FIRSTWAVE CLOUD TECHNOLOGY LIMITED — Annual Report 2016

May 17, 2016

FINANCIAL REPORT

FOR THE YEAR ENDED 30 JUNE 2014

755 Hunter Street Newcastle West 2302 Phone: (02) 4925 4455

CONTENTS

	Page No.
Directors' Declaration	2
Auditor's Independence Declaration	3
Independent Auditor's Report	4
Detailed Profit and Loss Statement	6
Statement of Financial Position	8
Notes to the Financial Statements	9
Compilation Report	14

DIRECTORS' DECLARATION

The directors have determined that the company is not a reporting entity and that this special purpose financial report should be prepared in accordance with the accounting policies outlined in Note 1 to the financial statements.

The directors of the company declare that:

• $1.7$ the financial statements and notes as set out on pages 2 to 9 presents fairly the company's financial position as at 30 June 2014 and its performance for the year ended on that date in accordance with the accounting policies described in Note 1 to the financial statements;
• $2.$ in the directors' opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Director

inn

Scott Kelvin Lidgett

Director

Edward Timothy Keating

Dated:

$28 - 10 - 14$

A division of The Linkara Group Pty Ltd

3/91 Frederick St Merewether NSW 2291 PO Box 3123 Merewether NSW 2291 T: 1300 766 631 F: 02 4963 4084 E: advice@linkara.com.au W: linkaraaccountants.com.au ABN: 89 072 030 123

First Wave Technology Pty Ltd ABN 99 098 940 544 Auditor's Independence Declaration

UNDER SECTION 307C OF THE CORPORATIONS ACT 2001

I declare that, to the best of my knowledge and belief, during the year ended 30 June 2014 there have been:

• (i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the Audit; and
• (ii) no contraventions of any applicable code of professional conduct in relation to the audit

The Linkara Group Pty Ltd. Auditors No. 328217. Lindsay Karathanassis, Chartered Accountant, PO Box 123 Merewether NSW 2291

The Ankana Coacy Py Lid

A division of The Linkara Group Pty Ltd

3/91 Frederick St Merewether NSW 2291 PO Box 3123 Merewether NSW 2291 T: 1300 766 631 F: 02 4963 4084 E: advice@linkara.com.au W: linkaraaccountants.com.au ABN: 89 072 030 123

First Wave Technology Pty Ltd ABN 99 098 940 544 Independent Auditor's Report

We have audited the accompanying financial report, being a special purpose financial report, of First Wave Technology Pty Ltd (the company), which comprises the Directors' Declaration, the Statement of Profit or Loss and Other Comprehensive Income, the Statement of Financial Position, Statement of Cash Flows, Statement of Changes In Equity, notes comprising a summary of significant accounting policies and other explanatory information, for the year ended 30 June 2014.

Directors' Responsibility for the Financial Report

The directors of the company are responsible for the preparation of the financial report that gives a true and fair view and have determined that the accounting policies described in Note 1 of the financial report are appropriate to meet the requirements of the Corporations Act 2001 and to meet the needs of the members. The directors' responsibility also includes such internal control as the directors determine is necessary to enable the preparation of a financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the company's preparation and fair presentation of the financial report that gives a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Liability limited by a scheme approved under Professional Standards Legislation

First Wave Technology Pty Ltd ABN 99 098 940 544 Independent Auditor's Report

Independence

In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of First Wave Technology Pty Ltd, would be in the same terms if given to the directors as at the time of the auditor's report.

Opinion

In our opinion the financial report of First Wave Technology Pty Ltd is in accordance with the Corporations Act 2001, including:

• giving a true and fair view of the company's financial position as at 30 June 2014 and of $(a)$ its performance for the year ended on that date in accordance with the accounting policies described in Note 1; and
• complying with Australian Accounting Standards to the extent described in Note 1 and $(b)$ complying with the Corporations Regulations 2001.

Basis of Accounting

Without modifying our opinion, we draw attention to Note 1 to the financial report, which describes the basis of accounting. The financial report has been prepared for the purpose of fulfilling the directors' financial reporting responsibilities under the Corporations Act 2001. As a result, the financial report may not be suitable for another purpose.

Signed on: 28 October 2014 The hunkara Croup Pty Litar
Lindsay Karathanassis, Chartered Accountant, Auditors No. 328217.

The Linkara Group Pty Ltd PO Box 123 Merewether NSW 2291

PROFIT AND LOSS STATEMENT FOR THE YEAR ENDED 30 JUNE 2014

	Note	2014	2013
		\$	\$
INCOME
Interest received		14,168	8,688
Sales		3,977,410	2,959,375
		3,991,578	2,968,063
LESS EXPENDITURE
Accountancy fees		29,685	33,195
Advertising and promotion		72,761	99,208
Audit fees		-	6,620
Bank charges and Fees		6,421	27,624
Bad debts		(967)	6,213
Commission		42,900	33,982
Consultants fees		126,425	184,167
Depreciation expense		49,840	77,069
Directors' fees		113,900	103,625
Electricity		7,911	6,571
Entertainment		16,876	22,819
Fringe benefits tax		6,152	12,058
Holiday pay		13,442	23,115
Insurance		41,866	40,400
Interest paid		115,298	57,044
Legal fees		20,000	2,169
License fees		1,195,963	701,494
Long service leave		24,183	30,158
Payroll tax		58,873	50,028
Postage		1,056	801
Printing and stationery		5,690	2,371
Rent on land and buiding		113,573	114,505
Repairs and maintenance		11,024	6,043
Reasearch and development - amortisation		503,155	450,054
Salaries - ordinary		1,921,025	1,576,566
Staff training and recruitment		30,526	18,570

The accompanying notes form part of these financial statements.

These statements should be read in conjunction with the attached compilation report.

PROFIT AND LOSS STATEMENT FOR THE YEAR ENDED 30 JUNE 2014

Note	2014	2013
	\$	\$
Software and support	13,853	16,205
Subscriptions	11,137	10,412
Sundry expenses	(2,918)	57,884
Superannuation	148,012	125,959
Telephone	29,586	31,109
Travel, accom and conference	61,973	51,283
Transfers to capitalised R&D	(627,128)	(571,944)
	4,162,093	3,407,377
NET OPERATING PROFIT (LOSS) BEFORE INCOME TAX	(170,515)	(439,314)
Income tax benefit	(173,525)	(315,754)
NET OPERATING PROFIT (LOSS) AFTER INCOME TAX	3,010	(123,560)
Retained profits at the beginning of the financial year	71,795	195,355
TOTAL AVAILABLE FOR APPROPRIATION	74,805	71,795
RETAINED PROFITS AT THE END OF THE FINANCIAL YEAR	74,805	71,795

The accompanying notes form part of these financial statements.

These statements should be read in conjunction with the attached compilation report.

STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2014

	Note	2014 \$	2013 \$
ASSETS
CURRENT ASSETS
Cash and cash equivalents	2	1,054,336	279,087
Trade and other receivables	3	265,723	376,997
Other current assets	4	1,312,015	843,301
TOTAL CURRENT ASSETS		2,632,074	1,499,385
NON-CURRENT ASSETS
Property, plant and equipment	5	78,365	104,188
Intangibles	6	52,901	50,867
Other non-current assets	4	3,770,988	3,647,016
TOTAL NON-CURRENT ASSETS		3,902,254	3,802,071
TOTAL ASSETS		6,534,328	5,301,456
LIABILITIES
CURRENT LIABILITIES
Trade and other payables	7	315,633	426,955
Borrowings	8	187,901	137,848
Provisions	9	419,419	306,177
Other	10	1,243,081	487,572
TOTAL CURRENT LIABILITIES		2,166,034	1,358,552
NON-CURRENT LIABILITIES
Borrowings	8	1,098,257	700,060
Provisions	9	123,971	99,788
TOTAL NON-CURRENT LIABILITIES		1,222,228	799,848
TOTAL LIABILITIES		3,388,262	2,158,400
NET ASSETS		3,146,066	3,143,056
EQUITY
Issued capital	11	3,071,261	3,071,261
Retained profits		74,805	71,795
TOTAL EQUITY		3,146,066	3,143,056

The accompanying notes form part of these financial statements.

These statements should be read in conjunction with the attached compilation report.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

1 Summary of Significant Accounting Policies

The directors have prepared the financial statements on the basis that the company is a non-reporting entity because there are no users dependent on general purpose financial statements. The financial statements are therefore special purpose financial statements that have been prepared in order to meet the needs of the member.

The financial statements have been prepared in accordance with the significant accounting policies disclosed below, which the directors have determined are appropriate to meet the needs of the member. Such accounting policies are consistent with the previous period unless stated otherwise.

The financial statements have been prepared on an accruals basis and are based on historical costs unless otherwise stated in the notes. The accounting policies that have been adopted in the preparation of the financial statements are as follows:

(a) Income Tax

The income tax expense (revenue) for the year comprises current income tax expense (income). The company does not apply deferred tax.

Current income tax expense charged to profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted, or substantially enacted, as at reporting date. Current tax liabilities (assets) are therefore measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

(b) Property, Plant and Equipment

Property, plant and equipment are carried at cost. Freehold land and buildings are revalued by directors every three years. All assets, excluding freehold land and buildings are depreciated over their useful lives to the company.

The carrying amount of plant and equipment is reviewed annually by the directors to ensure it is not in excess of the recoverable amount. The recoverable amount is assessed on the basis of expected net cash flows that will be received from the assets employment and subsequent disposal. The expected net cash flows have been discounted to present values in determining recoverable amounts.

(c) Depreciation

The depreciable amount of all fixed assets including buildings and capitalised leased assets, but excluding freehold land, are depreciated over their estimated useful lives to the entity commencing from the time the asset is held ready for use.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

(d) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO).

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial position.

These notes should be read in conjunction with the attached compilation report.

Page 10

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

		Note	2014 \$	2013 \$
2.	CASH AND CASH EQUIVALENTS
	Cash on hand Cash at bank Term deposit Cash maximiser account		1,000 5,845 45,520 1,001,971	1,000 12,684 40,520 224,883
			1,054,336	279,087
3.	TRADE AND OTHER RECEIVABLES
	CURRENT Trade debtors		265,723	376,997
4.	OTHER ASSETS
	CURRENT Taxation Accrued income Prepayments Short term deposit		173,525 247,990 890,050 450 1,312,015	315,754 333,272 193,825 450 843,301
	NON-CURRENT
	R&D R&D at cost R&D at cost - email platform R&D at cost - other Accumulated amortisation		1,086,097 3,451,927 1,508,533 (2,275,569) 3,770,988	1,086,097 2,824,799 1,508,533 (1,772,413) 3,647,016
5.	PROPERTY, PLANT AND EQUIPMENT
	System equipment at cost Accumulated depreciation - system equipment		492,568 (442,023) 50,545	481,996 (399,667) 82,329
	Leasehold improvements		13,445	-
	Accumulated depreciation - leasehold improvements		(5) 13,440	- -

These notes should be read in conjunction with the attached compilation report.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

		Note	2014 \$	2013 \$
	Furniture and fittings		13,520	13,520
	Accumulated depreciation - furniture and fittings		(7,837)	(6,497)
			5,683	7,023
	Computer platform - Globalswitch Accumulated depreciation - computer platform -		214,621	214,621
	Globalswitch		(209,308)	(204,015)
			5,313	10,606
	Website development Accumulated depreciation - website development		11,557 (8,173)	11,557 (7,327)
			3,384	4,230
	Total plant and equipment		27,820	21,859
	Total property, plant and equipment		78,365	104,188
6.	INTANGIBLE ASSETS
	Patents		52,901	50,867
7.	TRADE AND OTHER PAYABLES
	CURRENT
	Goods and services tax		84,689	66,114
	Trade creditors		193,897	224,037
	Other creditors		37,047 315,633	136,804 426,955
8.	BORROWINGS
	CURRENT
	Hire purchase		166,673	99,764
	Financed insurance		21,228	38,084
			187,901	137,848
	NON-CURRENT
	Loans from other person		795,832	595,331
	Hire purchase liability		302,425	104,729
			1,098,257	700,060

These notes should be read in conjunction with the attached compilation report.

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2014

		Note	2014 \$	2013 \$
9.	PROVISIONS
	CURRENT
	Employee entitlements: Employee entitlements		419,419	306,177
	NON-CURRENT
	Employee entiltlements		123,971	99,788
10.	OTHER LIABILITIES
	CURRENT
	Accrued expenses Income in advance		374,211 868,870	303,084 184,488
			1,243,081	487,572
11.	ISSUED CAPITAL
	Fully paid ordinary shares		3,071,261	3,071,261

These notes should be read in conjunction with the attached compilation report.

COMPILATION REPORT

TO FIRST WAVE TECHNOLOGY PTY LTD

We have compiled the accompanying special purpose financial statements of First Wave Technology Pty Ltd, as set out on pages 2 to 9. The specific purpose for which the special purpose financial statements have been prepared is set out in Note 1.

The Responsibility of Directors

The directors are solely responsible for the information contained in the special purpose financial statements and have determined that the significant accounting policies adopted as set out in Note 1 to the financial statements are appropriate to meet their needs and for the purpose that the financial statements were prepared.

Our Responsibility

On the basis of information provided by the directors, we have compiled the accompanying special purpose financial statements in accordance with the significant accounting policies adopted as set out in Note 1 to the financial statements and APES 315: Compilation of Financial Information.

Our procedures use accounting expertise to collect, classify and summarise the financial information, which the directors provided, in compiling the financial statements. Our procedures do not include verification or validation procedures. No audit or review has been performed and accordingly no assurance is expressed.

The special purpose financial statements were compiled exclusively for the benefit of the directors of First Wave Technology Pty Ltd. We do not accept responsibility to any other person for the contents of the special purpose financial statements.

RML Accountants Newcastle West, NSW, 2302 755 Hunter Street

________________________________________ Principal: Deborah Matthews

NEWCASTLE

Dated: