ThZeal - The Zeal

10-K/A 1 f10k2013a1_sourcefinaincial.htm AMENDMENT TO ANNAUL REPORT f10k2013a1_sourcefinaincial.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Mark One)

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2013

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

For the transition period from ___________ to ___________

Commission file number 000-55122

SOURCE FINANCIAL, INC.

(Exact name of registrant as specified in its charter).

Delaware		80-0142655
State or other jurisdiction of incorporation or organization		(I.R.S. Employer Identification No.)

Level6/97 Pacific Highway North Sydney NSW 2060 Australia
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: +61 2 8907-2500

Securities registered under Section 12(b) of the Act:

Title of each class:		Name of each exchange on which registered:
None		None

Securities registered under Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

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

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 o

Indicate by check mark 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 o

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

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

Large accelerated filer	o	Accelerated filer	o

Non-accelerated filer (Do not check if a smaller reporting company)	o	Smaller reporting company	x

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter ended December 31, 2012: $1,744,054

As of October 15, 2013, the registrant had outstanding 9,961,637 shares of common stock.

Documents Incorporated by Reference: None.

EXPLANATORY NOTE

This amendment is being filed to amend Item 7 (Management’s Discussion and Analysis of Financial Condition and Results of Operations), Item 8 (Financial Statements) and Item 9A (Controls and Procedures) of Part III and Item 15 (Exhibits) of Part IV to this Report.

On February 24, 2014,we reported that our financial statements for the fiscal years ended June 2013, 2012 and 2011, and certain of our interim financial statements for the fiscal quarters within such years and for the fiscal quarters ended September 30, 2013 and December 31, 2013should not be relied upon and needed to be restated. The restatements were determined to be necessary due to errors in the amounts recognized in revenue and cost of revenue for certain gift card programs and in provisions for income tax and deferred tax assets. We have also taken this opportunity to provide additional disclosures so that our future filings are consistent with prior period filings.

TABLE OF CONTENTS

	Page
FORWARD-LOOKING STATEMENTS	2
USE OF CERTAIN DEFINED TERMS	2

PART III
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	3
Item 8. Financial Statements and Supplementary Data.	11
Item 9A. Controls and Procedures.	12

PART IV
Item 15. Exhibits, Financial Statement Schedules.	14

SIGNATURES	15

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (this “Report”) contains “forward-looking statements” within the meaning of the Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Any statements about our expectations, beliefs, plans, predictions, forecasts, objectives, assumptions, or future events or performance are not historical facts and may be forward-looking. These statements are often, but not always, made through the use of words or phrases such as “anticipate,” “believes,” “can,” “could,” “may,” “predicts,” “potential,” “should,” “will,” “estimate,” “plans,” “projects,” “continuing,” “ongoing,” “expects,” “intends,” and similar words or phrases. Accordingly, these statements are only predictions and involve estimates, known and unknown risks, assumptions, and uncertainties that could cause actual results to differ materially from those expressed in them. Our actual results could differ materially from those anticipated in such forward-looking statements as a result of several factors more fully described under the caption “Risk Factors” and elsewhere in this prospectus, including the exhibits hereto.

Any or all of our forward-looking statements in this Report may turn out to be inaccurate. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates, or expectations contemplated by us will be achieved. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy, and financial needs. There are important factors that could cause our actual results, level of activity, performance, or achievements to differ materially from the results, level of activity, performance, or achievements expressed or implied by the forward-looking statements.

All forward-looking statements are necessarily only estimates of future results, and actual results may differ materially from expectations. You are, therefore, cautioned not to place undue reliance on such statements which should be read in conjunction with the cautionary statements that are included elsewhere in this report. In particular, you should consider the numerous risks described in Item. 1A of this Report under the caption “Risk Factors.”. Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

USE OF CERTAIN DEFINED TERMS

Except where the context otherwise requires and for the purposes of this report only:

	·	“AUD” or AU Dollar” refer to the legal currency of Australia;
	·	the “Company,” “we,” “us,” and “our” refer to the combined businesses of Source Financial, Inc., a Delaware corporation, and its subsidiaries, Moneytech Limited, an Australian company (“Moneytech”) and its subsidiaries, WikiTechnologies, Inc., a Delaware corporation (WikiTechnologies”), and Moneytech USA, Inc., a Delaware corporation.
	·	“Exchange Act” refers to the Securities Exchange Act of 1934, as amended;
	·	“SEC” refers to the Securities and Exchange Commission;
	·	“Securities Act” refers to the Securities Act of 1933, as amended;
	·	“Series B Shares” refers to the Company’s Series B Preferred Stock; and
	·	“U.S. dollars,” “dollars”, “USD” and “$” refer to the legal currency of the United States.

All share and per share information in this Annual Report on Form 10-K give effect to a 1-for-100 reverse stock split of our common stock that became effective on March 21, 2013.

PART I

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion of our financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and the notes to those statements included elsewhere in this Report. This discussion contains forward-looking statements that involve risks and uncertainties. You should specifically consider the various risk factors identified in this Report that could cause actual results to differ materially from those anticipated in these forward-looking statement.

We provide commercial trade financing and other financial services to small to medium sized businesses and individuals with a focus on utilizing cutting edge technology to deliver these services. Our services are offered in Australia through Moneytech and its subsidiaries and in the United States through WikiTechnologies.

On June 30, 2013, we acquired Moneytech in exchange for 5,300,000 shares of our common stock (the “Share Exchange”). As a result of the Share Exchange, Moneytech has become our wholly-owned subsidiary, and the former shareholders of Moneytech own in excess of 50% of our outstanding shares of common stock on a fully diluted basis. In connection with acquisition of Moneytech, we issued 5,000 shares of our Series B Preferred Stock to Hugh Evans, the Chairman and Managing Director of Moneytech. The Series B Shares enable Mr. Evans, until June 30, 2018, to (A) elect the majority of our Board of Directors and (B) vote on all other matters presented to the holders of our common stock (the “Common Shareholders”), with each vote per Series B Share equal to 1,000 shares of common stock. After June 30, 2018, the Series B Shares will have no voting rights and may be redeemed by us for a per share price one tenth of a cent ($0.001).

The Share Exchange was accounted for as a recapitalization of Moneytech effected by a share exchange, where Moneytech is considered the acquirer for accounting and financial reporting purposes. Our net assets and liabilities as of the date of the consummation of the Share Exchange were brought forward at their book value and no goodwill was recognized. Consequently, the historical consolidated financial statements of Moneytech are now the historical financial statements of Source Financial, Inc.

The following chart reflects our organizational structure as of the date of this Report.

Overview

Our objective is to become a leading provider of commercial lines of credit and financial services, in particular money transfer services, to small to medium businesses in Australia, and a provider of money transfer services to individuals in the United States. We seek to differentiate our services by developing and utilizing cutting edge technologies to deliver our services.

Moneytech provides asset backed lines of credit in Australia using funds made available under its Receivables Purchase Facility with one of the four leading Australian banks. We also provide payment aggregation and processing solutions in Australia. For the immediate future we intend to continue to focus on our asset backed credit solutions business in Australia while seeking to expand our money transfer businesses in Australia and the United States. We plan to achieve our growth objectives by signing up new customers for our products in existing markets, expanding the services offered to our customers, entering new international markets, and continuing our research and development efforts to launch new technology driven financial products into both the Australian and United States markets.

WikiTechnologies offers on-line financial services through two platforms: WikiPay, a simple, low-cost alternative to existing mobile and online payment solutions; and WikiLoan, a low-cost peer-to-peer lending solution.

Net income attributable to our shareholders, and the associated return on equity, are the primary metrics by which we judge the performance of our business. Accordingly, we closely monitor the primary drivers of net income:

	·	Net financing income – We track the split between the fee, interest, finance charge and fee income earned on our assets and the interest, finance charges and fees incurred on our Wholesale Facility, and continually monitor the components of our yield and our cost of funds. In addition, we monitor external rate trends, including the Reserve Bank of Australia cash rate.

	·	Net bad debt losses – Other than our cost of funds interest expense and related fees, the largest driver of business profitability is the minimization of bad debts. Each asset backed line of credit is priced based on industry and individual customer risk profile. Increases in delinquencies negatively impact our business performance if they are above the level assumed in our projections. Our profitability is directly connected to whether actual net credit losses are consistent with forecasted losses; therefore, we closely analyze credit performance and seek to limit our exposure when feasible through the purchase of credit insurance. Our target customer is a high quality corporate credit and has financing requirements (with regard to size of funding requirement) that places them outside the large Australian banks sphere of interest. Our lending criteria result in a low level of overdue and delinquent balances and correspondingly low levels of bad debt. Credit is extended for a maximum period of 122 days. Any amounts unpaid after this are considered overdue and amounts overdue for greater than 30 days are considered delinquent. We monitor credit quality in our portfolio by observing trends in average collection periods (using Days Sales Outstanding), delinquent balances as a percentage of the portfolio and single obligor concentration limits and expect our actual bad debt to be approximately 0.15% of amount funded. We assess the recoverability of each delinquent balance specifically when determining the amount of doubtful debt reserve that is required.

	·	Costs and expenses – We assess our operational efficiency using our cost-to-income ratio. We perform extensive analysis to determine whether observed fluctuations in cost and expense levels indicate a trend or are the nonrecurring impact of large projects. Our cost and expense analysis also includes a loan- and portfolio-level review of origination and servicing costs to assist us in assessing profitability by pool and vintage.

Because portfolio volume and rate of turnover determine the magnitude of the impact of each of the above factors on our earnings, we also closely monitor new business volume and business growth.

The accounts of Moneytech and its wholly owned subsidiaries are maintained, and its consolidated financial statements are expressed, in Australian dollars. Such financial statements were translated into United States Dollars with the Australian Dollar as the functional currency to prepare the consolidated financial statements included in this Report. All assets and liabilities were translated at the exchange rate at the balance sheet date, stockholder’s equity is translated at the historical rates and income statement items are translated at the average exchange rate for the period. Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of operations. The resulting translation adjustments are reported under other comprehensive income as a component of shareholders’ equity.

Results of Operations

Comparison of the fiscal year ended June 30, 2013 (“Fiscal 2013”), to the fiscal year ended June 30, 2012 (“Fiscal 2012”)

All amounts, other than percentages, in U.S. dollars

	Year Ended June 30, 2013		Year Ended June 30, 2012			Dollar Increase(Decrease)			Percentage Increase(Decrease)
Revenue	$	5,305,130	$	4,171,622			1,133,508			27	%
Cost of revenue		3,001,573		2,715,227			286,346			11	%
Gross profit		2,303,557		1,456,395			847,162			58	%

Compensation expenses		730,268		806,711			(76,443	)		-9	%
Research and development expense		472,229		199,144			273,085			137	%
Bad debt expenses		393,774		78,038			315,736			405	%
Occupancy expenses		254,132		221,000			33,132			15	%
Depreciation expense		75,844		36,402			39,442			108	%
General and administration expenses		251,220		226,936			24,284			11	%
Income (loss) from operations		126,090		(111,836	)		237,926			213	%

Other income		441,908		369,423			72,485			20	%

Income before income tax		567,998		257,587			310,411			121	%

Income tax expense		305,246		179,647			125,599			70	%

Net income	$	262,752	$	77,940			184,812			237	%

Balance Sheet Data:

	2013		2012		2011
Cash and cash equivalents	$	7,205,827	$	5,617,025	$	2,854,959
Trade Receivables		27,008,840		26,577,290		19,801,075
Total Assets		41,360,924		40,113,093		29,962,270

Wholesale Loan Facility	$	25,669,388	$	24,688,865	$	17,792,207

Total Liabilities		33,696,546		32,208,188		23,837,632

Total Equity	$	7,664,378	$	7,904,905	$	6,124,638

Revenue

Consolidated revenues from operations for the year ended June 30, 2013 (“Fiscal 2013”) were approximately $5,305,130, an increase of $1,133,508 or 27% compared with consolidated revenues from operations of $4,171,622 for the year ended June 30, 2012, (“Fiscal 2012”). The increase in revenues primarily reflects the increase in the volume of the lines of credit we funded which grew from approximately US$162 million during Fiscal 2012 to approximately US$245 million during Fiscal 2013.

Cost of Revenue; Gross Profit;

Our cost of revenue, which is composed principally of the fees and interest we pay on our RPA and amortization expense of capitalized research and development costs, was $3,001,573 for Fiscal 2013, an increase of $286,346 or 11% from our cost of sales of $2,715,227 for Fiscal 2012. The increase in our cost of sales primarily results from the growth in the volume of credit lines funded as discussed above. Because we were able to decrease the rates of interest charged to our customers at a slower rate than the decrease in the rate of interest paid by us, we were able to increase our gross profit from $1,456,395 in Fiscal 2012 to $2,303,557 in Fiscal 2013, a rate of increase which exceeded the growth rate in our revenues.

Operating Expenses; Bad Debt Expense; Income from Operations

The other significant factor in determining our overall profitability is our operating expenses, in particular our bad debt expense. Our bad debt expense for Fiscal 2013 was $393,774, an increase of $315,736 or 405% from bad debt expense of $78,038 for Fiscal 2012.

The percentage of delinquent balances in our portfolio was 1.60% as of June 30, 2013 and 2012 respectively. The percentage of delinquent balances in our portfolio averaged 1.85% and 2.24% in the fiscal year ended June 30, 2013 and 2012 respectively. The average collection period in our portfolio decreased from 47 days to 45 days during the fiscal year ended June 30, 2013 and remained constant at 47 days during the fiscal year ended June 30, 2012. Bad debts as a percentage of amount funded was 0.21% and 0.05% in the fiscal year ended June 30, 2013 and 2012 respectively.

Our total operating expenses (other than bad debt) increased by 20% from $1,490,193 in Fiscal 2012 to $1,783,693 in Fiscal 2013. Our ability to control the growth in our operating expenses, other than bad debt, from Fiscal 2012 to Fiscal 2013, while increasing the volume of our business enabled us to generate income from operations in Fiscal 2012 as compared to the loss from operations generated in Fiscal 2012. The biggest increase was from the research and development cost that was not capitalized in Fiscal 2013 for Moneytech Exchange and mPay.

The design and technical development of the Moneytech Exchange is completed and it is operational for purposes of providing the services we currently offer. Although we will continue to upgrade and add additional functionality to the Moneytech Exchange and will need to add additional personnel as we grow, the rate of growth of these expenses should be less than the rate of growth of our revenue. Further, we anticipate that as we expand our portfolio and increase the number of services we offer, the rate of growth in the lines of credit we service and in our revenues will exceed the rate of growth in our operating expenses. There are a number of reasons for this, the most significant being that most of the expense involved with any debtor/obligor is incurred when the relationship is established. In the absence of a default or other triggering event, so long as a debtor/obligor is online, it generates revenue for us with little impact on our operating expenses. We do anticipate a slight increase in the rate of growth of our operating expenses this year due to, among other factors, the fact that Moneytech’s operational financial statements do not include any of the expenses associated with being a public company nor the expenses to be incurred by WikiTechnologies.

Other Income (Expense); Provision for income taxes; net income (loss)

To date, our other expense (income) has consisted of financing costs other than those incurred under the RPA, offset by interest income on the cash reserves we are required to maintain under the RPA and research and development grants received from the government.

In both Fiscal 2012 and 2013, we received research grants from the Australia government, for Fiscal year 2013; we received $526,962 and $302,876 in Fiscal 2012. The increase was due our increased costs for the development of mPay during fiscal 2013. Interest income increased from $109,899 to $114,309 due to the increase in cash reserve from Fiscal 2012 to 2013. Other expenses increased from $14,797 to $182,566 due to increase in the cost related to the exchange agreement.

Our net income before tax for Fiscal 2013 was $567,998, a 121% increase from net income of $257,587 for Fiscal 2012. As a result of the income, we incurred $305,246 in taxes incurred in Fiscal 2013 and $179,647 in taxes for Fiscal 2012. Our net income for Fiscal 2013 of $262,752, as compared to net income after tax for Fiscal 2012 of $257,586 was mainly due to the increase in revenue.

Other comprehensive income.

Our other comprehensive income consists of gains and losses in net asset value that occur when movements in foreign exchange rates occur. These gains or losses are primarily as a result of changes in the AUD/USD exchange rate. We cannot and do not attempt to predict movements in these exchange rates. The changes in net asset value occur because our net assets and operational activity are principally in Australian Dollars. We do not hedge the foreign exchange rate exposure. As operations in the United States expand the impact of foreign exchange rates on our results of operations will decrease.

The average AUD/USD exchange rates were 1 to 1.0269 and 1 to 1.0323 in the fiscal years ended June 30, 2013 and 2012 respectively.

Liquidity and Capital Resources

Our ability to offer asset backed credit lines is determined by the amount of our capital and the amount of funds we can borrow. We require a significant amount of liquidity to offer our asset backed credit lines and our rate of growth and profitability will, for the foreseeable future, largely be determined by our ability to raise equity or borrow funds with which to purchase receivables and the effective cost of such funds.

Credit Facility

In 2005 we entered into a Receivables Purchase Agreement (the “Wholesale Facility” or the “RPA”) with one of the “Big Four” Australian Banks which has been renewed annually each year thereafter. Pursuant to this Agreement we electronically offer eligible receivables to our lender for purchase on a nightly basis. These offerings are then settled by the lender on a daily basis. The funds we receive upon settlement are automatically and electronically delivered to our customers. Our gross profit is represented by the difference between what we charge our customers in interest, finance charges and fees and what we pay to our lender. Our borrowing limit under the RPA is AUD$50 million, subject to interim agreed upon limits determined by various tests and covenants which currently limit our borrowing capacity to AUD $30 million. As at June 30, 2013 the total amount drawn against the facility was $25,669,388,

We pay an interest rate on all borrowed monies under the Receivables Purchase Agreement which is directly linked to the Reserve Bank of Australia cash-rate, a utilization fee charged on monies available to be borrowed but not utilized, an annual line fee and fees for electronically accessing the facility. The Facility contains a number of covenants relating to our financial performance and performance of our receivables portfolio including but not limited to net profit targets, maximum dilution ratios, concentration limits, maximum delinquency ratios and cash reserve requirements. As of the date hereof we are in compliance with all covenants imposed by the Receivables Purchase Agreement.

We, in turn, provide our customers with funds provided by the Receivables Purchase Agreement. We charge each of our clients interest at a rate above that charged by our lender and seek to have our clients pay a fee corresponding to each of the fees charged to us in respect of their loans. To the extent that the RPA requires that we deposit monies into an account to partially secure repayment of our loans, we seek to have those funds advanced by our customers as a condition of their credit lines. The cash reserve we are required to maintain pursuant to the RPA is included under Cash and cash equivalents on our balance sheet.

Insurance

As a condition of the RPA, the receivables due Moneytech from its customers or their counterparties are insured pursuant to a policy issued by Euler Hermes, a Standard & Poor’s rated Trade Credit insurance provider. Pursuant to this policy, Moneytech would bear the first $500,000 of losses incurred in any calendar year, after which any bad debt losses are borne by Euler Hermes. This policy is renewed annually.

Cash Flow Comparison

After adjusting for the cash deemed used in operating activities as a result of the increase in the volume of the credit lines we made available each year, we have produced positive net cash from operating activities every year since July 2009. Our revenue generating activities have consisted primarily of making credit lines available to our customer and our principal cost of sales have consisted primarily of interest charges and other fees payable under our Wholesale Facility.

	Year Ended June 30,
	2013			2012			2011

Net cash provided by (used in) operating activities	$	(2,855,751	)	$	(4,034,980	)	$	(2,613,851	)
New cash provided by (used in) investing activities	$	(824,747	)	$	(790,967	)	$	(581,107	)
Net cash provided by (used in) financing activities	$	6,096,650		$	7,751,988		$	3,429,948

Cash used in Operating Activities

For Fiscal 2013, we used approximately $2,855,751 of net cash in our operating activities. This reflects our net income of $262,752 less $3,815,520 used by changes in operating assets and liabilities and adjustments for non-cash items providing $697,017. Adjustments for non-cash items consisted entirely of depreciation and amortization. The increase in operating assets and liabilities was primarily impacted by an increase in trade receivables of $3,555,934, reflecting the increase in the volume of credit lines we provided.

For Fiscal 2012, we used approximately $4,034,980 of net cash in our operating activities. This reflects our net income of $77,940 less $4,706,931 used by changes in operating assets and liabilities and adjustments for non-cash items providing $594,011. Adjustments for non-cash items consisted entirely of depreciation and amortization. Cash used in working capital items and other activities was primarily impacted by an increase in trade receivables of $7,765,220 reflecting an increase in the volume of credit lines we provided offset by an increase in Trade payables of $3,737,665 reflecting an increase in balances associated with the new confirmed capital business.

Cash Used in Investing Activities

During Fiscal 2013, net cash used in investing activities of $824,747 was primarily impacted by $747,580 in capitalized costs incurred on the development of intangible assets, principally software related to the Moneytech Exchange and mPay, $110,392 invested in our subsidiary mPayments Pty Ltd. and $32,063 used to purchase property, plant and equipment, partially offset by $65,288 realized upon consummation of the Exchange Agreement.

During Fiscal 2012, net cash used in investing activities of $790,967 reflects $706,496 in capitalized costs incurred on the development of intangible assets, principally software related spent on the development of the Moneytech Exchange and $84,471 used to purchase property, plant and equipment.

Cash Provided by Financing Activities

During Fiscal 2013, net cash provided by financing activities of $6,096,650 reflects an increase in our borrowings under the Wholesale Loan Facility of $3.906 million, contributions to our capital reserve account received from our customers $2.360 million, partially offset by payment of loan.

During Fiscal 2012, net cash provided by financing activities of $7,751,988 consisted entirely of an increase in the amounts borrowed under the RPA.

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fee is fixed or determinable, and collectability is probable. Revenue generally is recognized net of allowances for returns and any taxes collected from customers and subsequently remitted to governmental authorities.

Cost of Sales

Cost of sales includes; programs licensed; operating costs including costs of funds and related product support service centers to drive traffic to our websites, costs incurred to support and maintain products and services, including inventory valuation adjustments; costs associated with the delivery of consulting services; and the amortization of capitalized intangible software costs.

Research and Development

Research and development expenses include payroll, employee benefits, and other headcount-related expenses associated with product development. Research and development expenses also include third-party development and programming costs, localization costs incurred to translate software for international markets, and the amortization of purchased software code and services content. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached, which for our software products, is generally shortly before the products are put into service. Once technological feasibility is reached, such costs are capitalized and amortized to cost of revenue over the estimated lives of the products.

Equity Investments

The Company uses the equity method of accounting for investments when the percentage of ownership of the investment is between 20% and 50%. The Company includes the proportionate share of the profit or loss as part of the carrying value of the investment.

Exchange (Loss) Gain

During the fiscal years ended June 30, 2013 and 2012, the transactions of Moneytech and its wholly owned subsidiaries were denominated in foreign currency and were recorded in Australian dollar (AUD) at the rates of exchange in effect when the transactions occurred. Exchange gains and losses are recognized for the different foreign exchange rates applied when the foreign currency assets and liabilities are settled.

Foreign Currency Translation and Comprehensive (Loss) Income

The accounts of Moneytech and its wholly owned subsidiaries were maintained, and its financial statements were expressed, in AUD. Such financial statements were translated into USD with the AUD as the functional currency. All assets and liabilities were translated at the exchange rate at the balance sheet date, stockholder’s equity is translated at the historical rates and income statement items are translated at the average exchange rate for the period. Transactions in foreign currencies are initially recorded at the functional currency rate ruling at the date of transaction. Any differences between the initially recorded amount and the settlement amount are recorded as a gain or loss on foreign currency transaction in the consolidated statements of operations. The resulting translation adjustments are reported under other comprehensive income as a component of shareholders’ equity.

Allowance for Doubtful Accounts

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves.

Inventory

Inventories are valued at the lower of cost (determined on a weighted average basis) or market. Management compares the cost of inventories with the market value and allowance is made to write down inventories to market value, if lower. As of June 30, 2013 and 2012, inventory only consisted of finished goods.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination. Goodwill is not amortized but is evaluated for impairment at the reporting unit level annually as of June 30, or more frequently if events or changes in circumstances indicate that impairment may exist. Effective October 1, 2011, the Company adopted ASU 2011-08, which allows the Company to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. This step serves as the basis for determining whether it is necessary to perform the two-step goodwill impairment test. The two-step test first compares the fair value of the reporting unit to its carrying value. If the fair value exceeds the carrying value, no impairment exists, and the second step is not performed. If the fair value is less than the carrying value, the second step is performed to compute the amount of the impairment by comparing the implied fair value of reporting unit goodwill with the carrying amount of that goodwill.

Income Taxes

The Company utilizes FASB Accounting Standards Codification (ASC) Topic 740, Income Taxes, which requires recognition of deferred tax assets and liabilities for the expected future tax consequences of events that were included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

The Company follows FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (codified in FASB ASC Topic 740). When tax returns are filed, it is likely that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest associated with unrecognized tax benefits is classified as interest expense and penalties are classified in selling, general and administrative expenses in the statements of income. At June 30, 2013 and 2012, the Company had not taken any significant uncertain tax positions on its tax returns for 2012 and prior years or in computing its tax provision for 2013.

Recently Issued Accounting Pronouncements

In June 2011, the FASB issued ASU 2011-05, which impacts the presentation of comprehensive income. The guidance requires components of other comprehensive income to be presented with net income to arrive at total comprehensive income. This ASU impacts presentation only and does not impact the underlying components of other comprehensive income or net income. In December 2011, the FASB issued an amendment to ASU 2011-05, which defers the requirement to present components of reclassifications of other comprehensive income on the face of the income statement. All other components of ASU 2011-05 are effective October 1, 2012.

In July 2012, the FASB issued ASU 2012-02, which will allow an entity to first assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test for indefinite-lived intangible assets. The standard was adopted on October 1, 2012.

We do not believe that the adoption off any recently issued accounting pronouncements, including those set forth above, will have a material effect on our consolidated financial statements.

Item 8. Financial Statements and Supplementary Data.

The financial statements start on page F-1.

SOURCE FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2013 AND 2012

(RESTATED)

F-1

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm	F-3

Consolidated Balance Sheets as of June 30, 2013 (Restated) and 2012 (Restated)	F-4

Consolidated Statements of Operations and Comprehensive (Loss) Income for the Years Ended June 30, 2013 (Restated) and 2012 (Restated)	F-5

Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended June 30, 2013 (Restated) and 2012 (Restated)	F-6

Consolidated Statements of Cash Flows for the Years Ended June 30, 2013(Restated) and 2012 (Restated)	F-7

Notes to Consolidated Financial Statements	F-8 F-24

F-2

Report of Independent Registered Public Accounting Firm

Lichter, Yu and Associates

Certified Public Accountants

16133 Ventura Blvd., suite 450

encino, California 91436

Tel (818)789-0265 Fax (818) 789-3949

Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders of

Source Financial, Inc. and Subsidiaries

We have audited the accompanying consolidated balance sheets of Source Financial, Inc. and Subsidiaries (the “Company”) as of June 30, 2013 (as restated) and 2012 (as restated), and the related consolidated statements of operations and comprehensive (loss) income (as restated), stockholders' equity (as restated), and cash flows for the years ended June 30, 2013 (as restated) and 2012 (as restated). These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing 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 over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of June 30, 2013 (as restated) and 2012 (as restated), and the consolidated results of its operations (as restated) and its cash flows for the years ended June 30, 2013 (as restated) and 2012 (as restated), in conformity with U.S. generally accepted accounting principles.

As discussed in Note 1, the consolidated financial statements as of June 30, 2013 and 2012 have been restated.

Lichter, Yu & Associates

Encino, California

October 14, 2013, except as to Notes 1, 2, 3, 4, 12, 13, and 14, which are as of March 26, 2014.

F-3

SOURCE FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

JUNE 30, 2013 AND 2012

(RESTATED)

ASSETS
CURRENT ASSETS	2013 (Restated)			2012 (Restated)

Cash and cash equivalents	$	7,205,827		$	5,617,025
Trade receivables, net		27,008,840			26,577,290
Other receivable		-			50,795
Inventories		220,377			125,783
Deferred tax asset		718,767			317,850
Other current assets		820,726			1,230,603
TOTAL CURRENT ASSETS		35,974,537			33,919,346

NON-CURRENT ASSETS
Intangible assets, net		3,512,767			3,467,872
Deferred tax asset		1,130,454			2,041,089
Property, plant and equipment, net		578,136			684,786
Other assets		95,973			-
Goodwill		69,057			-
TOTAL NON-CURRENT ASSETS		5,386,387			6,193,747

TOTAL ASSETS	$	41,360,924		$	40,113,093

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Trade and other payables	$	5,250,399		$	6,597,746
Wholesale loan facility		25,669,388			24,688,865
Cash reserve		2,731,094			703,003
TOTAL CURRENT LIABILITIES		33,650,881			31,989,614
NON-CURRENT LIABILITIES
Shareholders loans		45,665			218,574
TOTAL NON-CURRENT LIABILITIES		45,665			218,574

TOTAL LIABILITIES		33,696,546			32,208,188

STOCKHOLDERS' EQUITY
Preferred stock, Series A, $0.01 par value, 10,000,000 shares authorized, no shares issued and outstanding		-			-
Preferred stock, Series B, $0.01 par value, 10,000,000 shares authorized, 5,000 issued and outstanding		50			50
Common stock, $0.10 par value, 500,000,000 and 250,000,000 shares authorized, 9,961,632 and 5,300,000 shares issued and outstanding respectively		996,163			530,000
Common stock to be issued		33,837			-
Additional paid-in capital		14,462,575			14,639,150
Other accumulated comprehensive loss		(1,079,762	)		(253,058	)
Accumulated deficit		(6,748,485	)		(7,011,237	)
TOTAL STOCKHOLERS' EQUITY		7,664,378			7,904,905

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	41,360,924		$	40,113,093

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

F-4

SOURCE FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

(RESTATED)

	2013 (Restated)			2012 (Restated)

Revenue	$	5,305,130		$	4,171,622
Cost of revenue		3,001,573			2,715,227
Gross profit		2,303,557			1,456,395

Operating Expenses

Compensation expenses		730,268			806,711
Research and development expense		472,229			199,144
Bad debt expenses		393,774			78,038
Occupancy expenses		254,132			221,000
Depreciation expense		75,844			36,402
General and administration expenses		251,220			226,936
Total operating expenses		2,177,467			1,568,231
Income (loss) from operations		126,090			(111,836	)

Other Income (Expense)
Interest income		114,309			109,899
Research and development grant		526,962			302,876
Other expense (income)		(182,566	)		(14,797	)
Finance costs		(16,797	)		(28,555	)
Total Other Income		441,908			369,423
Income before Provision of income taxes		567,998			257,587

Provision for income taxes		305,246			179,647

Net income		262,752			77,940
Other comprehensive loss
Foreign currency translation		(826,704	)		(253,280	)

Comprehensive loss	$	(563,952	)	$	(175,340	)

Net income per share
Basic	$	0.049		$	0.015
Diluted	$	0.049		$	0.015

Weighted average number of shares used in computing basic and diluted net income per share:

Basic		5,313,661			5,300,000
Diluted		5,313,680			5,300,000

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

F-5

SOURCE FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

(RESTATED)

												Other
									Additional			Accumulated			Total
	Common Stock				Preferred Stock				Paid in			Comprehensive			Accumulated			Stockholders'
	Shares		Amount		Shares		Amount		Capital			Loss			Deficit			Equity
Balance June 30, 2011 (Restated)		5,300,000	$	530,000		5,000	$	50	$	14,639,150		$	222		$	(7,089,177	)	$	8,080,245
Foreign currency translation adjustments		-		-		-		-		-			(253,280	)		-			(253,280	)
Net income for the year ended June 30, 2012		-		-		-		-		-			-			77,940			77,940
Balance June 30, 2012 (Restated)		5,300,000	$	530,000		5,000	$	50	$	14,639,150		$	(253,058	)	$	(7,011,237	)	$	7,904,905
Issue of share capital at merger (Restated)		5,000,000		500,000		-		-		(176,575	)		-			-			323,425
Foreign currency translation adjustments		-		-		-		-					(826,704	)		-			(826,704	)
Net income for the year ended June 30, 2013		-														262,752			262,752
Balance June 30, 2013 (Restated)		10,300,000	$	1,030,000		5,000	$	50	$	14,462,575		$	(1,079,762	)	$	(6,748,485	)	$	7,664,378

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

F-6

SOURCE FINANCIAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED JUNE 30, 2013 AND 2012

(RESTATED)

	2013 (Restated)			2012 (Restated)
Net income	$	262,752		$	77,940
Adjustments to reconcile net income to net cash used in operating activities:

Depreciation and amortization		697,017			594,011

(Increase) decrease in assets:
Trade receivables, net		(3,555,934	)		(7,765,220	)
Inventories		(120,644	)		3,440
Deferred tax asset		305,246			179,646
Other assets		324,906			(862,462	)
Increase (decrease) in current liabilities:
Trade payables		(769,094	)		3,737,665
Net cash used in operating activities		(2,855,751	)		(4,034,980	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(32,063	)		(84,471	)
Cash acquired in acquisition		65,288			-
Investment in subsidiary		(110,392	)		-
Development of intangible assets		(747,580	)		(706,496	)
Net cash used in investing activities		(824,747	)		(790,967	)

CASH FLOWS FROM FINANCING ACTIVITIES
Wholesale loan facility, net		3,906,061			7,751,988
Capital Reserve		2,360,184			-
Repayment of shareholder loans		(169,595	)		-
Net cash provided by financing activities		6,096,650			7,751,988

Effect of exchange rate changes on cash and cash equivalents		(827,350	)		(163,975	)

Net increase in cash and cash equivalents		1,588,802			2,762,066

Cash and cash equivalents at the beginning of the period		5,617,025			2,854,959

Cash and cash equivalents at the end of the period	$	7,205,827		$	5,617,025

SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Income tax payments	$	-		$	-

Interest payments	$	1,905,471		$	1,711,920

Assets acquired in merger transaction	$	323,425		$	-

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

F-7

SOURCE FINANCIAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2013 AND 2012

Note 1 – BASIS OF PRESENTATION AND ORGANIZATION (RESTATED)

Basis of Presentation

Source Financial, Inc., formerly known as The Wiki Group, Inc., (the “Company” or “Source”) was incorporated under the laws of the State of Delaware on June 24, 1988 as Windsor Capital Corp. Between March 2001 and January 2008 the Company amended and restated its Articles of Incorporation and changed its corporate name to Energy Control Technology, Inc., 5Fifty5.com, Inc., Swap-A-Debt, Inc., WikiLoan, Inc. and finally Wiki Group, Inc. on March 12, 2012.

Moneytech Limited (“Moneytech”) was incorporated under the laws of Australia on September 9, 2003, and (through its wholly owned subsidiaries Moneytech Finance Pty Ltd, mPayments Pty Ltd., Moneytech POS Pty Ltd. and Moneytech Services Pty Ltd.) offers working capital, trade and debtor finance solutions, to small and medium sized businesses in Australia.

On June 30, 2013, Source acquired Moneytech and it’s wholly owned subsidiaries, Moneytech Finance Pty. Ltd., mPayments Pty. Ltd., Moneytech POS Pty. Ltd. and Moneytech Services Pty. Ltd. Under the terms of the Exchange Agreement, all stockholders of Moneytech received a total of 5,300,000 shares of voting common stock of Source in exchange for all outstanding shares of Moneytech. In addition, pursuant to a separate agreement, the President of Moneytech received 5,000 shares of Preferred Series B Stock. Under accounting principles generally accepted in the United States, the share exchange is considered to be a capital transaction in substance, rather than a business combination. That is, the share exchange is equivalent to the issuance of stock by Moneytech for the net monetary assets of Source accompanied by a recapitalization, and is accounted for as a change in capital structure. Accordingly, the accounting for the share exchange will be identical to that resulting from a reverse acquisition, except no goodwill will be recorded. Under share reverse takeover accounting, the post reverse acquisition comparative historical financial statements of the legal acquirer, Source are those of the legal acquiree, Moneytech, which is considered to be the accounting acquirer. Share and per share amounts stated have been retroactively adjusted to reflect the merger.

Organization

Moneytech delivers its product offerings through ‘The Moneytech Exchange’, which is a real-time core banking platform, developed in-house and which continues to be upgraded with the support of the Australian Federal Government’s Research and Development program.

The Moneytech Exchange serves as the backbone of the business in Australia by providing internet banking style access to Moneytech’s customers and back-office systems to Moneytech staff.

The Company offers a range of innovative financial products and services to businesses and consumers in Australia and the United States through its principal operating subsidiaries, Moneytech and WikiTechnologies, Inc. The Company recently formed a new corporation in the United States, Moneytech USA, Inc.

When used in these notes, the terms "Company," "we," "our," or "us" mean Source Financial, Inc. and its subsidiaries.

Restatements

Subsequent to the issuance of the Company's financial statements for the fiscal year ended June 30, 2013, the Company determined that certain transactions and presentation in the financial statements had not been accounted for properly in the Company's financial statements. Specifically, the amount of the value available on the card for the consumer in certain gift card and similar programs had been improperly recognized in revenue and cost of revenues. Also, the provision for income tax and deferred tax was incorrectly calculated. The Company also used this opportunity to realign operating expenses and cost of revenue to conform to future financials filed.

The Company has restated the consolidated balance sheet, consolidated statement of operations and comprehensive (loss) income, consolidated statement of stockholders’ equity, consolidated statement of cash flows for the fiscal years ended June 30, 2013 and 2012 to give effect to these changes.

F-8

The effects of these restatements and reclassifications are as follows:

BALANCE SHEETS	Reported			Adjustments			Restated			Reported			Adjustments			Restated
	June 30, 2012			June 30, 2012			June 30, 2012			June 30, 2013			June 30, 2013			June 30, 2013
ASSETS
CURRENT ASSETS
TOTAL CURRENT ASSETS		33,919,346			-			33,919,346			35,974,537			-			35,974,537

NON-CURRENT ASSETS
Intangible assets		3,467,872			-			3,467,872			3,512,767			-			3,512,767
Deferred tax asset		2,155,244			(114,156	)		2,041,089			988,860			141,594			1,130,454
Property, plant and equipment		684,786			-			684,786			578,136			-			578,136
Other assets		-			-			-			95,973			-			95,973
Goodwill		-			-			-			69,057			-			69,057
TOTAL NON-CURRENT ASSETS		6,307,902			(114,156	)		6,193,747			5,244,793			141,594			5,386,387

TOTAL ASSETS	$	40,227,248		$	(114,156	)	$	40,113,093		$	41,219,330		$	141,594		$	41,360,924

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Trade and other payables		6,597,747			(1	)		6,597,746			5,250,399			-			5,250,399
Wholesale loan facility		24,688,865			-			24,688,865			25,669,388			-			25,669,388
Cash reserve		703,003			-			703,003			2,731,094			-			2,731,094
TOTAL CURRENT LIABILITIES		31,989,615			(1	)		31,989,614			33,650,881			-			33,650,881

NON-CURRENT LIABILITIES
TOTAL NON-CURRENT LIABILITIES		218,574			-			218,574			45,665			-			45,665

TOTAL LIABILITIES		32,208,189			(1	)		32,208,188			33,696,546			-			33,696,546

EQUITY
Preferred stock		50			-			50			50			-			50
Common stock		530,000			-			530,000			996,164			(1	)		996,163
Common stock to be issued		-			-			-			-			33,837			33,837
Additional paid-in capital		14,639,149			1			14,639,150			14,496,411			(33,836	)		14,462,575
Other accumulated comprehensive gain (loss)		(244,289	)		(8,769	)		(253,058	)		(1,052,144	)		(27,618	)		(1,079,762	)
Accumulated deficit		(6,905,851	)		(105,386	)		(7,011,237	)		(6,917,697	)		169,212			(6,748,485	)
TOTAL EQUITY		8,019,059			(114,154	)		7,904,905			7,522,784			141,594			7,664,378

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	40,227,248		$	(114,155	)	$	40,113,093		$	41,219,330		$	141,594		$	41,360,924

F-9

STATEMENTS OF OPERATIONS	Reported			Adjustments			Restated			Reported			Adjustments			Restated
	June 30, 2012			June, 30 2012			June, 30 2012			June 30, 2013			June 30, 2013			June 30, 2013
Revenue	$	4,171,622		$	-		$	4,171,622		$	6,098,374		$	(793,244	)	$	5,305,130
Cost of revenue		2,622,383			92,844			2,715,227			3,700,918			(699,345	)		3,001,573
Gross profit		1,549,239			(92,844	)		1,456,395			2,397,456			(93,899	)		2,303,557

Operating expenses
Compensation expenses		807,671			(960	)		806,711			859,754			(129,486	)		730,268
Research and development expense		199,144			-			199,144			472,229			-			472,229
Bad debt expenses		78,038			-			78,038			393,774			-			393,774
Occupancy expenses		254,145			(33,145	)		221,000			276,615			(22,483	)		254,132
Depreciation expense		129,246			(92,844	)		36,402			169,743			(93,899	)		75,844
General and administration expenses		207,629			19,307			226,936			99,251			151,969			251,220
Total operating expenses		1,675,873			(107,642	)		1,568,231			2,271,366			(93,899	)		2,177,467
(loss) Income from operations		(126,634	)		14,798			(111,836	)		126,090			-			126,090

Other income / (expense)
Interest income		109,899			-			109,899			114,309			-			114,309
Research and development grant		302,876			-			302,876			526,962			-			526,962
Other (expense) income		-			(14,797	)		(14,797	)		(182,566	)		-			(182,566	)
Finance costs		(28,555	)		-			(28,555	)		(16,797	)		-			(16,797	)
Total other income		384,220			(14,797	)		369,423			441,908			-			441,908
(Loss) income from operations before income taxes		257,586			1			257,587			567,998			-			567,998
Income tax expense		-			179,647			179,647			579,844			(274,598	)		305,246
Net (loss) income		257,586			(179,646	)		77,940			(11,846	)		274,598			262,752
Other comprehensive income		(253,444	)		164			(253,280	)		(807,855	)		(18,849	)		(826,704	)
Comprehensive (loss) income	$	4,142		$	(179,482	)	$	(175,340	)	$	(819,701	)	$	255,749		$	(563,952	)

Net income (loss) per share:
Basic	$	0.049		$	(0.034	)	$	0.015		$	(0.002	)	$	0.052		$	0.049
Diluted	$	0.049		$	(0.034	)	$	0.015		$	(0.002	)	$	0.052		$	0.049

F-10

STATEMENTS OF CASH FLOWS	Reported			Adjustments			Restated			Reported			Adjustments			Restated
	June 30, 2012			June 30, 2012			June 30, 2012			June 30, 2013			June 30, 2013			June 30, 2013
Net income (loss)	$	257,586		$	(179,646	)	$	77,940		$	(11,846	)	$	274,598		$	262,752
Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation & amortization		594,011			-			594,011			697,017			-			697,017
(Increase) / decrease in assets:
Trade receivables		(7,765,220	)		-			(7,765,220	)		(3,555,934	)		-			(3,555,934	)
Inventories		3,440			-			3,440			(120,644	)		-			(120,644	)
Deferred tax assets		-			179,646			179,646			579,844			(274,598	)		305,246
Other assets		(862,462	)		-			(862,462	)		324,906			-			324,906
Increase/ (decrease) in current liabilities:
Trade payables		3,737,665			-			3,737,665			(769,094	)		-			(769,094	)
Net cash used in operating activities		(4,034,980	)		-			(4,034,980	)		(2,855,751	)		-			(2,855,751	)

CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in investing activities		(790,967	)		-			(790,967	)		(824,747	)		-			(824,747	)

CASH FLOWS FROM FINANCING
ACTIVITIES
Net cash provided by financing activities		7,751,988			-			7,751,988			6,096,650			-			6,096,650

Net cash provided by operations		2,926,041			-			2,926,041			2,416,152			-			2,416,152

Effect of exchange rate changes on cash and cash equivalents		(163,975	)		-			(163,975	)		(827,350	)		-			(827,350	)
Net increase in cash and cash equivalents		2,762,066			-			2,762,066			1,588,802			-			1,588,802
Cash and cash equivalents at the beginning of the period		2,854,959			-			2,854,959			5,617,025			-			5,617,025

Cash and cash equivalents at the end of the period		5,617,025			-			5,617,025			7,205,827			-			7,205,827

SUPPLEMENTAL DISCLOSURES:
Cash paid during the year for:
Income tax payments	$	-		$	-		$	-		$	-		$	-		$	-
Interest payments	$	1,711,920		$	-		$	1,711,920		$	1,905,471		$	-		$	1,905,471

F-11

Note 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (RESTATED)

Basis of Presentation

The accompanying consolidated financial statements were prepared in conformity with generally accepted accounting principles in the United States (“US GAAP”).

Principles of Consolidation

The consolidated financial statements include the accounts of Source and its wholly owned subsidiaries Moneytech, Moneytech Finance Pty Ltd, mPayments Pty Ltd., Moneytech POS Pty Ltd., Moneytech Services Pty Ltd, Moneytech USA and Wikitechnologies, Inc., collectively referred to as the Company. Moneytech USA was formed and Wikitechnologies, Inc. was acquired on June 30, 2013. All material intercompany accounts, transactions and profits were eliminated in consolidation.

Reclassifications

Certain prior year amounts were reclassified to conform to the presentation in the current year. The reclassifications did not have an effect on the results of operations or the cash flow.

Equity Investments

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include collectability of accounts receivable, accounts payable, sales returns and recoverability of long-term assets.

Exchange (Loss) Gain

Foreign Currency Translation and Comprehensive (Loss) Income

Reportable Segment

The Company has one reportable segment. The Company’s activities are interrelated and each activity is dependent upon and supportive of the other. Accordingly, all significant operating decisions are based on analysis of financial products provided as a single global business.

Revenue Recognition

Cost of Revenue

Cost of revenue includes; programs licensed; operating costs including costs of funds and related product support service centers to drive traffic to our websites, costs incurred to support and maintain products and services, including inventory valuation adjustments; costs associated with the delivery of consulting services; and the amortization of capitalized intangible software costs. Capitalized intangible software costs are amortized over the estimated lives of the products.

F-12

Research and Development

Income Taxes

At June 30, 2013 and 2012, the Company had not taken any significant uncertain tax positions on its tax returns for 2012 and prior years or in computing its tax provision for 2013.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions. The Company has a diversified customer base, most of which are in Australia. The Company controls credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. The Company routinely assesses the financial strength of its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

Risks and Uncertainties

The Company is subject to risks from, among other things, competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.

Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and legal counsel assess such contingent liabilities, and such assessment inherently involves judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.

F-13

If the assessment of a contingency indicates it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.

Cash and Equivalents

Cash and equivalents include cash in hand and cash in demand deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. At June 30, 2013, the Company had $7,205,827 in cash, of which $7,137,539 was on deposit in Australia and not covered by insurance. At June 30, 2012, the Company had $5,617,025 in cash in Australia which was not covered by insurance. The Company has not experienced any losses in such accounts and believes it is not exposed to any risks on its cash in bank accounts.

Allowance for Doubtful Accounts

Inventory

Property, Plant & Equipment

Property and equipment is stated at cost and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The estimated useful lives of our property and equipment are generally as follows:

Computer software	3 to 10 years
Computer hardware	5 to 15 years
Furniture and equipment	3 to 5 years

As of June 30, 2013 and 2012, Property, Plant & Equipment consisted of the following:

	2013			2012
Office equipment	$	35,949		$	26,970
Furnitures and fixtures		249,770			229,713
Computers and software		1,282,317			1,349,340
Accumulated Depreciation		(989,900	)		(921,237	)
	$	578,136		$	684,786

As of June 30, 2013 and 2012, depreciation expense consisted of the following:

	2013		2012
Depreciation, operating	$	75,844	$	36,402
Depreciation, cost of revenue		107,723		111,735
Total depreciation expense	$	183,567	$	148,137

F-14

Fair Value of Financial Instruments

For certain of the Company’s financial instruments, including cash and equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities and short-term debt, the carrying amounts approximate their fair values due to their short maturities. ASC Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows:

Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The Company analyzes all financial instruments with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.

As of June 30, 2013, the Company did not identify any assets and liabilities that are required to be presented on the balance sheet at fair value.

Earnings Per Share (EPS)

Basic EPS is computed by dividing income available to common shareholders and equivalents by the weighted average number of common shares and equivalents outstanding for the period. Diluted EPS is computed similar to basic net income per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if all the potential common shares, warrants and stock options had been issued and if the additional common shares were dilutive. Diluted EPS is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method for the outstanding options and the if-converted method for the outstanding convertible preferred shares. Under the treasury stock method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period. Under the if-converted method, convertible outstanding instruments are assumed to be converted into common stock at the beginning of the period (or at the time of issuance, if later).

The following table sets for the computation of basic and diluted earnings per share for period ended June 30, 2013and 2012:

	FOR THE YEAR ENDED
	2013		2012
Net income	$	262,752	$	77,940

Weighted average number of shares used in computing basic and diluted net income per share:

Basic		5,313,661		5,300,000
Diluted		5,313,680		5,300,000

Net income per share
Basic	$	0.049	$	0.015
Diluted:	$	0.049	$	0.015

F-15

Goodwill

Effective October 1, 2011, the Company adopted ASU 2011-08, which allows the Company to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. This step serves as the basis for determining whether it is necessary to perform the two-step goodwill impairment test. The two-step test first compares the fair value of the reporting unit to its carrying value. If the fair value exceeds the carrying value, no impairment exists, and the second step is not performed. If the fair value is less than the carrying value, the second step is performed to compute the amount of the impairment by comparing the implied fair value of reporting unit goodwill with the carrying amount of that goodwill. The adoption did not have a material impact on the consolidated financial statements.

The Company evaluated its goodwill for impairment on June 30, 2013, and concluded there was no impairment as of that date.

Intangible Assets

The Company records identifiable intangible assets at fair value on the date of acquisition and evaluates the useful life of each asset. Finite-lived intangible assets primarily consist of software development capitalized. Finite-lived intangible assets are amortized on a straight-line basis and are tested for recoverability if events or changes in circumstances indicate that their carrying amounts may not be recoverable. These intangibles have useful lives ranging from 1 to 10 years. No events or changes in circumstances indicate that impairment existed as of June 30, 2013.

Stock-Based Compensation

The Company accounts for its stock-based compensation in accordance with SFAS No. 123R, “Share-Based Payment, an Amendment of FASB Statement No. 123” (codified in FASB ASC Topic 718 and 505). The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity-based compensation issued to employees. Non-employees stock based compensation is accounted for according to ASC 718.

Recently Issued Accounting Pronouncements

In December 2010, the FASB issued ASU 2010-29, which provides requirements over pro forma revenue and earnings disclosures related to business combinations. The ASU requires disclosure of revenue and earnings of the combined business as if the combination occurred at the start of the prior annual reporting period only. The Company adopted ASU 2010-29 effective October 1, 2011. The adoption did not have a material impact on the consolidated financial statements.

F-16

Note 3 – SHARE EXCHANGE AGREEMENT (RESTATED)

On June 30, 2013, Source consummated the transactions contemplated by the Exchange Agreement. Accordingly Source acquired all of the issued and outstanding shares of stock of Moneytech in exchange for the issuance in the aggregate of 5,300,000 shares of common stock which shares represented in excess of 50% of the issued and outstanding capital stock of Source after the consummation of the Exchange Agreement and the transactions contemplated thereby. Pursuant to a separate agreement, the President of Moneytech received 5,000 shares of Preferred Series B Stock of Source. The Series B Preferred shares have certain control provisions (see note 15)

In connection with the exchange agreement, on June 30, 2013, Source, Marco Garibaldi (“Garibaldi”), Edward DeFeudis (“DeFeudis”), and Eaton & Van Winkle LLP (the”Agent”) entered into an Escrow Agreement. As a condition to the exchange agreement, Garibaldi has agreed to deposit in escrow with the Agent 1,120,000 shares of Source Common Stock (the “Garibaldi Shares”), DeFeudis has agreed to deposit in escrow with the Agent 1,120,000 shares of Source Common Stock (the “DeFeudis Shares”) and Source has agreed to deposit in escrow with the Agent 1,000 shares of the common stock of Wiki Sub, representing all of the outstanding shares of Wiki Sub (the “Wiki Sub Shares,” and together with the Garibaldi Shares and the DeFeudis Shares, the “Escrow Shares”), on the terms and subject to the conditions set forth in the Escrow Agreement.

During the term of the Escrow Agreement, the operations of WikiTechnologies will be directed by Messrs. Garibaldi and DeFeudis. If during the twelve-month period commencing July 1, 2013, (the “Earn-Out Period”), WikiTechnologies achieves revenues of $4.2 million, a gross profit percentage of 25% and breaks even (the “Benchmarks”), the Garibaldi Shares and DeFeudis Shares will be returned to Messrs. Garibaldi and DeFeudis and the WikiTechnologies Shares will be returned to us. If the Benchmarks are not met during the Earn-Out Period, at our option, the Garibaldi Shares and DeFeudis Shares will be cancelled and returned to treasury, and the WikiTechnologies Escrow Shares will be delivered to Messrs. DeFeudis and Garibaldi, and we will no longer own WikiTechnologies. Further, if, at any point during the Earn-Out Period, the Company sells WikiTechnologies, merges WikiTechnologies with another entity, disposes of the assets of WikiTechnologies, or takes any other action to compromise the ability of WikiTechnologies to meet the Benchmarks, the Benchmarks will be deemed to have been achieved, and the Garibaldi Shares and DeFeudis Shares will be returned to Messrs. Garibaldi and DeFeudis. Under the terms of the Exchange Agreement, we are under no obligation to take affirmative action(s) to further the objectives of WikiTechnologies, except that we have agreed to seek to raise up to $2,000,000 in a private placement and to allocate one-half of the first $800,000 of net proceeds and the next $200,000 of net proceeds to the business of WikiTechnologies. In addition, the Exchange Agreement provides that at any time during the Earn-Out Period our Board of Directors in its discretion may determine that we will keep WikiTechnologies and cause the Garibaldi Shares and DeFeudis Shares to be delivered to Messrs. Garibaldi and DeFeudis.

As a result of the exchange agreement, the reorganization was treated as an acquisition by the accounting acquiree that is being accounted for as a recapitalization and as a reverse merger by the legal acquirer for accounting purposes. Pursuant to the recapitalization, all capital stock shares and amounts and per share data have been retroactively restated. Accordingly, the financial statements include the following:

(1) The balance sheet consists of the net assets of the accounting acquirer at historical cost and the net assets of the legal acquirer at fair value.

(2) The statements of operations include the operations of the accounting acquirer for the period presented and the operations of the legal acquirer from the date of the merger.

Note 4 – TRADE RECEIVABLES, NET (RESTATED)

Trade receivables consist principally of accounts receivable and trade financing and other financial services to small to medium sized businesses and individuals, principally in Australia. Trade receivables are recorded at the invoiced amount and net of allowances for doubtful accounts. Trade receivables bear interest. The allowance for doubtful accounts represents management’s estimate of the amount of probable credit losses in existing accounts receivable, as determined from a review of past due balances and other specific account data. Account balances are written off against the allowance when management determines the receivable is uncollectible.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that the consolidated entity or parent entity will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization and default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

F-17

All trade receivables must be paid within 122 days. Trade receivables not paid in full by this time are considered overdue and once 30 days past due are considered delinquent.

As of June 30, 2013 and 2012, trade receivables consist of the following:

	2013			2012
Trade receivables	$	27,740,315		$	27,328,853
Allowance for bad debt		(731,475	)		(751,563	)
Total trade receivables, net	$	27,008,840		$	26,577,290

Note 5 – OTHER ASSETS

Other assets consist of the following as of June 30, 2013 and 2012:

Other current assets	2013		2012
Research and development grant receivable	$	401,852	$	602,834
Insurance claim receivable		269,556		528,280
Prepayment		66,922		30,551
Other assets		82,396		68,938
	$	820,726	$	1,230,603

Other non current assets		2013		2012
Deferred payment processing cost	$	50,000	$	-
Prepaid gift card establishment fees		45,973		-
	$	95,973	$	-

Note 6 – INTANGIBLE ASSETS (RESTATED)

Intangible assets consist of the following as of June 30, 2013 and 2012:

	2013			2012
Moneytech software	$	4,574,761		$	5,101,997
mPayments software		664,880			-
Domain name		198,353			-
Accumulated amortization		(1,925,227	)		(1,634,125	)
	$	3,512,767		$	3,467,872

The intangible assets are amortized over 10-12 years. Amortization expense of $513,450 and $445,874 was included in cost of revenues for the years ended June 30, 2013 and 2012, respectively.

F-18

Amortization for the Company’s intangible assets over the next five fiscal years from June 30, 2013 is estimated to be:

June 30, 2014	$	456,650
June 30, 2015		456,650
June 30, 2016		456,650
June 30, 2017		456,650
June 30, 2018		456,650
Thereafter		1,229,517
Total	$	3,512,767

Note 7 – GOODWILL

On November 9, 2012, Moneytech purchased Moneytech Pos Pty. Ltd. (“MPos”). The goodwill was acquired with the acquisition of MPos.

As of June 30, 2013, the Goodwill comprised of the following:

	2013
Acquisition cost of Moneytech POS Pty Ltd.	$	98,180
Fixed assets received		(54,695	)
Liability assumed		25,572
Acquisition cost assigned to goodwill	$	69,057

The Company performed an impairment test relating to goodwill arising from its acquisitions and concluded that there was no impairment as to the carrying value of goodwill as of June 30, 2013.

Note 8 – TRADE AND OTHER PAYABLES

As of June 30, 2013 and 2012, trade and other payables consist of the following:

	2013		2012
Trade payables	$	4,848,656	$	6,337,545
Employee benefits		122,097		55,959
Other liabilities		279,646		204,242
Total payables	$	5,250,399	$	6,597,746

Note 9 –CURRENT LIABILITIES

	2013		2012
Wholesale loan facility	$	25,669,388	$	24,688,865
Cash reserve		2,731,094		703,003
	$	28,400,482	$	25,391,868

Wholesale Loan Facility

The Company has a secured line of credit with a bank in Sydney Australia for up to AUD $30,000,000 for the Company to use as of June 30, 2013 and AUD $25,000,000 as of June 30, 2012. The line of credit is secured mainly by trade receivables. Interest is charged at the banks reserve rate plus an agreed upon margin from the bank. The agreement is currently set to expire on December 31, 2013 and can be renewed annually in September. The Company has requested the renewal and is awaiting final bank approval. Interest expense charged to cost of revenue related to the loan for the year ended June 30, 2013 and 2012 was approximately USD $1,905,471 and USD $1,711,920, respectively.

F-19

Cash Reserve

The Company is required to maintain certain cash reserves with its senior debt provider in accordance with the Receivables Purchase Agreement (RPA) between the parties. The Required Cash Reserve amount may be provided by the Company or its customers and is held in a ‘Cash Reserve Account’ with its senior debt provider in accordance with the RPA’s terms and conditions. The Required Cash Reserve balance is adjusted based on the RPA and the total facility limit provided to the Company by the senior lender.

Note 10 – NON-CURRENT LIABILITY

	6/30/2013		6/30/2012
Shareholders loans		45,665		218,574
	$	45,665	$	218,574

Shareholders Loan

The Company had an accrued interest amount payable to a shareholder in the amount of AUD$165,153 as of June 30, 2012. The loan was paid during the fiscal year ended June 30, 2013. There was no interest charged on the balance.

The company has a loan payable in the amount of AUD $50,000 to a shareholder. The loan is due and payable on September 30, 2014. Interest of 8% is only payable if Moneytech has positive retained earnings at the time of repayment.

Note 11 – RELATED PARTY TRANSACTIONS

In the years ended June 30, 2013 and 2012, the Company paid a company controlled by the President of Moneytech for consulting services in the amount of $209,500 and $201,299 respectively.

Note 12 – INCOME TAX (RESTATED)

The following is the income tax expense reflected in the Statement of Operations for the years ended June 30, 2013 and 2012:

INCOME TAX EXPENSE	June 30
	2013		2012
Income tax expense - current	$	-	$	-
Income tax expense - deferred		305,246		179,647
Total	$	305,246	$	179,647

The following are the components of income before income tax reflected in the Statement of Operations for the years ended June 30, 2013 and 2012:

COMPONENTS OF INCOME BEFORE INCOME TAX	June 30
	2013			2012
Income (loss) from USA operations	$	-		$	-
Income from Australian operations		567,998			257,587
(Loss) income before Income tax	$	567,998		$	257,587
Income tax	$	305,246		$	179,647
Effective tax rate		54	%		70	%

F-20

The following is a reconciliation of the provision for income taxes at the US federal income tax rate to the income taxes reflected in the Statement of Operations for the years ended June 30, 2013 and 2012:

INCOME TAX RATE RECONCILIATION	June 30
	2013			2012
US statutory rates		34	%		34	%
Tax rate difference		(4	)%		(4	)%
Research and development		24	%		40	%
Tax expenses at actual rate		54	%		70	%

The following are the components of deferred tax reflected in the Balance Sheet and Statement of Operations for the years ended June 30, 2013 and 2012:

COMPONENTS OF DEFERRED TAX EXPENSE	June 30
	2013			2012
Tax losses carried forward	$	348,179		$	242,351
Doubtful debts reserve		(18,827	)		(51,403	)
Accruals		(24,106	)		(11,301	)
		305,246			179,647

COMPONENTS OF DEFERRED TAX ASSET	June 30
		2013			2012
Tax losses carried forward	$	1,592,888		$	2,116,283
Doubtful debts reserve		219,442			225,469
Accruals		36,891			17,187
		1,849,221			2,358,939

Deferred tax assets - current	$	718,767		$	317,850
Deferred tax assets - non current		1,130,454			2,041,089
		1,849,221			2,358,939

Deferred income taxes arise from temporary differences between the tax and financial statement recognition of revenue and expense. In evaluating the ability to recover the deferred tax assets within the jurisdiction from which they arise, the Company considered all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. In projecting future taxable income, the Company began with historical results adjusted for changes in accounting policies and incorporates assumptions including the amount of future pretax operating income, the reversal of temporary differences, and the implementation of feasible and prudent tax planning strategies. These assumptions require significant judgment about the forecasts of future taxable income and are consistent with the plans and estimate the Company are using to manage the underlying businesses. In evaluating the objective evidence that historical results provide, the Company consider three years of cumulative operating income (loss).

As of June 30, 2013, Moneytech had approximately $5,309,627 in net operating loss (“NOL”) carry forward available to offset future taxable income in Australia. The NOLs can be carried forward without expiration in Australia. Management believes that all NOLs will be utilized in the near future and therefore no allowance was made.

As of June 30, 2013, Source had NOL’s of approximately $13 million dollars to offset future taxable income in the US. Federal NOLs can generally be carried forward 20 years. However, under Internal Revenue Code section 382 due to the change in ownership there are certain limitations placed on the NOL carryover and Source may only use approximately $161,500 per year of the available NOL. The deferred tax assets of the US entities at December 31, 2013 were fully reserved. Management believes it is more likely than not that these assets will not be realized in the near future.

F-21

Note 13 - GEOGRAPHIC SEGMENT INFORMATION (RESTATED)

As a result of the reverse merger on June 30, 2013 the Company operates in two regions: Australia and United States of America.

All inter-company transactions are eliminated in consolidation. For the twelve months ended June 30, 2013 and 2012, geographic segment information is as follows:

	Twelve Months Ended June 30, 2013								Twelve Months Ended June 30, 2012
	Australia		USA		Elimination		Consolidated		Australia		USA		Elimination		Consolidated
Revenue		5,305,130	$	-	$	-	$	5,305,130	$	4,171,622	$	-	$	-	$	4,171,622
Cost of Revenue		3,001,573		-		-		3,001,573		2,715,227		-		-		2,715,227
Total Expenses		2,177,467				-		2,177,467		1,568,231		-		-		1,568,231
Other Income (Expense)		441,908		-		-		441,908		369,423		-		-		369,423
Net Income (Loss) before tax		567,998				-		567,998		257,587		-		-		257,587
Assets		41,034,499		326,425		-		41,360,924		40,113,093		-		-		40,113,093
Debt		33,693,546		3,000		-		33,696,546		32,208,188		-		-		32,208,188

Note 14 – EQUITY INVESTMENT (RESTATED)

On January 16, 2013 the Company entered into an agreement whereby it received a 37.5% equity interest in 360 Market Pty. Limited (“360”) in exchange for allowing 360 to utilize certain license rights. There was no exchange of cash or debt for the transaction and it was accounted for on the historical cost basis with a $0 value. The investment is accounted for by the equity method since the Company obtained a 37.5% equity interest. Due to the continuous loss from inception through June 30, 2013 incurred by 360, the Company did not recognize any income or return from the investment as doing so would have created a negative carrying value in the investment account. The Company discontinued using the equity method rather than establish a negative balance. The investment retains a zero balance until subsequent investee profits eliminate all unrealized losses. In addition, 360 has had a negative equity position since inception of the investment thereby precluding any other disclosure regarding our underlying position in the net equity of 360.

Note 15 –STOCKHOLDERS’ EQUITY

Preferred Stock

The Company has 10,000,000 shares Preferred Stock authorized at a par value of $0.01 and there were no shares issued and outstanding as of June 30, 2012 and 5,000 shares of Class B, Preferred Stock issued and outstanding as of June 30, 2013.

Under the terms of the Class B Certificate of Designation, the holder(s) of the Series B have the right, until June 30, 2018, to (A) elect the majority of the Company’s Board of Directors and (B) vote on all other matters to come before the holders of common stock (the “Common Shareholders”) with each vote per Series B Preferred Share equal to 1,000 shares of common stock.

After June 30, 2018, the Series B Preferred Shares shall have no voting rights and shall be redeemable by the Company for the sum of one tenth of a cent ($0.001) per Series B Preferred Share. The Series B Preferred Shares will not have any conversion rights and shall not be entitled to receive any dividends, distributions, or other economic or financial interest in the Company, and in the event of a liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the holders of Series B Preferred, the holders of Series B Preferred Shares will be entitled to receive out of the Company’s assets, whether such assets are capital or surplus, of any nature, the sum of one-tenth of a cent ($0.001) per Series B Preferred Share, after payment to the holders of the Common Stock and the holders of any other series or class of the Company’s equity securities ranking senior to the Common Stock.

Common Stock

The Company has 500,000,000 and 250,000,000 shares of Common Stock authorized at a par value of $0.10 as of June 30, 2013 and 2012, respectively. There were 9,961,632 and 5,300,000 shares issued and outstanding as of June 30, 2013 and 2012, respectively. The Company has 338,368 shares to be issued as of June 30, 2013, respectively. Each Common Stock holder will have one (1) vote.

Each Common Stock holder will have one (1) vote.

F-22

Dividend Policy

The Company has not yet adopted a policy regarding the payment of dividends and no dividends have been declared.

Note 16 – RESTRICTED STOCKS

As of June 30, 2013, the Company has 338,638 shares to be issued for services performed prior to the exchange agreement.

	Number of Shares
Granted but not issued at June 30, 2012		-

Issued during fiscal year ended June 30, 2012		-
Granted during fiscal year ended June 30, 2012		338,368
Granted but not issued at June 30, 2013		338,368

Note 17 –STOCK OPTIONS

On April 19, 2013, the Company entered into an agreement with a software developer. Upon achievement of certain milestones, the contractor can receive up to 100,000 Performance Based Stock Options at an exercise price of $2.50 per share. The option vest and become exercisable immediately upon grant with a 3 year life.

As of June 30, 2013, 7,000 of the Performance Based Stock Options have been earned.

	Number of Shares
Outstanding at June 30, 2012		-
Exercisable at June 30, 2012		-

Granted		7,000
Exercised		-
Expired		-

Outstanding at June 30, 2013		7,000
Exercisable at June 30, 2013		7,000

Options outstanding at June 30, 2013 are as follow:

Exercise Price		Total Options Outstanding				Weighted Average Remaining Life (Years)				Total Weighted Average Exercise Price				Options Exercisable				Weighted Average Exercise Price
$2.50			7,000				3			$	2.50				7,000			$	2.50

Note 18 –COMMITMENTS

The Company leases two offices under a renewable operating leases expiring on August 31, 2014 and July 31, 2015. The aggregate monthly rent is approximately $11,189. For the years ended June 30, 2013 and 2012, the rental expense was $157,522 and $110,278.

F-23

Future minimum rental payments required under operating leases as of June 30, 2013 are as follows:

June 30,
2014	$	134,264
2015		34,935
2016		1,256
	$	170,455

The Company has entered into three employment agreements with certain members of management of the Company. Two agreements terminate as of May 29, 2015 and the other one continues until terminated. Future minimum salaries required under the employment agreement as of June 30, 2013 are as follows:

June 30,
2014	$	490,000
2015		470,000
2016		250,000
2017		250,000
2018		250,000
	$	1,710,000

Note 19 –SUBSEQUENT EVENTS

Management has evaluated events subsequent through October 14, 2013 for transactions and other events that may require adjustment of and/or disclosure in such financial statements and these included:

	·	The shareholders and board of directors voted to reduce the authorized common stock to 50,000,000 common shares and 1,000,000 preferred shares.
	·	The Company granted options to purchase 75,000 shares of common stock to three board members pursuant to the 2013 Omnibus Incentive Plan.
	·	The Company authorised the issuance of 350,000 restricted shares of common stock, being 179,638 restricted shares granted for consulting services undertaken prior to the Share Exchange June 30, 2013 and 170,632 restricted shares granted for consulting services to be provided after the Share Exchange June 30, 2013.
	·	The Company granted options to purchase 25,000 shares of common stock to an employee.

F-24

Item 9A. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management is responsible for maintaining disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is disclosed, processed summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. In addition, the disclosure controls and procedures must ensure that such information is accumulated and communicated to our management, including our Chief executive Officer and Chief Financial officer, as appropriate, to allow timely decisions regarding required financial and other disclosures. Our Chief Executive Officer and Chief Financial Officer, have reviewed the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report and have concluded that due to material weaknesses in our internal control over financial reporting as described below, our disclosure controls and procedures were not effective as of June 30, 2013 to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Notwithstanding the ineffectiveness of our disclosure controls and procedures as of June 30, 2013 and the material weaknesses in our internal control over financial reporting that existed as of that date as described below, management believes that (i) this Form 10-K/A does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which they were made, not misleading with respect to the periods covered by this Report and (ii) the consolidated financial statements, and other financial information, included in this Report fairly present in all material respects in accordance with generally accepted accounting principles ("GAAP") our financial condition, results of operations and cash flows as of, and for, the dates and periods presented.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance to our management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles.

Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions; (ii) provide reasonable assurance that transactions are recorded as necessary for preparation of our financial statements; (iii) provide reasonable assurance that receipts and expenditures of company assets are made in accordance with management authorization; and (iv) provide reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on our financial statements would be prevented or detected on a timely basis.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because changes in conditions may occur or the degree of compliance with the policies or procedures may deteriorate.

Prior to the consummation of the Share Exchange Agreement whereby we acquired Moneytech Limited, our Australian subsidiary, the accounting staff at Moneytech, which became our accounting staff as a result of the consummation of the Share Exchange Agreement, was adequate to perform the financial reporting obligations imposed upon it as a private company. Our management has conducted an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our internal control over financial reporting as of June 30, 2013. This evaluation was based on criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission, or COSO, Internal Control-Integrated Framework. On the basis of such examination, our management has concluded that our internal controls over financial reporting were not adequate as of June 30, 2013. In the opinion of management our financial staff, formerly the staff of Moneytech, was not sufficient to deal with the reporting obligations imposed as a result of the transformation of Moneytech to a public company. The inadequacies of the financial staff resulted from a lack of sufficient personnel, which caused Moneytech to rely upon temporary employees and outside consultants, and the lack of familiarity of such persons with the obligations imposed upon a public company and US Generally Accepted Accounting Principles.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management concluded that we did not maintain effective internal control over financial reporting as of June 30, 2013 because of the deficiencies in the number and experience of our accounting staff described above. Accordingly, we have determined that these control deficiencies constitute material weaknesses.

Management’s Remediation Initiatives

Our management has worked, and continues to work, to strengthen our internal control over financial reporting. We are committed to ensuring that such controls are operating effectively. Since consummation of the Share Exchange Agreement in an effort to enhance our internal controls, we have hired a new CFO who has familiarity with US GAAP and who has installed new procedures to correct the material weaknesses and deficiencies in our reporting systems. The CFO has already implemented controls that will improve our controls and documentation related to our accounting policies and practices to identify, document and periodically assess whether all key judgments, conventions and estimates used conform to accounting principles generally accepted in the United States. We are committed to remediating these material weaknesses that existed at June 30, 2013, and believe that the actions we have taken subsequent to fiscal year end will prevent the recurrence of circumstances such as those that resulted in our determination to restate prior period financial statements. As our business grows in size and complexity, we will continue to actively identify, develop and implement additional measures to materially improve and strengthen our internal control over financial reporting and ensure that they remain effective.

This Report shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liabilities of that section, and is not incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. The rules of the Securities and Exchange Commission do not require an attestation of the Management’s report by our registered public accounting firm in this annual report.

Changes in Internal Controls

Except for changes in our accounting staff and procedures described above, there have been no changes in our internal control over financial reporting that occurred during or subsequent to the fourth quarter of our fiscal year ended June 30, 2013 that have materially affected, or are reasonable likely to materially affect, our internal control over financial reporting. Given the limitations of our accounting personnel, we need to take additional steps to insure that our financial statements are in accordance with US GAAP.

PART IV

Item 15. Exhibits, Financial Statement Schedules.

(a) The following documents are filed as part of this report:

(1)	Financial Statements

The audited consolidated balance sheet of the Company and its subsidiaries as of June 30, 2013 and June 30, 2012, the related condensed statements of operations, changes in stockholders’ equity and cash flows for the years then ended, the footnotes thereto, and the report of Lichter, Yu and Associates, independent auditors, are filed herewith.

(2)	Financial Statement Schedules

None.

Financial statement schedules have been omitted because they are either not applicable or the required information is included in the financial statements or notes hereto.

(3)

Exhibits:

Exhibit Number		Description
31.1		Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

31.2		Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

32.1		Certification of Principal Executive Officer pursuant to 18 U.S.C. S. 1350 (Section 906 of Sarbanes-Oxley Act of 2002)

32.2		Certification of Principal Financial Officer pursuant to 18 U.S.C. S. 1350 (Section 906 of Sarbanes-Oxley Act of 2002)

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Schema

101.CAL		XBRL Taxonomy Calculation Linkbase

101.DEF		XBRL Taxonomy Definition Linkbase

101.LAB		XBRL Taxonomy Label Linkbase

101.PRE		XBRL Taxonomy Presentation Linkbase

SIGNATURES

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

	SOURCE FINANCIAL, INC.

Dated: April 30, 2014	By:	/s/ Hugh Evans
		Hugh Evans
		Chief Executive Officer, President and Director

Dated: April 30, 2014	By:	/s/ Brian Pullar
		Brian Pullar
		Chief Finance Officer