MOBILICOM LIMITED Mobilicom Limited
ABN 26 617 155 978
Annual Report - 31 December 2023
| Mobilicom Limited | |
| Contents | |
| 31 December 2023 |
| Corporate directory | 2 |
| Directors' report | 3 |
| Auditor's independence declaration | 8 |
| Consolidated statement of profit or loss and other comprehensive income | 9 |
| Consolidated statement of financial position | 10 |
| Consolidated statement of changes in equity | 11 |
| Consolidated statement of cash flows | 12 |
| Notes to the consolidated financial statements | 13 |
| Directors' declaration | 37 |
| Independent auditor's report to the members of Mobilicom Limited | 38 |
1
| Mobilicom Limited | |
| Corporate directory | |
| 31 December 2023 |
| Directors | Oren Elkayam (Chairman and Managing Director) |
| Yossi Segal (Executive Director) | |
| Campbell McComb (Non-executive Director) | |
| Jonathan Brett (Non-executive Director) | |
| Company secretary | Justin Mouchacca |
| Registered office | C/- JM Corporate Services |
| Level 21 | |
| 459 Collins Street | |
| Melbourne, VIC 3000 | |
| Ph: 03 8630 3321 | |
| Auditor | Hall Chadwick WA Audit Pty Ltd |
| 283 Rokeby Road | |
| Subiaco WA 6008 | |
| Australia | |
| Website | https://mobilicom-ltd.com.au |
2
| Mobilicom Limited | |
| Directors' report | |
| 31 December 2023 |
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 2023.
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)
Jonathan Brett (Non-executive Director)
Principal activities
The Company's principal activities are design, develop and deliver of cybersecurity and robust solutions including communication datalinks, mesh network, ground control systems, cybersecurity and could-software solutions for drone, robotics and autonomous platforms.
The Company is an end-to-end provider of cybersecurity and robust solutions for drones, robotics & autonomous platforms. As a high-tech company it designs, develops, and delivers robust solutions focused primarily on targeting global drone, robotics and autonomous system manufacturers. The Company holds patented technology & unique know-how for Mobile Mesh networking. It has a large, field proven portfolio of commercialized products used in a variety of applications. The Company is growing a global customer base with sales to high profile customers including corporates, governments, and military departments. The Company's competitive advantages include outstanding security capabilities and performance in harsh environmental conditions. The Company's large solution portfolio is being deployed worldwide, seeing the Company derive revenue from hardware, software sales & licensing fees.
Dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Financial Highlights
| ● | Revenues increased 43% year-over-year to $3.3 million driven by repeat orders |
| ● | Gross margin remained high, at 59% compared to 62% in 2022, reflects our strong IP and know-how |
| ● | Confirmed order backlog of $2.0 million expected to be fulfilled in first half of 2024 |
| ● | Strong cash position of $12.3 million with narrowing monthly burn rate affords Mobilicom a long cash runway to implement its strategic plans, capture market share, and ramp revenues |
| ● | Completed $4.31 million (US$ 2.95 million) capital raise in January 2024 adding to strong cash position at year-end |
Operational Highlights
| ● | Received initial production-scale order in Q3 2023 followed by additional quantity-increase order in Q4 2023 from U.S. Tier-1 drone manufacturer which delivers to the U.S. Department of Defense ("DOD") |
| ● | Chosen by the U.S.DOD for Soldiers' Next Generation Wearable Tactical AI-Enhanced Mission Kits |
| ● | Secured $1.3 million initial production-scale order from global Tier-1 Israeli-based manufacturer for loitering (kamikaze) drones platform |
| ● | Secured initial production-scale order from another global Tier-1 Israeli-based manufacturer for use by the Israeli Defense Forces |
| ● | Secured license-based order for ICE Cybersecurity from Israel's Ministry of Defense for its small-sized drone program |
| ● | Launched MCU-70, cybersecure SDR Product with high size-to-performance ratio addressing new target market for mid-sized long-range UAVs |
3
| Mobilicom Limited | |
| Directors' report | |
| 31 December 2023 |
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
Commencing January 1, 2024, the Company elected to shift from Australian dollar functional currency to U.S. dollar functional currency and accordingly all internal financial reporting and presentations, to board of directors and executive management as well as external financial reporting and presentations are denominated in U.S. dollar. Following the transition to U.S. Dollar as functional currency the currency transaction adjustment ("CTA") reserve balance as of December 31, 2023 will remain as is (freeze) and starting January 1, 2024 differences between the USD and the NIS will be recorded under the CTA reserve while transactions with AUD will be recorded as foreign currency transactions under the statement of profit or loss and other comprehensive income (loss).
On January 25, 2024, the Company entered into a definitive agreement (the "Purchase Agreement") with certain institutional investors providing for the issuance of (i) 133,889,525 ordinary shares represented by 486,871 American Depositary Shares ("ADSs"), and (ii) prefunded warrants to purchase up to an aggregate of 389,497,350 ordinary shares represented by 1,416,354 ADSs, in a registered direct offering at an offering price of US$1.55 per ADS and US$1.5499 per pre-funded warrant, for aggregate gross proceeds of approximately US$2.95 million (AUD$4.31 million). Each ADS represents two hundred seventy-five (275) ordinary shares, no par value, of the company. The offering was closed on January 30, 2024.
In addition, in a concurrent private placement, the Company agreed to issue the investors warrants to purchase up to an aggregate of 523,386,875 ordinary shares represented by 1,903,225 ADSs at an exercise price of US$1.55 per ADS. The warrants will be immediately exercisable and will expire five years following the initial exercise date. The warrants may be exercised on a cashless basis if there is no effective registration statement registering the ADSs underlying the warrants.
Each pre-funded warrant is exercisable for one ADS at an exercise price of US$0.001 per share. The pre-funded warrants are immediately exercisable and may be exercised at any time until all of the pre-funded warrants are exercised in full.
No other matter or circumstance has arisen since 31 December 2023 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.
Likely developments and expected results of operations
The information on likely development and expected results of operations has been disclosed as part of the Review of Operations above.
Environmental regulation
The consolidated entity is not subject to any significant environmental regulation under Australian Commonwealth or State law.
Risk Statement
The Company is committed to the effective management of risk to reduce uncertantity in the consolidated entity's business outcomes and to protect and enhance shareholder value. There are various risks that could have a material impact on the achievement of the consolidated entity's strategic objectives and future prospects.
Key risks and mitigation activities associated with the Company's objectives are set out below:
Financial Condition
The Company is predominately in the business of research and development of new products and has had a history of losses. We expect that we will need to invest significant time and raise substantial additional capital before we can expect to become profitable from sales of our products. This additional capital may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product development efforts or other operations.
Product quality and safety
The Company focuses on safety through active identification and management of safety hazards and operational risks. The Company continues to invest in safety in order to mitigate safety hazards and also embeds a culture of safety into its workplaces.
4
| Mobilicom Limited | |
| Directors' report | |
| 31 December 2023 |
Change in regulations
The Company is subject to a number of regulatory approvals in order to be able to manufacture and sell our products. There is a risk that failure to obtain necessary regulatory approvals may prevent the Company from selling its hardware products. The Company ensures that it continues to review regulatory requirements to mitigate any potential risk of not meeting up with regulatory requirements.
Political, economic and military instability in Israel may impede our ability to operate and harm our financial results. The Company may become subject to claims for remuneration or royalties for assigned service invention rights by our employees, which could result in litigation and adversely affect our business.
Intellectual Property
If the Company fails to protect, or incur significant costs in defending, our intellectual property and other know-how or proprietary rights, our business, financial condition, and results of operations could be materially harmed. Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment, and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements. We may be sued by third parties for alleged infringement of their proprietary rights, which could be costly, time-consuming and limit our ability to use certain technologies in the future.
Information on directors
| Name: | Mr Oren Elkayam |
| Title: | Chairman and Managing Director |
| Qualifications: | B.Sc, MBA |
| Experience and expertise: | Oren Elkayam is a tech executive, founder, and public company CEO who has led growth and innovation at tech companies from inception through commercialization. Applying his deep experience in technology, the military, and strategic business management, Oren's expertise is in accelerating ventures. Having raised over $100 million in venture and public company investments, Oren has led IPOs, developed breakthrough cybersecurity, software and hardware solutions, commercialized these new products, and built high-performing corporate organizations from the ground up. He has served on the boards of venture-backed firms and is currently CEO & Founder of Mobilicom (Nasdaq:MOB), a leading provider of cybersecure and robust end-to-end solutions for drones, robotics, and autonomous systems. Oren has been instrumental in building Mobilicom's product portfolio and global Tier-1 customer base while deeply involved in the evolution of the industry, backed by innovation that enables drones and robotics rise. Oren served as an Officer in the Israeli Air Force, led an elite R&D unit for large cutting-edge technology projects. He has been a voting member on both the Institute of Electrical and Electronic Engineers (IEEE) and WiMAX international committees, He holds a B.Sc in Electrical Engineering and an MBA (magna cum laude) from Ben-Gurion University, Israel. |
| Special responsibilities: | No special responsibilities |
| Name: | Mr Yossi Segal |
| Title: | Executive Director |
| Qualifications: | B.Sc, M.Sc, MBA |
| Experience and expertise: | Mr Segal (Vice President of R&D and Co-Founder of Mobilicom Israel) was the former CTO and a founding member of Runcom Ltd. Mr Segal is a worldwide expert in OFDM/A and has written essential patents for OFDM/A technology, being the first to implement OFDM/A in a working product. He has also previously led the design and development groups of three mobile integrated circuits (IC chip) and eight wireless broadband systems which are currently in operation and sold worldwide. Mr Segal has taken a leading role in several international wireless standards (IEEE and ETSI) as a committee voting member, and served in the Israeli Army as an officer in an elite electronic warfare research and development unit. |
| Special responsibilities: | No special responsibilities |
| Name: | Mr Campbell McComb |
| Title: | Non-executive Director |
| Qualifications: | BEc, GAICD, FINSIA |
| Experience and expertise: | Mr McComb has over 20 years' experience in funds management and investment banking and has overseen the development of numerous businesses. He has significant investment experience across equity securities, venture capital and private equity. Mr McComb is currently the Managing Director of Auctus (ASX: AVC), a listed Alternative Investment Management business. |
| Special responsibilities: | Member of Audit Committee |
5
| Mobilicom Limited | |
| Directors' report | |
| 31 December 2023 |
| Name: | Mr Jonathan Brett |
| Title: | Non-executive Director |
| Qualifications: | BCom (Legal), BAcc, MCom (Financial Management), Dip Datametrics (Computer Science) and is a CA(SA) |
| Experience and expertise: | 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. Mr Brett is a non-executive director of Corporate Travel Management Limited (ASX: CTD) and Raiz Invest Limited (ASX: RZI). |
| Special responsibilities: | Chairman of Audit Committee |
Company secretary
Justin Mouchacca
Justin Mouchacca holds a Bachelor of Business majoring in Accounting, is a Chartered Accountant and Fellow of the Governance Institute of Australia with over 14 years' experience in public company responsibilities including statutory, corporate governance and financial reporting requirements. Since July 2019, Justin has been principal of JM Corporate Services and has been appointed Company Secretary and Financial Officer for a number of entities listed on the ASX and unlisted public companies.
Meetings of directors
The number of meetings of the company's Board of Directors ('the Board') and of each Board committee held during the year ended 31 December 2023, and the number of meetings attended by each director were:
| Full Board | Audit Committee | |||||||||||||||
| Attended | Held |
Committee Attended |
Committee Held | |||||||||||||
| Mr O Elkayam | 4 | 4 | - | - | ||||||||||||
| Mr Y Segal | 4 | 4 | - | - | ||||||||||||
| Mr C McComb | 4 | 4 | 1 | 1 | ||||||||||||
| Mr J Brett | 4 | 4 | 1 | 1 |
Held: represents the number of meetings held during the time the director held office or was a member of the relevant committee.
Shares under options and warrants
Unissued ordinary shares of Mobilicom Limited under options and warrants at the date of this report are as follows:
| Exercise | Number | |||||||||
| Grant date | Expiry date | price | under option | |||||||
| 20/10/2016 | 20/10/2026 | $ | 0.05 | 614,090 | ||||||
| 05/11/2015 | 05/11/2025 | $ | 0.12 | 767,611 | ||||||
| 30/05/2018 | 29/05/2024 | $ | 0.15 | 400,000 | ||||||
| 30/05/2019 | 25/06/2025 | $ | 0.15 | 3,000,000 | ||||||
| 29/12/2020 | 29/12/2025 | $ | 0.15 | 3,325,000 | ||||||
| 15/07/2021 | 15/07/2026 | $ | 0.08 | 11,500,000 | ||||||
| 13/04/2022 | 13/04/2027 | $ | 0.08 | 400,000 | ||||||
| 13/04/2022 | 13/04/2027 | $ | 0.07 | 573,678 | ||||||
| 13/04/2022 | 13/04/2027 | $ | 0.05 | 4,740,000 | ||||||
| 24/08/2022 | 24/08/2027 | * | 2,931,355 | |||||||
| 31/05/2023 | 31/05/2033 | $ | 0.01 | 210,000,000 | ||||||
| 03/08/2023 | 03/08/2028 | $ | 0.01 | 43,600,000 | ||||||
| 25/01/2024 | 25/01/2029 | ** | 1,416,354 | |||||||
| 283,268,088 |
| * | Warrants issued against pre-funded warrants traded on Nasdaq Capital Market, with an exercise price of US$5.00 per pre-funded warrant. |
| ** | Warrants issued against pre-funded warrants issued under January 2024 Purchase Agreement, with an exercise price of US$0.0001 per pre-funded warrant. |
6
| Mobilicom Limited | |
| Directors' report | |
| 31 December 2023 |
No person entitled to exercise the options had or has any right by virtue of the option or warrants 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 2023 and up to the date of this report.
Indemnity and insurance of officers
The Company has indemnified the directors and executives of the Company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith.
During the financial year, the Company paid a premium in respect of a contract to insure the directors and executives of the Company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium.
Indemnity and insurance of auditor
The Company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the Company or any related entity against a liability incurred by the auditor.
During the financial year, the Company has not paid a premium in respect of a contract to insure the auditor of the Company or any related entity.
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.
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
Hall Chadwick WA Audit Pty Ltd continues in office in accordance with section 327 of the Corporations Act 2001.
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
| /s/ Oren Elkayam | |
| Oren Elkayam | |
| Chairman and Managing Director | |
| 9 April 2024 | |
| Tel Aviv |
7
| Mobilicom Limited | |
| Auditor's independence declaration | |
To the Board of Directors
AUDITOR'S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001
As lead audit director for the audit of the financial statements of Mobilicom Limited for the financial year ended 31 December 2023, I declare that to the best of my knowledge and belief, there have been no contraventions of:
| ● | the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and |
| ● | any applicable code of professional conduct in relation to the audit. |
Yours Faithfully,
| /s/ HALL CHADWICK | /s/ MARK DELAURENTIS | |
| HALL CHADWICK WA AUDIT PTY LTD |
MARK DELAURENTIS CA Director |
Dated this 9th day of April 2024
Perth, Western Australia
8
| Mobilicom Limited | |
| Consolidated statement of profit or loss and other comprehensive income | |
| For the year ended 31 December 2023 |
| Consolidated | ||||||||||
| Note |
31 December 2023 |
31 December 2022 | ||||||||
| $ | $ | |||||||||
| Revenue | 4 | 3,301,887 | 2,327,058 | |||||||
| Cost of sales | 5 | (1,341,265 | ) | (850,552 | ) | |||||
| Government grants | 296,567 | 923,033 | ||||||||
| Interest received | 441,715 | 168,843 | ||||||||
| Foreign exchange gains/(losses) | 552,971 | 1,175,735 | ||||||||
| Fair value gain/(loss) from financial liability | (476,745 | ) | 3,768,466 | |||||||
| Other income | 814,508 | 6,036,077 | ||||||||
| Expenses | ||||||||||
| Selling and marketing expenses | 6 | (2,462,177 | ) | (2,415,883 | ) | |||||
| Research and development | 7 | (2,715,427 | ) | (2,516,922 | ) | |||||
| General and administration expenses | 8 | (3,410,874 | ) | (2,532,033 | ) | |||||
| Share based payments | 32 | (882,055 | ) | (309,256 | ) | |||||
| Finance costs | (54,765 | ) | (65,972 | ) | ||||||
| Loss before income tax expense | (6,750,168 | ) | (327,483 | ) | ||||||
| Income tax expense | 9 | (121,797 | ) | (13,986 | ) | |||||
| Loss after income tax expense for the year attributable to the owners of Mobilicom Limited | (6,871,965 | ) | (341,469 | ) | ||||||
| Other comprehensive income | ||||||||||
| Items that will not be reclassified subsequently to profit or loss | ||||||||||
| Re-measurement of defined benefit plans | 9,560 | 366,517 | ||||||||
| Items that may be reclassified subsequently to profit or loss | ||||||||||
| Foreign currency translation | (511,368 | ) | (935,142 | ) | ||||||
| Other comprehensive income/(loss) for the year, net of tax | (501,808 | ) | (568,625 | ) | ||||||
| Total comprehensive loss for the year attributable to the owners of Mobilicom Limited | (7,373,773 | ) | (910,094 | ) | ||||||
| Cents | Cents | |||||||||
| Basic earnings/(loss) per share | 31 | (0.52 | ) | (0.05 | ) | |||||
| Diluted earnings/(loss) per share | 31 | (0.52 | ) | (0.05 | ) |
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes
9
| Mobilicom Limited | |
| Consolidated statement of financial position | |
| As at 31 December 2023 |
| Consolidated | ||||||||||
| Note |
31 December 2023 |
31 December 2022 | ||||||||
| $ | $ | |||||||||
| Assets | ||||||||||
| Current assets | ||||||||||
| Cash and cash equivalents | 10 | 12,259,185 | 18,917,416 | |||||||
| Restricted cash | 10 | 86,880 | 59,126 | |||||||
| Trade and other receivables, net | 11 | 1,429,209 | 828,351 | |||||||
| Inventories | 12 | 1,366,635 | 838,658 | |||||||
| Total current assets | 15,141,909 | 20,643,551 | ||||||||
| Non-current assets | ||||||||||
| Property, plant and equipment | 13 | 117,758 | 135,878 | |||||||
| Right-of-use assets | 14 | 672,954 | 426,817 | |||||||
| Total non-current assets | 790,712 | 562,695 | ||||||||
| Total assets | 15,932,621 | 21,206,246 | ||||||||
| Liabilities | ||||||||||
| Current liabilities | ||||||||||
| Trade and other payables | 15 | 2,076,052 | 1,608,846 | |||||||
| Lease liabilities | 16 | 327,046 | 333,850 | |||||||
| Warrants financial liability | 17 | 1,572,818 | 1,097,520 | |||||||
| Total current liabilities | 3,975,916 | 3,040,216 | ||||||||
| Non-current liabilities | ||||||||||
| Lease liabilities | 16 | 334,909 | 95,403 | |||||||
| Employee benefits | 18 | 295,542 | 203,636 | |||||||
| Governmental liabilities on grants received | 19 | 6,666 | 6,084 | |||||||
| Total non-current liabilities | 637,117 | 305,123 | ||||||||
| Total liabilities | 4,613,033 | 3,345,339 | ||||||||
| Net assets | 11,319,588 | 17,860,907 | ||||||||
| Equity | ||||||||||
| Issued capital | 20 | 41,855,722 | 41,636,762 | |||||||
| Reserves | 21 | 388,674 | 276,988 | |||||||
| Accumulated losses | (30,924,808 | ) | (24,052,843 | ) | ||||||
| Total equity | 11,319,588 | 17,860,907 |
The above consolidated statement of financial position should be read in conjunction with the accompanying notes
10
| Mobilicom Limited | |
| Consolidated statement of changes in equity | |
| For the year ended 31 December 2023 |
| Issued |
Share based payments |
Foreign currency translation |
Re- measurement | Accumulated | Total | |||||||||||||||||||
| capital | reserve | reserves | reserves | losses | equity | |||||||||||||||||||
| Consolidated | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Balance at 1 January 2022 | 26,504,136 | 1,214,809 | 237,437 | (508,949 | ) | (24,118,314 | ) | 3,329,119 | ||||||||||||||||
| Loss after income tax expense for the year | - | - | - | - | (341,469 | ) | (341,469 | ) | ||||||||||||||||
| Other comprehensive income for the year, net of tax | - | - | (935,142 | ) | 366,517 | - | (568,625 | ) | ||||||||||||||||
| Total comprehensive income/ (loss) for the year | - | - | (935,142 | ) | 366,517 | (341,469 | ) | (910,094 | ) | |||||||||||||||
| Transactions with owners in their capacity as owners: | ||||||||||||||||||||||||
| Contributions of equity, net of transaction costs (note 20) | 15,132,626 | - | - | - | - | 15,132,626 | ||||||||||||||||||
| Share-based payments (note 32) | - | 309,256 | - | - | - | 309,256 | ||||||||||||||||||
| Expiry of options | - | (311,840 | ) | - | - | 311,840 | - | |||||||||||||||||
| Forfeiture of options | - | (95,100 | ) | - | - | 95,100 | - | |||||||||||||||||
| Balance at 31 December 2022 | 41,636,762 | 1,117,125 | (697,705 | ) | (142,432 | ) | (24,052,843 | ) | 17,860,907 |
| Issued | Share based payments |
Foreign currency translation |
Re- measurement | Accumulated | Total | |||||||||||||||||||
| capital | reserve | reserves | reserves | losses | equity | |||||||||||||||||||
| Consolidated | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
| Balance at 1 January 2023 | 41,636,762 | 1,117,125 | (697,705 | ) | (142,432 | ) | (24,052,843 | ) | 17,860,907 | |||||||||||||||
| Loss after income tax expense for the year | - | - | - | - | (6,871,965 | ) | (6,871,965 | ) | ||||||||||||||||
| Other comprehensive income for the year, net of tax | - | - | (511,368 | ) | 9,560 | - | (501,808 | ) | ||||||||||||||||
| Total comprehensive income for the year | - | - | (511,368 | ) | 9,560 | (6,871,965 | ) | (7,373,773 | ) | |||||||||||||||
| Transactions with owners in their capacity as owners: | ||||||||||||||||||||||||
| Share-based payments (note 32) | - | 882,055 | - | - | - | 882,055 | ||||||||||||||||||
| Forfeiture of options | - | (18,899 | ) | - | - | - | (18,899 | ) | ||||||||||||||||
| Expiry of options | 249,662 | (249,662 | ) | - | - | - | - | |||||||||||||||||
| Cancellation of shares | (30,702 | ) | - | - | - | - | (30,702 | ) | ||||||||||||||||
| Balance at 31 December 2023 | 41,855,722 | 1,730,619 | (1,209,073 | ) | (132,872 | ) | (30,924,808 | ) | 11,319,588 |
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes
11
| Mobilicom Limited | |
| Consolidated statement of cash flows | |
| For the year ended 31 December 2023 |
| Consolidated | ||||||||||||
| Note |
31 December 2023 | 31 December 2022 | ||||||||||
| $ | $ | |||||||||||
| Cash flows from operating activities | ||||||||||||
| Receipts from customers (inclusive of GST) | 2,534,404 | 2,670,178 | ||||||||||
| Payments to suppliers and employees (inclusive of GST) | (9,458,587 | ) | (8,209,263 | ) | ||||||||
| Interest and other finance costs paid | (22,199 | ) | (22,004 | ) | ||||||||
| Government grants received | 297,149 | 923,942 | ||||||||||
| Interest received | 441,715 | 168,843 | ||||||||||
| Net cash used in operating activities | 30 | (6,207,518 | ) | (4,468,304 | ) | |||||||
| Cash flows from investing activities | ||||||||||||
| Payments for property, plant and equipment | (1,463 | ) | (26,628 | ) | ||||||||
| Net cash used in investing activities | (1,463 | ) | (26,628 | ) | ||||||||
| Cash flows from financing activities | ||||||||||||
| Proceeds from issue of shares | 20 | - | 22,450,965 | |||||||||
| Share issue transaction costs | - | (2,615,470 | ) | |||||||||
| Shares buyback (Small parcel plan) payments | (30,702 | ) | - | |||||||||
| Repayment of lease liabilities | (390,794 | ) | (360,321 | ) | ||||||||
| Net cash from/(used in) financing activities | (421,496 | ) | 19,475,174 | |||||||||
| Net increase/(decrease) in cash and cash equivalents and restricted cash | (6,630,477 | ) | 14,980,242 | |||||||||
| Cash and cash equivalents and restricted cash at the beginning of the financial year | 18,976,542 | 3,996,300 | ||||||||||
| Cash and cash equivalents and restricted cash at the end of the financial year | 10 | 12,346,065 | 18,976,542 |
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes
12
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 1. General information
The financial statements cover Mobilicom Limited as a Group consisting of Mobilicom Limited and the entities it controlled at the end of, or during, the year. The financial statements are presented in Australian dollars, which is Mobilicom Limited's functional and presentation currency.
The functional currency of the Company's subsidiary, Mobilicom Ltd ("Mobilicom Israel"), is Israeli New Shekels.
The Company is a listed public company limited by shares, incorporated and domiciled in Australia. On October 19, 2023, the Company chose to voluntarily remove its ordinary shares from the Australian Securities Exchange ("ASX") and trade exclusively on the NASDAQ in the form of American Depository Receipts. Its registered office and principal place of business are:
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/- JM Corporate Services | 1 Rakefet Street | |
| Level 21, 459 Collins Street | Shoham, Israel 6083705 | |
| Melbourne, Victoria, 3000 | ||
| Australia |
Note 2. Material accounting policy information
The accounting policies that are material to the consolidated entity are set out either in the respective notes or below. The accounting policies adopted are consistent with those of the previous financial year, 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 adopted.
The consolidated entity has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.
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 and other comprehensive income.
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.
13
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 2. Material accounting policy information (continued)
Going concern
The consolidated entity incurred a net loss after tax for the year ended 31 December 2023 of $6,871,965 (2022: $341,469) and had net cash outflows from operating activities $6,207,518 (2022: $4,468,304). The consolidated entity's ability to continue as a going concern is dependent upon it 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 2023 the consolidated entity had cash and cash equivalents of $12,346,065, total assets of $15,932,621 and net assets of $11,319,588; | |
| ● | As at the end of the year, the Company had a trade and other receivables balance amounting to $1,429,209. | |
| ● | The Directors have prepared a budget 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. |
Principles of consolidation
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of Mobilicom Limited ('Company' or 'parent entity') as at 31 December 2023 and the results of all subsidiaries for the year then ended. Mobilicom Limited and its subsidiaries together are referred to in these financial statements as the 'consolidated entity'.
Subsidiaries are all those entities over which the consolidated entity has control. The consolidated entity controls an entity when the consolidated entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity. They are de-consolidated from the date that control ceases.
Intercompany transactions, balances and unrealised gains on transactions between entities in the consolidated entity are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the consolidated entity.
The acquisition of subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.
Where the consolidated entity loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The consolidated entity recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.
Foreign currency translation
The financial statements are presented in Australian dollars, which is Mobilicom Limited's presentation currency.
Foreign currency transactions
Foreign currency transactions are translated into Australian dollars using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss. Non-monetary items are converted at the rate of exchange used to convert the related consolidated statements of financial position items i.e., at the time of the transaction
Foreign operations
The assets and liabilities of foreign operations are translated into Australian dollars using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Australian dollars using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity.
The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.
Research and development
Expenditure during the research phase of a project is recognised as an expense when incurred.
14
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 2. Material accounting policy information (continued)
Development costs are capitalised only when technical feasibility studies identify that the project will develop an intangible asset that will be completed and available for use or sale, that there are adequate technical, financial and other resources to complete the development, that it will deliver future economic benefits and these benefits can be measured reliably.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.
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
Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.
Finance costs
Finance costs attributable to qualifying assets are capitalised as part of the asset. All other finance costs are expensed in the period in which they are incurred.
Defined benefit plans
The Company operates a defined benefit plan in respect of severance pay pursuant to the Severance Pay Law. According to the Law, employees are entitled to severance pay upon dismissal retirement and several other events prescribed by that Law. The liability for termination of employee-employer relationship is measured using the projected unit credit method.
The actuarial assumptions include rates of employee turnover and future salary increases based on the estimated timing of payment. The amounts are presented based on discounted expected future cash flows using a discount rate determined by reference to yields on corporate bonds with a term that matches the estimated term of the benefit plan. In respect of its severance pay obligation to certain of its employees, the Company makes current deposits in pension funds and insurance companies ("plan assets").
Plan assets comprise assets held by a Long-term employee benefits fund or qualifying insurance policies. Plan assets are not available to the Company's own creditors and cannot be returned directly to the Company. The liability for employee benefits presented in the statement of financial position presents the present value of the defined benefit obligation less the fair value of the plan assets.
Remeasurements, comprising of actuarial gains and losses, the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability and the return on plan assets (excluding amounts included in net interest on the net defined benefit liability), are recognized immediately in the statement of financial position with a corresponding debit or credit to retained earnings through OCI in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods. Past service costs are recognised in profit or loss.
Goods and Services Tax ('GST') and other similar taxes
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the statement of financial position.
15
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 2. Material accounting policy information (continued)
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 adopted
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet mandatory, have not been early adopted by the consolidated entity for the annual reporting period ended 31 December 2023. The consolidated entity has not yet assessed the impact of these new or amended Accounting Standards and Interpretations.
Note 3. Critical accounting judgements, estimates and assumptions
The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.
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.
Financial liability
The Company measures the value of the pre-funded warrants and underwriters warrants issued under August 2022 Nasdaq IPO & listing. The fair value of these warrants is estimated by using the Hull-White pricing model (trinomial Lattice model), on the date of the grant and remeasured at cut-off date (31 December 2023 and 2022),and is based on certain assumptions. Those assumptions include, among others, the dividend growth rate, expected share price, volatility and expected life of the warrants, early exercise / exercise multiple, capital structure effects and trinomial steps.
Lease term
The lease term is a significant component in the measurement of both the right-of-use asset and lease liability. Judgement is exercised in determining whether there is reasonable certainty that an option to extend the lease or purchase the underlying asset will be exercised, or an option to terminate the lease will not be exercised, when ascertaining the periods to be included in the lease term. In determining the lease term, all facts and circumstances that create an economical incentive to exercise an extension option, or not to exercise a termination option, are considered at the lease commencement date. Factors considered may include the importance of the asset to the consolidated entity's operations; comparison of terms and conditions to prevailing market rates; incurrence of significant penalties; existence of significant leasehold improvements; and the costs and disruption to replace the asset. The consolidated entity reassesses whether it is reasonably certain to exercise an extension option, or not exercise a termination option, if there is a significant event or significant change in circumstances.
16
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 4. Revenue
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Sale of goods | 3,301,887 | 2,327,058 |
Revenue from contracts with customers
Revenue from the sale of goods is recognised at the point in time when the customer obtains control of the goods, which is generally at the time of delivery.
Interest
Interest revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.
Government Grant income
The Company receives government grant income from the Israeli Innovation Authority (formerly the Office of the Chief Scientist) (Innovation Authority). Grant income is recognised as the related milestone is met.
Fair value gains (loss) from financial liability
Fair value gain (loss) is recognised at an amount that reflects the changes in fair value of the financial liability between the measured periods.
Note 5. Cost of sales
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Salaries and benefits | 193,473 | 189,762 | ||||||
| Cost of materials | 1,051,315 | 577,902 | ||||||
| Occupancy and office expenses | 18,270 | 22,431 | ||||||
| Other | 26,452 | 21,507 | ||||||
| Depreciation | 51,755 | 38,950 | ||||||
| 1,341,265 | 850,552 |
Note 6. Selling and marketing expenses
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Salaries and benefits | 1,636,092 | 1,751,265 | ||||||
| Marketing services | 369,763 | 255,306 | ||||||
| Travel expenses | 91,178 | 74,425 | ||||||
| Depreciation | 180,477 | 142,325 | ||||||
| Occupancy and office expenses | 24,926 | 38,547 | ||||||
| Other | 159,741 | 154,015 | ||||||
| 2,462,177 | 2,415,883 |
17
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 7. Research and development
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Salaries and benefits | 1,885,061 | 1,937,121 | ||||||
| Materials | 174,260 | 111,856 | ||||||
| Royalties to the OCS | 9,865 | 6,478 | ||||||
| Subcontractors | 359,464 | 121,471 | ||||||
| Depreciation | 117,849 | 140,426 | ||||||
| Other | 168,928 | 199,570 | ||||||
| 2,715,427 | 2,516,922 |
Note 8. General and administration expenses
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Salaries and benefits | 1,225,102 | 1,140,392 | ||||||
| Professional fees | 894,796 | 576,254 | ||||||
| Insurance | 435,713 | 297,855 | ||||||
| Travel expenses | 86,314 | 6,675 | ||||||
| Depreciation | 62,012 | 53,815 | ||||||
| Occupancy and office expenses | 237,757 | 48,648 | ||||||
| Other | 469,180 | 408,394 | ||||||
| 3,410,874 | 2,532,033 |
Note 9. Income tax expense
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Numerical reconciliation of income tax expense and tax at the statutory rate | ||||||||
| Loss before income tax expense | (6,750,168 | ) | (327,483 | ) | ||||
| Tax at the statutory tax rate of 27.5% | (1,856,296 | ) | (90,058 | ) | ||||
| Tax expenses related with previous years' non-deductible/(taxable) costs in calculating taxable income | 104,840 | - | ||||||
| Effect of statutory tax rates difference between Australian company tax rate to Israeli company's tax rate (23%) | 233,122 | 200,724 | ||||||
| Effect of statutory tax rates difference between Australian company tax rate to U.S. Federal company's tax rate (21%) | (6,687 | ) | - | |||||
| Share-based payments | 242,565 | 85,045 | ||||||
| Other temporary differences not recognised | 1,404,253 | (181,725 | ) | |||||
| Income tax expense | 121,797 | 13,986 |
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
18
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 10. Current assets - cash and cash equivalents
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Cash at bank | 12,259,185 | 18,917,416 | ||||||
| Restricted cash | 86,880 | 59,126 | ||||||
| 12,346,065 | 18,976,542 |
Accounting policy for cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
Restricted cash is considered by Mobilicom to be deposits with banks which are used mainly as a security for guarantees provided against facilities lease agreement and line of use for credit card.
Note 11. Current assets - trade and other receivables, net
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Trade receivables | 971,220 | 203,737 | ||||||
| Other receivables | 457,989 | 624,614 | ||||||
| 1,429,209 | 828,351 |
Accounting policy for trade and other receivables
Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any allowance for expected credit losses. Trade receivables are generally due for settlement within 30 days.
The consolidated entity has applied the simplified approach to measuring expected credit losses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue.
Other receivables are recognised at amortised cost, less any allowance for expected credit losses.
No allowance for expected credit losses or overdue balances are accounted for in the financial statements.
Note 12. Current assets - inventories
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Finished goods - at cost | 621,562 | 345,865 | ||||||
| Raw materials - at cost | 776,575 | 518,217 | ||||||
| Accrual for slow inventory | (31,502 | ) | (25,424 | ) | ||||
| 1,366,635 | 838,658 |
19
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 12. Current assets - inventories (continued)
Accounting policy for inventories
Inventories are recognised at the lower of cost and net realisable value.
Inventories cost is based on weighted average method.
Note 13. Non-current assets - property, plant and equipment
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Computer equipment - at cost | 277,045 | 275,582 | ||||||
| Less: Accumulated depreciation | (251,192 | ) | (242,159 | ) | ||||
| 25,853 | 33,423 | |||||||
| Office furniture & equipment - at cost | 131,728 | 131,728 | ||||||
| Less: Accumulated depreciation | (50,013 | ) | (41,818 | ) | ||||
| 81,715 | 89,910 | |||||||
| Machinery & equipment - at cost | 85,309 | 85,309 | ||||||
| Less: Accumulated depreciation | (75,119 | ) | (72,764 | ) | ||||
| 10,190 | 12,545 | |||||||
| 117,758 | 135,878 |
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
| Computer | Office furniture & | Machinery & | ||||||||||||||
| equipment | equipment | equipment | Total | |||||||||||||
| Consolidated | $ | $ | $ | $ | ||||||||||||
| Balance at 1 January 2022 | 32,849 | 100,582 | 19,140 | 152,571 | ||||||||||||
| Additions | 22,018 | 2,190 | 2,420 | 26,628 | ||||||||||||
| Depreciation expense | (21,444 | ) | (12,862 | ) | (9,015 | ) | (43,321 | ) | ||||||||
| Balance at 31 December 2022 | 33,423 | 89,910 | 12,545 | 135,878 | ||||||||||||
| Additions | 1,463 | - | - | 1,463 | ||||||||||||
| Depreciation expense | (9,033 | ) | (8,195 | ) | (2,355 | ) | (19,583 | ) | ||||||||
| Balance at 31 December 2023 | 25,853 | 81,715 | 10,190 | 117,758 |
Accounting policy for property, plant and equipment
Plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.
Depreciation is calculated on a straight-line basis to write off the net cost of each item of property, plant and equipment (excluding land) over their expected useful lives as follows:
| Computer equipment | 3 years | |||
| Machinery and equipment | 6-7 years | |||
| Office furniture and equipment | 10-14 years |
The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.
20
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 13. Non-current assets - property, plant and equipment (continued)
An item of property, plant and equipment is derecognised upon disposal or when there is no future economic benefit to the consolidated entity. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.
Note 14. Non-current assets - right-of-use assets
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Land and buildings - right-of-use | 556,107 | 254,409 | ||||||
| Motor vehicles - right-of-use | 116,847 | 172,408 | ||||||
| 672,954 | 426,817 |
Additions to the right-of-use assets during the financial year were $702,079 (2022: $148,815).
During the 2023 financial year, the Company leased new cars for the Israeli subsidiary under agreement for 3 years.
The Company leases land and buildings for its offices in Israel under agreements for 5 years, starting February 1, 2019, and in some cases, options to extend for three additional consecutive periods, each for 24 months. On renewal, the terms of the leases are renegotiated.
The Company continued using the premises and is currently negotiating the terms of the extended lease for a period of additional 24 months.
Reconciliations
Reconciliations of the written down values at the beginning and end of the current and previous financial year are set out below:
| Land and | Motor | |||||||||||
| Buildings | Vehicle | Total | ||||||||||
| Consolidated | $ | $ | $ | |||||||||
| Balance at 1 January 2022 | 517,719 | 92,478 | 610,197 | |||||||||
| Additions | - | 148,815 | 148,815 | |||||||||
| Depreciation expense | (263,310 | ) | (68,885 | ) | (332,195 | ) | ||||||
| Balance at 31 December 2022 | 254,409 | 172,408 | 426,817 | |||||||||
| Additions | 562,233 | 139,846 | 702,079 | |||||||||
| Early return of leased cars | - | (105,532 | ) | (105,532 | ) | |||||||
| Depreciation expense | (260,535 | ) | (89,875 | ) | (350,410 | ) | ||||||
| Balance at 31 December 2023 | 556,107 | 116,847 | 672,954 |
Accounting policy for right-of-use assets
A right-of-use asset is recognised at the commencement date of a lease. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability, adjusted for, as applicable, any lease payments made at or before the commencement date net of any lease incentives received, any initial direct costs incurred, and, except where included in the cost of inventories, an estimate of costs expected to be incurred for dismantling and removing the underlying asset, and restoring the site or asset.
Right-of-use assets are depreciated on a straight-line basis over the unexpired period of the lease or the estimated useful life of the asset, whichever is the shorter. Where the consolidated entity expects to obtain ownership of the leased asset at the end of the lease term, the depreciation is over its estimated useful life. Right-of use assets are subject to impairment or adjusted for any remeasurement of lease liabilities.
21
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 14. Non-current assets - right-of-use assets (continued)
The consolidated entity has elected not to recognise a right-of-use asset and corresponding lease liability for short-term leases with terms of 12 months or less and leases of low-value assets. Lease payments on these assets are expensed to profit or loss as incurred.
Note 15. Current liabilities - trade and other payables
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Trade payables | 733,076 | 299,289 | ||||||
| Other payables | 1,342,976 | 1,309,557 | ||||||
| 2,076,052 | 1,608,846 |
Refer to note 23 for further information on financial instruments.
Amounts noted above in other payables include amounts payable to Directors for wages payable.
Accounting policy for trade and other payables
These amounts represent liabilities for goods and services provided to the consolidated entity prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.
Note 16. Lease liabilities
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Current | 327,046 | 333,850 | ||||||
| Non-Current | 334,909 | 95,403 | ||||||
| 661,955 | 429,253 |
Accounting policy for lease liabilities
A lease liability is recognised at the commencement date of a lease. The lease liability is initially recognised at the present value of the lease payments to be made over the term of the lease, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company's incremental borrowing rate. Lease payments comprise of fixed payments less any lease incentives receivable, variable lease payments that depend on an index or a rate, amounts expected to be paid under residual value guarantees, exercise price of a purchase option when the exercise of the option is reasonably certain to occur, and any anticipated termination penalties. The variable lease payments that do not depend on an index or a rate are expensed in the period in which they are incurred.
Lease liabilities are measured at amortised cost using the effective interest method. The carrying amounts are remeasured if there is a change in the following: future lease payments arising from a change in an index, or a rate used; residual guarantee; lease term; certainty of a purchase option and termination penalties. When a lease liability is remeasured, an adjustment is made to the corresponding right-of use asset, or to profit or loss if the carrying amount of the right-of-use asset is fully written down.
22
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 17. Warrants financial liability
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Warrants at fair value | 1,572,818 | 1,097,520 |
On 25 August 2022 the Company completed its US listing via the issuance of 3,220,338 ADRs (American Depository Shares) and the accompanying 3,220,338 pre-funded warrants for a total consideration of USD 13,299,996. One ADR represents 275 ordinary shares in the Company. One pre-funded warrant gives the holder the right to purchase one ADR share. The warrants have 5 year term and they can be exercised any time before expiry date 24 August 2027.
In addition, on 25 August 2022, under the U.S listing the Company granted a total 161,017 representative warrants each exercised to single ADS at an exercise price of US$5.16. The representative warrant carrying a cashless exercise option with variable exercise mechanism.
The pre-funded warrant and representative warrant are referred herein together as "warrants".
The warrants represent financial liabilities at fair value through profit or loss.
As at 31 December 2023, the Group reassessed the valuation methodology applied to the valuation of the warrants, in conjunction with an independent valuation from a third party. The warrants are trading on Nasdaq and based on current market activity, it was deemed to be in an active market. The directors believe the quoted share price of the MOBBW security trading on the Nasdaq represents a more accurate valuation of the warrants based on the guidance of AASB 13 Fair Value Measurement where the fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities. This has resulted in a change of valuation methodology that was applied at 31 December 2022 and is a change in accounting estimates.
The following assumptions were based on observable market conditions that existed at the issue date and at 31 December 2023:
| Assumption |
At issue date |
At 31 December 2022 |
At 31 December 2023 |
At 31 December 2023 | ||||||||||||
| Value methodology | Level 2 | Level 2 | Level 1 | Level 1 | ||||||||||||
| Historical volatility | 81 | % | 81 | % | - | - | ||||||||||
| Exercise price | US$ | 5.0 | US$ | 5.0 | US$ | 5.0 | US$ | 5.16 | ||||||||
| Share price | US$ | 2.929 | US$ | 0.970 | US$ | 0.367 | US$ | 0.367 | ||||||||
| Risk-free interest rate | 3.3 | % | 4 | % | - | - | ||||||||||
| Dividend yield | 0 | % | 0 | % | - | - | ||||||||||
| Fair value per warrant | US$ | 1.2005 | US$ | 0.2555 | US$ | 0.367 | US$ | 0.367 |
23
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 17. Current liabilities - Warranty liability (continued)
A summary of changes in share purchase warrants issued by the Company during the year ended 31 December 2023 and 2022 is as follows:
| Fair value measurements using input type | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Balance as of 1 January 2022 | - | - | ||||||||||||||
| Warrants issued during the period | - | $ | 5,598,835 | - | $ | 5,598,835 | ||||||||||
| Fair value loss (gain) recognized in consolidated statement of profit or loss and other comprehensive income | - | (3,768,466 | ) | - | (3,768,466 | ) | ||||||||||
| Transfer upon exercise | - | (825,609 | ) | - | (825,609 | ) | ||||||||||
| Translation adjustments | 92,760 | 92,760 | ||||||||||||||
| Warrant liability as of 31 December 2022 | - | $ | 1,097,520 | - | $ | 1,097,520 | ||||||||||
| Transfer to level 1 valuation input | 1,097,520 | (1,097,520 | ) | - | - | |||||||||||
| Fair value loss (gain) recognized in consolidated statement of profit or loss | 476,745 | - | - | 476,745 | ||||||||||||
| Translation adjustments | (1,447 | ) | - | (1,447 | ) | |||||||||||
| Warrant liability as of 31 December 2023 | $ | 1,572,818 | - | - | $ | 1,572,818 |
Refer to note 20 for further information on issued capital.
Note 18. Non-current liabilities - employee benefits
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Employee benefits | 295,542 | 203,636 |
The company's liabilities for severance pay retirement and pension pursuant to Israeli law and employment agreements are recognized by full - in part by managers' insurance policies, for which the company makes monthly payments and accrued amounts in severance pay funds and the rest by the liabilities which are included in the financial statements.
The amounts funded displayed above include amounts deposited in severance pay funds with the addition of accrued income. According to the Severance Pay Law, the aforementioned amounts may not be withdrawn or mortgaged as long as the employer's obligations have not been fulfilled in compliance with Israeli law.
Note 19. Non-current liabilities - Governmental liabilities on grants received
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Governmental liabilities on grants received | 6,666 | 6,084 |
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.
24
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 19. Non-current liabilities - Governmental liabilities on grants received (continued)
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 each year.
Note 20. Equity - issued capital
| Consolidated | ||||||||||||||||
|
31 December 2023 |
31 December 2022 |
31 December 2023 |
31 December 2022 | |||||||||||||
| Shares | Shares | $ | $ | |||||||||||||
| Ordinary shares - fully paid | 1,326,676,693 | 1,331,279,665 | 41,855,722 | 41,636,762 |
Movements in ordinary share capital
| Details | Date | Shares | Issue price | $ | ||||||||||
| Balance | 1 January 2022 | 321,936,715 | 26,504,136 | |||||||||||
| Issue of NASDAQ IPO shares (net of warrant fair value)* | 29 August 2022 | 885,592,950 | $ | 0.015 | 13,662,563 | |||||||||
| Exercise of 450,000 NASDAQ warrants* | 31 August 2022 | 123,750,000 | $ | 0.026 | 4,085,533 | |||||||||
| Capital raising costs | - | - | (2,615,470 | ) | ||||||||||
| Balance | 31 December 2022 | 1,331,279,665 | 41,636,762 | |||||||||||
| Expiry of options | - | - | 249,662 | |||||||||||
| Cancelation of shares through small parcel buy back | (4,602,972 | ) | - | (30,702 | ) | |||||||||
| Balance | 31 December 2023 | 1,326,676,693 | 41,855,722 |
| * | On 24 August 2022, the Company issued 3,220,338 units to shareholders in the Company's August 2022 Nasdaq listing & IPO. Each unit consists of a single ADS and a single pre-funded warrant exercisable to a single ADS. The warrants have an exercise price of AUD$7.36 (US$5.00), expire August 24, 2027. |
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on the winding up of the company in proportion to the number of and amounts paid on the shares held. The fully paid ordinary shares have no par value and the Company does not have a limited amount of authorised capital.
On a show of hands every member present at a meeting in person or by proxy shall have one vote and upon a poll each share shall have one vote.
Capital risk management
The consolidated entity's objectives when managing capital is to safeguard its ability to continue as a going concern, so that it can provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital structure to reduce the cost of capital.
Capital is regarded as total equity, as recognised in the statement of financial position, plus net debt. Net debt is calculated as total borrowings less cash and cash equivalents.
25
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 20. Equity - issued capital (continued)
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 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.
Warrants
The Company accounts for warrants issued to investors under IFRS 9.
(a) On 24 August 2022, under Nasdaq dual listing & IPO the Company issued a total of 3,220,338 units each includes single ADS and single tradable pre-funded warrant exercised to single ADS at an exercise price of US$5.00.
The Company recorded these warrants as a derivative financial liability which represents the fair value of the warrants on the transaction date due to the fact that they do not meet the criteria for a fixed number of equity instruments in exchange for a fixed amount of cash. The derivative financial liability is re-measured at each reporting date, with changes in fair value recognized under fair value gains/(losses) from financial liability. On 31 December 2023 it amounted to $1,486,424 (2022: $1,044,955). The amounts were recorded at fair value according to a valuation performed by an independent third-party appraiser. Refer to note 17 for further information on fair value measurement of the pre-funded warrants.
On August 31, 2022, 450,000 pre-funded warrants were exercised into ADS for AUD$3,259,925 (US$2,250,000).
The fair value of the pre-funded warrants on 31 August 2022 (exercise date), measured using a Hull-White trinomial option pricing model, was AUD$825,609 (US$569,832).
(b) On 24 August 2022, under Nasdaq dual listing & IPO the Company issued a total 161,017 representative warrants to the underwriter each exercised to single ADS at an exercise price of US$5.16. The representative warrant carrying a cashless exercise option with variable exercise mechanism.
The Company recorded these warrants as a derivative financial liability which represents the fair value of the warrants on the transaction date due to the fact that they do not meet the criteria for a fixed number of equity instruments in exchange for a fixed amount of cash. The derivative financial liability is re-measured at each reporting date, with changes in fair value recognized under fair value gains/(losses) from financial liability. The derivative financial liability as of 24 August 2022 amounted to AUD$281,436, reflecting the average between high & low valuation inputs. On 31 December 2023, it amounted to AUD$86,394 (US$59,093) (2022: AUD$52,565) reflecting the average between high & low valuation inputs. Refer to note 17 for further information on fair value measurement of the representative warrants.
26
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 20. Equity - issued capital (continued)
The pre-funded warrant and representative warrant are referred herein together as "Warrants".
For the year ended 31 December 2023, the Company recorded fair value losses, net of AUD$476,745 (us$326,094). For the year ended 31 December 2022, the Company recorded fair value gains, net of AUD$3,768,466 under the statement of comprehensive loss as a result of the change in the fair value of Warrants.
Note 21. Equity - reserves
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Foreign currency reserve | (1,209,073 | ) | (697,705 | ) | ||||
| Share-based payments reserve | 1,730,619 | 1,117,125 | ||||||
| Re-measurements reserve | (132,872 | ) | (142,432 | ) | ||||
| 388,674 | 276,988 |
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.
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 reserves
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:
| Re-measurement | Share based | Foreign currency | ||||||||||||||
| reserve | payments | reserve | Total | |||||||||||||
| Consolidated | $ | $ | $ | $ | ||||||||||||
| Balance at 1 January 2022 | (508,949 | ) | 1,214,809 | 237,437 | 943,297 | |||||||||||
| Foreign currency translation | - | - | (935,142 | ) | (935,142 | ) | ||||||||||
| Expiry of options | - | (311,840 | ) | - | (311,840 | ) | ||||||||||
| Share based payment | - | 309,256 | - | 309,256 | ||||||||||||
| Forfeiture of options | - | (95,100 | ) | - | (95,100 | ) | ||||||||||
| Re-measurement of defined benefits plans | 366,517 | - | - | 366,517 | ||||||||||||
| Balance at 31 December 2022 | (142,432 | ) | 1,117,125 | (697,705 | ) | 276,988 | ||||||||||
| Share based payments | - | 882,055 | - | 882,055 | ||||||||||||
| Expiry of options | - | (249,662 | ) | - | (249,662 | ) | ||||||||||
| Forfeiture of options | - | (18,899 | ) | - | (18,899 | ) | ||||||||||
| Re-measurement of defined benefits plans | 9,560 | - | - | 9,560 | ||||||||||||
| Foreign currency translation | - | - | (511,368 | ) | (511,368 | ) | ||||||||||
| Balance at 31 December 2023 | (132,872 | ) | 1,730,619 | (1,209,073 | ) | 388,674 |
27
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 22. Equity - dividends
There were no dividends paid, recommended or declared during the current or previous financial year.
Note 23. Financial instruments
Financial risk management objectives
The consolidated entity's activities expose it to a variety of financial risks: market risk (including foreign currency risk, price risk and interest rate risk), credit risk and liquidity risk. The consolidated entity's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the consolidated entity. The consolidated entity uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks, ageing analysis for credit risk and beta analysis in respect of investment portfolios to determine market risk.
Risk management is carried out by senior finance executives ('finance') under policies approved by the Board of Directors ('the Board'). These policies include identification and analysis of the risk exposure of the consolidated entity and appropriate procedures, controls and risk limits. Finance identifies, evaluates and hedges financial risks within the consolidated entity's operating units. Finance reports to the Board on a monthly basis.
Market risk
Foreign currency risk
The consolidated entity undertakes certain transactions denominated in foreign currency and is exposed to foreign currency risk through foreign exchange rate fluctuations.
Foreign exchange risk arises from future commercial transactions and recognised financial assets and financial liabilities denominated in a currency that is not the entity's functional currency. The risk is measured using sensitivity analysis and cash flow forecasting.
The carrying amount of the consolidated entity's foreign currency denominated financial assets and financial liabilities at the reporting date were as follows (holdings are shown in AUD equivalents):
| Assets | Liabilities | |||||||||||||||
|
31 December 2023 |
31 December 2022 |
31 December 2023 |
31 December 2022 | |||||||||||||
| Consolidated | $ | $ | $ | $ | ||||||||||||
| US dollars | 11,906,907 | 18,061,483 | 808,794 | 31,233 | ||||||||||||
| Euros | 48,210 | 1,826 | 468 | 871 | ||||||||||||
| Israeli New Shekel | 163,311 | 1,849,492 | - | - | ||||||||||||
| 12,118,428 | 19,912,801 | 809,262 | 32,104 |
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 cashflows derived from financial instruments will be changed as a result of a market price movement, other than foreign currency rates and interest rates. The consolidated entity is not exposed to any significant price risk.
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the consolidated entity. The consolidated entity has a strict code of credit, including obtaining agency credit information, confirming references and setting appropriate credit limits. The consolidated entity obtains guarantees where appropriate to mitigate credit risk. The maximum exposure to credit risk at the reporting date to recognised financial assets is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The consolidated entity does not hold any collateral.
28
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 23. Financial instruments (continued)
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 provisions 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.
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.
|
1 year or less |
Between 1 and 2 years |
Between 2 and 5 years |
Over 5 years |
Remaining contractual maturities | ||||||||||||||||
| Consolidated - 31 December 2023 | $ | $ | $ | $ | $ | |||||||||||||||
| Non-derivatives | ||||||||||||||||||||
| Non-interest bearing | ||||||||||||||||||||
| Trade payables | 733,076 | - | - | - | 733,076 | |||||||||||||||
| Other payables | 1,342,976 | - | - | - | 1,342,976 | |||||||||||||||
| Government liabilities | - | - | - | 6,666 | 6,666 | |||||||||||||||
| Total non-derivatives | 2,076,052 | - | - | 6,666 | 2,082,718 |
|
1 year or less |
Between 1 and 2 years |
Between 2 and 5 years |
Over 5 years |
Remaining contractual maturities | ||||||||||||||||
| Consolidated - 31 December 2022 | $ | $ | $ | $ | $ | |||||||||||||||
| Non-derivatives | ||||||||||||||||||||
| Non-interest bearing | ||||||||||||||||||||
| Trade payables | 299,289 | - | - | - | 299,289 | |||||||||||||||
| Other payables | 1,309,557 | - | - | - | 1,309,557 | |||||||||||||||
| Government liabilities | - | - | - | 6,084 | 6,084 | |||||||||||||||
| Total non-derivatives | 1,608,846 | - | - | 6,084 | 1,614,930 |
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.
29
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 24. Key management personnel disclosures
Directors
The following persons were directors of Mobilicom Limited during the financial year:
| Mr Oren Elkayam (Chairman and Managing Director) | ||
| Mr Yossi Segal (Executive Director) | ||
| Mr Campbell McComb (Non-executive director) | ||
| Mr Jon Brett (Non-executive director) |
Compensation
The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below:
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Short-term employee benefits | 860,229 | 821,414 | ||||||
| Post-employment benefits | 210,543 | 294,171 | ||||||
| Israel deferred payments | - | 653,768 | ||||||
| Share-based payments | 689,094 | 93,036 | ||||||
| 1,759,866 | 1,862,389 |
Note 25. Remuneration of auditors
During the financial year the following fees were paid or payable for services provided by Hall Chadwick (WA) Audit Pty Ltd, the auditor of the company, its network firms and unrelated firms:
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Audit services - BDO Audit Pty Ltd | ||||||||
| Audit or review of the financial statements | - | 79,500 | ||||||
| Other services - BDO Audit Pty Ltd | ||||||||
| Tax compliance services | 5,500 | 5,000 | ||||||
| Others | 5,000 | - | ||||||
| BDO Audit Pty Ltd total | 10,500 | 84,500 |
30
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 25. Remuneration of auditors (continued)
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Audit services - BDO Israel | ||||||||
| Audit or review of the financial statements | 203,899 | 189,324 | ||||||
| Other services - BDO Israel | ||||||||
| IPO assurance services and others | 15,683 | 177,546 | ||||||
| Tax compliance services | 8,080 | 11,112 | ||||||
| Others | 4,028 | 2,226 | ||||||
| 27,791 | 190,884 | |||||||
| BDO Israel total | 231,690 | 380,208 | ||||||
| Audit services - Hall Chadwick WA Audit Pty Ltd | ||||||||
| Audit or review of the financial statements | 55,000 | - | ||||||
| Other services - Hall Chadwick WA Audit Pty Ltd | ||||||||
| - | - | |||||||
| Hall Chadwick WA Audit Pty Ltd total | 55,000 | - |
Note 26. Related party transactions
Parent entity
Mobilicom Limited is the parent entity.
Subsidiaries
Interests in subsidiaries are set out in note 28.
Key management personnel
Disclosures relating to key management personnel are set out in note 24.
Receivable from and payable to related parties
The following balances are outstanding at the reporting date in relation to transactions with related parties:
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Current payables: | ||||||||
| Payables to related parties | 234,641 | 25,667 | ||||||
| Non-current payables: | ||||||||
| Payables to related parties | 132,896 | - |
31
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 26. Related party transactions (continued)
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
| Parent | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Profit/(loss) after income tax | (950,807 | ) | (18,542,719 | ) | ||||
| Total comprehensive income | (950,807 | ) | (18,542,719 | ) |
Statement of financial position
| Parent | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Total current assets | 261,420 | 382,354 | ||||||
| Total assets | 261,420 | 382,354 | ||||||
| Total current liabilities | 66,989 | 105,273 | ||||||
| Warrants financial liability | 1,572,818 | 1,097,520 | ||||||
| Total liabilities | 1,639,807 | 1,202,793 | ||||||
| Net liability | (1,378,387 | ) | (820,439 | ) | ||||
| Equity | ||||||||
| Issued capital | 35,820,014 | 35,673,114 | ||||||
| Share-based payments reserve | 1,078,198 | 832,239 | ||||||
| Accumulated losses | (38,276,599 | ) | (37,325,792 | ) | ||||
| Total equity | (1,378,387 | ) | (820,439 | ) |
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 2023.
Contingent liabilities
The parent entity had no contingent liabilities as at 31 December 2023.
Capital commitments - Property, plant and equipment
The parent entity had no capital commitments for property, plant and equipment as at 31 December 2023.
32
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 27. Parent entity information (continued)
Material accounting policy information
The accounting policies of the parent entity are consistent with those of the consolidated entity, as disclosed in note 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 subsidiaries in accordance with the accounting policy described in note 2:
| Ownership interest | ||||||||||
| Principal place of business / |
31 December |
31 December | ||||||||
| Name | Country of incorporation | 2023 | 2022 | |||||||
| % | % | |||||||||
| Mobilicom Ltd ("Mobilicom Israel") | Israel | 100.00 | % | 100.00 | % | |||||
| Mobilicom Inc | United States | 100.00 | % | 100.00 | % |
In late December 2022 and following the Company's listing on NASDAQ and increased operations in the United States, the Company incorporated a wholly owned subsidiary Mobilicom Inc, a Delaware incorporated Company.
Note 29. Events after the reporting period
Commencing 1 January 2024, the Company elected to shift from Australian dollar functional currency to U.S. dollar functional currency and accordingly all internal financial reporting and presentations, to board of directors and executive management as well as external financial reporting and presentations are denominated in U.S. dollar. Following the transition to U.S. Dollar as functional currency the currency transaction adjustment ("CTA") reserve balance as of 31 December 2023 will remain as is (freeze) and starting 1 January 2024 differences between the USD and the NIS will be recorded under the CTA reserve while transactions with AUD will be recorded as foreign currency transactions under the statement of profit or loss and other comprehensive income (loss).
On 25 January 2024, the Company entered into a definitive agreement (the "Purchase Agreement") with certain institutional investors providing for the issuance of (i) 133,889,525 ordinary shares represented by 486,871 American Depositary Shares ("ADSs"), and (ii) prefunded warrants to purchase up to an aggregate of 389,497,350 ordinary shares represented by 1,416,354 ADSs, in a registered direct offering at an offering price of US$1.55 per ADS and US$1.5499 per pre-funded warrant, for aggregate gross proceeds of approximately US$2.95 million (AUD$4.31 million). Each ADS represents two hundred seventy-five (275) ordinary shares, no par value, of the company. The offering was closed on January 30, 2024.
In addition, in a concurrent private placement, the Company agreed to issue the investors warrants to purchase up to an aggregate of 523,386,875 ordinary shares represented by 1,903,225 ADSs at an exercise price of US$1.55 per ADS. The warrants will be immediately exercisable and will expire five years following the initial exercise date. The warrants may be exercised on a cashless basis if there is no effective registration statement registering the ADSs underlying the warrants.
Each pre-funded warrant is exercisable for one ADS at an exercise price of US$0.001 per share. The pre-funded warrants are immediately exercisable and may be exercised at any time until all of the pre-funded warrants are exercised in full.
No other matter or circumstance has arisen since 31 December 2023 that has significantly affected, or may significantly affect the consolidated entity's operations, the results of those operations, or the consolidated entity's state of affairs in future financial years.
33
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 30. Reconciliation of loss after income tax to net cash used in operating activities
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Loss after income tax expense for the year | (6,871,965 | ) | (341,469 | ) | ||||
| Adjustments for: | ||||||||
| Depreciation and amortisation | 412,093 | 375,516 | ||||||
| Share-based payments | 882,055 | 309,256 | ||||||
| Foreign exchange differences | (559,504 | ) | (428,414 | ) | ||||
| Fair value adjustment on warrants financial liability through profit or loss | 476,745 | (3,768,466 | ) | |||||
| Lease interest | 22,199 | 22,004 | ||||||
| Change in operating assets and liabilities: | ||||||||
| Decrease/(increase) in trade and other receivables | (600,858 | ) | (132,810 | )* | ||||
| Increase in inventories | (527,977 | ) | (347,668 | ) | ||||
| Increase in trade and other payables | 467,206 | 457,392 | ||||||
| Increase/(decrease) in employee benefits | 91,906 | (614,554 | ) | |||||
| Increase in Government liabilities | 582 | 909 | ||||||
| Net cash used in operating activities | (6,207,518 | ) | (4,468,304 | ) |
| * | Reclassified |
Note 31. Earnings per share
| Consolidated | ||||||||
|
31 December 2023 |
31 December 2022 | |||||||
| $ | $ | |||||||
| Loss after income tax attributable to the owners of Mobilicom Limited | (6,871,965 | ) | (341,469 | ) |
| Number | Number | |||||||
| Weighted average number of ordinary shares used in calculating basic earnings (loss) per share | 1,328,152,166 | 664,158,704 | ||||||
| Weighted average number of ordinary shares used in calculating diluted earnings (loss) per share | 1,328,152,166 | 664,158,704 |
| Cents | Cents | |||||||
| Basic earnings (loss) per share | (0.52 | ) | (0.05 | ) | ||||
| Diluted earnings (loss) per share | (0.52 | ) | (0.05 | ) |
The rights to options held by option holders have not been included in the weighted average number of ordinary shares for the purposes of calculating diluted EPS as they do not meet the requirements for inclusion in AASB 133 "Earnings per Share". The rights to options are non-dilutive as the consolidated entity is loss generating.
Accounting policy for earnings per share
Basic earnings per share
Basic earnings per share is calculated by dividing the profit (loss) attributable to the owners of Mobilicom Limited , excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.
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| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 31. Earnings per share (continued)
Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.
Note 32. Share-based payments
Set out below is a summary of options granted and on issue at the end of the year.
| 2023 | |||||||||||||||||||||||||||
| Balance at | Expired/ | Balance at | |||||||||||||||||||||||||
| Exercise | the start of | forfeited/ | the end of | ||||||||||||||||||||||||
| Grant date | Expiry date | price | the year | Granted | Exercised | other | the year | ||||||||||||||||||||
| 20/10/2016 | 20/10/2026 | $ | 0.05 | 614,090 | - | - | - | 614,090 | |||||||||||||||||||
| 05/11/2015 | 05/11/2025 | $ | 0.12 | 767,611 | - | - | - | 767,611 | |||||||||||||||||||
| 17/04/2018 | 16/04/2023 | $ | 0.15 | 1,800,000 | - | - | (1,800,000 | ) | - | ||||||||||||||||||
| 30/05/2018 | 29/05/2024 | $ | 0.15 | 400,000 | - | - | - | 400,000 | |||||||||||||||||||
| 30/05/2019 | 25/06/2025 | $ | 0.15 | 3,000,000 | - | - | - | 3,000,000 | |||||||||||||||||||
| 29/12/2020 | 29/12/2025 | $ | 0.15 | 5,120,000 | - | - | (1,795,000 | ) | 3,325,000 | ||||||||||||||||||
| 15/07/2021 | 15/07/2026 | $ | 0.08 | 11,500,000 | - | - | - | 11,500,000 | |||||||||||||||||||
| 13/04/2022 | 13/04/2027 | $ | 0.08 | 400,000 | - | - | - | 400,000 | |||||||||||||||||||
| 13/04/2022 | 13/04/2027 | $ | 0.07 | 573,678 | - | - | - | 573,678 | |||||||||||||||||||
| 13/04/2022 | 13/04/2027 | $ | 0.05 | 5,440,000 | - | - | (700,000 | ) | 4,740,000 | ||||||||||||||||||
| 31/05/2023 | 31/05/2033 | $ | 0.01 | - | 210,000,000 | - | - | 210,000,000 | |||||||||||||||||||
| 03/08/2023 | 03/08/2028 | $ | 0.01 | - | 45,850,000 | - | (2,250,000 | ) | 43,600,000 | ||||||||||||||||||
| 29,615,379 | 255,850,000 | - | (6,545,000 | ) | 278,920,379 |
On 31 May 2023, the Company granted 210,000,000 unlisted options to directors of the Company which vest over three years (33.33% of the options 1 year after grant date; 66.66% remain in equally quarterly over the 2nd & 3rd years after date of grant).
On 3 August 2023, the Company issued 45,850,000 options to employees and consultants of the Company. 23,350,000 options are vested after 3 years, and 22,500,000 options are vested after 4 years.
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:
|
Share price at grant | Exercise | Expected | Dividend | Risk-free |
Fair value at grant | |||||||||||||||||||||||
| Grant date | Expiry date | date | price | volatility | yield | interest rate | date | |||||||||||||||||||||
| 31/05/2023 | 31/05/2033 | $ | 0.009 | $ | 0.008 | 86.60 | % | - | 0.0355 | % | $ | 0.0078 | ||||||||||||||||
| 03/08/2023 | 03/08/2028 | $ | 0.012 | $ | 0.008 | 128.89 | % | - | 0.0378 | % | $ | 0.0107 |
The Company recognized share-based compensation expense of $882,055 and $309,256 for the years ended 31 December 2023 and 2022, respectively.
35
| Mobilicom Limited | |
| Notes to the consolidated financial statements | |
| 31 December 2023 |
Note 32. Share-Based payments(continued)
Accounting policy for share-based payments
Equity-settled and cash-settled share-based compensation benefits are provided to employees.
Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services. Cash-settled transactions are awards of cash for the exchange of services, where the amount of cash is determined by reference to the share price.
The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using the Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the consolidated entity receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.
The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.
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 the non-vesting condition is within the control of the consolidated entity or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the consolidated entity or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.
If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.
36
| Mobilicom Limited | |
Directors' declaration | |
| 31 December 2023 |
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 2023 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. |
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
| /s/ Oren Elkayam | |
| Oren Elkayam | |
| Chairman and Managing Director | |
| 9 April 2024 | |
| Tel Aviv |
37
| Mobilicom Limited | |
| Independent auditor's report to the members of Mobilicom Limited | |
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF MOBILICOM LIMITED
Opinion
We have audited the financial report of Mobilicom Limited ("the Company") and its subsidiaries ("the Consolidated Entity"), which comprises the consolidated statement of financial position as at 31 December 2023, 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 financial statements, including a summary of significant accounting policies, and the directors' declaration.
In our opinion:
| a. | the accompanying financial report of the Consolidated Entity is in accordance with the Corporations Act 2001, including: |
| (i) | giving a true and fair view of the Consolidated Entity's financial position as at 31 December 2023 and of its financial performance for the year then ended; and |
| (ii) | complying with Australian Accounting Standards and the Corporations Regulations 2001. |
| b. | the financial report also complies with International Financial Reporting Standards as disclosed in Note 2. |
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. 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 Consolidated Entity in accordance with the auditor independence requirements of 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 believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Other Information
The directors are responsible for the other information. The other information comprises the information included in the Consolidated Entity's annual report for the year ended 31 December 2023, but does not include the financial report and our auditor's report thereon.
Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon.
38
| Mobilicom Limited | |
| Independent auditor's report to the members of Mobilicom Limited | |
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In Note 2, the directors also state in accordance with Australian Accounting Standard AASB 101 Presentation of Financial Statements, that the financial report complies with International Financial Reporting Standards.
In preparing the financial report, the directors are responsible for assessing the Consolidated Entity's ability 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 Consolidated Entity or to cease operations, or has no realistic alternative but to do so.
Auditor's Responsibilities for the Audit of the Financial Report
Our responsibility is to express an opinion on the financial report based on our audit. 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.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:
| ● | Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
| ● | Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Consolidated Entity's internal control. |
| ● | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. |
39
| Mobilicom Limited | |
| Independent auditor's report to the members of Mobilicom Limited | |
| ● | Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Consolidated Entity's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Consolidated Entity to cease to continue as a going concern. |
| ● | Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. |
| ● | Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Consolidated Entity to express an opinion on the financial report. We are responsible for the direction, supervision and performance of the Consolidated Entity audit. We remain solely responsible for our audit opinion. |
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the financial report of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
| /s/ HALL CHADWICK | /s/ MARK DELAURENTIS | |
| HALL CHADWICK WA AUDIT PTY LTD | MARK DELAURENTIS Ca Director |
Dated this 9th day of April 2024
Perth, Western Australia
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Mobilicom Ltd. published this content on 09 April 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 April 2024 20:26:51 UTC.
