The FASB has issued ASU No. 2014-12, Compensation - Stock Compensation (ASC Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. This ASU requires that a performance target that affects vesting, and that could be achieved after the requisite service period, be treated as a performance condition. As such, the performance target should not be reflected in estimating the grant date fair value of the award. This update further clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered.. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company's consolidated financial position and results of operations.
a) Direct commission cost: Compared with the comparable period of 2013, the share of the first-year commission (FYC) revenue in the total revenue increased. Accordingly, the cost matched with the FYC revenue increased. Compared with the commission cost of other types of commission revenue, the cost of the FYC is higher.
Our results of operations for the six months ended December 31, 2013 contains the results for the six months ended December 31, 2013 of AHFL. Our results of operations for the six months ended December 31, 2012 contains the results for four month ended December 31, 2012 of AHFL. The majority of AHFL’s result is generated by Law Broker, its subsidiary in Taiwan. Acquisition of AHFL enables us to expand our business to Taiwan.
Net cash provided by investing activities was $1,205,962 during the year ended December 31, 2014, which is mainly due to selling investment of approximately $1.6 million in current deposit and cash of approximately $0.2 million obtained by acquisition of PFAL. During the year ended December 31, 2013, net cash used in investing activities was $1,706,555, which is mainly due to the investment in purchase of marketable securities. In addition, compared with the year ended December 31, 2013, during the year ended December 31, 2014, the Company’s investment in property, plant and equipment decreased by approximately $0.3 million.
The functional currency for our subsidiaries in Taiwan is New Taiwan Dollar (“NT$”) and for the VIEs in China is Renminbi (“RMB”).
As of December 31, 2013, the Company booked $1,586,038 as short-term liability since we expected to record this amount as revenue within the next twelve months. The remaining balance of $6,344,152 was recorded as long-term liability (Note 14). According to the revised agreement, as of December 31, 2014, the Company did not book any short-term unearned revenue since we did not expect to achieve the sales target within the next twelve months, and the Company booked the whole $7,500,645 as long-term liability. For the year ended December 31, 2014, no income was recorded under the Alliance Agreement as performance targets were not met.
As described in Note 12, the Company recorded $7,500,645 (NT$238,095,238, net of tax) received from AIATW as unearned revenue. According to the revised agreement, as of December 31, 2014, the Company did not book any short-term unearned revenue since we did not expect to achieve the sales target within the next twelve months, and the Company booked the whole $7,500,645 as long-term liability. As of December 31, 2013, the Company booked $6,344,152 as long-term liability for the same reason.
Un-deductible and non-taxable items mainly represent un-deductible expenses according to PRC tax laws and the non-taxable tax income or loss.
The geographical distribution of China United’s revenue for the six months ended December 31, 2013 and for the years ended December 31, 2014, and June 30, 2013 and 2012 were as follows: