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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549


FORM 10-Q


 

[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended December 31, 2012 (Second quarter)

or


[    ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from _______________________  to  ___________________________  



Commission File Number:  000-53493


[gmt10q_123112apg002.gif]

Global MobileTech, Inc.

 (Exact name of registrant as specified in charter)


Nevada

 

26-1550187

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer Identification No.)


1312 North Monroe, Suite 750

Spokane, Washington 99201

 (Address of principal executive offices, including Zip Code)

 

Registrant’s telephone number: (509) 723-1312


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                     Yes [X]   No [   ]


Indicate by check whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).                Yes [X]   No [   ]


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):


Large accelerated filer [  ]

Accelerated filer [  ]

Non-accelerated filer [  ] (Do not check if a smaller reporting company)

Smaller reporting company [X]

 

 


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes [   ]   No [X]


As of February 6, 2013, there were 7,366,991 shares of our common stock, $0.001 par value, issued and outstanding.





TABLE OF CONTENTS

 

 

 

ITEM NUMBER AND CAPTION

PAGE

 

 

 

PART I

 FINANCIAL INFORMATION

3

  ITEM 1.

Financial Statements

3

  ITEM 2.

Management’s Discussion and Analysis of Financial Condition And Results of Operations

22

  ITEM 3.  

Quantitative and Qualitative Disclosures About Market Risk

30

  ITEM 4.

Controls and Procedures

30

  

 

 

PART II

 OTHER INFORMATION

31

  ITEM 1.

Legal Proceedings

31

  ITEM 1A.

Risk Factors

31

  ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

31

  ITEM 3.

Defaults Upon Senior Securities

31

  ITEM 4.

Mine Safety Disclosures

31

  ITEM 5.

Other Information

31

  ITEM 6.

Exhibits

31

 

 

 

SIGNATURES

 

32


USE OF PRONOUNS AND OTHER WORDS


The pronouns “we”, “us”, “our” and the equivalent mean Global MobileTech, Inc. and our consolidated subsidiaries.  In the notes to our financial statements, the “Company” means Global MobileTech, Inc. and our consolidated subsidiaries.  The pronoun “you” means the reader of this quarterly report on Form 10-Q.


FORWARD-LOOKING STATEMENTS


This quarterly report on Form 10–Q and the information incorporated by reference, if any, includes “forward–looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended. We intend the forward–looking statements to be covered by the safe harbor provisions for forward–looking statements in these sections.


From time to time, our representatives or we have made or may make forward-looking statements, orally or in writing.  Such forward-looking statements may be included in, but not limited to, press releases, oral statements made with the approval of an authorized executive officer or in various filings made by us with the U.S. Securities and Exchange Commission (“SEC”). We may, in some cases, use words such as “project”, “believe”, “anticipate”, “plan”, “expect”, “estimate”, “continue”, “intend”, “should”, “would”, “could”, “may”, “will”, “in the event”, "will likely result" and other similar words, use of future tense and absence of assurance that convey uncertainty regarding future events or outcomes and to identify these forward-looking statements. Such statements are qualified in their entirety by reference to and should be considered in the context of certain important factors that could cause actual results to differ materially from such forward-looking statements.  Accordingly, forward-looking statements should not be relied upon as a prediction of actual results.


Management is currently unaware of any trends or conditions other than those mentioned in this management's discussion and analysis that could have a material adverse effect on our financial position, future results of operations, or liquidity.  However, you should also be aware of factors that could have a negative impact on our prospects and the consistency of progress in the areas of revenue generation, liquidity, and generation of capital resources.  These include: (i) variations in revenue, (ii) possible inability to attract investors for our equity securities or otherwise raise adequate funds from any source should we seek to do so, (iii) increased governmental regulation, (iv) increased competition, (v) unfavorable outcomes to litigation involving us or to which we may become a party in the future and, (vi) a very competitive and rapidly changing operating environment.


The above-identified risks are not all inclusive. New risk factors emerge from time to time and it is not possible for our management to predict all of such risk factors, nor can it assess the impact of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements.


The financial information set forth in the following discussion should be read in conjunction with our consolidated financial statements included elsewhere herein.



2




PART I


ITEM 1.  FINANCIAL STATEMENTS


GLOBAL MOBILETECH, INC. AND SUBSIDIARIES


December 31, 2012 and 2011


Index to Consolidated Financial Statements

(Unaudited)



CONTENTS

Page

Consolidated Balance Sheets at December 31, 2012 (unaudited) and June 30, 2012 (audited)

4

Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Six Months Ended December 31, 2012 and 2011

5

Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2012 and 2011

6

Notes to the Consolidated Financial Statements

7-21




[Remainder of page left blank.]



3





GLOBAL  MOBILETECH, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AT DECEMBER 31, 2012 AND JUNE 30, 2012

 

ASSETS

 

 

 

 

 

 

 

 

December 31,

 

June 30,

 

 

 

 

 

 

 

 

2012

 

2012

 

 

 

 

 

 

 

 

(Unaudited)

 

(Audited)

 ASSETS

Current Assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

$

18,270

 

$

18,655

 

Accounts receivable, net

 

 

 

 

3,477,112

 

1,369,514

 

Deposits

 

 

 

 

 

3,885

 

1,948

 

Other debtors

 

 

 

 

1,039

 

1,751

 

 

   Total current assets

 

 

 

 

3,500,306

 

1,391,868

 

 

 

 

 

 

 

 

 

 

 

Property, Plant and Equipment:

 

 

 

 

 

 

 

 

Property, plant and equipment, at cost

 

 

 

 

4,507,818

 

4,223,140

 

(Less) : Accumulated depreciation and amortization

 

 

1,353,091

 

843,725

 

 

   Net property and equipment

 

 

 

3,154,727

 

3,379,415

 

 

 

 

 

 

 

 

 

 

 

Other Assets:

 

 

 

 

 

 

 

 

 

Patent  (net of accumulated amortization of $604,134 ; $398,205)

2,977,602

 

2,957,338

 

Patent & Technology License Agreement (net of accumulated amortization of $96,250 ; $43,750)

953,750

 

1,006,250

 

Methodology & Technology Assignment (net of accumulated amortization of $24,600 ; $18,108)

28,114

 

31,277

 

          Total other assets

 

 

 

 

 

3,959,466

 

3,994,865

 

 

 

 

 

 

 

 

 

 

Total Assets

 

 

 

 

 

$

10,614,499

 

$

8,766,148

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

      Accounts payable

 

 

 

 

 

$

1,720,805

 

$

607,372 

 

Accrued liabilities

 

 

 

 

342,764

 

939,139 

 

Federal and other taxes on income

 

 

 

 

 

67,040

 

3,311 

 

Due to related party

 

 

 

 

63,244

 

59,774 

 

 

Total Current Liabilities

 

 

 

 

2,193,853

 

1,609,596 

Non-Current Liabilities:

 

 

 

 

 

 

 

 

Non-current deferred income taxes

 

 

 

 

1,332,341

 

1,248,201 

 

 

Total Non-Current Liabilities

 

 

 

 

1,332,341

 

1,248,201 

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities

 

 

 

 

 

$

3,526,194

 

$

2,857,797 

 

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Preferred stock,  par value $0.001 per share; 10,000,000 shares

 

 

 

 

 

authorized; no shares issued or outstanding on December 31, 2012 and June 30, 2012, respectively

-

 

 

Common stock, par value $0.001 per share; 100,000,000 shares

 

 

 

 

 

authorized; 7,366,991  and 7,216,991 shares issued and outstanding on  December 31, 2012 and June 30,2012, respectively

7,367

 

7,217 

 

Additional paid-in capital

 

 

 

 

3,672,126

 

3,653,676 

 

Accumulated other comprehensive income (loss)

 

 

212,239

 

(153,690)

 

Accumulated income

 

 

 

 

3,196,573

 

2,401,148 

 

 

   Total Stockholders' Equity

 

 

 

7,088,305

 

5,908,351 

Total Liabilities and Stockholders' Equity

 

 

 

$

10,614,499

 

$

8,766,148 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes to consolidated financial statements are

an integral part of these statements.



4





GLOBAL  MOBILETECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2012 AND 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three

 

For the Three

 

For the Six

 

For the Six

 

 

 

 

 

 

 

Months ended

 

Months ended

 

Months ended

 

Months ended

 

 

 

 

 

 

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

 

 

 

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

$

4,499,781 

 

$

4,378,157 

 

$

8,782,989 

 

$

7,310,853 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Less) : Cost of Goods Sold

 

 

 

 

3,141,938 

 

3,092,296 

 

6,046,481 

 

5,162,590 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

 

 

1,357,843 

 

1,285,861 

 

2,736,508 

 

2,148,263 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Professional fees

 

 

 

17,225 

 

26,565 

 

34,056 

 

47,891 

 

Depreciation and amortization

 

 

 

339,158 

 

230,395 

 

671,589 

 

468,841 

 

Sales and marketing

 

 

197,147 

 

194,913 

 

390,054 

 

194,913 

 

General and administrative - Other

393,073 

 

407,069 

 

784,682 

 

602,144 

 

 

Total Operating Expenses

 

 

 

946,603 

 

858,942 

 

1,880,381 

 

1,313,789 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from Operations

 

 

 

 

411,240 

 

426,919 

 

856,127 

 

834,474 

 

 

 

 

 

 

 

 

 

 

 

Other Income :

 

 

 

 

 

 

 

 

 

 

 

 

Gain in currency translation 

 

 

 

1,032 

 

 

1,032 

 

 

 

Total Other Income

 

 

 

 

1,032 

 

 

1,032 

 

Income Before Income Taxes

 

 

412,272 

 

426,919 

 

857,159 

 

834,474 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Less) : Provision for income taxes: 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

(31,393)

 

(51,628)

 

(61,734)

 

(77,176)

 

Deferred

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

 

$

380,879 

 

$

375,291 

 

$

795,425 

 

$

757,298 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Income (Loss):

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment 

94,210 

 

2,216 

 

365,929 

 

(215,929)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Comprehensive Income

 

 

$

475,089 

 

$

377,507 

 

$

1,161,354 

 

$

541,369 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Common Share:

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

$

0.05 

 

$

0.08 

 

$

0.11 

 

$

0.19 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

$

0.05 

 

$

0.07 

 

$

0.10 

 

$

0.18 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Number of Common Shares Outstanding:

 

 

 

 

 

 

 

Basic

 

 

 

 

7,366,991

 

4,712,339 

 

7,302,589 

 

4,030,679 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

7,688,803

 

5,042,586 

 

7,624,401 

 

4,311,064 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes to consolidated financial statements are

an integral part of these statements.




5





GLOBAL  MOBILETECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED DECEMBER 31, 2012 AND 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended

 

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

 

2012

 

2011

 

 

 

 

 

 

 

(Unaudited)

 

(Unaudited)

Operating Activities:

 

 

 

 

 

 

 

 

Net income

 

 

 

 

$

795,425 

 

$

757,298 

 

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

 

 

    Income taxes

 

 

 

 

61,734 

 

77,176 

 

    Depreciation and amortization

 

 

 

671,589 

 

468,841 

 

    Common stock issued for services

 

 

 

 

Changes in assets and liabilities-

 

 

 

 

 

 

 

 

Deposit and other debtors

 

 

 

 

(976)

 

(26,635)

 

 

Accounts receivable - Trade

 

 

(2,015,281)

 

(269,004)

 

 

Accounts payable - Trade

 

 

 

1,075,521 

 

(1,426,113)

 

 

Accrued liabilities

 

 

 

(647,382)

 

(153,790)

Net Cash Used in Operating Activities

 

(59,370)

 

(572,227)

 

 

 

 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Cash Used in Investing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

 

 

 

Proceeds from loan from related party

 

 

 

14,075 

 

23,987 

 

Proceeds from exercise of stock options / warrants 

 

53,436 

Net Cash Provided by Financing Activities

 

 

14,075 

 

77,423 

 

 

 

 

 

 

 

 

 

 

Effect of Exchange Rate Changes

 

 

 

44,910 

 

492,133 

 

 

 

 

 

 

 

 

 

 

Net Decrease in Cash

 

 

 

(385)

 

(2,671)

 

 

 

 

 

 

 

 

 

 

Cash - Beginning of Period

 

 

 

18,655 

 

17,681 

 

 

 

 

 

 

 

 

 

 

Cash - End of Period

 

 

 

 

$

18,270 

 

$

15,010 

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information: 

 

 

 

 

Cash paid during the period for:

 

 

 

 

 

 

 

 

Interest paid

 

 

 

 

$

 

$

 

 

Income taxes paid

 

 

 

$

 

$

 

 

 

 

 

 

 

 

 

 

Non-Cash Transactions Affecting Operating, Investing and

 Financing Activities :   

 

 

 

 

Issuance of stock for payment of debts

 

$

18,600

 

$

 

 

 

 

 

 

 

 

 

 

The accompanying notes to consolidated financial statements are

an integral part of these statements.



6




GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

(Unaudited)


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


General Organization and Business


Global MobileTech, Inc.  (the “Company”) is focused on the provision of mobile Voice over Internet Protocol (“VoIP”) communications and mobile advertising solutions and services since April 2010. The Company provides a proprietary mobile marketing platform that enables the Company’s customers to sell advertisement banners on the mobile phones of persons who have registered with them. The Company also provides its customers with access to mobile advertising content via the Company’s proprietary platform, as well as multimedia content production services which the Company’s customers utilize to sell services to advertisers and advertising agencies and to disseminate to registered mobile phone users via the rewards program. In July 2010, the Company expanded into the renewable energy business to include (i) the provision of consultancy services for the design and integration of solar photovoltaic (“PV”)-wind hybrid power generation applications (ii) the production of synthetic gas (“syngas”), bio-oil and biochar using biomass such as wood residues, and oil palm stems and fronds as feedstock; and (iii) the establishment and operation of syngas-to-electricity generation plants.


In June 2011 the Company acquired an U.S. patent and in December 2011, the Company acquired a new Technology License Agreement to drive the Company’s mobile platform by combining the methodologies of the Company’s patent and the Technology License Agreement. The Company’s platform provides the essential business logic, platform intelligence and central management that drives the platform and enables the application of flexible business models. The Company has achieved its objective by integrating the Company’s platform with internal and external enablers that are embedded in the Company’s platform. The Company’s platform enables the conversion of media (text, voice, video and graphics) into value-added solutions in different protocols and formats that are seamlessly integrated for transmission to mobile phones.


Unaudited Interim Financial Statements


The interim consolidated financial statements of the Company at December 31, 2012 and December 31, 2011 and for the three months and six months ended December 31, 2012 and 2011 are unaudited. In the opinion of management, the interim consolidated financial statements include all adjustments (consisting solely of normal recurring adjustments) which are necessary for a fair statement of the Company’s financial position at December 31, 2012 and 2011 and the results of its operations and its cash flows for the six months ended December 31, 2012 and 2011. These results are not necessarily indicative of the results expected for the fiscal year ending June 30, 2013. The accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States of America (“GAAP”). Refer to the Company’s audited financial statements as of June 30, 2012, filed with the SEC for additional information, including significant accounting policies.


Basis of presentation


The financial information included herein is unaudited and has been prepared consistent with GAAP for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these consolidated financial statements do not include all information and footnotes required by GAAP for complete consolidated financial statements. These notes should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended June 30, 2012. In the opinion of management, these interim consolidated financial statements include all adjustments (consisting solely of normal recurring adjustments) which are necessary for a fair statement of results for the interim period presented. The results of operations for the three months and six months ended December 31, 2012 are not necessarily indicative of the results to be expected for the full year.


Fiscal Year End


The Company has elected June 30 as its fiscal year end date.


Cash and Cash Equivalents


For purposes of reporting within the consolidated statements of cash flows, the Company and its subsidiaries consider all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.





7




GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

(Unaudited)


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


Principles of Consolidation


The accompanying consolidated financial statements include the accounts of the Company and the following entities at December 31, 2012:


Entity

Jurisdiction or Place of Incorporation

Attributable Interest

Global MobileTech, Inc.

U.S.

100%

Trevenex Acquisitions, Inc.

U.S.

100%

Info-Accent Sdn Bhd

Malaysia

100%

Maxcents Sdn Bhd

Malaysia

30%


All significant intercompany accounts and transactions have been eliminated in consolidation.


Impairment of Long-Lived Assets


In accordance to GAAP Codification of Accounting Standards (“ASC”) 360, Accounting for the Impairment or Disposal of Long-Lived Assets, the Company evaluates the recoverability of long-lived assets and the related estimated remaining lives at each balance sheet date. The Company records an impairment or change in useful life whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed. For the period ended December 31, 2012, and 2011, no events or circumstances occurred for which an evaluation of the recoverability of long-lived assets was required.


Revenue Recognition


Info-Accent Sdn Bhd, a wholly owned Malaysian subsidiary, commenced operations on April 7, 2010. The Company recognizes revenue when it is realized or realizable and earned less estimated future doubtful accounts. The Company applies the revenue recognition principles set forth under SEC Staff Accounting Bulletin (“SAB”) 104 and considers revenue realized or realizable and earned when all of the following criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.


The Company derives its revenue from sales contracts with customers with revenues being generated upon the product or services have been rendered. The Company also licenses the right to use its patent through license agreements. The annual license fee revenues are recognized when earned based on the contractual time period covered by the fees.


Accounts Receivable and Allowance for Doubtful Accounts


The Company recognizes an allowance for doubtful accounts to ensure that accounts receivable are not overstated due to uncollectibility. The allowance for doubtful accounts is maintained for all customers based on a variety of factors, including the length of time the receivables are past due, significant one-time events and historical experience. An additional reserve for individual accounts is recorded when the Company and its subsidiaries become aware of a customer’s inability to meet its financial obligation, such as in the case of bankruptcy filings or deterioration in the customer’s operating results or financial position. If the circumstances related to customers change, estimates of the recoverability of receivables would be further adjusted. At December 31, 2012 and 2011, the Company had no allowance for doubtful accounts.


Stock-based Compensation


The Company accounts for its stock-based compensation in which the Company obtains employee services in share-based payment transactions under Financial Accounting Standards Board (“FASB”) - ASC Topic 718, Compensation - Stock Compensation, which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments over the vesting period.





8




GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

(Unaudited)


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


Stock-based Compensation (Continued)


The Company accounts for equity instruments issued to parties other than employees for acquiring goods or services under guidance of FASB – ASC Topic 505-50-30. Pursuant to FASB - ASC paragraph 718-10-30-6, all transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete or the date on which it is probable that performance will occur.


The fair value of each option award is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The ranges of assumptions for inputs are as follows:


·

The Company uses historical data to estimate employee termination behavior.  The expected life of options granted is derived from FASB - ASC paragraph 718-10-S99-1 and represents the period of time the options are expected to be outstanding.

·

The expected volatility is based on a combination of the historical volatility of the comparable companies stock over the contractual life of the options.

·

The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods within the contractual life of the option.

·

The expected dividend yield is based on the Companys current dividend yield as the best estimate of projected dividend yield for periods within the contractual life of the option.


Earnings per Common Share


Earnings/loss per common share is computed pursuant to FASB - ASC Topic 260, Earnings per Share. Basic net income/loss per share is computed by dividing net earnings/loss by the weighted average number of shares of common stock outstanding during the period. Diluted net income/loss per share is computed by dividing net earnings/loss by the weighted average number of shares of common stock and potentially outstanding shares of common stock during each period to reflect the potential dilution that could occur from common shares issuable through stock options and warrants.


Income Taxes


The Company accounts for income taxes under FASB - ASC Topic 740, Income Taxes. Deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes.  The deferred tax assets and liabilities are classified according to the consolidated financial statement classification of the assets and liabilities generating the differences.


The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s consolidated financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry forward period under the Federal tax laws.


Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.



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9




GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

(Unaudited)


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


Fair Value of Financial Instruments


The Company has adopted FASB - ASC Topic 825, Financial Instruments, and ASC Topic 820, Fair Value Measurements and Disclosures, which establishes a framework for measuring fair value in GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, it establishes a three-level valuation hierarchy of valuation techniques based on observable and unobservable inputs, which may be used to measure fair value and include the following:


Level 1

 

Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.

 

 

 

Level 2

 

Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.

 

 

 

Level 3

 

Pricing inputs that are generally observable inputs and not corroborated by market data.


Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.


The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.


The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts receivable, deposits, prepayments and other current assets, accounts payable, corporate income tax payable, accrued expenses and other current liabilities approximate their fair values because of the short maturity of these instruments.


The Company’s Level 3 financial liabilities consist of the derivative warrant issued in July 2011 for which there is no current market for these securities such that the determination of fair value requires significant judgment or estimation. The Company valued the automatic conditional conversion, re-pricing/down-round, change of control; default and follow-on offering provisions using a lattice model, with the assistance of a valuation specialist, for which management understands the methodologies. These models incorporate transaction details such as Company stock price, contractual terms, maturity, risk free rates, as well as assumptions about future financing, volatility, and holder behavior as of the date of issuance and each balance sheet date.


Transactions involving related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations can be substantiated.


It is not, however, practical to determine the fair value of advances from the significant stockholder and lease arrangement with the significant stockholder, if any, due to their related party nature.


Estimates


The consolidated financial statements are prepared on the basis of GAAP. The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at December 31, 2012 and 2011 and June 30, 2012, and income and expenses for the periods then ended. Actual results could differ from those estimates made by management.



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10




GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

(Unaudited)


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


Foreign Currency Translation


The Company follows the provisions of ASC 830, Foreign Currency Translation. The functional currency of the Company’s foreign subsidiary is Ringgit Malaysia (“RM”). All foreign currency assets and liabilities amounts are re-measured into U.S. dollars at end-of-period exchange rates. Foreign currency income and expense are re-measured at average exchange rates in effect during the year. Exchange gains and losses arising from foreign currency transactions are included in operations in the period in which they occur. Foreign currency translations are included in other comprehensive income class.


The reporting currency of the Company is United States Dollar ("$"). In general, for consolidation purposes, assets and liabilities of its subsidiaries whose functional currency is not the US$ are translated into US$, in accordance with ASC Topic 830-30, Translation of Financial Statement, using the exchange rate on the balance sheet date. Revenues and expenses are translated at average rates prevailing during the year. The gains and losses resulting from translation of financial statements of foreign subsidiaries are recorded as a separate component of accumulated other comprehensive income within the statement of stockholders’ equity.


Unless otherwise noted, the rate presented below per US$1.00 was the midpoint of the interbank rate as quoted by OANDA Corporation ( www.oanda.com ) contained in its consolidated financial statements. Management believes that the difference between RM vs. U.S. Dollar exchange rate quoted by the Central Bank of Malaysia and RM vs. U.S. dollar exchange rate reported by OANDA Corporation were immaterial.  Translations do not imply that the RM amounts actually represent, or have been or could be converted into, equivalent amounts in U.S. dollars. Translation of amounts from RM into U.S. dollars has been made at the following exchange rates for the respective periods:


 

December 31,

 

2012

 

2011

Balance Sheet

2.9907

 

3.1717

Statement of operations and comprehensive income (loss)

3.0765

 

3.0783


Property, Plant  and Equipment


Property, plant and equipment are recorded at cost. Depreciation and amortization are computed by the straight-line method over the estimated useful lives of the applicable assets, or term of the lease, whichever is shorter, if applicable. Expenditures for maintenance and repairs that do not improve or extend the life of the expected assets are expensed to operations, while expenditures for major upgrades to existing items are capitalized. Property, plant and equipment are depreciated and amortized over estimated useful lives ranging from 2 to 5 years.


Intangible Assets


Intangible assets are stated at cost, less accumulated amortization. Amortization is provided using the straight-line method over the estimated useful lives of the assets. Estimated useful lives range from 5 to 10 years.


Lease Obligations


All non-cancelable leases with an initial term greater than one year are categorized as either capital leases or operating leases. Assets recorded under capital leases are amortized according to the methods employed for property, plant and equipment or over the term of the related lease, if shorter.


Other Comprehensive Income


The Company presents comprehensive income (loss) under FASB - ASC 220, Comprehensive Income. ASC 220 states that all items that are required to be recognized under accounting standards as components of comprehensive income (loss) be reported in the financial statements. Accumulated other comprehensive income consisted of unrealized gains or losses resulting from the translation of financial statements from RM to U.S.Dollar.






11




GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

(Unaudited)


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)


Other Comprehensive Income (Continued)


For the three months and six months ended December 31, 2012 and 2011, comprehensive income for the Company consisted of net income/loss for the period and foreign currency translation adjustments and is presented in the Company’s Consolidated Statements of Operations and Comprehensive Income. Components of the Company’s comprehensive income for the three months and six months ended December 31, 2012 and 2011 as follow:


 

 

 

 

 

 

 

For the Three

 

For the Three

 

For the Six

 

For the Six

 

 

 

 

 

 

 

Months ended

 

Months ended

 

Months ended

 

Months ended

 

 

 

 

 

 

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

 

 

 

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

 

$         380,879 

 

$          375,291

 

$         795,425 

 

$           757,298

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Income (Loss):

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment 

94,210

 

2,216

 

365,929

 

(215,929)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Comprehensive Income

 

 

$         475,089 

 

$          377,507

 

$      1,161,354 

 

$           541,369



NOTE 2 – PROPERTY, PLANT AND EQUIPMENT


Property, plant and equipment are stated at cost less depreciation. Property, plant and equipment consists of the following at December 31, 2012 and June 30, 2012.


 

At December 31,

 

At June 30,

 

2012

 

2012

Computer Software

$

3,821,443

 

$

3,580,112

Plant and Equipment

 

673,087

 

 

630,580

Furniture and Fittings

 

1,891

 

 

1,771

Renovation

 

11,397

 

 

10,677

 

 

4,507,818

 

 

4,223,140

Less : Accumulated Depreciation

 

1,353,091

 

 

843,725

 

$

3,154,727

 

$

3,379,415

 

 

 

 

 

 


The depreciation expense recorded was $439,872 and $287,229 for the six months ended December 31, 2012 and 2011, respectively.



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12




GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

(Unaudited)


NOTE 3 – PATENT


On June 27, 2011, Info-Accent Sdn Bhd entered into a Patent Purchase Agreement with Sunway Technology Development Limited (“Sunway”) to purchase the entire right, title and interest in and to the U.S. patent # 8,005,057 for a total consideration of approximately $3.5 million. The patent relates to a certain invention entitled “DATA COMMUNICATIONS BETWEEN SHORT-RANGE ENABLED WIRELESS DEVICES OVER NETWORKS AND PROXIMITY MARKETING TO SUCH DEVICES”. The patent will expire on June 30, 2028.


Pursuant to the Patent Purchase Agreement, Sunway will receive net payment of $3,000,000 after setting off a sum of $500,000 previously paid by Info-Accent to VyseTech Asia Sdn Bhd (“VTA”) as a one-time license fee. Sunway received the remaining purchase consideration of $3.0 million through a combination of $2.0 million cash and issuance of 1.0 million unregistered shares of the Company’s common stock at $1.00 per share. On August 3, 2011, Info-Accent and Sunway executed a Supplemental Agreement to the Patent Purchase Agreement whereby Sunway agreed to receive 1,000,000 unregistered shares of common stock of the Company at $1.00 per share as full and final payment for the purchase of the patent. On August 5, 2011, the Company issued 1,000,000 restricted shares of its common stock to Sunway.


The acquisition of the patent will enable the Company to commercialize the proprietary technology, further enhance the technology and develop new mobile applications that will allow the Company to license to third parties globally; and provide the Company with the security and independence the Company needs for growth without being subjected to any form of control by a third party. Concurrent with the acquisition of the patent, Info-Accent terminated the five-year exclusive Marketing, Distribution and License Agreement with VTA on June 27, 2011.


A summary of the patent at December 31, 2012 and June 30, 2012 were presented below.


 

At December 31,

 

At June 30,

 

2012

 

2012

Patent

$

3,581,736

 

$

3,355,543

Less : Accumulated amortization

 

604,134

 

 

398,205

 

$

2,977,602

 

$

2,957,338

 

 

 

 

 

 


The amortization expense recorded was $174,093 and $173,991 for the six months ended December 31, 2012 and 2011, respectively.



NOTE 4 - PATENT AND TECHNOLOGY LICENSE AGREEMENT


On December 15, 2011, the Company entered into a Patent and Technology License Agreement (the “Technology License Agreement”) with Soon Hock Lim (“SHL”) pursuant to which SHL agreed to grant to the Company non-exclusive licensing rights to use the proprietary technologies and claims under U.S. patent # 8,089,943 in Malaysia, China, Thailand, Philippines and Indonesia. The provisions of the agreement require the Company to make a onetime license fee payment to SHL in the amount of $600,000, within thirty days of the execution of the Technology License Agreement. In addition to the onetime only payment, the Company will be required to pay a royalty equivalent to one percent (1%) of its gross sales which will be due and payable on or before each anniversary of the effective date of the Technology License Agreement or a minimum royalty payment of $100,000 annually, whichever is the higher. The royalty will remain in perpetuity and continue to be paid beyond the life of any patent. SHL agreed to accept 740,740 shares of the Company’s common stock at $0.54 per share for $400,000 in the aggregate and cash payment of $200,000 due within thirty days. On December 29, 2011, the Company issued 740,740 restricted shares of its common stock to SHL.



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13




GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

(Unaudited)


NOTE 4 - PATENT AND TECHNOLOGY LICENSE AGREEMENT (Continued)


On March 23, 2012, the Company entered into an Amended Patent and Technology License Agreement (the “Amended Technology License Agreement I”) pursuant to the Technology License Agreement signed on December 15, 2011 with SHL. Pursuant to the Amended Technology License Agreement I, SHL agreed to expand the licensed territory to include Vietnam, India and Korea. The provisions of the agreement required the Company to make additional onetime only license fee payment to SHL in the amount of $450,000, within sixty days of the execution of the Technology License Agreement. In addition to the onetime only payment, the Company will be required to pay a royalty equivalent to one percent (1%) of the Company’s gross sales which will be due and payable on or before each anniversary of the effective date of the Technology License Agreement or a minimum royalty payment of $100,000 annually, whichever is the higher. The royalty will remain in perpetuity and continue to be paid beyond the life of any patent. SHL agreed to accept 1,000,000 shares of the Company’s common stock at $0.30 per share for $300,000 in the aggregate and cash payment of $150,000, in lieu of the original payment of $450,000. The Company issued 1,000,000 restricted shares of its common stock to SHL on March 23, 2012 and the balance of the purchase consideration totaling $150,000 was due by May 22, 2012.


On June 1, 2012, the Company entered into a Second Amended Patent and Technology License Agreement  (the “Amended Technology License Agreement II”) with SHL. Pursuant to the Amended Technology License Agreement II, SHL agreed to accept 500,000 shares of the Company’s common stock at $0.30 per share for $150,000 in lieu of cash payment. On June 6, 2012, the Company issued 500,000 restricted shares of its common stock to SHL as full and final payment of the license fee.

 

A summary of the patent and technology license agreement at December 31, 2012 and June 30, 2012 is presented below.


 

At December 31,

 

At June 30,

 

2012

 

2012

Patent & Technology License Agreement

$

1,050,000

 

$

1,050,000

Less : Accumulated amortization

 

96,250

 

 

43,750

 

$

953,750

 

$

1,006,250

 

 

 

 

 

 


The amortization expense recorded was $52,500 and $2,500 for the six months ended December 31, 2012 and 2011, respectively



NOTE 5 – METHODOLOGY AND TECHNOLOGY ASSIGNMENT


On September 1, 2010, Info-Accent entered into an Assignment Agreement with the Company’s Chairman, Chief Executive Officer and Director Mohd Aris Bernawi whereby the Chairman assigned to the Company exclusively, throughout the world, all rights, title and interest in the methodology for the optimal sizing of solar PV-wind power generation system for a total consideration of $50,000. Under the terms of the Assignment Agreement, the Company issued 50,000 shares of common stock at $1.00 per share to the Chairman in lieu of cash payment as consideration for the Assignment. On September 1, 2010, the Company issued 50,000 unregistered shares of its common stock at $1.00 per share, to Mohd Aris Bernawi as full and final payment in connection with the acquisition.


The methodology relates to finding the optimum configuration, among a set of system components, which meets the desired system reliability requirements with the lowest value of levelized cost of energy (“LCE”). The LCE is a procedure for determining and comparing the cost of producing energy using different solar panel and wind turbine technologies. The procedure takes into account the installed system price and associated costs such as financing, land, insurance, transmission, operation and maintenance, depreciation, carbon emission and efficiency of the solar panel and wind turbine used.


Two steps are involved in the optimal sizing procedure. The first step is to design a solar PV-wind model based on available local solar and wind data. The second step is to optimize the sizing of a system according to the loss of power supply probability (“LPSP”) and the LCE concepts. The configuration: (i) which can meet the desired system reliability is obtained by changing the type and size of components that make up the system; and (ii) with the lowest LCE gives the optimal choice that places an important role in cost reduction as well as energy production.



14




GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

(Unaudited)


NOTE 5 – METHODOLOGY AND TECHNOLOGY ASSIGNMENT (Continued)


The Company has utilized the optimal sizing procedure in the design and integration of its solar PV-wind power generation applications for:


1.   rural and remote island electrification,

2.   powering remote radio base stations,

3.   potable water production; and

4.   potable water production and organic vegetable cultivation.


A summary of the methodology and technology assignment at December 31, 2012 and June 30, 2012 were presented below.


 

At December 31,

 

At June 30,

 

2012

 

2012

Methodology & Technology Assignment

$

52,714

 

$

49,385

Less : Accumulated amortization

 

24,600

 

 

18,108

 

$

28,114

 

$

31,277

 

 

 

 

 

 



The amortization expense recorded was $5,124 and $5,121 for the six months ended December 31, 2012 and 2011, respectively.



NOTE 6 – STOCKHOLDERS’ EQUITY


Common Stock


On September 18, 2012, two directors of the Company exercised their stock option to purchase an aggregate of 150,000 shares of common stock at an exercise price of $0.124 per share resulting in gross receipt to the Company of $18,600. The aggregate purchase price was set off against the amount due to the optionees at the date of exercise. The exercise price was based on 70% of the fair market value at the date of exercise.


Stock Option Plan


On December 10, 2007, the Company’s Board of Directors approved the adoption of the “2007 Non-Qualified Stock Option and Stock Appreciation Rights Plan” (“2007 Plan”) by unanimous consent and approved by the shareholders on the same date. The 2007 Plan continues in effect for ten years unless terminated earlier. The 2007 Plan was initiated to encourage and enable officers, directors, consultants, advisors, and other key employees of the Company to acquire and retain a proprietary interest in the Company by ownership of its common stock. A total of 1,000,000 of the authorized shares of the Company’s common stock may be subject to, or issued pursuant to, the terms of the 2007 Plan. The 2007 Plan was filed as an exhibit to the Company’s Registration Statement on Form S-1 filed on July 16, 2008.


A summary of the status of the Company’s stock options at December 31, 2012 and 2011; and June 30, 2012; and changes during the six months ended December 31, 2012 and 2011; and for the year ended June 30, 2012 were presented below:



[Table is on following page.]


 




15




GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

(Unaudited)


NOTE 6 – STOCKHOLDERS’ EQUITY (Continued)


Stock Option Plan (Continued)


 

 

At

 

 

December 31,

 

December 31,

 

June 30,

 

 

2012

 

2011

 

2012

Beginning of the period

 

430,000

 

160,000

 

160,000

Granted

 

-

 

-

 

270,000

Exercised

 

(150,000)

 

-

 

-

Cancelled

 

  (75,000)

 

-

 

-

End of the period

 

205,000

 

160,000

 

430,000

 

 

 

 

 

 

 

Options exercisable at end of period

 

145,000

 

160,000

 

227,500

Options unexercisable at end of period

 

  60,000

 

-

 

202,500



At December 31, 2012 and 2011, number of stock options available for issuance under the 2007 Plan were 635,000 and 830,000, respectively.


The following table summarizes information about options outstanding at December 31, 2012 and 2011.


 

 

 

Stock Options Outstanding

 

 

 

Number of Stock

Weighted Average

Weighted Average

 

 

 

Options Outstanding

Remaining Contractual Life

Exercise Price

At December 31, 2012:

 

 

 

 

 

For directors and officers

 

  45,000

1.00

0.2819

 

For directors and officers

 

160,000

0.80

0.2819

Total

 

205,000

 

0.2819

 

 

 

 

 

 

At December 31, 2011:

 

 

 

 

 

For directors and officers

 

160,000

1.00

0.2893

Total

 

160,000

 

0.2893



As of December 31, 2012 and 2011, these stock options were valued at 70% of the fair market value using the Black-Scholes option-pricing model that generated a total fair value of $57,790 and $46,288, respectively.



[Remainder of page left blank.]



16




GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

(Unaudited)


NOTE 6 – STOCKHOLDERS’ EQUITY (Continued)


Warrants


A summary of the status of the Company’s warrants at December 31, 2012 and 2011and changes during 2012 and 2011 is presented below:


 

 

At

 

 

December 31,

December 31,

 

 

2012

2011

Beginning of the period

 

116,812

170,247

Granted

 

-

-

Exercised

 

-

  (53,435)

Cancelled

 

-

-

End of the period

 

116,812

116,812

 

 

 

 

Weighted average exercise

price (Black-Scholes pricing)

 


0.1199


0.5386



At December 31, 2012, 116,812 warrants remain outstanding and were valued using Black-Scholes option-pricing model that generated a total current fair value of $14,006. During the six months ended December 31, 2011, four accredited investors exercised their warrants to purchase 53,435 shares of the Company’s common stock at $1.00 per share resulting in gross proceeds to the Company of $53,435. At December 31, 2011, 116,812 warrants remained outstanding and were valued using Black-Scholes option-pricing model that generated a total fair value of $62,915.



NOTE 7 – INCOME TAXES


United States income tax


The Company and Trevenex Acquisitions, Inc. are incorporated in the State of Nevada and are subjected to United States of America tax laws.


The provision (benefit) for income taxes for the United States for the six months ended December 31, 2012 and 2011, were as follows (assuming a 15 percent effective tax rate):


 

 

 

 

 

 

Six Months Ended

 

 

 

 

 

 

December 31, 2012

 

December 31, 2011

Current Tax Provision:

 

 

 

 

 

 

 

Federal-

 

 

 

 

 

 

 

 

    Taxable income

 

 

 

$

 

$

 

 

 

 

 

 

 

 

 

 

       Total current tax provision

 

 

$

 

$

 

 

 

 

 

 

 

 

 

Deferred Tax Provision:

 

 

 

 

 

 

 

Federal-

 

 

 

 

 

 

 

 

    Loss carryforwards

 

 

 

$

11,487 

 

$

59,598 

 

    Change in valuation allowance

 

 

              (11,487)

 

              (59,598)

 

 

 

 

 

 

 

 

 

 

       Total deferred tax provision

 

 

$

 

$




17




GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

(Unaudited)


NOTE 7 – INCOME TAXES (Continued)


United States income tax (Continued)


The Company had deferred income tax assets at December 31, 2012 and June 30, 2012 as follows:


 

 

 

At

December 31, 2012

 

At

 June 30, 2012

 

 

 

 

 

 

Loss carry forwards

 

$

53,237

 

$

41,750 

Less - Valuation allowance

           (53,237)

 

           (41,750)

 

 

 

 

 

 

     Total net deferred tax assets

$

 

$



The Company provided a valuation allowance equal to the deferred income tax assets for the six months ended December 31, 2012 and June 30, 2012, because it is not presently known whether future taxable income will be sufficient to utilize the loss carryforwards.


As of December 31, 2012 and June 30, 2012, the Company had approximately $354,912 and $278,330, respectively, in tax loss carryforwards that can be utilized in future periods to reduce taxable income, and will begin to expire in the year 2027.


Malaysia income tax


Info-Accent is registered and operates in Malaysia and is subject to Malaysian tax laws. The statutory income tax rate is 20%. Info-Accent provided a deferred income tax liability for the six months ended December 31, 2011 due to the temporary differences from the excess of capital allowances over depreciation.


The income of the Company was derived from its activities in Malaysia. The entity in Malaysia is subject to file on an entity–by-entity basis. The provision for the income tax liability of the Malaysian subsidiary for the six months ended December 31, 2012 and 2011, respectively, were as follows:


 

 

 

 

Six Months ended

 

 

 

 

December 31,

2012

 

December 31,

2011

  Current tax expense

 

 

$                 61,734

 

$                 71,176

  Deferred tax expense

 

 

 

  Provision for Malaysian income tax expense

 

$                 61,734

 

$                 71,176



NOTE 8 – RELATED PARTY TRANSACTIONS


Mohd Aris Bernawi, the Chairman and Chief Executive Officer, is paid a fixed monthly allowance of RM2,000 (approximately $645) in performing his duties as an Officer of the Company. At December 31, 2012, the Company owed the Chairman $29,002 for out-of-pocket expenses. The Company reimburses out-of-pocket expenses on a monthly basis.


At December 31, 2012, the Company owed Valerie Hoi Fah Looi, the Secretary and Director of the Company $34,242 for out-of-pocket expenses incurred in performing her duties as an Officer of the Company. The Company reimburses out-of-pocket expenses on a monthly basis.



[Remainder of page left blank.]



18




 GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

(Unaudited)


NOTE 9 - SIGNIFICANT CONCENTRATION AND CREDIT RISK


Customer Concentration


At December 31, 2012 and 2011, five and five customers, respectively, accounted for 91% and 77% of the trade accounts receivable. Credit concentration in the form of accounts receivables at December 31, 2012 and 2011 were as follows:


 

 

Percentage of Accounts Receivable at

 

 

December 31,

 

 

2012

 

2011

Customer B

 

-

 

14%

Customer D

 

23%

 

12%

Customer E

 

17%

 

10%

Customer F

 

14%

 

-

Customer G

 

18%

 

15%

Customer K

 

19%

 

-

Customer M

 

-

 

26%

 

 

91%

 

77%


Vendor Concentration


At December 31, 2012 and 2011, five and three vendors, respectively, accounted for 87% and 78% of total trade accounts payable. The Company does not rely on any single vendor to provide services. It has made a strategic decision to engage the services of only a small number of vendors after taking into consideration the quality of service and competitive pricing offered. Should the need arise, the Company could utilize alternative vendors for the services required. Vendor concentration at December 31, 2012 and 2011 were as follows:


 

 

Percentage of Accounts Payable at

 

 

December 31,

 

 

2012

 

2011

Vendor B

 

14%

 

-

Vendor C

 

15%

 

-

Vendor D

 

27%

 

21%

Vendor F

 

15%

 

-

Vendor H

 

-

 

31%

Vendor I

 

16%

 

26%

 

 

87%

 

78%


NOTE 10 - SEGMENT INFORMATION


The Company manages its business and aggregates its operational and financial information in accordance with two operating segments; namely (i) mobile VoIP communications and mobile advertising; and (ii) renewable energy.


Although the Company is able to track revenues by sales channel, the management, allocation of resources, analysis and reporting of expenses is presented on a combined basis, at the reportable segment level. Contribution margin is defined as net revenue less cost of sales and total operating expenses.


The following table sets forth the revenue and percentage of revenue attributable to each of the Company's operating segments.




19




GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

(Unaudited)


NOTE 10 - SEGMENT INFORMATION (Continued)


 

 

 

For the Three Months Ended

 

 

For the Six Months Ended

 

 

 

December 31,

 

 

December 31,

 

 

2012

 

2011

 

2012

 

2011

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

Revenue

 

 

Revenue

 

% of Revenue

 

 

Revenue

 

% of Revenue

 

 

Revenue

 

% of Revenue

 

 

Revenue

 

% of Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile VoIP Communications and Mobile Advertising

 

$

3,630,548

 

81%

 

 $

2,071,680

 

47%

 

6,724,481

 

77%

 

 $

2,875,613

 

39%

Renewable Energy

 

 

869,233

 

19%

 

 

2,306,477

 

53%

 

 

2,058,508

 

23%

 

 

4,435,240

 

61%

 

 

$

4,499,781

 

100%

 

 $

4,378,157

 

100%

 

8,782,989

 

100%

 

 $

7,310,853

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Goods Sold

 

 

Cost of Goods Sold

 

% of Cost of Goods Sold

 

 

Cost of Goods Sold

 

% of Cost of Goods Sold

 

 

Cost of Goods Sold

 

% of Cost of Goods Sold

 

 

Cost of Goods Sold

 

% of Cost of Goods Sold

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile VoIP Communications and Mobile Advertising

 

$

2,465,463

 

78%

 

$

1,295,968

 

42%

 

4,477,166

 

74%

 

$

1,628,172

 

32%

Renewable Energy

 

 

676,475

 

22%

 

 

1,796,328

 

58%

 

 

1,569,315

 

26%

 

 

3,534,418

 

68%

 

 

$

3,141,938

 

100%

 

$

3,092,296

 

100%

 

6,046,481

 

100%

 

$

5,162,590

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

Gross Profit

 

% of Gross Profit

 

 

Gross Profit

 

% of Gross Profit

 

 

Gross Profit

 

% of Gross Profit

 

 

Gross Profit

 

% of Gross Profit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile VoIP Communications and Mobile Advertising

 

$

1,165,085

 

86%

 

$

775,712

 

60%

 

2,247,315

 

82%

 

$

1,247,441

 

58%

Renewable Energy

 

 

192,758

 

14%

 

 

510,149

 

40%

 

 

489,193

 

18%

 

 

900,822

 

42%

 

 

$

1,357,843

 

100%

 

$

1,285,861 

 

100%

 

2,736,508

 

100%

 

$

2,148,263

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before Tax

 

Income before Tax

 

% of Income before Tax

 

Income before Tax

 

% of Income before Tax

 

Income before Tax

 

% of Income before Tax

 

Income before Tax

 

% of Income before Tax

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile VoIP Communications and Mobile Advertising

 

$

345,654

 

84%

 

$

207,300

 

49%

 

624,340

 

73%

 

$

333,303

 

40%

Renewable Energy

 

 

66,618

 

16%

 

 

219,619

 

51%

 

 

232,819

 

27%

 

 

501,171

 

60%

 

 

$

412,272

 

100%

 

$

426,919

 

100%

 

857,159

 

100%

 

$

834,474

 

100%


Segment assets  


A summary of the segment assets at December 31, 2012 and June 30, 2012 were presented below.


 

 

 

 

 

At

 

 

At

 

 

 

 

 

 December 31, 2012

 

 

 June 30, 2012

Mobile VoIP Communications and Mobile Advertising

$

  8,136,641

 

6,867,487

Renewable Energy

 

 

  2,477,858

 

 

1,898,661

 

 

 

 

$

10,614,499

 

$

8,766,148





20




GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2012 AND 2011

(Unaudited)


NOTE 11 – RECENT ACCOUNTING PRONOUNCEMENTS


From time to time, the Financial Accounting Standards Board (“FASB”) or other standards setting bodies issue new accounting pronouncements.  Updates to the FASB Accounting Standards Codification (“ASC”) are communicated through issuance of an Accounting Standards Update (“ASU”).


In July 2012, the FASB issued Accounting Standards Update ASU No. 2012-01, Health Care Entities (Topic 954) - Continuing Care Retirement Communities - Refundable Advance Fees. ASU 2012-01 updates Subtopic 954-430, Health Care Entities - Deferred Revenue, requires that a continuing care retirement community recognize a deferral of revenue when a contract between a continuing care retirement community and a resident stipulates that  (1) a portion of the advanced fee is refundable if the contract holder’s unit is reoccupied by a subsequent resident, (2) the refund is limited to the proceeds of reoccupancy, and (3) the legal environment and the entity’s management policy and practice support the withholding of refunds under condition (2). The objective of this Update is to clarify the reporting for refundable advance fees received by continuing care retirement communities. The amendments in this Update are effective for fiscal periods beginning after December 15, 2012. The amendments of ASU 2012-01, when adopted of the amended guidance are not expected to have a material impact on the Company’s consolidated financial statements.

In July 2012 the FASB issued ASU No. 2012-02, Intangibles - Goodwill and Other (Topic 350) Testing Indefinite-Lived Intangible Assets for Impairment, which simplifies how entities test indefinite-lived intangible assets for impairment. ASU 2012-02 permits an entity to first assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test currently required by ASC Topic 350-30 on general intangibles other than goodwill. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, provided that the entity has not yet issued its financial statements. The Company does not anticipate any material impact from the adoption of ASU 2012-02.


In August 2012, the FASB issued ASU 2012-03, Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (“SAB”) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010 in ASU No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.


In October 2012, FASB issued ASU 2012-04, Technical Corrections and Improvements in ASU No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.


Certain accounting pronouncements have been issued by the FASB and other standard setting organizations which are not yet effective and have not yet been adopted by the Company.  The impact on the Company’s financial position and results of operations from adoption of these standards is not expected to be material to the Company.



NOTE 12 - SUBSEQUENT EVENT


The Company has evaluated subsequent events per the requirements of ASC Topic 855 and has concluded that there is no event to be reported.



[Remainder of page left blank.]



21




ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Overview


We have two operating segments, namely: (i) mobile VoIP communications and mobile advertising services; and (ii) renewable energy.


Results of Operations


Our revenue for the three months ended December 31, 2012 was $4,499,781 comprising of $3,630,548 from mobile VoIP and mobile advertising services and $869,233 generated from renewable energy applications. Our earnings were $0.05 per share and net income before tax was $412,272 with $345,654 from mobile VoIP and mobile advertising and $66,618 from renewable energy.


For the six months ended December 31, 2012 our revenue was $8,782,989 comprising of $6,724,481 from mobile VoIP and mobile advertising services and $2,058,508 generated from renewable energy applications. Our earnings were $0.11 per share and net income before tax was $857,159 with $624,340 from mobile VoIP and mobile advertising and $232,819 from renewable energy.


Revenues


Operating Segment Revenue for the Three and Six Months Ended December 31, 2012


The following table sets forth the revenue and percentage of revenue attributable to each of our two operating segments.


 

 

 

 

For the Three Months Ended

 

 

 

 

 

 

 

 

December 31

 

 

 

 

 

 

 

2012

 

2011

 

 

 

 

Revenue

 

 

 

Revenue

 

% of Revenue

 

 

Revenue

 

% of Revenue

 

Increase / (Decrease)

% Increase /(Decrease)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile VoIP Communications and Mobile Advertising

 

$

3,630,548

 

81%

 

$

2,071,680

 

47%

 

$

1,558,868

75%

Renewable Energy

 

 

 

869,233

 

19%

 

 

2,306,477

 

53%

 

 

(1,437,244)

(62%)

 

 

 

$

4,499,781

 

100%

 

$

4,378,157

 

100%

 

$

121,624   

3%



 

 

 

 

For the Six Months Ended

 

 

 

 

 

 

 

 

December 31

 

 

 

 

 

 

 

2012

 

2011

 

 

 

 

Revenue

 

 

 

Revenue

 

% of Revenue

 

 

Revenue

 

% of Revenue

 

Increase / (Decrease)

% Increase /(Decrease)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile VoIP Communications and Mobile Advertising

 

$

6,724,481

 

77%

 

$

2,875,613

 

39%

 

$

3,848,868

134%

Renewable Energy

 

 

 

2,058,508

 

23%

 

 

4,435,240

 

61%

 

 

(2,376,732)

(54%)

 

 

 

$

8,782,989

 

100%

 

$

7,310,853

 

100%

 

$

1,472,136

20%



The increase in revenue for our mobile VoIP communications and mobile advertising segment for the three and six months ended December 31, 2012 compared to December 31, 2011 was attributed to (i) the securing of new mobile VoIP communications and mobile advertising contracts that were secured during 2012 and 2011; and (ii) adoption of the technology licensing model following the acquisition of U.S. patent #8,005,057 on June 27, 2011. Our adoption of the technology-licensing model has helped us to create a new recurring revenue stream. The new model has also helped our customers to offer a more flexible pricing structure to compete more aggressively in the market. We have mitigated the impact of the lower revenue by securing new multimedia content production and e-commerce contracts that generated a higher profit margin of between 20% and 25%. The lower revenue for our renewable energy segment for the three and six months ended December 31, 2012 compared to December 31, 2011 was attributed to the completion of renewable energy contracts that were secured during 2011.




22




Customer Concentration


Customer concentration based on revenue contribution for the three and six months ended December 31, 2012 and 2011; and credit concentrations at December 31, 2012 and 2011 were as follows:


 

 

Net Sales

 

Accounts Receivable

 

 

For the three months ended

 

For the six months ended

 

at

 

 

December 31,

 

December 31,

 

December 31,

 

 

2012

 

2011

 

2012

 

2011

 

2012

 

2011

Mobile VoIP Communications and Mobile Advertising

 

 

 

 

 

 

 

 

 

 

 

 

Customer A

 

-

 

-

 

-

 

11%

 

-

 

-

Customer B

 

16%

 

22%

 

17%

 

19%

 

-

 

14%

Customer D

 

28%

 

17%

 

23%

 

15%

 

23%

 

12%

Customer E

 

15%

 

15%

 

16%

 

13%

 

17%

 

10%

Customer F

 

15%

 

-

 

17%

 

-

 

14%

 

-

Customer G

 

14%

 

23%

 

15%

 

19%

 

18%

 

15%

 

 

88%

 

77%

 

88%

 

77%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renewable Energy

 

 

 

 

 

 

 

 

 

 

 

 

Customer K

 

73%

 

26%

 

53%

 

27%

 

19%

 

-

Customer L

 

-

 

24%

 

-

 

25%

 

-

 

-

Customer M

 

27%

 

26%

 

47%

 

23%

 

-

 

26%

Customer N

 

-

 

24%

 

-

 

25%

 

-

 

-

 

 

100%

 

100%

 

100%

 

100%

 

91%

 

77%



These significant customers play an important role in our revenue. If we are unable to retain any of the significant customers from our mobile VoIP communications and mobile advertising business segment it will have a material adverse effect on our results of operations and financial condition. We have increased our marketing efforts to increase our customer base to reduce our reliance on the five significant customers from our mobile VoIP communications and mobile advertising segment.


The following table sets forth revenues attributed to geographical location of our respective customers.


Geographic Information

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

 

 

 

 

 

December 31

 

 

 

 

 

 

 

2012

 

2011

 

 

 

 

Revenue

 

 

 

Revenue

 

% of Revenue

 

 

Revenue

 

% of Revenue

 

Increase / (Decrease)

% Increase /(Decrease)

Malaysia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile VoIP Communications and Mobile Advertising

 

$

3,466,260

 

77%

 

$

1,912,927

 

44%

 

$

1,553,333

81%

Renewable Energy

 

 

 

869,233

 

19%

 

 

2,306,477

 

53%

 

 

(1,437,244)

(62%)

 

 

 

 

4,335,493

 

96%

 

 

4,219,404

 

97%

 

 

116,089

3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Homg Kong

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile VoIP Communications and Mobile Advertising

 

$

164,288

 

4%

 

$

158,753

 

3%

 

$

5,535

3%

Renewable Energy

 

 

 

-

 

-

 

 

-

 

-

 

 

-

-

 

 

 

 

164,288

 

4%

 

 

158,753

 

3%

 

 

5,535

3%

 

 

 

 

 

 

 

 

 

 

 

 

$

4,499,781

 

100%

 

$

4,378,157

 

100%

 

$

121,624

3%

 

 

 

 

 

 

 

 

 



23





 

 

 

 

For the Six Months Ended

 

 

 

 

 

 

 

 

December 31

 

 

 

 

 

 

 

2012

 

2011

 

 

 

 

Revenue

 

 

 

Revenue

 

% of Revenue

 

 

Revenue

 

% of Revenue

 

Increase / (Decrease)

% Increase /(Decrease)

Malaysia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile VoIP Communications and Mobile Advertising

 

$

6,399,436

 

73%

 

$

2,550,759

 

35%

 

$

3,848,677

151%

Renewable Energy

 

 

 

2,058,508

 

23%

 

 

4,435,240

 

61%

 

 

(2,376,732)

(54%)

 

 

 

 

8,457,944

 

96%

 

 

6,985,999

 

96%

 

 

1,471,945

21%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hong Kong

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile VoIP Communications and Mobile Advertising

 

$

325,045

 

4%

 

$

324,854

 

4%

 

$

191

0%

Renewable Energy

 

 

 

-

 

-

 

 

-

 

-

 

 

-

-

 

 

 

 

325,045

 

4%

 

 

324,854

 

4%

 

 

191

0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

$

8,782,989

 

100%

 

$

7,310,853

 

100%

 

$

1,472,136

20%



Cost of Goods Sold


 

 

 

 

For the Three Months Ended

 

 

 

 

 

 

 

 

December 31

 

 

 

 

 

 

 

2012

 

2011

 

 

 

 

Cost of Goods Sold

 

 

 

Cost of Goods Sold

 

% of Cost of Goods Sold

 

Cost of Goods Sold

 

% of Cost of Goods Sold

 

Increase / (Decrease)

% Increase /(Decrease)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile VoIP Communications and Mobile Advertising

 

$

2,465,463

 

78%

 

$

1,295,968

 

42%

 

$

1,169,495

90%

Renewable Energy

 

 

 

676,475

 

22%

 

 

1,796,328

 

58%

 

 

(1,119,853)

(62%)

 

 

 

$

3,141,938

 

100%

 

$

3,092,296

 

100%

 

$

49,642

2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended

 

 

 

 

 

 

 

 

December 31

 

 

 

 

 

 

 

2012

 

2011

 

 

 

 

Cost of Goods Sold

 

 

 

Cost of Goods Sold

 

% of Cost of Goods Sold

 

Cost of Goods Sold

 

% of Cost of Goods Sold

 

Increase / (Decrease)

% Increase /(Decrease)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile VoIP Communications and Mobile Advertising

 

$

4,477,166

 

74%

 

$

1,628,172

 

32%

 

$

2,848,994

175%

Renewable Energy

 

 

 

1,569,315

 

26%

 

 

3,534,418

 

68%

 

 

(1,965,103)

(56%)

 

 

 

$

6,046,481

 

100%

 

$

5,162,590

 

100%

 

$

883,891

17%



The increase in cost of goods sold was due to an increase in revenues from our mobile VoIP communications and mobile advertising business segment.


[Remainder of page left blank.]




24





Vendor Concentration


Vendor concentration for the three and six months ended December 31, 2012 and 2011; and accounts payable at December 31, 2012 and 2011 were as follows:


 

 

Net Purchases

 

Accounts Payable

 

 

For the three months ended

 

For the six months ended

 

at

 

 

December 31,

 

December 31,

 

December 31,

 

 

2012

 

2011

 

2012

 

2011

 

2012

 

2011

Mobile VoIP Communications and

Mobile Advertising

 

 

 

 

 

 

 

 

 

 

 

 

Vendor B

 

14%

 

-

 

-

 

-

 

14%

 

-

Vendor C

 

15%

 

22%

 

16%

 

18%

 

15%

 

-

Vendor D

 

28%

 

39%

 

30%

 

31%

 

27%

 

21%

Vendor E

 

14%

 

24%

 

15%

 

40%

 

-

 

-

Vendor F

 

15%

 

15%

 

16%

 

11%

 

15%

 

-

Vendor G

 

14%

 

-

 

16%

 

-

 

-

 

-

 

 

100%

 

100%

 

93%

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renewable Energy

 

 

 

 

 

 

 

 

 

 

 

 

Vendor H

 

-

 

51%

 

100%

 

47%

 

-

 

31%

Vendor I

 

100%

 

49%

 

-

 

53%

 

16%

 

26%

 

 

100%

 

100%

 

100%

 

100%

 

87%

 

78%



We outsource our mobile advertising work to our vendors to: (i) accelerate the commercial rollout of our business, (ii) minimize our up-front investment and financial risks, (iii) enable us to offer products and services to our customers that we believe are best-in-class; and (iv) allow us to focus on our core competency in the development of mobile VoIP communications and mobile advertising applications. We have adopted a similar model in rolling out our solar PV-wind power generation business. All our vendors are located in Malaysia.


Gross Profit


 

 

For the Three Months Ended

 

 

 

December 31,

 

 

 

2012

 

2011

 

 

 

 

Gross Profit

 

 

Gross Profit

 

% of Gross Profit

 

 

Gross Profit

 

% of Gross Profit

 

Increase / (Decrease)

% Increase /(Decrease)

Mobile VoIP Communications and Mobile Advertising

 

$

1,165,085

 

86%

 

$

775,712

 

60%

 

$

389,373

50%

Renewable Energy

 

 

192,758

 

14%

 

 

510,149

 

40%

 

 

(317,391)

(62%)

 

 

$

1,357,843

 

100%

 

$

1,285,861

 

100%

 

$

71,982

6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Six Months Ended

 

 

 

December 31,

 

 

 

2012

 

2011

 

 

 

 

Gross Profit

 

 

Gross Profit

 

% of Gross Profit

 

 

Gross Profit

 

% of Gross Profit

 

Increase / (Decrease)

% Increase /(Decrease)

Mobile VoIP Communications and Mobile Advertising

 

$

2,247,315

 

82%

 

$

1,247,441

 

58%

 

$

999,874

80%

Renewable Energy

 

 

489,193

 

18%

 

 

900,822

 

42%

 

 

(411,629)

(46%)

 

 

$

2,736,508

 

100%

 

$

2,148,263

 

100%

 

$

588,245

27%



25








Gross profit margin for the three and six months ended December 31, 2012 and 2011 were as follows:


 

 

 For the Three Months Ended

 

 

 December 31,

 

 

2012

 

2011

Mobile VoIP Communications and Mobile Advertising

 

32%

 

37%

Renewable Energy

 

22%

 

22%

Overall Gross Profit Margin

 

30%

 

29%


 

 

 For the Six Months Ended

 

 

 December 31,

 

 

2012

 

2011

Mobile VoIP Communications and Mobile Advertising

 

33%

 

43%

Renewable Energy

 

24%

 

20%

Overall Gross Profit Margin

 

31%

 

29%



Gross profit margin from the mobile VoIP and mobile advertising segment decreased from 37% to 32% and 43% to 33%, respectively due to higher cost of sales from our mobile VoIP communications and mobile advertising contracts.



Total Operating Expenses


Three Months Ended December 31, 2012 Compared With Three Months Ended December 31, 2011


 

For the Three Months Ended

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

 

2012

 

 

2011

 

 

Increase / (Decrease)

% Increase / (Decrease)

Other General & Administration

$

393,073

 

$

407,069

 

$

(13,996)

(3%)

Depreciation & Amortization

 

339,158

 

 

230,395

 

 

108,763

47%

Professional Fees

 

17,225

 

 

26,565

 

 

(9,340)

(35%)

Sales & Marketing

 

197,147

 

 

194,913

 

 

2,234

1%

Total Operating Expenses

$

946,603

 

$

858,942

 

$

87,661 

10%



The increase in our operating expenses for the three months ended December 31, 2012 as compared to the three months ended December 31, 2011 was attributed primarily to an increase in provision for depreciation and amortization of assets.


For the three months ended December 31, 2012, the decrease in other general and administrative expenses was primarily attributable to a higher stock compensation during 2011 and offset by higher development cost in 2012. For the three months ended December 31, 2012, 72% of the total general and administrative expenses was for development cost, 8% was for royalties expenses, 8% was for administration and clerical costs; 5% was for payroll and 7% for other expenses such as rental of office space and utilities.


The decrease in professional fees for the three months ended December 31, 2012 compared to the same period in 2011 was primarily attributable to a decrease in accounting and attorney fees.


Sales and marketing expenses for the three months ended December 31, 2012  relate to the promotion and marketing of Info-Accent's mobile VoIP communications, mobile advertising advertisement and microblogging services in Asia.





26




Six Months Ended December 31, 2012 Compared With Six Months Ended December 31, 2011


 

For the Six Months Ended

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

 

2012

 

 

2011

 

 

Increase / (Decrease)

% Increase / (Decrease)

Other General & Administration

$

784,682

 

$

602,144

 

$

182,538

30%

Depreciation & Amortization

 

671,589

 

 

468,841

 

 

202,748

43%

Professional Fees

 

34,056

 

 

47,891

 

 

(13,835)

(29%)

Sales & Marketing

 

390,054

 

 

194,913

 

 

195,141

100%

Total Operating Expenses

$

1,880,381

 

$

1,313,789

 

$

566,592

43%



The increase in our operating expenses for the six months ended December 31, 2012 as compared to the six months ended December 31, 2011 was attributed primarily to an increase in other general and administrative expenses; sales & marketing; and provision for depreciation and amortization of assets.


For the six months ended December 31, 2012, the increase in other general and administrative expenses  compared to the same period in 2011was primarily attributable to an increase in development cost $481,205 in connection with our patent and license agreement purchased and increased in royalties expenses of $66,359 offset by lower stock compensation expense. For the six months ended December 31, 2012, 76% of the total general and administrative expenses was for development cost, 8% was for royalties expenses, 7% was for administration and clerical costs; 4% was for payroll and 5% for other expenses such as rental of office space and utilities.


The decrease in professional fees for the six months ended December 31, 2012 compared to  the same period in, 2011was primarily attributable to a decrease in accounting and attorney fees.


The increase in sales and marketing expenses for the six months ended December 31, 2012 compared to the same period in  2011 was primarily attributed to our increased marketing efforts to promote and market Info-Accent's mobile VoIP communications, mobile advertising advertisement and microblogging services in Asia.


Provision for Income Taxes

 

For the three and six months ended December 31, 2012, Info-Accent recorded an income tax provision of $31,393 and $61,734, respectively. For the three and six months ended December 31, 2011, Info-Accent recorded an income tax provision of $51,628 and $77,176, respectively. In 2012 and 2011, we did not record any tax benefit for the losses incurred in the U.S. by affecting a 100% valuation allowance on the potential benefit as per ASC Topic 740. We will record the tax benefits of U.S. losses once our U.S. operations have realized consistent profitability.


Net Income

 

 

For the Three Months Ended

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

 

2012

 

 

2011

 

 

Increase / (Decrease)

% Increase / (Decrease)

Net Income

$

380,879

 

$

375,291

 

$

5,588

2%


 

For the Six Months Ended

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

 

2012

 

 

2011

 

 

Increase / (Decrease)

% Increase / (Decrease)

Net Income

$

795,425

 

$

757,298

 

$

38,127

5%


The increase in net income was attributable to higher revenues.






27




Total Comprehensive Income


 

For the Three Months Ended

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

 

2012

 

 

2011

 

 

Increase / (Decrease)

% Increase / (Decrease)

Net Income

$

380,879

 

$

375,291

 

$

5,588

2%

Gain / (Loss) in currency translation

$

94,210

 

$

2,216

 

$

91,994

 

Total Comprehensive Income

$

475,089

 

$

377,507

 

$

97,582

26%



 

For the Six Months Ended

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

 

2012

 

 

2011

 

 

Increase / (Decrease)

% Increase / (Decrease)

Net Income

$

795,425

 

$

757,298

 

$

38,127

5%

Gain / (Loss) in currency translation

$

365,929

 

$

(215,929)

 

$

581,858

 

Total Comprehensive Income

$

1,161,354

 

$

541,369

 

$

619,985

115%


Comprehensive income consists of our net income and other comprehensive income, including gain or loss from foreign currency translation. The functional currency of our Malaysian subsidiary is the Ringgit Malaysia (“RM”). The financial statements of our subsidiary are translated to U.S. dollar using the exchange rate prevailing as of the date of balance sheet for assets and liabilities, and average exchange rates (for the period) for revenue, costs and expenses. Net gains or losses resulting from foreign exchange transaction are included in the consolidated statements of operations.


Liquidity and Capital Resources


Liquidity is the ability of a company to generate adequate amounts of cash to meet its needs for cash. During the six months ended December 31, 2012, our operations were primarily funded from internally generated funds. For the six months ended December 31, 2012, our principal sources of liquidity included cash and cash equivalents of $18,270 compared to $18,655 at June 30, 2012. At December 31, 2012, we had a positive working capital of $1,306,453 compared to a working capital deficit of $217,728 at June 30, 2012. The increase in working capital was mainly due to increase in accounts receivables.


Working Capital


 

 

At

December 31, 

2012

 

 

At

June 30, 

2012

 

Increase / (Decrease)

Current Assets

 

$

3,500,306

 

$

1,391,868

 

$

2,108,438

Current Liabilities

 

 

2,193,853

 

 

1,609,596

 

 

584,257

Working Capital (Deficit)

 

$

1,306,453

 

$

(217,728)

 

$

1,524,181



Cash Flows


Cash Flows from Operating Activities. Operating activities used net cash of $59,370 during the six months ended December 31, 2012 and used net cash of $572,227 during the six months ended December 31, 2011. Net cash used in operating activities during the six months ended December 31, 2012 was primarily attributed to an increase in accounts receivable of $2,015,281, increase in deposits and other debtors of $976, noncash adjustments of $733,323 and offset by an increase in the accounts payable amounting to $1,075,521, decreased accrued liabilities of $647,382 and net income of $795,425. Net cash used in operating activities during the six months ended December 31, 2011 was primarily attributed to an increase in accounts receivable of $269,004, increase in deposits and other debtors of $26,635, noncash adjustments of $546,017 and offset by a decrease in the accounts payable amounting to $1,426,113, decreased accrued liabilities of $153,790 and net income of $757,298.


Cash Flows from Investing Activities. There was no investing activity during the six months ended December 31, 2012 and 2011.




28




Cash Flows from Financing Activities. Cash generated from financing activities during the six months ended December 31, 2012 of $14,075 resulted from  unreimbursed expenses incurred by Mohd Aris Bernawi and Valerie Looi in performing their duties as Officers of the Company. Cash generated from financing activities during the six months ended December 31, 2011 of $77,423 resulted from proceeds received from our existing stockholders who exercised their warrants to purchase our common stock totaling $53,436, at an exercise price of $1.00 per share and unreimbursed expenses incurred by Mohd Aris Bernawi and Valerie Looi totaling $23,987 in performing their duties as Officers of the Company.



[Remainder of page left blank.]



29




New Accounting Pronouncements


We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our financial statements, or any of our subsidiaries’ operating results, financial position, or cash flow.



ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.



ITEM 4.  CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by our management, with the participation of our Chief Executive Officer and our Chief Financial Officer of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, as of December 31, 2012.  Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of December 31, 2012.


Changes in Internal Control Over Financial Reporting


There has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that occurred during the quarter ended December 31, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



[Remainder of page left blank.]




30




PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS


We are not engaged in any legal proceedings at the date of this report and have not terminated any legal proceedings during the period covered by this report.



ITEM 1A.  RISK FACTORS


We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.



ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


None



ITEM 3.  DEFAULTS UPON SENIOR SECURITIES


None



ITEM 4.  MINE SAFETY DISCLOSURE [ NOT APPLICABLE]


Not applicable



ITEM 5.  OTHER INFORMATION


None



ITEM 6.  EXHIBITS



Exhibit Number

 

Description of Exhibit

 

 

 

31.1

 

Certification of Principal Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.

 

 

 

31.2

 

Certification of Principal Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended.

 

 

 

32.1

 

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Executive Officer).

 

 

 

32.2

 

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Chief Financial Officer).



31





SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


 

Global MobileTech, Inc.

 

 

February 6, 2013

By:  

/s/ Mohd. Aris Bernawi

 

Mohd. Aris Bernawi

Chief Executive Officer

(Principal Executive Officer)

 

 

February 6, 2013

By:  

/s/ Hon Kit Wong

 

Hon Kit Wong

Chief Financial Officer

(Principal Financial and Accounting Officer)





32