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EXCEL - IDEA: XBRL DOCUMENT - MoneyOnMobile, Inc.Financial_Report.xls

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q  

 

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2014

 

Commission File No. 000-53997

 

picture

 

CALPIAN, INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

Texas

 

20-8592825

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

500 North Akard Street Suite 2850, Dallas, TX  75201

(Address of principal executive offices)

 

214-758-8600

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Exchange Act

None

 

Securities registered pursuant to Section 12(g) of the Exchange Act

Common Stock, Par Value $.001 Per Share

(Title of class)

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes   No 

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes   No 

 

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 past 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   No     

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, 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    No    

 


 

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S‑K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 

 

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.

 

Large accelerated filer           Accelerated filer           Non-accelerated filer            Smaller reporting company      

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes   No 

 

The number of shares outstanding of the registrant’s common stock as of November 13, 2014 was 40,332,615.

 


 

TABLE OF CONTENTS 

 

 

 

 

 

 

 

 

 


 

 

 

 

INTRODUCTORY COMMENT

 

In this Quarterly Report on Form 10-Q,  references to “Calpian,” “Company,” “we,” “us,” and “our” collectively refers to Calpian, Inc., its wholly-owned United States subsidiary, Calpian Commerce, Inc. (“Calpian Commerce”), and its partially-owned joint venture, Calpian Residual Acquisition, L.L.C, and partially-owned Indian Money-on-Mobile enterprise, which includes Digital Payment Processing Limited, My Mobile Payments Limited and Payblox Technologies (India) Private Limited, unless otherwise noted.  All intercompany accounts and transactions have been eliminated in the accompanying consolidated financial statements of the Company.

 

 

FORWARD-LOOKING STATEMENTS

 

When used in this Report, the words “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “intend,” and similar expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) regarding events, conditions and financial trends which may affect the Company’s future plans of operations, business strategy, operating results, and financial position. Such statements are not guarantees of future performance and are subject to risks and uncertainties and actual results may differ materially from those included within the forward-looking statements for various reasons, including those identified under “Risk Factors.”  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date made.  Except as required under federal securities laws and the rules and regulations of the United States Securities and Exchange Commission, the Company does not undertake, and specifically declines, any obligation to update any of these statements or to publicly announce the results of any revisions to any forward-looking statements after the distribution of this report, whether as a result of new information, future events, changes in assumptions, or otherwise.

 

 

 

3

 


 

 

 

PART I – FINANCIAL INFORMATION

 

ITEM  1FINANCIAL STATEMENTS

 

 

 

 

 

 

 

 

 

 

 

 

 

CALPIAN, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

Unaudited

 

Audited

 

September 30, 2014

 

March 31, 2014

 

 

 

 

 

 

ASSETS

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash and equivalents 

$

1,985,441 

 

$

8,078,505 

Accounts receivable 

 

1,451,684 

 

 

1,194,117 

Restricted cash 

 

51,607 

 

 

52,994 

Inventory 

 

3,024,815 

 

 

2,997,872 

Other current assets 

 

1,265,274 

 

 

1,758,270 

 Total current assets

 

7,778,821 

 

 

14,081,758 

Property and equipment  

 

4,055,158 

 

 

398,958 

Residual portfolios  

 

9,470,827 

 

 

9,095,133 

Equity investments

 

465,953 

 

 

301,680 

Deferred financing costs  

 

216,084 

 

 

324,126 

Goodwill  

 

21,619,870 

 

 

21,619,870 

Other intangible assets, at cost  

 

1,326,248 

 

 

1,351,965 

Other non-current assets  

 

1,161,772 

 

 

958,196 

  Total assets

$

46,094,733 

 

$

48,131,686 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY  

 

 

 

 

 

Current Liabilities  

 

 

 

 

 

Accounts payable

$

765,065 

 

$

985,616 

Accrued liabilities

 

1,198,024 

 

 

1,553,247 

Related party payables

 

623,092 

 

 

766,782 

Current portion of long-term debt

 

4,136,461 

 

 

7,260,800 

Deferred revenues

 

431,504 

 

 

595,929 

Total current liabilities

 

7,154,146 

 

 

11,162,374 

Long-term debt

 

15,517,145 

 

 

13,374,296 

Other non-current liabilities

 

208,859 

 

 

214,836 

Total liabilities

 

22,880,150 

 

 

24,751,506 

 

 

 

 

 

 

Shareholders' Equity (Note 12)  

 

 

 

 

 

Preferred stock 

 

 -

 

 

1,000,000 

Common stock 

 

38,909 

 

 

29,022 

Stock subscribed 

 

1,424 

 

 

7,056 

Additional paid-in capital 

 

34,372,306 

 

 

29,494,797 

Accumulated deficit 

 

(17,920,946)

 

 

(15,382,512)

Noncontrolling interest 

 

6,022,162 

 

 

7,230,120 

Cumulative other comprehensive income 

 

700,728 

 

 

1,001,697 

 Total shareholders' equity

 

23,214,583 

 

 

23,380,180 

 Total liabilities and shareholders' equity

$

46,094,733 

 

$

48,131,686 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

4

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CALPIAN, INC. AND SUBSIDIARIES

CONSOLIDATED (UNAUDITED) STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 

 

Three Months Ended

 

Six Months Ended

 

September 30,

 

September 30,

 

2014

 

2013

 

2014

 

2013

Revenues

 

 

 

 

 

 

 

 

 

 

 

Residual portfolios

$

1,131,692 

 

$

955,501 

 

$

2,151,845 

 

$

1,989,865 

Processing fees

 

4,469,432 

 

 

5,062,802 

 

 

9,082,753 

 

 

10,019,326 

Money-on-Mobile

 

53,223,161 

 

 

 -

 

 

93,384,070 

 

 

 -

Other

 

396,414 

 

 

342,909 

 

 

841,305 

 

 

1,004,178 

Total revenues

 

59,220,699 

 

 

6,361,212 

 

 

105,459,973 

 

 

13,013,369 

Cost of revenues

 

 

 

 

 

 

 

 

 

 

 

Residual portfolio amortization

 

272,969 

 

 

239,604 

 

 

581,432 

 

 

537,627 

Processing and servicing

 

3,797,948 

 

 

4,524,038 

 

 

7,676,952 

 

 

8,527,972 

Money-on-Mobile

 

52,637,887 

 

 

 -

 

 

92,392,209 

 

 

 -

Other

 

192,778 

 

 

284,671 

 

 

349,232 

 

 

375,427 

Total cost of revenues

 

56,901,582 

 

 

5,048,313 

 

 

100,999,825 

 

 

9,441,026 

Gross profit

 

2,319,117 

 

 

1,312,899 

 

 

4,460,148 

 

 

3,572,343 

General and administrative expenses

 

 

 

 

 

 

 

 

 

 

 

Salaries and wages

 

2,151,905 

 

 

960,420 

 

 

3,641,588 

 

 

1,969,003 

Selling, general and administrative

 

2,456,297 

 

 

1,215,297 

 

 

5,275,154 

 

 

2,754,655 

Depreciation and amortization

 

159,091 

 

 

30,030 

 

 

303,582 

 

 

56,374 

Total general and administrative

 

4,767,293 

 

 

2,205,747 

 

 

9,220,324 

 

 

4,780,032 

Operating loss

 

(2,448,176)

 

 

(892,848)

 

 

(4,760,176)

 

 

(1,207,689)

Other income / (expenses)

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

(746,036)

 

 

(765,168)

 

 

(1,621,498)

 

 

(1,514,595)

Equity investment gain / (loss)

 

7,189 

 

 

(1,286,062)

 

 

8,007 

 

 

(2,363,779)

Gain/ (loss) on sale of assets

 

2,855,737 

 

 

 -

 

 

2,859,709 

 

 

 -

Total other income/(expenses)

 

2,116,890 

 

 

(2,051,230)

 

 

1,246,218 

 

 

(3,878,374)

Net loss before income taxes

 

(331,286)

 

 

(2,944,078)

 

 

(3,513,958)

 

 

(5,086,063)

Income tax (expense) benefit

 

13,191 

 

 

 -

 

 

13,191 

 

 

 -

Net loss

 

(318,095)

 

 

(2,944,078)

 

 

(3,500,767)

 

 

(5,086,063)

Less net loss attributable to noncontrolling interest

 

363,812 

 

 

 -

 

 

962,333 

 

 

 -

Net income / (loss) attributable to Calpian, Inc. shareholders

 

45,717 

 

 

(2,944,078)

 

 

(2,538,434)

 

 

(5,086,063)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

Currency translation adjustments

 

(247,396)

 

 

 -

 

 

(300,969)

 

 

 -

Total comprehensive loss

$

(565,491)

 

$

(2,944,078)

 

$

(3,801,736)

 

$

(5,086,063)

Comprehensive loss attributable to:

 

 

 

 

 

 

 

 

 

 

 

Noncontrolling interest

$

(434,948)

 

$

 -

 

$

(1,049,064)

 

$

 -

Calpian, Inc. shareholders

$

(130,543)

 

$

(2,944,078)

 

$

(2,752,672)

 

$

(5,086,063)

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares outstanding,

 

 

 

 

 

 

 

 

 

 

 

Basic

 

38,884,201 

 

 

27,807,741 

 

 

38,394,636 

 

 

26,758,369 

Diluted effect of warrants

 

544,367 

 

 

 -

 

 

 -

 

 

 -

Diluted

 

39,428,568 

 

 

27,807,741 

 

 

38,394,636 

 

 

26,758,369 

Earnings Per Share

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.00 

 

$

(0.11)

 

$

(0.07)

 

$

(0.19)

Diluted

$

0.00 

 

$

(0.11)

 

$

(0.07)

 

$

(0.19)

 

The accompanying notes are an integral part of these consolidated financial statements.

 

 

5

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CALPIAN, INC. AND SUBSIDIARIES

CONSOLIDATED (UNAUDITED) STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

 

September 30,

 

2014

 

2013

OPERATING ACTIVITIES

 

 

 

 

 

Net loss

$

(3,500,767)

 

$

(5,086,063)

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

 

 

 

 

 

Equity investment loss (income)

 

(8,007)

 

 

2,363,779 

Deferred financing cost amortization

 

108,042 

 

 

108,042 

Residual portfolio amortization

 

581,432 

 

 

537,627 

Processing and servicing  - merchant portfolio amortization

 

514,981 

 

 

795,974 

Subordinated note discount amortization

 

199,740 

 

 

200,414 

Depreciation and amortization

 

303,582 

 

 

56,374 

Gain on sale of residual portfolio

 

(2,175,558)

 

 

 -

Management equity awards

 

710,014 

 

 

296,818 

Equity awards issued for services

 

96,499 

 

 

 -

Deferred consulting fee amortization

 

205,852 

 

 

183,013 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(257,567)

 

 

293,276 

Inventory

 

(26,939)

 

 

 -

Other assets

 

35,301 

 

 

(314,618)

Related party payables

 

(143,366)

 

 

 -

Accounts payable

 

(220,552)

 

 

217,676 

Accrued liabilities

 

(151,708)

 

 

813,132 

Interest payable

 

(209,249)

 

 

47,213 

Deferred revenue

 

(164,425)

 

 

 -

Other liabilities

 

7,280 

 

 

 -

Net cash (used in) provided by operating activities  

 

(4,095,415)

 

 

512,657 

 

 

 

 

 

 

INVESTING ACTIVITIES

 

 

 

 

 

Contribution to equity method - Money-on-Mobile

 

 -

 

 

(3,149,060)

Investment in equity method - Money-on-Mobile

 

(245,125)

 

 

 -

Contribution to other equity method investments

 

(163,847)

 

 

 -

Investment in residual portfolios

 

(3,093,400)

 

 

 -

Purchases of property and equipment

 

(1,469,200)

 

 

(126,446)

Proceed from sale of residual portfolio

 

3,800,000 

 

 

 -

Acquisition of intangible assets

 

(231,570)

 

 

 -

Net cash used in investing activities

 

(1,403,142)

 

 

(3,275,506)

 

 

 

 

 

 

FINANCING ACTIVITIES

 

 

 

 

 

Borrowings on senior notes

 

999,950 

 

 

 -

Borrowings on subordinated notes

 

 -

 

 

300,000 

Borrowings on notes payable

 

 -

 

 

 -

Payment on notes payable

 

(3,870,000)

 

 

(28,765)

Issuance of common stock and warrants

 

3,252,280 

 

 

2,778,104 

Return and cancellation of stock

 

(680,179)

 

 

 -

Change in restricted cash

 

1,386 

 

 

3,973 

Net cash (used in) provided by financing activities  

 

(296,563)

 

 

3,053,312 

 

 

 

 

 

 

Foreign currency effect on cash flows

 

(297,944)

 

 

 -

6

 


 

 

 

 

 

 

 

Net change in cash and equivalents  

 

(6,093,064)

 

 

290,463 

Cash and equivalents at beginning of period  

 

8,078,505 

 

 

585,717 

Cash and equivalents at end of period  

$

1,985,441 

 

$

876,180 

 

 

 

 

 

 

SUPPLEMENTAL INFORMATION

 

 

 

 

 

Bank financing purchase of fixed assets

 

2,254,500 

 

 

 -

Common stock issued to acquire equity investment

 

 -

 

 

1,504,074 

Stock and warrants for services

 

 -

 

 

480,000 

Common stock issued in exchange for residual portfolios

 

3,150 

 

 

14,880 

Warrants issued as part of debt and equity financings

 

257,000 

 

 

392 

Subordinated debt converted to common stock

 

300,000 

 

 

850,701 

Notes payable for insurance premiums

 

 -

 

 

65,600 

Non cash conversion of Series C preferred to common stock

 

1,000,000 

 

 

 -

Cancellation of common stock related to sale of residual portfolio

 

680,179 

 

 

 -

 

The accompanying notes are an integral part of these consolidated financial statements.

 

7

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CALPIAN, INC. AND SUBSIDIARIES

CONSOLIDATED (UNAUDITED) STATEMENTS OF SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

Series B Preferred

 

Series C Preferred

 

Common Stock

 

Subscribed Stock

 

Paid-in

 

Accumulated

 

Noncontrolling

 

Comprehensive

 

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

Deficit

 

Interests

 

Income

 

Total

Balance, March 31, 2013

 -

 

$

 -

 

 -

 

$

 -

 

23,915,806 

 

$

23,915 

 

 -

 

$

 -

 

$

14,159,576 

 

$

(8,790,446)

 

$

 -

 

$

1,195 

 

 

5,394,241 

Acquisition of residual portfolios

 -

 

 

 -

 

 -

 

 

 -

 

10,941 

 

 

11 

 

 -

 

 

 -

 

 

14,869 

 

 

 -

 

 

 -

 

 

 -

 

 

14,880 

Contribution to Money-on-Mobile

 -

 

 

 -

 

 -

 

 

 -

 

1,248,670 

 

 

1,249 

 

 -

 

 

 -

 

 

1,502,825 

 

 

 -

 

 

 -

 

 

 -

 

 

1,504,074 

Fair value of noncontrolling interest in business combination

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

7,500,000 

 

 

 -

 

 

7,500,000 

Noncontrolling interest contribution

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

97,108 

 

 

 -

 

 

97,108 

Issuance of common stock

 -

 

 

 -

 

 -

 

 

 -

 

1,784,043 

 

 

1,784 

 

6,889,170 

 

 

6,889 

 

 

7,566,467 

 

 

 -

 

 

 -

 

 

 -

 

 

7,575,140 

Warrants issued in financing transactions

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 

3,353,506 

 

 

 -

 

 

 -

 

 

 -

 

 

3,353,506 

Warrants exercised to common stock

 -

 

 

 -

 

 -

 

 

 -

 

391,920 

 

 

392 

 

 -

 

 

 -

 

 

(392)

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Conversion of debt to common stock

 -

 

 

 -

 

 -

 

 

 -

 

633,802 

 

 

633 

 

66,667 

 

 

67 

 

 

1,050,003 

 

 

 -

 

 

 -

 

 

 -

 

 

1,050,703 

Stock issued for services

 -

 

 

 -

 

 -

 

 

 -

 

622,835 

 

 

623 

 

100,000 

 

 

100 

 

 

937,401 

 

 

 -

 

 

 -

 

 

 -

 

 

938,124 

Stock-based compensation

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 

360,005 

 

 

 -

 

 

 -

 

 

 -

 

 

360,005 

Issuance of Series B preferred stock

550,000 

 

 

550 

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 

550,401 

 

 

 -

 

 

 -

 

 

 -

 

 

550,951 

Conversion of Series B to common stock

(550,000)

 

 

(550)

 

 -

 

 

 -

 

414,249 

 

 

414 

 

 -

 

 

 -

 

 

136 

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Issuance of Series C preferred stock

 -

 

 

 -

 

1,000 

 

 

1,000,000 

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

1,000,000 

Net loss

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

(6,592,066)

 

 

(366,988)

 

 

 -

 

 

(6,959,054)

Foreign currency translation adjustment

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

1,000,502 

 

 

1,000,502 

Balance, March 31, 2014

 -

 

$

 -

 

1,000 

 

$

1,000,000 

 

29,022,266 

 

$

29,021 

 

7,055,837 

 

$

7,056 

 

$

29,494,797 

 

$

(15,382,512)

 

$

7,230,120 

 

$

1,001,697 

 

$

23,380,180 

Issuance of common stock

 -

 

 

 -

 

 -

 

 

 -

 

9,607,850 

 

 

9,608 

 

(6,355,570)

 

 

(6,355)

 

 

2,561,593 

 

 

 -

 

 

 -

 

 

 -

 

 

2,564,846 

Warrants issued in financing transactions

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 

944,435 

 

 

 -

 

 

 -

 

 

 -

 

 

944,435 

Conversion of debt to common stock

 -

 

 

 -

 

 -

 

 

 -

 

216,667 

 

 

217 

 

(66,667)

 

 

(67)

 

 

299,850 

 

 

 -

 

 

 -

 

 

 -

 

 

300,000 

Conversion of Series C to common stock

 -

 

 

 -

 

(1,000)

 

 

(1,000,000)

 

 -

 

 

 -

 

1,000,000 

 

 

1,000 

 

 

942,000 

 

 

 -

 

 

 -

 

 

 -

 

 

(57,000)

Stock issued for services

 -

 

 

 -

 

 -

 

 

 -

 

183,422 

 

 

183 

 

(100,000)

 

 

(100)

 

 

96,416 

 

 

 -

 

 

 -

 

 

 -

 

 

96,499 

Acquisition of residual portfolios

 -

 

 

 -

 

 -

 

 

 -

 

2,100 

 

 

 

 -

 

 

 -

 

 

3,148 

 

 

 -

 

 

 -

 

 

 -

 

 

3,150 

Stock-based compensation

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 

710,014 

 

 

 -

 

 

 -

 

 

 -

 

 

710,014 

Canceled stock

 -

 

 

 -

 

 -

 

 

 -

 

(123,290)

 

 

(123)

 

(110,000)

 

 

(110)

 

 

(679,946)

 

 

 -

 

 

 -

 

 

 -

 

 

(680,179)

Purchase of DPPL shares from noncontrolling shareholder

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(265,875)

 

 

 -

 

 

(265,875)

Issuance of MMPL shares to noncontrolling shareholders

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

20,250 

 

 

 -

 

 

20,250 

Net loss

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

(2,538,434)

 

 

(962,333)

 

 

 -

 

 

(3,500,767)

Foreign currency translation adjustment

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

(300,969)

 

 

(300,969)

Balance, September 30, 2014

 -

 

 

 -

 

 -

 

 

 -

 

38,909,015 

 

 

38,909 

 

1,423,600 

 

 

1,424 

 

 

34,372,306 

 

 

(17,920,946)

 

 

6,022,163 

 

 

700,728 

 

 

23,214,583 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

8

 


 

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

1 - OVERVIEW

 

Basis of Presentation

In these consolidated financial statements, references to “Calpian,” “Company,” “we,” “us,” and “our” collectively refers to Calpian, Inc., its wholly-owned United States subsidiary, Calpian Commerce, Inc. (“Calpian Commerce”), and its partially-owned joint venture, Calpian Residual Acquisition, L.L.C, and partially-owned Indian Money-on-Mobile enterprise, which includes Digital Payment Processing Limited, My Mobile Payments Limited and Payblox Technologies (India) Private Limited, unless otherwise noted.  All intercompany accounts and transactions have been eliminated in the accompanying consolidated financial statements of the Company.

 

The Company

Calpian, Inc., a Texas corporation headquartered in Dallas, Texas, was incorporated on May 30, 2006, as Toyzap.com, Inc., and became a public company on May 7, 2008, through a self-underwritten registered public offering of 4,000,000 shares of $.001 par value common stock.  The offering raised $150,000 that was used to pursue a business strategy that never commenced operations.  The “shell company”, Toyzap.com, Inc., was acquired by members of the Company’s current management team, affiliates thereof, and certain other purchasers, on April 23, 2010, pursuant to purchase agreements whereby approximately 99% of the Company’s then issued and outstanding common stock was acquired.  At such time, the former management and Board of Directors resigned and a new management team and Board of Directors were appointed, who then redirected the business focus of the Company to the business plan described below.  On September 3, 2010, the Company changed its name to “Calpian, Inc.” pursuant to approval obtained at a meeting of our shareholders.  The Company’s common stock began trading in the over the counter (“OTC”) market on March 4, 2009, and it currently trades there under the symbol “CLPI.”

 

In March 2012, the Company began to acquire equity interests in Digital Payments Processing Limited (“DPPL”), a newly-organized company.  DPPL maintains an exclusive services agreement with My Mobile Payments Limited (“Money-on-Mobile”).  Both companies are organized under the laws of India and headquartered in Mumbai, India.  Money-on-Mobile is a contractual variable interest entity of DPPL.  As of September  30, 2014, the Company has acquired 72.9% of the outstanding common stock of DPPL.  The Company and DPPL have entered into an agreement by which the Company intends to acquire additional shares of common stock of DPPL to increase its equity percentage to 74% for an additional investment amount to be negotiated as future investments are made.  The acquisition of additional shares is subject to approval by the Indian government and regulations for foreign investment.  Additionally, Payblox Technologies (India) Private Limited (“Payblox”), a wholly owned subsidiary of Money-on-Mobile, organized in October 2010 under the laws of India and headquartered in Mumbai, India, provides certain back office and support services on behalf of Money-on-Mobile to its customer base.

 

In March 2013, the Company formed a wholly-owned subsidiary, Calpian Commerce, Inc. (“Calpian Commerce”), to own and operate certain assets and liabilities of Pipeline Data, Inc. and its subsidiaries acquired in exchange for a cash payment of $9.75 million.  The acquisition was financed by expanding the Company's senior credit facility from $5 million to $14.5 million.

 

Business Segments

Calpian includes three distinct business units: residual portfolios, merchant payment processing services and its Money-on-Mobile enterprise.

 

Residual portfolios

Small and medium-sized retail merchants typically buy credit card processing and acquiring services from independent sales organizations (“ISOs”). ISOs are sales agents authorized by one or more credit card processors to sell processing and acquiring services on their behalf.  ISOs facilitate the merchant’s application for processing and acquiring services through approvals, credit checks, guarantees, etc. that are required before the merchant can be approved to accept consumer credit card payments.  ISOs then receive payments from the processor, as a commission, based on a percentage of future credit card transaction dollars that are processed on behalf of those merchants gathered by the ISO.  These future payment streams paid to the ISO by the processor are called residuals.  We purchase portfolios of residuals from ISOs at a discounted present value rate, and then we collect the future cash payments from the processors as future credit card transactions occur.

 

Merchant payment processing services

Through our acquisition of Calpian Commerce, we are an integrated provider of merchant payment processing services and related software products throughout the United States. The Company delivers credit and debit card-based payment

9

 


 

processing solutions, primarily to small and medium-sized merchants who operate either in physical business environment, over the Internet, or in mobile or wireless settings via cellular-based wireless devices that the Company sells.

 

Money-on-Mobile

In March 2012, the Company began acquiring common stock of Digital Payments Processing Limited (“DPPL”), a newly-organized company based in Mumbai, India.  During 2012, DPPL entered into a services agreement with My Mobile Payments Limited (“MMPL”), an entity that shares common ownership with DPPL and is also based in Mumbai, India.  Collectively, DPPL, MMPL, and MMPL’s wholly-owned subsidiary, Payblox Technology (India) Private Limited (“Payblox”), operate the Money-on-Mobile enterprise.  In January 2014, the Calpian, Inc. acquired a majority of the common stock of DPPL, obtaining control of DPPL and, through DPPL’s services agreement, obtaining control of MMPL and Payblox.  As such, these entities are included in the Company’s consolidated financial statements (See Note 3).  Prior to obtaining control in January 2014, Money-on-Mobile was accounted for an equity method investment.

 

Money-on-Mobile offers electronic wallet services, similar to carrying a prepaid debit card, through a mobile phone.  Money-on-Mobile can be used to pay for goods and services and sending or receiving money using mobile phone text messages.

 

In India, end consumers are often required to prepay for certain utilities, such as mobile phone services.  Because bank accounts and credit cards are only used by a small portion of the Indian population, end consumers typically prepay for these utilities with cash, either directly to utility providers or through distributors.  Money-on-Mobile acts as an intermediary between a) the utility provider and distributors, b) distributors and end consumers, and c) end consumer and other parties.

 

As an intermediary between the utility provider and distributors, Money-on-Mobile purchases utility units, such as mobile phone minutes, at wholesale rates and resells these units to distributors.  Money-on-Mobile maintains an inventory of these utility units held for resell.

 

As an intermediate between distributors and end consumers, distributors use Money-on-Mobile’s electronic wallet technology to a) allow end consumers to purchase utility units from the distributor by mobile phone text message and b) allow distributors to send a text message confirmation back to the end user.   Money-on-mobile earns a transaction fee for these services, paid by the end consumer.

 

Once an end consumer has established a Money-on-Mobile electronic wallet account, end consumers can use Money-on-Mobile’s technology to facilitate non-distributor-related transactions with other parties that have Money-on-Mobile accounts, including other retailers and utilities and other Money-on-Mobile end consumers.  Money-on-mobile also earns a transaction fee for these services, paid by the end consumer.

 

 

2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Use of Estimates

The preparation of our consolidated financial statements in accordance with U.S. generally accepted accounting principles requires us, on an ongoing basis, to make significant estimates and judgments that affect the reported values of assets, liabilities, revenues, expenses and related disclosure of contingent assets and liabilities.  We base our estimates on historical experience and on various other assumptions we believe are reasonable under the circumstances, the results of which form the basis for our conclusions.  Actual results may differ from these estimates under different assumptions or conditions.  Such differences could have a material impact on our future financial position, results of operations, and cash flows.  Significant estimates include future cash flows used in our calculation of residual portfolio amortization, fair values of warrants and equity awards granted, fair value of asset and liabilities acquired in our business acquisitions, the valuation allowance on deferred tax assets and liabilities, estimates for certain employee benefits and time off, and estimates in the valuation of foreign pension plan liabilities. 

 

Fair Values

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.  We believe the carrying values of cash and equivalents, accounts receivable, other current assets, accounts payable, accrued expenses, and interest payable approximate their fair values.  We believe the carrying value of our senior notes, subordinated notes, and note payable approximate the estimated fair value for debt with similar terms, interest rates, and remaining maturities currently available to companies with similar credit ratings.

 

The estimated fair value of our common stock issued in share-based payments is measured by the more relevant of: (i) the prices received in private placement sales of our stock or (ii) its publically-quoted market price.  We estimate the fair value of warrants, other than those included in common stock unit purchases, and stock options when issued or vested using the

10

 


 

Black-Scholes option-pricing model which requires the input of highly subjective assumptions.  Recognition in shareholders’ equity and expense of the fair value of stock options awarded to employees is on the straight-line basis over the requisite service period and, for grants to nonemployees, when the options vest.  The fair value of exercisable warrants on the date of issuance issued in connection with debt financing transactions or for services are deferred and expensed over the term of the debt or as services are performed.

 

Reclassifications

Certain previously reported amounts have been reclassified to conform to the current presentation.

 

Foreign Currency Translation

The functional currency of wholly owned subsidiary DPPL, and of the variable interest entities MMPL and Payblox is the Indian rupee.  Its assets and liabilities are translated into U.S. dollars at the exchange rates in effect at each balance sheet date, revenues and expenses are translated at quarterly average exchange rates and resulting translation gains or losses are accumulated in other comprehensive loss as a separate component of shareholders’ equity.

 

Cash and Equivalents

We consider cash, deposits, and short-term investments with original maturities of three months or less as cash and equivalents.  Amounts designated by management for specific purposes, including withholdings from merchants to collateralize their contingent liabilities and processing reserves, and by contractual terms of debt agreements are considered restricted cash.  Our deposits at financial institutions at times exceed amounts covered by U.S. Federal Deposit Insurance Corporation insurance.

 

Included in cash and equivalents are proceeds from investors from the purchase of Company securities.   These funds are designated for the purchase of future residual portfolios.  As of September 30, 2014 and March 31, 2014, the Company held cash designated for future portfolio purchases of $473,548 and $4,139,337, respectively. 

 

Restricted Cash

We consider funds received which are held by us as merchant reserves against future losses to be restricted cash.  As of September 30, 2014 and March 31, 2014, the company held as restricted cash $51,607 and $52,994, respectively.

 

Accounts Receivable

Accounts receivable represents the uncollected portion of amounts recorded as revenues.  Management performs periodic analyses to evaluate all outstanding accounts receivable to estimate an allowance for doubtful accounts that may not be collectible, based on the best facts available to management.  Management considers historical collection patterns, accounts receivable aging trends and specific identification of disputed invoices in its analyses.  After all reasonable attempts to collect a receivable have failed, the receivable is directly written off.  As of September 30, 2014 and March 31, 2014, the balance of the allowance for doubtful accounts was $32,012 and $29,826, respectively.

 

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization, using the straight-line method based on estimated useful lives of three to five years.  Repairs and maintenance are charged to expense as incurred. Expenditures that increase the value or productive capacity of assets are capitalized. When property and equipment are retired, sold, or otherwise disposed of, the asset's carrying amount and related accumulated depreciation are removed from the accounts and any gain or loss is reflected in the consolidated statements of operations.

 

Residual Portfolios

Residual portfolios represent investments in (purchases of) recurring monthly residual income streams derived from credit card processing fees paid by merchants in the United States indirectly to third parties.  We purchase portfolios of recurring monthly residual income streams from ISOs as long-term investments and expect to hold them to the point in time when a portfolio’s cash flows become nominal. We value the recurring monthly residual income streams on a net present value basis and acquire the recurring monthly residual income stream through a negotiated agreement with the ISO.  Residual portfolios are recorded at cost and amortized over an estimated 10 year life into cost of revenues.  Each residual portfolio is amortized based on the percentage of actual cash received to total expected future cash flows adjusted for the expected attrition of the portfolio. The recurring monthly residual income streams are paid by processors to us on a monthly basis.  Although history within the industry indicates the cash flows from such income streams are reasonably predictable, the future cash flows are predicated on consumers continued use of credit and debit cards to purchase goods and services from merchants having our service to accept electronic payments.  Quarterly, we evaluate our cash flow estimates and prospectively adjust future amortization.

 

As part of the acquisition of Calpian Commerce, the Company acquired certain residual portfolio assets with a fair value of $6,379,000 determined by a discounted cash flow model for each portfolio using a discount rate of 18%.  The expected

11

 


 

future cash flows were determined based upon future projected revenue and costs adjusted the attrition rate of the merchant base, and the expected cost to service and maintain such portfolios.

 

The Company estimates a 10 year life to be an appropriate measure of the period over which future revenues will be generated by the portfolios.

 

Residual portfolio amortization for Calpian Commerce was $252,515 and $535,492 for the three months ended September 30, 2014 and 2013, respectively, and was $514,981 and $795,974 for the six months ended September 30, 2014 and 2013, respectively, and is included in Processing and services in the accompanying income statement.

 

Residual portfolio amortization for Calpian Inc. was $272,969 and $239,604 for the three months ended September 30, 2014 and 2013, respectively, and was $581,432 and $537,627 for the six months ended September 30, 2014 and 2013, respectively, and is included in Residual portfolio amortization in the accompanying income statement.

 

Equity Investment

Prior to obtaining control in January 2014 (See Note 3), Money-on-Mobile was accounted for as an equity method investment, as the Company had the ability to exercise significant influence, but did not control the enterprise and was not the primary beneficiary. Under the equity method of accounting, the Calpian, Inc. recorded its proportionate share of the net earnings or losses of Money-on-Mobile and a corresponding increase or decrease to the investment balances. In addition, the Company accounted for share issuances by Money-on-Mobile as if the Company had sold a proportional share of its investment and record any resulting gain or loss.  The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable.  No impairments were recorded during the periods three and six months ended September 30, 2014 or 2013.

 

Deferred Financing Costs

The Company capitalizes third-party costs paid to obtain its debt financing.  Capitalized costs are then amortized using a straight-line basis over the related debt term into interest expense.

 

Goodwill

Goodwill consists of the cost of our acquired businesses in excess of the fair value of the identifiable net assets acquired and is allocated to reporting units based on the relative fair value of the future benefit of the purchased operations to our existing business units as well as the acquired business unit.  As of September 30, 2014, goodwill was $19,277,942 for our Money-on-Mobile reporting unit and was $2,341,928 for our Calpian Commerce reporting unit.

 

We perform an annual impairment assessment in the fourth quarter of each year, or more frequently if indicators of potential impairment exist, to determine whether it is more likely than not that the fair value of a reporting unit in which goodwill resides is less than its carrying value.  For reporting units in which this assessment concludes that it is more likely than not that the fair value is more than its carrying value, goodwill is not considered impaired and we are not required to perform the two-step goodwill impairment test. Qualitative factors considered in this assessment include industry and market considerations, overall financial performance, and other relevant events and factors affecting the reporting unit.  For its annual impairment assessment for the year ended March 31, 2014, we determined it was more likely than not that the fair value of each of the reporting units exceeded the carrying values.  As a result, we concluded that goodwill was not impaired as of September  30, 2014 or March 31, 2014.

 

Intangible Assets

Intangible assets consist of software, customer lists, trademarks, and domain names acquired through business combinations, or consists of software developed by the Company which is intended for resale, in which case such capitalized costs are limited to activities occurring after the preliminary stage and before the project is substantially complete and ready for sale.  The weighted average amortization period is 5 years for customer lists, acquisitions costs, and trademarks, 4.5 years for software, and domain names are not amortized.

 

Impairment of Long-Lived Assets

In addition to the annual goodwill impairment test, long-lived assets, including property and equipment and other intangible assets, are reviewed for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable.  If such review indicates that the carrying amount of long-lived assets is not recoverable, the carrying amount of such assets is reduced to fair value.  There were no adjustments to the carrying value of long-lived assets during the six months ended September 30, 2014 or 2013.

 

Revenue Recognition

The Company has three primary revenue streams:  residual portfolios, merchant payment processing fees, and Money-on-Mobile transactions.

12

 


 

 

Residual portfolios

We recognize residual portfolio revenue based on actual cash receipts.

 

Merchant payment processing fees

We derive revenues primarily from the electronic processing of credit, charge and debit card transactions that are authorized and captured through third-party networks. Typically, merchants are charged for these processing services based on a percentage of the dollar amount of each transaction and in some instances, additional fees are charged for each transaction. Certain merchant customers are charged a flat fee per transaction and may also be charged miscellaneous fees, including fees for handling chargebacks, monthly minimums, equipment rentals, sales or leasing and other miscellaneous services.  Processing fees are recorded as revenue in the period the Company receives payment for the transactions.

 

Generally, revenues are reported gross of amounts paid to sponsor banks, as well as interchange and assessments paid to credit card associations (MasterCard and Visa), as Calpian Commerce bears the credit risk or the ultimate responsibility for the merchant accounts.  Included in cost of goods and services sold are the expenses covering interchange and bank processing expenses directly attributable to processing fee revenues are recognized in cost of revenues in the same period as the related revenue.

 

Revenues generated from certain portfolios are reported net of interchange, where we may not have credit risk, or the ultimate responsibility for the merchant accounts. 

 

Money-on-Mobile

As an intermediary between the utility provider and distributors, Money-on-Mobile purchases utility units, such as mobile phone minutes, at wholesale rates and resells these units to distributors.  Distributors often keep a prepaid balance with Money-on-Mobile to facilitate quick transactions.  Utility unit sales are recognized when utility units are delivered, either to the distributors or directly to the end users.  Often, distributors will maintain a prepaid balance in a Money-on-Mobile electronic wallet account to facilitate rapid transactions.  Prepaid balances are deferred until utility units are delivered.  As of September 30, 2014 and March 31, 2014, deferred revenue for Money-on-Mobile was $426,885 and $595,929, respectively.  Revenue from utility units is recognized on a gross basis, as the Company is the primary obligor, has latitude in establishing prices and has inventory risk.

 

The Company recognizes revenue at the time consumers use utility unites to pay for their services consumed.

 

As an intermediate between distributors and end consumers, distributors use Money-on-Mobile’s electronic wallet technology to a) allow end consumers to purchase utility units from the distributor by mobile phone text message and b) allow distributors to send a text message confirmation back to the end user.   Money-on-mobile earns a transaction fee for these services, paid by the end consumer.  Revenue from these transaction fees are recognized on a net basis, under ASC 605-45, at the time consumers use utility units to pay for their services consumed, as the Company is not the primary obligor, does not establish prices and does not maintain inventory risk.  The Company recognizes revenue at the time consumers use utility units to pay for their services consumed.

 

Once an end consumer has established a Money-on-Mobile electronic wallet account, end consumers can use Money-on-Mobile’s technology to facilitate non-distributor-related transactions with other parties that have Money-on-Mobile accounts, including other retailers and utilities and other Money-on-Mobile end consumers.  Money-on-mobile also earns a transaction fee for these services, paid by the end consumer.  Revenue from these transaction fees are recognized on a net basis, under ASC 605-45, at the time the transaction is consummated, as the Company is not the primary obligor, does not establish prices and does not maintain inventory risk.  The Company recognizes revenue at the time consumers use utility units to pay for their services consumed.

 

Income Taxes

Deferred income taxes are recognized for the future income tax effects of differences in the carrying amounts of assets and liabilities for financial reporting and income tax return purposes, including undistributed foreign earnings and losses, using enacted tax laws and rates. A valuation allowance is recognized if it is more likely than not that some or all of a deferred tax asset may not be realized. Tax liabilities, together with interest and applicable penalties included in the income tax provision, are recognized for the benefits, if any, of uncertain tax positions in the financial statements which, more likely than not, may not be realized.

 

Advertising

Advertising costs are expensed as incurred.   Advertising expense was $107,735 and $17,108 for the three months ended September 30, 2014 and 2013, respectively.   Advertising expense was $173,830 and $38,241 for the six months ended September 30, 2014 and 2013, respectively.

13

 


 

 

Recent Accounting Pronouncements

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”).  ASU 2014-09 requires an entity to recognize revenue in an amount that reflects the consideration to which the entity expects to receive in exchange for goods or services.  ASU 2014-09 is effective for our fiscal year beginning April 1, 2017.  We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements.

 

 

3 - BUSINESS ACQUISITIONS

 

Calpian Commerce Inc.

 

On March 15, 2013, the Company acquired certain assets and liabilities of Pipeline Data, Inc. and its subsidiaries, all of which were contributed to and are operated by Calpian Commerce.  The Company purchased the assets for $9.75 million and financed the transaction through an increase to the senior credit facility (see Note 11).  The financing and purchase of Calpian Commerce was treated as a single transaction, and accordingly the proceeds from financing and the disbursements for the purchase of the assets are shown in the Supplemental Information disclosure of the Consolidated Statement of Cash Flows.

 

The following presents the estimated fair values of the net assets acquired following an appraisal of certain assets based on assumptions we believe unrelated market participants would use based on observable and unobservable marketplace factors:

 

 

 

 

 

 

 

 

Cash

$

250,000 

Restricted cash

 

306,967 

Current assets

 

37,287 

Fixed assets

 

205,636 

Residual portfolios

 

6,379,000 

Intangibles

 

179,115 

Goodwill

 

2,341,928 

Accrued revenue receivable

 

107,467 

Liabilities

 

(57,400)

Net assets

$

9,750,000 

 

The residual portfolios are being amortized over 10 years.   

 

Money-on-Mobile

 

In March 2012, the Company began acquiring common stock of DPPL.  The Company continued to acquire additional shares of DPPL common stock throughout 2012, 2013 and 2014.  On January 6, 2014, Calpian, Inc.’s share of DPPL’s outstanding common stock increased from 49.9% to 56.2%, giving Calpian the majority control of the Money-on-Mobile enterprise and triggering step acquisition accounting.  At September 30, 2014, the Company’s ownership in DPPL was 72.9% after additional DPPL common stock purchases during the period from January 7, 2014 through September 30, 2014.

 

Although the Company does not directly own common stock of MMPL or its subsidiary Payblox, these entities are included in the Money-on-Mobile acquisition accounting due to certain terms of the DPPL service agreement.  Under this agreement, DPPL has a right, at its sole discretion, to trigger a merger with MMPL, the terms of which give DPPL control of MMPL.

 

As of January 6, 2014, just prior to acquisition, the Company’s equity interest in Money-on-Mobile was $10,124,831.  As of January 6, 2014, management preliminarily estimated that the fair value of the equity investment was $15,309,520, which resulted in a gain of $5,014,565 that was recognized in the consolidated income statement.  At January 6, 2014, Management preliminarily estimated that the fair value of the non-controlling interests was $7,500,000.   Management’s estimates of the fair values of the equity investment and non-controlling interest are only preliminary and have not yet been completed.  The Company has engaged the services of a third party valuation firm to assist it with its determination of these fair values, but the valuation has not yet been completed.

 

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The following presents the estimated fair values of the net assets acquired following an appraisal of certain assets based on assumptions we believe unrelated market participants would use based on observable and unobservable marketplace factors:

 

 

 

 

 

 

 

 

 

Cash

$

301,527 

Accounts receivable

 

995,411 

Inventory

 

2,034,187 

Prepaids

 

1,369,235 

Other current assets

 

810,867 

Fixed assets

 

82,437 

Intangibles

 

1,228,019 

Non-current investments

 

227,010 

Notes payable & other advances

 

386,086 

Other long term assets

 

9,821 

Goodwill

 

18,474,695 

Accounts payable

 

(623,309)

Short term borrowings

 

(330,124)

Other current liabilities

 

(1,952,233)

Deferred tax liability

 

(22,905)

Other liabilities

 

(181,202)

Net assets

$

22,809,522 

 

 

In the allocation of fair value, goodwill and intangible assets of $19,702,714 were identified.  Additional identifiable intangible assets include software, customer lists, customer acquisition costs and trademark.  Management has not yet determined the separate fair values of these identifiable intangibles apart from goodwill.  The Company has engaged the services of a third party valuation firm to assist it with its determination of these fair values, but the valuation has not yet been completed.

 

Revenue of $53,223,161 and net losses of $887,754  for three months ended September 30, 2014 have been included in the Company’s consolidated statements of comprehensive loss. Revenue of $93,384,070 and net losses of $1,982,481 for six months ended September 30, 2014 have been included in the Company’s consolidated statements of comprehensive loss.

 

 

 

4 - INVENTORY

 

Inventory consisted of the following utility units, merchant equipment and supplies: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014

 

March 31, 2014

Money-on-Mobile utility units

$

2,998,852 

 

$

2,972,281 

Calpian Commerce equipment and supplies

 

25,963 

 

 

25,591 

Total

$

3,024,815 

 

$

2,997,872 

 

Money-on-Mobile utility units, such as mobile phone minutes, are purchased from Indian utility providers and held for sale to Indian distributors or end consumers.  Inventory balances function similar to a non-refundable prepaid account with the utility providers. 

 

Calpian Commerce equipment consists of point-of-sales terminal equipment held for sale to merchants, resellers and distributors of our domestic operations.  Inventory is valued at the lower of cost or market price. Cost is arrived at using the first-in, first-out method. Market price is estimated based on current sales of equipment.

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5 - OTHER CURRENT ASSETS

 

Other current assets consisted of the following: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014

 

March 31, 2014

Deferred financing fees

 

$

216,084 

 

$

216,084 

Deferred consulting fees

 

 

66,867 

 

 

232,826 

Capital advance

 

 

81,000 

 

 

538,440 

Prepaid foreign service and income taxes

 

 

505,590 

 

 

429,244 

Advance payments to vendors

 

 

169,550 

 

 

246,694 

Prepaid personnel costs

 

 

195,804 

 

 

87,919 

Other

 

 

30,379 

 

 

7,063 

Total other current assets

 

$

1,265,274 

 

$

1,758,270 

 

 

6 - PROPERTY AND EQUIPMENT

 

Property and equipment consisted of the following: 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014

 

March 31, 2014

Office building

 

$

3,689,138 

 

$

 -

Equipment

 

 

386,663 

 

 

375,645 

Software

 

 

157,344 

 

 

125,801 

Furniture and fixtures

 

 

69,802 

 

 

69,863 

Leasehold improvements

 

 

4,810 

 

 

4,810 

Subtotal

 

 

4,307,757 

 

 

576,119 

Less accumulated depreciation

 

 

(252,599)

 

 

(177,161)

Total property and equipment

 

$

4,055,158 

 

$

398,958 

 

Depreciation expense for the three months ended September 30, 2014 and 2013 was $51,163 and $30,030 respectively.   Depreciation expense for the six months ended September 30, 2014 and 2013 was $88,056 and $56,374 respectively.

 

 

 

 

 

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7 - EQUITY INVESTMENTS

 

Money-on-Mobile

 

On January 6, 2014, Calpian, Inc. acquired control of Money-on-Mobile (See Note 3).  Prior to that acquisition, the Company accounted for its investment in Money-on-Mobile using the equity method of accounting.   

 

The following table presents a summary results of operations for Money-on-Mobile for the three and six months ended September 30, 2013 under the equity method of accounting:

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months

 

Six Months

 

 

 

 

 

 

 

 

 

Ended

 

Ended

 

 

September 30, 2013

 

September 30, 2013

Total revenues

 

$

39,677,837 

 

$

84,303,853 

Gross profit

 

 

167,199,720 

 

 

168,126,779 

Total expenses

 

 

(168,567,835)

 

 

(170,176,868)

Net loss

 

$

(1,368,115)

 

$

(2,050,089)

 

 

 

Happy Cellular Services Limited

 

As part of our acquisition of Money-on-Mobile enterprise in January 2014, we acquired a 40% equity interest in Happy Cellular Services Limited (“Happy Cellular”), a mobile talk time reseller based in India.    As of September 30, 2014, our equity investment balance was $204,946.

 

Calpian Granite Hill, L.P.

 

In January 2014, we formed Calpian Granite Hill, L.P., a joint venture with a party related to our senior lender, for the purpose of acquiring additional residual portfolios.  As of September  30, 2014, the Company had a 20% ownership as a limited partner, and an equity investment balance of $261,007.    

  

8 - OTHER INTANGIBLE ASSETS

 

Intangible assets consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014

 

March 31, 2014

Customer lists and acquisition costs

 

$

1,351,567 

 

$

1,272,266 

Software

 

 

878,538 

 

 

735,499 

Trademarks

 

 

50,805 

 

 

51,978 

Domain names

 

 

20,000 

 

 

20,000 

Subtotal

 

 

2,300,910 

 

 

2,079,743 

Less accumulated amortization

 

 

(974,662)

 

 

(727,778)

Total

 

$

1,326,248 

 

$

1,351,965 

 

The Company determined the fair value of software acquired during the acquisition of Calpian Commerce was $150,000 and represents costs incurred to software products to be sold to customers.  Additionally, the Company determined the fair value of the software attributable to Money-on-Mobile to be $527,900, comprised of $476,370 in development costs of the MMPL propriety delivery system and $51,531 in development costs of the Payblox propriety delivery system.  Similarly, the Company determined the fair value of customer lists acquired during the acquisition of Money-on-Mobile to be $1,272,265, comprised of $8,898 of value in MMPL customer lists and $1,183,367 in DPPL customer lists.  

 

Amortization expense related to other intangible assets for the three month ended September 30, 2014 and 2013 was $107,928 and $0, respectively.  Amortization expense related to other intangible assets for the six month ended September 30, 2014 and 2013 was $215,526 and $0, respectively.

 

 

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9 - OTHER NON-CURRENT ASSETS

 

Other non-current assets consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014

 

March 31, 2014

Deposits held by lenders

 

$

492,000 

 

$

395,100 

Deposits held by processors

 

 

472,629 

 

 

350,000 

Security and vendor deposits

 

 

197,143 

 

 

213,096 

Total

 

$

1,161,772 

 

$

958,196 

 

 

 

10 - ACCRUED LIABILITIES

 

Accrued liabilities consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014

 

March 31, 2014

Interest

 

$

242,094 

 

$

409,870 

Wages and benefits

 

 

373,678 

 

 

417,918 

Foreign statutory fees

 

 

15,223 

 

 

236,418 

Bank overdraft

 

 

16,981 

 

 

186,198 

Legal settlement

 

 

 -

 

 

150,000 

Professional fees

 

 

70,384 

 

 

65,650 

Merchant reserves

 

 

52,994 

 

 

52,994 

Vendor payments

 

 

256,620 

 

 

 -

Other

 

 

170,050 

 

 

34,199 

Total accrued liabilities

 

$

1,198,024 

 

$

1,553,247 

  

11 – DEBT 

 

Long-term debt consisted of the following:

 

 

 

 

 

 

 

 

 

 

September 30, 2014

 

March 31, 2014

 

 

 

 

 

 

 

Senior credit facility

 

$

9,300,000 

 

$

13,170,000 

Senior promissory notes

 

 

4,000,000 

 

 

3,000,000 

Subordinated notes payable

 

 

4,800,000 

 

 

4,800,000 

Convertible subordinated notes

 

 

 -

 

 

300,000 

Union Bank of India

 

 

2,188,820 

 

 

 -

Less: debt discount

 

 

(635,214)

 

 

(634,904)

Subtotal

 

 

19,653,606 

 

 

20,635,096 

Less: current portion

 

 

(4,136,461)

 

 

(7,260,800)

Long-term debt

 

$

15,517,145 

 

$

13,374,296 

 

Senior Credit Facility

In April 2011, the Company secured an $8.0 million credit facility, bearing interest of 16% per year.  The Company paid origination, commitment and administration fees, and expenses totaling $323,639 and issued the lender warrants to acquire up to 804,467 shares of our common stock at $1.00 per share.  Unamortized deferred financing costs of $525,936 were charged to interest expense when the facility was repaid and closed in November 2012.  There are no related warrants outstanding as of September 30, 2014.

 

In November 2012, the Company entered into a  $5.0 million senior credit facility, amended in March 2013 to $14.5 million.  Outstanding balances under the senior credit facility accrue interest at an annual rate of 13.2%, payable monthly in arrears. On August 8, 2014, the facility was amended to extend interest only payments through September 2015; thereafter, principal is payable in 25 equal monthly installments, plus accrued interest, until maturity in September 2017.  In addition, the facility is subject to a facility growth fee of 4% of new borrowings arranged by the lender and 2% if arranged by others. 

 

During the three months ended September 30, 2014 and 2013, interest expense related to the senior credit facility, exclusive of accretion of debt discount and amortization of loan origination fees, was $367,917 and 434,620, respectively. During the

18

 


 

six months ended September 30, 2014 and 2013, interest expense related to the senior credit facility, exclusive of accretion of debt discount and amortization of loan origination fees, was $802,527 and $869,220, respectively.

 

Additional borrowings under the senior credit facility are limited to the acquisition of credit card residuals in the United States.  Qualifying borrowing amounts are also limited by 16 times the expected monthly gross cash flow of the residuals, as measured immediately following the acquisition.  The senior credit facility is secured by substantially all of the Company’s assets.  The facility requires the Company to meet certain financial covenants.  In addition, the Company maintains a reserve deposit with the lender of $400,200 at September 30, 2014.  As of September 30, 2014, the Company was in compliance with all covenants.

 

In March 2013, the Company issued 500,000 warrants to the senior credit facility lender.  The aggregate fair value of the warrants, determined on the date of issuance using a Black Scholes valuation model was $325,000.  In March 2014, the 500,000 warrants were cancelled in conjunction with raising $3.0 million in equity financing before April 2014.  For the three months ended September 30, 2014 and 2013, amortized debt discount included in interest expense was $32,500 for each period. For the six months ended September 30, 2014 and 2013, amortized debt discount included in interest expense was $65,000 for each period.

 

Loan origination fees related to our senior credit facility are amortized through the September 2016, the maturity date of the facility before the extension dated August 8, 2014, and are included in interest expense.  For the three months ended September 30, 2014 and 2013, amortized financing costs included in interest expense were $54,021 for each period.  For the six months ended September 30, 2014 and 2013, amortized financing costs included in interest expense were 108,042 for each period.

 

As of September 30, 2014 and March 31, 2014, the balance due under the senior credit facility was $9,300,000 and $13,170,000, respectively.

 

Senior Promissory Notes - Calpian Residual Acquisition, LLC

In February 2014, Calpian Residual Acquisition, LLC issued into $3.0 million senior promissory notes to three investors.  In September 2014, an additional $1.0 million of senior promissory notes were issued.  Outstanding balances under the senior promissory notes accrue interest at an annual rate of 12%, payable monthly in arrears. Interest only is payable through February 2015; thereafter, principal is payable evenly for 48 months through maturity, February 2019.  For the three months ended September 30, 2014, interest expense related to the senior promissory notes was $95,000.  For the six months ended September 30, 2014, interest expense related to the senior promissory notes was $198,571.

 

Warrants, valued at the time of issuance using a Black Scholes valuation model, have been issued in connection with the senior promissory notes as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregate Fair

 

 

Number

 

 

Value at the

Date of Issue

 

of Warrants

 

 

 Time of Issuance

Feb-14

 

300,000 

 

$

297,000 

Apr-14

 

50,000 

 

 

40,000 

May-14

 

25,000 

 

 

20,000 

Jul-14

 

50,000 

 

 

40,000 

Aug-14

 

25,000 

 

 

20,000 

Sep-14

 

100,000 

 

 

80,000 

 

 

550,000 

 

$

497,000 

 

 

For the three months ended September 30, 2014, debt discount accreted into interest expense was $23,125.    For the six months ended September 30, 2014, debt discount accreted into interest expense was $44,794.

 

As of September 30, 2014 and March 31, 2014, the balance due under the senior promissory notes was $4,000,000 and $3,000,000, respectively.

 

Subordinated Debt

The Company’s subordinated debt has been issued pursuant to a $3 Million Subordinated Debt Offering, a $2 Million Subordinated Debt Offering,  2012 $3 Million Notes Offering, and a 2012 Convertible Notes Offering, each exempt from registration under Rule 506 of Regulation D of the Securities and Exchange Commission (“SEC”), as described in the

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Current Reports on Form 8-K filed on January 6, 2011 and August 10, 2012.  The notes are secured by a first lien on substantially all of the Company’s assets, but are subordinated to the senior credit facility.  The notes bear interest at a rate of 12% annually paid monthly in arrears.

 

Subordinated Notes Payable 

For the three months ended September 30, 2014 and 2013, debt discount accreted into interest expense was $44,973 for each period.  For the six months ended September 30, 2014 and 2013, debt discount accreted into interest expense was $89,946 for each period.

 

At September  30,  2014 and March 31, 2014, the outstanding balances on subordinated notes payable were $4,800,000 for each period.  

 

Convertible Subordinated Notes

Our convertible subordinated notes can be converted shares of the Company’s common stock at a conversion rate of $1.50 per share at the option of the note holders.  In July 2014, the outstanding convertible subordinated note balances of $300,000 were converted into 150,000 shares of common stock 

 

For the three months ended September 30, 2014 and 2013, debt discount accreted into interest expense was $0 and $69,585, respectively.  For the six months ended September 30, 2014 and 2013, debt discount accreted into interest expense was $0 and $117,558, respectively. 

 

At September 30, 2014 and March 31, 2014, the outstanding balance on convertible subordinated notes payable was $0 and $300,000, respectively. 

 

For the three months ended September 30, 2014 and 2013, interest expense related to the subordinated notes payable, exclusive of debt discount accretion, was $144,000 and $159,833, respectively.  For the six months ended September 30, 2014 and 2013, interest expense related to the subordinated notes payable, exclusive of debt discount accretion, was $296,500 and $333,733, respectively.

 

Union Bank of India

In May 2014, Money-On-Mobile obtained a $2,254,500 loan with Union Bank of India to purchase an office building to be used as its headquarters.  The loan is interest only for the first six months at the rate of 16% per annum.  Thereafter, the interest rate is 15% per annum, and principal and interest payments are to be made in 26 equal quarterly payments.  The loan matures in May 2021 and is collateralized by the building.

 

 

12 - CAPITAL STOCK

 

We have not agreed to register any of our common stock or warrants for resale under the Securities Act of 1933, as amended; however, 9,565,665 shares common stock and warrants to acquire 2,114,123 shares of our common stock have customary “piggy back” registration rights in the event we register shares of our common stock in the future.

 

Preferred Stock

In March 2014, the Company issued 1,000 shares of newly created Series C Convertible Preferred Stock (“Series C Preferred Stock”) pursuant to a subscription agreement for the purchase of up to 5,000 shares of Series C Preferred Stock entered into with an accredited investor. The gross proceeds from the sale of 1,000 shares of Series C Preferred Stock were $1,000,000.  On June 23, 2014 the Series C holder elected to convert all 1,000 shares of Series C Preferred Stock to 1,000,000 shares of common stock.

 

Common Stock

Our common stock trades on the OTC® under the symbol “CLPI.”  Holders of our common stock are entitled to one vote per share and receive dividends or other distributions when, and if, declared by our Board of Directors.  We have reserved 11,103,528 shares for issuance on conversion of convertible subordinated notes, exercise of warrants, and equity incentive awards.

 

Our shareholder equity includes a line item for “subscribed stock,” which represents shares of common stock for which we irrevocably received investors’ purchase prices but, due to administrative delays, had not issued the respective shares of common stock before the period end.

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Warrants

 

A total of 7,603,528 warrants for our common stock with exercise prices ranging from $0.01 to $3.00 per share ($1.52 weighted average) have been issued in connection with our financing transactions and expire as follows by fiscal year:  0 in 2015; 642,501 in 2016; 522,500 in 2017; 677,925 in 2018,  4,441,531 in 2019,  and 1,319,071 in 2020.  On exercise, each warrant will be settled in delivery of one unregistered share of our common stock.

 

The following tables summarize the changes in warrants for the six months ended September 30, 2014.

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

Weighted

 

 

Six Months

 

Average

 

Average

 

 

Ended

 

Exercise

 

Fair Value

 

 

September 30, 2014

 

Price

 

At Grant Date

Outstanding at March 31, 2014

 

6,284,457 

 

1.61 

 

0.65 

Granted

 

1,319,071 

 

1.00 

 

0.73 

Exercised

 

-

 

-

 

-

Expired/canceled

 

 -

 

 -

 

 -

Outstanding at September 30, 2014

 

7,603,528 

 

1.52 

 

0.67 

 

 

For the six months ended September 30, 2014, the Company granted the following warrants:

 

 

 

 

 

 

 

 

Six Months

 

 

Ended

 

 

September 30, 2014

Holders of Series B convertible preferred stock

 

207,125 

Holders of Series C convertible preferred stock

 

100,000 

Warrants issued for common stock

 

739,446 

Warrants issued for services

 

22,500 

Holders of senior promissory notes

 

250,000 

    Total

 

1,319,071 

 

The weighted average expiration period of warrants during the 6 months ending September 30, 2014 is 5 years.

 

We estimate the fair value of warrant granted using the Black-Scholes option valuation model.  The expected life of warrant represents the term of warrant. The expected stock volatility is based on the average of historical volatility of the Company’s common stock and other subjective factors. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time awards are granted, and the expected dividend rate takes into account the absence of any historical payments and management’s intention to retain all earnings for future operations and expansion.

 

The fair value of each warrant granted was estimated on the date of grant using the Black-Scholes valuation model with the following weighted average assumptions for grants during the six months ended September 30, 2014 and 2013:

 

 

 

 

Warrants

2014

2013

Risk-free interest rates

1.63%

1.31%

Expected volatility

1.084

0.9266

Dividend yields

0.0000

0.0000

Expected lives

5 years

5 years

 

2011 Equity Incentive Plan

The 2011 Equity Incentive Plan (“Plan”) provides for issuing equity awards for an aggregate of 3.5 million shares of our common stock in the form of grants of restricted shares, incentive stock options (employees only), nonqualified stock options, share appreciation rights, performance shares, and performance units.  As of September 30, 2014, 1,240,000 shares are available under the Plan. The purposes of the Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to employees, directors, and consultants, and to promote the long-term growth and profitability of the Company.  Stock option awards have a maximum contractual life of ten years and specific vesting terms and performance goals are addressed in each equity award grant.  Shares issued to satisfy awards may be from authorized but unissued or reacquired common stock.

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Stock Options

In September 2014, the Company awarded stock options for 1,360,000 shares of common stock with a fair value $818,941.  Exercisable options with a weighted-average exercise price of $1.24 per share for 2,260,000 shares and $1.49 for 900,000 shares were outstanding at September 30, 2014 and 2013, respectively.  Intrinsic value is the amount by which the fair value of the underlying stock exceeds the exercise price of an option.  No intrinsic value existed for options granted in the three months ending September 30, 2014.  At September 30, 2014, outstanding options are fully vested and the weighted-average remaining contractual term was 9.4 years; however, if services are earlier terminated, 2,060,000 options become void 90 days after termination.  

 

We estimate the fair value of stock options granted using the Black-Scholes option valuation model .The expected life of options represents the period of time the options are expected to be outstanding and other subjective factors. The expected stock volatility is based on the average of historical volatility of the Company’s common stock and other subjective factors. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time awards are granted, and the expected dividend rate takes into account the absence of any historical payments and management’s intention to retain all earnings for future operations and expansion. No forfeiture is expected when stock option granted.

 

The fair value of each option granted was estimated on the date of grant using the Black-Scholes valuation model with the following weighted average assumptions for grants during the six months ended September 30, 2014 and 2013:

 

 

 

 

Option plan

2014

2013

Risk-free interest rates

2.21%

1.69%

Expected volatility

1.02

0.908

Dividend yields

0

0

Expected lives

5.3 years

5.35 years

 

 

The following table summarizes the changes in stock options for the six months ended September 30, 2014.

 

 

 

 

 

 

Options Available for Grant

Number of Options

Weighted Average Exercise Price

Outstanding at March 31, 2014

1,100,000 
900,000 

                       $1.49

Increase in authorized shares

1,500,000 

 

 

Granted

(1,360,000)
1,360,000 

                       $1.00

Exercised

- 

- 

                              -

Outstanding at September 30, 2014

1,240,000 
2,260,000 

                      $1.24

   

 

13 - EARNINGS PER SHARE

 

Basic earnings per share are based on the weighted average number of shares of our common stock outstanding during the period.  At September 30, 2014 and 2013, potentially dilutive securities that would have had an antidilutive effect on our basic net losses per share were:

 

 

 

 

 

 

2014

 

2013

Warrants (weighted-average purchase price per share: 2014 - $1.64; 2013 - $1.83)

7,053,528 

 

4,069,425 

Stock options (weighted-average exercise price per share: 2014 - $1.24; 2013- $1.78)

2,260,000 

 

900,000 

Convertible subordinated notes

 -

 

283,332 

 

  

 

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14 - INCOME TAXES

 

Our $9.3 million federal income tax net operating loss carryover expires over the period 2026 to 2034.  Our federal and state income tax returns are no longer subject to examination for the years before 2010.  We have taken no tax position that, more likely than not, may not be realized. 

 

Significant components of our income tax provision were:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

September 30, 2014

 

September 30, 2013

 

September 30, 2014

 

September 30, 2013

Current state

 

$

 -

 

$

 -

 

$

 -

 

$

 -

Current foreign

 

 

13,191 

 

 

 -

 

 

13,191 

 

 

 -

Deferred federal

 

 

(170,989)

 

 

(882,053)

 

 

546,788 

 

 

(1,280,153)

Valuation allowance

 

 

170,989 

 

 

882,053 

 

 

(546,788)

 

 

1,280,153 

 

 

$

13,191 

 

$

 -

 

$

13,191 

 

$

 -

 

The losses before income taxes and equity investment loss at the 34% federal statutory tax rate reconciles to our tax provision as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

September 30, 2014

 

September 30, 2013

 

September 30, 2014

 

September 30, 2013

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss before income taxes

 

$

(112,360)

 

 

(884,191)

 

$

(1,194,746)

 

$

(1,288,191)

Deferred tax valuation allowance

 

 

(23,274)

 

 

882,053 

 

 

854,155 

 

 

1,280,153 

Permanent items

 

 

11,938 

 

 

17,693 

 

 

13,398 

 

 

17,693 

Equity Adjustment

 

 

123,696 

 

 

(15,555)

 

 

327,193 

 

 

 -

Noncontrolling interests

 

 

 -

 

 

 -

 

 

 -

 

 

 -

State tax (net of federal benefit)

 

 

 -

 

 

 -

 

 

 -

 

 

(9,655)

Foreign

 

 

13,191 

 

 

 -

 

 

13,191 

 

 

 -

 

 

$

13,191 

 

$

 -

 

$

13,191 

 

$

 -

 

 

15 -RELATED PARTIES

Related party payables consisted of the following:

 

 

 

 

 

 

 

 

 

 

 

September 30, 2014

 

March 31, 2014

ART Holdings, Inc.

 

$

197,082 

 

$

155,786 

CMCP director compensation

 

 

426,010 

 

 

449,500 

CMCP short term loan

 

 

 -

 

 

120,000 

Due to Money-on-Mobile directors

 

 

 -

 

 

41,496 

Total related party payables

 

$

623,092 

 

$

766,782 

 

 

Art Holdings, Inc.

ART Holdings, Inc., a company in the merchant processing business founded in 1987 by our Chairman, Mr. Harold Montgomery, provides the Company with certain administrative and support services.  It has been verbally agreed that payment for these services would accrue interest-free and be paid at a future date to be agreed on by the parties. 

 

Cagan McAfee Capital Partners, LLC

On January 1, 2011, the Company signed a two year management advisory agreement with Cagan McAfee Capital Partners, LLC (“CMCP”), an investment company owned and controlled by Laird Q. Cagan, a member of our Board of Directors and a significant shareholder.  The nonexclusive agreement provides for CMCP advising the Company on an array of financial and strategic matters and provides for the services of Mr. Cagan as a member of our Board.  Pursuant to the agreement, CMCP is to be paid $14,500 plus expenses each month as available cash flow permits. On December 10, 2013, the agreement was extended through December 2015 and shall continue month-to-month beyond that date and is thereafter

23

 


 

terminable by either party with 30 days notice. Under the terms of the extension, interest is to accrue beginning January 1, 2013 on unpaid balances at the rate of 12% per annum. 

 

Additionally, in September 2013, the Company borrowed $120,000 from CMCP to help fund its investments in Money-on-Mobile.  The unsecured loan was payable on demand and did not accrue interest.  In April 2014, the loan was repaid in full. 

 

 

16 - LITIGATION

 

National Bankcard Systems, Inc.

On September 18, 2012, National Bankcard Systems, Inc. ("NBS") filed suit in the District Court of Dallas County, Texas against Calpian Residual Partners V, LP (“CRPV”) and Calpian alleging breach of the Residual Purchase Agreement dated November 4, 2008, between CRPV and NBS and certain other improprieties by CRPV.  Plaintiff alleged damages on the date the suit was filed of $729,000 including unpaid merchant servicing fees, compensation for residuals added after Calpian acquired the portfolio, and attorney fees.  Plaintiff further alleged that damages continue to grow, but would not specify an amount.  Craig Jessen, our President, and Harold Montgomery, our CEO, are members of our Board of Directors and substantial shareholders of Calpian, and are executive officers of CRPV, but CRPV is not otherwise an affiliate of Calpian.  Each of the Residual Purchase Agreement and the related alleged improprieties of CRPV arose prior to Calpian's acquisition of the underlying residual portfolio on December 31, 2010.  On October 23, 2013, a final settlement agreement was reached in the amount of $250,000  ($100,000 payable within ten business days of date of final settlement agreement and $30,000 per month thereafter).  As of September 30, 2014, the settlement was  paid in full, and in prior reporting periods the balance was  included in Accrued liabilities on the Company's balance sheet. 

 

 

17 – BUSINESS SEGMENT INFORMATION

 

The Company operates three business segments: (1) Calpian, Inc., which generates revenue by acquiring residual cash flow streams, (2) Calpian Commerce, an independent sales organization in the U.S. with merchant servicing revenue streams, and (3) Money-on-Mobile, which offers a mobile wallet service which can be used to pay for goods and services from the mobile phone as well as making other financial transactions such as sending or receiving money.  Management measures each of our business segments based on pretax results of operations using accounting policies consistent in all material respects with those described in Note 2.  No inter-segment revenue is recorded.

 

Our segments generally align with our revenue streams on the consolidated income statements, except for certain residual portfolio revenue that occurs in Calpian Commerce rather than in Calpian, Inc.  For the three months ended September 30, 2014 and 2013, residual portfolio revenue in Calpian Commerce was $234,170 and $220,582, respectively. For the six months ended September 30, 2014 and 2013, residual portfolio revenue in Calpian Commerce was $460,170 and $438,866, respectively.

 

 

The following presents operating information by segment, reconciled to our consolidated loss before income taxes and equity investment loss, and segment assets.  Information about our equity investee is included in Note 7. 

 

 

24

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

September 30,

 

September 30,

 

2014

 

2013

 

2014

 

2013

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Calpian, Inc.

$

897,522 

 

$

743,784 

 

$

1,691,675 

 

$

1,561,558 

Calpian Commerce

 

5,100,016 

 

 

5,617,428 

 

 

10,384,228 

 

 

11,451,811 

Money-on-Mobile

 

53,223,161 

 

 

 -

 

 

93,384,070 

 

 

 -

 

$

59,220,699 

 

$

6,361,212 

 

$

105,459,973 

 

$

13,013,369 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit:

 

 

 

 

 

 

 

 

 

 

 

Calpian, Inc.

$

584,150 

 

$

459,181 

 

$

1,069,839 

 

$

978,931 

Calpian Commerce

 

1,149,694 

 

 

853,718 

 

 

2,398,448 

 

 

2,593,412 

Money-on-Mobile

 

585,273 

 

 

 -

 

 

991,861 

 

 

 -

 

$

2,319,117 

 

$

1,312,899 

 

$

4,460,148 

 

$

3,572,343 

 

 

 

 

 

 

 

 

 

 

 

 

Purchases of property and equipment:

 

 

 

 

 

 

 

 

 

 

 

Calpian, Inc.

$

 -

 

$

 -

 

$

 -

 

$

 -

Calpian Commerce

 

26,575 

 

 

47,052 

 

 

42,028 

 

 

139,743 

Money-on-Mobile

 

282,322 

 

 

 -

 

 

3,739,413 

 

 

 -

 

$

308,897 

 

$

47,052 

 

$

3,781,441 

 

$

139,743 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization:

 

 

 

 

 

 

 

 

 

 

 

Calpian, Inc.

$

4,389 

 

$

1,244 

 

$

9,601 

 

$

1,244 

Calpian Commerce

 

40,080 

 

 

28,786 

 

 

78,837 

 

 

55,130 

Money-on-Mobile

 

114,622 

 

 

 -

 

 

215,144 

 

 

 -

 

$

159,091 

 

$

30,030 

 

$

303,582 

 

$

56,374 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

Calpian, Inc.

$

437,363 

 

$

428,511 

 

$

955,167 

 

$

841,369 

Calpian Commerce

 

335,613 

 

 

336,657 

 

 

672,501 

 

 

673,226 

Money-on-Mobile

 

(26,940)

 

 

 -

 

 

(6,170)

 

 

 -

 

$

746,036 

 

$

765,168 

 

$

1,621,498 

 

$

1,514,595 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss):

 

 

 

 

 

 

 

 

 

 

 

Calpian, Inc.

$

936,380 

 

$

(2,180,631)

 

$

(887,604)

 

$

(4,472,702)

Calpian Commerce

 

(366,721)

 

 

(763,447)

 

 

(630,682)

 

 

(613,361)

Money-on-Mobile

 

(887,754)

 

 

 -

 

 

(1,982,481)

 

 

 -

 

$

(318,095)

 

$

(2,944,078)

 

$

(3,500,767)

 

$

(5,086,063)

 

 

 

 

 

 

 

 

 

 

 

 

 

   

 

18 - SUBSEQUENT EVENTS

 

In accordance with ASC 855-10, the Company has analyzed its operations subsequent to September 30 2014 to the date these financial statements were issued, and has determined that it does not have any material subsequent to disclose in these financial statements.

 

 

 

25

 


 

ITEM  2 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

 

This Item 2 should be read in the context of the information included in our 2014 Transition Report on Form 10-KT filed with the Securities and Exchange Commission and elsewhere in this Quarterly Report, including our financial statements and accompanying notes in Item 1 of this Quarterly Report.

 

 

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED AND SIX MONTHS ENDED SEPTEMBER 30, 2014 COMPARED TO 2013

 

For the periods three and six months ended September 30, 2014 compared to 2013, the results for our three business segments were as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

September 30,

 

September 30,

 

2014

 

2013

 

2014

 

2013

Revenues:

 

 

 

 

 

 

 

 

 

 

 

Calpian, Inc.

$

897,522 

 

$

743,784 

 

$

1,691,675 

 

$

1,561,558 

Calpian Commerce

 

5,100,016 

 

 

5,617,428 

 

 

10,384,228 

 

 

11,451,811 

Money-on-Mobile

 

53,223,161 

 

 

 -

 

 

93,384,070 

 

 

 -

 

$

59,220,699 

 

$

6,361,212 

 

$

105,459,973 

 

$

13,013,369 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 

 

 

 

 

 

 

 

 

 

Calpian, Inc.

$

584,150 

 

$

459,181 

 

$

1,069,839 

 

$

978,931 

Calpian Commerce

 

1,149,694 

 

 

853,718 

 

 

2,398,448 

 

 

2,593,412 

Money-on-Mobile

 

585,273 

 

 

 -

 

 

991,861 

 

 

 -

Total gross profit

$

2,319,117 

 

 

1,312,899 

 

 

4,460,148 

 

 

3,572,343 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss):

 

 

 

 

 

 

 

 

 

 

 

Calpian, Inc.

$

936,380 

 

$

(2,180,631)

 

$

(887,604)

 

$

(4,472,702)

Calpian Commerce

 

(366,721)

 

 

(763,447)

 

 

(630,682)

 

 

(613,361)

Money-on-Mobile

 

(887,754)

 

 

 -

 

 

(1,982,481)

 

 

 -

 

$

(318,095)

 

 

(2,944,078)

 

 

(3,500,767)

 

 

(5,086,063)

 

Revenue for the Calpian Inc. business segment is generated from the acquisition of residual payment streams, which are primarily funded by debt financing, and which produces gross profit margins fluctuating between 60% and 65%. Margins for residual acquisitions have been within this range since the company began its public filings in 2010. Expansion of this segment’s revenue and gross profit is dependent on the company’s ability to secure additional debt financing.  Revenue for the three months ended September 30, 2014 was higher than 2013 by $154,000, while revenue for the six months ending September 30, 2014 was higher than 2013 by $130,000, both respective increases in revenue resulted from new portfolio acquisitions, offset by normal portfolio attrition and a reduction of revenue resulting from a strategic sale of revenue producing assets. Gross profits for this segment for the three months ended September 30, 2014 compared to 2013 were approximately 65% and 62%, respectively, and for the respective six months ended periods were 63.2% and 62.7%, respectively.  The increase in gross profits is attributable to the income from the acquisition of residual portfolio assets over the past two quarters more than offsetting the attrition of older residual portfolio assets during the same periods. Net income for this business segment for the three months ended September 30, 2014 was $945,513 which includes stock option expense of $605,719 resulting from a stock option grant to non-managerial employees of Calpian Commerce to purchase shares at $1.00 per share, and also includes a  one-time gain of $2.9 million recognized from the sale of revenue producing assets. The Calpian, Inc. business segment generally bears all of the cost of holding company activities such as the costs to acquire new capital and related financing costs, public filings, and other administrative burdens. Excluding stock option expense and the one-time gain on sale of assets Calpian Inc. expenses declined from previous quarter by approximately $500,000 due to reduction of personnel and contractors. This reduction includes one-time expenses of $250,000 related to the company’s refinancing of its senior debt. 

 

Calpian Commerce is a key platform in our strategy to purchase residual income portfolio streams, as it has the capability to service merchants, which is a requirement in most cases to attract new residual acquisition opportunities.

26

 


 

Revenue for the Calpian Commerce business segment is generated from providing servicing and payment processing activities for merchant.  Revenue for three and six month ended September 30, 2014 were lower than 2013 due to normal portfolio attrition.  The gross profit margins for this business segment are generally between 20% and 25%, and are lower compared to the Calpian Inc. business segment given Calpian Commerce offers payment processing services directly to merchant customers and resold through independent sales organizations. Gross profit margin for the three months ended September 30, 2014 compared to 2013 was approximately 22.5% compared to 19.5%, and for the respective six months ended periods was approximately 23.1% and 24.7%, respectively

 

Money-on-Mobile became majority owned on January 6, 2014, at which time the Company began to consolidate the results of its operations, which are included in the segment reporting above.  Prior to the acquisition, the Company accounted for the operations for Money-on-Mobile using the equity method of accounting. Accordingly, the above segment reporting shows no results for Money-on-Mobile for the three or six months periods ended September 30, 2013.  Money-on-Mobile, based in India, provides millions of Indian consumers who are typically unable to obtain a bank account with low cost payment processing through simple features available on cellular phones. This service is currently provided through hundreds of thousands of affiliated retailers, which are similar to “convenience stores” in the U.S. These retailers receive cash from Indian consumers and deposit the equivalent in a “mobile wallet” on consumer’s cell phones, which is then immediately available to be used to make payments to a limited number of utility and retail companies that accept Money-on-Mobile payments. This enterprise is funded on a pre-paid basis, and as a result, Money-on-Mobile has substantial amounts of at-risk inventories purchased from participating vendors. The turnover of these inventories ranges between seven to thirty calendar days. The demand for this service is extremely high with more than 100 million individual phones using this service at least once since the enterprise was founded in 2010.  During the three months ended September 30, 2014 more than 8 million unique individual phones used the service. This trend is expected to increase as the enterprise creates further options for payments using the service. During the three months ended September 30, 2014, Money-On-Mobile began to offer payments for railway ticketing,  which is expected to become an important component of revenue in future quarters. The revenues for the Money-on-Mobile segment for the three months ended and six months ended September 30, 2014 were $53.2 million and $93.4 million, respectively, and the gross margin was approximately 1% in both periods. Based upon the foregoing and the revenues and margins for similar businesses globally, the margin may decrease in the short term, but management expects the margin to increase in the long term given that this margin is below the average of similar payment company’s global margins with similar products and given the forecasted growth of the Indian economy. Money-on-Mobile’s operating losses are the result of the Company’s expenditures in furtherance of sales and marketing efforts to grow the business and be the dominate player in the market, which management believes is the best and fastest path to creating shareholder value.

 

 

LIQUIDITY AND CAPITAL RESOURCES

 

Cash used in consolidated operating activities for the six months periods ended September 30, 2014 was $2,066,742, and cash provided by consolidating operating activities for the six months ended September 30, 2013 was $527,559.  The change between the periods primarily reflects the change in accounting methodology for the Money-on-Mobile enterprise.  For the six months ended September 30, 2013, the Company invested approximately $2.4 million in Money-on-Mobile, accounting for the cash expenditure as an equity investment and not part of the Company’s operating activities.  The Company began including the Money-on-Mobile enterprise as part of its operating activities in the quarter ending March 31, 2014, and now includes Money-on-Mobile’s operating losses as part of the Company’s consolidating operating results including cash flow.

 

Expansion of U.S operations are generally funded primarily with credit facilities, while Indian operations are generally funded primarily by raising equity. As of June 30, 2014, the Company had a $14.5 million senior credit facility under which the Company had $13.1 million in principle outstanding. Of the $13.1 million principle, $9.75 million was used for the business acquisition of Calpian Commerce in March 2013, and $2.9 million was used to finance residual acquisitions during the fiscal year ending March 31, 2013. The $9.75 million utilized to acquire Calpian Commerce included $250,000 in unrestricted cash acquired.  The $1.4 million balance under the facility at March 31, 2014, was restricted to the acquisition of additional residuals portfolios in the U.S.  Under this facility the Company only paid interest on the outstanding balance, but was obligated to begin paying down principle on October 1, 2014. On August 3, 2014, the Company agreed with its senior creditor to reduce this outstanding balance to $9.1 million through a principal payment funded primarily by the sale of assets on which the company recognized a gain of $2.8 million and to extend the commencement of future principal payments until October 1, 2015. The Company is in the process of expanding its debt financing with other lenders to allow for additional purchases of residual cash flows and agreed to a prepayment penalty with the senior lender to facilitate those ongoing negotiations. During the fiscal year 2014 the Company successfully raised sufficient equity to completely fund its 2014 plan for the expansion of its Money-on-Mobile operations. Management believes greater opportunities exist for the expansion of its India operations and intends to fund future expansion with additional equity raises.

  

27

 


 

Our primary sources of liquidity are cash flows from operating activities, sales of our common stock in private placements, and subordinated debt borrowings.  We anticipate these sources will be sufficient to meet our operating needs for the foreseeable future.  However, there are no assurances we can sell more common stock, or issue additional subordinated debt.

The Company plans to raise additional debt to support residual acquisitions and additional equity to support further expansion of Money-On-Mobile operations in India.

 

OFF-BALANCE SHEET ARRANGEMENTS

 

We do not have any off-balance sheet arrangements.

 

CONTRACTUAL OBLIGATIONS

 

We did not incur any material contractual obligation during the reporting period.

 

CRITICAL ACCOUNTING POLICIES

 

We use estimates throughout our statements and changes in estimates could have a material impact on our operations and financial position.  We consider an accounting estimate to be critical if: (1) the estimate requires us to make assumptions about matters that are highly uncertain at the time the estimate is made or (2) changes in the estimate are reasonably likely to occur from period to period, or use of different estimates we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.

 

There have been no changes in the critical accounting policies disclosed in our 2014 Transition Report on Form 10-K

 

ITEM  3      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not required for smaller reporting companies.

 

ITEM 4      CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

The Company’s management, under the supervision of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), performed an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of the end of the period covered by this quarterly report using the “Internal Control – Integrated Framework (2013)” created by the Committee of Sponsoring Organizations of the Treadway Commissions (“COSO”) framework.  Based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures are not currently designed, and are not currently effective, to give reasonable assurance that the information required to be disclosed by the Company in reports that it files under the Securities Exchange Act of 1934 is accumulated  and communicated to management, include the CEO and CFO, to allow timely decisions regarding disclosures and that information is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

 

Changes in Internal Controls

There have been no changes during the quarter in management’s assessment of internal controls and procedures as disclosed in our 2014 Transition Report on Form 10-K. 

 

PART II – OTHER INFORMATION

 

 

ITEM 1LEGAL PROCEEDINGS

 

The description of the litigation in Note 17 of the Condensed Notes to Unaudited Consolidated Financial Statements in Part 1 Item 1 of this Quarterly Report is incorporated herein by reference.

 

ITEM 1ARISK FACTORS

 

This Report contains certain estimates and plans related to us and the industry in which we operate, which assume certain events, trends, and activities will occur and the projected information based on those assumptions.  We do not know all of our assumptions are accurate.  In particular, we do not know what level of acceptance our strategy will achieve, how many acquisitions we will be able to consummate or finance, or the size thereof.  If our assumptions are wrong about any events,

28

 


 

trends, or activities, then our estimates for future growth for our business also may be wrong.  There can be no assurances any of our estimates as to our business growth will be achieved.

 

 

ITEM 3 DEFAULTS UPON SENIOR SECURITIES

 

There have been no changes during the quarter in management’s assessment of market risks as disclosed in our 2014 Transition Report on Form 10-K.

 

ITEM 4 MINE SAFETY DISCLOSURES

 

Not applicable.

 

ITEM 5 OTHER INFORMATION

 

On August 18, 2014, the Company received a comment letter issued by the Securities and Exchange Commission (“SEC”) related to its filings of Form 10-K and Form 10-KA for the fiscal year ended December 2013, Form 10-K Transition Report for fiscal year ended March 31, 2014, and Form 8-K filed March 7, 2014.  As of the date of the filing of this quarterly report, the company’s management is currently in the process of determining whether the comments in the letter, which are currently unresolved, will have a material impact upon the financial information or disclosures included in such filings.

 

ITEM 6 EXHIBITS

 

(a) Exhibits required by Item 601 of Regulation S-K are as follows:

 

 

 

 

 

 

 

 

 

 

Incorporated By Reference

 

 

 

                      (if applicable)                       

Exhibit Number and Description

Form

Filed

Exhibit

 

 

 

 

 

 

 

 

 

 

(31)

Rule 13a-14(a)/15d-14(a) Certifications

 

 

 

 

   31.1

Certification Pursuant to Rule13a-14(a)/15d-14(a) (Chief Executive Officer) *

 

   31.2

Certification Pursuant to Rule13a-14(a)/15d-14(a) (Chef Financial Officer) *

(32)

Section 1350 Certifications

 

 

 

 

   32.1

Section 1350 Certification (Chief Executive Officer) *

 

   32.2

Section 1350 Certification (Chief Financial Officer) *

101

Interactive Data File

 

 

 

 

101.INS 

XBRL Instance **

 

 

 

 

101.SCH

XBRL Taxonomy Extension Schema **

 

 

 

 

101.CAL

XBRL Taxonomy Extension Calculation **

 

 

 

 

101.DEF

XBRL Taxonomy Extension Definition **

 

 

 

 

101.LAB

XBRL Taxonomy Extension Labels **

 

 

 

 

101.PRE

XBRL Taxonomy Extension Presentation **

 

 

 

                    

 

 

 

 

*

Filed herewith.

 

**

XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

29

 


 

SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) 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.

 

CALPIAN, INC.

(Registrant)

 

 

 

 

November 19, 2014

/s/ Harold H. Montgomery                 

 

Harold H. Montgomery

 

Chief Executive Officer and Secretary

 

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

 

 

 

 

 

 

 

Signature

 

 

Title

Date

 

 

 

 

 

 

 

 

 

 

Director, Chairman of the Board,

 

 

/s/ Harold H. Montgomery

 

 

Chief Executive Officer, and

November 19, 2014

 

Harold H. Montgomery

 

 

Secretary

 

 

 

 

 

(principal executive officer)

 

 

 

 

 

 

 

 

 

 

 

Chief Executive Officer, and

 

 

/s/ Harold H. Montgomery

 

 

Secretary

November 19, 2014

 

Harold H. Montgomery

 

 

(principal executive officer)

 

 

 

 

 

 

 

 

 

 

 

Chief Financial Officer

 

 

/s/ Scott S. Arey

 

 

(principal financial

November 19, 2014

 

Scott S. Arey

 

 

and accounting officer)

 

 

 

 

 

 

 

 

/s/ Craig A. Jessen

 

 

Director and President

November 19,2014

 

Craig A. Jessen

 

 

 

 

 

 

 

 

 

 

 

/s/ Laird Q. Cagan

 

 

Director

November 19, 2014

 

Laird Q. Cagan

 

 

 

 

 

 

 

 

 

 

 

/s/ Shashank M. Joshi

 

 

Director

November 19, 2014

 

Shashank M. Joshi

 

 

 

 

 

 

30

 


 

EXHIBIT INDEX

 

 

 

 

 

 

 

 

 

 

Incorporated By Reference

 

 

 

                      (if applicable)                       

Exhibit Number and Description

Form

Filed

Exhibit

 

 

 

 

 

(3)

Articles of Incorporation and Bylaws

 

 

 

 

3.1

Certificate of Formation – For-Profit Corporation of Toyzap.com, Inc.

SB-2

October 18, 2007

3.1

 

3.2

Bylaws

SB-2

October 18, 2007

3.2

 

3.3

Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock

8-K

June 7, 2010

3.1

 

3.4

Certificate of Amendment to Certificate of Designation of Preferences, Rights and Limitations of Series A Convertible Preferred Stock

8-K

August 9, 2010

3.1

 

3.5

Certificate of Amendment to Certificate of Formation – For-Profit Corporation of Toyzap.com, Inc.

8-K

September 8, 2010

3.1

 

3.6

Certificate of Designation of Series B Convertible Preferred Stock

8-K

October 9, 2013

3.1

 

3.7

Resolution Relating to a Series of Shares

8-K

March 11, 2014

3.1

 

3.8

Certificate of Designation of Series C Convertible Preferred Stock

8-K

March 11, 2014

3.2

(4)

Instruments Defining the Rights of Security Holders,

Including Indentures

 

 

 

 

  4.1

Specimen Common Stock Certificate

SB-2

October 18, 2007

4.1

 

  4.2

Common Stock Warrant, form of

8-K

August 9, 2010

4.1

 

  4.3

Company 2011 Equity Incentive Plan

8-K

April 15, 2011

10.1

 

  4.4

Registration Rights Agreement, dated as of April 28, 2011, between the Company and HD Special-Situations II, LP.

8-K

May 4, 2011

4.1

 

  4.5

Form of Warrant Agreement, dated August 7, 2012

8-K

August 10, 2012

4.1

 

  4.6

Form of 2012 $3.0 Million Note

8-K

August 10, 2012

4.2

 

  4.7

Loan and Security Agreement between the Company and Granite Hill Capital Ventures, LLC entered into in November 2012

10-Q

November 13, 2012

4.7

 

  4.8

First Amendment To Loan and Security Agreement dated as of February 27, 2013, by and among the Company and Granite Hill Capital Ventures, LLC

10-K

April 8, 2013

4.8

 

  4.9

Second Amendment To Loan and Security Agreement dated March 15, 2013, by and among the Company and Granite Hill Capital Ventures, LLC and listed new lenders

10-K

April 8, 2013

4.9

 

  4.10

Form of Term Note pursuant to the Second Amendment To Loan and Security Agreement dated March 15, 2013, by and among the Company and Granite Hill Capital Ventures, LLC, et al

10-K

April 8, 2013

4.10

 

  4.11

Letter agreement dated March 12, 2013,by and among the Company and Granite Hill Capital Ventures, LLC

10-Q

May 24, 2013

4.11

 

  4.12

Form of Subscription Agreement, Series B Convertible Preferred Stock

8-K

October 9, 2013

10.1

 

  4.13

Stock Purchase Agreement

8-K

March 11, 2014

10.1

 

  4.14

Form of Subscription Agreement

8-K

May 27, 2014

10.1

 

  4.15

Form of Warrant Agreement

8-K

May 27, 2014

10.2

31

 


 

 

  4.16

Form of Registration Rights Agreement

8-K

May 27, 2014

10.3

(10)

Material Contracts

 

 

 

 

  10.1

Addendum to Service Agreement dated March 28, 2012, between Digital Payment Processing Limited and My Mobile Payments Limited

10-K

April 8, 2013

10.24

 

  10.2

Asset Purchase Agreement dated February 27, 2013 among the Company and Pipeline Data Inc. and The Other Sellers

10-K

April 8, 2013

10.26

 

  10.3

Amendment #2 to Independent Contractor’s Agreement by and between the Company and DNP Financial Strategies effective February 1, 2013

10-K

April 8, 2013

10.29

 

 

 

 

 

(31)

Rule 13a-14(a)/15d-14(a) Certifications

 

 

 

 

   31.1

Certification Pursuant to Rule13a-14(a)/15d-14(a) (Chief Executive Officer) *

 

   31.2

Certification Pursuant to Rule13a-14(a)/15d-14(a) (Chef Financial Officer) *

(32)

Section 1350 Certifications

 

 

 

 

   32.1

Section 1350 Certification (Chief Executive Officer) *

 

   32.2

Section 1350 Certification (Chief Financial Officer) *

101

Interactive Data File

 

 

 

 

101.INS 

XBRL Instance **

 

 

 

 

101.SCH

XBRL Taxonomy Extension Schema **

 

 

 

 

101.CAL

XBRL Taxonomy Extension Calculation **

 

 

 

 

101.DEF

XBRL Taxonomy Extension Definition **

 

 

 

 

101.LAB

XBRL Taxonomy Extension Labels **

 

 

 

 

101.PRE

XBRL Taxonomy Extension Presentation **

 

 

 

                    

 

 

 

 

*

Filed herewith.

 

**

XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

 

32