Mobilicom Limited
ABN 26 617 155 978
Annual Report
31 December 2018
Mobilicom Limited
Contents
31 December 2018
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 cash flows
Notes to the consolidated financial statements
Directors' declaration
Independent auditor's report to the members of Mobilicom Limited
Shareholder information
2
3
5
16
17
18
20
21
45
46
49
1
Mobilicom Limited
Corporate directory
31 December 2018
Directors
Oren Elkayam (Chairman and Managing Director)
Yossi Segal (Executive Director)
Campbell McComb (Non-executive Director)
Mark Licciardo (Non-executive Director)
Jonathan Brett (Non-executive Director)
Company secretary
Kate Goland
Registered office
Share register
Auditor
C/- Mertons Corporate Servces Pty Ltd
Level 7
330 Collins Street
Melbourne, VIC 3000
Ph: 03 8689 9997
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/
2
Mobilicom Limited
Letter to Shareholders
31 December 2018
Oren Elkayam (Chairman and Managing Director)
1. Company Introduction
Mobilicom Limited (ASX: MOB) designs, develops and delivers holistic communication solutions for mission critical and
on an innovative approach that merges 4G and Mobile MESH technologies.
With versatile network topologies, Mobilicom has a large solution portfolio with deployments worldwide. It is comprised of
two business entities:
The Mobilicom business entity targets the Government & Enterprise sector. It offers holistic solutions and
equipment that cater to mission-critical communication, with applications in Unmanned Platforms; Disaster Relief
& Public Safety; and Offshore & Remote Areas;
The SkyHopper business entity ta rgets the Commercial & Industrial Drone & Robotics market. SkyHopper offers
a holistic approach that consists of end -to-end equipment, integration and support services. SkyHopper offering
includes: data-link communication, video, processing and analytics, controllers, viewing terminals and software
solutions. This enables commercial and industrial drone & robotics manufacturers to increase their chances for
success by focusing on their own business objectives, reducing time -to-market and minimizing resource
expenditures.
2. Financials
The Company has improved its financial results, year over year across all parameters, growing its revenues to $2.6
million, up 74% from $1.5 million in 2017. The increase resulted from both recurrent and new customers, as well as from
more products from different applications and new geographic markets.
Government grants for the year increased by 59% compared to 2017.
Operating expenses were lower than planned, reflecting strong execution and a significantly lower net cash bu rn rate for
the period. This has allowed the Company to maintain a strong cash balance of $5.0 million for 2018 year end.
In 2018, Mobilicom increased its sales and marketing activities, developing new geographic markets, engaging with new
and existing customers, building global brand awareness and releasing new products, which was reflected in higher
selling and marketing expenses. Research and Development (R&D) expenses also increased, with a new R&D site in
Europe that allowed Mobilicom to release new solutions in a more efficient and cost-effective manner. All activities have
been conducted to build Mobilicom's scalability and future sales.
The loss for the consolidated entity was reduced to $3.2 million, down 47% compared to the prior period.
3
Mobilicom Limited
Letter to Shareholders
31 December 2018
3. Significant Company Milestones
Mobilicom Business Entity Expands its Customer Base
In 2018, the Mobilicom business sold to existing customers and also attracted new customers in several geographic
markets. Mobilicom delivered on purchases from several industry leaders and multinational companies that integrated
the Mobilicom solution. These customers included one of the largest companies in the Fortune 500, General Electric;
oil and gas giant, ExxonMobil; German Aerospace Center; Israel Ministry of Defense; several autonomous drone
system manufacturers and a leading US robotics company.
Mobilicom released a Network Management Application (NMA), a New Mobile MESH Network Solution for Underground
Operations as well as two new Mobile Terminals, the MCU RVT and MCU mini controller.
SkyHopper Exceeds Aggressive Milestones One Year After Launch
The SkyHopper business entity, marked one year since its launch at the end of Q2 2018, outperforming its first-year
goals. SkyHopper showed acceptance by the commercial drone industry, having been purchased and integrated with
more than 50 drone manufacturers that are now plann ing their drone systems around SkyHopper products for future
commercial release. Customers include global aerospace giant, Airbus; market-leader in RC controllers, Futaba and
more.
ecosystem partners.
goal of 20.
goal of eight, and reached its goal of compatibility with 10
SkyHopper also launched five new products, including the SkyHopper VU and SkyHopper ControlAir. he full SkyHopper
product portfolio enables a fully end-to-end solution including data-link communication, video processing and analytics,
controllers, viewing terminals and software solutions.
Mobilicom Limited Strengthens Board and Management Team
Mobilicom made several appointments to its Board and management team
scale up sales initiatives. Jonathan Brett was appointed to the Board of Directors as a Non-Executive Director and Dr.
Yuval Dan-Gur was appointed to the Management Team as Chief Operations Officer.
4
Mobilicom Limited
Directors' report
31 December 2018
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 2018.
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)
Yossi Segal (Executive Director)
Campbell McComb (Non-executive Director)
Mark Licciardo (Non-executive Director)
Jonathan Brett (Non-executive Director) - appointed 18 September 2018
Principal activities
Mobilicom Limited designs, develops and delivers holistic communication solutions for mission critical and remote mobile
novative
approach that merges 4G and Mobile MESH technologies.
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 $3,176,686 (31 December 2017:
$6,089,936).
Revenues
Revenue from sales increased to $2,640,006 from the prior period (31 December 2017: $1,519,719). This increase has
resulted from the following:
Growth in customers worldwide due to the company's increasing presence; and
Growth in revenues from existing customers; and
Release of new products to the market.
Other income for the year includes government grants for $367,695, which are up 59.40% (31 December 2017: $230,673).
Expenses
In order to achieve the increase in revenues and orders forecast, the year ended 2018 saw higher production expenses
due to one-time manufacturing costs for yearly quantities.
2018 saw a slight decrease in gross margin.
Other expenses have reduced by 25.84% to $5,548,104 (31 December 2017: $7,481,320).
In addition, $427,116 in finance costs were recognised during the prior period.
The net decrease in company expenses included an increase in sales and marketing expenses, with the company
expanding its presence on a global level and establishing the sales and marketing infrastructure of SkyHopper. The
increase in research and development was led by a significant increase in the company's workforce, with new R&D
activities in Europe which will focus on so ftware development, as well as the release of new products under Mobilicom and
SkyHopper.
Statement of financial position
Cash reserves have decreased to $4,959,245 during the year (31 December 2017: $8,077,472), with Mobilicom
maintaining a strong financial position. At 31 December 2018 net assets amounted to $4,294,993.
Refer to the detailed review of operations preceding this report for further information on the consolidated entity's activit ies.
5
Mobilicom Limited
Directors' report
31 December 2018
Significant changes in the state of affairs
There were no significant changes in the state of affairs of the consolidated entity during the financial year.
Matters subsequent to the end of the financial year
On 21 January 2019 the consolidated entity announced that it has been chosen by the Israel Ministry of Defen ce and the
Israel Innovation Authority to execute an R&D program budget in excess of $1.8 million.
No other matter or circumstance has arisen since 31 December 2018 that has significantly affected, or may significantly
affect the consolidated entity's operations, the results of those operations, or the conso lidated 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
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.
925,000 Fully paid ordinary shares held
the name of Oren Elkayam.
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
months
issue date.
462,500 Options to acquire fully paid ordinary shares exercisable at $0.20, v esting 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:
6
Mobilicom Limited
Directors' report
31 December 2018
Name:
Title:
Qualifications:
Experience and expertise:
Mr Yossi Segal
Executive Director
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 (Orthogonal Frequency Division Multiple/ Access) 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 from the issue date, and expiring 5 years from the issue d ate.
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.
Other current directorships:
Former directorships (last 3 years): No other directorships of listed companies
Special responsibilities:
Interests in shares:
Interests in options:
Name:
Title:
Qualifications:
Experience and expertise:
Mr Campbell McComb
Non-executive Director
BEc, GAICD, FINSIA
Other current directorships:
Former directorships (last 3 years): DirectMoney Ltd
Special responsibilities:
Interests in shares:
banking and has overseen the development of numerous businesses. He has
significant investment experience across equity securities, venture capita l and private
equity. Mr McComb is currently the Managing Director of Auctus (ASX: AVC), a listed
Alternative Investment Management business.
Auctus Alternative Investments Limited
No special responsibilities
100,000 Fully paid ordinary shares held in the name of CM2 Investments Pty Ltd
(McComb Super Fund A/C)
2,130,000 Fully paid ordinary shares held in the name of Camac Investments Pty Ltd
Director.
Interests in options:
2,500,000 Options to acquire fully paid ordinary shares exercisable at $0.20 and
expiring 3 years from the issue date.
Director and Shareholder.
Name:
Title:
Qualifications:
Experience and expertise:
Mr Mark Licciardo
Non-executive Director
B Bus(Acc), GradDip CSP, FGIA, FCIS, FAICD
Mr 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. Mr Licciardo is also the former Chairman of the Academy of
Design Australia Limited, the Governance Institute of Australia Victoria division and
Melbourne Fringe Festival. Mr Licciardo is also a director of a number of public and
private companies.
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:
7
Mobilicom Limited
Directors' report
31 December 2018
Experience and expertise:
Name:
Title:
Qualifications:
Mr Jonathan Brett
Non-executive Director (appointed 18 September 2018)
BComm (Legal), Bachelor of Accountancy, Master of Commerce (Financial
Management), Diploma in Datametrics (Computer Science) and is a CA(SA)
Mr Brett is a highly strategic and commercial senior director with a strong track record
of driving transformational business performance and profitability across multiple
geographies. He was also Managing Director and CEO of Techway Limited which
pioneered internet banking in Australia. He is currently Executive Chairman of
Stridecorp Equity Partners, an AFSL licensed fund manager specialising in private
equity.
Other current directorships:
Indoor Skydive Australia Limited
Former directorships (last 3 years): Vocus Group Ltd, The Pas Group Limited, Godfreys Group Limited.
Special responsibilities:
Interests in shares:
No special responsibilities
250,000 Fully paid ordinary shares
'Other current directorships' quoted above are current directorships for listed entities only and excludes directorships of a ll
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
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 client s 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 matt ers.
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') held during the year ended 31 December 2018,
and the number of meetings attended by each director were:
Mr O Elkayam
Mr Y Segal
Mr C McComb
Mr M Licciardo
Mr J Brett (appointed 18 September 2018)
Held: represents the number of meetings held during the time the director held office.
Full Board
Attended
Held*
6
6
6
6
2
6
6
6
6
2
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.
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
8
Mobilicom Limited
Directors' report
31 December 2018
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 po sition 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.
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.
9
Mobilicom Limited
Directors' report
31 December 2018
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 a lign 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)
Yossi Segal (Executive Director)
Campbell McComb (Non-executive Director)
Mark Licciardo (Non-executive Director)
Jon Brett (Non-executive Director) - appointed 18 September 2018
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
$
39,996
39,996
-
358,660
358,660
797,312
-
-
-
-
-
-
-
-
-
-
-
-
14,966
14,966
29,932
110,680
110,680
221,360
-
-
-
-
-
-
-
-
20,000
39,996
39,996
20,000
-
-
484,306
484,306
20,000 1,068,604
2018
Non-Executive Directors:
Mr C McComb*
Mr M Licciardo**
Mr J Brett
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).
10
Mobilicom Limited
Directors' report
31 December 2018
2017
Non-Executive Directors:
Mr C McComb*
Mr M Licciardo**
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
$
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
Mr McComb received his remuneration through Camac Investments Pty Ltd (an entity associated with him).
*
**
Mr Licciardo received his remuneration through Mer tons 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.
The proportion of remuneration linked to performance and the fixed proportion are as follows:
Name
Non-Executive Directors:
Mr C McComb
Mr M Licciardo
Mr J Brett
Executive Directors:
Mr O Elkayam
Mr Y Segal
Fixed remuneration
2017
2018
At risk - STI
At risk
LTI
2018
2017
2018
2017
100%
100%
100%
100%
100%
100%
100%
68%
68%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
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:
Oren Elkayam
Chairman and Managing Director
28 February 2017
$250,000 USD per annum.
notice, or immediately by Mobilicom for cause which include a breach of trust or
fiduciary duty (for example, theft), conviction of a criminal offense and negligence
causing har
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.
11
Mobilicom Limited
Directors' report
31 December 2018
Name:
Title:
Agreement commenced:
Details:
Yossi Segal
Executive Director
28 February 2017
$250,000 USD per annum.
notice, or immediately by Mobilicom for cause which include a breach of trust or
fiduciary duty (for example, theft), conviction of a criminal offense and negligence
reason other than for cause, Mr Segal will be entitled to a p aid 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.
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 2018 are set out below:
Name
Mr J Brett
Date
Shares
Issue price
$
24 October 2018
250,000
$0.08
20,000
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
$0.20
$0.20
$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
Ordinary shares
Mr O Elkayam
Mr Y Segal
Mr C McComb
Mr M Licciardo
Mr J Brett
37,499,774
31,092,158
2,230,000
100,000
-
70,921,932
-
-
-
-
250,000
250,000
12
Disposals/
other
Balance at
the end of
the year
-
-
-
-
-
-
- 37,499,774
- 31,092,158
2,230,000
-
100,000
-
-
250,000
- 71,171,932
Mobilicom Limited
Directors' report
31 December 2018
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
2,500,000
4,350,000
-
-
-
-
-
-
-
-
-
-
-
-
925,000
925,000
2,500,000
4,350,000
Other transactions with key management personnel and their related parties
A total of $40,608 was paid to Mertons Corporate Services Pty Ltd (an entity related to Mr Licciardo) for provision of
corporate secretarial services.
A total of $17,002 was paid to Camac Investments Pty Ltd (an entity related to Mr McComb) for provision of consulting
services.
Payables to key management personnel and their related parties
As at 31 December 2018, the Company had director fees and corporate secretarial service fees payable to Mertons
Corporate Services Pty Ltd (an entity related to Mr Licciardo) of $14,818.
As at 31 December 2018, the Company has director fees and consulting fees payable to Camac Investments Pty Ltd (an
entity related to Mr McComb) of $6,700.
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
17/04/2018
30/05/2018
20/09/2018
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
16/04/2023
29/05/2024
19/09/2023
Exercise
price
Number
under option
$0.20
$0.20
$0.05
$0.05
$0.12
$0.12
$0.05
$0.12
$0.15
$0.15
$0.15
3,400,000
1,850,000
460,568
460,568
307,044
614,090
1,919,030
1,151,417
5,200,000
400,000
600,000
16,362,717
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
2018 and up to the date of this report.
13
Mobilicom Limited
Directors' report
31 December 2018
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.
Proceedings on behalf of the Company
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings to which the Company is a party for the purpose of taking
responsibility on behalf of the Company for all or part of those proceedings.
Non-audit services
Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor
are outlined in note 23 to the financial statements.
The directors are satisfied that the provision of non -audit services during the financial year, by the auditor (or by another
person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by
the Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 23 to the financial statements do not compromise the
external auditor's independence requirements of the Corporations Act 2001 for the following reasons:
all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and ob jectivity
of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code
of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including
reviewing or auditing the auditor's own work, acting in a management or decision -making capacity for the company,
acting as advocate for the company or jointly sharing economic risks and rewards.
Officers of the Company who are former partners of BDO East Coast Partnership
There are no officers of the Company who are former partners of BDO East Coast Partnership.
Auditor's independence declaration
A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out
immediately after this directors' report.
Auditor
BDO East Coast Partnership continues in office in accordance with section 327 of the Corporations Act 2001.
14
Mobilicom Limited
Directors' report
31 December 2018
This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act
2001.
On behalf of the directors
___________________________
Oren Elkayam
Chairman and Managing Director
25 February 2019
Tel Aviv
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 2018, I declare that, to the best
of my knowledge and belief, there have been:
1.
2.
No contraventions of the auditor independence requirements of the Corporations Act 2001 in
relation to the audit; and
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, 25 February 2019
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.
16
Mobilicom Limited
Consolidated statement of profit or loss and other comprehensive income
For the year ended 31 December 2018
Revenue
Cost of sales
Government grants
Interest received
Foreign exchange gains
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
Note
Consolidated
2018
$
2017
$
5
6
2,640,006
1,519,719
(758,798)
(384,598)
367,695
53,954
68,561
490,210
230,673
25,590
-
256,263
7
8
9
10
(1,448,328)
(2,699,341)
(1,308,744)
-
(91,691)
-
(1,076,372)
(2,063,294)
(1,109,584)
(1,103,425)
(1,701,529)
(427,116)
(3,176,686)
(6,089,936)
Income tax expense
11
-
-
Loss after income tax expense for the year attributable to the owners of
Mobilicom Limited
(3,176,686)
(6,089,936)
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Re- measurements on 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
Basic earnings per share
Diluted earnings per share
30,557
(195,529)
11,017
(26,934)
41,574
(168,595)
(3,135,112)
(6,258,531)
Cents
Cents
31
31
(1.46)
(1.46)
(4.12)
(4.12)
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the
accompanying notes
17
Mobilicom Limited
Consolidated statement of financial position
As at 31 December 2018
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
Total current liabilities
Non-current liabilities
Employee benefits
Governmental liabilities on grants received
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Reserves
Accumulated losses
Total equity
Note
Consolidated
2018
$
2017
$
12
13
14
4,959,245
490,144
437,483
5,886,872
8,077,472
423,644
303,936
8,805,052
39,111
39,111
42,440
42,440
5,925,983
8,847,492
15
16
17
986,512
986,512
888,732
888,732
476,798
167,680
644,478
456,959
163,387
620,346
1,630,990
1,509,078
4,294,993
7,338,414
18
19
19,075,915 19,055,915
763,412
(12,480,913)
876,677
(15,657,599)
4,294,993
7,338,414
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
18
Mobilicom Limited
Consolidated statement of changes in equity
For the year ended 31 December 2018
Consolidated
Issued
capital
$
Share based
payments
reserve
$
Foreign
currency
reserve
$
Remeasurem
ent
reserve
$
Accumulated
losses
$
Total equity
$
Balance at 1 January 2017
4,577,223
1,796,326
123,037
(191,369)
(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
32)
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)
26,934
(195,529)
-
(168,595)
26,934
(195,529)
(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
149,971
(386,898)
(12,480,913)
7,338,414
Consolidated
Issued
capital
$
Share based
payments
reserve
$
Foreign
currency
reserve
$
Remeasurem
ent
reserve
$
Accumulated
losses
$
Total equity
$
Balance at 1 January 2018
19,055,915
1,000,339
149,971
(386,898)
(12,480,913)
7,338,414
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
32)
-
-
-
-
-
-
-
-
(3,176,686)
(3,176,686)
11,017
30,557
-
41,574
11,017
30,557
(3,176,686)
(3,135,112)
20,000
71,691
-
-
-
91,691
Balance at 31 December 2018
19,075,915
1,072,030
160,988
(356,341)
(15,657,599)
4,294,993
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
19
Mobilicom Limited
Consolidated statement of cash flows
For the year ended 31 December 2018
Cash flows from operating activities
Receipts from customers*
Interest received
Payments to suppliers and employees*
Interest and other finance costs paid
Government grants received
Note
Consolidated
2018
$
2017
$
2,566,605
53,954
(5,955,165)
-
367,695
1,541,780
25,590
(5,162,466)
(285,116)
-
Net cash used in operating activities
30
(2,966,911)
(3,880,212)
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
Repayment of borrowings
Payment of transaction costs related to issues of shares, convertible notes, options
18
Net cash from financing activities
Net increase/(decrease) 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
(7,462)
(24,046)
(7,462)
(24,046)
-
-
-
-
-
-
7,500,000
1,147,461
298,711
(270,625)
(634,062)
8,041,485
(2,974,373)
8,077,472
(143,854)
4,137,227
4,127,057
(186,812)
Cash and cash equivalents at the end of the financial year
12
4,959,245
8,077,472
* inclusive of GST where applicable
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
20
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
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 Australia n dollars, which is Mobilicom Limited's
functional and presentation currency.
The functional currency of Mobilicom Limited's subsidiary, Mobilicom Ltd ("Mobilicom Israel"), is Israeli New Shekels.
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
C/- Mertons Corporate Services Pty Ltd
Level 7, 330 Collins Street
Melbourne, Victoria, 3000
Australia
Level 7, 90 Collins Street
Melbourne, Victoria, 3000
Australia
A description of the nature of the consolidated entity's operations and its principal activities are included in the director s'
report, which is not part of the financial statements.
The financial statements were authorised for issue, in accordance with a resolution of directors, on 2 5 February 2019. The
directors have the power to amend and reissue the financial statements.
Note 2. 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.
Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early ado pted.
The adoption of these Accounting Standards and Interpretations did not have any significant impact on the financial
performance or position of the consolidated entity.
21
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 2. Significant accounting policies (continued)
The following Accounting Standards and Interpretations are most relevant to the consolidated entity:
AASB 9 Financial Instruments
This standard replaces AASB 139 Financial Instruments: Recognition and Measurement. AASB 9 includes revised
guidance on the classification and measurement of financial instruments, including a new exp ected credit loss model for
calculation of impairment on financial assets, and new general hedge accounting requirements. It also carries forward
guidance on recognition and derecognition of financial instruments from AASB 139.
To assess for any expected credit losses under AASB 9, there is consideration around the probability of default upon initial
recognition of the asset, and subsequent consideration as to whether there have been any significant increases in credit
risk on an ongoing basis at each reporting period. To assess whether there is a significant increase in credit risk the
consolidated entity compares the risk of a default occurring on the asset as at the reporting date with the risk of default a s
at the date of initial recognition.
In making this assessment, as far as available, the consolidated entity considers both quantitative and qualitative
information that is reasonable and supportable, including historical experience and forward -looking information that is
available without undue cost or effort. Forward-looking information considered includes the future prospects of the
governmental bodies, relevant think-tanks and other similar organisations, as well as consideration of various external
In particular, as far as available, the following information is take n into account when assessing significant movements in
credit risk:
actual or expected significant adverse changes in business, financial or economic conditions that are expected to
actual or expected significant changes in the operating results of the borrower
significant increases in credit risk on other financial instruments of the same borrower
external credit rating
obligations
significant changes in the value of the collateral supporting the obligation or in the quality of third -party guarantees
or credit enhancements
significant changes in the expected performance and behaviour of the borrower, including changes in the payment
status of borrowers in the consolidated entity and changes in the operating results of the borrower
macroeconomic information such as market interest rates and growth rates
The consolidated entity assesses on a forward looking basis the expected credit losses associated with its financial assets.
The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade
receivables, the consolidated entity applies the simplified approach permitted by AASB 9, which requires expected lifetime
losses to be recognised from initial recognition of the receivables.
22
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 2. Significant accounting policies (continued)
AASB 15 Revenue from Contracts with Customers
The consolidated entity has adopted AASB 15 from 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
determination of 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
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 performanc e 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, th e
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.
Impact on application
AASB 9
The consolidated entity believes the change in method from recognition of incurred losses to recognition of expected credit
losses for impairment of financial assets under AASB 9 has not resulted in any adjustments.
AASB 15
The consolidated entity predominantly derives revenue from the sale of goods. Contracts with customers pertain to
predominantly one performance obligation, that being the delivery of the product.
Revenue from the sale of goods were previously 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 deliver y date is
usually the date on which risks and rewards pass.
The consolidated entity believes the application of AASB 15 has not resulted in any adjustments. Revenue from sale of
goods continue to be recognised at a point in time on the delivery date.
The total transaction price does not currently include any variable consideration.
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.
23
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 2. Significant accounting policies (continued)
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 3.
Going concern
The consolidated entity incurred a net loss after tax for the year ended 31 December 2018 of $3, 176,686 and had net cash
tinue as a going concern is dependent upon
them achieving its forecasts. The financial statements have been prepared on the basis that the consolidated entity is a
going concern, which contemplates the continuity of normal business activity, realisation of assets and settlements of
liabilities in the normal course of business for the following reasons:
As at 31 December 2018 the consolidated entity had cash and cash equivalents of $4,959,245, total assets of
$5,925,983 and net assets of $4,294,993.
The company has been awarded a significant R&D government program budget of $1.8m subsequent to 31
December 2018 from the Israel Ministry of Defence and Israel Innovation Authority which is expected to fund the
majority of related R&D salaries over the next 2.5 years.
The Directors have prepared budgets which demonstrates that, based on the above factors the consolidated entity
has sufficient funds available to meet its commitments for at least twelve months from the date of signing of this
report.
The Board are confident of raising further capital through equity raising when deemed necessary.
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 27.
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 Decemb er 2018 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 consolida ted 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 t he 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 gai ns 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.
24
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 2. Significant accounting policies (continued)
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 t he 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.
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 th e 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 fo reign 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 intangibl e
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 no t 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 circumstan ces 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 di sposal 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 independ ent cash flows are grouped together to
form a cash-generating unit.
25
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 2. 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 , 1963
(Israel). 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 Lo ng-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 positi on 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 de bit
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 p art
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 bu t are not yet
mandatory, have not been early adopted by the consolidated entity for the reporting period ended 31 December 2018. 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.
26
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 2. Significant accounting policies (continued)
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 depreciat ion 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 acco unting,
the standard does not substantially change how a lessor accounts for leases.
The consolidated entity will adopt this standard from 1 January 2019, and has assessed the potential effect of AASB 16 on
its consolidated financial statements. The consolidated entity leases premises for its offices and R&D centre in Azor, Israel.
As at 31 December 2018, the operating lease commitment amounts to approximately AUD $32,500, with the lease term
ending on 14 February 2019. On 25 October 2018, the company signed a new office rental agreement, with a
commencement date in February 2019. The consolidated entity believes the application of AASB 16 would not have a
material impact on the financial statements.
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make jud gements, 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 base s 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.
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.
Note 4. 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 segm ent 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.
27
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 5. Revenue
Sale of goods
Consolidated
2018
$
2017
$
2,640,006
1,519,719
Revenue from contracts with customers
Revenue is recognised at an amount that reflects the consideration to which the consolidated entity is expected to be
entitled in exchange for transferring goods or services to a customer. For each contract with a customer, the consolidated
entity: identifies the contract with a customer; identifies the performance obligations in the contract; determines the
transaction price which takes into account estimates of variable consideration and t he time value of money; allocates the
transaction price to the separate performance obligations on the basis of the relative stand -alone selling price of each
distinct good or service to be delivered; and recognises revenue when or as each performance obli gation is satisfied in a
manner that depicts the transfer to the customer of the goods or services promised.
Variable consideration within the transaction price, if any, reflects concessions provided to the customer such as discounts,
rebates and refunds, any potential bonuses receivable from the customer and any other contingent events. Such estimates
are determined using either the 'expected value' or 'most likely amount' method. The measurement of variable
consideration is subject to a constraining principle whereby revenue will only be recognised to the extent that it is highly
probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The measurement
constraint continues until the uncertainty associated with the variable consideration is subsequently resolved. Amounts
received that are subject to the constraining principle are initially recognised as deferred revenue in the form of a separat e
refund liability.
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 discount s estimated future cash receipts through the expected life of the financial asset
to the net carrying amount of the financial asset.
Note 6. Cost of sales
Salaries and benefits
Cost of materials
Rental and office expenses
Other
Consolidated
2018
$
2017
$
214,642
523,584
9,555
11,017
159,425
193,470
21,143
10,560
758,798
384,598
28
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 7. Selling and marketing expenses
Salaries and benefits
Marketing services
Travel expenses
Rental and office expenses
Other
Note 8. Research and development
Salaries and benefits
Materials
Royalties to the OCS
Subcontractors
Depreciation
Other
Note 9. General and administration expenses
Salaries and benefits
Professional fees
Insurance
Travel expenses
Depreciation
Rental and office expenses
Other
Note 10. Listing fees
Professional fees
Travel
Bonuses
Other
The company completed its initial public offering on the ASX in 2017.
29
Consolidated
2018
$
2017
$
944,144
313,414
91,699
16,509
82,562
792,846
94,780
95,666
26,355
66,725
1,448,328
1,076,372
Consolidated
2018
$
2017
$
1,988,562
20,471
11,102
502,618
10,791
165,797
1,676,512
40,344
27,686
157,923
19,476
141,353
2,699,341
2,063,294
Consolidated
2018
$
2017
$
555,550
163,993
49,792
53,022
9,946
27,380
449,061
402,121
201,654
30,875
61,468
12,680
19,348
381,438
1,308,744
1,109,584
Consolidated
2018
$
2017
$
-
-
-
-
-
115,081
38,547
500,000
449,797
1,103,425
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 11. Income tax benefit
Numerical reconciliation of income tax benefit 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 benefit
Consolidated
2018
$
2017
$
(3,176,686)
(6,089,936)
(873,589)
(1,674,732)
19,715
853,874
179,170
1,495,562
-
-
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 12. Current assets - cash and cash equivalents
Cash at bank
Cash on deposit
Consolidated
2018
$
2017
$
3,616,381
1,342,864
2,053,562
6,023,910
4,959,245
8,077,472
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.
Note 13. Current assets - trade and other receivables
Trade receivables
Other receivables
Consolidated
2018
$
2017
$
270,666
219,478
308,783
114,861
490,144
423,644
Accounting policy for trade and other receivables
Trade and other receivables are recognised at amortised cost, less any provision for impairment.
30
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 13. Current assets - trade and other receivables (continued)
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 o f
the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptc y 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 14. Current assets - inventories
Finished goods - at cost
Accounting policy for inventories
Inventories are recognised at the lower of cost and net realisable value.
Note 15. Current liabilities - trade and other payables
Trade payables
Other payables
Consolidated
2018
$
2017
$
437,483
303,936
Consolidated
2018
$
2017
$
256,710
729,802
214,745
673,987
986,512
888,732
Refer to note 21 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 16. Non-current liabilities - employee benefits
Employee benefits
Consolidated
2018
$
2017
$
476,798
456,959
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, these amounts may not be withdrawn or mortgaged as long as the
31
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 16. Non-current liabilities - employee benefits (continued)
Statement of financial position amounts
The amounts recognised in the statement of financial position are determined as follows:
Present value of the defined benefit obligation
Fair value of defined benefit plan assets
Net liability in the statement of financial position
Movement in plan assets:
Balance at the beginning of the year
Interest income
Contributions
Re measurements gain/(loss)
Return on plan assets (excluding interest)
Foreign exchanges differences
Balance at the end of the year
Reconciliations
Reconciliation of the present value of the defined benefit obligation
Balance at the beginning of the year
Interest cost
Current service cost
Actuarial loss/(gains) from financial assumptions
Adjustments
Balance at the end of the year
Consolidated
2018
$'000
2017
$'000
596,281
(119,483)
552,559
(95,600)
476,798
456,959
Consolidated
2018
$'000
2017
$'000
95,600
1,486
18,581
73,320
363
18,149
1,115
2,701
2,178
1,590
119,483
95,600
Consolidated
2018
$'000
2017
$'000
552,559
17,015
52,557
(25,094)
(756)
295,657
5,537
59,058
36,911
155,396
596,281
552,559
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
32
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 16. Non-current liabilities - employee benefits (continued)
Significant actuarial assumptions
The significant actuarial assumptions used (expressed as weighted averages) were as follows:
Discount rate on plan liabilities
Future salary increases
Note 17. Non-current liabilities - Governmental liabilities on grants received
Governmental liabilities on grants received
Consolidated
2018
%
2017
%
3.45
1
2.86
1
Consolidated
2018
$
2017
$
167,680
163,387
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 Israeli Innovation Authority- Office of 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.
Note 18. Equity - issued capital
Ordinary shares - fully paid
217,626,715 217,376,715 19,075,915 19,055,915
Consolidated
2018
Shares
2017
Shares
2018
$
2017
$
33
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 18. Equity - issued capital (continued)
Movements in ordinary share capital
Details
Date
Shares
Issue price
$
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
1 January 2017
10,000,000
4,577,223
(10,000,000)
-
-
132,090,972
-
11,814,243
-
-
$0.06
-
1,039,568
748,301
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
Issue of shares to Directors
31 December 2017
24 October 2018
217,376,715
250,000
19,055,915
20,000
$0.08
Balance
31 December 2018
217,626,715
19,075,915
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 eac h
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 calcula ted
as total borrowings less cash and cash equiva lents.
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.
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.
34
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 19. Equity - reserves
Foreign currency reserve
Share-based payments reserve
Re-measurements reserve
Consolidated
2018
$
2017
$
160,988 149,971
1,000,339
(386,898)
1,072,030
(356,341)
876,677
763,412
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.
Re-measurements reserve
The reserve is used for remeasurements comprising actuarial gains and losses on the net defined benefit liability.
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 2017
Foreign currency translation
Share based payments
Conversion of warrants during the year
Re-measurement of defined benefit plans
Balance at 31 December 2017
Foreign currency translation
Share based payments
Re-measurement of defined benefit plans
Re-
measurement
reserve
$
Share based
payments
$
1,796,326
-
693,171
(1,489,158)
-
1,000,339
-
71,691
-
(191,369)
-
-
-
(195,529)
(386,898)
-
-
30,557
Foreign
currency
reserve
$
123,037
26,934
-
-
-
149,971
11,017
-
-
Total
$
1,727,994
26,934
693,171
(1,489,158)
(195,529)
763,412
11,017
71,691
30,557
Balance at 31 December 2018
(356,341)
1,072,030
160,988
876,677
Note 20. Equity - dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 21. 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 focus es
on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financi al 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 r isks,
ageing analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk.
35
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 21. Financial instruments (continued)
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 fluc tuations.
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
Liabilities
2018
$
2017
$
2018
$
2017
$
1,121,000
33,000
1,078,000
1,564,000
177,000
61,000
52,000
20,000
797,000
75,000
6,000
743,000
2,232,000
1,802,000
869,000
824,000
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.
Price risk
Price risk is the risk that future cash flows 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.
Interest rate risk
to interest rate risk.
iable rates expose the consolidated entity
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 ri sk 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.
The consolidated entity has adopted a lifetime expected loss allowance in estimating expected credit losses to trade
receivables through the use of a provisions matrix using fixed rates of credit loss provisioning. These provision s are
considered representative across all customers of the consolidated entity based on recent sales experience, historical
collection rates and forward-looking information that is available.
Generally, trade receivables are written off when there is no reasonable expectation of recovery. Indicators of this include
the failure of a debtor to engage in a repayment plan, no active enforcement activity and a failure to make contractual
payments for a period greater than 1 year.
36
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 21. Financial instruments (continued)
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 - 2018
Non-derivatives
Non-interest bearing
Trade payables
Other payables
Government liabilities
Total non-derivatives
Consolidated - 2017
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
$
-
-
-
256,710
636,049
47,264
940,023
-
-
57,473
57,473
-
-
129,692
129,692
-
-
-
-
256,710
636,049
234,429
1,127,188
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
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.
Note 22. 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 Jonathan Brett (Non-executive director)
Appointed 18 September 2018
37
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 22. Key management personnel disclosures (continued)
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 23. Remuneration of auditors
Consolidated
2018
$
2017
$
827,244
221,360
20,000
1,184,705
183,284
597,116
1,068,604
1,965,105
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:
Audit services - BDO East Coast Partnership
Audit or review of the financial statements
Other services - BDO East Coast Partnership
Preparation of tax return and other tax consulting
Initial Public Offering
Audit services - BDO Israel
Audit or review of the financial statements
Other services - BDO Israel
Other
Consolidated
2018
$
2017
$
48,000
48,000
8,050
-
-
37,300
8,050
37,300
56,050
85,300
53,871
43,045
1,934
-
55,805
43,045
38
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 24. Contingent liabilities
The Company participates in programs sponsored by the Israeli Innovation Authority - Office of 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 develo ped 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 each year.
Note 25. Commitments
The Company leases premises for its offices and R&D center in Azor.
Lease commitments
Committed at the reporting date but not recognised as liabilities, payable:
Within one year
operating
Note 26. Related party transactions
Parent entity
Mobilicom Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 28.
Consolidated
2018
$
2017
$
32,500
24,000
Key management personnel
Disclosures relating to key management personnel are set out in note 22 and the remuneration report included in the
directors' report.
Transactions with related parties
The following transactions occurred with related parties:
Consolidated
2018
$
2017
$
Payment for other expenses:
Corporate secretarial fees paid to Mertons Corporate Services Pty Ltd (an entity related to
Mark Licciardo)
Consulting fees paid to Camac Investments Pty Ltd (an entity related to Campbell McComb)
40,608
17,002
40,000
-
Other transactions:
Repayment of payables to and loans from Mr Elkayam
Repayment of payables to and loans from Mr Segal
2,130,000 shares were paid to director related entity (Mr McComb (through Camac
Investments Pty Ltd)) for as part of the Advisor offer.
-
-
-
128,717
127,632
426,000
39
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 26. 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
Terms and conditions
All transactions were made on normal commercial terms and conditions and at market rates.
Note 27. 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
Consolidated
2018
$
2017
$
21,518
22,821
Parent
2018
$
2017
$
(5,731,613)
(6,405,381)
(5,731,613)
(6,405,381)
Parent
2018
$
2017
$
1,415,090
6,232,202
5,411,200
7,764,500
68,676
64,966
68,676
426,085
13,112,267 13,092,267
651,529
(6,405,381)
723,220
(8,492,964)
5,342,523
7,338,415
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 2018.
Contingent liabilities
The parent entity had no contingent liabilities as at 31 December 2018.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 31 December 2018.
40
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 27. Parent entity information (continued)
Significant accounting policies
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in not e 2,
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 28. 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 2:
Name
Principal place of business /
Country of incorporation
Ownership interest
2017
2018
%
%
Mobilicom Ltd ("Mobilicom Israel")
Israel
100.00%
100.00%
Note 29. Events after the reporting period
On 21 January 2019 the consolidated entity announced that it has been chosen by the Israel Ministry of Defence and the
Israel Innovation Authority to execute an R&D project valued in excess of $1.8 million.
No other matter or circumstance has arisen since 31 December 2018 that has significantly affected, or may significantly
affect the consolidated entity's operations, the results of those operations, or the consolidated entity's sta te of affairs in
future financial years.
Note 30. Reconciliation of loss after income tax to net cash used in operating activities
Loss after income tax expense for the year
(3,176,686)
(6,089,936)
Consolidated
2018
$
2017
$
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 prepayments
Increase/(decrease) in trade and other payables
Increase in employee benefits
Increase in Government liabilities
Net cash used in operating activities
10,791
91,691
143,854
-
19,476
1,701,529
-
427,117
(73,400)
(133,546)
6,900
139,353
19,839
4,293
(32,985)
(133,929)
-
(12,779)
240,418
877
(2,966,911)
(3,880,212)
41
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 31. Earnings per share
Consolidated
2018
$
2017
$
Loss after income tax attributable to the owners of Mobilicom Limited
(3,176,686)
(6,089,936)
Weighted average number of ordinary shares used in calculating basic earnings per share
217,423,290 147,697,056
Weighted average number of ordinary shares used in calculating diluted earnings per share 217,423,290 147,697,056
Number
Number
Basic earnings per share
Diluted earnings per share
Cents
Cents
(1.46)
(1.46)
(4.12)
(4.12)
The rights to options held by option holders have not been included in the weighted average number of ordinary shares for
s to options are non-dilutive currently because the option price is below the market share price.
Accounting policy for earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit attributable to the owner s 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 potent ial ordinary shares and the
weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential
ordinary shares.
Note 32. Share-based payments
Set out below is a summary of options granted and on issue at the end of the year.
2018
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
17/04/2018
30/05/2018
20/09/2018
27/04/2020
27/04/2022
20/03/2020
21/09/2021
25/11/2025
20/10/2026
25/09/2021
05/11/2025
16/04/2023
29/05/2024
19/09/2023
$0.20
$0.20
$0.05
$0.05
$0.12
$0.12
$0.05
$0.12
$0.15
$0.15
$0.15
3,400,000
1,850,000
460,568
460,568
307,044
614,090
1,919,030
1,151,417
-
-
-
10,162,717
-
-
-
-
-
-
-
-
5,200,000
400,000
600,000
6,200,000
-
-
-
-
-
-
-
-
-
-
-
-
3,400,000
-
1,850,000
-
460,568
-
460,568
-
307,044
-
614,090
-
1,919,030
-
1,151,417
-
5,200,000
-
400,000
-
-
600,000
- 16,362,717
42
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 32. Share-based payments (continued)
During the year, the company granted the following options:
400,000 options granted to Mr Shalom Elkayam (Mobilicom Israel's board member), as part of his remuneration
5,800,000 options granted as part of the company's Employee Share Option Plan (ESOP)
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
17/04/2018
30/05/2018
20/09/2018
16/04/2023
29/05/2024
19/09/2023
Share price Exercise
at grant date
price
Expected
volatility
Dividend
Risk-free
Fair value
yield
interest rate at grant date
$0.07
$0.06
$0.07
$0.15
$0.15
$0.15
68.61%
68.61%
68.61%
-
-
-
2.45%
2.09%
2.33%
$0.0000
$0.0000
$0.0000
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 impa ct
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 equit y 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.
The cost of cash-settled transactions is initially, and at each reporting date until vested, determ ined 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 f air 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.
43
Mobilicom Limited
Notes to the consolidated financial statements
31 December 2018
Note 32. Share-based payments (continued)
If equity-settled awards are cancelled, it is treated as if it has vested on th e 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.
44
Mobilicom Limited
Directors' declaration
31 December 2018
In the directors' opinion:
the attached financial statements and notes comply with the Corporations Act 2001, the Australian Accounting
Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements;
the attached financial statements and notes comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board as described in note 2 to the financial statements;
the attached financial statements and notes give a true and fair view of the consolidated entity's financial position as
at 31 December 2018 and of its performance for the financial year ended on that date; and
there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
The directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001.
On behalf of the directors
___________________________
Oren Elkayam
Chairman and Managing Director
25 February 2019
Tel Aviv
45
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 2018, 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 statements, 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)
(ii)
Giving a true and fair view of the Group’s financial position as at 31 December 2018 and of its
financial performance for the year ended on that date; and
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 Australia Ltd ABN 77 050 110 275, an Australian company limited by guarantee, is a member of BDO International Ltd, a UK company limited by
guarantee, and forms 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.
46
Audit Strategy for Overseas Operations
Key audit matter
How the matter was addressed in our audit
The Group’s structure comprises significant overseas
operations. The existence of such operations heightens
Our procedures included but were not limited to:
• Gaining an understanding of the Group, its
the importance of engaging with the component
auditor to mitigate the risk associated with delivering
an audit in a location and regulatory environment other
than Australia.
components and the environment it operates in
to identify the risks of material misstatement to
the Group’s financial report; and
• 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 and deliverables, in particular the areas
that were key to the Group audit.
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 2018, 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.
47
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.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 8 to 13 of the directors’ report for the
year ended 31 December 2018.
In our opinion, the Remuneration Report of Mobilicom Limited, for the year ended 31 December 2018,
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, 25 February 2019
48
Mobilicom Limited
Shareholder information
31 December 2018
The shareholder information set out below was applicable as at 13 February 2019.
Distribution of equitable securities
Analysis of number of equitable security holders by size of holding:
Number
Number
of holders of holders
of ordinary of options
Number
of holders
of ordinary
shares
shares
ASX
Escrowed
24 months
over
ordinary
shares
-
-
-
4
24
28
-
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
8
28
85
230
143
494
53
-
-
-
8
7
15
-
Twenty largest quoted equity security holders
The names of the twenty largest security holders of quoted equity securities are listed below:
IBI Trust Management
HSBC Custody Nominees
Lancing Liquid Relative Value Fund
MCR19 Holdings LLC
Hershman Holdings LLC
Mr Alan Hirmes
National Nominees Limited
HSBC Custody Nominees (Australia) Limited - A/C 2
Steven & Mali Shwartz LLC
Carrier International Pty Limited (Super Fund A/C)
BNP Paribas Nominees Pty Ltd (Ib Au Noms Retailclient Drp)
Citicorp Nominees Pty Limited
Mr John Plummer
Australian Executor Trustees Limited (No 1 Account)
Muhlbauer Investments Pty Ltd (Muhlbauer Family A/C)
Jetan Pty Ltd
BCJMOB LLC
Mr Nathan Kaplan
BC Business LLC
Mr Harry Kotowitz
49
Ordinary shares
Number held
% of total
shares
issued
28,803,496
4,335,066
4,302,713
4,217,645
4,074,370
3,894,864
3,537,500
2,797,397
2,530,587
2,320,945
2,317,595
2,246,822
2,127,515
1,820,986
1,496,481
1,375,000
1,265,294
1,265,294
1,222,307
1,222,307
21.230
3.195
3.171
3.109
3.003
2.871
2.607
2.062
1.865
1.711
1.708
1.656
1.568
1.342
1.103
1.013
0.933
0.933
0.901
0.901
77,174,184
56.883
Mobilicom Limited
Shareholder information
31 December 2018
Unquoted equity securities
Fully paid ordinary shares
Options over ordinary shares issued
The following person holds 20% or more of unquoted equity securities:
Number
on issue
Number
of holders
81,954,413
16,362,717
15
28
Name
Class
Number held
IBI Trust Management
months
76,704,413
Options over ordinary shares issued ASX escrowed 24
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:
Ordinary shares
% of total
shares
issued
Number held
37,329,774
31,092,158
12,051,511
17.15
14.29
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.
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.
50