UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C.  20549
 
 FORM
10-K
 
 (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, 2009
 
 [   ]
              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: 333-151807
 
 PSM
Holdings, Inc.
 (Exact
name of Registrant as specified in its charter)
 
 Nevada
                90-0332127(State
      or other jurisdiction of
                  incorporation
      or organization)
                (I.R.S.
      Employer
                  Identification
      No.)
 1112 N. Main Street,
Roswell, New Mexico 88201
 (Address of principal
executive offices and Zip
Code)
 
 
 Issuer’s
telephone number, including area code:  (575) 624-4170
 
 Securities
registered pursuant to Section 12(b) of the Act:  None
 
 Securities
registered pursuant to 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  [    ]    No  [X]
 
 Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Act.  [  ]
 
 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.
 (1)  Yes
[X]    No
[   ]       (2)  Yes  [   ]    No  [X]
  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  [   ]    No  [   ]
 
 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]
  1
  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 definitions of “large accelerated filer,” “accelerated
filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
 
 Large
Accelerated
Filer  [   ]                                                      Accelerated
Filer  [   ]
 Non-accelerated
Filer  [   ]                                                         Smaller
reporting company  [X]
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the
Act).  Yes  [   ]    No  [X]
 
 The
aggregate market value of the voting and non-voting common equity held by
non-affiliates of the registrant was $6,849,195, computed by reference to the
average bid and asked price of the Common Stock as of the last business day of
the registrant’s most recently completed second fiscal quarter.
 
 At September 25,
2009, there were 12,943,494 shares of the registrant’s Common Stock
outstanding.
 
 DOCUMENTS
INCORPORATED BY REFERENCE
 
 None
 
  EXPLANATORY
NOTE
 
 On August
11, 2009, the registration statement of PSM Holdings, Inc. (the "Company"),
filed on Form S-1 (Commission File No. 333-151807) (the “Form S-1
Registration Statement”) relating to the resale of 1,033,100 outstanding shares
of common stock, was declared effective by the Securities and Exchan e
Commission (the “SEC”).  A detailed description of the offering is
included in the Form S-1 Registration Statement.
  Rule
15d-2 (“Rule 15d-2”) under the Securities Exchange Act of 1934, as amended,
provides generally that if a company files a registration statement under the
Securities Act of 1933, as amended, which does not contain certified financial
statements for the company’s last full fiscal year (or for the life of the
company if less than a full fiscal year), then the company must, within 90 days
after the effective date of the registration statement, file a special report
furnishing certified financial statements for the last full fiscal year or other
period as the case may be. Rule 15d-2 further provides that the special
financial report is to be filed under cover of the facing sheet of the form
appropriate for annual reports of the company.
  Our Form
S-1 Registration Statement did not contain the certified financial statements
contemplated by Rule 15d-2 for the year ended June 30, 2009; therefore, as
required by Rule 15d-2, we are hereby filing such certified financial statements
with the SEC under cover of the facing page of an annual report on Form
10-K.
  2
  Table
of Contents
 
 EXPLANATORY
      NOTE
                        2PART
      II
                        4ITEM
      8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
                        4PART
      IV
                        24ITEM
      15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES
                        24
  3
 PART
II
 
 ITEM
8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY
DATA
 PSM
HOLDINGS, INC. and
 SUBSIDIARY
 
 FINANCIAL
REPORT
 
 June
30, 2009 and 2008
  4
  
 
 REPORT
OF INDEPENDENT REGISTERED
 PUBLIC
ACCOUNTING FIRM
 
 To the
Board of Directors and Stockholders
 of PSM
Holdings, Inc. and Subsidiary
 Roswell,
New Mexico
 
 We have
audited the accompanying balance sheets of PSM Holdings, Inc., (a Nevada
corporation) and
Subsidiary (the "Company"), as of June 30, 2009 and 2008, and the
related statements of operations, cash flows and changes in stockholders’ equity
for the years then ended.  These financial statements are the
responsibility of the Company’s management.  Our responsibility is to
express an opinion on these financial statements based on our
audit.
 
 We
conducted our audits of the financial statements as described above in
accordance with the standards of the Public Company Accounting Oversight Board
(United States) and the standards applicable to financial audits contained in
Government Auditing
Standards issued by the Comptroller General of the United
States.  Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement.  The Company is not required to have, nor were
we engaged to perform, an audit of its internal control over financial
reporting.  Our audit 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 also includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation.  We believe that our audits
provide a reasonable basis for our opinion.
 
 In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of PSM Holdings, Inc. and Subsidiary
as of June 30, 2009 and 2008, and the results of its operations and its cash
flows for the years then ended in conformity with accounting principles
generally accepted in the United States of America.
 
 The
mortgage industry has gone through a significant consolidation over the past two
years with many sub-prime lenders going out of business.  The foreclosures
in 2008 and 2009 have caused a credit tightening, making qualifying for loans
more difficult for borrowers.  The U.S. housing market as a whole is
undergoing a significant contraction with lenders and investors tightening their
credit standards causing a decrease in  mortgage origination volumes in
2009 and 2009.   See Note 15 to the financial statements for more
information regarding industry risk.
  In
accordance with Government
Auditing Standards, we have also issued a report dated September 25, 2009
on our consideration of PSM Holdings, Inc. and Subsidiary’s internal control
over financial reporting.  The purpose of that report is to describe
the scope of our testing of internal control over financial reporting and the
results of that testing and not to provide an opinion on the internal control
over financial reporting.  In accordance with Government Auditing
Standards, we have also issued an opinion dated September 25, 2009, on
PSM Holdings, Inc. and Subsidiary’s compliance with certain provisions of laws,
regulations, contracts, and grant agreements, and other matters that could have
a direct and material effect on a major HUD-assisted program.  Those
reports are an integral part of an audit performed in accordance with Government Auditing Standards
and should be considered in assessing the results of our audit.
 
 
 
 
 
 Accounting
& Consulting Group, LLP
 Certified
Public Accountants
 
 Carlsbad,
New Mexico
 September
25, 2009
  5
  PSM
      HOLDINGS, INC.AND
      SUBSIDIARYCONSOLIDATED
      BALANCE SHEETSJune
      30, 2009
                                          
                                          
                                          June
      30, 2008ASSETSCurrent
      Assets:Cash
      and cash equivalents
                                          
                                          $
                                          83,158
                                          
                                          
                                          $
                                          11,869Accounts
      receivable, net of allowance for
      doubtful accounts, 2009 - $12,500 and 2008 - $0
                                          
                                          
                                          90,415
                                          
                                          
                                          
                                          75,296Marketable
      securities
                                          
                                          
                                          42,039
                                          
                                          
                                          
                                          59,282Total
      current assets
                                          
                                          
                                          215,612
                                          
                                          
                                          
                                          146,447Property
      and equipment, net
                                          
                                          
                                          27,516
                                          
                                          
                                          
                                          35,535Loan
      receivable
                                          
                                          
                                          94,206
                                          
                                          
                                          
                                          100,351NWBO
      License, net of accumulated amortization, 2009 - $189,218 and 2008 -
      $130,289
                                          
                                          
                                          635,781
                                          
                                          
                                          
                                          694,710Total
      Assets
                                          
                                          $
                                          973,115
                                          
                                          
                                          $
                                          977,043LIABILITIES
      AND STOCKHOLDERS' EQUITYCurrent
      Liabilities:Accounts payable
                                          
                                          $
                                          97,203
                                          
                                          
                                          $
                                          108,607Accrued liabilities
                                          
                                          
                                          9,268
                                          
                                          
                                          
                                          8,715Bank overdraft
                                          
                                          
                                          -
                                          
                                          
                                          
                                          4,792Total
      current liabilities
                                          
                                          
                                          106,471
                                          
                                          
                                          
                                          122,114Long-term
      Liabilities:Due
      to related party
                                          
                                          
                                          110,000
                                          
                                          
                                          
                                          80,000Total
      long-term liabilities
                                          
                                          
                                          110,000
                                          
                                          
                                          
                                          80,000Total
      Liabilities
                                          
                                          
                                          216,471
                                          
                                          
                                          
                                          202,114Commitment
      and contingencies
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Stockholders'
      Equity:Common
      stock, $0.001 par value, 100,000,000 shares authorized, 12,942,294
      and12,893,367
      shares issued and outstanding at June 30, 2009 and 2008,
      respectively
                                          
                                          
                                          12,942
                                          
                                          
                                          
                                          12,893Preferred
      stock, $0.001 par value, 10,000,000 shares authorized, no shares
      issuedand
      outstanding at June 30, 2009 and 2008, respectively
                                          
                                          
                                          -
                                          
                                          
                                          
                                          -Treasury
      stock, at cost (shares held: 179,495 and 21,600 at June 30, 2009 and 2008,
      respectively)
                                          
                                          
                                          (72,747
                                          )
                                          
                                          
                                          (22,747
                                          )Additional
      paid in capital
                                          
                                          
                                          4,244,502
                                          
                                          
                                          
                                          3,527,840Accumulated
      other comprehensive (loss) income, net of deferred tax
                                          
                                          
                                          (9,770
                                          )
                                          
                                          
                                          1,002Accumulated
      deficit
                                          
                                          
                                          (3,418,283
                                          )
                                          
                                          
                                          (2,744,059
                                          )Total
      stockholders' equity
                                          
                                          
                                          756,644
                                          
                                          
                                          
                                          774,929Total
      Liabilities and Stockholders' Equity
                                          
                                          $
                                          973,115
                                          
                                          
                                          $
                                          977,043
  The accompanying notes are an integral part of these
audited consolidated financial statements.
  6
  PSM
      HOLDINGS, INC.AND
      SUBSIDIARYCONSOLIDATED
      STATEMENTS OF OPERATIONSFor
      the years endedJune
      30,2009
                                        
                                        
                                        2008Revenues
                                        
                                        $
                                        3,251,890
                                        
                                        
                                        $
                                        2,539,234Operating
      expenses:Brokerage
      commission
                                        
                                        
                                        2,943,450
                                        
                                        
                                        
                                        2,167,348Selling,
      general and administrative
                                        
                                        
                                        908,572
                                        
                                        
                                        
                                        866,996Depreciation
      and amortization
                                        
                                        
                                        69,628
                                        
                                        
                                        
                                        70,941Total
      operating expenses
                                        
                                        
                                        3,921,650
                                        
                                        
                                        
                                        3,105,285Loss
      from operations
                                        
                                        
                                        (669,760
                                        )
                                        
                                        
                                        (566,051
                                        )Non-Operating
      Income (Expense):Interest
      expense
                                        
                                        
                                        (6,619
                                        )
                                        
                                        
                                        (7,937
                                        )Interest
      and dividend income
                                        
                                        
                                        9,824
                                        
                                        
                                        
                                        20,747Realized
      gain (loss) on sale of securities
                                        
                                        
                                        (7,669
                                        )
                                        
                                        
                                        4,335Total
      non-operating income (expense)
                                        
                                        
                                        (4,464
                                        )
                                        
                                        
                                        17,145Loss
      from continuing operations before income tax
                                        
                                        
                                        (674,224
                                        )
                                        
                                        
                                        (548,906
                                        )Provision
      for income tax
                                        
                                        
                                        -
                                        
                                        
                                        
                                        -Net
      loss from continuing operations
                                        
                                        
                                        (674,224
                                        )
                                        
                                        
                                        (548,906
                                        )Discontinued
      operations:Loss
      from discontinued operations
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (154,611
                                        )Net
      loss
                                        
                                        
                                        (674,224
                                        )
                                        
                                        
                                        (703,517
                                        )Other
      comprehensive (loss):Unrealized
      (loss) on marketable securities
                                        
                                        
                                        (10,772
                                        )
                                        
                                        
                                        (13,938
                                        )Comprehensive
      gain (loss)
                                        
                                        $
                                        (684,996
                                        )
                                        
                                        $
                                        (717,455
                                        )Net
      loss per common share and equivalents -basic
      and diluted:Loss
      from continuing operations
                                        
                                        $
                                        (0.05
                                        )
                                        
                                        $
                                        (0.04
                                        )Loss
      from discontinued operations
                                        
                                        
                                        -
                                        
                                        
                                        
                                        (0.01
                                        )$
                                        (0.05
                                        )
                                        
                                        $
                                        (0.05
                                        )Weighted
      average shares of share capital outstanding-
      basic and diluted
                                        
                                        
                                        12,923,555
                                        
                                        
                                        
                                        12,865,119Weighted
      average number of shares used to compute basic and diluted loss per share
      for the year ended June 30, 2009 and 2008 are the same since the
      effect of dilutive securities is anti-dilutive.
  The accompanying notes are
an integral part of these audited consolidated financial
statements.
  7
 PSM
      HOLDINGS, INC.AND
      SUBSIDIARYCONSOLIDATED
      STATEMENTS OF STOCKHOLDERS' EQUITYAccumulated
      otherCommon
      Stock
                            
                            
                            Additional
                            
                            
                            Treasury
                            
                            
                            Comprehensive
                            
                            
                            Accumulated
                            
                            
                            Stockholders'Shares
                            
                            
                            ParValue
                            
                            
                            Paid
      in Capital
                            
                            
                            Stock
                            
                            
                            (Loss)
      Income
                            
                            
                            Deficit
                            
                            
                            EquityBalance,
      June 30, 2007
                            
                            
                            12,836,872
                            
                            
                            $
                            12,837
                            
                            
                            $
                            3,103,819
                            
                            
                            $
                            -
                            
                            
                            $
                            14,940
                            
                            
                            $
                            (2,040,542
                            )
                            
                            $
                            1,091,054Shares
      sold under stock purchase plan
                            
                            
                            56,495
                            
                            
                            
                            56
                            
                            
                            
                            119,944
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            120,000Stock
      transferred from President
                            
                            
                            (203,880
                            )
                            
                            
                            (204
                            )
                            
                            
                            (294,173
                            )
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (294,377
                            )Stock
      issued to branch owners
                            
                            
                            203,880
                            
                            
                            
                            204
                            
                            
                            
                            294,173
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            294,377Purchase
      of treasury stock
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (22,747
                            )
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (22,747
                            )Capital
      contribution
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            9,700
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            9,700Forgiveness
      of debt by an officer
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            294,377
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            294,377Unrealized
      loss on marketable securities
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (13,938
                            )
                            
                            
                            -
                            
                            
                            
                            (13,938
                            )Net
      loss
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (703,517
                            )
                            
                            
                            (703,517
                            )Balance,
      June 30, 2008
                            
                            
                            12,893,367
                            
                            
                            $
                            12,893
                            
                            
                            $
                            3,527,840
                            
                            
                            $
                            (22,747
                            )
                            
                            $
                            1,002
                            
                            
                            $
                            (2,744,059
                            )
                            
                            $
                            774,929Stock
      transferred from President
                            
                            
                            (223,181
                            )
                            
                            
                            (223
                            )
                            
                            
                            (172,241
                            )
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (172,464
                            )Stock
      issued to branch owners
                            
                            
                            223,181
                            
                            
                            
                            223
                            
                            
                            
                            172,241
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            172,464Stock
      issued - stock issuance plan
                            
                            
                            48,927
                            
                            
                            
                            49
                            
                            
                            
                            78,798
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            78,847Purchase
      of treasury stock
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (50,000
                            )
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            (50,000
                            )Capital
      contribution
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            465,400
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            465,400Forgiveness
      of debt by an officer
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            172,464
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            172,464Unrealized
      loss on marketable securities
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            
                            
                            
                            
                            (10,772
                            )
                            
                            
                            -
                            
                            
                            
                            (10,772
                            )Net
      loss
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            -
                            
                            
                            
                            
                            
                            
                            
                            -
                            
                            
                            
                            (674,224
                            )
                            
                            
                            (674,224
                            )Balance,
      June 30, 2009
                            
                            
                            12,942,294
                            
                            
                            $
                            12,942
                            
                            
                            $
                            4,244,502
                            
                            
                            $
                            (72,747
                            )
                            
                            $
                            (9,770
                            )
                            
                            $
                            (3,418,283
                            )
                            
                            $
                            756,644
  The accompanying notes are
an integral part of these audited consolidated financial
statements.
  8
  PSM
      HOLDINGS, INC.AND
      SUBSIDIARYCONSOLIDATED
      STATEMENTS OF CASH FLOWSFor the years
      ended June 30,2009
                              
                              
                              
                              2008CASH
      FLOWS FROM OPERATING ACTIVITIES:Net
      loss
                              
                              $
                              (674,224
                              )
                              
                              $
                              (703,517
                              )Adjustments
      to reconcile net loss to net cashused
      in operating activities:Bad
      debts
                              
                              
                              12,500
                              
                              
                              
                              1,719Depreciation
      and amortization
                              
                              
                              69,628
                              
                              
                              
                              72,066Non-cash
      commissions contributed by an officer
                              
                              
                              172,464
                              
                              
                              
                              294,377Share
      based payment awards
                              
                              
                              78,847
                              
                              
                              
                              -Non
      cash interest income
                              
                              
                              -
                              
                              
                              
                              (1,606
                              )Gain
      (loss) on sale of marketable securities
                              
                              
                              7,669
                              
                              
                              
                              (4,335
                              )(Increase)
      decrease in current assets:Receivables
                              
                              
                              (27,619
                              )
                              
                              
                              (47,454
                              )Prepaid
      expenses
                              
                              
                              -
                              
                              
                              
                              75Accrued
      interest receivable
                              
                              
                              (3,008
                              )
                              
                              
                              (308
                              )Increase
      (decrease) in current liabilities:Accounts
      payable
                              
                              
                              (11,404
                              )
                              
                              
                              6,590Accrued
      liabilities
                              
                              
                              554
                              
                              
                              
                              (2,399
                              )Bank
      overdraft
                              
                              
                              (4,792
                              )
                              
                              
                              4,792Net
      cash used in operating activities
                              
                              
                              (379,385
                              )
                              
                              
                              (380,000
                              )CASH
      FLOWS FROM INVESTING ACTIVITIES:Acquisition
      of property and equipment
                              
                              
                              (2,680
                              )
                              
                              
                              (5,341
                              )Proceeds
      from loan and notes receivable
                              
                              
                              9,152
                              
                              
                              
                              54,180Purchase
      of treasury stock
                              
                              
                              (50,000
                              )
                              
                              
                              -Proceeds
      from sale of marketable securities
                              
                              
                              36,880
                              
                              
                              
                              17,938Purchase
      of marketable securities
                              
                              
                              (38,078
                              )
                              
                              
                              (17,051
                              )Net
      cash (used in) provided by investing activities
                              
                              
                              (44,726
                              )
                              
                              
                              49,726CASH
      FLOWS FROM FINANCING ACTIVITIES:Cash
      receipts from issuing equity instruments
                              
                              
                              -
                              
                              
                              
                              120,000Cash
      receipts from capital contributions
                              
                              
                              465,400
                              
                              
                              
                              9,700Cash
      receipts from loan from related party
                              
                              
                              30,000
                              
                              
                              
                              80,000Net
      cash provided by financing activities
                              
                              
                              495,400
                              
                              
                              
                              209,700NET
      INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
                              
                              
                              71,289
                              
                              
                              
                              (120,574
                              )CASH
      AND CASH EQUIVALENTS, BEGINNING BALANCE
                              
                              
                              11,869
                              
                              
                              
                              132,443CASH
      AND CASH EQUIVALENTS, ENDING BALANCE
                              
                              $
                              83,158
                              
                              
                              $
                              11,869See
      Note 4 - Statements of Cash Flows Additional Disclosures
  The accompanying notes are
an integral part of these audited consolidated financial
statements.
  9
 PSM
HOLDINGS, INC.
 AND
SUBSIDIARY
 Notes
to Consolidated Financial Statements
 June
30, 2009
 NOTE 1 – NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
 
 Company
Background
 As used
herein and except as otherwise noted, the Company shall mean PSM Holdings, Inc.
and its wholly owned subsidiary PrimeSource Mortgage, Inc.
  The
Company was incorporated under the laws of the State of Utah on March 12,
1987, as Durban Enterprises, Inc. On July 19, 2001, Durban Enterprises, Inc.,
created a wholly owned subsidiary called Durban Holdings, Inc., a Nevada
corporation, to facilitate changing the domicile of the Company to
Nevada.  On August 17, 2001, Durban Enterprises, Inc. merged with and
into Durban Holdings, Inc., leaving the Nevada Corporation as the
survivor.  The Company retained the originally authorized 100,000,000
shares at $0.001 par value.
  On May
18, 2005, Durban Holdings, Inc. completed the acquisition of all of the
outstanding stock of PrimeSource Mortgage, Inc., a Texas corporation, by a stock
for stock exchange in which the stockholders of PrimeSource Mortgage, Inc.
received 10,250,000 shares, or approximately 92% of the outstanding stock of the
Company.  Following the acquisition, effective May 18, 2005, the name
of the parent “Durban Holdings, Inc.”, was changed to “PSM Holdings, Inc.” For
reporting purposes, the acquisition was treated as an acquisition of the Company
by PrimeSource Mortgage, Inc. (reverse acquisition) and a recapitalization of
PrimeSource Mortgage, Inc. The historical financial statements prior to May 18,
2005, are those of PrimeSource Mortgage, Inc. Goodwill was not recognized from
the transaction.
  Business
Activity
 PrimeSource
Mortgage, Inc., the wholly owned subsidiary of PSM Holdings, Inc. was
incorporated February 15, 1991 under the laws of the State of Texas.  PrimeSource
Mortgage, Inc. became a wholly owned subsidiary of PSM Holdings, Inc., a
Nevada corporation, on May 18, 2005.  PrimeSource Mortgage, Inc. acts
as an agent or broker for mortgage lenders in real estate mortgage loan
transactions, and solicits and receives applications for secured or unsecured
loans.  PrimeSource Mortgage, Inc. establishes Independent Network
Office Agreements with originators who act as an independent contractor to
originate mortgage applications for submission to lenders under the terms and
conditions provided in the Network Office Agreement.  PrimeSource
Mortgage, Inc. pays the originators commissions and fees based on a split
schedule accepted and agreed to by PrimeSource Mortgage, Inc., the respective
lenders and the originators.  PrimeSource Mortgage, Inc. will then
return to the originator a percentage of the commission and fee split in stock
awards.  The Network Office Agreements are effective for a period of
30 days, and are automatically extended for 30 day periods until they are
cancelled.  The Company primarily operates and is licensed in the
following 20 states:  Arkansas, California, Colorado, Connecticut,
Florida, Georgia, Idaho, Iowa, Kansas, Louisiana, Missouri, Montana, Nebraska,
New Mexico, Oklahoma, South Dakota, Tennessee, Texas, Washington, and
Wyoming.
 
 Summary of Significant
Accounting Policies
 The
following summary of significant accounting policies of the Company is presented
to assist in the understanding of the Company’s financial
statements.  The financial statements and notes are the representation
of PSM Holdings, Inc.’s management who is responsible for their integrity and
objectivity.  The financial statements of the Company conform to
accounting principles generally accepted in the United States of America
(GAAP).  The Financial Accounting Standards Board (FASB) is the
accepted standard-setting body for establishing accounting and financial
reporting principles.
 
 Principles of
Consolidation
 The
consolidated financial statements include the accounts of PSM Holdings, Inc. and
its wholly owned subsidiary PrimeSource Mortgage, Inc.  All material
intercompany transactions have been eliminated in consolidation.
 
 Use of
Estimates
 Management
uses estimates and assumptions in preparing financial
statements.  Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses.  Accordingly,
actual results could differ from those estimates.  Significant
estimates include the value of other non-current assets, estimated depreciable
lives of property, plant and equipment, estimated valuation of deferred tax
assets due to net operating loss carry-forwards and estimates of uncollectible
amounts of loans and notes receivable.
  10
 PSM
HOLDINGS, INC.
 AND
SUBSIDIARY
 Notes
to Consolidated Financial Statements
 June
30, 2009
 Cash and Cash
Equivalents
 For the
purposes of the statement of cash flows, cash and
cash equivalents include cash on hand and cash in checking and savings
accounts, and all investment instruments with an original maturity of three
months or less.
 
 Accounts
Receivable
 Accounts
receivable represent commissions earned on closed loans and fees charged to new
branch offices that the Company has not yet received payment.  Accounts receivable are stated at
the amount management expects to collect from balances outstanding at
period-end.  The Company estimates the allowance for doubtful accounts
based on an analysis of specific accounts and an assessment of the customer of
branch owner’s ability to pay. The Company recorded an allowance for doubtful
accounts of $12,500
and $0 for the years ended June 30, 2009 and 2008,
respectively.
 
 Loan
Receivable
 The loan
receivable is stated at the unpaid principal balance.  Interest income
is recognized in the period in which it is earned.
 
 Investments in Marketable
Securities
 Investments
consist of equity securities categorized as available-for-sale which includes
securities that are not classified in either the held-to-maturity category or
the trading category.  In accordance with Statement of Financial
Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt
and Equity Securities, the securities are recognized at fair value, with
unrealized holding gains and losses included as other comprehensive income, net
of any deferred income taxes and reported as a net amount in a separate
component of stockholders’ equity until realized.  Interest and
dividends earned on investment securities are recognized in the period in which
they are received.  Interest and dividends are reported in the
non-operating income section of the Consolidated Statements of
Operations.
 
 Property and
Equipment
 Property
and equipment are stated at cost.  Depreciation is provided using the
straight-line method over the estimated useful lives of the assets as
follows.  Expenditures for maintenance and repairs are charged to
expense as incurred.
  Furniture,
      fixtures and office equipment
                    5-7
      yearsComputer
      equipment
                    5
      years
 Income
Taxes
 Income
taxes are provided for the tax effects of transactions reported in the financial
statements and consist of taxes currently due plus deferred taxes related
primarily to differences between the bases of certain assets and liabilities for
financial and tax reporting. The deferred taxes represent the future tax return
consequences of those differences, which will either be deductible or taxable
when the assets and liabilities are recovered or settled.  In
addition, there is the deferred tax asset which represents the economic value of
various tax carryovers.
 
 Taxes Collected and Remitted
to Governmental Authorities
 When
applicable, the Company collects New Mexico gross receipts taxes from its
customers and remits them to the required governmental
authorities.  Related revenues are reported net of applicable taxes
collected and remitted to governmental authorities.
 
 Advertising
 Advertising
costs are expensed as incurred.  Advertising
expense was $16,194 and $23,712  for the years ended June 30, 2009 and
2008, respectively.  Advertising expense included in discontinued
operations for the year ended June 30, 2008 was $5,844.
  11
 
 Share Based Payment
Plan
 Under the
2002 Stock Option/Stock Issuance Plan, the Company can grant stock or options to
employees, related parties, and unrelated contractors in connection with the
performance of services provided to the Company by the awardees.  The
Branch Owner Stock Program provides for issuance of stock to branch owners for
outstanding performance. The Company uses the fair value method pursuant to SFAS
123 – Accounting for Stock
Based Compensation to account for employee stock compensation costs and
to account for share based payments to non-employees.
 
 Revenue
Recognition
 The
Company’s revenue is derived primarily from revenue earned from the origination
of mortgage loans that are funded by third parties.  The Company has a
network of independently owned branch offices that originate mortgage loans from
which the Company receives a percentage of the fees earned by the
branch.  The revenue is recognized as earned on the later of the
settlement date or the funding date of the loan.
 
 The
Company also generated less than 1% and approximately 3% of total revenue from
fees charged to new branch offices for joining the network during the years
ended June 30, 2009 and 2008, respectively.  The fee is recognized as
revenue when the new branch signs agreements to join the network, in accordance
with generally accepted accounting principles.
 
 Beginning
May of 2009, the Company receives a fee on the warehouse line of credit of one
eighth of one percent (1/8%) of the loan amount on loans closed on the
line.  The revenue is recognized as earned on the later of the
settlement date or the funding date of the loan.
 
 Selling,
general, and administrative costs are charged to expense as
incurred.
  Reclassification
 Certain
accounts in the prior-year financial statements have been reclassified for
comparative purposes to conform with the presentation in the current-year
financial statements.  Following are the more significant
reclassifications:
 
 Management
has determined that its investments in marketable securities are short-term and
available for current use.  Accordingly, investments in marketable
securities with a fair value of $59,282 were reclassified as current assets for
the year ended June 30, 2008.
 
 Recent Accounting
Pronouncements
 The
Company has evaluated the possible effects on it financial statements of the
following accounting pronouncements:
 
 FASB Statement No. 162 – the
Hierarchy of Generally Accepted Accounting Principles - This Statement
identifies the sources of accounting principles and the framework for selecting
the principles to be used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles (GAAP) in the United States (the GAAP hierarchy).
The Board is responsible for identifying the sources of accounting principles
and providing entities with a framework for selecting the principles used in the
preparation of financial statements that are presented in conformity with GAAP.
The Board believes that the GAAP hierarchy should be directed to entities
because it is the entity (not its auditor) that is responsible for selecting
accounting principles for financial statements that are presented in conformity
with GAAP. Accordingly, the Board concluded that the GAAP hierarchy should
reside in the accounting literature established by the FASB and is issuing this
Statement to achieve that result. This Statement is effective 60 days following
the SEC’s approval of the Public Company Accounting Oversight Board amendments
to AU Section 411, The Meaning of Present Fairly in Conformity With Generally
Accepted Accounting Principles. The Company plans to adopt this statement
prospectively as of the beginning of the fiscal year in which this Statement is
initially applied. The statement is not expected to have a significant effect on
the financial statements of the Company.
  12
 PSM
HOLDINGS, INC.
 AND
SUBSIDIARY
 Notes
to Consolidated Financial Statements
 June
30, 2009
 EITF Issue No. 07-1
Accounting for Collaborative Arrangements - The objective of this issue
is to define collaborative arrangements and to establish reporting requirements
for transactions between participants in a collaborative arrangement and between
participants in the arrangement and third parties. A collaborative arrangement
is a contractual arrangement that involves a joint operating activity. These
arrangements involve two (or more) parties who are both (a) active participants
in the activity and (b) exposed to significant risks and rewards dependent on
the commercial success of the activity. Participants in a collaborative
arrangement shall report costs incurred and revenue generated from transactions
with third parties in each entity’s respective income statement pursuant to the
guidance in Issue 99-19. An entity should not apply the equity method of
accounting under Opinion 18 to activities of collaborative arrangements.
Information related to individually significant collaborative arrangements
should be disclosed separately.
  This
issue shall be effective for financial statements issued for fiscal years
beginning after December 15, 2008, and interim periods within those fiscal
years. This Issue shall be applied retrospectively to all prior periods
presented for all collaborative arrangements existing as of the effective date.
The Company plans to adopt this statement prospectively as of the beginning of
the fiscal year in which this Statement is initially applied. This Statement
encourages, but does not require, comparative disclosures for earlier periods at
initial adoption. The statement is not expected to have a significant effect on
the financial statements of the Company.
  FASB Statement No. 141
(revised 2007)-Business Combinations - This Statement applies to all
transactions or other events in which an entity (the acquirer) obtains control
of one or more businesses (the acquirer), including those sometimes referred to
as “true mergers” or “mergers of equals” and combinations achieved without the
transfer of consideration, for example, by contract alone or through the lapse
of minority veto rights. This Statement applies to all business entities,
including mutual entities that previously used the pooling-of-interests method
of accounting for some business combinations. This Statement replaces FASB
Statement No. 141, Business Combinations. This Statement retains the fundamental
requirements in Statement 141 that the acquisition method of accounting
(which Statement 141 called the purchase method) be used for all business
combinations and for an acquirer to be identified for each business combination.
This Statement defines the acquirer as the entity that obtains control of one or
more businesses in the business combination and establishes the acquisition date
as the date that the acquirer achieves control. Statement 141 did not define the
acquirer, although it included guidance on identifying the acquirer, as does
this Statement. This Statement’s scope is broader than that of Statement 141,
which applied only to business combinations in which control was obtained by
transferring consideration. By applying the same method of accounting—the
acquisition method—to all transactions and other events in which one entity
obtains control over one or more other businesses, this Statement improves the
comparability of the information about business combinations provided in
financial reports. This Statement applies prospectively to business combinations
for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. An entity may not
apply it before that date. The effective date of this Statement is the same as
that of the related FASB Statement No. 160, Non-controlling Interests in
Consolidated Financial Statements.  The statement is not expected to
have a significant effect on the financial statements of the
Company.
  FASB Statement No. 160 –
Non-controlling Interests in Consolidated Financial Statements—an amendment of
ARB No. 51 - This Statement applies to all entities that prepare
consolidated financial statements, except not-for-profit organizations, but will
affect only those entities that have an outstanding non-controlling interest in
one or more subsidiaries or that deconsolidate a subsidiary. Not-for-profit
organizations should continue to apply the guidance in Accounting Research
Bulletin No. 51, Consolidated Financial Statements, before the amendments made
by this Statement, and any other applicable standards, until the Board issues
interpretative guidance. This Statement amends ARB 51 to establish accounting
and reporting standards for the non-controlling interest in a subsidiary and for
the deconsolidation of a subsidiary. It clarifies that a non-controlling
interest in a subsidiary is an ownership interest in the consolidated entity
that should be reported as equity in the consolidated financial statements.
Before this Statement was issued, limited guidance existed for reporting
non-controlling interests. As a result, considerable diversity in practice
existed. So-called minority interests were reported in the consolidated
statement of financial position as liabilities or in the mezzanine section
between liabilities and equity. This Statement improves comparability by
eliminating that diversity. This Statement is effective for fiscal years, and
interim periods within those fiscal years, beginning on or after December 15,
2008 (that is, January 1, 2009, for entities with calendar year-ends). Earlier
adoption is prohibited. The effective date of this Statement is the same as that
of the related Statement 141(R). The Company plans to adopt this statement
prospectively as of the beginning of the fiscal year in which this Statement is
initially applied, except for the presentation and disclosure requirements. The
presentation and disclosure requirements shall be applied retrospectively for
all periods presented.  The statement is not expected to have a
significant effect on the financial statements of the Company.
  13
 PSM
HOLDINGS, INC.
 AND
SUBSIDIARY
 Notes
to Consolidated Financial Statements
 June
30, 2009
 In May
2009, the FASB issued SFAS No. 165, "Subsequent Events" (“SFAS 165”). SFAS 165
sets forth the period after the balance sheet date during which management of a
reporting entity should evaluate events or transactions that may occur for
potential recognition or disclosure in the financial statements, the
circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements, and the
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. SFAS 165 will be effective for interim or
annual period ending after June 15, 2009 and will be applied prospectively. The
Company has adopted the requirements of this pronouncement for the year ended
June 30, 2009.
 
 NOTE 2 – ALLOWANCE FOR
DOUBTFUL ACCOUNTS
  Accounts
receivable is presented on the balance sheet net of estimated uncollectible
amounts.  The Company records an allowance for estimated uncollectible
accounts in an amount approximating anticipated losses. Individual uncollectible
accounts are written off against the allowance when collection of the individual
accounts appears doubtful. Changes in the allowance for doubtful accounts during
the year ended June 30, 2009 and 2008 were as follows:
  2009
                    
                    
                    2008Allowance
      for doubtful accounts, July 1
                    
                    $
                    -
                    
                    
                    $
                    -Additions
      charged to expenses
                    
                    
                    12,500
                    
                    
                    
                    -Allowance
      for doubtful accounts, June 30
                    
                    $
                    12,500
                    
                    
                    $
                    -
  NOTE 3 – PROPERTY AND
EQUIPMENT
 Property
and equipment as of June 30, 2009 and 2008 is summarized as
follows:
 
 2009
                    
                    
                    2008Fixtures
      and equipment
                    
                    $
                    114,563
                    
                    
                    $
                    111,883Accumulated
      depreciation
                    
                    
                    (87,047
                    )
                    
                    
                    (76,348
                    )Property
      and equipment, net
                    
                    $
                    27,516
                    
                    
                    $
                    35,535
 
 Depreciation
expense for the years ended June 30, 2009 and 2008, was $10,699 and $13,137,
respectively.
 
 NOTE 4 – STATEMENTS OF CASH
FLOWS ADDITIONAL DISCLOSURES
 
 2009
                    
                    
                    2008Cash
      paid for interest
                    
                    $
                    6,619
                    
                    
                    $
                    7,937Cash
      paid for income taxes
                    
                    
                    -
                    
                    
                    
                    -
  14
 PSM
HOLDINGS, INC.
 AND
SUBSIDIARY
 Notes
to Consolidated Financial Statements
 June
30, 2009
 Non-cash
investing and financing activities during the years ended June 30, 2009 and 2008
were as follows:
 
 2009
                            
                            
                            2008Stock
      issuance and transfers (Note 8):Stock transferred from Company
      President to branch owners
                            
                            $
                            (172,464
                            )
                            
                            $
                            (294,377
                            )Stock issued to branch owners as
      a result of transfer from theCompany
      President
                            
                            
                            172,464
                            
                            
                            
                            294,377Loan
      repayment from related party in exchange for stock includedin
      Treasury Stock on the Balance Sheet
                            
                            
                            -
                            
                            
                            
                            22,747
 
 NOTE 5 – INVESTMENTS IN
MARKETABLE SECURITIES
 Cost and
fair value of marketable securities at June 30, 2009 and 2008, are as
follows:
 
 Cost
                          
                          
                          Gross Unrealized
      Gains
                          
                          
                          Gross Unrealized
      Losses
                          
                          
                          Fair
      ValueJune 30, 2009Available
      for SaleEquity
      Securities
                          
                          $
                          50,685
                          
                          
                          $
                          1,029
                          
                          
                          $
                          (9,675
                          )
                          
                          $
                          42,039June 30, 2008Available
      for SaleEquity
      Securities
                          
                          $
                          57,157
                          
                          
                          $
                          6,149
                          
                          
                          $
                          (4,024
                          )
                          
                          $
                          59,282
 
 Available
for sale securities are carried in the financial statements at fair
value.  Net unrealized holding losses on available for sale securities
in the amount of $8,646 and net unrealized holding gains of $2,125 for the years
ended June 30, 2009 and 2008, respectively, have been included in accumulated
other comprehensive income.  Estimated income tax related to
unrealized holding gains for the periods ending June 30, 2009 and 2008 was
$0.
 
 Proceeds
from the sale of securities available for sale during the year ended June 30,
2009 were $36,880.  Gross realized losses from the sale of securities
available for sale and included in earnings was $7,669.  The cost of
securities sold is determined by specific identification.
 
 Proceeds
from the sale of securities available for sale during the year ended June 30,
2008 were $17,938.  Gross realized gains from the sale of securities
available for sale and included in earnings was $4,335.  The cost of
securities sold is determined by specific identification.
  15
 PSM
HOLDINGS, INC.
 AND
SUBSIDIARY
 Notes
to Consolidated Financial Statements
 June
30, 2009
 Temporary
impairments
 The
following table shows the gross unrealized losses and fair value of the
Company’s investments with unrealized losses that are not deemed to be
other-than-temporarily impaired, aggregated by investment category and the
length of time that individual securities have been in a continuous unrealized
loss position at June 30, 2009.
 
 Less
      than 12 Months
                    
                    
                    More
      than 12 Months
                    
                    
                    TotalDescription
      of Securities
                    
                    Fair
      Value
                    
                    
                    Unrealized Losses
                    
                    
                    Fair Value
                    
                    
                    Unrealized Losses
                    
                    
                    Fair Value
                    
                    
                    Unrealized LossesMarketableEquity
      Securities
                    
                    $
                    27,706
                    
                    
                    $
                    (6,970
                    )
                    
                    $
                    3,933
                    
                    
                    $
                    (2,786
                    )
                    
                    $
                    31,639
                    
                    
                    $
                    (9,756
                    )Total
                    
                    $
                    27,706
                    
                    
                    $
                    (6,970
                    )
                    
                    $
                    3,933
                    
                    
                    $
                    (2,786
                    )
                    
                    $
                    31,639
                    
                    
                    $
                    (9,756
                    )
 
 Marketable Equity
Securities
 The
Company’s investments in marketable equity securities consist primarily of
investments in common stock of companies engaged in a variety of
industries.  The industries and the Company’s investees are
susceptible to changes in the U.S. economy and the economies of their
customers.  The severity of the impairments in relation to the
carrying amounts of the individual investments is consistent with market
developments within the various industries.  The Company evaluated the
near-term prospects of the issuers in relation to the severity and duration of
the impairments.  Based on that evaluation and the Company’s ability
and intent to hold these investments for a reasonable period of time sufficient
for a forecasted recovery of fair value, the Company does not consider these
investments to be other than temporarily impaired at June 30, 2009.
 
 NOTE 6 – RELATED PARTY
TRANSACTIONS
 The
Company leases office space in a building that is 100% owned by an LLC whose
members are the Company’s President and his immediate family.  The
Company rents a vehicle that is owned by the Company’s President.  The
rental is on a month-to-month basis and is cancellable at any
time.  Monthly rental payments are $500.  During the years
ended June 30, 2009 and 2008, the Company paid $6,000 and $4,000 respectively
under the rental agreement.  As of June 30, 2009 the Company owed a
balance of $360 to the LLC due to an increase in rent.
 
 During
the year ended June 30, 2009, the Company had the following loan to a related
party outstanding:
 
 Original
      Loan
                  
                  
                  Balance
      due
                    June
      30, 2009
                  
                  
                  Balance
      due
                    June
      30, 2008Unsecured
      loans to NWBO Corporation(NWBO)
      bearing interest at 9.25%annually
      with no definedpayment
      terms
                  
                  $
                  167,000
                  
                  
                  $
                  90,890
                  
                  
                  $
                  100,043Accrued
      interest due from NWBO
                  
                  
                  -
                  
                  
                  
                  3,316
                  
                  
                  
                  308167,000
                  
                  
                  
                  94,206
                  
                  
                  
                  100,351Less
      allowance for uncollectible amounts
                  
                  
                  -
                  
                  
                  
                  -
                  
                  
                  
                  -$
                  167,000
                  
                  
                  $
                  94,206
                  
                  
                  $
                  100,351
 
 During
the year ended June 30, 2007 the Company loaned $20,000 to a
director.  The loan and accrued interest was repaid with Company stock
during the year ended June 30, 2008.  The stock is held by the Company
as treasury stock.
  16
 PSM
HOLDINGS, INC.
 AND
SUBSIDIARY
 Notes
to Consolidated Financial Statements
 June
30, 2009
 The
Company conducted business with a branch office owned by a director of the
Company.  Effective July 1, 2006, PrimeSource Mortgage, Inc. purchased the
assets of the Roswell branch in exchange for stock with a fair market value of
$33,000 as of the date of purchase.  The assets purchased consisted of
various office equipment, furniture and fixtures which have been included in
property, plant and equipment.  For the year ended June 30, 2008 the
commissions paid under the branch agreement were $103,613, which included share
based payments of $9,283.  At June 30, 2008 the Company owed the Roswell
Branch $2,992 in commissions.  For the year ended June 30, 2009 the
commissions paid under the branch agreement were $205,883, which included share
based payments of $23,024.  At June 30, 2009 the Company owed the Roswell
Branch $9,670 in commissions.
 
 The
Company conducted business with the Ruidoso Branch office which is owned by a
director of the Company.  For the year ended June 30, 2008 the
commissions paid under the branch agreement were $0.  At June 30, 2008 the
Company did not owe the Ruidoso Branch any commissions.  For the year ended
June 30, 2009 the commissions paid under the branch agreement were
$22,845.  At June 30, 2009 the Company did not owe the Ruidoso Branch
any commissions.  There were no share based payments during the years
ended June 30, 2009 and 2008.
 
 The
Company purchased certain services from one of the Company’s
directors.  Cash payments for services purchased during the year ended
June 30, 2009 and 2008 included in selling, general, and administrative expenses
were $54,544 and $59,415, respectively.  Share based payments,
included in selling, general, and administrative expenses were recorded at the
fair market value as of June 30, 2009 and 2008 amounting to $0, and $42,120,
respectively.
 
 During
the year ended June 30, 2008 the Company’s President was issued 56,495 shares of
common stock of the Company in the amount of $120,000.  The Company
issued 25,000 shares valued at $2.00 per share, 21,739 shares valued at $2.30
and 9,756 shares valued at $2.05.  There were no shares issued to the
Company President during the year ended June 30, 2009.
 
 The
following table represents the Company President’s contributions for the years
ended June 30, 2009 and 2008:
 
 2009
                            
                            
                            2008Transfer
      of personal stock to branch owners in exchangefor
      services rendered
                            
                            $
                            172,464
                            
                            
                            $
                            294,377Cash
    contributions
                            
                            
                            465,400
                            
                            
                            
                            -Issuance
      of common stock to the Company President
                            
                            
                            -
                            
                            
                            
                            120,000Non
      rent of personal vehicle
                            
                            
                            -
                            
                            
                            
                            2,000Total
      Contributions from President to Company
                            
                            $
                            637,864
                            
                            
                            $
                            416,377
 During the years ended
June 30, 2009 and 2008, the Company’s President committed to make loans to the
Company in the form of transfers of his personal stock of the Company to branch
owners in exchange for services rendered during the periods.  As part
of his commitment, he has agreed to forgive 100% of the resulting loans to the
Company.  Transactions under this agreement for the years ended June
30, 2009 and 2008 were:
  2009
                        
                        
                        2008Fair
      value of stock transferred, recognized as commissionsin the financial
      statements
                        
                        $
                        172,464
                        
                        
                        $
                        294,377Loan
      amounts forgiven and recognized as additionalpaid
      in capital in the financial statements
                        
                        
                        172,464
                        
                        
                        
                        294,377
 17
 PSM
HOLDINGS, INC.
 AND
SUBSIDIARY
 Notes
to Consolidated Financial Statements
 June
30, 2009
 During
the year ended June 30, 2008, the Company entered into a revolving line of
credit from the Company’s President to the Holding Company for up to
$120,000.  The term of the note is five years at an adjustable
interest rate of the Prime Rate minus
0.76%.  The balance of the note at June 30, 2009 and 2008 was
$110,000 and $80,000, respectively.
 
 NOTE 7 – INCOME
TAXES
 The
Company’s total deferred tax liabilities, deferred tax assets, and deferred tax
asset valuation allowances at June 30, 2009 and 2008, were as
follows:
 
 2009
                                
                                
                                2008Deferred
      tax assets:Deferred revenue principally
      due to accrual forfinancial reporting
      purposes
                                
                                $
                                6,310
                                
                                
                                $
                                16,516Deferred revenue due to non
      deductible expensesand treatment of marketable
      securities
                                
                                
                                26,364
                                
                                
                                
                                22,131Net operating loss
      carry-forwards
                                
                                
                                1,163,641
                                
                                
                                
                                1,021,951Gross deferred tax
      assets
                                
                                
                                1,196,315
                                
                                
                                
                                1,060,598Valuation
    allowance
                                
                                
                                (1,191,807
                                )
                                
                                
                                (1,055,473
                                )Total
                                
                                
                                4,508
                                
                                
                                
                                5,125Deferred
      tax liabilities:Property and equipment,
      principally due todifferences in
      depreciation
                                
                                
                                4,508
                                
                                
                                
                                5,125Total
                                
                                
                                4,508
                                
                                
                                
                                5,125Net
      deferred tax asset (liability)
                                
                                $
                                -
                                
                                
                                $
                                -
 
 A
reconciliation of the statutory U. S. federal rate and effective rates is as
follows:
 
 Statutory
      U. S. federal rate
                    
                    
                    34.0
                    %State
      income taxes-net of federal benefit
                    
                    
                    5.3
                    %39.3
                    %
 
 Deferred
income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of deferred taxes related primarily to
differences between the bases of certain assets and liabilities for financial
and tax reporting.  The deferred taxes represent the future tax return
consequences of those differences, which will either be deductible or taxable
when the assets and liabilities are recovered or settled.
 
 The
Company’s provision for income taxes differs from applying the statutory U S
Federal income tax rate to income before income taxes.  The primary
differences result from providing for state income taxes and from deducting
certain expenses for financial statement purposes but not for federal income tax
purposes.
 
 The
Company has estimated net operating loss carry-forwards as follows:  U
S Federal income tax, expiring 2028, $412,965, expiring 2027, $863,409 and
expiring 2026, $996,719 and for state income tax purposes, expiring at various
times from five to twenty years, $2,273,093.
  18
 PSM
HOLDINGS, INC.
 AND
SUBSIDIARY
 Notes
to Consolidated Financial Statements
 June
30, 2009
 NOTE 8 –STOCK
ISSUANCE
 Following
is the status of the share based payment plans during the year ended June 30,
2009.
 
 The
Company uses the fair value method pursuant to SFAS 123 – Accounting for Stock Based
Compensation to account for employee stock compensation costs and to
account for share based payments to non-employees.  The fair value of
each share granted/issued for services is estimated on the grant/issue date
using the Black-Scholes pricing model.
 
 During
the year ended June 30, 2009 the Company issued a total of 48,927 shares to an
employee, branch owners and consultants under the 2002 Stock Option/Stock
Issuance Plan.  The market value of the shares was $78,847 which was
charged to selling, general and administrative expenses.
 
 During
the year ended June 30, 2009 the Company purchased 157,895 shares of its stock
from a single shareholder.  The purchase price of the stock was
$50,000.  The stock is held by the Company as treasury
stock.
 
 During
the year ended June 30, 2008, the Company issued stock under its stock issuance
plans.  The Company issued 56,495 shares of common stock to its
President in the amount of $120,000.  The issuance occurred as
follows:
  AdditionalMarket
                        
                        
                        Purchase
                        
                        
                        Common
                        
                        
                        Paid
      inAuthorization
                        Board
      meeting authorized
                        
                        Price
                        
                        
                        Price
                        
                        
                        Stock
                        
                        
                        Capital25,000 shares
                        October
      29,
      2007
                        
                        $
                        2.00
                        
                        
                        $
                        50,000
                        
                        
                        $
                        25
                        
                        
                        $
                        49,97521,739 shares
                        November
      27,
      2007
                        
                        
                        2.30
                        
                        
                        
                        50,000
                        
                        
                        
                        21
                        
                        
                        
                        49,9799,756 shares
                        November
      27,
      2007
                        
                        
                        2.05
                        
                        
                        
                        20,000
                        
                        
                        
                        10
                        
                        
                        
                        19,99056,495 shares
                        
                        
                        
                        
                        
                        
                        $
                        120,000
                        
                        
                        $
                        56
                        
                        
                        $
                        119,944
 
 During
the years ended June 30, 2009 and 2008, there were no options granted under the
2002 Stock Option/Stock Issuance Plan and at June 30, 2009, there were no
options outstanding under the plan.
 
 NOTE 9 –
COMMITMENTS
  Nationwide By Owners
License
 On April
14, 2006, the Company entered into a five-year renewable license agreement with
Nationwide By Owner, Inc. (“NWBO”), a Texas based company engaged in the
business of marketing real property for sale by owners.  In the course
of its business, NWBO generates a proprietary system which produces a database
of sales leads containing home buyer and home seller information for persons
seeking financing on the purchase or refinancing of real property. The license
agreement permits exclusive use of the database to be used to generate leads for
the origination of mortgage applications for submission to PrimeSource Mortgage,
Inc.
 
 The
initial cost of the license was $150,000 cash, plus the issuance of 150,000
shares of PSM Holdings, Inc. stock in favor of NWBO and its principals, at a
fair value for consideration received of $674,999 on the date of
issue.  The Company is amortizing the cost of the license over
fourteen years, which is the initial five-year period of the agreement, plus
three automatic three year renewal terms.  Amortization expense
recorded during the years ended June 30, 2009 and 2008 was $58,929 and $58,929,
respectively.  Amortization expense to be recognized for each of the
years ending June 30, 2010 through 2019 is $58,929 and for the year ending
June 30, 2020 is $46,497.
  19
 PSM
HOLDINGS, INC.
 AND
SUBSIDIARY
 Notes
to Consolidated Financial Statements
 June
30, 2009
 The
agreement between NWBO and the Company calls for the establishment of a National
Processing Center for the collection, origination and tracking of the sales lead
database.  As agreed to by NWBO and the Company, the National
Processing Center has been delayed until a written approval has been obtained
between NWBO and a national marketing company.  There are several
on-going conversations taking place at this time, but no agreement has been
executed.  NWBO continues to provide the platform that produces a
database of sales leads containing home buyer and home seller information for
persons seeking financing on the purchase or refinancing of real property for
exclusive use by the Company.  Upon completion of a National
Processing Center, the Company has also committed to provide year-end bonuses
under the license agreement which the parties can elect to take in cash, stock,
or any combination of the two.  Bonus cash will be calculated by
multiplying the annual net profit of the National Processing Center by the
following percentage rates:  15% for the initial five year term of the
license agreement, 20% for the first automatic renewal term, 25% for the second
automatic renewal term, and 30% for the third automatic renewal term and all
subsequent annual renewal terms.  Should the parties elect to take all
or part of the bonus in common stock, the number of shares awarded will be
calculated according to the base value of the shares as defined in the
contract.  No accrual has been recorded for the year-end bonuses
because the National Processing Center has not been established.
  Pursuant
to the agreement with NWBO, the Company has also committed to pursue obtaining,
in good faith and diligently, the appropriate licenses to originate mortgages in
all 50 states of the United States of America.
 
 Historically
the Company has not gathered data on the number of leads and loans closed, and
commissions earned and paid, relating to the NWBO license since the branch
offices are independently owned and operated and may choose not to use these
lead generating opportunities.  Because some of the branches have
taken advantage of the NWBO opportunity, management has recently begun tracking
some of the results from those offices.  From the seven offices that
have used the NWBO technology, management believes there are approximately 20%
of the loans being derived from the NWBO signs.  However, management
also believes there are other benefits from the association for the branches in
the form of marketing exposure and the control of a transaction.  If a
prospective buyer calls the telephone number on the NWBO sign while looking for
a property, and if they are not already working with a realtor, the branch
office has the opportunity not only to generate the loan business, but may also
refer a lead prospect to a producing realtor in the market area.
 
 The
Company has developed a method to measure the value of the NWBO license. 
The method is a computation based on income from new and existing branches and
an estimate of the value NWBO brings to each of the branches.  The
computation is prepared each quarter.  The computed value of the license is
compared to the book value of the license at the end of each quarter to
determine if there is any impairment in the carrying value of the license. 
The book value is determined by the original cost of the license less
accumulated amortization as of the end of the quarter.  The value of the
license recorded on the balance sheet is book value.  The book value
of the license was less than the computed value at June 30, 2009 and
2008.
 
 Lease
commitments
 The
Company leases office space in a building that is 100% owned by an LLC whose
members are the Company’s President and his immediate family.  The
terms under these lease agreements are that of month-to-month operating leases,
and there are no future non-cancelable lease commitments due by the
Company.  Total rents paid during the years ended June 30, 2009 and
2008 were $36,480 and $52,250, respectively.  The Company rents
various property and equipment under leases and rental agreements with
cancellable terms.  Total rents paid under these agreements during the
years ended June 30, 2009 and 2008 were $10,022 and $7,148,
respectively.  This included $6,000 and $4,000 paid to a related party
during the years ended June 30, 2009 and 2008 respectively.
 
 NOTE 10 – LOSS PER COMMON
SHARE
  Basic and
diluted loss per common share is computed by dividing the loss available to
common shareholders by the weighted average number of common shares outstanding
during the period. Diluted loss per share does not reflect per share amounts
that would have resulted if diluted potential common stock has been converted to
common stock because the effect would be anti-dilutive.  The weighted
average number of common shares outstanding during the years ended June 30, 2009
and 2008 was 12,923,555 and 12,865,119 respectively.  Loss per common
share from continuing operations for the years ended June 30, 2009 and 2008 was
$0.05 and $0.04 respectively.  Loss per common share from discontinued
operations for the year ended June 30, 2008 was $0.01.
  20
 PSM
HOLDINGS, INC.
 AND
SUBSIDIARY
 Notes
to Consolidated Financial Statements
 June
30, 2009
 NOTE 11 – DISCONTINUED
OPERATIONS
 
 Effective
March 1, 2008, the Company discontinued operations of the Roswell mortgage
origination branch office as a Company-owned office.   The former
CFO of the Company took over those operations solely as his own mortgage
origination branch office.  The office is part of the Company’s branch
network.  A network branch agreement was signed on March 1,
2008.  The Company operated the branch at a loss during the eight
months ended February 29, 2008 of $154,611.  The amounts are reported
as a separate component of income after income from operations.
 
 NOTE 12 – LINE OF
CREDIT
 
 The
Company has two warehouse lines of credit.  On August 3, 2008, the
Company entered into a warehouse line of credit agreement for up to
$1,000,000.  The annual interest rate is
5%.  On June 11, 2009 the Company entered into an additional warehouse
line of credit for up to $1,000,000.  The new warehouse line of credit
was modified on June 19, 2009 to increase the line to up to
$4,000,000.  The annual interest rate on the new line is Wall Street
Journal Prime plus 1⁄2 %. As of June 30, 2009 no loans had been originated on the
new line of credit.  The lines of credit provide short term funding
for mortgage loans originated by the branches.  The lines of
credit are repaid within 5 to 7 days, when the loan is sold.  The
Company does not intend to hold and service the loans.  The lines are
used strictly to fund mortgage loans and not to provide operating funds for the
Company. As of June 30, 2009, the Company did not have any amounts outstanding
for payment against the lines of credit.
 
 NOTE 13 – FAIR VALUE
MEASUREMENTS
 
 Financial
Accounting Standards Board Statement No. 157, Fair Value Measurements (FASB
Statement No. 157), defines fair value, establishes a framework for using fair
value to measure assets and liabilities, and expands disclosures about fair
value measurements.  The Statement establishes a hierarchy that prioritizes
the inputs used in measuring fair value such that the highest priority is given
to unadjusted quoted prices in active markets for identical assets or
liabilities (level 1 measurements) and the lowest priority to unobservable
inputs (level 3 measurements). FASB Statement No. 157 became effective for the
Company beginning January 1, 2008.  The three levels of the fair value
hierarchy under FASB Statement No. 157 are described below:
  Level
       1
                    Inputs
      to the valuation methodology are unadjusted quoted prices for identical
      assets or liabilities in active markets that the Company has the ability
      to access.Level
       2
                    Inputs
      to the valuation methodology include:
                      •    
      Quoted prices for similar assets or liabilities in active
      markets;
                      •    
      Quoted prices for identical or similar assets or liabilities in inactive
      markets;
                      •    
      Inputs other than quoted prices that are observable for the asset or
      liability;
                      •    
      Inputs that are derived principally from or corroborated by observable
      market data by correlation or other means.
                      
                      If
      the asset or liability has a specified (contractual) term, the Level 2
      input must be observable for substantially the full term of the asset or
      liability.Level
       3
                    Inputs
      to the valuation methodology are unobservable and significant to the fair
      value measurement.
 
 21
 PSM
HOLDINGS, INC.
 AND
SUBSIDIARY
 Notes
to Consolidated Financial Statements
 June
30, 2009
 The
asset’s or liability’s fair value measurement level within the fair value
hierarchy is based on the lowest level of any input that is significant to the
fair value measurement.  Valuation techniques used maximize the use of
observable inputs and minimize the use of unobservable inputs.  See Note 1
for discussion of valuation methodologies used to measure fair value of
investments.
 
 The
valuation methodologies described above may produce a fair value calculation
that may not be indicative of net realizable value or reflective of future fair
values.  Furthermore, while the Company believes its valuation methods are
appropriate and consistent with other market participants, the use of different
methodologies or assumptions to determine the fair value of certain financial
instruments could result in a different fair value measurement at the reporting
date.
  The fair
value of the marketable securities were determined using Level 1 inputs. The
fair value of the remaining assets and liabilities were determined using Level 2
inputs. The carrying amounts and fair values of the Company's financial
instruments at June 30, 2009 and 2008 are as follows:
  June
      30, 2009
                                    
                                    
                                    June
      30, 2008Carrying
      Amount
                                    
                                    
                                    Fair
      Value
                                    
                                    
                                    Carrying
      Amount
                                    
                                    
                                    Fair
      ValueFinancial
      assets:Cash
      and cash equivalents
                                    
                                    $
                                    83,158
                                    
                                    
                                    $
                                    83,158
                                    
                                    
                                    $
                                    11,869
                                    
                                    
                                    $
                                    11,869Accounts
      receivable
                                    
                                    
                                    90,415
                                    
                                    
                                    
                                    90,415
                                    
                                    
                                    
                                    75,296
                                    
                                    
                                    
                                    75,296Marketable
      securities
                                    
                                    
                                    42,039
                                    
                                    
                                    
                                    42,039
                                    
                                    
                                    
                                    59,282
                                    
                                    
                                    
                                    59,282Loan
      receivable
                                    
                                    
                                    94,206
                                    
                                    
                                    
                                    94,206
                                    
                                    
                                    
                                    100,351
                                    
                                    
                                    
                                    100,351Financial
      liabilities:Accounts
      payable
                                    
                                    $
                                    97,203
                                    
                                    
                                    $
                                    97,203
                                    
                                    
                                    $
                                    108,607
                                    
                                    
                                    $
                                    108,607Accrued
      liabilities
                                    
                                    
                                    9,268
                                    
                                    
                                    
                                    9,268
                                    
                                    
                                    
                                    8,715
                                    
                                    
                                    
                                    8,715Bank
      overdraft
                                    
                                    
                                    -
                                    
                                    
                                    
                                    -
                                    
                                    
                                    
                                    4,792
                                    
                                    
                                    
                                    4,792Due
      to a related party
                                    
                                    
                                    110,000
                                    
                                    
                                    
                                    110,000
                                    
                                    
                                    
                                    80,000
                                    
                                    
                                    
                                    80,000
  NOTE 14 – CORRECTION OF AN
ERROR
 
 During
the years ended June 30, 2009 and 2008 the Company’s president transferred stock
from his personal shares to branch owners under an arrangement between the
Company, the Company’s president, and the Company’s chairman of the board of
directors.  In 2009 the Company determined that the transaction is in
essence a capital transaction.  Accordingly, amounts not expected to
be repaid to the Company president under the arrangement have been charged to
additional paid-in-capital during the year ended June 30, 2009, and have been
reclassified from retained earnings to additional-paid-in-capital for the year
ended June 30, 2008.  The effect is an increase in additional
paid-in-capital of $294,377, an decrease in retained earnings of $294,377, and a
decrease in loss per share of $0.02.
  22
 PSM
HOLDINGS, INC.
 AND
SUBSIDIARY
 Notes
to Consolidated Financial Statements
 June
30, 2009
 NOTE
15 – INDUSTRY RISK
  The
Company continues to build on its plan to add additional branches to increase
bottom line revenue while continuing its relationship with NationWide By Owner
(NWBO); however the Company continues to post losses through the end of its
fiscal years ended June 30, 2009 and 2008.  The development of the national
processing center remains temporarily on hold while NWBO and a business partner
attempt to reach an agreement with each other.  NWBO is instrumental in
soliciting new branches for the Company and that is where management is focusing
their attention.  The Company has signed some significant branches
subsequent to the year ended June 30, 2009, however should those branches not
produce, or the Company is unsuccessful in acquiring additional branches enough
to achieve profitability, they may be forced to reduce to the level of services
necessary to operate the remaining branches in the network.
  The
mortgage industry has gone through a significant consolidation over the past two
years.  The foreclosures in 2008 and 2009 have caused a credit tightening,
making qualifying for loans more difficult for borrowers.  PrimeSource
Mortgage, Inc. has not experienced credit losses because the Company either has
either sold the loan prior to closing, or simply does not fund the loans they
originate.
  The U.S.
housing market as a whole has undergone a significant contraction with lenders
and investors tightening their credit standards, making the mortgage origination
volumes decrease in 2008 and 2009.  The lower rates in 2009 have
brought the market back to some degree.  Because of the Company's long
standing practices of dealing primarily with buyers who qualify for loans in the
standard market, having their loans sold in advance, and forming relationships
with quality lenders, management believes the impact of the current industry
crisis on the Company will be minimal, although it cannot be determined with any
certainty.
  NOTE
16 – SUBSEQUENT EVENTS
  The
Company has continued to actively recruit and establish new branch
offices.  The Company has added three new branch offices to their
network subsequent to June 30, 2009.
  On June
20, 2008, the Company filed a Registration Statement on Form S-1 to register the
sale of 1,033,100 shares of its common stock. The Registration Statement filed
by the Company was declared effective by the U.S. Securities and Exchange
Commission on August 11, 2009. As a result the Company is now subject to limited
reporting obligations under the Securities Exchange Act of 1934, as amended,
under Section 15(d) thereof.  All costs associated with the
registration filing have been charged to selling, general and administrative
costs in the Statements of Operations for the years ended June 30, 2009 and
2008.
 23
  PART
IV
 
 ITEM
15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 
 Financial
Statements
 
 The
following financial statements are filed with this report:
  Report of
Independent Registered Public Accounting Firm
  Consolidated
Balance Sheets at June 30, 2009 and 2008
  Consolidated
Statements of Operations for the years ended June 30, 2009 and 2008
 
 Consolidated
Statements of Stockholders’ Equity for the years ended June 30, 2009 and
2008
  Consolidated
Statements of Cash Flows for the years ended June 30, 2009 and 2008
  Notes to
Consolidated Financial Statements
 
 Exhibits
 
 The
following exhibits are filed with this report:
 
 Incorporated by ReferenceExhibitNumber
                            Exhibit Description
                            Form
                            File No.
                            Exhibit
                            Filing Date
                            Filed Here-with3.1
                            Articles
      of Incorporation
                            S-1
                            333-151807
                            3.1
                            6/20/083.2
                            Current
      Bylaws
                            S-1
                            333-151807
                            3.2
                            6/20/084.1
                            Form
      of Common Stock Certificate
                            S-1
                            333-151807
                            4.1
                            6/20/084.2
                            Form
      of Registration Rights Agreement dated March 4, 2008
                            S-1
                            333-151807
                            4.2
                            6/20/084.3
                            Registration
      Rights Agreement dated July 12, 2002, with Angela Ross
                            S-1
                            333-151807
                            4.3
                            6/20/084.4
      & 10.1
                            2002
      Stock Option/Stock Issuance Plan, including grant forms*
                            S-1
                            333-151807
                            4.4
      & 10.1
                            6/20/0810.2
                            License
      Agreement dated April 14, 2006, with Nationwide, as amended April 14,
      2006, and March 1, 2007 (confidential information has been
      redacted)
                            S-1
                            333-151807
                            10.2
                            6/20/0810.3
                            Office
      Lease Agreement dated March 1, 2008
                            S-1
                            333-151807
                            10.3
                            6/20/0810.4
                            Promissory
      Note and Security Agreements dated November 16, 2006 and February 16, 2007
      by Nationwide By Owner Inc. for $98,954
                            S-1/A
                            333-151807
                            10.4
                            5/14/0910.5
                            Promissory
      Note dated January 28, 2009, to Jeffrey Smith for the $120,000 revolving
      line of credit
                            S-1/A
                            333-151807
                            10.5
                            5/14/0910.6
                            Employment
      agreement with Deborah E. Erickson, as amended*
                            S-1/A
                            333-151807
                            10.6
                            7/28/0910.7
                            Warehouse
      Line of Credit Agreement dated August 4, 2008
                            S-1/A
                            333-151807
                            10.7
                            5/14/0910.8
                            Promissory
      Note dated October 25, 2006, from Deborah E. Erickson for
      $20,000
                            S-1/A
                            333-151807
                            10.8
                            5/14/0921.1
                            List
      of Subsidiaries
                            S-1
                            333-151807
                            21.1
                            6/20/0831.1
                            Rule
      13a-14(a) Certification by Principal Executive Officer
                            
                            
                            
                            
                            X31.2
                            Rule
      13a-14(a) Certification by Principal Financial Officer
                            
                            
                            
                            
                            X32.1
                            Section
      1350 Certification of Principal Executive Officer and Principal Financial
      Officer
                            
                            
                            
                            
                            X
 *Management
contract, or compensatory plan or arrangement required to be filed as an
exhibit.
   Signature
Page Follows
  24
 
 SIGNATURES
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
  PSM Holdings,
    Inc.Date:  September
      28, 2009
                        By:
                        /s/ Jeffrey
      R SmithJeffrey
      R Smith, President
 Date:  September
      28, 2009
                        By:
                        /s/ James
      E. Kunko,James
      E. Kunko, Chief Financial Officer
                          (Principal
      Financial and Accounting Officer)
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the date indicated.
  Name
                                                                    
                                                                    Title
                                                                    
                                                                    Date/s/ Jeffrey
      R. SmithJeffrey
      R. Smith
                                                                    
                                                                    Director
      & President(Principal
      Executive Officer)
                                                                    
                                                                    September
      28, 2009/s/ Ron
      HannaRon
      Hanna
                                                                    
                                                                    Chairman
      & Executive Vice-President
                                                                    
                                                                    September
      28, 2009/s/ Douglas
      F. SmithDouglas
      F. Smith
                                                                    
                                                                    Director
                                                                    
                                                                    September
      28, 2009/s/ Deborah
      E. EricksonDeborah
      E. Erickson
                                                                    
                                                                    Director
                                                                    
                                                                    September
      28, 2009/s/ Matt
      LamoreuxMatt
      Lamoreux
                                                                    
                                                                    Director
                                                                    
                                                                    September
      28, 2009/s/ James
      E. KunkoJames
      E. Kunko
                                                                    
                                                                    CFO
      (Principal Financial and Accounting Officer)
                                                                    
                                                                    September
      28,
2009
   25