appendix 4f

20 March 2006
The Manager
Company Announcements Platform
Announcement for Immediate Release
In accordance with the company’s arrangement contained in correspondence dated 5 July,
2005, the company encloses herewith the Appendix 4F, together with the financial report
for the 12 month period ended 31 December 2005”.
Yours faithfully,
Ian May
Managing Director
Tele-IP Limited
Appendix 4F
Year ended 31 December 2005
_________________________________________________________________
TELE-IP LIMITED
ABN 39 010 568 804
Appendix 4F
Change of Balance Date
Year ended 31 December 2005
1. Reporting periods
Current reporting period Year ended 31 December 2005
Previous corresponding period Year ended 31 December 2004
2. Results for announcement to the market
$A'000
2.1 Revenues from ordinary activities
Up 9.1% to 7,536
2.2 (Loss) from ordinary activities after tax
attributable to members
Up 81.9%
to (3,208)
2.3 Net profit (loss) for the period attributable to
members
Up 81.9% to (3,208)
2.4 Dividends (distributions) Amount per
security
Franked amount
per security
Final dividend
Interim dividend
NIL ¢ NIL ¢
Previous corresponding period:
Final dividend
Interim dividend
NIL ¢ NIL ¢
2.5 Record date for determining entitlements to the
dividend
N/A
2.6
EXPLANATION
Losses are primarily attributable to revenue and gross margin from businesses acquired in
July 2005 being lower than anticipated.
Condensed Consolidated Financial Statements for the year ended 31 December, 2005
and comparative information for the previous corresponding period to 31 December, 2004
have been impacted by the implementation of Australian equivalents to International
Financial Reporting Standards ( A-IFRS).
3. Financial Statements attached
Tele-IP Limited
Appendix 4F
Year ended 31 December 2005
_________________________________________________________________
4. Individual and Total Dividend or Distribution Payments
Dividend or distribution
payments:
Amount Date on which
each dividend or
distribution is
payable
Amount per
security of
foreign sourced
dividend or
distribution
(if known)
N/A
N/A
N/A
N.A
Total
5. Dividend or Distribution Reinvestment Plans
N/A
6. Foreign entities
N/A
7, 8 & 9. Un-audited financial statements
This report is based on un-audited financial statements for the year ended 31 December 2005.
Signed by Managing Director:
___________________________
Name: Ian May
Date: 17 March 2006
31 DECEMBER 2005
TELE-IP LIMITED AND CONTROLLED ENTITIES
ABN 39 010 568 804
FINANCIAL REPORT
FOR THE YEAR ENDED
Page
Financial Report for the year ended 31 December 2005
Condensed Consolidated Income Statement 3
Condensed Consolidated Balance Sheet 4
Condensed Consolidated Statement of Changes in Equity 5
Condensed Consolidated Cash Flow Statement 6
Notes to the Financial Statements 7
TABLE OF CONTENTS
31 DECEMBER 2005
TELE-IP LIMITED AND CONTROLLED ENTITIES
FINANCIAL REPORT
FOR THE YEAR ENDED
TELE-IP LIMITED AND CONTROLLED ENTITIES
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2005
Note Year Year
Ended Ended
31-Dec-05 31-Dec-04
$ $
Revenue 7,535,895 6,907,592
Changes in inventories of raw materials, finished goods
and work in progress ( 5,098,856) (5,244,185)
Employee benefits expense ( 3,154,852) (1,748,227)
Consultancy and contractor expense ( 220,806) (283,730)
Depreciation expense ( 78,164) (39,573)
Finance costs expense ( 239,814) (456,394)
Auditing and accounting expense ( 149,673) ( 91,800)
Legal and insurance expense ( 201,169) (178,045)
Rental and outgoings expense ( 206,502) ( 95,770)
Reconstruction costs provided ( 350,000) -
Technology research costs expense - (166,000)
Other expenses ( 1,043,990) ( 665,765)
Loss from continuing operations before income tax ( 3,207,931) (2,061,897)
Income tax benefit - 298,737
Loss for the year ( 3,207,931) (1,763,160)
Loss attributable to members of the parent ( 3,207,931) (1,763,160)
Basic earnings per share (cents) 6 ( 0.81) (0.99)
Diluted earnings per share (cents) 6 ( 0.77) (0.87)
The above Income Statement should be read in conjunction with the accompanying notes.
3
TELE-IP LIMITED AND CONTROLLED ENTITIES
CONDENSED CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2005
Note 31-Dec-05 31-Dec-04
$ $
CURRENTS ASSETS
Cash and cash equivalents 1,019,650 476,693
Inventories 1,010,114 1,137,922
Receivables 2,412,308 520,544
TOTAL CURRENT ASSETS 4,442,072 2,135,159
NON-CURRENT ASSETS
Receivables 43,750 43,750
Plant & equipment 296,215 89,466
Intangible assets 4,710,002 -
TOTAL NON-CURRENT ASSETS 5,049,967 133,216
TOTAL ASSETS 9,492,039 2,268,375
CURRENT LIABILITIES
Trade and other payables 6,142,929 2,822,962
Provisions 389,397 158,329
Deferred revenue - 97,057
TOTAL CURRENT LIABILITIES 6,532,326 3,078,348
TOTAL LIABILITIES 6,532,326 3,078,348
NET ASSETS 2,959,713 ( 809,973)
EQUITY
Contributed equity 3 17,572,009 10,594,391
Accumulated losses 4 ( 14,612,296) ( 11,404,364)
TOTAL EQUITY 2,959,713 ( 809,973)
The above Balance Sheet should be read in conjunction with the accompanying notes.
4
TELE-IP LIMITED AND CONTROLLED ENTITIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2005
Note Year Year
Ended Ended
31-Dec-05 31-Dec-04
$ $
Total equity at the beginning of the year ( 809,973) 893,139
Remuneration based options payments 3 41,640 55,236
Net income recognised directly in equity 41,640 55,236
Net loss for the year ( 3,207,931) ( 1,763,160)
Total recognised income and expense for the year
attributable to members of the parent entity ( 3,166,291) ( 1,707,924)
Transactions with equity holders in their capacity as equity holders:
Net Contributions 3 6,935,977 4,812
6,935,977 4,812
Total equity at the end of the year 2,959,713 ( 809,973)
The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.
5
TELE-IP LIMITED AND CONTROLLED ENTITIES
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2005
Year Year
Ended Ended
31-Dec-05 31-Dec-04
$ $
Cash flow from operating activities
Receipts from customers 5,477,284 8,401,013
Payments to suppliers and employees (8,685,773) (8,863,927)
Research and development tax offset - 298,737
Interest received 13,529 14,554
Interest and finance charges paid (91,149) (171,340)
Net cash used in operating activities (3,286,109) (320,963)
Cash flow from investing activities
Purchases of property, plant and equipment (68,664) (20,313)
Proceeds - sale of NMS portfolio 109,545 50,000
Purchases of Communications businesses (2,253,000) -
Net cash provided by/(used in) investing activities (2,212,119) 29,687
Cash flow from financing activities
Net cash proceeds from share and rights issue transactions 7,957,785 4,813
Net cash proceeds/(payments) - Loans (1,916,600) 523,600
Net cash provided by financing activities 6,041,185 528,413
Net increase in cash and cash equivalents 542,957 237,137
Cash and cash equivalents at beginning of year 476,693 239,556
Cash and cash equivalents at end of the year 1,019,650 476,693
The above Cash flow Statement should be read in conjunction with the accompanying notes.
6
TELE-IP LIMITED AND CONTROLLED ENTITIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2005
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The condensed consolidated financial report is a general purpose financial report that has been prepared in accordance
with the Corporations Act 2001and AASB 134 "Interim Financial Reporting". Compliance with AASB 134 ensures compliance
with International Financial Reporting Standard IAS 34 "Interim Financial Reporting". The condensed consolidated financial report
does not include notes of the type normally included in an annual financial report and shall be read in conjunction with the most
recent annual financial report.
Pursuant to subsection 340(1) of the Corporations Act, the Australian Securities and Investments Commission provided an
order to allow the company to change its balance date from December to June year end effective June 2005. Accordingly, in
compliance with ASX requirements, this Appendix 4F is compiled to indicate results from operations for the half-year ended
31 December, 2005 combined with the previous Annual Report representing six months ended 30 June, 2005, to form a
notional twelve month period. Comparatives are derived from the previous twelve month period ended 31 December, 2004 as
reported.
The consolidated entity changed its accounting policies on 1 July, 2005 to comply with Australian equivalents to International
Financial Reporting Standards(A-IFRS). The transition to A-IFRS is accounted for in accordance with Accounting Standard
AASB 1 "First-time Adoption of Australian Equivalents to International Financial Reporting Standards", with 1 January, 2004
as the date of transition for the purposes of this Appendix 4F. An explanation of how the transition from superseded policies
to A-IFRS has affected the consolidated entity's income statement, balance sheet and cash flow statement is disclosed in
Note 2.
The resultant amended accounting policies set out below have been applied in preparing the condensed consolidated
financial statements for the year ended 31 December, 2005, the comparative information presented in these financial
statements, and in the preparation of the opening A-IFRS balance sheet at 1 January, 2004 (as disclosed in Note 2).
(a) Share Based Payments
Remuneration based share, rights and option issues made during the reporting period are measured at fair value at grant
date and expensed on a straight-line basis over the vesting period and are disclosed as part of employee benefit expense
with a corresponding increase to equity. The effect of this change in policy is outlined in Note 2.
(b) Income tax
The company calculates its current tax position as the amount of income taxes payable or recoverable in respect
o f the taxable profit or loss for the reporting period referable to current tax rates and laws.
Deferred tax is accounted for using the comprehensive balance sheet liability method in respect of temporary differences
arising between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of
those items. A deferred tax asset in respect of carried forward tax losses may be recognised to the extent that it is
probable that future taxable income would be available subject to the tax consolidation rules. Due to recent tax losses
incurred by the consolidated entity no such asset has been recognised.
The company and its wholly owned Australian resident subsidiaries have formed a tax-consolidated group under
Australian taxation law. Tele-IP Limited is the head entity in the tax consolidated group.
There is considered to be no effect arising from this change of policy at the reporting date.
(c) Impairment of Assets
At each reporting date, the consolidated entity reviews the carrying amounts of its tangible and intangible assets to
determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss.
Any impairment loss or a reversal of a prior impairment loss is generally recognised in profit or loss immediately, however
impairment losses recognised relating to Goodwill are not subsequently reversed.
A subsequent reversal of impairment losses cannot cause an asset value to exceed its original carrying value.
There is considered to be no effect arising from this change of policy at the reporting date.
(d) Goodwill
Goodwill, representing the excess of the cost of acquisition over the fair value of the identifiable assets, liabilities and
contingent liabilities acquired, is recognised as an asset and not amortised. At each reporting date, Goodwill is tested for
impairment and any such impairment loss is recognised immediately and may not be subsequently reversed.
There is considered to be no effect arising from this change of policy at the reporting date.
(e) Going concern
Tele-IP Ltd and its controlled entities incurred a trading loss for the year ended 31 December 2005 of $3,207,931
(31 December 2004 year loss: $1,763,160). The economic entity also has a deficiency in working capital as at 31 December
2005 of $2,090,254 (31 December 2004 deficiency of $943,189). This deficiency included monies received as a subscription
for shares amounting to $2,290,260 which was included as a creditor at 31 December 2005, and which was converted to
share capital on the allotment of shares on 3 January 2006.
The ability of Tele-IP Ltd and its controlled entities to continue as a going concern is dependent upon the generation of positive
cash flows from continuing trading operations, the completion of the sale of assets in a subsidiary as stated in Note 9 and
the maintenance of existing bank facilities or other arrangements.
7
TELE-IP LIMITED AND CONTROLLED ENTITIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2005
2 IMPACT OF ADOPTION OF A-IFRS
The consolidated entity changed its accounting policies on 1 July 2005 to comply with Australian equivalents to International
Financial Reporting Standards (A-IFRS). The transition to A-IFRS is accounted for in accordance with AASB 1: First time
Adoption of Australian Equivalents to International Financial Reporting Standards, with 1 January, 2004 as the date of
transition for the purposes of this Appendix 4F.
Reconciliations of how the transition from superseded accounting policies to A-IFRS have impacted the consolidated
entity's income statement, balance sheet and cash flow statement are detailed in the following tables and accompanying
notes to the tables.
Effect of A-IFRS on Condensed Consolidated Income Statement for the year ended 31 December 2004
Note
Superseded
policies*
Effect of
transition
to A-IFRS
A-IFRS
$ $ $
Revenue 6,907,592 - 6,907,592
Changes in inventories of raw materials, finished goods
and work in progress (5,244,185) - ( 5,244,185)
Employee benefits expense 2(a) (1,692,991) (55,236) ( 1,748,227)
Consultancy and contractor expense (283,730) - ( 283,730)
Depreciation expense (39,573) - (39,573)
Finance costs expense (456,394) - ( 456,394)
Auditing and accounting expense (91,800) - (91,800)
Legal and insurance expense (178,045) - ( 178,045)
Rental and outgoings expense (95,770) - (95,770)
Technology research costs expense 2(b) - (166,000) ( 166,000)
Other expenses (665,765) - ( 665,765)
Loss from continuing operations before income tax (1,840,661) (221,236) ( 2,061,897)
Income tax benefit 298,737 - 2 98,737
Loss for the year (1,541,924) (221,236) ( 1,763,160)
Loss attributable to members of the parent (1,541,924) (221,236) ( 1,763,160)
Effect of A-IFRS on Condensed Consolidated Balance Sheet as at 1 January 2004
Note
Superseded
policies*
Effect of
transition
to A-IFRS
A-IFRS
$ $ $
CURRENTS ASSETS
Cash and cash equivalents 239,556 - 2 39,556
Inventories 1,617,594 - 1,617,594
Receivables 1,433,928 - 1,433,928
TOTAL CURRENT ASSETS 3,291,078 - 3,291,078
NON-CURRENT ASSETS
Receivables 43,000 - 4 3,000
Plant & equipment 108,726 - 1 08,726
Other 2(b) 300,000 (300,000) -
TOTAL NON-CURRENT ASSETS 451,726 (300,000) 1 51,726
TOTAL ASSETS 3,742,804 (300,000) 3,442,804
CURRENT LIABILITIES
Trade and other payables 2,217,945 - 2,217,945
Provisions 153,673 - 1 53,673
Deferred Revenue 178,047 - 1 78,047
TOTAL CURRENT LIABILITIES 2,549,665 - 2,549,665
TOTAL LIABILITIES 2,549,665 - 2,549,665
NET ASSETS 1,193,139 (300,000) 8 93,139
EQUITY
Contributed equity 2(a) 10,531,137 3,206 10,534,343
Accumulated losses (9,337,998) (303,206) ( 9,641,204)
TOTAL EQUITY 2(c) 1,193,139 (300,000) 8 93,139
* Reported financial position under previous Australian GAAP
8
TELE-IP LIMITED AND CONTROLLED ENTITIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2005
2 IMPACT OF ADOPTION OF A-IFRS (continued)
Effect of A-IFRS on Condensed Consolidated Balance Sheet as at 31 December 2004
Note
Superseded
policies*
Effect of
transition
to A-IFRS
A-IFRS
$ $ $
CURRENTS ASSETS
Cash and cash equivalents 476,693 - 4 76,693
Inventories 1,137,922 - 1,137,922
Receivables 520,544 - 5 20,544
TOTAL CURRENT ASSETS 2,135,159 - 2,135,159
NON-CURRENT ASSETS
Receivables 43,750 - 4 3,750
Plant & equipment 89,466 - 8 9,466
Other 2(b) 466,000 (466,000) -
TOTAL NON-CURRENT ASSETS 599,216 (466,000) 1 33,216
TOTAL ASSETS 2,734,375 (466,000) 2,268,375
CURRENT LIABILITIES
Trade and other payables 2,822,962 - 2,822,962
Provisions 158,329 - 1 58,329
Deferred revenue 97,057 - 9 7,057
TOTAL CURRENT LIABILITIES 3,078,348 - 3,078,348
TOTAL LIABILITIES 3,078,348 - 3,078,348
NET ASSETS (343,973) (466,000) ( 809,973)
EQUITY
Contributed equity 2(a) 10,535,949 58,442 10,594,391
Accumulated losses (10,879,922) (524,442) ( 11,404,364)
TOTAL EQUITY 2(c) (343,973) (466,000) ( 809,973)
* Reported financial position under previous Australian GAAP
Effect of A-IFRS on Condensed Consolidated Cash Flow Statement for the year ended 31 December 2004
There are no material differences between the cash flow statement presented under A-IFRS and the cash flow statement
presented under the superseded accounting policies.
Notes to Reconciliations of the effects of A-IFRS
(a) Share Based Payments
Under AASB 2 "Share-based Payments", remuneration based share, rights and option issues must be expensed over
expected vesting periods with a corresponding increase to equity. This resulted in a change in the superseded accounting
policy, which did not expense any share based payments but only recognised an increase in equity upon issue of shares.
(b) Intangible Asset
Deferred Technology costs previously capitalised, and amortised, are expensed as incurred under AASB 138 "Intangible Assets".
(c) Total equity
The effects of the transition to A-IFRS on Total Equity are as follows: 31-Dec-04 1-Jan-04
$ $
Total equity reported under previous Australian GAAP (343,973) 1,193,139
Retrospective adjustments to total equity:
- Recognition of remuneration based options payments: Contributed equity 58,442 3 ,206
- Recognition of remuneration based options payments: Accumulated losses (58,442) (3,206)
- Deferred technology costs derecognised (466,000) ( 300,000)
(809,973) 8 93,139
9
TELE-IP LIMITED AND CONTROLLED ENTITIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2005
31-Dec-05 31-Dec-04
$ $
3 CONTRIBUTED EQUITY
Issued and paid up capital:
Ordinary fully paid shares 17,572,009 10,594,391
Movements in issued and paid up ordinary share capital of the
company during the period were as follows:
Note No. of Issue Price $
Shares (cents)
01.01.04 Opening balance 178,820,706 10,534,343
23.11.04 Issue of Shares 3(a) 75,000 2.00 1,500
23.11.04 Issue of Shares 3(a) 37,500 3.50 1,312
24.12.04 Issue of Shares 3(a) 100,000 2.00 2,000
31.12.04 Remuneration based options payments 2 55,236
31.12.04 Closing balance 179,033,206 10,594,391
09.05.05 Rights Issue 3(b) 237,500,000 2.00 4,750,000
30.06.05 Transactions costs arising on rights issue (403,127)
12.07.05 Issue of Shares 3(c) 54,750,000 2.00 1,095,000
15.07.05 Rights Issue 3(d) 56,080,301 2.00 1,121,606
26.08.05 Rights Issue 3(d) 21,550,000 2.00 431,000
20.09.05 Rights Issue 3(d) 8,585,000 2.00 171,700
31.12.05 Transactions costs arising on rights issue (230,201)
6,935,977
31.12.05 Remuneration based options payments 41,640
6,977,617
31.12.05 Closing balance 557,498,507 17,572,009
(a) Exercise of employee options under employee share plan. No amounts remain unpaid in respect of these shares.
(b) Rights Issue
In May 2005, 237,500,000 ordinary shares were issued at $0.02 per share fully paid pursuant to the company's 5 for 2
renounceable issue on a deferred settlement basis. These securities ranked equally and merged with existing quoted
securities.
(c) Issue of Shares
On 12 July 2005, the contract for the acquisition of two new business operations, PGS Communication Systems and
Able Communications were completed: consideration for which was satisfied by the issue of 54,750,000 ordinary shares
at $0.02 per share plus $4,005,000 in cash on a deferred payment basis. (Refer Note 7)
(d) Rights Issue Shortfall Placements
In accordance with the 2005 Rights Issue Prospectus and Listing rule 7.2 Exception 3, the following Rights Issue
shortfall placements occurred:
(i) 15 July 2005 - 56,080,301 ordinary shares at $0.02 each fully paid to raise $1,121,606.
(ii) 26 August 2005 - 21,550,000 ordinary shares at $0.02 each fully paid to raise $431,000.
(iii) 20 September 2005 - 8,585,000 ordinary shares at $0.02 each fully paid to raise $171,700.
Ordinary shares issued as a result of these placements rank pari passu in all respects with fully paid ordinary shares.
Year Year
Ended Ended
31-Dec-05 31-Dec-04
$ $
4 ACCUMULATED LOSSES
Accumulated losses at the beginning of the year 11,404,364 9,641,204
Current year loss 3,207,931 1,763,160
Accumulated losses at the end of the year 14,612,296 11,404,364
5 SEGMENT REPORTING
During the period the economic entity operated solely in the telecommunications sector within Australia.
10
TELE-IP LIMITED AND CONTROLLED ENTITIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2005
Year Year
Ended Ended
31-Dec-05 31-Dec-04
6 EARNINGS PER SHARE cents cents
Basic earnings per share (0.81) (0.99)
Diluted earnings per share (0.77) (0.87)
Weighted average number of ordinary shares used in
the calculation of Basic Earnings Per Share 394,258,112 178,834,336
Weighted average number of options outstanding 21,264,000 24,665,500
Weighted average number of ordinary shares used in
the calculation of Dilutive Earnings Per Share 415,522,112 203,499,836
Earnings used in the calculation of Basic (3,207,931) (1,763,160)
Earnings Per Share
Earnings used in the calculation of Dilutive (3,207,931) (1,763,160)
Earnings Per Share
7 ACQUISITION OF BUSINESSES
On 12 July, 2005 the consolidated entity acquired two new business operations, PGS Communication Systems and
Able Communications, for a total consideration of $2,200,000 and $2,900,000 respectively.
The acquisitions had the following effect on the consolidated entity's assets and liabilities:
(a) PGS Communication Systems
Acquiree's net assets at the date of acquisition
Tele-IP
Recognised
values
Fair Value
Adjustments
Acquiree
carrying
amounts
$
Property, plant and equipment 136,000 - 136,000
Vendors interest in the contracts 1 - 1
Intellectual property 1 - 1
Stock purchases 123,000 - 123,000
259,002 - 259,002
Goodwill on acquisition* 1,940,998
Consideration paid 2,200,000
Satisfied in:
- cash 770,000
- issue of 33,000,000 shares at $0.02 per share 660,000
- deferred cash payment at 31 December 2005 770,000
2,200,000
Net cash outflow 1,540,000
(b) Able Communications
Acquiree's net assets at the date of acquisition
Tele-IP
recognised
values
Fair value
adjustments
Acquiree
carrying
amounts
$
Property, plant and equipment 60,000 - 60,000
Vendors interest in the contracts 1 - 1
Intellectual property 1 - 1
Stock purchases 70,998 - 70,998
131,000 - 131,000
Goodwill on acquisition 2,769,000
Consideration paid 2,900,000
Satisfied in:
- cash 1,483,000
- issue of 21,750,000 shares at $0.02 per share 435,000
- deferred cash payment at 31 December 2005 982,000
2,900,000
Net cash outflow 2,465,000
* Goodwill has arisen on the acquisitions of PGS Communication Systems and Able Communications because of business
activities and existing customer relationships that did not meet the criteria for recognition as an intangible asset at the date
of acquisition.
11
TELE-IP LIMITED AND CONTROLLED ENTITIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2005
8 COMMITMENTS AND CONTINGENT LIABILITIES
There has been no change in the consolidated entity's commitments and contingent liabilities since its most recent annual
financial report.
9 EVENTS SUBSEQUENT TO REPORTING DATE
The following significant events have occurred subsequent to balance date, the financial effects of which have
not been recognised:
PURCHASE OF NEW BUSINESS OPERATIONS
In February 2006, the parent company entered into Heads of Agreement to acquire the business assets of TSA
Communications Pty Ltd for a consideration of $3.5million, subject to due diligence. The consideration is payable by the
issue of shares with a value of $1million and term payments of $2.5million over a 12 month period.
SALE OF SUBSIDIARY ASSETS
On 30 September, 2005, the parent company entered into a conditional contract for the sale of goodwill, plant and
equipment, intellectual property and contractual rights owned by its subsidiary company, StratoSonde Pty Ltd, for a
consideration of $1,105,000. The contract is due for settlement by 31 March 2006.
SHARE ISSUE
On 3 January 2006, the parent company issued 50,894,666 shares at 4.5 cents per share to raise additional working
capital. The monies were received in advance as at 31 December, 2005.
In February, 2006, the parent company issued 1,333,333 shares to an employee at an average price of 4.5 cents as a
consequence of the exercise of options under the company's option incentive plan.
OPTION ISSUE
In February, 2006, the parent company issued 9,350,000 options to employees under the company's option incentive plan
and options previously issued to employees over 3,166,667 shares lapsed as a consequence of the cessation of
employment.
12