Our administrative offices are located at 121 North Commercial Drive, Mooresville, North Carolina 28815.
The cost of sales was $157,487, or 50.51% of revenues for the current fiscal year ended June 30, 2014.
Cost of sales includes the costs directly attributable to revenue recognition, such as marketing and leads generation costs, leads purchased costs, and payments to agents, which was $151,864, $173,949, and $323,348 for the fiscal year ended June 30, 2013.
We had operating expenses of $477,126 during the current fiscal year ended June 30, 2014, compared to operating expenses of $914,254 during the fiscal year ended June 30, 2013. The decrease of $437,128 during the current fiscal year ended June 30, 2014 was due primarily to the decrease in contract labor, payroll and related taxes and other general and administrative expenses by $167,349, $214,717, and $134,000, respectively.
Net cash used in operating activities was $94,530 during the current fiscal year ended June 30, 2014. Negative cash flow from operation during the current fiscal year ended June 30, 2014 was due to the net loss of $410,085, offset by the common stock issued for compensation of $10,800, loss on derivative liabilities by $66, loss on disposal of fixed assets of $3,717, amortization of debt discount of $54,309, the issuance of convertible debt for professional fee of $12,500, depreciation expense of $484, the decrease in rent deposit of $4,578, the increase in accounts payable in amount of $500, the increase in accrued expense of $222,018, and the increase in accrued interest of $4,803.
Net cash used in investing activities was $1,315 for the fiscal year ended June 30, 2014, due primarily to the purchase of computer. Comparatively, net cash used in investing activities was $3,371 for the fiscal year ended June 30, 2013, due primarily to the purchase of furniture.
The Company recognized revenue during the period in which insurance carriers receive premium payments, at which point the Company has fully earned the commission. Commission payments are generally received within few days of being earned.
he lead sales revenue is recognized when one of our agents submits an order to rent leads and simultaneously their credit card is processed and the leads are distributed to them. The Company recognizes revenue when the agent submits an order to rent the leads for 30 days. After thirty days the leads become available for rental to another agent. Leads may be rented multiple times at decreasing rates due to the lead’s age and number of times it has been rented. The Company earned selling leads in December 2013.
Cost of Sales - The Company’s policy is to recognize cost of sales in the same manner in conjunction with revenue recognition, when the costs are incurred. Cost of sales includes the costs directly attributable to revenue recognition and include marketing and leads generation costs, leads purchased costs and agent expenses. Selling, general and administrative expenses are charged to expense as incurred.
After the closing of the Exchange (discussed in this Item above under “General”), we expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business after the reverse merger with First Choice. In connection with our business plan, management anticipates additional increases in operating expenses and capital expenditures relating to: (i) logistic expenses; (ii) advertisement expenses; and (iii) marketing expenses. We intend to finance these expenses with further issuances of securities, and potentially debt issuances. Thereafter, we expect we will need to raise additional capital and generate revenues to meet long-term operating requirements. Additional issuances of equity or debt securities could potentially result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations. We will have to raise additional funds in the next twelve months in order to sustain and expand our operations. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock.
As of the date of this Annual Report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
The Company has suffered recurring losses from operations since inception and has a negative working capital. These factors raise substantial doubt as to the ability of the Company to continue as a going concern.
Our financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.