177,000
61,000
3,727,000
106,000
393,000
75,000
6,000
743,000
62,000
1,000
272,000
1,802,000
4,226,000
824,000
335,000
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities
denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis.
Consolidated - 2017
% change
profit before
tax
Effect on
equity
% change
profit before
tax
Effect on
equity
AUD strengthened
Effect on
AUD weakened
Effect on
AUD/USD
AUD/EUR
AUD/NIS
5%
5%
5%
74,000
9,000
34,000
74,000
9,000
34,000
5%
5%
5%
(74,000)
(9,000)
(34,000)
(74,000)
(9,000)
(34,000)
117,000
117,000
(117,000)
(117,000)
Price risk
Price risk is the risk that future cashflows derived from financial instruments will be changed as a result of a market price
movement, other than foreign currency rates and interest rates. The consolidated entity is not exposed to any significant
price risk.
35
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 23. Financial instruments (continued)
Interest rate risk
The consolidated entity’s exposure to the risk of changes in market interest rates relates primarily to the consolidated
entity’s cash deposits with floating interest rates. These financial assets with variable rates expose the consolidated entity
to interest rate risk.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
consolidated entity. The consolidated entity has a strict code of credit, including obtaining agency credit information,
confirming references and setting appropriate credit limits. The consolidated entity obtains guarantees where appropriate
to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the
carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position
and notes to the financial statements. The consolidated entity does not hold any collateral.
Liquidity risk
Vigilant liquidity risk management requires the consolidated entity to maintain sufficient liquid assets (mainly cash and cash
equivalents) and available borrowing facilities to be able to pay debts as and when they become due and payable.
The consolidated entity manages liquidity risk by maintaining adequate cash reserves and available borrowing facilities by
continuously monitoring actual and forecast cash flows and matching the maturity profiles of financial assets and liabilities.
Remaining contractual maturities
The following tables detail the consolidated entity's remaining contractual maturity for its financial instrument liabilities. The
tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which
the financial liabilities are required to be paid. The tables include both interest and principal cash flows disclosed as
remaining contractual maturities and therefore these totals may differ from their carrying amount in the statement of
financial position.
Consolidated - 2017
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Government liabilities
Total non-derivatives
Consolidated - 2016
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Government liabilities
Total non-derivatives
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
-
-
214,706
627,239
46,877
888,822
-
-
52,414
52,414
-
-
182,710
182,710
-
-
-
-
214,706
627,239
282,001
1,123,946
Weighted
average
interest rate
%
1 year or less
$
Between 1
and 2 years
$
Between 2
and 5 years
$
Over 5 years
$
Remaining
contractual
maturities
$
-
-
-
114,597
956,540
44,827
1,115,964
-
-
50,972
50,972
-
-
182,198
182,198
-
-
-
-
114,597
956,540
277,997
1,349,134
The cash flows in the maturity analysis above are not expected to occur significantly earlier than contractually disclosed
above.
Fair value of financial instruments
Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value.
36
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 24. Key management personnel disclosures
Directors
The following persons were directors of Mobilicom Limited during the financial year:
Mr Oren Elkayam (Chairman and Managing Director)
Mr Yossi Segal (Executive Director)
Mr Campbell McComb (Non-executive director)
Mr Mark Licciardo (Non-executive director)
Mr Alexander Fabbri (Non-executive director)
(appointed 2 February 2017)
(appointed 27 April 2017)
(appointed 2 February 2017)
(appointed 28 February 2017)
(appointed 2 February 2017 and resigned 28 February 2017)
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated
entity is set out below:
Short-term employee benefits
Post-employment benefits
Share-based payments
Note 25. Remuneration of auditors
Consolidated
2017
$
2016
$
1,184,705
183,284
597,116
364,232
108,568
-
1,965,105
472,800
During the financial year the following fees were paid or payable for services provided by BDO East Coast Partnership, the
auditor of the company, and its network firms:
Consolidated
2017
$
2016
$
48,000
37,300
85,300
-
-
-
43,045
33,619
-
53,791
43,045
87,410
Audit services - BDO East Coast Partnership
Audit or review of the financial statements
Other services - BDO East Coast Partnership
Initial Public Offering
Audit services - BDO Israel
Audit or review of the financial statements
Other services - BDO Israel
Initial Public Offering
37
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 26. Contingent liabilities
The Company participates in programs sponsored by the Chief Scientist ("OCS"), for the support of research and
development projects. Several programs are subjected to royalties, while others are not (the company is committed to pay
royalties for the R&D programs, while the research programs do not required repayment).
In exchange for the Chief Scientist's participation in the programs, the Company is required to pay royalties to the Chief
Scientist at a rate between 3% and 3.5% of sales of developed products linked to U.S dollars, until repayment of 100% of
the amount of grants received, plus annual interest at the LIBOR rate. The company is required to pay royalties, to the
OCS, of sales to end customers of products developed with funds provided by the Chief Scientist, if and when such sales
are recognised.
The obligation to pay these royalties is contingent on actual sales of the products. Changes in the liability are recognised in
research and development expenses. The exceptions of the Company to pay the grants are based on its estimation at the
end of the each year.
Note 27. Commitments
The Company leases premises for its offices and R&D center in Azor.
Lease commitments - operating
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
Note 28. Related party transactions
Parent entity
Mobilicom Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 30.
Consolidated
2017
$
2016
$
24,000
-
Key management personnel
Disclosures relating to key management personnel are set out in note 24 and the remuneration report included in the
directors' report.
Transactions with related parties
The following transactions occurred with related parties:
Payment for other expenses:
Consulting fees paid to director related entity (Mark Licciardo (through Mertons Corporate
Services Pty Ltd)) for provision of Corporate secretarial services.
Other transactions:
Repayment of payables to and loans from Mr Elkayam
Repayment of payables to and loans from Mr Segal
Payment to Mr Elkayam in exchange for waiver on equity rights
Payment to Mr Segal in exchange for waiver on equity rights
Shares/options paid to director related entity (Mr McComb (through Camac Investments Pty
Ltd)) for as part of the Advisor offer.
38
Consolidated
2017
$
2016
$
40,000
-
128,717
127,632
-
-
738,068
-
-
202,000
202,824
-
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 28. Related party transactions (continued)
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
Current payables:
Payables to related parties
Consolidated
2017
$
2016
$
22,821
49,526
Loans to/from related parties
The following balances are outstanding at the reporting date in relation to loans with related parties:
Current borrowings:
Loan from related parties
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 29. Parent entity information
Set out below is the supplementary information about the parent entity.
Statement of profit or loss and other comprehensive income
Loss after income tax
Total comprehensive income
Statement of financial position
Total current assets
Total assets
Total current liabilities
Total liabilities
Equity
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
39
Consolidated
2017
$
2016
$
-
214,372
Parent
2017
$
2016
$
(6,405,381)
(6,405,381)
Parent
2017
$
2016
$
6,232,202
7,764,500
64,966
426,085
13,092,267
651,529
(6,405,381)
7,338,415
-
-
-
-
-
-
-
-
-
-
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 29. Parent entity information (continued)
Guarantees entered into by the parent entity in relation to the debts of its subsidiaries
The parent entity had no guarantees in relation to the debts of its subsidiaries as at 31 December 2017.
Contingent liabilities
The parent entity had no contingent liabilities as at 31 December 2017.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 31 December 2017.
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 3,
except for the following:
●
●
●
Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity.
Investments in associates are accounted for at cost, less any impairment, in the parent entity.
Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an
indicator of an impairment of the investment.
Note 30. Interests in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiary in
accordance with the accounting policy described in note 3:
Name
Principal place of business /
Country of incorporation
Ownership interest
2016
2017
%
%
Mobilicom Ltd ("Mobilicom Israel")
Israel
100.00%
-
Note 31. Events after the reporting period
In addition to six design wins in 2017, the Company achieved an additional 1 design win in February 2018. Currently the
Company has achieved 7 design wins from a target of 8 through 18/Q2.
At the end of 2017, the Company received a significant backlog of purchase orders which will translate into 2018 revenues.
The company is establishing new R&D activities in Europe which focus on software development.
No other matter or circumstance has arisen since 31 December 2017 that has significantly affected, or may significantly
affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in
future financial years.
40
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 32. Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax expense for the year
(6,089,936)
(443,355)
Consolidated
2017
$
2016
$
Adjustments for:
Depreciation and amortisation
Share-based payments
Foreign exchange differences
Amortisation of loan costs
Change in operating assets and liabilities:
Increase in trade and other receivables
Increase in inventories
Decrease in trade and other payables
Increase/(decrease) in employee benefits
Increase in Government liabilities
Net cash used in operating activities
Note 33. Earnings per share
19,476
1,701,529
-
427,117
19,654
87,248
(68,332)
-
(32,985)
(133,929)
(12,779)
240,418
877
(240,436)
(43,004)
(83,183)
(5,950)
42,544
(3,880,212)
(734,814)
Consolidated
2017
$
2016
$
Loss after income tax attributable to the owners of Mobilicom Limited
(6,089,936)
(443,355)
Weighted average number of ordinary shares used in calculating basic earnings per share
147,697,056 10,000,000
Weighted average number of ordinary shares used in calculating diluted earnings per share 147,697,056 10,000,000
Number
Number
Basic earnings per share
Diluted earnings per share
Cents
Cents
(4.12)
(4.12)
(4.43)
(4.43)
The rights to options held by option holders have not been included in the weighted average number of ordinary shares for
the purposes of calculating diluted EPS as they do not meet the requirements for inclusion in AASB 133 “Earnings per
Share”. The rights to options are non-dilutive as the consolidated entity is loss generating.
Accounting policy for earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owners of Mobilicom Limited , excluding any
costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding
during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account
the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
41
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 34. Share-based payments
During the financial year the Company issued 3,400,000 unlisted options to advisors, 1,850,000 options to Directors and
5,373,284 exchange options to employees of the Company as set out below:
2017
Grant date
Expiry date
price
Exercise
Balance at
the start of
the year
Granted
Exercised
Expired/
forfeited/
other
Balance at
the end of
the year
27/04/2017
27/04/2017
10/03/2010
21/09/2011
05/11/2015
20/10/2016
25/09/2011
05/11/2015
27/04/2020
27/04/2022
20/03/2020
21/09/2021
25/11/2025
20/10/2026
25/09/2021
05/11/2025
$0.2000
$0.2000
$0.0472
$0.0472
$0.1233
$0.1233
$0.0472
$0.1233
3,400,000
-
1,850,000
-
460,568
-
460,568
-
307,044
-
614,090
-
1,919,030
-
-
1,151,417
- 10,162,717
-
-
-
-
-
-
-
-
-
3,400,000
-
1,850,000
-
460,568
-
460,568
-
307,044
-
614,090
-
1,919,030
-
-
1,151,417
- 10,162,717
For the options granted during the current financial year, the valuation model inputs used to determine the fair value at the
grant date, are as follows:
Grant date
Expiry date
27/04/2017
27/04/2017
10/03/2010
21/09/2011
05/11/2015
20/10/2016
25/09/2011
05/11/2015
27/04/2020
27/04/2022
20/03/2020
21/09/2021
25/11/2025
20/10/2026
25/09/2021
05/11/2025
Share price Exercise
at grant date
price
Expected
volatility
Dividend
Risk-free
Fair value
yield
interest rate at grant date
$0.2000
$0.2000
$0.4416
$4.4474
$6.6218
$5.8821
$4.6534
$6.6218
$0.2000
$0.2000
$0.0472
$0.0472
$0.1233
$0.1233
$0.0472
$0.1233
100.00%
100.00%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1.80%
2.13%
4.09%
4.68%
1.28%
1.24%
4.10%
1.28%
$0.1250
$0.1500
$0.1682
$3.7260
$4.0655
$3.4536
$3.8986
$4.0655
Accounting policy for share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for
the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of
cash is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined
using the Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact
of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield
and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether
the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of any
other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the
vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the
best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount
recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already
recognised in previous periods.
42
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2017
Note 34. Share-based payments (continued)
The cost of cash-settled transactions is initially, and at each reporting date until vested, determined by applying either the
Black-Scholes option pricing model, taking into consideration the terms and conditions on which the award was granted.
The cumulative charge to profit or loss until settlement of the liability is calculated as follows:
●
during the vesting period, the liability at each reporting date is the fair value of the award at that date multiplied by the
expired portion of the vesting period.
from the end of the vesting period until settlement of the award, the liability is the full fair value of the liability at the
reporting date.
●
All changes in the liability are recognised in profit or loss. The ultimate cost of cash-settled transactions is the cash paid to
settle the liability.
Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions
are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are
satisfied.
If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made.
An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair
value of the share-based compensation benefit as at the date of modification.
If the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is
treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied
during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the
award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining
expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and
new award is treated as if they were a modification.
43
Tel: +61 3 9603 1700
Fax: +61 3 9602 3870
www.bdo.com.au
Collins Square, Tower Four
Level 18, 727 Collins Street
Melbourne VIC 3008
GPO Box 5099 Melbourne VIC 3001
Australia
INDEPENDENT AUDITOR'S REPORT
To the members of Mobilicom Limited
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of Mobilicom Limited (the Company) and its subsidiaries (the
Group), which comprises the consolidated statement of financial position as at 31 December 2017, the
consolidated statement of profit or loss and other comprehensive income, the consolidated statement
of changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the consolidated financial report, including a summary of significant accounting policies and the
directors’ declaration.
In our opinion the accompanying financial report of the Group, is in accordance with the Corporations
Act 2001, including:
(i)
Giving a true and fair view of the Group’s financial position as at 31 December 2017 and of its
financial performance for the year ended on that date; and
(ii)
Complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the Financial
Report section of our report. We are independent of the Group in accordance with the Corporations
Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the
financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance
with the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has been
given to the directors of the Company, would be in the same terms if given to the directors as at the
time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in
our audit of the financial report of the current period. These matters were addressed in the context of
our audit of the financial report as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
BDO East Coast Partnership ABN 83 236 985 726 is a member of a national association of independent entities which are all members of BDO Australia Ltd
ABN 77 050 110 275, an Australian company limited by guarantee. BDO East Coast Partnership and BDO Australia Ltd are members of BDO International Ltd,
a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved
under Professional Standards Legislation, other than for the acts or omissions of financial services licensees.
45
Group Reorganisation
Key audit matter
How the matter was addressed in our audit
Prior to listing on the ASX, the group underwent a
Our procedures included but were not limited to:
restructure whereby Mobilicom Limited acquired the
entire issued capital of Mobilicom Israel in a share
Gaining an understanding of the structure of
the Group through review of Share Swap
swap transaction.
agreement schedules;
As disclosed in Note 2 and 20 this Group reorganisation
did not constitute a business combination in
accordance with AASB 3: Business Combinations,
instead the Directors’ have treated this as a form of
capital reoganisation. As there are no accounting
standards which govern the treatment of the
transaction the directors have had to exercise
Obtaining an understanding of the
transactions used to affect the group
reorganisation;
Assessing the appropriateness of the group
reorganisation including internal technical
consultation; and
significant judgement in accounting for this
Assessing the appropriateness of the
reorganisation.
disclosures in notes 2 and 20 of the Financial
The Group reorganisation is considered a Key Audit
Matter as a result of the complexity in the steps
involved in affecting the group reorganisation and the
judgement exercised in determining the accounting
treatment to apply to this transaction.
Audit strategy for overseas operations
Report.
Key audit matter
How the matter was addressed in our audit
The Group’s structure comprises significant overseas
Our procedures included but were not limited to:
operations. The existence of such operations heightens
• Gaining an understanding of the Group, its
the importance of engaging with the component
auditor to mitigate the risk associated with delivering
components and the environment they operate
in to identify the risks of material misstatement
an audit in a location and regulatory environment other
to the Group’s financial report; and
than Australia.
• Engaging component auditors in Israel.
As part of this matter we evaluated:
• Their understanding of the ethical requirements
and their professional competence to ensure
they were competent and independent;
• The business activities of the component that
were significant to the Group audit through
regular teleconferences throughout the audit
process;
• The susceptibility of the component's financial
information to material misstatement from
fraud and error; and
• Review of the component auditor's working
papers, in particular the areas that were key to
the Group audit.
46
Other information
The directors are responsible for the other information. The other information comprises the
information in the Group’s annual report for the year ended 31 December 2017, but does not include
the financial report and the auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the group to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the
Auditing and Assurance Standards Board website (http://www.auasb.gov.au/Home.aspx) at:
http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf
This description forms part of our auditor’s report.
47
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 10 to 15 of the directors’ report for the
year ended 31 December 2017.
In our opinion, the Remuneration Report of Mobilicom Limited, for the year ended 31 December 2017,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility
is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with
Australian Auditing Standards.
BDO East Coast Partnership
Tim Fairclough
Partner
Melbourne, 16 February 2018
48
Mobilicom Limited
Shareholder information
31 December 2017
The shareholder information set out below was applicable as at 15 February 2018.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Number
of holders
of options
Number
of holders
of ordinary ordinary
over
1 to 1,000
1,001 to 5,000
5,001 to 10,000
10,001 to 100,000
100,001 and over
Holding less than a marketable parcel
Equity security holders
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
shares
shares
4
27
72
231
109
443
5
-
-
-
-
4
4
-
Ordinary shares
% of total
shares
issued
Number held
105,507,909
10,136,189
9,912,031
5,632,581
4,355,066
4,217,645
4,074,370
3,894,864
2,530,587
2,375,000
2,148,473
2,130,000
2,127,515
1,995,586
1,853,648
1,649,253
1,265,294
1,265,294
1,222,307
1,222,307
48.54
4.66
4.56
2.59
2.00
1.94
1.87
1.79
1.16
1.09
0.99
0.98
0.98
0.92
0.85
0.76
0.58
0.58
0.56
0.56
169,515,919
77.96
IBI Trust Management
Morgan Stanley Australia Securities (Nominee) Pty Ltd (No 1 Account)
CS Fourth Nominees Pty Ltd (HSBC Cust NOM AU Ltd 11 a/c)
Lancing Liquid Relative Value Fund
HSBC Custody Nominees (Australia) Limited
MCR19 Holdings LLC
Hershman Holdings LLC
Mr Alan Hirmes
Steven & Mali Shwartz LLD
Jetan Pty Ltd
Citicorp Nominees Pty Limited
Camac Investments Pty Ltd
Mr John Plummer
Australian Executor Trustees Limited (No 1 Account)
Fallang Family Limited Partnership
BNP Paribas Nominees Pty Ltd (IB AU NOMS Retail Client DRP)
BCJMOB LLC
Mr Nathan Kaplan
BC business LLC
Mr Harry Kotowitz
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Mobilicom Limited
Shareholder information
31 December 2017
Camac Investments Pty Ltd
Oren Elkayam
Yossi Segal
Nicholas Burnham
Unquoted equity securities
Options over ordinary shares issued
Fully paid ordinary shares
Substantial holders
Substantial holders in the Company are set out below:
Oren Elkayam
Yossi Segal
Shalom Elkayam
Voting rights
The voting rights attached to ordinary shares are set out below:
Options over ordinary
shares
% of total
options
issued
Number held
2,500,000
925,000
925,000
900,000
47.62
17.62
17.62
17.14
5,250,000
100.00
Number
on issue
Number
of holders
5,250,000
93,092,849
4
18
Ordinary shares
% of total
shares
issued
Number held
37,329,774
31,092,158
12,051,511
17.17
14.30
5.54
Ordinary shares
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each
share shall have one vote. There are no other classes of equity securities.
Restricted securities
Class
Fully paid ordinary shares
Fully paid ordinary shares
Unlisted options
Unlisted options
Expiry date
1 May 2019
27 April 2018
27 April 2020
27 April 2022
Number
of shares
81,954,413
11,138,436
3,400,000
1,850,000
98,342,849
Consistency with business objectives - ASX Listing Rule 4.10.19
In accordance with Listing Rule 4.10.19, the Group states that it has used the cash and assets in a form readily convertible
to cash that it had at the time of admission in a way consistent with its business objectives. The business objectives are to
develop the business of Mobilicom Limited in line with its business model.
The consolidated entity believes it has used its cash in a consistent manner to which was disclosed under the Prospectus
dated 21 March 2017.
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