Mobi Limited - ABN 98 009 805 298(formerly known as Fusia...

Mobi Limited - ABN 98 009 805 298
(formerly known as Fusia Limited)
ASX half yearly report – 31 December 2005
Lodged with the ASX under Listing Rule 4.2A.3
THE INFORMATION CONTAINED IN THIS REPORT SHOULD BE READ IN CONJUNCTION WITH THE MOST RECENT ANNUAL FINANCIAL REPORT
Contents
Results for Announcement to the Market 1
Other Appendix 4D Information 2
Half yearly report attached
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Mobi Limited
Half-year ended 31 December 2005
Results for Announcement to the Market
A$
Revenue from ordinary activities
down
82.5%
to
6,030
(Loss) from ordinary activities after tax attributable to members
down
54%
to
(1,051,039)
Net (loss) for the period attributable to members
Down
54%
to
(1,051,039)
Dividends
No Dividends have been declared or paid.
Explanation of Net Profit/ (Loss)
During the half-year the Group received R&D Tax Concession Grants totalling a net amount of $201,945 in respect of the year ended 30 June 2005 and interest of $6,030.
Losses totalled $1,051,039 which were considerably down when compared to the previous corresponding period of $2,300,756. This was due to the reorganisation of the Group and that the merger of Mobi Limited and MobiData Holdings Pty Limited did not occur until 15 December 2004.
It should be noted that Mobi Limited acquired 100% of MobiData Holdings Pty Limited on 15 December 2004 (name changed from MobiData Group Pty Limited on 14 December 2004). The Australian equivalent to International Financial Reporting Standards (AIFRS) identify MobiData Holdings Pty Limited as the acquirer in relation to the consolidated financial statements. That is, the acquisition of Mobi Limited by MobiData Holdings Pty Limited represents a reverse acquisition. MobiData Holdings Pty Limited was consolidated with Mobi Limited in the period to 31 December 2004. The adoption of AIFRS has resulted in a restatement of the comparative figures.
Other Appendix 4D Information
Previous
Current Period
Corresponding
Period
Net tangible asset backing per ordinary security
$0.001
$0.336
1. Details of entities over which control has been gained or lost during the period, including the following.
Not applicable – no entities gained or lost during the period.
It should be noted that Mobi Limited acquired 100% of MobiData Holdings Pty Limited on 15 December 2004 (name changed from MobiData Group Pty Limited on 14 December 2004). AIFRS identified MobiData Holdings Pty Limited as the acquirer in relation to the consolidated financial statements. That is, the acquisition of Mobi Limited by MobiData Holdings Pty Limited represents a reverse acquisition. MobiData Holdings Pty Limited was consolidated with Mobi Limited in the period to 31 December 2004.
2. Details of individual and total dividends or distributions and dividend or distribution payments. The details must include the date on which each dividend or distribution is payable, and (if known) the amount per security of foreign sourced dividend or distribution.
Not applicable – no dividends have been declared or paid.
3. Details of any dividend or distribution reinvestment plans in operation and the last date for the receipt of an election notice for participation in any dividend or distribution reinvestment plan.
Not applicable.
4. Details of associates and joint venture entities.
Not applicable.
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ACN 009 805 298
HALF-YEAR FINANCIAL REPORT
For the half-year ended 31 December 2005
(formerly known as Fusia Limited)
incorporating
MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
2
2
2
CONTENTS
DIRECTORS’ REPORT 3
CONDENSED INCOME STATEMENT 5
CONDENSED BALANCE SHEET 6
CONDENSED CASH FLOW STATEMENT 7
CONDENSED STATEMENT OF CHANGES IN EQUITY 8
NOTES TO THE HALF-YEAR FINANCIAL STATEMENTS 9
DIRECTORS’ DECLARATION 0
AUDITORS’ INDEPENDENCE DECLARATION 1
INDEPENDENT REVIEW REPORT 2
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MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
DIRECTORS’ REPORT
Your directors submit their report for the half-year ended 31 December 2005.
Directors’
The names of the directors in office during or since the half-year are as follows:
Richard G Carey (Managing Director)
Kevin J Brough
Daren J Anderson (appointed 27 January 2006)
Bruce S Ind (appointed 27 January 2006)
Ramin Marzbani (retired 28 November 2005)
Russell J Scrimshaw (resigned 27 January 2006)
Directors were in office for this entire period unless otherwise stated.
Review and Results of Operations
On 25 November 2005, the Company announced it had signed a distribution agreement with Allphones Retail Pty Limited (Allphones). Initially, Allphones will launch two of MobiData’s suite of products, MobiPod and MobiChat. Allphones is one of Australia’s largest retailers of mobile phones and mobile products. Established for over 16 years Allphones has over 140 stores nationwide, and sells in excess of 500,000 mobile phones per annum.
At the Annual General Meeting of the Company held on 28 November 2005, the Shareholders resolved to change the name of the Company to “Mobi Limited” from “Fusia Limited”. The new ASX Code for the Company is “MBI”.
During the half-year the Group received R&D Tax Concession Grants totalling a net amount of $201,945.
The net loss for the period was $1,051, 039 (2004 loss $2,300,756)
In early December the Company began marketing the MobiChat product direct to the public via the company’s own website (http://www.mobipowered.com.au) and advertising on other international web market places such as http://www.getjar.com to direct potential subscribers back to the main website.
The promotion offered potential interested subscribers a 1 month free trial of the MobiChat product with no obligation to continue with the subscription after the free trial period. At the end of the trial period subscribers may take up subscriptions of 3, 6 and 12 months for $19.95, $34.95 and $59.95 respectively.
As there is no distributor involved, all revenues received from the subscribers who continue after the trail period are retained by MobiData. This means a considerably higher gross margin for the company.
Numbers have grown beyond the expectations of the Directors with over 50,000 people having installed the MobiChat application on their handset. Installations have grown from under 50 per day to over 500 per day and this number continues to grow.
Due to the nature of the MobiChat product, numbers will grow exponentially as users tell friends to get the product. MobiChat also encourages viral marketing by informing the other chatter that they are being chatted to from a mobile phone and sending an email to all contacts of the new subscriber informing them of the MobiChat product.
The website now also offers the full suite of MobiData products of MobiChat, MobiAntiVirus, MobiPod and MobiGuard and these products are also being advertised on international websites.
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MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
On 16 January 2006, the Company announced the signing of an agreement with BT plc (BT) through it’s operating division BT Agilemedia for the distribution, via UK third party resellers, of the entire suite of mobile applications. Under the agreement BT will introduce MobiData’s suite of products to the UK Market and more specifically it’s reseller network. Effectively BT will act as the gatekeeper for MobiData’s entry into the UK market.
The Company has also undertaken a cost reduction programme. Over the next month cash burn is expected to be reduced to around $75,000 per month
Subsequent Events
The Company has signed an Unsecured Convertible Note and Option Deed with an Experienced Investor for the issue of 250,000 Unsecured Convertible Notes (Notes) of $1.00 each and the proposed issue of 31,250,000 Options exercisable at $0.01 on or before 30 September 2008. The issue of these Notes will raise $250,000. Shareholder approval will be required before the Notes can be converted into Ordinary Shares and the Options Issued.
In addition, the Company has reached agreement with another Experienced Investor to subscribe for 62,500,000 Ordinary Shares at $0.004 each and 31,250,000 Options exercisable at $0.01 on or before 30 September 2008. The subscription funds of $250,000 are to be held in trust until Shareholder approval for the issue is received.
The Company will call a Shareholders Meeting shortly to approve the conversion of Notes and issue of Ordinary Shares and Options.
Other than the above there has not been any matter or circumstance that has arisen since the end of the financial period that has significantly affected, or may significantly affect, the operations of the company, the results of those operations, or the state of affairs of the Company in future financial years.
Auditors’ Independence Declaration
An independence declaration from our auditors, Ernst & Young, is included on page 21 of our financial report.
This report has been made in accordance with a resolution of directors.
Richard Carey
Managing Director
Sydney
15 March 2006
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MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
CONDENSED INCOME STATEMENT
FOR THE HALF-YEAR ENDED 31 DECEMBER 2005
Consolidated
December
December
Notes
2005
2004
$
$
Revenue and Other Income
2
6,030
34,397
Other Expenses
2
(1,256,945)
(2, 333,440)
Loss before tax and finance costs
(1,250,915)
(2,299,043)
Finance costs
(2,069)
(1,713)
Loss before income tax
(1,252,984)
(2,300,756)
Income tax credit
201,945
-
Loss attributable to members of Mobi Limited
(1,051,039)
(2,300,756)
Earnings per share (dollars per share)
- basic & diluted for loss for the half-year
$(0.012)
$(9.785)
All potential ordinary shares, being options to acquire ordinary shares are not considered dilutive, as the exercise of the options would not decrease the basic loss per share.
This Condensed Income Statement should be read in conjunction with the accompanying notes.
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MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
CONDENSED BALANCE SHEET
AS AT 31 DECEMBER 2005
Consolidated
Notes
As At
As At
31 Dec 2005
30 June 2005
$
$
ASSETS
Current Assets
Cash and cash equivalents
268,624
592,117
Trade and other receivables
40,739
33,167
Other Current Assets
22,820
15,472
Total Current Assets
332,183
640,756
Non-Current Assets
Property, Plant & Equipment
79,511
89,817
Total Non-Current Assets
79,511
89,817
TOTAL ASSETS
411,694
730,573
LIABILITIES
Current Liabilities
Trade and other payables
251,147
299,381
Provisions
17,208
18,540
Total Current Liabilities
268,355
317,921
TOTAL LIABILITIES
268,355
317,921
NET ASSETS
143,339
412,652
EQUITY
Contributed Capital
3
4,944,332
4,163,382
Reserves
7,176
6,400
Accumulated Losses
(4,808,169)
(3,757,130)
TOTAL EQUITY
143,339
412,652
This Condensed Balance Sheet should be read in conjunction with the accompanying notes.
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MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
CONDENSED CASH FLOW STATEMENT
FOR THE HALF-YEAR ENDED 31 DECEMBER 2005
Consolidated
December 2004
December 2005
Cash Flows From Operating Activities
$
$
Receipts from Customers
-
33,000
Payments to Suppliers and Employees
(1,028,760)
(426,903)
Interest Received
6,030
1,397
Other Income
206,317
-
Borrowing Costs
(2,069)
(1,713)
Net Cash Flows used in Operating Activities
(818,482)
(394,219)
Cash Flows from Investing Activities
Net Payments for property, plant & equipment
(15,261)
(6,015)
Advance to MobiData Holdings Pty Ltd
-
1,081,924
Net Cash Flows used in Investing Activities
(15,261)
1,075,909
Cash Flows From Financing Activities
Proceeds from issue of shares
575,000
-
Payment of share issue expenses
(28,750)
-
Repayment of borrowings
(36,000)
-
Net Cash Flows from Financing Activities
510,250
-
Net (decrease) increase in cash and cash equivalents
(323,493)
681,960
Cash and cash equivalents at beginning of period
592,117
-
Cash and cash equivalents at end of period
268,624
681,690
This Condensed Cash Flow Statement should be read in conjunction with the accompanying notes
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MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
CONDENSED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF-YEAR ENDED 31 DECEMBER 2005
Total Equity
Accumulated Losses
Consolidated
ContributedCapital
Other Reserves
$
$
$
$
At 1 July 2004
2
(726,382)
(726,380)
Loss for the period
(2,300,756)
(2,300,756)
Issue of share capital
338,557
338,557
Impact on equity of reverse acquisition
3,162,704
3,162,704
At 31 December 2004
3,501,263
(3,027,138)
474,125
At 1 July 2005
4,163,382
6,400
(3,757,130)
412,652
Loss for the period
(1,051,039)
(1,051,039)
Issue of share capital
546,250
546,250
(net of costs: $28750)
Cost of share-based payments to staff
115,900
115,900
Cost of share-based payments to directors
118,800
118,800
Cost of option-based payments to directors
776
776
At 31 December 2005
4,944,332
7,176
(4,808,169)
143,339
This Condensed Statement of Changes in Equity should be read in conjunction with the accompanying notes
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MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
NOTES TO THE HALF-YEAR FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2005
1. Basis of Preparation of the Half-Year Financial Report
The half-year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the consolidated entity as the full financial report.
The half-year financial report should be read in conjunction with the Annual Financial Report of Mobi Limited as at 30 June 2005, which was prepared based on Australian Accounting Standards applicable before 1 January 2005 (AGAAP).
It is also recommended that the half-year financial report be considered together with any public announcements made by Mobi Limited and its controlled entities during the half-year ended 31 December 2005 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001.
(a) Basis of accounting
The half-year financial report is a general-purpose financial report, which has been prepared in accordance with the requirements of the Corporations Act 2001, applicable Australian Accounting Standards including AASB 134 “Interim Financial Reporting” and other mandatory professional reporting requirements.
The half-year financial report has been prepared on a historical cost basis.
For the purpose of preparing the half-year financial report, the half year has been treated as a discrete reporting period.
(b) Statement of compliance
The half-year financial report complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (AIFRS). Compliance with AIFRS ensures that the half-year financial report, comprises the financial statements and notes thereto, complies with International Financial Reporting Standards (IFRS).
This is the first half-year financial report prepared based on AIFRS and comparatives for the half-year ended 31 December 2004 and full-year ended 30 June 2005 have been restated accordingly. A summary of the significant accounting policies of the Group under AIFRS are disclosed in Note 1 (d) below.
Reconciliations of:
- AIFRS equity as at 1 July 2004, 31 December 2004 and 30 June 2005: and
- AIFRS loss for the half-year 31 December 2004 and full year 30 June 2005,
to the balances reported in the 31 December 2004 half-year report and 30 June 2005 full-year financial report prepared under AGAAP are detailed in Note 1 (e) below.
(c) Going Concern
The half-year financial report has been prepared on an accrual basis of accounting including the historical cost convention and the going concern basis assumption. In common with start-up technology companies the company’s operations are subject to considerable risk and significant uncertainty due primarily to the nature of the development and commercialisation to be undertaken. The Company is in the process of marketing and distributing its products and has commenced negotiations and signing agreements with distributors to facilitate the generation of revenues. The free trial period for use of the MobiChat product has attracted over 50,000 users and the Directors are closely monitoring the conversion rates to assess the revenues that may be generated from this marketing initiative. The company will require 9 of 23
MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
NOTES THE HALF-YEAR FINANCIAL STATEMENTS (Continued)
additional funding to successfully execute its existing and future plans. If further funding were obtained by way of raising of additional capital this would have the effect of further diluting existing shareholders’ equity, which may require approval of shareholders. In the event that the Company does not generate sufficient revenues or raise additional funding, significant uncertainty exists whether Mobi Limited and/or the consolidated entity will be able to continue as a going concern. The financial statements take no account of the consequences, if any, of the effects of either unsuccessful product commercialisation or, of the inability of the company to obtain adequate additional funding if required.
As described in Note 6 – Events after the balance sheet date, in order to fund identified projects and to provide additional working capital, the Company has subject to Shareholder approval, reached agreement with two Experienced Investors to raise $500,000.
This additional funding will provide sufficient working capital for the immediate future and along with initial revenues from the commercialisation of the Company’s products, the company will be able to continue its current operations. The Directors are confident of raising the additional funds and generating future revenue. The necessity for any further capital raising will be reviewed from time to time.
(d) Summary of significant accounting policies
(i) Basis of consolidation
The consolidated financial statements comprise the financial statements of Mobi Limited and its subsidiaries (the Group).
The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies.
Adjustments are made to bring into line any dissimilar accounting policies that may exist.
All intercompany balances and transactions have been eliminated in full.
Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.
Where there is loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting period during which Mobi Limited has control.
Mobi Limited acquired 100% of MobiData Holdings Pty Limited on 15 December 2004 (name changed from MobiData Group Pty Limited on 14 December 2004). The AIFRS accounting standards identify MobiData Holdings Pty Limited as the acquirer in relation to the consolidated financial statements. That is, the acquisition of Mobi Limited by MobiData Holdings Pty Limited represents a reverse acquisition. MobiData Holdings Pty Limited was consolidated with Mobi Limited as from 15 December 2004.
(ii) Revenue Recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:
Sale of Goods
Control of the goods has passed to the buyer.
Interest
Control of the right to receive the interest payment.
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MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
NOTES THE HALF-YEAR FINANCIAL STATEMENTS (Continued)
(iii) Income tax
Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary differences:
• except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
• in respect of taxable temporary differences associated with investments in subsidiaries,associates and interests in joint ventures, except where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised:
• except where the deferred income tax asset relating to the deductible temporarydifferences arise from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and
• in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.
Income taxes relating to items recognised directly in equity are recognised in equity and no in the income statement.
(iv) Other Taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
• where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and
• receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.
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MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
NOTES THE HALF-YEAR FINANCIAL STATEMENTS (Continued)
Cash flows are included in the Cash Flow Statement on a gross basis and the GST components of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(v) Recoverable amount of assets
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired. Where an indicator of impairment exists, the Group makes a formal estimate of recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is considered impaired and is written down to its recoverable amount.
Recoverable amount is the greater of fair value less costs to sell and value in use. It is determined for an individual asset, unless the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case, the recoverable amount is determined for those cash-generating unit to which the asset belongs.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
(vi) Trade and Other Payables
Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the consolidated entity.
Payables to related parties are carried at the principal amount, Interest, when charged by the lender, is recognised as an expense on an accrual basis.
(vii) Trade and Other Receivables
Trade receivables, which generally have 30 – 90 day terms, are recognised and carried at original invoice amount less an allowance for uncollectible amounts.
An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off when identified.
(viii) Leases
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments.
Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income.
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MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
NOTES THE HALF-YEAR FINANCIAL STATEMENTS (Continued)
Capitalised leased assets are depreciated over the shorter of the estimated useful life of the asset or the lease term.
Leases where the lessor retains substantially all the risk and benefits of ownership of the assets are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as the lease income.
Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the lease term.
(ix) Property, Plant and Equipment
Plant and equipment is stated at cost less accumulated depreciation and any impairment in value
Depreciation rates are reviewed on a regular basis and calculated on a straight-line basis over the estimated useful life of the asset as follows:
2005
2004
Office equipment
15% - 25%
5% - 33.3%
Computer Equipment
37.5%
20% - 33.3%
Furniture & Fittings
7.5%
20% - 33.3%
Impairment
The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable.
For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.
If any such indication exists and when the carrying value exceeds the estimated recoverable amount, the asset or cash-generating units are written down to their recoverable amount.
The recoverable amount of plant and equipment is the greater of fair value less cost to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using o pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
(x) Intangible assets
Research and Development Costs
Research costs are expensed as incurred.
Development expenditure incurred on an individual project is carried forward when its future recoverability can reasonably be regarded as assured.
Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated amortisation and accumulated impairment losses.
Any expenditure carried forward is amortised over the period of expected future sales from the related project.
The carrying value of development costs is reviewed for impairment annually when the asset is not yet in use, or more frequently when an indicator of impairment arises during the reporting year indicating that the carrying value may not be recoverable. 13 of 23
MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
NOTES THE HALF-YEAR FINANCIAL STATEMENTS (Continued)
(xi) Share-based payment transactions
The group provides benefits to employees (including directors) of the Group in the form of share-based payment transactions, whereby employees render services in exchange for shares or rights over shares (equity–settled transactions).
Currently, the group has an Employee Share Option Plan, which provides benefits to employees of and consultants to each Company in the MobiData Group and the Company, including executives Directors.
The cost of these equity-settled transactions with employees is measured by reference to the fair value at the date at which they are granted.
In valuing equity-settled transactions, no account is taken of any performance conditions other than conditions linked to the price of shares of Mobi Limited (market conditions).
The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (vesting date).
(xii) Goodwill
Goodwill on acquisition is initially measured at cost being the excess of the cost of the business combination over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities
Following initial recognition, goodwill is measured at cost less any accumulated impairment losses.
Goodwill is not amortised.
Goodwill is reviewed for impairment, annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired.
As at acquisition date, any goodwill acquired is allocated to each of the cash-generating units expected to benefit from the combination’s synergies.
Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates.
Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised.
Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation.
Goodwill disposed of in this circumstance is measured on the basis of the relative values of the operation disposed of and the portion of the cash-generating unit retained
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MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
NOTES THE HALF-YEAR FINANCIAL STATEMENTS (Continued)
(xiii) Provisions
Provisions are recognised when the Group has a present obligation (legal or Constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
Where the Group expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the income statement net of any reimbursement.
If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risk specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
(xiv) Cash and cash equivalents
Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity date of three months or less.
For the purpose of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.
(xv) Borrowing Costs
Borrowing costs are recognised as an expense when incurred.
(xvi) Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at cost, being the fair value of the consideration received net of issue costs associated with the borrowing.
After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.
Gains and losses are recognised in the income statement when the liabilities are derecognised and as well as though the amortisation process.
(e) AASB 1 Transitional exemptions
The Group has made its election in relation to the transitional exemptions allowed by AASB 1 ‘First-time Adoption of Australian Equivalents to International Financial Reporting Standards’ as follows:
Business combinations
AASB 3 ‘Business Combinations’ was not applied retrospectively to past business combinations (i.e. business combinations that occurred before the date of transition to AIFRS).
Share-based payment transactions
AASB 2 ‘Share-Based Payments’ is applied only to equity instruments granted after 7 November 2002 that had not vested on or before 1 January 2005.
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MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
NOTES THE HALF-YEAR FINANCIAL STATEMENTS (Continued)
(f) Impact of adoption of AIFRS
The impacts of adopting AIFRS on the total equity and profit after tax as reported under Australian Accounting Standards applicable before 1 January 2005 (AGAAP) are illustrated below.
(i) Reconciliation of total equity as presented under AGAAP to that under AIFRS
Consolidated
30 June 2005
31 December 2004
1 July 2004
$
$
$
Total equity under AGAAP
1,500,269
2,124,482
848,968
Adjustments to Equity:
Reverse AGAAP Consolidated Equity (A)
(1,500,269)
(2,124,482)
(848,968)
Reinstate MobiData Holdings Pty Limited’s
net equity at 1 July 2004 (B)
(726,380)
(726,380)
(726,380)
Business Combinations and Goodwill (C)
3,162,704
3,162,704
-
Restated Loss for the Period to 31 December 2004
(3,030,748)
(2,300,756)
-
Issue of Share Capital Post Acquisition (net of costs)
1,007,076
338,557
-
Total equity under AIFRS
412,652
474,125
(726,380)
(A) Mobi Limited acquired 100% of MobiData Holdings Pty Limited on 15 December 2004 (name changed from MobiData Group Pty Limited on 14 December 2004). The AIFRS accounting standards identify MobiData Holdings Pty Limited as the acquirer in relation to the consolidated financial statements. That is, the acquisition of Mobi Limited by MobiData Holdings Pty Limited represents a reverse acquisition. Accordingly, Mobi Limited’s net equity at 31 December 2004 has been reversed.
(B) AIFRS identify MobiData Holdings Pty Limited as the acquirer and their net equity at 31 December 2004 has been included.
(C) The fair value applied to the acquisition of the business combination of Mobi Limited by MobiData Holdings Pty Limited was $3,162,704. 16 of 23
MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
NOTES THE HALF-YEAR FINANCIAL STATEMENTS (Continued)
(ii) Reconciliation of loss after tax under AGAAP to that under AIFRS
Consolidated
Year Ended
Half-Year Ended
30 June 2005
31 December 2004
$
$
Loss after tax as previously reported
(1,479,068)
(192,736)
De-consolidate Mobi Limited’s loss for the Period (A)
192,736
192,736
Reinstate MobiData Holdings Pty Limited’s
loss for the period (B)
(2,300,756)
(2,300,756)
Write-back of Amortisation of Research
-
and Development (C)
362,539
Write-back of Research and Development
-
Receipt (D)
200,201
Cost of Options granted to Underwriter (E)
(6,400)
Loss after tax under AIFRS
(3,030,748)
(2,300,756)
(A) Mobi Limited acquired 100% of MobiData Holdings Pty Limited on 15 December 2004 (name changed from MobiData Group Pty Limited on 14 December 2004). The AIFRS accounting standards identify MobiData Holdings Pty Limited as the acquirer in relation to the consolidated financial statements. That is, the acquisition of Mobi Limited by MobiData Holdings Pty Limited represents a reverse acquisition. Accordingly, Mobi Limited’s Operating Loss of $192,736 for the six months ended 31 December 2004 has been reversed.
(B) AIFRS identify MobiData Holdings Pty Limited as the acquirer then their Operating Loss of $2,300,756 for the six months ended 31 December 2004 has been recognised.
(C) As Research and Development arising on consolidation has now been eliminated due to the reverse acquisition of Mobi Limited by MobiData Holdings Pty Limited, the Amortisation of Research and Development for the year ended 30 June 2005 has also been reversed.
(D) A Research and Development Tax Concession Grant of $200,201 (net) was received in March 2005 by MobiData Holdings Pty Limited. The Grant was in respect to the year ended 30 June 2004 and was previously treated as a pre-acquisition adjustment this amount has now been recognised.
(E) The cost of 5,000,000 Options granted to Taycol Nominees Pty Limited as part payment for underwriting the Share Purchase Plan in April 2005 has been calculated at $6,400 using the Black Scholes valuation model 17 of 23
MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
NOTES THE HALF-YEAR FINANCIAL STATEMENTS (Continued)
2. INCOME AND EXPENSES
Consolidated
December
December
2005
2004
$
$
Income and Revenue
Sales revenue
-
33,000
Interest
6,030
1,397
Total other income
6,030
34,397
Expenses
Advertising and Selling Expenses
120,660
18,369
Australian Stock Exchange Fees
29,062
-
Directors Fees
78,000
-
Depreciation
25,566
104
Management and Consultants Fees Paid
65,240
139,591
Salaries and Wages
224,283
-
Shareholder expenses
21,742
-
Travelling Expenses
42,125
8,538
Audit, accounting and legal fees
92,781
34,884
Superannuation
20,148
-
Operating Lease Rentals
40,074
9,604
Provision for Annual Leave
17,208
-
Contract Labour
136,991
-
Employee Share and Option Benefits
235,476
-
Software Development
-
74,161
Impairment of Goodwill (A)
-
2,038,222
Other Expenses
107,589
9,967
Total expenses
1,256,945
2,333,240
(A) The Goodwill arising from the acquisition of Mobi Limited by MobiData Holdings Pty Limited of $2,038,222 is considered to be impaired as at the date of acquisition Mobi Limited was largely a “cash box”. The impaired loss on goodwill has been recognised under AIFRS.
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MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
NOTES THE HALF-YEAR FINANCIAL STATEMENTS (Continued)
3. CONTRIBUTED EQUITY
December 2005
June 2005
$
$
Ordinary Shares
Contributed and fully paid
4,944,332
4,163,382
Movements in ordinary shares on issue
Number of Shares
$
Issued At 1 July 2005
463,176,068
4,163,382
Issued on 11 October 2005 to employees as part of their remuneration package
11,590,000
115,900
Issued on 11 November 2005 to Experienced Investors
57,500,000
575,000
Share issue costs
(28,750)
Issued on 30 November 2005 to Directors as part of their remuneration packages for the six months to 30 June 2005
5,618,176
61,800
Issued at 31 December 2005
537,884,244
4,887,332
Issued subsequent to balance date, issue applicable to half-year ended 31 December 2005
Issued on 18 January 2006 to Directors as part of their remuneration packages for the six months to 31 December 2005
5,181,814
57,000
Contributed at 31 December 2005
543,066,058
4,944,332
4. BUSINESS SEGMENT
The Group operates within one business segment in Australia, being the software development industry. As a result, disclosures in the consolidated financial statements and notes are representative of this segment.
5. CONTINGENT ASSETS AND LIABILITIES
Since the last annual reporting date, there has been no material change of any contingent liability or contingent assets.
6. EVENTS AFTER THE BALANCE SHEET DATE
The Company has signed an Unsecured Convertible Note and Option Deed with an Experienced Investor for the issue of 250,000 Unsecured Convertible Notes (Notes) of $1.00 each and the proposed issue of 31,250,000 Options exercisable at $0.01 on or before 30 September 2008. The issue of these Notes will raise $250,000. Shareholder approval will be required before the Notes can be converted into Ordinary Shares and the Options Issued.
In addition, the Company has reached agreement with another Experienced Investor to subscribe for 62,500,000 Ordinary Shares at $0.004 each and 31,250,000 Options exercisable at $0.01 on or before 30 September 2008. The subscription funds of $250,000 are to be held in trust until Shareholder approval for the issue is received.
The Company will call a Shareholders Meeting shortly to approve the conversion of Notes and issue of Ordinary Shares and Options.
Other than the above there has not been any matter or circumstance that has arisen since the end of the financial period that has significantly affected, or may significantly affect, the operations of the company, the results of those operations, or the state of affairs of the Company in future financial years. 19 of 23
MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
DIRECTORS’ DECLARATION
In accordance with a
resolution of the directors of Mobi Limited, I
state that:
In the opinion of the directors:
(a) the financial statements and notes of the consolidated entity:
(i) give a true and fair view of the financial position as at 31 December 2005 and the performance for the half-year ended on that date of the consolidated entity; and
(ii) comply with Accounting Standard AASB 134 “Interim Financial Reporting” and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.
On behalf of the Board
Richard Carey
Managing Director
Sydney
15 March 2006
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AUDITORS’ INDEPENDENCE DECLARATION
Ernst & Young
MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005
INDEPENDENT REVIEW REPORT
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MOBI LIMITED – ABN 98 009 805 298
Half Yearly Financial Report 31 December 2005