|
|
|
Reported
|
|
Adjustments
|
|
Restated
|
|
Reported
|
|
|
Adjustments
|
|
|
Restated
|
|
|
|
|
June 30, 2011
|
|
June 30, 2011
|
|
June 30, 2011
|
|
June 30, 2012
|
|
|
June 30, 2012
|
|
|
June 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
128,231
|
|
|
$
|
(125,143
|
)
|
|
$
|
3,088
|
|
|
$
|
257,586
|
|
|
$
|
(179,646
|
)
|
|
$
|
77,940
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash
used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation & amortization
|
|
|
501,696
|
|
|
|
-
|
|
|
|
501,696
|
|
|
|
594,011
|
|
|
|
-
|
|
|
|
594,011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) / decrease in assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
(4,064,817
|
)
|
|
|
-
|
|
|
|
(4,064,817
|
)
|
|
|
(7,765,220
|
)
|
|
|
-
|
|
|
|
(7,765,220
|
)
|
|
Inventories
|
|
|
(2,913
|
)
|
|
|
-
|
|
|
|
(2,913
|
)
|
|
|
3,440
|
|
|
|
-
|
|
|
|
3,440
|
|
|
Deferred tax assets
|
|
|
1
|
|
|
|
125,142
|
|
|
|
125,143
|
|
|
|
-
|
|
|
|
179,646
|
|
|
|
179,646
|
|
|
Other assets
|
|
|
330,442
|
|
|
|
-
|
|
|
|
330,442
|
|
|
|
(862,462
|
)
|
|
|
-
|
|
|
|
(862,462
|
)
|
|
Increase/ (decrease) in current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables
|
|
|
493,510
|
|
|
|
-
|
|
|
|
493,510
|
|
|
|
3,737,665
|
|
|
|
-
|
|
|
|
3,737,665
|
|
|
Net cash used in operating activities
|
|
|
(2,613,851
|
)
|
|
|
-
|
|
|
|
(2,613,851
|
)
|
|
|
(4,034,980
|
)
|
|
|
-
|
|
|
|
(4,034,980
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(581,107
|
)
|
|
|
-
|
|
|
|
(581,107
|
)
|
|
|
(790,967
|
)
|
|
|
-
|
|
|
|
(790,967
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
3,429,948
|
|
|
|
-
|
|
|
|
3,429,948
|
|
|
|
7,751,988
|
|
|
|
-
|
|
|
|
7,751,988
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) operations
|
|
|
234,990
|
|
|
|
-
|
|
|
|
234,990
|
|
|
|
2,926,041
|
|
|
|
-
|
|
|
|
2,926,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
515,941
|
|
|
|
-
|
|
|
|
515,941
|
|
|
|
(163,975
|
)
|
|
|
-
|
|
|
|
(163,975
|
)
|
|
Net increase in cash and cash equivalents
|
|
|
750,931
|
|
|
|
-
|
|
|
|
750,931
|
|
|
|
2,762,066
|
|
|
|
-
|
|
|
|
2,762,066
|
|
|
Cash and cash equivalents at the beginning of the period
|
|
|
2,104,028
|
|
|
|
-
|
|
|
|
2,104,028
|
|
|
|
2,854,959
|
|
|
|
-
|
|
|
|
2,854,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the period
|
|
|
2,854,959
|
|
|
|
-
|
|
|
|
2,854,959
|
|
|
|
5,617,025
|
|
|
|
-
|
|
|
|
5,617,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid during the year for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax payments
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Interest payments
|
|
$
|
196,188
|
|
|
$
|
1,331,966
|
|
|
$
|
1,528,154
|
|
|
$
|
179,242
|
|
|
$
|
1,532,677
|
|
|
$
|
1,711,920
|
|
Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (RESTATED)
Liquidity Matters
Based upon its current projection of revenue, management believes that its current cash position and available financing provide sufficient resources and operating flexibility through at least the next twelve months. However, there can be no assurance that projected revenue growth and improvement in operating results will occur or that the Company will successfully implement its plans. In the event cash flow from operations is not sufficient, additional sources of financing will be required in order to maintain the Company’s current operations. Whereas management believes it will have access to other financing sources, no assurance can be given that such additional sources of financing will be available on acceptable terms, on a timely basis or at all.
Foreign Currency Translation and Comprehensive Income (Loss)
The accounts of Moneytech and its wholly owned subsidiaries were maintained, and its financial statements were expressed, in AUD. Such financial statements were translated into USD with the AUD as the functional currency. All assets and liabilities were translated at the exchange rate at the balance sheet date, stockholder’s equity is translated at the historical rates and income statement items are translated at the average exchange rate for the period. Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of operations. The resulting translation adjustments are reported under other comprehensive income as a component of shareholders’ equity.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include collectability of accounts receivable, accounts payable, sales returns and recoverability of long-term assets.
Principles of Consolidation
The consolidated financial statements include the accounts of Moneytech Limited and its wholly owned subsidiaries Moneytech Finance Pty Ltd and Moneytech Services Pty Ltd, and are collectively referred to as the Company. All material intercompany accounts, transactions and profits were eliminated in consolidation.
Revenue Recognition
Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. Revenue generally is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities.
Cost of Revenue
Cost of revenue includes; programs licensed; operating costs related to product support service centers to drive traffic to our websites, costs incurred to support and maintain products and services, including inventory valuation adjustments; costs associated with the delivery of consulting services; and the amortization of capitalized research and development costs. Capitalized research and development costs are amortized over the estimated lives of the products.
Research and Development
Research and development expenses include payroll, employee benefits, and other headcount-related expenses associated with product development. Research and development expenses also include third-party development and programming costs, localization costs incurred to translate software for international markets, and the amortization of purchased software code and services content. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached, which for our software products, is generally shortly before the products are put into service. Once technological feasibility is reached, such costs are capitalized and amortized to cost of revenue over the estimated lives of the products.
Certain research and development costs are available for reimbursement by the Australian government. Research and development expense is included as an operating expense and research and development grant income is reported as other income.
Income Taxes
The Company utilizes FASB Accounting Standards Codification (ASC) Topic 740, Income Taxes, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that were included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The Company follows FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (codified in FASB ASC Topic 740). When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statements of income.
At June 30, 2012 and 2011, the Company had not taken any significant uncertain tax positions on its tax returns for 2012 and prior years or in computing its tax provisions.
Statement of Cash Flows
In accordance with SFAS No. 95, “Statement of Cash Flows” (codified in FASB ASC Topic 230), cash flows from the Company’s operations are based upon local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows will not necessarily agree with changes in the corresponding balances on the balance sheet.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base, most of which are in Australia. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.
Risks and Uncertainties
The Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.
Contingencies
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.
If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.
Cash and Equivalents
Cash and equivalents include cash in hand and cash in demand deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. At June 30, 2012 and 2011, the Company had $5,617,025 and $2,854,959 in cash, respectively, of which no deposits were covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.
Allowance for Doubtful Accounts
The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. The allowance for doubtful accounts was $751,564 and $607,962 at June 30, 2012 and 2011.
Inventory
Inventories are valued at the lower of cost (determined on a weighted average basis) or market. Management compares the cost of inventories with the market value and allowance is made to write down inventories to market value, if lower. As of June 30, 2012 and 2011, inventory only consisted of finished goods.
Property, Plant & Equipment
Property and equipment is stated at cost and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The estimated useful lives of our property and equipment are generally as follows: computer software developed or acquired for internal use, three to 10 years; computer equipment, two to three years; buildings and improvements, five to 15 years; leasehold improvements, two to 10 years; and furniture and equipment, one to five years. Land is not depreciated.
As of June 30, 2012 and 2011, Property, Plant & Equipment consisted of the following:
|
|
|
2012
|
|
|
2011
|
|
|
Plant and Equipment
|
|
$
|
1,606,023
|
|
|
$
|
1,588,253
|
|
|
Accumulated Depreciation
|
|
|
(921,237
|
)
|
|
|
(828,123
|
)
|
|
|
|
$
|
684,786
|
|
|
$
|
760,130
|
|
For the years ended June 30, 2012 and 2011, depreciation expense consisted of the following:
|
|
|
2012
|
|
|
2011
|
|
|
Depreciation, operating
|
|
$
|
36,402
|
|
|
$
|
21,919
|
|
|
Depreciation, cost of revenue
|
|
|
111,735
|
|
|
|
102,093
|
|
|
Total depreciation expense
|
|
$
|
148,137
|
|
|
$
|
124,012
|
|
Fair Value of Financial Instruments
For certain of the Company’s financial instruments, including cash and equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.
As of June 30, 2012 and 2011, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at fair value.
Earnings Per Share (EPS)
Basic EPS is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similar to basic net income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if all the potential common shares, warrants and stock options had been issued and if the additional common shares were dilutive. Diluted EPS is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding options and the if-converted method for the outstanding convertible preferred shares. Under the treasury stock method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, convertible outstanding instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later).
The following table sets for the computation of basic and diluted earnings per share for the years ended June 30 :
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
77,940
|
|
|
$
|
3,088
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing basic and diluted net (loss) income per share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
111,676,854
|
|
|
|
91,271,854
|
|
|
Dilutive effect of stock options
|
|
|
37,500,000
|
|
|
|
37,500,000
|
|
|
Dilutive effect of convertible loan
|
|
|
530,000
|
|
|
|
20,835,000
|
|
|
Diluted
|
|
|
149,706,854
|
|
|
|
149,606,854
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
$
|
0.001
|
|
|
$
|
0.000
|
|
|
Diluted:
|
|
$
|
0.001
|
|
|
$
|
0.000
|
|
Intangible Assets
All of our intangible assets are subject to amortization and are amortized using the straight-line method over their estimated period of benefit, ranging from one to 10 years. We evaluate the recoverability of intangible assets periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired.
Recent accounting pronouncements
In December 2011, the FASB issued guidance enhancing disclosure requirements about the nature of an entity’s right to offset and related arrangements associated with its financial instruments and derivative instruments. The new guidance requires the disclosure of the gross amounts subject to rights of set-off, amounts offset in accordance with the accounting standards followed, and the related net exposure. The new guidance will be effective for us beginning July 1, 2013. Other than requiring additional disclosures, we do not anticipate material impacts on our financial statements upon adoption.
In September 2011, the FASB issued guidance on testing goodwill for impairment. The new guidance provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines that this is the case, it is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized for that reporting unit (if any). If an entity determines that the fair value of a reporting unit is greater than its carrying amount, the two-step goodwill impairment test is not required. The new guidance will be effective for us beginning July 1, 2012.
In June 2011, the FASB issued guidance on presentation of comprehensive income. The new guidance eliminates the current option to report other comprehensive income and its components in the statement of changes in stockholders’ equity. Instead, an entity will be required to present either a continuous statement of net income and other comprehensive income or in two separate but consecutive statements. This portion of the guidance will be effective for us beginning July 1, 2012 and will require financial statement presentation changes only. The new guidance also required entities to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement in which net income is presented and the statement in which other comprehensive income is presented. However, in December 2011, the FASB issued guidance which indefinitely defers the guidance related to the presentation of reclassification adjustments.
Note 3 – INTANGIBLE ASSETS (RESTATED)
As of June 30, 2012 and 2011, intangible assets consisted of the following:
|
|
|
2012
|
|
|
2011
|
|
|
Moneytech and mPayments software
|
|
$
|
5,553,260
|
|
|
$
|
5,066,481
|
|
|
Accumulated amortization
|
|
|
(2,085,388
|
)
|
|
|
(1,697,876
|
)
|
|
|
|
$
|
3,467,872
|
|
|
$
|
3,368,605
|
|
The intangible assets are amortized over 10-30 years. Amortization expense of $445,874 and $377,684 was included in cost of revenue for years ended June 30, 2012 and 2011, respectively.
Amortization for the Company’s intangible assets over the next five fiscal years from June 30, 2012 is estimated to be:
Years ending
|
June 30, 2013
|
|
$
|
467,765
|
|
|
June 30, 2014
|
|
|
467,765
|
|
|
June 30, 2015
|
|
|
467,765
|
|
|
June 30, 2016
|
|
|
467,765
|
|
|
June 30, 2017
|
|
|
467,765
|
|
|
Thereafter
|
|
|
1,129,047
|
|
|
Total
|
|
$
|
3,467,872
|
|
Note 4 - TRADE RECEIVABLES (RESTATED)
Trade receivables consist principally of accounts receivable and trade financing and other financial services to small to medium sized businesses and individuals, principally in Australia. Trade receivables are recorded at the invoiced amount and net of allowances for doubtful accounts. Trade receivables bear interest. The allowance for doubtful accounts represents management’s estimate of the amount of probable credit losses in existing accounts receivable, as determined from a review of past due balances and other specific account data. Account balances are written off against the allowance when management determines the receivable is uncollectible.
Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that the consolidated entity or parent entity will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization and default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.
All trade receivables must be paid within 122 days. Trade receivables not paid in full by this time are considered overdue and once 30 days past due are considered delinquent.
As of June 30, 2012 and 2011, other receivable are comprised of the following:
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
Trade receivable
|
|
$
|
27,328,853
|
|
|
$
|
20,409,036
|
|
|
Allowance for bad debt
|
|
|
(751,563
|
)
|
|
|
(607,961
|
)
|
|
Total receivable
|
|
$
|
26,577,290
|
|
|
$
|
19,801,075
|
|
Note 5 – OTHER ASSETS
As of June 30, 2012 and 2011, other assets are comprised of the following:
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
Government R&D receivable
|
|
$
|
602,834
|
|
|
$
|
317,850
|
|
|
Prepaid and other assets
|
|
|
627,769
|
|
|
|
80,380
|
|
|
Total other assets
|
|
$
|
1,230,603
|
|
|
$
|
398,230
|
|
Note 6 – TRADE AND OTHER PAYABLE
As of June 30, 2012 and 2011, trade and other payable are comprised of the following:
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
Trade payable
|
|
$
|
6,337,545
|
|
|
$
|
3,310,493
|
|
|
Employee benefits
|
|
|
55,959
|
|
|
|
81,310
|
|
|
Other
|
|
|
204,242
|
|
|
|
182,706
|
|
|
Total payable
|
|
$
|
6,597,746
|
|
|
$
|
3,574,509
|
|
Note 7 –LOANS (RESTATED)
|
Current:
|
|
2012
|
|
|
2011
|
|
|
Wholesale loan facility
|
|
$
|
24,688,865
|
|
|
$
|
17,792,207
|
|
|
Cash reserve
|
|
|
703,003
|
|
|
|
203,424
|
|
|
|
|
$
|
25,391,868
|
|
|
$
|
17,995,631
|
|
Wholesale loan Facility
The Company has a secured bank Senior Debt Finance Facility with a bank in Sydney Australia for up to AUD $25,000,000 for the company to use. The Senior Debt Finance Facility is secured mainly by their trade receivables. Interest rate charges at the bank reserve rate plus margin from the bank. The agreement is currently set to expire on December 31, 2013 that can be renewed annually in September.
Cash Reserve
The Company is required to maintain certain cash reserves with its senior debt provider in accordance with the Receivables Purchase Agreement (RPA) between the parties. The Required Cash Reserve amount may be provided by the Company or its customers and is held in a ‘Cash Reserve Account’ with its senior debt provider in accordance with the RPA terms and conditions. The Required Cash Reserve balance is adjusted based on the RPA and the total facility limit provided to the Company by the senior debt.
|
Non Current:
|
|
2012
|
|
|
2011
|
|
|
Convertible loan
|
|
|
50,795
|
|
|
|
2,092,513
|
|
|
Shareholders loans
|
|
|
167,779
|
|
|
|
174,979
|
|
|
|
|
$
|
218,574
|
|
|
$
|
2,267,492
|
|
Convertible Loan
20,405,000 shares of common stock were issued for AUD$1,925,000 of $1 par value RPS during the fiscal year ended June 30, 2012.
Shareholders Loans
The Company had a convertible loan balance for AUD $50,000 with one shareholder. The Company has the right to retire the loan prior to September 30, 2014, through the issuance of 530,000 shares of its common stock.
The Company has an accrued interest amount payable to a shareholder in the amount of AUD$165,153 as of June 30, 2012 and 2011. The amount is due by July 31, 2013. There is no interest charged on the balance.
The shareholder also had an option to purchase 37,500,000 shares of common stock which expired on September 30, 2012.
Note 8 –
INCOME TAXES (RESTATED)
The following is the income tax expense reflected in the Statement of Operations for the years ended June 30, 2012 and 2011:
|
INCOME TAX EXPENSE
|
|
FOR THE YEAR ENDED
|
|
|
|
|
2012
|
|
|
2011
|
|
|
Income tax expense - current
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Income tax expense - deferred
|
|
|
179,647
|
|
|
|
125,142
|
|
|
Total
|
|
$
|
179,647
|
|
|
$
|
125,142
|
|
The following are the components of income before income tax reflected in the Statement of Operations for the years ended June 30, 2012 and 2011:
|
COMPONENTS OF INCOME BEFORE INCOME TAX
|
|
FOR THE YEAR ENDED
|
|
|
|
|
2012
|
|
|
2011
|
|
|
Income from Australian operations
|
|
$
|
257,586
|
|
|
$
|
128,231
|
|
|
Income tax
|
|
$
|
179,647
|
|
|
$
|
125,142
|
|
|
Effective tax rate
|
|
|
70
|
%
|
|
|
97
|
%
|
The Company did not have a United States tax paying entity during the years ended June 30, 2012 and 2011.
The following is a reconciliation of the provision for income taxes at the US federal income tax rate to the income taxes reflected in the Statement of Operations for the years ended June 30, 2012 and 2011:
|
|
|
FOR THE YEAR ENDED
|
|
|
|
|
2012
|
|
|
2011
|
|
|
US statutory rates
|
|
|
34
|
%
|
|
|
34
|
%
|
|
Tax rate difference
|
|
|
(4
|
)%
|
|
|
(4
|
)%
|
|
Research and development
|
|
|
40
|
%
|
|
|
68
|
%
|
|
Other expenses (benefits)
|
|
|
-
|
%
|
|
|
(1
|
)%
|
|
Tax expenses at actual rate
|
|
|
70
|
%
|
|
|
97
|
%
|
The following are the components of deferred tax reflected in the Statement of Operations for the years ended and Balance Sheet as at June 30, 2012 and 2011:
|
COMPONENTS OF DEFERRED TAX EXPENSE
|
|
FOR THE YEAR ENDED
|
|
|
|
|
2012
|
|
|
2011
|
|
|
Tax losses carried forward
|
|
$
|
242,351
|
|
|
$
|
115,166
|
|
|
Doubtful debts reserve
|
|
|
(51,403
|
)
|
|
|
9,921
|
|
|
Accruals
|
|
|
(11,301
|
)
|
|
|
55
|
|
|
|
|
|
179,647
|
|
|
|
125,142
|
|
|
COMPONENTS OF DEFERRED TAX ASSET
|
|
|
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
|
Tax losses carried forward
|
|
$
|
2,116,283
|
|
|
$
|
2,455,845
|
|
|
Doubtful debts reserve
|
|
|
225,469
|
|
|
|
182,389
|
|
|
Accruals
|
|
|
17,187
|
|
|
|
6,326
|
|
|
|
|
|
2,358,939
|
|
|
|
2,644,560
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets - current
|
|
$
|
317,850
|
|
|
$
|
304,770
|
|
|
Deferred tax assets - non current
|
|
|
2,041,089
|
|
|
|
2,339,790
|
|
|
|
|
|
2,358,939
|
|
|
|
2,644,560
|
|
Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the ability to recover the deferred tax assets within the jurisdiction from which they arise, the Company considered all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company began with historical results adjusted for changes in accounting policies and incorporates assumptions including the amount of future pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimate the Company are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, the Company consider three years of cumulative operating income (loss).
As of June 30, 2012, Moneytech had approximately $7,054,277 in net operating loss (“NOL”) carry forward available to offset future taxable income in Australia. The NOLs can be carried forward without expiration in Australia. Management believes that all NOLs will be utilized in the near future and therefore no allowance was made.
Note 9 – RELATED PARTY TRANSACTIONS
As of June 30, 2012 and 2011, the Company paid a company controlled by Hugh Evans for consulting services in the amount of $201,299 and $163,219 respectively.
Note 10- COMMITMENTS
The Company leases its office under a renewable operating lease expiring on August 31, 2014. The monthly rent is $10,458. For 2012 and 2011, the rental expense was $144,832 and $173,998, respectively.
Future minimum rental payments required under operating leases as of June 30, 2012 are as follows by fiscal years ended June 30:
|
2013
|
|
$
|
129,543
|
|
|
2014
|
|
|
151,134
|
|
|
Total
|
|
$
|
280,677
|
|
Note 11 –
SUBSEQUENT EVENTS
The Company and Wiki Group, Inc. signed a non-binding Letter of Intent to be acquired by Wiki Group, Inc. on December 14, 2012.
Management has evaluated events subsequent to June 30, 2012 through February 14, 2013 for transactions and other events that may require adjustment of and/or disclosure in such financial statements.
MONEYTECH LIMITED AND SUBSIDIARIES
INTERIM FINANCIAL STATEMENTS
MARCH 31, 2013
(UNAUDITED)
(RESTATED)
INDEX TO UNAUDITED FINANCIAL STATEMENTS
|
Condensed Consolidated Balance Sheet (Restated)
|
F2-3
|
|
|
|
|
Condensed Consolidated Statement of Operations and Comprehensive (Loss) Income (Restated)
|
F2-4
|
|
|
|
|
Condensed Consolidated Statement of Stockholders’ Equity (Restated)
|
F2-5
|
|
|
|
|
Condensed Consolidated Statement of Cash Flows (Restated)
|
F2-6
|
|
|
|
Notes to Condensed Consolidated Financial Statements
|
F2-7 to F2- 17
|
|
MONEYTECH LIMITED AND SUBSIDIARIES
|
|
CONDENSED CONSOLIDATED BALANCE SHEET
|
|
AS AT MARCH 31, 2013
|
|
(UNAUDITED)
|
|
(RESTATED)
|
|
ASSETS
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
5,635,373
|
|
|
Trade receivables
|
|
|
31,396,498
|
|
|
Inventories
|
|
|
261,632
|
|
|
Deferred tax assets
|
|
|
416,640
|
|
|
Other assets
|
|
|
1,449,119
|
|
|
TOTAL CURRENT ASSETS
|
|
|
39,159,262
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
Intangible assets
|
|
|
3,803,366
|
|
|
Deferred tax assets
|
|
|
1,760,852
|
|
|
Property, plant and equipment
|
|
|
692,916
|
|
|
TOTAL NON-CURRENT ASSETS
|
|
|
6,257,134
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
45,416,396
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
Trade and other payables
|
|
$
|
4,113,146
|
|
|
Wholesale loan facility
|
|
|
29,724,410
|
|
|
Cash reserve
|
|
|
3,186,529
|
|
|
TOTAL CURRENT LIABILITIES
|
|
|
37,024,085
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
Convertible Loan
|
|
|
52,080
|
|
|
Shareholder loans
|
|
|
57,341
|
|
|
TOTAL NON-CURRENT LIABILITIES
|
|
|
109,421
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
37,133,506
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
Common Stock - no par value; 111,676,854 shares issued and outstanding
|
|
|
15,169,200
|
|
|
Other accumulated comprehensive gain (loss)
|
|
|
(52,570
|
)
|
|
Accumulated Deficit
|
|
|
(6,833,740
|
)
|
|
TOTAL EQUITY
|
|
|
8,282,890
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
45,416,396
|
|
The accompanying notes are an integral part of these financial statements
|
MONEYTECH LIMITED AND SUBSIDIARIES
|
|
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND
|
|
COMPREHENSIVE (LOSS) INCOME
|
|
FOR THE NINE MONTHS ENDED MARCH 31, 2013 AND 2012
|
|
(UNAUDITED)
|
|
(RESTATED)
|
|
|
|
March 31,
|
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
3,673,405
|
|
|
$
|
2,895,766
|
|
|
Cost of revenue
|
|
|
2,196,874
|
|
|
|
1,918,343
|
|
|
Gross profit
|
|
|
1,476,531
|
|
|
|
977,423
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
Payroll expenses
|
|
|
500,169
|
|
|
|
448,783
|
|
|
Research and development expense
|
|
|
358,207
|
|
|
|
139,245
|
|
|
Bad debt expenses
|
|
|
114,956
|
|
|
|
93,560
|
|
|
Occupancy expenses
|
|
|
182,691
|
|
|
|
156,000
|
|
|
Depreciation and amortization expenses
|
|
|
53,620
|
|
|
|
23,645
|
|
|
General and administration expenses
|
|
|
276,757
|
|
|
|
119,839
|
|
|
Loss from operations
|
|
|
(9,869
|
)
|
|
|
(3,649
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Other (Income) Expense
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
82,818
|
|
|
|
79,537
|
|
|
Research and development grant
|
|
|
356,404
|
|
|
|
204,029
|
|
|
Finance costs
|
|
|
(140
|
)
|
|
|
(22,972
|
)
|
|
Other expense
|
|
|
(11,288
|
)
|
|
|
(9,218
|
)
|
|
Total Other Income
|
|
|
427,794
|
|
|
|
251,376
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before income tax
|
|
|
417,925
|
|
|
|
247,727
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
240,428
|
|
|
|
147,967
|
|
|
|
|
|
|
|
|
|
|
|
|
Net profit
|
|
|
177,497
|
|
|
|
99,760
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
Foreign currency translation
|
|
|
200,488
|
|
|
|
(559,536
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive Income (loss)
|
|
$
|
377,985
|
|
|
$
|
(459,776
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share from net loss
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
0.002
|
|
|
|
0.001
|
|
|
Diluted
|
|
|
0.002
|
|
|
|
0.001
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
111,676,854
|
|
|
|
91,271,854
|
|
|
Diluted
|
|
|
112,206,854
|
|
|
|
149,706,854
|
|
The accompanying notes are an integral part of these financial statements
|
MONEYTECH LIMITED AND SUBSIDIARIES
|
|
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
|
|
FOR THE NINE MONTHS ENDED MARCH 31, 2013
|
|
(UNAUDITED)
|
|
(RESTATED)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
Total
|
|
|
|
|
Common Stock
|
|
|
Comprehensive
|
|
|
Accumulated
|
|
|
Stockholders'
|
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Gain (Loss)
|
|
|
Deficit
|
|
|
Equity
|
|
|
Balance June 30, 2012 (Restated)
|
|
|
111,676,854
|
|
|
$
|
15,169,200
|
|
|
$
|
(253,058
|
)
|
|
$
|
(7,011,237
|
)
|
|
$
|
7,904,905
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments
|
|
|
|
|
|
|
|
|
|
|
200,488
|
|
|
|
|
|
|
|
200,488
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the nine months ended March 31, 2013
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
177,497
|
|
|
|
177,497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance March 31, 2013 (Restated)
|
|
|
111,676,854
|
|
|
$
|
15,169,200
|
|
|
$
|
(52,570
|
)
|
|
$
|
(6,833,740
|
)
|
|
$
|
8,282,890
|
|
The accompanying notes are an integral part of these financial statements
|
MONEYTECH LIMITED AND SUBSIDIARIES
|
|
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
|
|
FOR THE NINE MONTHS ENDED MARCH 31, 2013 AND 2012
|
|
(UNAUDITED)
|
|
(RESTATED)
|
|
|
|
March 31,
|
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
(Restated)
|
|
|
(Restated)
|
|
|
Net profit
|
|
$
|
177,497
|
|
|
$
|
99,760
|
|
|
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation & amortization
|
|
|
525,538
|
|
|
|
413,534
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) / decrease in assets:
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
(4,134,909
|
)
|
|
|
(162,234
|
)
|
|
Inventories
|
|
|
(132,286
|
)
|
|
|
8,208
|
|
|
Deferred tax assets
|
|
|
240,420
|
|
|
|
147,967
|
|
|
Other receivable
|
|
|
51,930
|
|
|
|
-
|
|
|
Other assets
|
|
|
(186,844
|
)
|
|
|
(289,077
|
)
|
|
Increase/ (decrease) in current liabilities:
|
|
|
|
|
|
|
|
|
|
Trade payables
|
|
|
(2,643,873
|
)
|
|
|
439,995
|
|
|
Net cash (used in) provided by operating activities
|
|
|
(6,102,527
|
)
|
|
|
658,153
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment
|
|
|
(651,773
|
)
|
|
|
(577,051
|
)
|
|
Purchase of subsidiary
|
|
|
(111,650
|
)
|
|
|
-
|
|
|
Net cash used in investing activities
|
|
|
(763,423
|
)
|
|
|
(577,051
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
Wholesale loan facility
|
|
|
4,398,267
|
|
|
|
(66,728
|
)
|
|
Capital Reserve
|
|
|
2,458,640
|
|
|
|
336,840
|
|
|
Repayment of borrowings
|
|
|
(114,352
|
)
|
|
|
-
|
|
|
Net cash provided by financing activities
|
|
|
6,742,555
|
|
|
|
270,112
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
141,743
|
|
|
|
(260,730
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
18,348
|
|
|
|
90,484
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the beginning of the period
|
|
|
5,617,025
|
|
|
|
2,854,959
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the period
|
|
$
|
5,635,373
|
|
|
$
|
2,945,443
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES:
|
|
|
|
|
|
|
|
|
|
Cash paid during the year for:
|
|
|
|
|
|
|
|
|
|
Income tax payments
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Interest payments
|
|
$
|
1,410,596
|
|
|
$
|
1,209,087
|
|
The accompanying notes are an integral part of these financial statements
MONEYTECH LIMITED AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2013
(UNAUDITED)
Note 1 – BASIS OF PRESENTATION AND ORGANIZATION (RESTATED)
Moneytech Limited was incorporated under the laws of the Australia on September 9, 2003. Through its wholly owned subsidiaries, Moneytech Finance Pty Ltd and Moneytech Services Pty Ltd, it offers working capital, trade and debtor finance solutions, to small and medium sized businesses. When used in these notes, the terms "Company," "we," "our," or "us" mean Moneytech Limited and its Subsidiaries. The Company delivers its product offerings through ‘The Moneytech Exchange’, which is a real-time core banking platform, developed in-house and which continues to be upgraded with the support of the Australian Federal Government’s Research and Development program. The Moneytech Exchange serves as the backbone of the Company’s business by providing internet style banking access to the Company’s customers and back-office systems to the Company’s staff.
Restatements
Subsequent to the issuance of the Company's financial statements for the nine months ended March 31, 2013, the Company determined that certain transactions and presentation in the financial statements had not been accounted for properly in the Company's financial statements. Specifically, research and development grant income was improperly reflected in revenue, the amount of the value available on the card for the consumer in certain gift card and similar programs had been improperly recognized in revenue and cost of revenues and amortization relating to our system assets was improperly reflected in Operating expenses. Certain research and development expenses that were expensed should have been capitalized and the Balance Sheet of Mpay was improperly classified. Also, the provision for income tax and deferred tax was incorrectly calculated. As a result of these errors, the Company decided to restate the consolidated balance sheet as of March 31, 2013, consolidated statement of operations and comprehensive (loss) income, consolidated statement of stockholders’ equity, consolidated statement of cash flows for the nine months ended March 31, 2013 and 2012. The Company also used this opportunity to realign operating expenses and cost of revenue to conform to future financials filed.
The effects of these restatements and reclassifications are as follows:
|
|
|
Reported
|
|
Adjustments
|
|
Restated
|
|
|
|
|
March 31, 2013
|
|
March 31, 2013
|
|
March 31, 2013
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
5,583,748
|
|
|
|
51,625
|
|
|
|
5,635,373
|
|
|
Trade receivables, net
|
|
|
31,395,931
|
|
|
|
567
|
|
|
|
31,396,498
|
|
|
Inventories
|
|
|
245,286
|
|
|
|
16,346
|
|
|
|
261,632
|
|
|
Deferred tax assets
|
|
|
416,640
|
|
|
|
-
|
|
|
|
416,640
|
|
|
Other assets
|
|
|
1,492,248
|
|
|
|
(43,129
|
)
|
|
|
1,449,119
|
|
|
TOTAL CURRENT ASSETS
|
|
|
39,133,853
|
|
|
|
25,409
|
|
|
|
39,159,262
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS
|
|
|
Intangible assets
|
|
|
3,289,789
|
|
|
|
513,577
|
|
|
|
3,803,366
|
|
|
Deferred tax asset
|
|
|
1,753,190
|
|
|
|
7,662
|
|
|
|
1,760,852
|
|
|
Property, plant and equipment
|
|
|
712,858
|
|
|
|
(19,942
|
)
|
|
|
692,916
|
|
|
TOTAL NON-CURRENT ASSETS
|
|
|
5,755,837
|
|
|
|
501,297
|
|
|
|
6,257,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS
|
|
$
|
44,889,690
|
|
|
$
|
526,706
|
|
|
$
|
45,416,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
Trade and other payables
|
|
|
4,034,566
|
|
|
|
78,580
|
|
|
|
4,113,146
|
|
|
Wholesale loan facility
|
|
|
29,724,410
|
|
|
|
-
|
|
|
|
29,724,410
|
|
|
Provisions
|
|
|
32,399
|
|
|
|
(32,399
|
)
|
|
|
-
|
|
|
Cash reserve
|
|
|
-
|
|
|
|
3,186,529
|
|
|
|
3,186,529
|
|
|
TOTAL CURRENT LIABILITIES
|
|
|
33,791,375
|
|
|
|
3,232,710
|
|
|
|
37,024,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES
|
|
|
Cash reserve
|
|
|
3,186,529
|
|
|
|
(3,186,529
|
)
|
|
|
-
|
|
|
Convertible loan
|
|
|
52,080
|
|
|
|
-
|
|
|
|
52,080
|
|
|
Shareholders loans
|
|
|
57,341
|
|
|
|
-
|
|
|
|
57,341
|
|
|
TOTAL NON-CURRENT LIABILITIES
|
|
|
3,295,950
|
|
|
|
(3,186,529
|
)
|
|
|
109,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES
|
|
|
37,087,325
|
|
|
|
46,181
|
|
|
|
37,133,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
15,169,200
|
|
|
|
-
|
|
|
|
15,169,200
|
|
|
Other accumulated comprehensive gain (loss)
|
|
|
(42,633
|
)
|
|
|
(9,937
|
)
|
|
|
(52,570
|
)
|
|
Accumulated deficit
|
|
|
(7,324,201
|
)
|
|
|
490,461
|
|
|
|
(6,833,740
|
)
|
|
TOTAL EQUITY
|
|
|
7,802,365
|
|
|
|
480,524
|
|
|
|
8,282,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
44,889,690
|
|
|
$
|
526,705
|
|
|
$
|
45,416,396
|
|
|
|
|
Reported
|
|
|
Adjustments
|
|
|
Restated
|
|
|
Reported
|
|
|
Adjustments
|
|
|
Restated
|
|
|
|
|
March 31, 2012
|
|
|
March 31, 2012
|
|
|
March 31, 2012
|
|
|
March 31, 2013
|
|
|
March 31, 2013
|
|
|
March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
5,779,737
|
|
|
$
|
(2,883,971
|
)
|
|
$
|
2,895,766
|
|
|
$
|
4,029,295
|
|
|
$
|
(355,890
|
)
|
|
$
|
3,673,405
|
|
|
Cost of revenue
|
|
|
4,208,396
|
|
|
|
(2,290,053
|
)
|
|
|
1,918,343
|
|
|
|
1,735,683
|
|
|
|
461,191
|
|
|
|
2,196,874
|
|
|
Gross profit
|
|
|
1,571,341
|
|
|
|
(593,918
|
)
|
|
|
977,423
|
|
|
|
2,293,612
|
|
|
|
(817,081
|
)
|
|
|
1,476,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation expenses
|
|
|
700,143
|
|
|
|
(251,360
|
)
|
|
|
448,783
|
|
|
|
897,449
|
|
|
|
(397,280
|
)
|
|
|
500,169
|
|
|
Research and development expense
|
|
|
|
|
|
|
139,245
|
|
|
|
139,245
|
|
|
|
-
|
|
|
|
358,207
|
|
|
|
358,207
|
|
|
Bad debt expenses
|
|
|
105,831
|
|
|
|
(12,271
|
)
|
|
|
93,560
|
|
|
|
171,055
|
|
|
|
(56,099
|
)
|
|
|
114,956
|
|
|
Occupancy expenses
|
|
|
179,176
|
|
|
|
(23,176
|
)
|
|
|
156,000
|
|
|
|
199,745
|
|
|
|
(17,054
|
)
|
|
|
182,691
|
|
|
Depreciation expense
|
|
|
413,534
|
|
|
|
(389,889
|
)
|
|
|
23,645
|
|
|
|
450,678
|
|
|
|
(397,058
|
)
|
|
|
53,620
|
|
|
General and administration expenses
|
|
|
475,929
|
|
|
|
(356,090
|
)
|
|
|
119,839
|
|
|
|
764,872
|
|
|
|
(488,115
|
)
|
|
|
276,757
|
|
|
Total operating expenses
|
|
|
1,874,613
|
|
|
|
(893,541
|
)
|
|
|
981,072
|
|
|
|
2,483,799
|
|
|
|
(997,399
|
)
|
|
|
1,486,400
|
|
|
(Loss) Income from operations
|
|
|
(303,272
|
)
|
|
|
299,623
|
|
|
|
(3,649
|
)
|
|
|
(190,187
|
)
|
|
|
180,318
|
|
|
|
(9,869
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income / (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
79,537
|
|
|
|
-
|
|
|
|
79,537
|
|
|
|
91,941
|
|
|
|
(9,123
|
)
|
|
|
82,818
|
|
|
Research and development grant
|
|
|
|
|
|
|
204,029
|
|
|
|
204,029
|
|
|
|
-
|
|
|
|
356,404
|
|
|
|
356,404
|
|
|
Other (expense) income
|
|
|
12,271
|
|
|
|
(21,489
|
)
|
|
|
(9,218
|
)
|
|
|
56,099
|
|
|
|
(67,387
|
)
|
|
|
(11,288
|
)
|
|
Finance costs
|
|
|
(22,972
|
)
|
|
|
-
|
|
|
|
(22,972
|
)
|
|
|
(140
|
)
|
|
|
-
|
|
|
|
(140
|
)
|
|
Total other income
|
|
|
68,836
|
|
|
|
182,540
|
|
|
|
251,376
|
|
|
|
147,900
|
|
|
|
279,894
|
|
|
|
427,794
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from operations before income taxes
|
|
|
(234,436
|
)
|
|
|
482,163
|
|
|
|
247,727
|
|
|
|
(42,287
|
)
|
|
|
460,212
|
|
|
|
417,925
|
|
|
Income tax expense
|
|
|
9,217
|
|
|
|
138,750
|
|
|
|
147,967
|
|
|
|
376,061
|
|
|
|
(135,633
|
)
|
|
|
240,428
|
|
|
Net (loss) income
|
|
|
(243,653
|
)
|
|
|
343,413
|
|
|
|
99,760
|
|
|
|
(418,348
|
)
|
|
|
595,845
|
|
|
|
177,497
|
|
|
Other comprehensive income
|
|
|
(553,674
|
)
|
|
|
(5,862
|
)
|
|
|
(559,536
|
)
|
|
|
181,656
|
|
|
|
18,832
|
|
|
|
200,488
|
|
|
Comprehensive (loss) income
|
|
$
|
(797,327
|
)
|
|
$
|
337,551
|
|
|
$
|
(459,776
|
)
|
|
$
|
(236,692
|
)
|
|
$
|
614,677
|
|
|
$
|
377,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share:
|
|
|
Basic
|
|
$
|
0.003
|
|
|
$
|
(0.002
|
)
|
|
$
|
0.001
|
|
|
$
|
(0.004
|
)
|
|
$
|
0.006
|
|
|
$
|
0.002
|
|
|
Diluted
|
|
$
|
0.002
|
|
|
$
|
(0.001
|
)
|
|
$
|
0.001
|
|
|
$
|
(0.004
|
)
|
|
$
|
0.006
|
|
|
$
|
0.002
|
|
STATEMENTS OF CASH FLOWS
|
|
|
Reported
|
|
Adjustments
|
|
Restated
|
|
Reported
|
|
Adjustments
|
|
Restated
|
|
|
|
|
March 31, 2012
|
|
March 31, 2012
|
|
March 31, 2012
|
|
March 31, 2013
|
|
March 31, 2013
|
|
March 31, 2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(243,653
|
)
|
|
$
|
343,413
|
|
|
$
|
99,760
|
|
|
$
|
(418,348
|
)
|
|
$
|
595,844
|
|
|
$
|
177,497
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net loss to net cash
used in operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation & amortization
|
|
|
413,534
|
|
|
|
-
|
|
|
|
413,534
|
|
|
|
450,678
|
|
|
|
74,860
|
|
|
|
525,538
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Increase) / decrease in assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade receivables
|
|
|
(162,235
|
)
|
|
|
1
|
|
|
|
(162,234
|
)
|
|
|
(4,187,641
|
)
|
|
|
52,732
|
|
|
|
(4,134,909
|
)
|
|
Inventories
|
|
|
8,208
|
|
|
|
-
|
|
|
|
8,208
|
|
|
|
(115,986
|
)
|
|
|
(16,300
|
)
|
|
|
(132,286
|
)
|
|
Deferred tax assets
|
|
|
-
|
|
|
|
147,967
|
|
|
|
147,967
|
|
|
|
364,774
|
|
|
|
(124,354
|
)
|
|
|
240,420
|
|
|
Other assets
|
|
|
(289,076
|
)
|
|
|
(1
|
)
|
|
|
(289,077
|
)
|
|
|
(176,919
|
)
|
|
|
42,005
|
|
|
|
(134,914
|
)
|
|
Increase/ (decrease) in current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade payables
|
|
|
439,995
|
|
|
|
-
|
|
|
|
439,995
|
|
|
|
(2,689,921
|
)
|
|
|
46,048
|
|
|
|
(2,643,873
|
)
|
|
Net cash used in operating activities
|
|
|
166,773
|
|
|
|
491,380
|
|
|
|
658,153
|
|
|
|
(6,773,363
|
)
|
|
|
670,836
|
|
|
|
(6,102,527
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
Purchase of property, plant and equipment
|
|
(85,671
|
)
|
|
|
(491,380
|
)
|
|
|
(577,051
|
)
|
|
|
(31,412
|
)
|
|
|
(620,361
|
)
|
|
|
(651,773
|
)
|
|
Purchase of subsidiary
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
(111,650
|
)
|
|
|
-
|
|
|
|
(111,650
|
)
|
|
Net cash used in investing activities
|
|
|
(85,671
|
)
|
|
|
(491,380
|
)
|
|
|
(577,051
|
)
|
|
|
(143,062
|
)
|
|
|
(620,361
|
)
|
|
|
(763,423
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
270,112
|
|
|
|
-
|
|
|
|
270,112
|
|
|
|
6,742,555
|
|
|
|
-
|
|
|
|
6,742,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash (used in) operations
|
|
|
351,214
|
|
|
|
-
|
|
|
|
351,214
|
|
|
|
(173,870
|
)
|
|
|
50,475
|
|
|
|
(123,395
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(260,730
|
)
|
|
|
-
|
|
|
|
(260,730
|
)
|
|
|
141,593
|
|
|
|
150
|
|
|
|
141,743
|
|
|
Net increase in cash and cash equivalents
|
|
|
90,484
|
|
|
|
-
|
|
|
|
90,484
|
|
|
|
(32,277
|
)
|
|
|
50,625
|
|
|
|
18,348
|
|
|
Cash and cash equivalents at the beginning of the period
|
|
|
2,854,959
|
|
|
|
-
|
|
|
|
2,854,959
|
|
|
|
5,617,025
|
|
|
|
-
|
|
|
|
5,617,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at the end of the period
|
|
|
2,945,443
|
|
|
|
-
|
|
|
|
2,945,443
|
|
|
|
5,584,748
|
|
|
|
50,625
|
|
|
|
5,635,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURES:
|
|
|
Cash paid during the year for:
|
|
|
Income tax payments
|
|
$
|
9,217
|
|
|
$
|
(9,217
|
)
|
|
$
|
-
|
|
|
$
|
10,868
|
|
|
$
|
(10,868
|
)
|
|
$
|
-
|
|
|
Interest payments
|
|
$
|
22,972
|
|
|
$
|
1,186,115
|
|
|
$
|
1,209,087
|
|
|
$
|
140
|
|
|
$
|
1,410,456
|
|
|
$
|
1,410,596
|
|
Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (RESTATED)
Basis of Presentation
The accompanying financial statements were prepared in conformity with generally accepted accounting principles in the United States of America (“US GAAP”).
Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to U.S. GAAP rules and regulations for presentation of interim financial information. Therefore, the unaudited condensed interim financial statements should be read in conjunction with the audited annual financial statements for the years ended June 30, 2012 and 2011. Current and future financial statements may not be directly comparable to the Company’s historical financial statements. Accordingly, the results of operations for the interim period are not necessarily indicative of the results to be expected for any other interim period or for the full year.
Principles of Consolidation
The consolidated financial statements include the accounts of Moneytech Limited and its wholly owned subsidiaries Moneytech, Moneytech Finance Pty Ltd, mPayments Pty Ltd., Moneytech POS Pty Ltd., and Moneytech Services Pty Ltd, , collectively referred to as the Company. All material intercompany accounts, transactions and profits were eliminated in consolidation.
Equity Investments
The Company uses the equity method of accounting for investments when the percentage of ownership of the investment is between 20% and 50%. The Company includes the proportionate share of the profit or loss as part of the carrying value of the investment
.
Liquidity Matters
Based upon its current projection of revenue, management believes that its current cash position and available financing provide sufficient resources and operating flexibility through at least the next twelve months. However, there can be no assurance that projected revenue growth and improvement in operating results will occur or that the Company will successfully implement its plans. In the event cash flow from operations is not sufficient, additional sources of financing will be required in order to maintain the Company’s current operations. Whereas management believes it will have access to other financing sources, no assurance can be given that such additional sources of financing will be available on acceptable terms, on a timely basis or at all.
Foreign Currency Translation and Comprehensive Income (Loss)
The accounts of Moneytech Limited and subsidiaries were maintained, and its financial statements were expressed, in AUD. Such financial statements were translated into USD with the AUD as the functional currency. All assets and liabilities were translated at the exchange rate at the balance sheet date, stockholder’s equity is translated at the historical rates and income statement items are translated at the average exchange rate for the period. Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of operations. The resulting translation adjustments are reported under other comprehensive income as a component of shareholders’ equity. There were no significant fluctuations in the exchange rate for the conversion of AUD to USD after the balance sheet date.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include collectability of accounts receivable, accounts payable, sales returns and recoverability of long-term assets.
Revenue Recognition
Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. Revenue generally is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities.
Cost of Revenue
Cost of revenue includes; programs licensed; operating costs including costs of funds and related product support service centers to drive traffic to our websites, costs incurred to support and maintain products and services, including inventory valuation adjustments; costs associated with the delivery of consulting services; and the amortization of capitalized intangible software costs. Capitalized intangible software costs are amortized over the estimated lives of the products.
Research and Development
Research and development expenses include payroll, employee benefits, and other headcount-related expenses associated with product development. Research and development expenses also include third-party development and programming costs, localization costs incurred to translate software for international markets, and the amortization of purchased software code and services content. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached, which for our software products, is generally shortly before the products are put into service. Once technological feasibility is reached, such costs are capitalized and amortized to cost of revenue over the estimated lives of the products.
Certain research and development costs are available for reimbursement by the Australian government. Research and development expense is included as an operating expense and research and development grant income is reported as other income.
Income Taxes
The Company utilizes FASB Accounting Standards Codification (ASC) Topic 740, Income Taxes, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that were included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
The Company follows FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (codified in FASB ASC Topic 740). When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statements of income.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base, most of which are in Australia. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.
Risks and Uncertainties
The Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.
Contingencies
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.
If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.
Cash and Equivalents
Cash and equivalents include cash in hand and cash in demand deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. At March 31, 2013, the Company had $5,635,373 in cash, of which no deposits were covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.
Allowance for Doubtful Accounts
The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. The allowance for doubtful accounts was $595,112 at March 31, 2013.
Inventory
Inventories are valued at the lower of cost (determined on a weighted average basis) or market. Management compares the cost of inventories with the market value and allowance is made to write down inventories to market value, if lower. As of March 31, 2013, inventory only consisted of finished goods.
Property, Plant & Equipment
Property and equipment is stated at cost and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The estimated useful lives of our property and equipment are generally as follows: computer software developed or acquired for internal use, three to 10 years; computer equipment, two to three years; buildings and improvements, five to 15 years; leasehold improvements, two to 10 years; and furniture and equipment, one to five years. Land is not depreciated.
As of March 31, 2013 Property, Plant & Equipment consisted of the following
:
|
Plant and equipment
|
|
$
|
1,762,667
|
|
|
Accumulated depreciation
|
|
|
(1,069,750
|
)
|
|
|
|
$
|
692,916
|
|
For the nine months ended March 31, 2013 and 2012, depreciation expense consisted of the following:
|
|
|
March 31
|
|
|
|
|
2013
|
|
|
2012
|
|
|
Depreciation, operating
|
|
$
|
53,620
|
|
|
$
|
23,645
|
|
|
Depreciation, cost of revenue
|
|
|
82,443
|
|
|
|
78,127
|
|
|
Total depreciation expense
|
|
$
|
136,063
|
|
|
$
|
101,772
|
|
Fair Value of Financial Instruments
For certain of the Company’s financial instruments, including cash and equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:
Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.
As of March 31, 2013, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at fair value.
Earnings Per Share (EPS)
Basic EPS is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted EPS is computed similar to basic net income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if all the potential common shares, warrants and stock options had been issued and if the additional common shares were dilutive. Diluted EPS is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding options and the if-converted method for the outstanding convertible preferred shares. Under the treasury stock method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, convertible outstanding instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later).
The following table sets for the computation of basic and diluted earnings per share for period ended March 31, 2013 and 2012:
|
|
|
March 31
|
|
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
177,497
|
|
|
$
|
99,760
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares used in computing basic and diluted net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
111,676,854
|
|
|
|
91,271,854
|
|
|
Dilutive effect of convertible loan
|
|
|
530,000
|
|
|
|
58,435,000
|
|
|
Diluted
|
|
|
112,206,854
|
|
|
|
149,706,854
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share
|
|
|
|
|
|
|
|
|
|
Basic:
|
|
$
|
0.002
|
|
|
$
|
0.001
|
|
|
Diluted:
|
|
$
|
0.002
|
|
|
$
|
0.001
|
|
Intangible Assets
All of our intangible assets are subject to amortization and are amortized using the straight-line method over their estimated period of benefit, ranging from one to 10 years. We evaluate the recoverability of intangible assets periodically by taking into account events or circumstances that may warrant revised estimates of useful lives or that indicate the asset may be impaired.
Note 3 – OTHER ASSETS (RESTATED)
Other assets consist of the following as of March 31, 2013:
|
Research and development grant receivable
|
|
$
|
690,745
|
|
|
Insurance claim receivable
|
|
|
541,644
|
|
|
Other receivable
|
|
|
25,501
|
|
|
Prepaid expenses
|
|
|
152,731
|
|
|
Deposits
|
|
|
38,498
|
|
|
|
|
$
|
1,449,119
|
|
Note 4 – INTANGIBLE ASSETS (RESTATED):
Intangible assets consist of the following as of March 31, 2013:
|
Moneytech software
|
|
$
|
6,345,312
|
|
|
Accumulated amortization
|
|
|
(2,541,946
|
)
|
|
|
|
$
|
3,803,366
|
|
The intangible assets are amortized over 10-12 years. Amortization expense of $389,475 and $311,762 was included in cost of revenue for the period ended March 31, 2013 and 2012, respectively.
Note 5 –LOANS (RESTATED)
|
Current:
|
|
|
|
|
Wholesale loan facility
|
|
$
|
29,724,410
|
|
|
Cash reserve
|
|
|
3,186,529
|
|
|
|
|
$
|
32,910,939
|
|
Wholesale Loan Facility
The Company has a secured bank overdraft with a bank in Sydney Australia for up to AUD $25,000,000 for the company to use. The overdraft is secured mainly by their trade receivables. Interest rate charges at the bank reserve rate plus margin from the bank. The agreement is currently set to expire on December 31, 2013 that can be renewed annually in September.
Cash Reserve
The Company is required to maintain certain cash reserves with its senior debt provider in accordance with the Receivables Purchase Agreement (RPA) between the parties. The Required Cash Reserve amount may be provided by the Company or its customers and is held in a ‘Cash Reserve Account’ with its senior debt provider in accordance with the RPA terms and conditions. The Required Cash Reserve balance is adjusted based on the RPA and the total facility limit provided to the Company by the senior debt
.
|
Non Current:
|
|
|
|
|
Convertible loan
|
|
$
|
52,080
|
|
|
Shareholders loans
|
|
|
57,341
|
|
|
|
|
$
|
109,421
|
|
Convertible Loan
The Company had a convertible loan balance for AUD $50,000 with one shareholder. The Company has the right to retire the loan prior to September 30, 2014, through the issuance of 530,000 shares of its common stock.
Shareholders Loan
The Company has an accrued interest amount payable to a shareholder in the amount of AUD$57,341 as of March 31, 2013. The amount is due by July 31, 2013. There is no interest charged on the balance.
Note 6 – RELATED PARTY TRANSACTIONS (RESTATED)
The Company paid a company controlled by Hugh Evans for consulting services for the nine months ended March 31, 2013 and 2012 in the amount of $88,875 and $140,751 respectively
.
Note 7 –INCOME TAXES (RESTATED)
The following is the income tax expense reflected in the Statement of Operations for the nine months ended March 31, 2013 and 2012:
|
INCOME TAX EXPENSE
|
|
March 31
|
|
|
|
|
2013
|
|
|
2012
|
|
|
Income tax expense - current
|
|
$
|
-
|
|
|
$
|
-
|
|
|
Income tax expense - deferred
|
|
|
240,428
|
|
|
|
147,967
|
|
|
Total
|
|
$
|
240,428
|
|
|
$
|
147,967
|
|
The following are the components of income before income tax reflected in the Statement of Operations for the nine months ended March 31, 2013 and 2012:
|
COMPONENTS OF INCOME BEFORE INCOME TAX
|
|
March 31
|
|
|
|
|
2013
|
|
|
2012
|
|
|
Income from Australian operations
|
|
$
|
417,925
|
|
|
$
|
247,727
|
|
|
Income tax
|
|
$
|
240,428
|
|
|
$
|
147,967
|
|
|
Effective tax rate
|
|
|
57
|
%
|
|
|
60
|
%
|
The Company did not have a United States tax paying entity during the nine months ended March 31, 2013 and 2012.
The following is a reconciliation of the provision for income taxes at the US federal income tax rate to the income taxes reflected in the Statement of Operations for the nine months ended March 31, 2013 and 2012.
|
INCOME TAX RATE RECONCILIATION
|
|
March 31
|
|
|
|
|
2013
|
|
|
2012
|
|
|
US statutory rates
|
|
|
34
|
%
|
|
|
34
|
%
|
|
Tax rate difference
|
|
|
(4
|
)%
|
|
|
(4
|
)%
|
|
Research and development
|
|
|
27
|
%
|
|
|
30
|
%
|
|
Tax expenses at actual rate
|
|
|
57
|
%
|
|
|
60
|
%
|
The following are the components of deferred tax reflected in the Statement of Operations for the nine months ended and Balance Sheet as at March 31:
|
COMPONENTS OF DEFERRED TAX EXPENSE
|
|
March 31
|
|
|
|
|
2013
|
|
|
2012
|
|
|
Tax losses carried forward
|
|
$
|
185,120
|
|
|
$
|
116,558
|
|
|
Doubtful debts reserve
|
|
|
52,488
|
|
|
|
31,610
|
|
|
Accruals
|
|
|
2,820
|
|
|
|
(201
|
)
|
|
|
|
|
240,428
|
|
|
|
147,967
|
|
|
COMPONENTS OF DEFERRED TAX ASSET
|
|
March 31
|
|
|
|
|
|
2013
|
|
|
|
Tax losses carried forward
|
|
$
|
1,984,165
|
|
|
|
Doubtful debts reserve
|
|
|
178,534
|
|
|
|
Accruals
|
|
|
14,793
|
|
|
|
|
|
|
2,177,492
|
|
|
|
|
|
|
|
|
|
|
Deferred tax assets - current
|
|
$
|
416,640
|
|
|
|
Deferred tax assets - non current
|
|
|
1,760,852
|
|
|
|
|
|
|
2,177,492
|
|
|
Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the ability to recover the deferred tax assets within the jurisdiction from which they arise, the Company considered all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company began with historical results adjusted for changes in accounting policies and incorporates assumptions including the amount of future pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimate the Company are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, the Company consider three years of cumulative operating income (loss).
As of March 31, 2013, Moneytech had approximately $6,613,805 in net operating loss (“NOL”) carry forward available to offset future taxable income in Australia. The NOLs can be carried forward without expiration in Australia. Management believes that all NOLs will be utilized in the near future and therefore no allowance was made.
Note 8 – EQUITY INVESTMENT (RESTATED)
On January 16, 2013 the Company entered into an agreement whereby it received a 37.5% equity interest in 360 Market Pty. Limited (“360”) in exchange for allowing 360 to utilize certain license rights. There was no exchange of cash or debt for the transaction and it was accounted for on the historical cost basis with a $0 value. The investment is accounted for by the equity method since the Company obtained a 37.5% equity interest. Due to the continuous loss from inception through June 30, 2013 incurred by 360, the Company did not recognize any income or return from the investment as doing so would have created a negative carrying value in the investment account. The Company discontinued using the equity method rather than establish a negative balance. The investment retains a zero balance until subsequent investee profits eliminate all unrealized losses. In addition, 360 has had a negative equity position since inception of the investment thereby precluding any other disclosure regarding our underlying position in the net equity of 360.
Note 9 –SUBSEQUENT EVENTS
On May 30, 2013, the Company entered into a Share Exchange Agreement (the “Exchange Agreement”) by and among the Company, Source Financial, Inc., Marco Garibaldi (“Garibaldi”), Edward DeFeudis (“DeFeudis”) and Hugh Evans (“Evans”), pursuant to which the shareholders of Moneytech (the “Moneytech Shareholders”), will transfer to the Company all of the shares of Moneytech in exchange for the issuance of up to 5,300,000 shares of the Company’s common stock (the “Exchange Transaction”). Following the Exchange Transaction, Moneytech will be a wholly-owned subsidiary of the Source. The Exchange Agreement was finalized on June 30, 2013.
Management has evaluated events subsequent through September 12, 2013 for transactions and other events that may require adjustment of and/or disclosure in such financial statements.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements are provided to aid you in your analysis of the financial aspects of the acquisition of Moneytech Limited by the Company. The unaudited pro forma condensed combined income statements combine the operating statements of Source and Moneytech giving effect to the acquisition as if it had occurred at the beginning of each period presented. The pro forma condensed consolidated balance sheet is based on the assumption that the acquisition occurred March 31, 2013. These unaudited pro forma condensed combined financial statements should be read in conjunction with the financial statements of Moneytech and the related notes thereto, included elsewhere in this Report. Pro forma financial data are based on assumptions and reflect adjustments as reflected in the notes thereto, The unaudited pro forma information is not necessarily indicative of the results of operations that may have actually occurred had the transaction taken place on the dates noted, or the future financial position or operating results of the combined company.
|
SOURCE FINANCIAL, INC. AND SUBSIDIARIES
|
|
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
|
|
March 31, 2013
|
|
|
|
Moneytech
Limited
|
|
|
Source
Financial,
Inc.
|
|
|
Wiki-Sub
|
|
|
Combined
Historical
|
|
Proforma
Adjustments
|
|
|
Combined
Pro Forma
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
5,635,373
|
|
|
$
|
117,285
|
|
|
$
|
-
|
|
|
$
|
5,752,658
|
|
|
|
|
|
$
|
5,752,658
|
|
|
Trade and other receivables, net
|
|
|
31,396,498
|
|
|
|
-
|
|
|
|
-
|
|
|
|
31,396,498
|
|
|
|
|
|
|
31,396,498
|
|
|
Inventory
|
|
|
261,632
|
|
|
|
-
|
|
|
|
-
|
|
|
|
261,632
|
|
|
|
|
|
|
261,632
|
|
|
Deferred tax
|
|
|
416,640
|
|
|
|
-
|
|
|
|
-
|
|
|
|
416,640
|
|
|
|
|
|
|
416,640
|
|
|
Other current assets
|
|
|
1,449,119
|
|
|
|
6,128
|
|
|
|
-
|
|
|
|
1,455,247
|
|
|
|
|
|
|
1,455,247
|
|
|
TOTAL CURRENT ASSETS
|
|
|
39,159,262
|
|
|
|
123,413
|
|
|
|
-
|
|
|
|
39,282,675
|
|
|
|
|
|
|
39,282,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment in subsidiary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
6,625,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
(6,625,000
|
)
|
|
|
|
|
|
Goodwill and intangible assets, net
|
|
|
3,803,366
|
|
|
|
173,290
|
|
|
|
-
|
|
|
|
3,976,656
|
|
|
|
|
|
|
|
3,976,656
|
|
|
Deferred tax assets
|
|
|
1,760,852
|
|
|
|
-
|
|
|
|
-
|
|
|
|
1,760,852
|
|
|
|
|
|
|
|
1,760,852
|
|
|
Property and equipment, net
|
|
|
692,916
|
|
|
|
9,766
|
|
|
|
-
|
|
|
|
702,682
|
|
|
|
|
|
|
|
702,682
|
|
|
Other assets
|
|
|
-
|
|
|
|
56,957
|
|
|
|
-
|
|
|
|
56,957
|
|
|
|
|
|
|
|
56,957
|
|
|
TOTAL NON-CURRENT ASSETS
|
|
|
6,257,134
|
|
|
|
240,013
|
|
|
|
-
|
|
|
|
6,497,147
|
|
|
|
|
|
|
|
6,497,147
|
|
|
TOTAL ASSETS
|
|
$
|
45,416,396
|
|
|
$
|
363,426
|
|
|
$
|
-
|
|
|
$
|
45,779,822
|
|
|
|
|
|
|
$
|
45,779,822
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade and other payables
|
|
$
|
4,113,146
|
|
|
$
|
3,000
|
|
|
$
|
-
|
|
|
$
|
4,116,146
|
|
|
|
|
|
|
$
|
4,116,146
|
|
|
Wholesale loan facility
|
|
|
29,724,410
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
Cash reserve
|
|
|
3,186,529
|
|
|
|
-
|
|
|
|
-
|
|
|
|
3,186,529
|
|
|
|
|
|
|
|
3,186,529
|
|
|
Accrued expenses
|
|
|
-
|
|
|
|
59,877
|
|
|
|
-
|
|
|
|
59,877
|
|
|
|
|
|
|
|
59,877
|
|
|
Long-term debt, current portion
|
|
|
-
|
|
|
|
889,545
|
|
|
|
-
|
|
|
|
889,545
|
|
3
|
|
(889,545
|
)
|
|
|
-
|
|
|
TOTAL CURRENT LIABILITIES
|
|
|
37,024,085
|
|
|
|
952,422
|
|
|
|
-
|
|
|
|
37,976,507
|
|
|
|
|
|
|
|
37,976,507
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible loan
|
|
|
52,080
|
|
|
|
-
|
|
|
|
-
|
|
|
|
52,080
|
|
|
|
|
|
|
|
52,080
|
|
|
Shareholder loan
|
|
|
57,341
|
|
|
|
-
|
|
|
|
-
|
|
|
|
57,341
|
|
|
|
|
|
|
|
57,341
|
|
|
TOTAL NON-CURRENT LIABILITIES
|
|
|
109,421
|
|
|
|
-
|
|
|
|
-
|
|
|
|
109,421
|
|
|
|
|
|
|
|
109,421
|
|
|
TOTAL LIABILITIES
|
|
|
37,133,506
|
|
|
|
952,422
|
|
|
|
-
|
|
|
|
38,085,928
|
|
|
|
|
|
|
|
38,085,928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
15,169,200
|
|
|
|
206,125
|
|
|
|
-
|
|
|
|
15,375,325
|
|
1
|
|
530,000
|
|
|
|
796,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
(15,169,200
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
60,000
|
|
|
|
|
|
|
Preferred stock
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
1
|
|
50
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid in capital
|
|
|
-
|
|
|
|
10,101,933
|
|
|
|
-
|
|
|
|
10,101,933
|
|
1
|
|
6,094,950
|
|
|
|
15,836,222
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
(1,190,206
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
829,545
|
|
|
|
|
|
|
Accumulated deficit
|
|
|
(7,011,237
|
)
|
|
|
(9,734,406
|
)
|
|
|
-
|
|
|
|
(16,745,643
|
)
|
2
|
|
9,734,406
|
|
|
|
(7,011,237
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current income (loss)
|
|
|
177,497
|
|
|
|
(1,152,810
|
)
|
|
|
-
|
|
|
|
(975,313
|
)
|
|
|
-
|
|
|
|
(975,313
|
)
|
|
Accumulated other comprehensive income (loss)
|
|
|
(52,570
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
(52,570
|
)
|
|
|
|
|
|
|
(52,570
|
)
|
|
Treasury stock
|
|
|
-
|
|
|
|
(9,838
|
)
|
|
|
-
|
|
|
|
(9,838
|
)
|
|
|
|
|
|
|
(9,838
|
)
|
|
TOTAL STOCKHOLDERS' EQUITY
|
|
|
8,282,890
|
|
|
|
(588,996
|
)
|
|
|
-
|
|
|
|
7,693,894
|
|
|
|
|
|
|
|
7,693,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$
|
45,416,396
|
|
|
$
|
363,426
|
|
|
$
|
-
|
|
|
$
|
45,779,822
|
|
|
|
|
|
|
$
|
45,779,822
|
|
ProForma Adjustments
|
#1
|
Investment in subsidiary
|
|
|
6,625,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
|
|
530,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock
|
|
|
|
|
|
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid in capital
|
|
|
|
|
|
|
6,094,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To record investment for Moneytech. Issuance of 5,300,000 common stock and 5,000 preferred shares
|
|
#2
|
Investment in subsidiary
|
|
|
|
|
|
|
6,625,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
15,169,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated deficit
|
|
|
|
|
|
|
9,734,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid in capital
|
|
|
1,190,206
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To remove investment during consolidation and adjust equity for reverse merger
|
|
#3
|
Longterm debt current portion
|
|
|
889,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid in capital
|
|
|
|
|
|
|
829,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To record the converstion of debt to equity upon merger transaction
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SOURCE FINANCIAL, INC. AND SUBSIDIARIES
|
|
UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
|
|
For the Nine Months Ended March 31, 2013
|
|
UNAUDITED
|
|
|
|
|
|
|
Source
|
|
|
Combined
|
|
|
Proforma
|
|
|
|
|
|
|
|
Limited
|
|
|
Financial, Inc.
|
|
|
Historial
|
|
|
Adjustments
|
|
|
Pro Forma
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue, net
|
|
$
|
3,673,405
|
|
|
$
|
3,813
|
|
|
$
|
3,677,218
|
|
|
|
-
|
|
|
$
|
3,677,218
|
|
|
Cost of sales
|
|
|
2,196,874
|
|
|
|
19,598
|
|
|
|
2,216,472
|
|
|
|
|
|
|
|
2,216,472
|
|
|
Gross profit
|
|
|
1,476,531
|
|
|
|
(15,785
|
)
|
|
|
1,460,746
|
|
|
|
|
|
|
|
1,460,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payroll expenses
|
|
|
500,169
|
|
|
|
-
|
|
|
|
500,169
|
|
|
|
|
|
|
|
500,169
|
|
|
Research and development expense
|
|
|
358,207
|
|
|
|
-
|
|
|
|
358,207
|
|
|
|
|
|
|
|
358,207
|
|
|
Bad debt expenses
|
|
|
114,956
|
|
|
|
-
|
|
|
|
114,956
|
|
|
|
|
|
|
|
114,956
|
|
|
Occupancy expenses
|
|
|
182,691
|
|
|
|
-
|
|
|
|
182,691
|
|
|
|
|
|
|
|
182,691
|
|
|
Depreciation and amortization expenses
|
|
|
53,620
|
|
|
|
993,330
|
|
|
|
1,046,950
|
|
|
|
-
|
|
|
|
1,046,950
|
|
|
General and administration expenses
|
|
|
276,757
|
|
|
|
-
|
|
|
|
276,757
|
|
|
|
|
|
|
|
276,757
|
|
|
Total operating expenses
|
|
|
1,486,400
|
|
|
|
993,330
|
|
|
|
2,479,730
|
|
|
|
|
|
|
|
2,479,730
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(9,869
|
)
|
|
|
(1,009,115
|
)
|
|
|
(1,018,984
|
)
|
|
|
|
|
|
|
(1,018,984
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interst income
|
|
|
82,818
|
|
|
|
-
|
|
|
|
82,818
|
|
|
|
|
|
|
|
82,818
|
|
|
Other income
|
|
|
356,404
|
|
|
|
(258
|
)
|
|
|
356,146
|
|
|
|
|
|
|
|
356,146
|
|
|
Finance costs
|
|
|
(140
|
)
|
|
|
-
|
|
|
|
(140
|
)
|
|
|
|
|
|
|
(140
|
)
|
|
Other expense
|
|
|
(11,288
|
)
|
|
|
(143,437
|
)
|
|
|
(154,725
|
)
|
|
|
-
|
|
|
|
(154,725
|
)
|
|
Total other income (expense)
|
|
|
71,390
|
|
|
|
(143,695
|
)
|
|
|
(72,305
|
)
|
|
|
|
|
|
|
284,099
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax provision
|
|
|
61,521
|
|
|
|
(1,152,810
|
)
|
|
|
(1,091,289
|
)
|
|
|
|
|
|
|
(734,885
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
240,428
|
|
|
|
-
|
|
|
|
240,428
|
|
|
|
|
|
|
|
240,428
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
178,907
|
|
|
|
(1,152,810
|
)
|
|
|
(1,331,717
|
)
|
|
|
|
|
|
|
(975,313
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.002
|
|
|
$
|
(0.56
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
$
|
(1.23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.002
|
|
|
$
|
(0.56
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
$
|
(1.23
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
111,676,854
|
|
|
|
2,065,266
|
|
|
|
113,742,120
|
|
|
|
(112,945,995
|
)
|
|
|
796,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
111,676,854
|
|
|
|
2,065,266
|
|
|
|
113,742,120
|
|
|
|
(112,945,995
|
)
|
|
|
796,125
|
|
|
|
Pro Forma Adjustments
|
|
|
|
|
#1
|
To effect shares issued upon reorganization
|
|
|
The Company did not include potentially dilutive shares issued or outstanding as the effect of those shares would have resulted in an anti dilutive.
|
|
SOURCE FINANCIAL, INC. AND SUBSIDIARIES
|
|
UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT
|
|
For The Fiscal Year Ended June 30, 2012
|
|
UNAUDITED
|
|
|
|
Moneytech
|
|
|
Source Financial,
|
|
|
Combined
|
|
|
Proforma
|
|
|
|
|
|
|
|
Limited
|
|
|
Inc.
|
|
|
Historial
|
|
|
Adjustments
|
|
|
Pro Forma
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue, net
|
|
$
|
4,171,622
|
|
|
$
|
3,414
|
|
|
$
|
4,175,036
|
|
|
|
-
|
|
|
$
|
4,175,036
|
|
|
Cost of sales
|
|
|
2,715,227
|
|
|
|
-
|
|
|
|
2,715,227
|
|
|
|
|
|
|
|
2,715,227
|
|
|
Gross profit
|
|
|
1,456,395
|
|
|
|
3,414
|
|
|
|
1,459,809
|
|
|
|
|
|
|
|
1,459,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Payroll expenses
|
|
|
806,711
|
|
|
|
-
|
|
|
|
806,711
|
|
|
|
|
|
|
|
806,711
|
|
|
Research and development expense
|
|
|
199,144
|
|
|
|
-
|
|
|
|
199,144
|
|
|
|
|
|
|
|
199,144
|
|
|
Bad debt expenses
|
|
|
78,038
|
|
|
|
-
|
|
|
|
78,038
|
|
|
|
|
|
|
|
78,038
|
|
|
Occupancy expenses
|
|
|
221,000
|
|
|
|
0
|
|
|
|
221,000
|
|
|
|
|
|
|
|
221,000
|
|
|
Depreciation and amortization expenses
|
|
|
36,402
|
|
|
|
615,382
|
|
|
|
651,784
|
|
|
|
-
|
|
|
|
651,784
|
|
|
General and administration expenses
|
|
|
226,936
|
|
|
|
-
|
|
|
|
226,936
|
|
|
|
|
|
|
|
226,936
|
|
|
Total operating expenses
|
|
|
1,568,231
|
|
|
|
615,382
|
|
|
|
2,183,613
|
|
|
|
|
|
|
|
2,183,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(111,836
|
)
|
|
|
(611,968
|
)
|
|
|
(723,804
|
)
|
|
|
|
|
|
|
(723,804
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interst income
|
|
|
109,899
|
|
|
|
-
|
|
|
|
109,899
|
|
|
|
|
|
|
|
109,899
|
|
|
Research and development grant
|
|
|
302,876
|
|
|
|
-
|
|
|
|
302,876
|
|
|
|
|
|
|
|
302,876
|
|
|
Other income
|
|
|
(14,797
|
)
|
|
|
202,325
|
|
|
|
187,528
|
|
|
|
|
|
|
|
187,528
|
|
|
Finance costs
|
|
|
(28,555
|
)
|
|
|
(147,202
|
)
|
|
|
(175,757
|
)
|
|
|
-
|
|
|
|
(175,757
|
)
|
|
Total other income
|
|
|
369,423
|
|
|
|
55,123
|
|
|
|
424,546
|
|
|
|
|
|
|
|
424,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income tax provision
|
|
|
257,587
|
|
|
|
(556,845
|
)
|
|
|
(299,258
|
)
|
|
|
|
|
|
|
(299,258
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
179,647
|
|
|
|
-
|
|
|
|
179,647
|
|
|
|
|
|
|
|
179,647
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
77,940
|
|
|
|
(556,845
|
)
|
|
|
(478,905
|
)
|
|
|
|
|
|
|
(478,905
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.001
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
$
|
(0.60
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.001
|
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
$
|
(0.60
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
111,676,854
|
|
|
|
77,634,452
|
|
|
|
189,311,306
|
|
|
|
(188,515,181
|
)
|
|
|
796,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
149,706,854
|
|
|
|
77,634,452
|
|
|
|
227,341,306
|
|
|
|
(226,545,181
|
)
|
|
|
796,125
|
|
|
|
Pro Forma Adjustments
|
|
|
|
|
#1
|
To effect shares issued upon reorganization
|
|
|
The Company did not include potentially dilutive shares issued or outstanding as the effect of those shares would have resulted in an anti dilutive.
|
NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Note 1 – Basis for Pro Forma Presentation
The accompanying condensed combined pro forma financial statements illustrate the effect of the acquisition effective June 30, 2013 between Source Financial, Inc. (Company), and Moneytech Pty. Limited. (Moneytech) on the Company's financial position and results of operations. The pro forma condensed combined balance sheet as of March 31, 2013 is based on the historical balance sheets of the Company and Moneytech as of that date. The pro forma condensed combined balance sheet assumes the acquisition took place on March 31, 2013.
The pro forma condensed combined income statement for the year ended June 30, 2012 is based on the historical income statements of Moneytech and the Company, and assumes the acquisition took place on July 1, 2011. The pro forma condensed combined income statements for the nine months ended March 31, 2013 is based on the historical income statements of the Company and Moneytech and assumes the acquisition took place on July 1, 2012.
The pro forma condensed combined financial statements may not be indicative of the actual results of the acquisition and there can be no assurance that the foregoing results will be obtained. In particular, the pro form condensed combined financial statements are based on the Company’s acquisition on June 30, 2013. The actual may differ.
The accompanying pro forma condensed combined financial statements should be read in conjunction with the historical financial statements of the Company and Moneytech.
Note 2 – Acquisition
Source Financial, Inc. was incorporated in the State of Delaware on June 24, 1988. Our business is conducted through two wholly owned operating entities: WikiTechnologies, Inc. and Moneytech USA, Inc. On June 30, 2013 the Company completed an acquisition of Moneytech Pty. Ltd, an Australian Company.
The Reorganization has been accounted for as a reverse merger with Moneytech being treated as the accounting acquirer.
3. Pro Forma Adjustments
Certain adjustments have been made to the historical financial statements in order to prepare the pro forma financial information as if the transaction had occurred at the beginning of the fiscal periods presented.
The adjustments are as follows:
|
1.
|
To record stock issuance of 5,300,000 common shares for the acquisition of Moneytech Pty Ltd.
|
|
2.
|
To eliminate the investment in subsidiaries during consolidation and equity for reverse merger.
|
|
3.
|
To record the conversion of long term debt to equity at date of acquisition.
|