Attached files
| file | filename |
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| 8-K/A - FORM 8-K/A - FUND.COM INC. | f8k032910a3_fund.htm |
| EX-99.6 - UNAUDITED FINANCIAL STATEMENTS OF WESTON CAPITAL MANAGEMENT, LLC FOR THE THREE MONTHS ENDED MARCH 31, 2009. - FUND.COM INC. | f8k032910a3ex99vi_fund.htm |
Exhibit 99.5
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WESTON CAPITAL MANAGEMENT, LLC
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CONSOLIDATED BALANCE SHEET
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MARCH 31, 2010
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ASSETS
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Current Assets
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Cash
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$ | 3,212,256 | ||
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Fees Receivable
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2,317,540 | |||
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Advances
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951,497 | |||
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Prepayments and Deposits
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56,061 | |||
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Total Current Assets
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6,537,354 | |||
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Fixed Assets - At Cost
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Furniture and Equipment
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484,603 | |||
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Leasehold Improvements
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77,027 | |||
| 561,630 | ||||
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Less Accumulated Depreciation
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452,377 | |||
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Net Book Value of Fixed Assets
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109,253 | |||
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Investments
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30,000 | |||
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Goodwill
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6,471,597 | |||
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TOTAL ASSETS
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$ | 13,148,204 | ||
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LIABILITIES AND PARTNERS' CAPITAL
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Liabilities
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Accounts Payable
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$ | 1,350,885 | ||
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Accrued Expenses
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214,123 | |||
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Other Liabilities
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2,254 | |||
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Total Liabilities
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1,567,262 | |||
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Partners' Capital
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11,580,942 | |||
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TOTAL LIABILITIES AND PARTNERS' CAPITAL
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$ | 13,148,204 | ||
The accompanying notes are an integral part of these financial statements.
F-1
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WESTON CAPITAL MANAGEMENT, LLC
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CONSOLIDATED STATEMENT OF INCOME AND PARTNERS' CAPITAL
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THREE MONTHS ENDED MARCH 31, 2010
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INCOME FROM OPERATIONS
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Fee Revenue
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$ | 1,111,669 | ||
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Interest and Other Income
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149,396 | |||
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Income from Operations
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1,261,065 | |||
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General and Administrative expenses
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1,778,768 | |||
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Operating Loss
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(517,703 | ) | ||
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Minority Interest in Subsidiary
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(80,830 | ) | ||
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Loss Before Provision for Taxes
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(598,533 | ) | ||
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Provision for Taxes
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- | |||
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NET LOSS
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(598,533 | ) | ||
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Partners' Capital, Beginning
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10,943,445 | |||
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Minority Interest
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441,675 | |||
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Contributions
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800,000 | |||
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Withdrawals
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- | |||
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Change in Translation
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(5,645 | ) | ||
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Partners' Capital, End
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$ | 11,580,942 | ||
The accompanying notes are an integral part of these financial statements.
F-2
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WESTON CAPITAL MANAGEMENT, LLC
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CONSOLIDATED STATEMENT OF CASH FLOWS
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THREE MONTHS ENDED MARCH 31, 2010
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Cash Flows From Operating Activities:
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Net income
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$ | (598,533 | ) | |
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Adjustments to reconcile net income to net cash used in operating activities
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Depreciation
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16,711 | |||
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Minority Interest in Net Income
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80,830 | |||
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Translation Adjustment
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(5,645 | ) | ||
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(Increase) decrease in assets:
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Fees Receivable
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273,649 | |||
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Prepayments and Deposits
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(36,319 | ) | ||
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Advances
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399,666 | |||
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Increase (decrease) in Liabilities:
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Accounts Payable
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(38,901 | ) | ||
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Accrued Expenses
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(23,688 | ) | ||
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Other Liabilities
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(144 | ) | ||
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Net cash provided (used in) by operating activities
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67,626 | |||
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Cash Flows From Investing Activities:
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Purchase of Fixed Assets
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(1,415 | ) | ||
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Net cash provided (used in) by investing Activities
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(1,415 | ) | ||
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Cash Flows From Financing Activities:
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Contributed Capital
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800,000 | |||
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Net Cash Received of Minority Interest
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360,959 | |||
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Net cash provided (used in) by financing activities
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1,160,959 | |||
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Net Decrease in Cash
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1,227,170 | |||
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Cash, Beginning of Period
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1,985,086 | |||
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Cash, End of Period
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$ | 3,212,256 | ||
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Supplemental Disclosure of Cash Flow information:
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Cash paid during the quarter for:
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Taxes
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$ | 4,052 | ||
The accompanying notes are an integral part of these financial statements.
F-3
WESTON CAPITAL MANAGEMENT, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2010
1. ORGANIZATION AND BUSINESS
The consolidated financial statements of Weston Capital Management, LLC (a Delaware limited liability company (“Weston”)) include its wholly-owned subsidiaries Weston Capital Advisers Ltd. (a UK corporation registered with the Financial Services Authority (“FSA”)), Weston Capital Asset Management, Ltd. (a Bermuda corporation), Weston Capital Asset Management, LLC (a Delaware limited liability company and registered investment advisor), and Weston Financial Services, LLC (a Delaware limited liability company and a broker dealer registered with the National Association of Securities Dealers (“NASD”)) (“collectively, “The Weston Group”).
Included in the financial statements is the interest in three entities Weston Atlas Advisers, Ltd, Weston Atlas Partners, LLC and Weston Partners Advisors, Ltd collectively known as the Partners Fund.
The Weston Capital Group provides investment advisory services as a fund management organization specializing in alternative investments. It develops multi-manager and single-manager investment fund products; designs customized investment portfolios as well as provide investment management and administrative services.
All material intercompany transactions and balances have been eliminated when consolidated.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Advertising
Advertising costs are expensed as incurred.
Advances
Advances primarily represent developmental expenditures made on behalf of new funds. Advances will be repaid when the funds become operational.
F-4
WESTON CAPITAL MANAGEMENT, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2010
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Revenue Recognition
The Weston Group earns management fees ranging from 1% to 2% per annum of the month-end net assets and quarterly performance-based fees ranging from 10% to 20% of the trading profits, as defined in the respective agreements for Weston sponsored products and other consulting roles. Performance-based fees for the various product groups are generally paid on the basis of investment profits, as defined in the respective agreements, determined as of each quarterly period. Fees are subject to rebate arrangements, and revenues are reflected net of those rebates.
The Weston Group earns, for some of the funds it sponsors, an operating expense fee of the difference between 1% of the various Funds’ net assets per annum and the Funds’ ordinary operating expenses if less than 1%. Net operating expenses earned for the three months ending March 31, 2010 equaled $113,371.
Fixed Assets and Leasehold Improvements
Fixed assets and leasehold improvements are carried at cost. Depreciation and amortization is computed on a straight-line basis using rates that are consistent with the assets useful life or lease term.
Compensated Absences
No accrual has been made for compensated absences since vacations are taken throughout the year, and the amounts are neither easily estimated nor material.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.
Concentration of Credit Risk
During the year, cash balances in the Bank of New Canaan and Fortis checking account exceeded the amount of $250,000 which is insured by the F.D.I.C. In accordance with FASB #105 this represents a concentration of credit risk.
F-5
WESTON CAPITAL MANAGEMENT, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2010
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
Goodwill
During June 2006, the interest of Brigadier Investments Ltd was purchased for $10,000,000. Goodwill represents the residual purchase price remaining after allocation of the purchase price, based upon the fair value of assets acquired. Goodwill and intangible assets deemed to have indefinite lives are not amortized, but are subject to annual impairment test. Intangible assets deemed to have definite lives are amortized over their estimated useful lives. The Company annually reviews goodwill for recoverability based primarily on a multiple of earnings analysis comparing the fair value to the carrying value. As required by SFAS No. 142, the Company will assess goodwill annually for impairment and more frequently if impairment indicators are identified during the year.
Fair Value Measurements
FASB Statement No. 157, Fair Value Measurements, establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under FASB Statement No. 157 are described as follows:
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Level 1
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Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the plan has the ability to access.
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Level 2
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Inputs to the valuation methodology include:
· quoted prices for similar assets or liabilities in active markets;
· quoted prices for identical or similar assets or liabilities in active markets;
· inputs other than quoted prices that are observable for the asset or liability;
· inputs that are derived principally from or corroborated by observable market data by correlation or other means.
If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.
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Level 3
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Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
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The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.
F-6
WESTON CAPITAL MANAGEMENT, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2010
3. INCOME TAXES
Members of limited liability companies treated as partnerships for income tax purposes are responsible for income taxes based upon their respective share of company income. For the three months ended 2010, a net loss was recorded by Weston Capital Advisers, Ltd, and as such no provision for corporate taxes are included in the accompanying financial statements.
4. LEASE COMMITMENTS
The Company leases various equipment and office space under noncancelable operating lease arrangements. The Company does not currently utilize any other off-balance sheet financing arrangements. The office space leases are generally for terms of one to ten years. As of March 31, 2010, the Company's total future minimum lease payments under noncancelable operating leases were $385,602 of which $264,737 related to leases of office space.
Rent expense under all operating leases, including both cancelable and noncancelable leases, was $129,084.
Future minimum lease payments under noncancelable operating leases having remaining terms in excess of one year as of March 31, 2010:
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Years
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Total
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Remaining 2010
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313,418 | |||
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2011
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56,070 | |||
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2012
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16,114 | |||
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Total minimum lease payments
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$ | 385,602 | ||
5. MAJOR CLIENT
Included in the fees earned during the three months ending March 31, 2010, were net fees earned from The Wimbledon Fund SPC - Class C shares amounting to $220,414, from WHDN amounting to $164,598, and from The Wimbledon Fund SPC – Class TT shares amounting to $191,980.
F-7
WESTON CAPITAL MANAGEMENT, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2010
6. RETIREMENT PLANS
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a.
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The Company has a profit sharing plan covering substantially all of its full time employees. The Company made no annual contributions to the plan for the three months ending March 31, 2010.
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b.
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The Company has a 401(k) profit sharing plan for all full-time employees upon a short waiting period upon hire. The Company will match employee contributions up to 3%.
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7. INVESTMENT
In October 2009 the Company invested $30,000 into White Oak Merchant Partners. The Investment is considered level 3, and is valued at cost and this represents fair market value.
8. CONTINGENCY
Weston has been named as a defendant in a lawsuit pending in the United States District Court, brought by a former employee. This action was filed on March 21, 2007 pursuant to Title VII of the Civil Rights Act of 1964, as amended, asserting sex and pregnancy discrimination. Discovery is ongoing in the case and a trial date has not yet been assigned. Weston is defending the case vigorously and believes that the allegations of this lawsuit are without merit.
Weston and Albert Hallac have been named as defendants in a lawsuit pending in the Connecticut Superior Court, brought by a former employee. This action was filed on or about April 7, 2009. The complaint alleges a violation of the Connecticut Wage Statute, Breach of Contract and Breach of the Implied Covenant of Good Faith and Fair Dealing. The Company denies the claims and on May 28, 2009 asserted special defenses and a counterclaim against the former employee. In the counterclaim, the Company alleges Breach of Contract, Breach of Fiduciary Duty and Negligent Misrepresentation. Discovery is ongoing in the case and a trial date has not yet been assigned. Weston and Albert Hallac are defending the case vigorously and believe that the allegations of this lawsuit are without merit.
F-8