10-Q 1 gmt10q_033112apg.htm GLMB 10-Q 03/31/12 Global Mobiletech, Inc. 10-Q 03/31/12


UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549


FORM 10-Q


QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934


For the Quarterly Period ended March 31, 2012 (Third Quarter)


Commission File Number:  000-53493


 

Global MobileTech, Inc.

 (Exact name of registrant as specified in charter)


Nevada

 

26-1550187

(State or other jurisdiction of

incorporation or organization)

 

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


1312 North Monroe, Suite 750

Spokane, Washington 99201

(Address of principal executive offices, including Zip Code)

 

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


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X]   No [   ]


Indicate by check whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X]   No [   ]


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


Large accelerated filer [  ]

Accelerated filer [  ]

Non-accelerated filer [  ] 

Smaller reporting company [X]


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

Yes [   ]   No [X]


As of May 15, 2012, there were 6,716,991 shares of our common stock, $0.001 par value, issued and outstanding.






TABLE OF CONTENTS

 

 

 

ITEM NUMBER AND CAPTION

PAGE

 

 

 

PART I

 

2

 

 

 

  ITEM 1.

Financial Statements

2

  ITEM 2.

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

16

  ITEM 3.  

Quantitative and Qualitative Disclosures About Market Risk

25

  ITEM 4.

Controls and Procedures

25

  

 

 

PART II

 

26

 

 

 

  ITEM 1.

Legal Proceedings

26

  ITEM 1A.

Risk Factors

26

  ITEM 2.

Unregistered Sales of Equity Securities and Use of Proceeds

26

  ITEM 3.

Defaults Upon Senior Securities

26

  ITEM 4.

Mine Safety Disclosure [not applicable]

26

  ITEM 5.

Other Information

26

  ITEM 6.

Exhibits

26

 

 

 

SIGNATURES

 

27



PRELIMINARY COMMENTS


As used in this report, the pronouns “we”, “us”, “our” and equivalent pronouns refer to Global MobileTech, Inc. and our consolidated subsidiaries.  As used in the financial statements which are a part of this report, the “Company” and “GMT” refers to Global MobileTech, Inc. and our consolidated subsidiaries. The pronoun “you” refers to the reader of this report. The pronoun “it” refers to the person, party or thing antecedent in the sentence or paragraph.


PART I


ITEM 1.  FINANCIAL STATEMENTS


GLOBAL MOBILETECH, INC. AND SUBSIDIARIES


March 31, 2012 and 2011


Index to Consolidated Financial Statements

(Unaudited)


CONTENTS

Page

Consolidated Balance Sheets at March 31, 2012 (unaudited) and June 30, 2011 (audited)

3

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

4

Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2012 and 2011

5

Notes to the Consolidated Financial Statements

6

 

 


[Remainder of page left blank.]




2





GLOBAL  MOBILETECH, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2012 AND JUNE 30, 2011

 

ASSETS

 

 

 

 

 

 

 

 

March 31,

 

June 30,

 

 

 

 

 

 

 

 

2012

 

2011

ASSETS

 

 

 

 

 

 

(Unaudited)

 

(Audited)

Current Assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

$

18,121 

 

$

17,681 

 

Accounts receivable, net

 

 

 

 

2,508,901 

 

2,319,265 

 

Deposit

 

 

 

 

 

7,526 

 

 

 

   Total Current Assets

 

 

 

 

2,534,548 

 

2,336,946 

Property, Plant and Equipment:

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

 

 

2,888,058 

 

2,910,781 

 

Less - Accumulated depreciation and amortization

 

 

(683,832)

 

(252,596)

 

 

   Property, Plant and Equipment, net

 

 

 

2,204,226 

 

2,658,185 

Other Assets:

 

 

 

 

 

 

 

 

 

Patent (net of accumulated amortization of $327,745; $65,841)

 

3,171,160 

 

3,460,594 

 

Patent & Technology License Agreement  (net of accumulated amortization of $17,500; $0)

 

1,032,500 

 

 

Methodology & Technology Assignment (net of accumulated amortization of $16,307 ; $8,650)

 

35,188 

 

43,250 

 

 

Total Other Assets

 

 

 

 

4,238,848 

 

3,503,844 

Total Assets

 

 

 

 

 

$

8,977,622 

 

$

8,498,975 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

 

 

$

1,220,247

 

$

3,509,293

 

Accrued liabilities

 

 

 

 

 

136,303

 

85,602

 

Federal and other taxes on income

 

 

 

130,117

 

3,480

 

Patent payable

 

 

 

 

 

-

 

1,082,861

 

License agreement payable

 

 

 

 

150,000

 

-

 

Due to related party

 

 

 

 

63,578

 

24,390

 

Notes payable

 

 

 

 

 

-

 

-

 

 

   Total Current Liabilities

 

 

 

 

1,700,245

 

4,705,626

Non-Current Liabilities

 

 

 

 

 

 

 

 

Non-current deferred income taxes

 

 

 

633,211

 

638,194

 

 

Non-Current Liabilities

 

 

 

 

633,211

 

638,194

Total Liabilities

 

 

 

 

 

2,333,456

 

5,343,820

 

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

authorized; none shares issued or outstanding

 

 

-

 

-

 

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

 

 

 

 

 

 

 

 shares authorized; 6,716,991 and 3,652,816 shares

 

 

 

 

 

 

 

 issued and outstanding , respectively

 

 

 

6,716

 

3,653

 

Additional paid-in capital

 

 

 

 

3,844,916

 

1,672,805

 

Accumulated other comprehensive income

 

 

 

52,841

 

77,598

 

Accumulated income

 

 

 

 

2,739,693

 

1,401,099

 

 

   Total stockholders' equity

 

 

 

6,644,166

 

3,155,155

 

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders' Equity

 

 

 

$

8,977,622

 

$

8,498,975

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes to consolidated financial statements are

an integral part of these statements.



3





GLOBAL  MOBILETECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2012 AND 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three

 

For the Three

 

For the Nine

 

For the Nine

 

 

 

 

 

 

 

Months ended

 

Months ended

 

Months ended

 

Months ended

 

 

 

 

 

 

 

March 31,

 

March 31,

 

March 31,

 

March 31,

 

 

 

 

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

 

 

$

4,004,422 

 

$

8,094,496 

 

$

11,315,275 

 

$

24,332,208 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Goods Sold

 

 

 

 

(2,758,364)

 

(6,841,253)

 

(7,920,953)

 

(20,565,364)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

 

 

1,246,058 

 

1,253,243 

 

3,394,322 

 

3,766,844 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Professional fees

 

 

 

12,646 

 

25,107 

 

60,538 

 

71,474 

 

Depreciation and amortization

 

 

249,697 

 

11,173 

 

718,538 

 

129,412 

 

Sales and marketing

 

 

 

195,763 

 

228,889 

 

390,676 

 

516,497 

 

General and administrative - Other

 

 

157,557 

 

114,236 

 

759,731 

 

554,077 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

 

615,663 

 

379,405 

 

1,929,483 

 

1,271,460 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from Operations

 

 

 

630,395 

 

873,838 

 

1,464,839 

 

2,495,384 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

(577)

 

Loss on disposal of mining claims

 

 

 

 

 

(21,211)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other expenses

 

 

 

 

 

 

(21,788)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income Before Income Taxes

 

 

 

630,395 

 

873,838 

 

1,464,839 

 

2,473,596 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes:

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

 

 

(49,071)

 

(135,065)

 

(126,247)

 

(539,402)

 

Deferred

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

 

$

581,324 

 

$

738,773 

 

$

1,338,592 

 

$

1,934,194 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Income:

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

191,172 

 

60,102 

 

(24,757)

 

130,148 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Comprehensive Income

 

 

 

$

772,496 

 

$

798,875 

 

$

1,313,835 

 

$

2,064,342 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings Per Common Share:

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

 

 

$

0.10 

 

$

0.22 

 

$

0.27 

 

$

0.68 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

$

0.10 

 

$

0.20 

 

$

0.26 

 

$

0.65 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Number of Common Shares Outstanding:

 

 

 

 

 

 

 

Basic

 

 

 

 

5,584,464

 

3,395,514

 

4,871,277

 

2,831,274 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

5,953,282

 

3,694,610

 

5,160,852

 

2,973,380 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes to consolidated financial statements are

an integral part of these statements.



4





GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED MARCH 31, 2012 AND 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the  Nine Months Ended

 

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

 

2012

 

2011

 

 

 

 

 

 

 

 

(Unaudited)

 

(Unaudited)

 

Operating Activities:

 

 

 

 

 

 

 

 

Net income

 

 

 

$

1,338,592 

 

$

1,934,194 

 

 

Adjustments to reconcile net income to net cash

 

 

 

 

 

  provided by (used in) operating activities:

 

 

 

 

 

 

Income taxes

 

 

 

126,247 

 

539,402 

 

 

Depreciation and amortization

 

 

718,538 

 

129,412 

 

 

Common stock issued for services

 

(86,408)

 

276,359 

 

 

  Changes in assets and liabilities-

 

 

 

 

 

 

 

 

Deposit

 

 

 

(23,040)

 

(9,000)

 

 

 

Accounts receivable - Trade

 

 

(207,741)

 

(3,714,801)

 

 

 

Accounts payable - Trade

 

 

(2,262,052)

 

1,354,901 

 

 

 

Accrued liabilities

 

 

81,906 

 

(120,459)

 

 

 

 

 

 

 

 

 

 

 

 

Net Cash (Used in) Provided by Operating Activities

(313,958)

 

390,008 

 

 

 

 

 

 

 

 

 

 

 

 

Investing Activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Cash Used in Investing Activities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financing Activities:

 

 

 

 

 

 

 

 

(Repayment to) Proceeds from loan from related party

39,339 

 

(2,893)

 

 

Proceeds from the issuance of notes payable

 

 

(20,000)

 

 

Proceeds from the issuance of common stock

 

53,435 

 

195,224 

 

 

 

 

 

 

 

 

 

 

 

 

Net Cash Provided by Financing Activities

 

92,774 

 

172,331 

 

 

 

 

 

 

 

 

 

 

 

 

Effect of Exchange Rate Changes

 

 

221,624 

 

(546,305)

 

 

 

 

 

 

 

 

 

 

 

 

Net Increase in Cash

 

 

 

440 

 

16,034 

 

 

 

 

 

 

 

 

 

 

 

 

Cash - Beginning of Period

 

 

17,681 

 

18,416 

 

 

 

 

 

 

 

 

 

 

 

 

Cash - End of Period

 

 

 

$

18,121 

 

$

34,450 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental Disclosure of Cash Flow Information:

 

 

 

 

 

 

Interest paid

 

 

 

$

 

$

 

 

 

Income taxes paid

 

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

The accompanying notes to financial statements are

an integral part of these statements.



5






GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2012 AND 2011

(Unaudited)


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



General Organization and Business


Global MobileTech, Inc. (“Global MobileTech”, “GMT” or the “Company”) has focused on the provision of mobile voice over internet protocol (“VoIP”) communications and mobile advertising solutions and services since April 2010. In July 2010, we expanded into the renewable energy business to include (i) the provision of consultancy services for the design and integration of solar photovoltaic (“PV”)-wind hybrid power generation applications (ii) the production of synthetic gas (“syngas”), bio-oil and biochar using biomass such as wood residues, and oil palm stems and fronds as feedstock; and (iii) the establishment and operation of syngas-to-electricity generation plants. Our entry into the renewable energy business was intended to develop additional recurring revenue streams to complement our mobile VoIP communications and mobile advertising business segment.



Unaudited Interim Financial Statements


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



Basis of presentation


The financial information included herein is unaudited and has been prepared consistent with GAAP for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, these consolidated financial statements do not include all information and footnotes required by GAAP for complete consolidated financial statements. These notes should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended June 30, 2011. In the opinion of management, these interim consolidated financial statements include all adjustments (consisting solely of normal recurring adjustments) which are necessary for a fair statement of results for the interim period presented. The results of operations for the three months and nine months ended March 31, 2012 are not necessarily indicative of the results to be expected for the full year.



Principles of Consolidation


The accompanying consolidated financial statements include the accounts of the Company, its wholly owned subsidiaries Trevenex Acquisitions, Inc. and Info-Accent Sdn Bhd (“Info-Accent”). All significant intercompany balances and transactions have been eliminated in consolidation.



[Remainder of page left blank.]



6






GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2012 AND 2011

(Unaudited)


NOTE 2 – PROPERTY, PLANT AND EQUIPMENT


Property, plant and equipment are stated at cost less depreciation. Property, plant and equipment consists of the following at March 31, 2012 and June 30, 2011.


 

At March 31,

 

At June 30,

 

2012

 

2011

 

 

 

 

Computer Software

$

2,228,904

 

$

2,246,441

Plant and Machinery

657,521

 

662,694

Furniture

1,633

 

1,646

 

2,888,058

 

2,910,781

(Less) : Accumulated Depreciation

683,832

 

252,596

 

$

2,204,226

 

$

2,658,185



The depreciation expense recorded was $431,784 and $99,488 for the nine months ended March 31, 2012 and 2011, respectively.



NOTE 3 – STOCKHOLDERS’ EQUITY


Common Stock


In July 2011, an existing stockholder exercised his warrant to purchase 2,000 unregistered shares of common stock at an exercise price of $1.00 per share resulting in gross proceeds to GMT of $2,000.  


On August 3, 2011, Info-Accent and Sunway Technology Development Limited (“Sunway”) executed a Supplemental Agreement to the Patent Purchase Agreement whereby Sunway agreed to receive 1,000,000 unregistered shares of common stock of the Company at $1.00 per share as full and final payment for the purchase price.  On August 5, 2011, the Company issued 1,000,000 restricted shares of its common stock to Sunway.


In August 2011, three existing stockholders exercised their warrants to purchase 51,435 unregistered shares of common stock at an exercise price of $1.00 per share resulting in gross proceeds to GMT of $51,435.


On December 15, 2011, the Company entered into a Patent and Technology License Agreement with Soon Hock Lim (“SHL”). The provisions of the Agreement require GMT to make a onetime only license fee payment to SHL in the amount of $600,000, within 30 days of the execution of the License Agreement. SHL agreed to accept 740,740 shares of GMT’s common stock at $0.54 per share for $400,000 in the aggregate and cash payment of $200,000, in lieu of the original payment of $600,000 due within thirty days. On December 29, 2011, the Company issued 740,740 restricted shares of its common stock to SHL.


On March 15, 2012, the Company awarded an aggregate of 270,000 shares of its common stock to its directors and officers at $0.30 per share. These stock awards were valued on the date that generated a total fair value of $81,000.


On March 23, 2012, the Company entered into an Amended Patent and Technology License Agreement (the “Amended License Agreement”) with SHL. The provisions of the Amended License Agreement required GMT to make an additional onetime only license fee payment to SHL in the amount of $450,000, within 60 days of the execution of the Amended License Agreement. SHL agreed to accept 1,000,000 shares of GMT’s common stock at $0.30 per share for $300,000 in the aggregate and cash payment of $150,000, in lieu of the original payment of $450,000 due within sixty days. On March 23, 2012, the Company issued 1,000,000 restricted shares of its common stock to SHL.




7






GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2012 AND 2011

(Unaudited)


NOTE 3 – STOCKHOLDERS’ EQUITY (Continued)


Stock Option Plan


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


A summary of the status of the Company’s stock options at March 31, 2012 and 2011; and June 30, 2011; and changes during March 31, 2012 and 2011; and June 30, 2011 is presented below:


 

 

At

 

 

March 31,

 

March 31,

 

June 30,

 

 

2012

 

2011

 

2011

Beginning of the period

 

160,000

 

-

 

-

Granted

 

270,000

 

170,000

 

170,000

Exercised

 

-

 

-

 

(10,000)

Cancelled

 

-

 

-

 

-

End of the period

 

430,000

 

170,000

 

160,000

 

 

 

 

 

 

 

Options exercisable at end of period

 

160,000

 

-

 

75,000

Options unexercisable at end of period

 

270,000

 

170,000

 

85,000


As of March 31, 2012 and 2011, stock options available for issuance under the 2007 Plan remained at 560,000.


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


 

 

 

Options Outstanding

 

 

 

Number

Weighted Average

Weighted Average

 

 

 

Outstanding

Remaining Contractual Life

Exercise Price

At March 31, 2012:

 

 

 

 

 

For directors and officers

 

160,000

1.000

0.2859

 

For directors and officers

 

270,000

0.047

0.2859

Total

 

430,000

 

0.2859

 

 

 

 

 

 

At March 31, 2011:

 

 

 

 

 

For directors and officers

 

170,000

0.255

0.5099

Total

 

170,000

 

0.5099


As of March 31, 2012 and 2011, these stock options were valued at 70% of the fair market value using the Black-Scholes option-pricing model that generated a total fair value of $122,937 and $86,696, respectively.



[Remainder of page left blank.]



8





GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2012 AND 2011

(Unaudited)


NOTE 3 – STOCKHOLDERS’ EQUITY (Continued)


Warrants


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


 

 

At

 

 

March 31

March 31,

 

 

2012

2011

Beginning of the period

 

170,247

  72,635

Granted

 

-

  97,612

Exercised

 

  53,435

-

Cancelled

 

-

-

End of the period

 

116,812

170,247

 

 

 

 

Weighted average exercise

price (Black-Scholes option-pricing)

 


0.4590


1.4968


During the nine months ended March 31, 2012, four accredited investors exercised their warrants to purchase 53,435 shares of the Company’s common stock at $1.00 per share resulting in gross proceeds to the Company of $53,435. As of March 31, 2012, 116,812 warrants remained outstanding and were valued using Black-Scholes option-pricing model that generated a total fair value of $53,617. As of March 31, 2011, 170,247 warrants remained outstanding and were valued using Black-Scholes option-pricing model that generated a total fair value of $254,822.



NOTE 4 – INCOME TAXES


United States income tax


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


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


 

 

 

 

 

 

Nine Months Ended

 

 

 

 

 

 

March 31,

 

March 31,

 

 

 

 

 

 

2012

 

2011

Current Tax Provision:

 

 

 

 

 

 

 

Federal-

 

 

 

 

 

 

 

 

  Taxable income

 

 

 

$

 

$

 

 

 

 

 

 

 

 

 

 

     Total current tax provision

 

 

$

 

$

 

 

 

 

 

 

 

 

 

Deferred Tax Provision:

 

 

 

 

 

 

 

Federal-

 

 

 

 

 

 

 

 

  Loss carryforwards

 

 

 

$

76,994 

 

$

54,850 

 

  Change in valuation allowance

 

 

(76,994)

 

(54,850)

 

 

 

 

 

 

 

 

 

 

     Total deferred tax provision

 

 

$

 

$



9









GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2012 AND 2011

(Unaudited)


NOTE 4 – INCOME TAXES (Continued)


United States income tax (Continued)


The Company had deferred income tax assets as of March 31, 2012 and June 30, 2011 as follows:


 

 

 

 

 

 At

 

 At

 

 

 

 

 

March 31,

 

 June 30,  

 

 

 

 

 

2012

 

2011

 

 

 

 

 

 

 

 

  Loss carryforwards

 

 

 

$

118,499 

 

$

41,505 

  Less - Valuation allowance

 

 

(118,499)

 

(41,505)

 

 

 

 

 

 

 

 

     Total net deferred tax assets

 

 

$

 

$


The Company provided a valuation allowance equal to the deferred income tax assets for the nine months ended March 31, 2012 and June 30, 2011, because it is not presently known whether future taxable income will be sufficient to utilize the loss carryforwards.


As of March 31, 2012 and June 30, 2011, the Company had approximately $789,991 and $276,697, respectively, in tax loss carryforwards that can be utilized in future periods to reduce taxable income, and will begin to expire in the year 2027.


Malaysia income tax


Info-Accent is registered and operates in Malaysia and is subject to Malaysian tax laws. The statutory income tax rate is 20%. Info-Accent provided a deferred income tax liability for the nine months ended March 31, 2012 due to the temporary differences from the excess of capital allowances over depreciation.


The income of the Company was derived from its activities in Malaysia. The entity in Malaysia is subject to file on an entity–by-entity basis. The provisions for the income tax liability of the Malaysian subsidiary for the nine months ended March 31, 2012 and June 30, 2011, respectively, are as follows:


 

 

 

 

 

 Nine Months Ended

 

 

 

 

 

March 31,

 

 June 30,  

 

 

 

 

 

2012

 

2011

 

 

 

 

 

 

 

 

Current tax expense

 

 

 

$

126,247

 

$

3,426

Deferred tax expense

 

 

 

-

 

625,655

 

 

 

 

 

 

 

 

     Provision for Malaysian income tax expense

$

126,247

 

$

629,081




[Remainder of page left blank.]



10






GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2012 AND 2011

(Unaudited)


NOTE 5 – RELATED PARTY TRANSACTIONS


As of March 31, 2012, the Company owed Mohd. Aris Bernawi, the Chairman of the Company, $19,217. The amount due to Mr. Aris was to compensate the Chairman for out-of-pocket expenses incurred in carrying out his duties as Chairman and Director of the Company. This amount is unsecured, bears no interest and has no fixed terms of repayment.


As of March 31, 2012, the Company owed Valerie Hoi Fah Looi, the Secretary and Director of the Company, $44,361. The amount due to Ms. Looi was for general and administration expenses paid on behalf of the Company. This amount is unsecured, bears no interest and has no fixed terms of repayment.



NOTE 6 - SIGNIFICANT CONCENTRATION AND CREDIT RISK


Customer Concentration


For the period ended March 31, 2012 and 2011, four and four customers, respectively, accounted for the trade accounts receivable. Credit concentration in the form of accounts receivables at March 31, 2012 and 2011 were as follows:


 

 

For the period ended

 

 

March 31,

 

 

2012

 

2011

Customer A

 

22%

 

14%

Customer B

 

21%

 

13%

Customer C

 

23%

 

10%

Customer E

 

          -   

 

11%

Customer H

 

15%

 

             -   

 

 

81%

 

48%


Vendor Concentration


For the period ended March 31, 2012 and 2011, two and four vendors, respectively, accounted for cost of goods sold. The Company does not rely on any single vendor to provide services. It has made a strategic decision to engage the services of only a small number of vendors after taking into consideration the quality of service and competitive pricing offered. Should the need arise, the Company could utilize alternative vendors for the services required. Vendor concentration for the nine months ended March 31, 2012 and 2011 were as follows:


 

 

For the period ended

 

 

March 31,

 

 

2012

 

2011

Vendor A

 

49%

 

19%

Vendor B

 

          -   

 

18%

Vendor C

 

          -   

 

12%

Vendor G

 

          -   

 

21%

Vendor H

 

37%

 

             -   

 

 

86%

 

70%



[Remainder of page left blank.]



11






GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2012 AND 2011

(Unaudited)


NOTE 7 - SEGMENT INFORMATION


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


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


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


 

 

 

For the Three Months Ended

 

 

For the Nine Months Ended

 

 

 

March 31,

 

 

March 31,

 

 

2012

 

2011

 

2012

 

2011

Revenue

 

 

Revenue

 

% of Revenue

 

 

Revenue

 

% of Revenue

 

 

Revenue

 

% of Revenue

 

 

Revenue

 

% of Revenue

Mobile VoIP Communications and Mobile Advertising

 

$

2,557,386

 

64%

 

$

5,695,868

 

70%

 

$

5,432,999

 

48%

 

$

17,420,807

 

72%

Renewable Energy

 

 

1,447,036

 

36%

 

 

2,398,628

 

30%

 

 

5,882,276

 

52%

 

 

6,911,401

 

28%

 

 

$

4,004,422

 

100%

 

$

8,094,496

 

100%

 

$

11,315,275

 

100%

 

$

24,332,208

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Goods Sold

 

 

Cost of Goods Sold

 

% of Cost of Goods Sold

 

 

Cost of Goods Sold

 

% of Cost of Goods Sold

 

 

Cost of Goods Sold

 

% of Cost of Goods Sold

 

 

Cost of Goods Sold

 

% of Cost of Goods Sold

Mobile VoIP Communications and Mobile Advertising

 

$

1,652,855

 

60%

 

$

4,922,290

 

72%

 

$

3,281,027

 

41%

 

$

15,036,502

 

73%

Renewable Energy

 

 

1,105,509

 

40%

 

 

1,918,963

 

28%

 

 

4,639,926

 

59%

 

 

5,528,862

 

27%

 

 

$

2,758,364

 

100%

 

$

6,841,253

 

100%

 

$

7,920,953

 

100%

 

$

20,565,364

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

Gross Profit

 

% of Gross Profit

 

 

Gross Profit

 

% of Gross Profit

 

 

Gross Profit

 

% of Gross Profit

 

 

Gross Profit

 

% of Gross Profit

Mobile VoIP Communications and Mobile Advertising

 

$

904,531

 

73%

 

$

773,578

 

62%

 

$

2,151,972

 

63%

 

$

2,384,305

 

63%

Renewable Energy

 

 

341,527

 

27%

 

 

479,665

 

38%

 

 

1,242,350

 

37%

 

 

1,382,539

 

37%

 

 

$

1,246,058

 

100%

 

$

1,253,243

 

100%

 

$

3,394,322

 

100%

 

$

3,766,844

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before Tax

 

Income before Tax

 

% of Income before Tax

 

Income before Tax

 

% of Income before Tax

 

Income before Tax

 

% of Income before Tax

 

Income before Tax

 

% of Income before Tax

Mobile VoIP Communications and Mobile Advertising

 

$

276,055

 

44%

 

$

662,659

 

76%

 

$

608,701

 

42%

 

$

1,692,410

 

68%

Renewable Energy

 

 

354,340

 

56%

 

 

211,179

 

24%

 

 

856,138

 

58%

 

 

781,186

 

32%

 

 

$

630,395

 

100%

 

$

873,838

 

100%

 

$

1,464,839

 

100%

 

$

2,473,596

 

100%




12






GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2012 AND 2011

(Unaudited)


NOTE 7 - SEGMENT INFORMATION  (Continued)


 

 

 

 

 At

 

 

 

 

 March 31, 2012

 

June 30, 2011

Segment assets

 

 

 

 

 

 

 

 

Mobile VoIP Communications and Mobile Advertising

 

$

8,207,696

 

$

7,826,165

 

 

Renewable Energy

 

 

769,926

 

 

672,810

 

 

 

 

 

8,977,622

 

 

8,498,975



NOTE 8 – PATENT


On June 27, 2011, Info-Accent, a wholly owned subsidiary of GMT, entered into a Patent Purchase Agreement with Sunway Technology Development Limited (“Sunway”) to purchase the entire right, title and interest in and to the patent rights under U.S. patent # 8,005,057 entitled “Data communications between short-range enabled wireless devices over networks and proximity marketing to such devices” for a total consideration of $3.5 million. Pursuant to the Patent Purchase Agreement, Sunway received net payment of $3.0 million after setting off a sum of $0.5 million previously paid by Info-Accent to VyseTech Asia Sdn Bhd (a wholly owned subsidiary of Sunway) as a one-time license fee. The purchase consideration of $3.0 million was a combination of $2.0 million cash and issuance of 1.0 million unregistered shares of our common stock at $1.00 per share.



NOTE 9 - PATENT AND TECHNOLOGY LICENSE AGREEMENT


On December 15, 2011, GMT entered into a Patent and Technology License Agreement (the “License Agreement”) with Soon Hock Lim (“SHL”) pursuant to which SHL agreed to grant GMT non-exclusive licensing rights to use the proprietary technologies and claims under U.S. patent # 8,089,943 in Malaysia, China, Thailand, Philippines and Indonesia. The provisions of the agreement require GMT to make a onetime only license fee payment to SHL in the amount of $600,000, within thirty days of the execution of the License Agreement. In addition to the onetime only payment, we will be required to pay a royalty equivalent to one percent (1%) of GMT’s gross sales which will be due and payable on or before each anniversary of the effective date of the Agreement or a minimum royalty payment of $100,000 annually, whichever is the higher. The royalty will remain in perpetuity and continue to be paid beyond the life of any patent. SHL agreed to accept 740,740 shares of GMT common stock at $0.54 per share for $400,000 in the aggregate and cash payment of $200,000, in lieu of the original payment of $600,000 due within thirty days. On December 29, 2011, the Company issued 740,740 restricted shares of its common stock to SHL and as of March 31, 2012, the amount outstanding had been fully paid.


On March 23, 2012, GMT entered into an Amended Patent and Technology License Agreement (the “Amended License Agreement”) pursuant to the License Agreement signed on December 15, 2011 with SHL. Pursuant to the Amended License Agreement which SHL agreed to grant GMT additional non-exclusive licensing rights to use the proprietary technologies and claims under U.S. patent # 8,089,943 in Vietnam, India and Korea. The provisions of the agreement required GMT to make additional onetime only license fee payment to SHL in the amount of $450,000, within sixty days of the execution of the License Agreement. In addition to the onetime only payment, GMT will be required to pay a royalty equivalent to one percent (1%) of GMT’s gross sales which will be due and payable on or before each anniversary of the effective date of the Agreement or a minimum royalty payment of $100,000 annually, whichever is the higher. The royalty will remain in perpetuity and continue to be paid beyond the life of any patent. SHL agreed to accept 1,000,000 shares of GMT common stock at $0.30 per share for $300,000 in the aggregate and cash payment of $150,000, in lieu of the original payment of $450,000 due within sixty days. On March 23, 2012, the Company issued 1,000,000 restricted shares of its common stock to SHL. As of March 31, 2012, the Company still owed SHL $150,000.




13






GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2012 AND 2011

(Unaudited)


NOTE 10 – FOREIGN CURRENCY TRANSLATION


The functional currency of our foreign subsidiary, Info-Accent is Ringgit Malaysia (“RM”). Assets and liabilities are translated from RM into U.S. dollars at the exchange rates prevailing at the balance sheet date. Foreign currency income and expense are re-measured at average exchange rates in effect during the period. Exchange gains and losses arising from foreign currency transactions are included in operations in the period in which they occur. Foreign currency translations are included in other comprehensive income class.


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


Translation of amounts from RM into US$ has been made at the following exchange rates for the nine months ended March 31, 2012 and 2011:


 

2012

 

2011

March 31 - RM: US$ exchange rate

3.0615

 

3.0228

Reporting period average - RM: US$ exchange rate

3.0716

 

3.1095



NOTE 11 – RECENT ACCOUNTING PRONOUNCEMENTS


In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. ASU 2011-04 amends Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurements (ASC 820) by: (1) clarifying that the highest-and-best-use and valuation-premise concepts only apply to measuring the fair value of non-financial assets; (2) allowing a reporting entity to measure the fair value of the net asset or net liability position in a manner consistent with how market participants would price the net risk position, if certain criteria are met; (3) providing a framework for considering whether a premium or discount can be applied in a fair value measurement; (4) providing that the fair value of an instrument classified in a reporting entity’s shareholders’ equity is estimated from the perspective of a market participant that holds the identical item as an asset; and (5) expanding the qualitative and quantitative fair value disclosure requirements. The expanded disclosures include, for Level 3 items, a description of the valuation process and a narrative description of the sensitivity of the fair value to changes in unobservable inputs and interrelationships between those inputs if a change in those inputs would result in a significantly different fair value measurement. ASU 2011-04 also requires disclosures about the highest-and-best-use of a non-financial asset when this use differs from the asset’s current use and the reasons for such a difference. In addition, this ASU amends Accounting Standards Codification 820, Fair Value Measurements, to require disclosures to include any transfers between Level 1 and Level 2 of the fair value hierarchy. These amendments are effective for fiscal years beginning after December 15, 2011 and for interim periods within those fiscal years. The amendments of ASU 2011-04, when adopted of the amended guidance are not expected to have a material impact on the Company’s consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income. ASU 2011-05 requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. Under the two-statement approach, the first statement would include components of net income, and the second statement would include components of other comprehensive income. This ASU does not change the items that must be reported in other comprehensive income. These provisions are effective for fiscal years beginning after December 15, 2011 and for interim periods within those fiscal years; however, early adoption is permitted. The provisions of ASU 2011-05, when adopted, are not expected to have a material impact on the Company’s consolidated financial statements.



14





GLOBAL MOBILETECH, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2012 AND 2011

(Unaudited)


NOTE 11 – RECENT ACCOUNTING PRONOUNCEMENTS (Continued)


In September 2011, the FASB issued ASU 2011-08 to Topic 350, Intangibles - Goodwill and Other. ASU 2011-08 amends the guidance in ASC 350-20 on testing for goodwill impairment. The revised guidance allows entities testing for goodwill impairment to have the option of performing a qualitative assessment before calculating the fair value of the reporting unit. The ASU does not change how goodwill is calculated or assigned to reporting units, nor does it revise the requirement to test annually for impairment. The ASU is limited to goodwill and does not amend the annual requirement for testing other indefinite-lived intangible assets for impairment. The ASU is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The amended guidance results in a change in the procedures for assessing goodwill impairment and will not have an impact on the Company’s financial position and results of operations.


In September 2011, the FASB issued amended ASU 2011-09, Compensation-Retirement- Benefit-Multiemployer Plans (Subtopic 715-80) relates to an employer’s participation in a multiemployer pension and other postretirement benefit plans to require that employers provide additional quantitative and qualitative disclosures for these types of plans. The amended guidance is effective for us on a retrospective basis commencing in the fourth quarter of 2012. Earlier adoption is permitted. The provisions of ASU 2011-09, when adopted, are not expected to have a material impact on the Company’s consolidated financial statements.


In December 2011, the FASB issued disclosure guidance ASU 2011-10, Property, Plant and Equipment (Topic 360) – Derecognition of in Substance Real Estate related to the offsetting of assets and liabilities. The guidance requires an entity to disclose information about offsetting and related arrangements for recognized financial and derivative instruments to enable users of its financial statements to understand the effect of those arrangements on its financial position. The amended guidance is effective for us on a retrospective basis commencing in the first quarter of 2014. The provisions of ASU 2011-10, when adopted, are not expected to have a material impact on the Company’s consolidated financial statements.


In December 2011, the FASB issued disclosure guidance ASU 2011-11, Balance Sheet (Topic 210) – Disclosures about Offsetting Assets and Liabilities. The amendments in this update require an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. The amended guidance is effective for us on a retrospective basis commencing in the first quarter of 2014. The provisions of ASU 2011-11, when adopted, are not expected to have a material impact on the Company’s consolidated financial statements.


In December 2011, the FASB issued disclosure guidance ASU 2011-12, Comprehensive Income – Deferral of the Effective Date for Amendments to the Presentation of Reclassification of Items Out of Accumulated Other Comprehensive Income in ASU 2011-05. In order to defer only those changes in ASU 2011-05 that relates to the presentation of reclassification adjustments, the paragraphs in this update supersede certain pending paragraphs in ASU 2011-05. The amendments are being made to allow the FASB time to redeliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. While the FASB is considering the operational concerns about the presentation requirements for reclassification adjustments and the needs of financial statement users for additional information about reclassification adjustments, entities should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before ASU 2011-05. All other requirements in ASU 2011-05 are not affected by this update, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. These provisions are effective for fiscal years beginning after December 15, 2011 and for interim periods within those fiscal years; however, early adoption is permitted. The provisions of ASU 2011-05, when adopted, are not expected to have a material impact on the Company’s consolidated financial statements.


NOTE 12 - SUBSEQUENT EVENT


None



15




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



Forward Looking Statements


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


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


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


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



Overview


We were incorporated in Nevada in December 2007. We have two operating segments: (i) mobile VoIP communications and mobile advertising services; and (ii) renewable energy, as described below.


(i)  Mobile VoIP Communications and Mobile Advertising Services


We provide a proprietary platform that enables our customers to sell advertisement banners on the mobile phones of persons who have registered with them. Mobile phone users are incentivized to consent to receiving advertisement banners by a rewards program that allows mobile phone users to earn rewards points to make long distance and international calls and to send multimedia messages from their mobile phones. Our customers, who we call channel partners and private label partners, are marketers/advertisers who we have selected and trained and to whom we grant an exclusive territory in which they operate. Our customers pay us a fee to utilize our licensed proprietary platform within their exclusive territory.


We provide our customers with access to mobile advertising content via our proprietary platform, as well as multimedia content production services which our customers utilize to sell services to advertisers and advertising agencies and to disseminate to registered mobile phone users via the rewards program. We utilize some of that fee revenue to purchase VoIP call capacity from VyseTech Asia Sdn Bhd (“VTA”), which we provide to our customers (the private label partners) to make available to registered mobile phone users.  


We generate revenues from sale of our mobile VoIP communications and mobile advertising solutions; as well as MobiCAST and MobiREWARDS programs to our channel partners and private label partners. We also generate revenues from license fee payments by our existing customers for the use of our proprietary platform as well as fees for providing maintenance and monitoring services that include monitoring users’ response to advertisements and communicating such responses to advertisers.


On December 15, 2011, we entered into a Patent and Technology License Agreement (the “License Agreement”) and an



16




Amended Patent and Technology License Agreement (the “Amended License Agreement”) on March 23, 2012, with Soon Hock Lim (”SHL”) pursuant to which SHL agreed to grant us non-exclusive licensing rights to use the proprietary technologies and claims under U.S. patent # 8,089,943 in Malaysia, China, Thailand, Philippines, Indonesia, Vietnam, India and Korea. The License Agreement relates to how data stored in an array of protocols are converted and seamlessly integrated into value-added solutions in different formats and transmitted to mobile phones.


Our mobile advertising platform is driven by the combined methodologies of our patent which we acquired in June 2011 and the License Agreement. Our platform provides the essential business logic, platform intelligence and central management that drives the platform and enables the application of flexible business models. We have achieved our objective by integrating our platform with internal and external enablers that are embedded in our advertising server (ad server). Our platform enables the conversion of media (text, voice, video and graphics) into value-added solutions in different protocols and formats that are seamlessly integrated for transmission to mobile phones.


 (ii) Renewable Energy


We generate revenues from services we render to our customers that include (i) the provision of consultancy services for the design and integration of solar PV-wind hybrid power generation applications (ii) the production of syngas, bio-oil and biochar using biomass such as wood residues, and oil palm stems and fronds as feedstock; and (iii) the establishment and operation of a syngas-to-electricity generation plants. Our entry into the renewable energy business was intended to develop additional recurring revenue streams to complement our mobile VoIP communications and mobile advertising business segment.


We help our customers to conceptualize, design and integrate solar PV-wind systems to obtain structure design efficiency, energy efficiency, indoor environment quality enhancement, operation and maintenance optimization and the most important is waste reduction. The solar PV-wind systems that we design and build are based on the methodology for the optimal sizing of a solar PV-wind hybrid power generation system developed by our Chairman, Mohd. Aris Bernawi. The services we render include site assessment, site verification, power system modeling and analysis, engineering design, project management, progress inspection, installation and integration of the power generation system with solar PV to operate as a hybrid power generation system.


Applications that we have developed for the solar PV-wind hybrid power generation system include


·

Rural and remote island electrification

·

Powering remote radio base stations

·

Potable water production; and

·

Potable water production and organic vegetable cultivation


We do not manufacture any of the components used for the power generation systems. The components are source from various suppliers. We typically solicit competitive proposals from various component manufacturers, evaluate the proposals and recommend to our customers’ components that meet with their system performance specifications.


We derive revenues by helping our clients to:


·

identify projects and conducts feasibility studies on the proposed projects


·

conduct site assessment, site verification and progress inspection


·

design and integrate solar PV-wind hybrid power generation system to adapt and customize our solar PV-wind hybrid power generation system to local climatic and geographical conditions


·

project management services that include cost planning, tendering, negotiating and awarding of tenders, procurement, site superintendence and contract administration


·

integrate their control system to a central data collection system that can remotely monitor the operation of the plant and provide maintenance warnings; and


·

maintain their plant by providing computer aided maintenance management systems


The incentives and liberal policies for producing renewable energy in Malaysia, Thailand and Indonesia have encouraged more companies to be involved in biomass power generation. The increased demand for production



17




equipment to meet the requirements for renewable energy and limited suppliers of such equipment has caused the price of production equipment to increase between 30-35% during the past nine months. The higher price is expected to remain firm during the next twelve months. Arising from this development, we have decided to hold in abeyance our entry into the production of biomass energy (syngas, bio-oil and torrefied wood) for the next twelve months. We will monitor the market conditions and decide whether the project is commercially viable to implement in Malaysia at the end of the twelve -month period.


Results of Operations


The following table summarizes the consolidated statements of operations for the three and nine months ended March 31, 2012 and 2011:


Statement of Operation Data

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three

 

For the Nine

 

 

 

 

 

Months ended

 

Months ended

 

 

 

 

 

March 31,

 

March 31,

 

 

 

 

 

2012

 

2011

 

2012

 

2011

 

 

 

 

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

 

$

4,004,422 

 

$

8,094,496 

 

$

11,315,275 

 

$

24,332,208 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of Goods Sold

 

 

(2,758,364)

 

(6,841,253)

 

(7,920,953)

 

(20,565,364)

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit

 

 

1,246,058 

 

1,253,243 

 

3,394,322 

 

3,766,844 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Less) : Total operating expenses

615,663 

 

379,405 

 

1,929,483 

 

1,271,460 

 

 

 

 

 

 

 

 

 

 

 

 

Income from Operations

 

630,395 

 

873,838 

 

1,464,839 

 

2,495,384 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Less) : Total other expenses

 

 

 

 

(21,788)

 

 

 

 

 

 

 

 

 

 

 

 

Income  Before Income Taxes

 

630,395 

 

873,838 

 

1,464,839 

 

2,473,596 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for income taxes:

 

 

 

 

 

 

 

 

 

Current

 

 

(49,071)

 

(135,065)

 

(126,247)

 

(539,402)

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

$

581,324 

 

$

738,773 

 

$

1,338,592 

 

$

1,934,194 



Revenues


Operating Revenue for the Three and Nine Months Ended March 31, 2012


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



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18





 

 

 

 

For the Three Months Ended

 

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

2012

 

2011

 

 

 

 

Revenue

 

 

 

Revenue

 

% of Revenue

 

 

Revenue

 

% of Revenue

 

Increase / (Decrease)

% Increase /(Decrease)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile VoIP Communications and Mobile Advertising

 

 

$

2,557,386

 

64%

 

$

5,695,868

 

70%

 

$

(3,138,482)

-55%

Renewable Energy

 

 

 

1,447,036

 

36%

 

 

2,398,628

 

30%

 

 

(951,592)

-40%

 

 

 

$

4,004,422

 

100%

 

$

8,094,496

 

100%

 

$

(4,090,074)

-51%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended

 

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

2012

 

2011

 

 

 

 

Revenue

 

 

 

Revenue

 

% of Revenue

 

 

Revenue

 

% of Revenue

 

Increase / (Decrease)

% Increase /(Decrease)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile VoIP Communications and Mobile Advertising

 

 

$

5,432,999

 

48%

 

$

17,420,807

 

72%

 

$

(11,987,808)

-69%

Renewable Energy

 

 

 

5,882,276

 

52%

 

 

6,911,401

 

28%

 

 

(1,029,125)

-15%

 

 

 

$

11,315,275

 

100%

 

$

24,332,208

 

100%

 

$

(13,016,933)

-53%



The lower revenue for our mobile VoIP communications and mobile advertising segment for the three and nine months ended March 31, 2012 compared to March 31, 2011 was attributed to (i) the completion of mobile VoIP communications and mobile advertising contracts that were secured during 2010; and (ii) adoption of the technology licensing model following the acquisition of U.S. patent #8,005,057 on June 27, 2011 that generated lower revenues but a higher profit margin. Our adoption of the technology-licensing model has helped us to create a new recurring revenue stream. The new model has also helped our customers to offer a more flexible pricing structure to compete more aggressively in the market. We have mitigated the impact of the lower revenue by securing new multimedia content production and e-commerce contracts that generated a higher profit margin of between 20% to 25%.


Customer Concentration


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



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19





 

 

Net Sales

 

Accounts Receivable

 

 

For the three months ended

 

For the nine months ended

 

at

 

 

March 31,

 

March 31,

 

March 31,

 

 

2012

 

2011

 

2012

 

2011

 

2012

 

2011

Mobile VoIP Communications and Mobile Advertising

 

 

 

 

 

 

 

 

 

 

 

 

Customer A

 

19%

 

20%

 

19%

 

19%

 

22%

 

14%

Customer B

 

16%

 

16%

 

14%

 

15%

 

21%

 

13%

Customer C

 

13%

 

14%

 

13%

 

14%

 

23%

 

10%

Customer D

 

                   -   

 

                  -   

 

10%

 

10%

 

          -   

 

             -   

Customer E

 

10%

 

12%

 

10%

 

11%

 

          -   

 

11%

Customer F

 

                   -   

 

10%

 

10%

 

10%

 

          -   

 

             -   

Customer G

 

10%

 

                  -   

 

                -   

 

                -   

 

          -   

 

             -   

Customer H

 

                   -   

 

                  -   

 

                -   

 

                -   

 

15%

 

             -   

 

 

68%

 

72%

 

76%

 

79%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renewable Energy

 

 

 

 

 

 

 

 

 

 

 

 

Customer J

 

26%

 

25%

 

26%

 

25%

 

          -   

 

             -   

Customer K

 

25%

 

24%

 

25%

 

25%

 

          -   

 

             -   

Customer L

 

25%

 

24%

 

25%

 

24%

 

          -   

 

             -   

Customer M

 

24%

 

27%

 

24%

 

26%

 

          -   

 

             -   

 

 

100%

 

100%

 

100%

 

100%

 

81%

 

48%



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20





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


Geographic Information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Revenue

 

% of Revenue

 

 

Revenue

 

% of Revenue

 

Increase / (Decrease)

% Increase /(Decrease)

Malaysia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile VoIP Communications and Mobile Advertising

 

$

2,393,896

 

60%

 

$

5,555,438

 

69%

 

$

(3,161,542)

-57%

Renewable Energy

 

 

1,447,036

 

36%

 

 

2,398,628

 

30%

 

 

(951,592)

-40%

 

 

$

3,840,932

 

96%

 

$

7,954,066

 

98%

 

$

(4,113,134)

-52%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hong Kong

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile VoIP Communications and Mobile Advertising

 

$

163,490

 

4%

 

$

140,430

 

2%

 

$

23,060 

16%

Renewable Energy

 

 

-

 

-

 

 

-

 

-

 

 

-

-

 

 

$

163,490

 

4%

 

$

140,430

 

2%

 

$

23,060 

16%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

$

4,004,422

 

100%

 

$

8,094,496

 

100%

 

$

(4,090,074)

-51%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

2012

 

2011

 

 

 

 

 

 

 

Revenue

 

% of Revenue

 

 

Revenue

 

% of Revenue

 

Increase / (Decrease)

% Increase /(Decrease)

Malaysia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile VoIP Communications and Mobile Advertising

 

$

4,944,654

 

44%

 

$

16,787,265

 

69%

 

$

(11,842,611)

-71%

Renewable Energy

 

 

5,882,276

 

52%

 

 

6,911,401

 

28%

 

 

(1,029,125)

-15%

 

 

$

10,826,930

 

96%

 

$

23,698,666

 

97%

 

$

(12,871,736)

-54%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Hong Kong

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mobile VoIP Communications and Mobile Advertising

 

$

488,345

 

4%

 

$

633,542

 

3%

 

$

(145,197)

-23%

Renewable Energy

 

 

-

 

-

 

 

-

 

-

 

 

-

-

 

 

$

488,345

 

4%

 

$

633,542

 

3%

 

$

(145,197)

-23%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

$

11,315,275

 

100%

 

$

24,332,208

 

100%

 

$

(13,016,933)

-53%




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21




Cost of Goods Sold


 

 

 

 

For the Three Months Ended

 

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

2012

 

2011

 

 

 

 

Cost of Goods Sold

 

 

 

Cost of Goods Sold

 

% of Cost of Goods Sold

 

 

Cost of Goods Sold

 

% of Cost of Goods Sold

 

Increase / (Decrease)

% Increase /(Decrease)

Mobile VoIP Communications and Mobile Advertising

 

 

$

1,652,855

 

60%

 

$

4,922,290

 

72%

 

$

(3,269,435)

-66%

Renewable Energy

 

 

 

1,105,509

 

40%

 

 

1,918,963

 

28%

 

 

(813,454)

-42%

 

 

 

$

2,758,364

 

100%

 

$

6,841,253

 

100%

 

$

(4,082,889)

-60%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended

 

 

 

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

2012

 

2011

 

 

 

 

Cost of Goods Sold

 

 

 

Cost of Goods Sold

 

% of Cost of Goods Sold

 

 

Cost of Goods Sold

 

% of Cost of Goods Sold

 

Increase / (Decrease)

% Increase /(Decrease)

Mobile VoIP Communications and Mobile Advertising

 

 

$

3,281,027

 

41%

 

$

15,036,502

 

73%

 

$

(11,755,475)

-78%

Renewable Energy

 

 

 

4,639,926

 

59%

 

 

5,528,862

 

27%

 

 

(888,936)

-16%

 

 

 

$

7,920,953

 

100%

 

$

20,565,364

 

100%

 

$

(12,644,411)

-61%



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


Gross Profit


 

 

 

For the Three Months Ended

 

 

 

 

March 31,

 

 

 

 

2012

 

2011

 

 

 

 

Gross Profit

 

 

 

Gross Profit

 

% of Gross Profit

 

 

Gross Profit

 

% of Gross Profit

 

Increase / (Decrease)

% Increase /(Decrease)

Mobile VoIP Communications and Mobile Advertising

 

 

$

904,531

 

73%

 

$

773,578

 

62%

 

$

130,953 

17%

Renewable Energy

 

 

 

341,527

 

27%

 

 

479,665

 

38%

 

 

(138,138)

-29%

 

 

 

$

1,246,058

 

100%

 

$

1,253,243

 

100%

 

$

(7,185)

-1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Nine Months Ended

 

 

 

 

March 31,

 

 

 

 

2012

 

2011

 

 

 

 

Gross Profit

 

 

 

Gross Profit

 

% of Gross Profit

 

 

Gross Profit

 

% of Gross Profit

 

Increase / (Decrease)

% Increase /(Decrease)

Mobile VoIP Communications and Mobile Advertising

 

 

$

2,151,972

 

63%

 

$

2,384,305

 

63%

 

$

(232,333)

-10%

Renewable Energy

 

 

 

1,242,350

 

37%

 

 

1,382,539

 

37%

 

 

(140,189)

-10%

 

 

 

$

3,394,322

 

100%

 

$

3,766,844

 

100%

 

$

(372,522)

-10%




22







 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

 

March 31,

 

March 31,

Gross Profit Margin

 

 

 

 2012

 

2011

 

 

 2012

 

2011

Mobile VoIP Communications and Mobile Advertising

 

 

 

35%

 

14%

 

 

40%

 

14%

Renewable Energy

 

 

 

24%

 

20%

 

 

21%

 

20%

Overall Gross Profit Margin

 

 

 

31%

 

15%

 

 

30%

 

15%


Following our acquisition of the U.S. patent # 8,005,057 in June 2011, we phased-in our technology licensing model during the first fiscal quarter of 2012. The cost of goods associated with our licensing model is approximately 41% of revenue compared to between 85% - 95% for our mobile VoIP communications and mobile advertising contracts. The lower cost has generated higher gross profit margins of 35% for the three months and 40% for the nine months ended March 31, 2012 compared to profit margins of approximately 14% generated by our mobile VoIP communications and mobile advertising contracts in 2010.


Vendor Concentration


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


 

 

Net Purchases

 

Accounts Payable

 

 

For the three months ended

 

For the nine months ended

 

at

 

 

March 31,

 

March 31,

 

March 31,

 

 

2012

 

2011

 

2012

 

2011

 

2012

 

2011

Mobile VoIP Communications and

Mobile Advertising

 

 

 

 

 

 

 

 

 

 

 

 

Vendor A

 

41%

 

24%

 

36%

 

24%

 

49%

 

19%

Vendor B

 

                   -   

 

26%

 

                -   

 

22%

 

          -   

 

18%

Vendor C

 

                   -   

 

16%

 

                -   

 

17%

 

          -   

 

12%

Vendor D

 

20%

 

15%

 

19%

 

16%

 

          -   

 

             -   

Vendor E

 

19%

 

12%

 

15%

 

13%

 

          -   

 

             -   

Vendor F

 

20%

 

                  -   

 

30%

 

                -   

 

          -   

 

             -   

 

 

100%

 

93%

 

100%

 

92%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Renewable Energy

 

 

 

 

 

 

 

 

 

 

 

 

Vendor G

 

26%

 

49%

 

46%

 

49%

 

          -   

 

21%

Vendor H

 

74%

 

51%

 

54%

 

51%

 

37%

 

             -   

 

 

100%

 

100%

 

100%

 

100%

 

86%

 

70%


Total Operating Expenses


 

 

For the Three Months Ended

For the Nine Months Ended

 

 

March 31,

March 31,

 

 

 

2012

 

 

2011

 

 

Increase / (Decrease)

% Increase / (Decrease)

 

 

2012

 

 

2011

 

Increase / (Decrease)

% Increase / (Decrease)

Other General & Administration

 

$

157,557

 

$

114,236

 

$

43,321 

27%

 

$

759,731

 

$

554,077

$

205,654 

27%

Depreciation & Amortization

 

 

249,697

 

 

11,173

 

 

238,524 

96%

 

 

718,538

 

 

129,412

 

589,126 

82%

Professional Fees

 

 

12,646

 

 

25,107

 

 

(12,461)

-99%

 

 

60,538

 

 

71,474

 

(10,936)

-18%

Sales & Marketing

 

 

195,763

 

 

228,889

 

 

(33,126)

-17%

 

 

390,676

 

 

516,497

 

(125,821)

-32%

Total Operating Expenses

 

$

615,663

 

$

379,405

 

$

236,258 

38%

 

$

1,929,483

 

$

1,271,460

$

658,023 

34%





23




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


For the three months ended March 31, 2012, other general and administrative expenses increased by $43,321 or 27% to $157,557 compared to $114,236 for the three months ended March 31, 2011. The increase was primarily attributable to an increase in stock-based compensation of $67,456 to our directors and officers; and decrease of $11,427 from other general expenses such as office rental and payroll. For the three months ended March 31, 2012, 51% of the total general and administrative expenses was for stock-based compensation, 19% was for administration and clerical costs; 6% was for payroll and 24% for other expenses such as rental of office space and utilities.


For the nine months ended March 31, 2012, other general and administrative expenses increased by $205,654 or 27% to $759,731 compared to $554,077 for the nine months ended March 31, 2011. The increase was primarily attributable to an increase in stock-based compensation to our directors and officers of $163,996 and an increase in development cost of $98,225 in connection with our patent purchase. For the nine months ended March 31, 2012, 56% of the total general and administrative expenses was for stock-based compensation, 15% was for development cost, 12% was for administration and clerical costs, 6% was for payroll, and 11% was for other expenses such as rental of office space and utilities.


For the three months ended March 31, 2012, we incurred sales and marketing expenses of $195,763 compared to $228,889 for the three months ended March 31, 2011, a decrease of $33,126 or 14%. The sales and marketing expenses relate to the promotion and marketing of Info-Accent's mobile advertisement and microblogging services in Asia. For the nine months ended March 31, 2012, we incurred sales and marketing expenses of $390,676 compared to $516,497 for the nine months ended March 31, 2011, a decrease of $125,821 or 24%. The sales and marketing expenses relate to the promotion and marketing of Info-Accent's renewable energy services, mobile VoIP communications and mobile advertising services in Asia.


Provision for Income Taxes


For the three and nine months ended March 31, 2012, Info-Accent recorded an income tax provision of $49,071 and $126,247, respectively. For the three and nine months ended March 31, 2011, Info-Accent recorded an income tax provision of $135,065 and $539,402, respectively. In March 31, 2012 and 2011, we did not record any tax benefit for the losses incurred in the U.S. by affecting a 100% valuation allowance on the potential benefit as per ASC Topic 740. We will record the tax benefits of U.S. losses once our U.S. operations have realized consistent profitability.


Net Income


 

 

For the Three Months Ended

 

 

 

 

 

For the Nine Months Ended

 

 

 

 

 

 

March 31,

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

2012

 

 

2011

 

 

Increase / (Decrease)

% Increase /(Decrease)

 

 

2012

 

 

2011

 

 

Increase / (Decrease)

% Increase /(Decrease)

Net Income

 

$

581,324

 

$

738,773

 

$

(157,449)

-27%

 

$

1,338,592

 

$

1,934,194

 

$

(595,602)

-44%


The decrease in net income was attributable to lower revenues and increase in depreciation and amortization.


Total Comprehensive Income


 

 

For the Three Months Ended

 

 

 

 

 

For the Nine Months Ended

 

 

 

 

 

 

March 31,

 

 

 

 

 

March 31,

 

 

 

 

 

 

 

2012

 

 

2011

 

 

Increase / (Decrease)

% Increase /(Decrease)

 

 

2012

 

 

2011

 

 

Increase / (Decrease)

% Increase /(Decrease)

Total Comprehensive Income

 

$

772,496

 

$

798,875

 

$

(26,379)

-3%

 

$

1,313,835

 

$

2,064,342

 

$

(750,507)

-57%


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



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of these translations, we reported a loss of $24,757 for the first nine months ended March 31, 2012, compared to a gain of $130,148 for the same period in 2011.


Liquidity and Capital Resources


Liquidity is the ability of a company to generate adequate amounts of cash to meet its needs for cash. At March 31, 2012 we had cash and cash equivalents of $18,121 compared to $17,681 at June 30, 2011. For the nine months ended March 31, 2012 and 2011, our operations were primarily funded from internally generated funds.


Operating activities. Working capital as of March 31, 2012 and June 30, 2011 amounted to $834,303 and negative working capital of $2,368,680, respectively. The increase in working capital was mainly due to decrease in accounts payables. Operating activities used net cash of $313,958 during the nine months ended March 31, 2012 and provided net cash of $390,008 during the nine months ended March 31, 2011. Net cash used in operating activities during the nine months ended March 31, 2012 was primarily attributed to a decrease in accounts receivable of $207,741, reduced noncash adjustments of $758,377 and offset by a decrease in the accounts payable amounting to $2,262,082, increased accrued liabilities of $81,906 and net income of $1,338,592. Net cash provided by operating activities during the nine months ended March 31, 2011 was primarily attributed to noncash adjustments of $945,173 and an increase in accounts payable of $1,354,901.


Investing activities. There was no investing activity during the nine months ended March 31, 2012 and 2011.


Financing activities. Cash generated from financing activities during the nine months ended March 31, 2012 of $92,774 resulted from proceeds received from our existing stockholders who exercised their warrants to purchase our common stock totaling $53,435, at an exercise price of $1.00 per share and advances by Mr. Aris and Ms. Looi totaling $39,339. Cash generated from financing activities during the nine months ended March 31, 2011 of $172,331 resulted from proceeds received from the private placement of our common stock totaling $195,224, offset by the repayment of three promissory notes totaling $20,000 and repayment to Mr. Aris and Valerie Looi in the amount of $2,500 and $393, respectively.


We need to raise approximately $11.0 million over the next year in costs related to the implementation of our mobile advertising business in North and South America. We intend to fund our expansion through a combination of internally generated funds and equity financing. The $11.0 million will be utilized to finance (i) the set up cost to launch our mobile advertising business in North and South America; and the expansion of our mobile advertising business in Asia. If we are unable to raise the $11.0 million, we will delay our entry into the North and South American market; and continue with our efforts to raise funds.


New Accounting Pronouncements


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


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


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


ITEM 4.  CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


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


Changes in Internal Control Over Financial Reporting


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



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PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS


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


ITEM 1A.  RISK FACTORS


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


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


On March 15, 2012, we awarded an aggregate of 270,000 shares of our common stock to our directors and officer at $0.30 per share. We relied on the exemption from registration provided by Section 4(2) under the Securities Act of 1933, as amended, in that the offer and sale of the shares was negotiated directly with our directors and officer and did not involve a public offering.


On March 23, 2012, GMT and Soon Hock Lim (“SHL”) executed an Amended Patent and Technology License Agreement. The provisions of the Agreement required GMT to pay an additional onetime license fee of $450,000. SHL agreed to accept 1,000,000 unregistered shares of our common stock at $0.30 per share as part payment of the license fee. On March 23, 2012 we issued 1,000,000 restricted shares of our common stock to SHL. We relied on the exemption from registration provided by Section 4(2) under the Securities Act of 1933, as amended, in that the offer and sale of the shares was negotiated directly with SHL and did not involve a public offering.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES


None


ITEM 4.  MINE SAFETY DISCLOSURE [ NOT APPLICABLE]


ITEM 5.  OTHER INFORMATION


None.


ITEM 6.  EXHIBITS



Exhibit Number

 

Description of Exhibit

 

 

 

31.1

 

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

 

 

 

31.2

 

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

 

 

 

32.1

 

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

 

 

 

32.2

 

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



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SIGNATURES


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


 

Global MobileTech, Inc.

 

 

 May 15, 2012

By:  

/s/ Mohd. Aris Bernawi

 

Mohd. Aris Bernawi

Chief Executive Officer

(Principal Executive Officer)

 

 

 

May 15, 2012

By:  

/s/ Hon Kit Wong

 

Hon Kit Wong

Chief Financial Officer

(Principal Financial and Accounting Officer)





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