Audio Pixels : Full Year Statutory Accounts

AUDIO PIXELS HOLDINGS LIMITED ACN 094 384 273 FINANCIAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2016 AUDIO PIXELS HOLDINGS LIMITED

ACN 094 384 273

CORPORATE DIRECTORY Directors

Fred Bart (Chairman) Ian Dennis

Cheryl Bart AO Company Secretary Ian Dennis

Registered Office Israel Corporate Office

Level 12 3 Pekris Street

75 Elizabeth Street Rehovot

SYDNEY NSW 2000 ISRAEL 76702

Australia

Telephone:- [phone] Telephone:- + 972 73 232 4444

Facsimile:- [phone] Facsimile:- + 972 73 232 4455

E-Mail:- [e-mail] E-Mail:- [e-mail]

Web site

www.audiopixels.com.au

Auditor Bankers

Deloitte Touche Tohmatsu St George Bank

Chartered Accountants Level 13

Brindabella Circuit 182 George Street

Brindabella Business Park SYDNEY NSW 2000

Canberra Airport ACT 2609 Australia Australia

Share Registry

Computershare Investor Services Pty Limited Level 3

60 Carrington Street

Sydney NSW 2000

GPO Box 7045

Sydney NSW 1115 Australia

Telephone [phone] or

[phone] outside Australia

Facsimile 1300 137 341

DIRECTORS' REPORT

The Directors of Audio Pixels Holdings Limited submit herewith the financial report of the company for the financial year ended 31 December 2016. In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:

The names and particulars of the directors of the company during or since the end of the financial year are:

Name Particulars

Fred Bart Chairman and Chief Executive Officer. A director since 5 September 2000. He has been Chairman and Managing Director of numerous private companies since 1980, specialising in manufacturing, property and marketable securities. Mr Bart is also Chairman of Immunovative Therapies Limited, an Israeli company involved in in the manufacture of cancer vaccines for the treatment of most forms of cancer. He is a member of the Audit Committee and a member of the Nomination and Remuneration Committee.

Ian Dennis Non-executive director and Company Secretary. Ian is a chartered accountant with experience as director and secretary in various public listed and unlisted technology companies. He has been involved in the investment banking industry and stockbroking industry for the past thirty years. Prior to that, Ian was with KPMG, Chartered Accountants in Sydney. Appointed to the Board on 5 September 2000. He is a member of the Audit Committee and Nomination and Remuneration Committee.

Cheryl Bart AO Non-executive director. Appointed to the Board on 26 November 2001. Cheryl Bart is a lawyer and company director. She is non- executive director of SG Fleet Australia Limited, ME Bank, Invictus Games Sydney 2018, Prince's Charities of Australia, Football Federation of Australia (FFA), Ted X Sydney and the Australian Himalayan Foundation.

She is immediate past director of ABC (Australian Broadcasting Corporation), SA Power Networks (formerly ETSA Utilities), Spark Infrastructure Limited, and the Local Organising Committee of the 2015 Australian Asian Cup.

She is a fellow of the Australian Institute of Company Directors, Patron of SportsConnect and a member of Chief Executive Women. She is a member of the Audit Committee and a member of the Nominations and Remuneration Committee.

DIRECTORS' REPORT (CONTINUED) Directorships of other listed companies

Directorships of other listed companies held by directors in the 3 years immediately before the end of the financial year are as follows:

Name Fred Bart Ian Dennis	Company Electro Optic Systems Holdings Limited Electro Optic Systems Holdings Limited	Period of directorship Since May 2000 Since May 2000
Cheryl Bart	Spark Infrastructure Group Limited	November 2005 to May 2015
SG Fleet Australia Limited	Since February 2014

Principal activities

The principal activity of the Company is an investment in Audio Pixels Limited of Israel. Audio Pixels Limited is engaged in the development of digital speakers.

Results

The net loss for the financial year ended to 31 December 2016 was $5,054,771 (31 December 2015 - $1,840,940).

Dividends

The directors recommend that no dividend be paid and no amount has been paid or declared by way of dividend since the end of the previous financial year and up to the date of this report.

Review of operations

During the reporting period there were no significant changes in the nature of the company's principal activities which were focused on the refinement of technology and fabrication processes' required to mass produce a commercial version of the Company's proven groundbreaking MEMS ("Micro Electro Mechanical Structure") based digital loudspeaker technologies.

Audio Pixels is a world leader in the digital transformation of sound reproduction; combining the emergence of a multibillion-dollar MEMS device industry together with the multibillion-dollar loudspeaker market that has over the course of a century become an indispensable fixture of daily life throughout a myriad of industries and applications.