Document:

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                                                                     Exhibit 4.5

                                                           [English translation]

                             SPLIT MERGER AGREEMENT

                                 BY AND BETWEEN

                SHINHAN CARD CO., LTD. AND CHOHUNG BANK CO., LTD.

                                DECEMBER 30, 2005

                         AS AMENDED ON FEBRUARY 15, 2006

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                             SPLIT MERGER AGREEMENT

This split merger agreement (hereinafter referred to as the "Agreement") has
been entered into on December 30, 2005 by and between Shinhan Card Co., Ltd.
(hereinafter referred to as "Shinhan Card") whose principal place of business is
located in TaePyeng-Ro-2-Ga 120, Jung-Gu, Seoul, and Chohung Bank Co., Ltd.
(hereinafter referred to as "Chohung Bank") whose principal place of business is
located in NamDaeMoonRo-1-Ga 14, Jung-Gu, Seoul, each of which is a corporation
established under the laws of the Republic of Korea. An amendment to the
Agreement has been entered into between the same parties on February 15, 2006,
which is reflected below.

                                    RECITALS

WHEREAS, each of Shinhan Card and Chohung Bank is a corporation established
under the laws of the Republic of Korea (hereinafter referred to as "Korea"),
and Shinhan Card mainly engages in the credit card business as provided by the
Credit Specialty Financial Business Act while Chohung Bank mainly engages in the
banking business as provided by Banking Act, the trust business as provided by
the Trust Business Act, and the credit card business as provided by Credit
Specialty Financial Business Act.

WHEREAS, as of the date hereof, the aggregate number of authorized shares of
Shinhan Card is 100,000,000 shares of par value 5,000 Won, of which 30,569,400
shares of common stock are issued and outstanding, and the aggregate number of
authorized shares of Chohung Bank is 2,000,000,000 shares of par value 5,000
Won, of which 719,118,429 shares (which is the number of shares before the Split
Merger) of common stock are issued and outstanding.

WHEREAS, Chohung Bank and Shinhan Bank Co., Ltd. (hereinafter referred to as
"Shinhan Bank") will enter into a merger agreement on the same date hereof
(hereinafter referred to as the "Merger Agreement") pursuant to which Shinhan
Bank and Chohung Bank shall be merged by way of merger.

WHEREAS, Shinhan Card and Chohung Bank have agreed that the Credit Card Business
(as defined in Article 1) of Chohung Bank be split off and merged into Shinhan
Card pursuant to this Agreement.

NOW THEREFORE, Shinhan Card and Chohung Bank hereby agree as follows:

ARTICLE 1 DEFINITIONS

Except as otherwise provided by this Agreement, the following terms shall have
the following meanings:

"Representatives" shall mean directors, employees, agencies, accountants,
consultants, or attorneys of the parties hereto who are authorized by the
parties hereto to engage in the matters pursuant to this Agreement.

"Split Merger" shall mean the split-off of the Credit Card Business (as defined
in

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Article 1) of Chohung Bank and the merger of such business into Shinhan Card
pursuant to this Agreement and the Act on Structural Improvement of Financial
Industry and the Commercial Code.

"Split Merger Effective Date" shall have the meaning as defined in Article 2.2.

"Credit Card Business" shall mean credit card business of Chohung Bank,
including assets and liabilities related thereto, which shall be split off from
Chohung Bank and merged into Shinhan Card as a result of the Split Merger.

"Required Approvals of Supervisory Authorities" shall mean the approvals of
supervisory authorities that are required for the execution and performance of
this Agreement, including, but not limited to, the approval of the Split Merger
by the Financial Supervisory Commission.

ARTICLE 2 PRINCIPLES OF SPLIT MERGER

2.1      Form of Split Merger

         2.1.1    As a result of the Split Merger, the Credit Card Business of
                  Chohung Bank shall be split off and merged into Shinhan Card.

         2.1.2    Shinhan Card, into which the Credit Card Business of Chohung
                  Bank shall be merged after splitting off from Chohung Bank as
                  a result of the Split Merger, shall engage in the businesses
                  permitted by Shinhan Card's Articles of Incorporation and
                  applicable laws.

         2.1.3    The name of Shinhan Card, the surviving company after the
                  Split Merger, shall be "Shinhan Card Co., Ltd."

2.2      Split Merger Effective Date

         Provided that all the conditions to the Split Merger as provided under
         Article 8 hereof are satisfied, the Split Merger shall be effective as
         of 0:00 A.M., April 1, 2006 ("Split Merger Effective Date") unless
         otherwise agreed by Shinhan Card and Chohung Bank as necessary due to
         additional requirements related to the Required Approvals of
         Supervisory Authorities.

2.3      Split Merger Ratio

         2.3.1    The merger ratio for the Split Merger shall be 1 to
                  0.980941772.

         2.3.2    Shinhan Card shall assign its newly issued shares to the
                  shareholders listed in the shareholder registry of Chohung
                  Bank as of the Split Merger Effective Date in the ratio of
                  0.980941772 shares of Shinhan Card's common stock, par value
                  5,000 Won, per one share of Chohung Bank's common stock, par
                  value 5,000 Won.

         2.3.3    Notwithstanding Article 2.3.2, no fractional shares shall be
                  issued as a result of assigning the newly issued shares of
                  Shinhan Card according

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                  to the ratio of the Split Merger, provided that the
                  shareholders of Chohung Bank so consent; provided further,
                  however, that applicable laws shall apply where such consent
                  is not obtained from the shareholders of Chohung Bank.

2.4      Capital Decrease of Chohung Bank and Capital Increase of Shinhan Card

         2.4.1    Chohung Bank's paid-in capital shall decrease by
                  210,042,315,000 Won from 3,595,592,145,000 Won to
                  3,385,549,830,000 Won as a result of the split-off of the
                  Credit Card Business Department as part of the Split Merger,
                  and the aggregate number of issued shares of Chohung Bank
                  shall decrease by 42,008,463 shares from 719,118,429 shares to
                  677,109,966 shares.

         2.4.2    The properties of the Credit Card Business of Chohung Bank,
                  including its assets and liabilities, to be transferred to
                  Shinhan Card as part of the Split Merger, and their values
                  shall be determined as follows:

                  2.4.2.1  The scope and value of such properties shall
                           initially be determined as set forth in the Schedule
                           of Transferred Assets and Liabilities attached hereto
                           as Attachment 2, which is based on the Split Merger
                           Balance Sheet of Chohung Bank prepared as of
                           September 30, 2005 attached hereto as Attachment 3.
                           The scope and value of such properties shall be
                           conclusively determined according to a revised Split
                           Merger Balance Sheet and a revised Schedule of
                           Transferred Assets and Liabilities to be prepared as
                           of the Split Merger Effective Date, which shall
                           reflect changes in assets and liabilities resulting
                           from the business and financial activities of the
                           Credit Card Business of Chohung Bank up to the Split
                           Merger Due Date, provided that the ratio for the
                           Split Merger as set forth in Article 2.3.1 shall be
                           retained.

                  2.4.2.2  The values of the transferred assets and liabilities
                           as determined pursuant to Article 2.4.2.1 shall be
                           their book values as of the date immediately
                           preceding the Split Merger Effective Date (March 31,
                           2006), provided that in conclusively determining such
                           values, the results of examinations of a third party
                           appraiser (which shall be a certified public
                           accountant) selected through consultation between
                           Shinhan Card and Chohung Bank shall be reflected.

         2.4.3    As part of the Split Merger, Shinhan Card shall issue
                  41,207,856 shares of Shinhan Card's common stock to Shinhan
                  Financial Group Co., Ltd, the sole shareholder of Chohung
                  Bank.

         2.4.4    Following the increase in the paid-in capital of Shinhan Card
                  by 206,039,280,000 Won pursuant to Article 2.4.3, the paid-in
                  capital

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                  immediately following the Split Merger shall be
                  358,886,280,000 Won, and the aggregate number of issued shares
                  of Shinhan Card immediately following the Split Merger shall
                  be 71,777,256 shares of common stock.

         2.4.5    The reserve of Shinhan Card shall be the amount calculated
                  according to the generally accepted accounting principles in
                  Korea.

2.5      Board of Directors and General Meeting of Shareholders for Approval of
         the Split Merger

         2.5.1    Each board of directors of Shinhan Card and Chohung Bank
                  approved this Agreement on December 30, 2005.

         2.5.2    Each of Shinhan Card and Chohung Bank shall approve the Split
                  Merger through an extraordinary general meeting of
                  shareholders to be held on February 15, 2006; provided,
                  however, that if the Required Approvals of Supervisory
                  Authorities are obtained after February 15, 2006, the
                  extraordinary general meeting of shareholders shall be held as
                  soon as possible to the extent permitted under relevant laws
                  after such Required Approvals of Supervisory Authorities are
                  obtained.

2.6      Articles of Incorporation of Shinhan Card

         As part of the Split Merger, the Articles of Incorporation of Shinhan
         Card shall be amended as set forth in Attachment 1.

ARTICLE 3 ACTIONS ON THE SPLIT MERGER EFFECTIVE DATE

On the Split Merger Effective Date, Shinhan Card and Chohung Bank shall take the
following actions:

3.1      Transfer of All Assets, Liabilities, and Relevant Documents

         Chohung Bank shall transfer to Shinhan Card all of the assets,
         liabilities, and relevant documents of its Credit Card Business, and
         Shinhan Card shall acquire them.

3.2      Transfer of Business Office

         Chohung Bank shall transfer to Shinhan Card all of the business offices
         and their businesses relating to its Credit Card Business, and Shinhan
         Card shall acquire them. Chohung Bank shall provide in sound form all
         the information required for Shinhan Card to succeed to the business
         operations of its Credit Card Business, and shall cooperate as
         necessary.

ARTICLE 4 CONSUMMATION AND EFFECTIVENESS OF THE SPLIT MERGER

4.1      Report of Matters Related to the Split Merger

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         Promptly after the Split Merger Effective Date, Shinhan Card shall
         convene a general meeting of shareholders as provided in Article 526 of
         the Commercial Code and report the matters related to the Split Merger,
         or in lieu thereof, convene a meeting of the board of directors and
         publicly announce such matters related to the Split Merger.

4.2      Effectiveness of the Split Merger

         The Split Merger shall take effect upon the filing of a split merger
         registration (the "Split Merger Registration") by Shinhan Card in the
         district where its head office is located.

ARTICLE 5 GOVERNANCE STRUCTURE OF SHINHAN CARD

5.1      The directors and audit committee members of Shinhan Card shall
         continue in office or be newly elected as set forth in Attachment 4.
         The terms of office of the continuing directors and audit committee
         members shall be the same as resolved by the general meeting of
         shareholders originally electing such directors and audit committee
         members, and the terms of office of newly elected directors and audit
         committee members shall be as set forth in Attachment 4. Non-continuing
         directors and audit committee members shall be terminated as of the
         Split Merger.

5.2      The terms of office of the directors and audit committee members to be
         newly elected pursuant to Article 5.1 shall be determined pursuant to
         Shinhan Card's Articles of Incorporation (as amended as part of the
         Split Merger and to apply mutatis mutandis in the remainder of this
         Agreement) as set forth in Attachment 4. Such terms of office shall
         commence on the date of the Split Merger Registration, provided,
         however, that Shinhan Card may elect prior to the date of the Split
         Merger Registration all or any of the persons set forth in Attachment 4
         as newly elected directors or audit committee members of Shinhan Bank
         as necessary to facilitate matters arising in relation to the Split
         Merger, in which case the respective terms of office shall commence on
         the date determined by the general meeting of shareholders of Shinhan
         Bank and expire on the date prescribed in Attachment 4.

ARTICLE 6 REPRESENTATIONS AND WARRANTIES

6.1      Representations and Warranties of Chohung Bank

         In relation to this Split Merger, Chohung Bank hereby represents and
         warrants to Shinhan Card the following, which shall be true and correct
         at and as of the date of this Agreement and at and as of the Split
         Merger Effective Date (except to the extent that a representation or
         warranty expressly speaks as of a specified date, which representation
         or warranty shall be true and correct at and as of such specified
         date):

         6.1.1    Establishment. Chohung Bank is a company duly organized and
                  validly existing under the laws of the Republic of Korea, with
                  all

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                  necessary authority and qualifications to own, lease and
                  operate its assets and businesses, and to conduct its
                  businesses as conducted as of the Split Merger Effective Date.

         6.1.2    Approval of Agreement; Enforceability. Chohung Bank has the
                  authority and qualifications to execute, enter into, and
                  deliver this Agreement, and to perform the obligations
                  hereunder. As of the date hereof, the execution and
                  performance of this Agreement has been duly authorized by all
                  necessary organizational action on the part of Chohung Bank,
                  other than the approval of the Split Merger at the general
                  meeting of shareholders provided in Article 2.5.2. This
                  Agreement has been duly executed by Chohung Bank, and subject
                  to the approval of the Split Merger at the general meeting of
                  shareholders provided in Article 2.5.2. constitutes a valid
                  and binding agreement of Chohung Bank, enforceable in
                  accordance with its terms.

         6.1.3    Capitalization. The aggregate number of shares that Chohung
                  Bank is authorized to issue is 2,000,000,000 shares. Of such
                  shares, 719,118,429 shares of common stock are issued and
                  outstanding, all of which have been duly issued and fully
                  paid.

         6.1.4    Consents; Absence of Conflict of Interests. (1) The execution
                  and performance of this Agreement by Chohung Bank require no
                  approval of any supervisory authority other than the Required
                  Approvals of Supervisory Authorities, and (2) the execution
                  and performance of this Agreement do not and will not (A)
                  contravene or conflict with Chohung Bank's Articles of
                  Incorporation or its other organizational documents or (B)
                  result in a violation of laws or approvals of supervisory
                  authorities to which Chohung Bank is subject.

6.2      Representations and Warranties of Shinhan Card

         In relation to this Split Merger, Shinhan Card hereby represents and
         warrants to Chohung Bank the following, which shall be true and correct
         at and as of the date of this Agreement and at and as of the Split
         Merger Effective Date (except to the extent that a representation or
         warranty expressly speaks as of a specified date, which representation
         or warranty shall be true and correct at and as of such specified
         date):

         6.2.1    Establishment. Shinhan Card is a company duly organized and
                  validly existing under the laws of the Republic of Korea, with
                  all necessary authority and qualifications to own, lease and
                  operate its assets and businesses, and to conduct its
                  businesses as conducted as of the Split Merger Effective Date.

         6.2.2    Approval of Agreement; Enforceability. Shinhan Card has the
                  authority and qualifications to execute, enter into, and
                  deliver this Agreement, and to perform the obligations
                  hereunder. As of the date hereof, the execution and
                  performance of this Agreement has been

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                  duly authorized by all necessary organizational action on the
                  part of Shinhan Card, other than the approval of the Split
                  Merger at the general meeting of shareholders provided in
                  Article 2.5.2. This Agreement has been duly executed by
                  Shinhan Card, and subject to the approval of the Split Merger
                  at the general meeting of shareholders provided in Article
                  2.5.2. constitutes a valid and binding agreement of Shinhan
                  Card, enforceable in accordance with its terms.

         6.2.3    Capitalization. The aggregate number of shares that Shinhan
                  Card is authorized to issue is 100,000,000 shares. Of such
                  shares, 30,569,400 shares of common stock are issued and
                  outstanding, all of which have been duly issued and fully
                  paid.

         6.2.4    Consents; Absence of Conflict of Interests. (1) The execution
                  and performance of this Agreement by Shinhan Card require no
                  approval of any supervisory authority other than the Required
                  Approvals of Supervisory Authorities, and (2) the execution
                  and performance of this Agreement do not and will not (A)
                  contravene or conflict with Shinhan Card's Articles of
                  Incorporation or its other organizational documents or (B)
                  result in a violation of laws or approvals of supervisory
                  authorities to which Shinhan Card is subject.

ARTICLE 7 COVENANTS

7.1      Covenants of Chohung Bank

         Chohung Bank covenants to Shinhan Card that it shall perform the
         following from the date hereof until the Split Merger Effective Date.

         7.1.1    Taking Necessary Measures. Chohung Bank shall use its best
                  efforts to obtain the Required Approvals of Supervisory
                  Authorities, and to consummate the Split Merger as provided
                  herein.

         7.1.2    Access to Information. Chohung Bank shall provide reasonable
                  access to data or information requested by Shinhan Card or its
                  Representatives, provided that such access does not interfere
                  with Chohung Bank's ordinary business affairs. Chohung Bank
                  shall cause its Representatives to consult with Shinhan Card
                  with regard to providing data and information as described
                  above.

         7.1.3    Notice. If conditions or circumstances arise (i) that may have
                  a material adverse effect on the Split Merger, (ii) that would
                  cause the representations and warranties provided in this
                  Agreement to be untrue or incorrect in material respects, or
                  (iii) that prevents the satisfaction of the conditions to the
                  obligations of Shinhan Card provided in Article 8.2, Chohung
                  Bank shall promptly notify Shinhan Card in writing of such
                  fact together with a description thereof.

         7.1.4    Third Party Consents. Chohung Bank shall use its best effort
                  to give

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                  third party notices and obtain third party consents required
                  in connection with the transactions contemplated by this
                  Agreement.

         7.1.5    Due Diligence. Shinhan Card may conduct legal and accounting
                  due diligence on the business, properties and financial status
                  of Chohung Bank from the date hereof until the Split Merger
                  Effective Date, and Chohung Bank shall cooperate to the
                  maximum extent in response to requests for such due diligence
                  from Shinhan Card, including by providing necessary data.

7.2      Covenants of Shinhan Card

         Shinhan Card covenants to Chohung Bank that it shall perform the
         following from the date hereof until the Split Merger Effective Date.

         7.2.1    Taking Necessary Measures. Shinhan Card shall use its best
                  efforts to obtain the Required Approvals of Supervisory
                  Authorities, and to consummate the Split Merger as provided
                  herein.

         7.2.2    Access to Information. Shinhan Card shall provide reasonable
                  access to data or information requested by Chohung Bank or its
                  Representatives, provided that such access does not interfere
                  with Shinhan Card's ordinary business affairs. Shinhan Card
                  shall cause its Representatives to consult with Chohung Bank
                  with regard to providing data and information as described
                  above.

         7.2.3    Notice. If conditions or circumstances arise (i) that may have
                  a material adverse effect on the Split Merger, (ii) that would
                  cause the representations and warranties provided in this
                  Agreement to be untrue or incorrect in material respects, or
                  (iii) that prevents the satisfaction of the conditions to the
                  obligations of Chohung Bank provided in Article 8.1, Shinhan
                  Card shall promptly notify Chohung Bank in writing of such
                  fact together with a description thereof.

         7.2.4    Third Party Consents. Shinhan Card shall use its best effort
                  to give third party notices and obtain third party consents
                  required in connection with the transactions contemplated by
                  this Agreement.

         7.2.5    Due Diligence. Chohung Bank may conduct legal and accounting
                  due diligence on the business, properties and financial status
                  of Shinhan Card from the date hereof until the Split Merger
                  Effective Date, and Shinhan Card shall cooperate to the
                  maximum extent in response to requests for such due diligence
                  from Chohung Bank, including by providing necessary data.

ARTICLE 8 CONDITIONS TO THE SPLIT MERGER

8.1      Conditions to the Obligations of Chohung Bank

         The obligations of Chohung Bank to consummate the Split Merger pursuant
         to

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         this Agreement are subject to the following conditions being satisfied
         on or prior to the Split Merger Effective Date, provided, however, that
         Chohung Bank may in writing waive or exempt such conditions in whole or
         in part.

         8.1.1    Approval. The approval of the board of directors and the
                  general meeting of shareholders of both Chohung Bank and
                  Shinhan Card and the Required Approvals of Supervisory
                  Authorities shall have been obtained, and all other
                  requirements under applicable laws of Korea shall have been
                  satisfied, as required for the execution of this Agreement and
                  the performance of the transactions contemplated hereby.

         8.1.2    Representations and Warranties. The representations and
                  warranties of Shinhan Card under this Agreement shall be true
                  and correct in all material respects at and as of the date of
                  this Agreement and at and as of the Split Merger Effective
                  Date.

         8.1.3    Covenants. Shinhan Card shall have performed in all material
                  respects the covenants and all other obligations required to
                  be performed by it under this Agreement.

         8.1.4    Material Adverse Changes. A material adverse change shall not
                  have occurred to the properties or businesses of Shinhan Card
                  between the date of this Agreement and the Split Merger
                  Effective Date.

8.2      Conditions to the Obligations of Shinhan Card

         The obligations of Shinhan Card to consummate the Split Merger pursuant
         to this Agreement are subject to the following conditions being
         satisfied on or prior to the Split Merger Effective Date, provided,
         however, that Shinhan Card may in writing waive or exempt such
         conditions in whole or in part.

         8.2.1    Approval. The approval of the board of directors and the
                  general meeting of shareholders of both Chohung Bank and
                  Shinhan Card and the Required Approvals of Supervisory
                  Authorities shall have been obtained, and all other
                  requirements under applicable laws of Korea shall have been
                  satisfied, as required for the execution of this Agreement and
                  the performance of the transactions contemplated hereby.

         8.2.2    Representations and Warranties. The representations and
                  warranties of Chohung Bank under this Agreement shall be true
                  and correct in all material respects at and as of the date of
                  this Agreement and at and as of the Split Merger Effective
                  Date.

         8.2.3    Covenants. Chohung Bank shall have performed in all material
                  respects the covenants and all other obligations required to
                  be performed by it under this Agreement.

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         8.2.4    Material Adverse Changes. A material adverse change shall not
                  have occurred to the properties or businesses of Chohung Bank
                  between the date of this Agreement and the Split Merger
                  Effective Date.

ARTICLE 9 TERMINATION OF AGREEMENT

9.1      Cause of Termination

         This Agreement may be terminated prior to the consummation of the Split
         Merger for the following causes upon written notice from either party
         to the other party, provided that only Chohung Bank may give such
         notice for the cause provided in Article 9.1.4 and only Shinhan Card
         may give such notice for the cause provided in Article 9.1.5:

         9.1.1    if Shinhan Card and Chohung Bank mutually agree in writing to
                  terminate this Agreement;

         9.1.2    if it becomes evident that the consummation of the Split
                  Merger is impossible or illegal due to the failure to obtain
                  the Required Approvals of Supervisory Authorities or changes
                  in applicable laws, and Shinhan Card and Chohung Bank do not
                  agree otherwise within 30 days after such circumstances arise;

         9.1.3    if it becomes evident that the consummation of the merger
                  between Chohung Bank, excluding its Credit Card Business, and
                  Shinhan Bank pursuant to the Merger Agreement is impossible
                  due to causes such as the Merger Agreement no longer having
                  effect or the failure to obtain the required approvals of
                  supervisory authorities for such merger, and Shinhan Card and
                  Chohung Bank do not agree otherwise within thirty days after
                  such circumstances arise;

         9.1.4    if there has been a breach by Shinhan Card of any
                  representation, warranty, covenant, or other agreement
                  contained herein resulting in a material adverse effect, and
                  such breach has not been cured within 30 days after receipt of
                  Chohung Bank's written request for cure; or

         9.1.5    if there has been a breach by Chohung Bank of any
                  representation, warranty, covenant, or other agreement
                  contained herein resulting in a material adverse effect, and
                  such breach has not been cured within 30 days after receipt of
                  Shinhan Card's written request for cure.

9.2      Effect of Termination

         9.2.1    If this Agreement is terminated, each party shall, at the
                  request of the other party, return or destroy the data or
                  information that the other party has provided within 14 days
                  after the date of termination.

         9.2.2    Notwithstanding any termination of this Agreement, any claim
                  for damages or other rights or remedies that one party has
                  against the other party arising from a breach or violation of
                  this Agreement shall

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                  remain in full force and effect and survive such termination.

         9.2.3    Notwithstanding any termination of this Agreement, Articles
                  9.2, 10.1, 10.2, 10.3, 10.9, 10.10, and 10.11 of this
                  Agreement shall remain in full force and effect and survive
                  such termination.

ARTICLE 10 GENERAL PROVISIONS

10.1     Confidentiality

         Neither party may make public, disclose, or leak to a third party the
         contents of this Agreement or the data or information provided by the
         other party in the course of negotiations for, execution of, and
         performance of this Agreement without the prior written consent of the
         other party, provided, however, that such data or information may be
         disclosed if required by applicable law or court order.

10.2     Expenses

         Expenses incurred in connection with the execution or performance of
         this Agreement shall be paid by the party incurring such expenses.

10.3     Notice

         All notices, requests, demands, and other communications in connection
         with this Agreement shall be given by personal delivery, registered
         mail or facsimile transmission to the following addresses:

         (a)      Notice to Shinhan Card

                  Address: TaePyeng-Ro-2-Ga 120, Jung-Gu, Seoul
                  Telephone: 02) 6262 - 7360
                  Facsimile: 02) 6263 - 7115
                  E-mail: csh113@hanmail.net
                  Attention: Sung-Ha Jo, Management Support Manager

         (b)      Notice to Chohung Bank

                  Address: NamDaeMoonRo-1-Ga 14, Jung-Gu, Seoul
                  Telephone: 02) 2010 - 2296
                  Facsimile: 02) 2010 - 2062
                  E-mail: leokim@chb.co.kr
                  Attention: Yong-Kil Kim, Planning Manager

         A party may change its address provided above at any time with prior
         written notice to the other party.

10.4     Modification; Amendment

         This Agreement may be modified or amended by a written agreement
         between

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         Shinhan Card and Chohung Bank.

10.5     Waiver

         No failure on the part of a party to exercise, and no delay in
         exercising, any right hereunder shall operate as a waiver thereof, nor
         shall any single or partial exercise of such right by such party
         preclude further exercise thereof.

10.6     Entire Agreement

         This Agreement constitutes the entire agreement between the parties
         with respect to the subject matter of this Agreement as of the date
         hereof, and there are no agreements, conditions, or obligations with
         respect to the subject matter of this Agreement, whether oral or
         written, or express or implied, except as set forth in this Agreement.

10.7     Severability

         The illegality, invalidity or unenforceability in any respect of any
         provision of this Agreement, including sentences, phrases, or portions
         thereof, shall not affect the legality, validity or enforceability of
         any other provision of this Agreement, provided that such illegality,
         invalidity or unenforceability does not cause interference with the
         attainment of the objective of this Agreement.

10.8     Assignment

         Neither party may assign or delegate its rights or obligations under
         this Agreement without the prior written consent of the other party.
         This Agreement shall inure to the benefit of and be binding upon the
         parties hereto and their successors and assigns.

10.9     Governing Law

         All questions concerning the interpretation or performance of this
         Agreement and the resolution of disputes arising in connection with
         this Agreement shall be governed by the laws of Korea.

10.10    Governing Language

         This Agreement shall be executed in the Korean language, and the Korean
         version of this Agreement shall prevail in case of conflict with a
         translated version thereof, regardless of which party prepared such
         translation.

10.11    Resolution of Conflicts

         Both parties agree that the Seoul Central District Court shall have
         non-exclusive jurisdiction over any dispute related to the execution,
         performance, interpretation or violation of this Agreement.

                           [Signature page to follow]

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IN WITNESS WHEREOF, the parties have caused the persons authorized to represent
such parties to print his or her name and affix seal to this Agreement.

Shinhan Card Co., Ltd                          Chohung Bank Co., Ltd.

/s/ Sung-Gyun Hong                             /s/ Dong-Su Choi
----------------------------------             ---------------------------------
Name: Sung-Gyun Hong                           Name: Dong-Su Choi
Title: Representative Director                 Title: Representative Director

                                       13Ex-4.41 Share Sale Agreement

 

Exhibit 4.41

31 October 2005

SHARE SALE AGREEMENT relating to

T3 Communication Partners Pty Ltd ACN 099 374 580

(COMPANY)

between

Pacific Internet (Australia) Pty Ltd ACN 085 213 690

(PURCHASER)

and

Teide Pty Ltd ACN 109 149 484 (‘First Vendor’)

Cumberland Properties Pty Ltd ACN 000 126 125 (‘Second Vendor’)

Evogue Pty Ltd ACN 088 848 739 (‘Third Vendor’)

Jason Cynthia Pty Ltd ACN 105 702 903 (‘Fourth Vendor’).

(VENDORS)

and

Carlos Miguel Perez Sotomayor and Claudio Tropea (GUARANTORS)

and

Frank Bradicich

(RESTRAINED PARTY)

 

 

CONTENTS

	 	 	 	 	 
	1. Purpose of Deed
	 	 	5	 
	 
	 	 	 	 
	2. The parties
	 	 	5	 
	 
	 	 	 	 
	3. Background
	 	 	5	 
	 
	 	 	 	 
	4. Conditions precedent
	 	 	6	 
	 
	 	 	 	 
	5. Sale and purchase
	 	 	6	 
	 
	 	 	 	 
	6. Purchase price
	 	 	6	 
	 
	 	 	 	 
	7. Payment of Purchase Price
	 	 	7	 
	 
	 	 	 	 
	8. Pre-payment of Earn Out
	 	 	7	 
	 
	 	 	 	 
	9. Earn Out Instalment
	 	 	7	 
	 
	 	 	 	 
	10. Financial reporting
	 	 	8	 
	 
	 	 	 	 
	11. Financial standards
	 	 	8	 
	 
	 	 	 	 
	12. Escrow
	 	 	9	 
	 
	 	 	 	 
	13. Integration
	 	 	10	 
	 
	 	 	 	 
	14. Agents and resellers
	 	 	10	 
	 
	 	 	 	 
	15. Novated Leases
	 	 	11	 
	 
	 	 	 	 
	16. Property Leases
	 	 	11	 
	 
	 	 	 	 
	17. Employees of the Company
	 	 	11	 
	 
	 	 	 	 
	18. Completion of the transfer of the Shares
	 	 	11	 
	 
	 	 	 	 
	19. Dispute resolution and appointment of Expert
	 	 	13	 
	 
	 	 	 	 
	20. Goods and services tax
	 	 	14	 
	 
	 	 	 	 
	21. Warranties
	 	 	14	 
	 
	 	 	 	 
	22. Limitation of liability for Claims
	 	 	15	 
	 
	 	 	 	 
	23. Payment of Claims
	 	 	15	 
	 
	 	 	 	 
	24. Conduct of claims
	 	 	17	 
	 
	 	 	 	 
	25. Restrictions on Vendors and Guarantors
	 	 	18	 
	 
	 	 	 	 
	26. Confidentiality and announcements
	 	 	19	 
	 
	 	 	 	 
	27. Further assurance
	 	 	21	 
	 
	 	 	 	 
	28. Assignment
	 	 	21	 
	 
	 	 	 	 
	29. Whole agreement
	 	 	21	 
	 
	 	 	 	 
	30. Variation and waiver
	 	 	21	 
	 
	 	 	 	 
	31. Costs
	 	 	22	 

2

 

	 	 	 	 	 
	32. Notices
	 	 	22	 
	 
	 	 	 	 
	33. Acknowledgments
	 	 	23	 
	 
	 	 	 	 
	34. Interest on payments
	 	 	23	 
	 
	 	 	 	 
	35. Counterparts
	 	 	24	 
	 
	 	 	 	 
	36. Severance
	 	 	24	 
	 
	 	 	 	 
	37. Agreement survives completion
	 	 	24	 
	 
	 	 	 	 
	38. Third party rights
	 	 	24	 
	 
	 	 	 	 
	39. Governing law and jurisdiction
	 	 	24	 
	 
	 	 	 	 
	40. Interpretation
	 	 	24	 
	 
	 	 	 	 
	Schedule 2 - Statement of Financial Position Acquired
	 	 	32	 
	 
	 	 	 	 
	Schedule 3 - Warranties
	 	 	33	 
	 
	 	 	 	 
	1. Power to sell the Company
	 	 	33	 
	 
	 	 	 	 
	2. Shares in the Company
	 	 	33	 
	 
	 	 	 	 
	3. Constitutional and Corporate Documents
	 	 	34	 
	 
	 	 	 	 
	4. Accounts
	 	 	34	 
	 
	 	 	 	 
	5. Solvency
	 	 	34	 
	 
	 	 	 	 
	6. Business
	 	 	35	 
	 
	 	 	 	 
	7. Assets
	 	 	36	 
	 
	 	 	 	 
	8. Property Lease
	 	 	36	 
	 
	 	 	 	 
	9. Contracts
	 	 	36	 
	 
	 	 	 	 
	10. Intellectual Property Rights
	 	 	37	 
	 
	 	 	 	 
	11. Official Investigations
	 	 	38	 
	 
	 	 	 	 
	12. Litigation
	 	 	38	 
	 
	 	 	 	 
	13. Insurance
	 	 	38	 
	 
	 	 	 	 
	14. Personnel
	 	 	39	 
	 
	 	 	 	 
	15. Superannuation
	 	 	39	 
	 
	 	 	 	 
	16. Industrial Relations
	 	 	40	 
	 
	 	 	 	 
	17. Taxation
	 	 	40	 
	 
	 	 	 	 
	18. Trusts
	 	 	40	 
	 
	 	 	 	 
	Schedule 4 - Intellectual Property Rights
	 	 	41	 
	 
	 	 	 	 
	Schedule 5 - Particulars of Properties
	 	 	42	 
	 
	 	 	 	 
	Schedule 6 - Disclosure Schedule
	 	 	43	 

3

 

	 	 	 	 	 
	1. General
	 	 	43	 
	 
	 	 	 	 
	2. General disclosures
	 	 	43	 
	 
	 	 	 	 
	3. Specific Disclosures
	 	 	43	 
	 
	 	 	 	 
	Schedule 7 - Due Diligence Material
	 	 	46	 
	 
	 	 	 	 
	Schedule 9 - Accounts
	 	 	48	 
	 
	 	 	 	 
	Schedule 11 - Employees of the Company and salary packages
	 	 	50	 
	 
	 	 	 	 
	Schedule 12 - Material Contracts
	 	 	51	 

4

 

	1.	 	Purpose of Deed

     This document is a sale of shares agreement made by way of deed.

	2.	 	The parties

     The parties to this Deed are:

	 	2.1.	 	The Purchaser:
	 
	 	 	 	Pacific Internet (Australia) Pty Ltd ACN 085 213 690 of Level 1, 1 Southbank
Blvd, Southbank 3006 (‘Purchaser’); and
	 
	 	2.2.	 	The Vendors:

	 	2.2.1.	 	Teide Pty Ltd ACN 109 149 484 of Suite 601A, 97 Pacific Hwy, North
Sydney 2060 (‘First Vendor’);
	 
	 	2.2.2.	 	Cumberland Properties Pty Ltd ACN 000 126 125 of Level 16, 309 Kent
Street, Sydney 2000 (‘Second Vendor’);
	 
	 	2.2.3.	 	Evogue Pty Ltd ACN 088 848 739 of Level 1, 22 Atchison Street, St
Leonards 2065 (‘Third Vendor’);
	 
	 	2.2.4.	 	Jason Cynthia Pty Ltd ACN 105 702 903 of Unit 3, 198 Pacific Hwy,
Lindfield 2070 (‘Fourth Vendor’); and

	 	2.3.	 	The Guarantors:

	 	2.3.1.	 	Claudio Tropea of 4 Sherwin Street, Henley 2111 (‘Tropea’); and
	 
	 	2.3.2.	 	Carlos Miguel Perez Sotomayor of 14A Hopetoun Avenue, Mosman 2088
(‘Perez’).

	 	2.4.	 	The Restrained Party:

	 	2.4.1.	 	Frank Bradicich of Unit 3,198 Pacific Highway, Lindfield NSW 2070

	3.	 	Background

	 	3.1.	 	The issued capital of the Company is composed of 10 F Class Shares and 22107
Ordinary Shares.
	 
	 	3.2.	 	The Company has 3 wholly owned subsidiaries, T3 Communications Pty Ltd ACN
099 127 536, T3 Rewards Pty Ltd ACN 103 226 946, and T3 Technology Solutions
Pty Ltd ACN 099 404 654.
	 
	 	3.3.	 	The First Vendor is the legal owner of 10 fully paid F Class Shares, and 6803
Ordinary Shares in the Company.
	 
	 	3.4.	 	The Second Vendor is the legal and beneficial owner of 4250 Ordinary Shares in
the Company.

5

 

	 	3.5.	 	The Third Vendor is the legal and beneficial owner of 10001 Ordinary Shares in
the Company.
	 
	 	3.6.	 	The Fourth Vendor is the legal and beneficial owner of 1053 Ordinary Shares in
the Company.
	 
	 	3.7.	 	The Purchaser has agreed to buy the Shares on the terms of this agreement.
	 
	 	3.8.	 	The Vendors have agreed to sell the Shares to the Purchaser on the terms of this
agreement.
	 
	 	3.9.	 	The Guarantors are Directors of the Company.
	 
	 	3.10.	 	Perez controls or exercises substantial control over the First Vendor.
	 
	 	3.11.	 	Tropea controls or exercises substantial control over the Third Vendor.

	4.	 	Conditions precedent

	 	4.1.	 	Completion of this agreement is conditional upon each of the following
being fulfilled or waived (by the Purchaser) by 31 October 2005:

	 	4.1.1.	 	the Purchaser (and it’s parent Pacific Internet Limited)
conducting,
completing and being satisfied with financial, legal, technical and customer
due diligence of the Company;
	 
	 	4.1.2.	 	where a Contract with a supplier allows that supplier to terminate the
relevant Contract on the occurrence of a change in Control of the
Company, the Purchaser obtaining the written approval of the relevant
supplier to the change in Control, and their continued willingness to
provide the Company with the same or similar products and services on
terms which are no less favourable than currently exist;
	 
	 	4.1.3.	 	the due diligence confirming that the composition of the Statement of
Financial Position Acquired is substantially the same.

	5.	 	Sale and purchase
	 
	 	 	The Vendors must sell, and Purchaser must buy, the Shares on the terms of this agreement.
	 
	6.	 	Purchase price

	 	6.1.	 	The purchase price for the Shares is the aggregate of the Initial Instalment
and the
Earn Out Instalment, and must be paid in accordance with this agreement
(‘Purchase Price’).
	 
	 	6.2.	 	All payments in respect of the Purchase Price shall be made to the client trust
account of the Vendors’ solicitors at Nova Legal & Advisory Trust Account ANZ
Bank, Pitt Street, Sydney (BSB 012 003 Account 107461229) in immediately
available funds. Payment of the Purchase Price to the Vendors Solicitors in
accordance with this clause 6.2 shall satisfy the Purchaser’s obligations to pay the
Purchase Price to all of the Vendors.

6

 

	7.	 	Payment of Purchase Price

	 	7.1.	 	The Initial Instalment must be paid to the Vendors in two components:

	 	7.1.1.	 	the first payment, on Completion; and
	 
	 	7.1.2.	 	the second payment, 3 business days after the Purchaser approves in
writing, the Financial Report for the 3 months ended 30 September 2005 in
accordance with clause 10.

	 	7.2.	 	The first payment of the Initial Instalment will be $2,850,000.
	 
	 	7.3.	 	The second payment will be calculated in accordance with clause 7.4.
	 
	 	7.4.	 	The notional second payment of $150,000 will be adjusted as follows:

	 	7.4.1.	 	if the Net Assets in the Financial Reports (for the period end 30 September
2005) is equal to or exceeds $651,000 then the notional second payment of
$150,000 will be increased by the amount which exceeds $651,000;
–then
this figure will become the second payment amount; or
	 
	 	7.4.2.	 	if the Net Assets in the Financial Reports (for the period end 30 September
2005) is less than $651,000 then the notional second payment of $150,000 will
be reduced by the difference between $651,000 and the Net Assets;
–then this
figure will become the second payment amount.

	 	7.5.	 	The Purchaser must pay the Earn Out Instalment in accordance with clauses 8 and 9.
	 
	 	7.6.	 	The Vendors must prepare (or procure that the Company prepares) the Financial
Reports referred to in this clause 7.

	8.	 	Pre-payment of Earn Out

	 	8.1.	 	Subject to clause 8.2, the Purchaser must pay the Vendors the sum of $1,000,000
(in pre-payment of the Earn Out Instalment) if at the end of any month during the
Earn Out Period the EBIT is equal to or greater than $750,000.
	 
	 	8.2.	 	The EBIT in clause 8.1 is to be determined with reference to a Financial Report
for
the relevant month (prepared under clause 8.4) which is reviewed and approved in
accordance with clause 10.
	 
	 	8.3.	 	The payment in clause 8.1 is to be made within 3 business days of the approval
in
clause 8.2.
	 
	 	8.4.	 	The Purchaser and the Directors must procure that the Company prepares
Financial Reports for the period from the Effective Date to the end of every month
during the Earn Out Period.

	9.	 	Earn Out Instalment

	 	9.1.	 	Subject to clause 9.2, the Earn Out Instalment is calculated as follows:

	 	9.1.1.	 	if the EBIT for the earn out period is less than or equal to $500,000, then
the earn out Instalment will be zero; but

7

 

	 	9.1.2.	 	if the EBIT for the earn out period exceeds $500,000, then
the earn out Instalment will be a sum equal to 4 times the EBIT that
exceeds $500,0001 but capped at a sum of no more than
$2,000,000.

	 	9.2.	 	The amount payable in respect of the Earn Out Instalment at the end of the
Earn
Out Period is reduced by any pre-payment under clause 8.
	 
	 	9.3.	 	The Purchaser will pay the Earn Out Instalment (if any) to the Vendors within 3
Business Days of the approval of the Financial Reports (in this clause 9) in
accordance with clause 10.
	 
	 	9.4.	 	Where the Earn Out Instalment is determined to be zero, then the Purchaser will be
deemed to have paid the Purchase Price in full.
	 
	 	9.5.	 	The Purchaser and the Directors must procure that the Company prepares
Financial Reports up to the end of the Earn Out Period.

	10.	 	Financial reporting

	 	10.1.	 	Where the Purchaser receives any Financial Report in connection with any of
clauses 7, 8, or 9 it shall have 25 days from the date of receipt of the relevant
Financial Report to review and assess them (“the Review Period”).
	 
	 	10.2.	 	If the Purchaser believes that the Financial Reports referred to in clause
10.1 are
incorrect it must notify the Vendors in writing on or before the expiry of the relevant
Review Period, providing details of where the Purchaser believes the Financial
Reports are not correct. If the parties do not agree to the terms of
the Financial Reports within 5 business days of receipt of written notification from the Purchaser,
the parties must comply with the dispute resolution procedure for Financial Reports
in clause 19.
	 
	 	10.3.	 	If the Purchaser does not notify the Vendors that it believes the Financial Reports
referred to in clause 10.1 are incorrect on or before the expiry of the relevant
Review Period, then the Purchaser is deemed to have accepted them as correct.
	 
	 	10.4.	 	For the purpose of this clause 10, receipt is determined by reference to clause 32.
	 
	 	10.5.	 	The Purchaser must prepare the Financial Reports required under clauses 8 and 9,
as soon as practicable after the end of the relevant period of the Financial Report.

	11.	 	Financial standards

	 	11.1.	 	All Financial Reports must be prepared:

	 	11.1.1.	 	in accordance with all relevant legislative requirements; and
	 
	 	11.1.2.	 	in accordance with the then current Australian Accounting Standards.

 

			
	1	 	For example, if the EBIT is $600,000, then the earn out installment will be
$400,000.

8

 

	 	11.2.	 	Subject to clause 11.1, the Financial Reports must be prepared in a manner
which
is consistent with the basis used to prepare the preceding (the current financial
year) three financial years Financial Reports.
	 
	 	11.3.	 	In addition to the obligations set out in clause 11.1 and 11.2, the Vendors must
ensure that they maintain adequate accounting records and internal controls that
are designed to prevent and detect fraud or error, and for accounting policies and
accounting estimates inherent in the financial or management report up to
Completion, and the Purchasers must do the same after Completion.
	 
	 	11.4.	 	The Purchaser may examine (and the Vendors must facilitate) and review all
accounting records, books and documents which relate to any Financial Report as
is reasonably necessary to verify compliance with this clause 11 or any other part of
this agreement.

	12.	 	Escrow

	 	12.1.	 	On or before Completion, the Purchaser must pay or procure its Related
Entities to
pay the security deposit of $2,000,000 (“the Security Deposit”) into the Escrow
Account in accordance with this clause 12.
	 
	 	12.2.	 	The Purchaser must procure that the Stakeholder provides written confirmation
addressed to the Vendors and the Purchaser that it is holding the Security Deposit
on the terms of this agreement and will release the Security Deposit (or parts of it)
in accordance with this clause 12.
	 
	 	12.3.	 	The Security Deposit is intended to secure performance of the Purchaser’s
obligations for payment of the Purchase Price and is payable in accordance with
this clause 12,
	 
	 	12.4.	 	The Stakeholder must invest the Security Deposit on Completion in an interest
bearing controlled monies account styled ‘Escrow Account — sale’ (or another style
the parties reasonably agree) in the name of the Vendors and the Purchaser (“the
Escrow Account”).
	 
	 	12.5.	 	The Purchaser (or its nominee) is solely entitled to the interest earned from the
security deposit (and may draw down on the interest only, at any time), but must
pay all bank fees and charges incurred.
	 
	 	12.6.	 	The reasonable costs of the Stakeholder in administering the security deposit under
the terms of this agreement will be borne by the Purchaser.
	 
	 	12.7.	 	The Purchaser and the Vendors acknowledge that the Stakeholder will make
payments from the Security Deposit strictly in accordance with the terms of this
clause 12, and is not required to verify the validity and amounts of those payments
and is not liable to either the Purchaser or the Vendors in respect of those
payments where the Stakeholder has acted within the terms of this clause.
	 
	 	12.8.	 	The Purchaser and the Vendors indemnify the Stakeholder against any losses,
costs or expenses of the Stakeholder arising from any payment made from the
Security Deposit in accordance with the provisions of this clause 12. The Purchaser

9

 

	 	 	 	and the Vendors irrevocably instruct and authorize the Stakeholder to make
the payments from the Security Deposit prescribed by or required under this clause
12.
	 
	 	12.9.	 	The Stakeholder must pay the following parts of the Security Deposit in
the following circumstances only:

	 	12.9.1.	 	$1,000,000 to the Vendors in respect of pre-payment of the Earn Out
Instalment on the date specified in clause 8;
	 
	 	12.9.2.	 	the Earn Out Instalment less any amounts paid under clause 8 to the
Vendors in accordance with clause 9; and
	 
	 	12.9.3.	 	once the Purchase Price has been paid in full and only after resolution of
any dispute in relation to the amount of the Earn Out Instalment in
accordance with clause 19, any balance of the Security Deposit may be paid
to the Purchaser.

	13.	 	Integration

	 	13.1.	 	The Purchaser intends to allow the Key Personnel to continue to manage and
operate the Business in substantially the same manner in which it is managed and
operated as at the date of this agreement, provided that the Key Personnel
continue to meet the key performance indicators set out, in relation to Perez, in his
contract of employment and, in relation to Frank Bradicich, in the consultancy
agreement which relates to him.
	 
	 	13.2.	 	In order to facilitate the effective and efficient operation of the Company by the key
personnel, the Purchaser will:

	 	13.2.1.	 	with respect to the subject matter of this clause 13, at all times act in good faith
	 
	 	13.2.2.	 	provide the key personnel with access to the Managing Director of the
Purchaser on reasonable notice, and where he is not available, then a
senior member of the Purchaser’s management team; and
	 
	 	13.2.3.	 	distribute monthly Financial Reports of the Company to the Guarantors
who must immediately provide them to the Vendors.

	 	13.3.	 	The Purchaser will provide the Company with access to its data products
(excluding
voice products) subject to wholesale supply arrangements on terms no less
favourable than it provides to other wholesale customers.

	14.	 	Agents and resellers

	 	14.1.	 	The Vendors are responsible for and will indemnify the Purchaser against all
actual
or contingent liabilities with respect to agents, dealers and resellers, which exist as
at the Effective Date and which have not been included (and accounted for) in the
Financial Reports for the period ended 30 September 2005.
	 
	 	14.2.	 	For the purpose of this agreement all agents, dealers and resellers are deemed to
be material suppliers (and their agreements with the Company material contracts).

10

 

	15.	 	Novated Leases

	 	15.1.	 	For the purposes of this clause the novated lease is the lease for the
following motor vehicle Lexus RX330, NSW registration ARX 83W.
	 
	 	 	 	A copy of which is contained in Schedule 7.

	16.	 	Property Leases

	 	16.1.	 	This agreement is subject to the landlord (under the lease agreements detailed
in Schedule 5) of Suite 601A and 601B, Level 6, 97 Pacific Hwy, North Sydney 2060
consenting to the change in control of the Company by Completion.
	 
	 	16.2.	 	If the landlord does not consent to the change of control on or before
Completion then this agreement is voidable at the option of the Purchaser.
	 
	 	16.3.	 	This clause 16 enures solely for the benefit of the Purchaser.

	17.	 	Employees of the Company

	 	17.1.	 	Subject to any other rights or obligations under this agreement, the
employment of all employees of the Company identified in Schedule 11 will continue on
the current terms and conditions, provided they comply with the law.
	 
	 	17.2.	 	In consideration for the key personnel being a party to this agreement, the
Purchaser will enter into the contracts of employment or contractor agreements with
them.

	18.	 	Completion of the transfer of the Shares

	 	18.1.	 	Completion will take place on 31 October 2005 at the offices of the Vendors
solicitors Company or at any such other place or time that the parties may mutually
agree.
	 
	 	18.2.	 	The Purchaser is not obligated to complete this agreement unless the Vendors
transfer the Shares to the Purchaser at Completion and:

	 	18.2.1.	 	if the Vendors fail to transfer all of their Shares, then this agreement is
voidable at the option of the Purchaser; and
	 
	 	18.2.2.	 	clause 18.2.1 solely enures for the benefit of the Purchaser.

	 	18.3.	 	At Completion the Vendors must:

	 	18.3.1.	 	transfer the Shares in such form as is necessary for the Purchaser to
establish legal and beneficial ownership in accordance with the laws of the
State of New South Wales and under the Corporations Act 2001;
	 
	 	18.3.2.	 	deliver to the Purchaser the common seal (if any), seal register (if any),
certificate of incorporation or registration, asset register, corporate
register, minutes of meetings, all other registers, tax returns, business
papers and files, Financial Reports (for all periods from the incorporation of
the Company to the Effective Date), budgets and all books of accounts,

11

 

	 	 	 	ledgers, records, documents and other business papers of any kind of the
Company;
	 
	 	18.3.3.	 	deliver to the Purchaser all keys (and other access devices) to business
premises used by the Company not already within the control of
Purchaser;
	 
	 	18.3.4.	 	deliver to the Purchaser written and duly executed resignations with effect
from the Completion of all Directors and Company Secretaries or auditor of
the Company.
	 
	 	18.3.5.	 	deliver to the Purchaser all cheque books of the Company;
	 
	 	18.3.6.	 	deliver to the Purchaser all other documents identified in the Completion
Agenda as documents to be delivered by the Vendors at Completion; and
	 
	 	18.3.7.	 	procure that a meeting of the Directors of the Company (and of each of the
Subsidiaries) is held at which the following business is conducted:

	 	18.3.7.1.	 	the persons nominated by the Purchaser to be officers of the
Company are appointed in accordance with such nominations;
	 
	 	18.3.7.2.	 	the resignation of those officers nominated by the Purchaser are
tabled and accepted; and
	 
	 	18.3.7.3.	 	all such additional business identified for that meeting in the
Completion Agenda is conducted;

	 	18.4.	 	At Completion the Purchaser must:

	 	18.4.1.	 	deliver all documents identified in the Completion Agenda as documents to be
delivered by Purchaser at Completion;
	 
	 	18.4.2.	 	pay the first payment of the Initial Instalment in accordance with clauses 6
and 7; and
	 
	 	18.4.3.	 	pay the Security Deposit in to the Escrow Account in accordance with clause 12

	 	18.5.	 	For the avoidance of any doubt, the Vendors may deliver items referred to in
clause 18.3 by leaving those items at the Company’s principal place of business or
such other place, as the parties may agree.
	 
	 	18.6.	 	On Completion, the beneficial ownership of and risk in the Shares will pass to
Purchaser with immediate effect.
	 
	 	18.7.	 	The requirements of clauses 18.3 and 18.4 are interdependent and no delivery
or payment will be deemed to be made until all deliveries and payments have been made.
All actions at Completion will be deemed to take place simultaneously.
	 
	 	18.8.	 	Prior to Completion the Vendors and the Guarantors will each release the
Company including its subsidiaries (or procure the release of the Company and
subsidiaries) from all loans (including interest), royalties and any other sums owed by
the Company to the Vendors or their associates or related entities.

12

 

	 	18.9.	 	The Vendors and the Guarantors must ensure that the internal debts released in
accordance with clause 18.8 and any debts forgiven and released are written off in
all Financial Reports prior to Completion, and must provide a letter (to the
Purchaser at Completion) addressed to the Purchaser from each Vendors
confirming the matters in clause 18.8.

	19.	 	Dispute resolution and appointment of Expert

	 	19.1.	 	In the event of any disagreement or dispute notified by the Purchaser to the
Vendors (or by the Vendors to the Purchaser) in relation to:

	 	19.1.1.	 	the amount of the second payment of the Initial Instalment;
	 
	 	19.1.2.	 	the obligation of the Purchaser to make a pre-payment of the Earn Out
Instalment in accordance with clause 8; or
	 
	 	19.1.3.	 	the amount of the Earn Out Instalment,

	 	 	 	the parties shall negotiate in good faith in order to resolve the disagreement or
dispute.

	 	19.2.	 	If the parties cannot resolve a disagreement or dispute within 7 days of the
relevant disagreement or dispute being notified, the parties must
use reasonable endeavours to promptly agree on the appointment of an independent
Expert.
	 
	 	19.3.	 	If the parties are unable to agree on the appointment of an Expert within 7
days of either party suggesting a person to the other, the Expert will be an
independent accountant nominated at the request of either party by the President for
the time being of the Institute of Chartered Accountants.
	 
	 	19.4.	 	The Expert is required to prepare a written decision and give notice
(including a copy) of the decision to the parties within a maximum of 21 days of the
matter being referred to the Expert.
	 
	 	19.5.	 	The parties are entitled to make submissions to the Expert and will provide
(or procure that others provide) the Expert with such assistance and documents as the
Expert reasonably requires for the purpose of reaching a decision.
	 
	 	19.6.	 	The Vendors and Purchaser must supply each other with all information and give
each other access to all documentation and personnel as is, in all cases, reasonably
required to make a submission under this clause.
	 
	 	19.7.	 	The Expert acts as an expert and not as an arbitrator and the Expert’s written
decision on the matters referred is, save for manifest error, final and binding.
	 
	 	19.8.	 	The costs of any reference to an Expert are to be borne as to 50 per cent by
the Vendors (in proportion to their Relevant Proportions) and as to 50 per cent by the
Purchaser.

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	20.	 	Goods and services tax

	 	20.1.	 	In this clause, references to the terms “supply of a going concern”, “taxable
supply”, “consideration”, “value” and “registered” have the same meaning as those
expressions in the GST Act.
	 
	 	20.2.	 	If the Vendors become liable to pay any GST in relation to any supply made
under this agreement, then the Purchaser must pay to the Vendors an additional amount
equal to the GST payable on or for the supply. The Vendors must deliver to the
Purchaser a valid tax invoice in respect of the supply at the time of payment. Payment
of the additional amount will be made at the same time as payment for the supply as
otherwise required to be made in connection with this agreement.
	 
	 	20.3.	 	To the extent that the Vendors make a taxable supply in connection with this
agreement, except where express provision is made to the contrary, and subject to this
clause 20, the consideration payable by the Purchaser under this agreement represents
the value of the taxable supply for which payment is to be made.
	 
	 	20.4.	 	If the Vendors make a taxable supply in connection with this agreement for a
consideration which, under clause 20 represents its value, then the Purchaser being
liable to pay for the taxable supply must also pay, at the same time and in the same
manner as the value is otherwise payable, the amount of any GST payable in respect of
the taxable supply.
	 
	 	20.5.	 	A party’s right to payment under clause 20 is subject to a valid tax invoice being
delivered to the party liable to pay for the taxable supply.

	21.	 	Warranties

	 	21.1.	 	The Purchaser enters into this agreement on the basis of, and in reliance on,
the Warranties and the due diligence which it has conducted on the Company and the
Business. The Purchaser acknowledges that:

	 	21.1.1.	 	the Warranties are the only warranties given by the Vendors in relation
to the Transaction and are the only warranties required by the Purchaser;
	 
	 	21.1.2.	 	all other warranties, representations, undertakings, promises
or assurances in each case whether express or implied, in writing or oral, are
excluded to the fullest extent permitted by law; and
	 
	 	21.1.3.	 	no warranty or representation, express or implied, is given in relation to
any information or expression of intention or expectation nor any forecast,
budget, or projection contained in or referred to in the Due Diligence
Material;
	 
	 	21.1.4.	 	except as provided by law, it shall have no right or remedy in respect of
any warranty, representation, undertaking, promise or assurance (made by any
person whether of not a party to this agreement) which is not included within
the Warranties).

	 	21.2.	 	Subject only to clauses 22 and 23, the Vendors give the Warranties in favour
of the Purchaser severally and in their Relevant Proportions only as at the date of
this

14

 

	 	 	 	agreement. Each of the Warranties is to be construed independently of the
others and is not limited by reference to any other Warranty. Each of the
Disclosures is to be construed independently of the others and is not limited by
reference to any individual Warranty or Disclosure.
	 
	 	21.3.	 	The Vendors and the Guarantors acknowledge that the Purchaser has relied
on the Warranties in entering into this agreement.
	 
	 	21.4.	 	The Warranties provided under this agreement are valid for a period of 4 years from
Completion except for:

	 	  21.4.1.	 	tax warranties, which continue for a period of 5 years from Completion;
and
	 
	 	  21.4.2.	 	corporate warranties, which continue for a period of 7 years
from Completion.

	 	 	 	The Purchaser may not make any claim for breach of a Warranty after the expiry of
the periods referred to above.

	 	21.5.	 	For the purposes of this agreement:

	 	21.5.1.	 	warranties in clauses 4, 6.1,11, 15 and 17 in schedule 3, are tax
warranties; and
	 
	 	21.5.2.	 	warranties in clauses 1, 2, 3, 5, and 11 in schedule 3, are corporate
warranties.

	22.	 	Limitation of liability for Claims

	 	22.1.	 	The liability of the Vendors under this agreement is capped in each case at
the aggregate amounts equal to the following percentages of the Purchase Price:

	 	22.1.1.	 	First Vendor 30.77%;
	 
	 	22.1.2.	 	Second Vendor 19.23%;
	 
	 	22.1.3.	 	Third Vendor 45.24%;
	 
	 	22.1.4.	 	Fourth Vendor 4.76%;

	 	 	(“Relevant Proportions”). The Vendors obligations under clause 21 are limited to
repayment of the actual amount received by them in respect of the Purchase Price.

	23.	 	Payment of Claims

	 	23.1.	 	‘Entitlement’ means an amount that the Purchaser is entitled to recover
pursuant to a judgment, settlement, agreement or award in respect of a Claim.
	 
	 	23.2.	 	Subject to clause 22, the Purchaser may recover an Entitlement:

	 	23.2.1.	 	immediately, from each Vendor up to the amount that that Vendor has actually
received from the Purchaser on account of the Purchase Price; and

15

 

	 	23.2.2.	 	if that is not sufficient to satisfy the
Entitlement — by keeping amounts that later fall due
for payment on account of the Purchase Price.

	 	23.3.	 	The Guarantors, jointly and severally, guarantee
payment by the Vendors of all sums due or that become
due under clause 21. The liability of the Guarantors
under this clause is capped at an aggregate amount equal
to 75% of the Purchase Price. The Guarantors obligations
under this clause are limited to repayment of the
amounts received by both the First Vendor and the Third
Vendor in accordance with clause 22.
	 
	 	23.4.	 	The liability of the Vendors in respect of any
Claim for breach of a Warranty is reduced to the extent
that:

	 	23.4.1.	 	the fact, matter or circumstance giving rise to
the Claim has been disclosed in the Disclosure
Schedule;
	 
	 	23.4.2.	 	a reserve in respect of the liability which is the
subject of the Claim is made in the Accounts; or
	 
	 	23.4.3.	 	the amount of any Claim in respect of the breach
is less than $10,000;
	 
	 	23.4.4	 	the Claim has arisen directly as a result of or in
consequence of any voluntary act, omission, transaction
or arrangement by the Purchaser after the date of this
agreement or
	 
	 	23.4.5.	 	the liability is contingent only, unless and until
such liability becomes an
actual liability and becomes due and payable;
	 
	 	23.4.6.	 	the Claim is a result of or in respect of, or
where the Claim arises from any increase in the rate of
Taxation liable to be paid or any imposition of
Taxation not in effect at the date of this agreement;
or
	 
	 	23.4.7.	 	the Purchaser has not complied with clause 24;
	 
	 	23.4.8.	 	the Claim occurs or is increased as a result of
legislation not in force or in effect at the date of
this agreement;
	 
	 	23.4.9.	 	the Purchaser is aware of any fact, matter or
thing that it should reasonably know constitutes, or
would be reasonably expected with the lapse of time to
constitute, a breach of that Warranty.

	 	23.5.	 	Despite anything to the contrary:

	 	23.5.1.	 	the limitation of liability in clauses 22 and
23.3 do not apply to a party with respect to a claim
under the Warranties which arises or is increased as a
result of an act of fraud by the relevant party;
	 
	 	23.5.2.	 	any payment made in respect of a Claim for breach
of the Warranties shall be deemed to be a reduction of
the Purchase Price;
	 
	 	23.5.3.	 	the Guarantors liability in clause 23.3 is joint
and several; and
	 
	 	23.5.4.	 	the Vendors liability in clause 22 is several
only (in their Relevant Proportions) and not joint and
several.

16

 

	 	23.6.	 	In no circumstances is the
Purchaser liable for any indirect,
secondary or consequential loss or
loss of income that anyone may
suffer.

	24.	 	Conduct of claims

	 	24.1.	 	If the Purchaser becomes aware of anything which
is or may be reasonably likely to give rise to a Claim
under the Warranties it must notify the Vendors in
writing, within 10 Business Days after it has first come
to the Purchaser’s attention (‘a Claim Notice’), setting
out the act, matter or thing relied on as giving rise to
the Claim, the
Warranty the subject of the Claim and all relevant
details of the Claim in so far as they are available to
the Purchaser.
	 
	 	24.2.	 	If a Claim Notice relates to an actual or
threatened Claim from a third party (a “Third Party
Claim”), the Purchaser may take such actions as the
Purchaser may decide about the Third Party Claim,
including the right to negotiate, defend and/or settle
the Third Party Claim and to recover costs incurred as a
consequence of the Third Party Claim from any person
if:

	 	24.2.1.	 	the Purchaser at reasonable and regular
intervals provides the Vendors with written reports
concerning the conduct, negotiation, control, defence
and/or settlement of the Third Party Claim, and must
not settle (subject to clause 24.3) the Third Party
Claim without the prior approval of the Vendors in
accordance with clause 24.3;
	 
	 	24.2.2.	 	the Purchaser consults with the Purchaser on
all issues and matters of material significance in
relation to the conduct, negotiation and settlement of
the Third Party Claim; and

	 	24.3.	 	A request by the Purchaser for the Vendors’
approval to settle a Third Party Claim pursuant to
clause 24.2.1 must be made in writing and contain in
reasonable detail the terms of the proposed settlement.
The Vendors must respond to a request for approval
within 14 days of receipt of the request (as determined
in accordance with clause 32) and must not unreasonably
withhold its approval. If the Vendors, acting
reasonably, do not approve the proposed terms of
settlement of the Third Party Claim within the 14 day
approval period, the Vendors and the Purchaser must use
their best endeavours to agree terms on which the
Vendors’ approve settlement of the Third Party
Claim.
	 
	 	24.4.	 	The Purchaser must itself take and, to the
extent reasonably practicable having regard to its
contractual obligations with the Vendors (whether under
this agreement or otherwise), must procure from
Completion that the Company takes all reasonable steps
to mitigate any loss which arises due to a breach by
the Vendors of any provision of this Agreement
including any breach of Warranty.

	 
	 	24.5.	 	If any payment in respect of a Claim under the
Warranties is made to the Purchaser by or on behalf of
the Vendors and after the payment is made the Purchaser
or the Company receives any benefit or credit in
relation to the subject matter of the Claim (including
payment under any insurance policy), then the
Purchaser:

	 	24.5.1.	 	must immediately notify the Vendors of the benefit or credit; and

17

 

	 	24.5.2.	 	pay to the Vendors an amount
equal to the amount (net of expenses
and Taxation) of the benefit or
credit received by the Purchaser or
the Company (as the case may
be).

	25.	 	Restrictions on Vendors and Guarantors

	 	25.1.	 	For the purposes of this clause 25, Restraint Period means:

	 	25.1.1.	 	24 months after Completion;
	 
	 	25.1.2.	 	18 months after Completion;
	 
	 	25.1.3.	 	12 months after Completion;
and
	 
	 	25.1.4.	 	9 months after Completion.

	 	25.2.	 	The Vendors and the Guarantors may not (either
individually or together) during the Restraint Period, in
any geographic areas (within Australia) in which any
business of the Company was carried on at the date of
Completion, carry on or be employed, engaged, assist, or
be interested in any business which would be in
competition with any part of the business of the Company
as the business was carried on at Completion other than in
their capacity as employees of the Company.
	 
	 	25.3.	 	The Vendors and the Guarantors may not during the
Restraint Period, deal with consult to, or seek the custom
of any person (with a view to promoting or selling
products and or services which are the same or similar or
substitutable to those of the Company) that is at
Completion, or that has been at any time during the period
of 12 months immediately preceding that date, a client or
customer or a prospective client or customer of the
Company.
	 
	 	25.4.	 	The Vendors and the Guarantors may not at any time
during the Restraint Period or at anytime before:

	 	25.4.1.	 	offer employment to, enter into a contract for the
services of, or attempt to entice away from the Company,
any individual who is at the time of the offer or
attempt, and was at Completion, an employee holding an
executive or managerial position with the Company or is
one of the key personnel; or
	 
	 	25.4.2.	 	procure or facilitate the making of any such offer
(in clause 25.4.1) or attempt by any other person.

	 	25.5.	 	The Vendors and the Guarantors may not, at any time
after Completion, use in the course of any business:

	 	25.5.1.	 	the words:

	 	25.5.1.1.	 	T3;
	 
	 	25.5.1.2.	 	T3 Communications Partners;
	 
	 	25.5.1.3.	 	T3 Technology Solutions;
	 
	 	25.5.1.4.	 	T3 Rewards; and
	 
	 	25.5.1.5.	 	T3 Communications.

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	 	25.5.2.	 	any trade or service mark, business or domain name,
design or logo which, at Completion, was or had been used by the
Company or any of its Related Entities;
	 
	 	25.5.3.	 	any of the Company’s intellectual property rights; or

anything which is, in the reasonable opinion of Purchaser, capable of
confusion with such words, mark, name, design or logo.

	 	25.6.	 	Nothing in clause 25.2 prevents the Vendors and
the Guarantors from holding, for investment purposes
only not more than 5% of any class of shares or
securities of any company whose securities are traded
on Australian Stock Exchange or any Prescribed
Financial Market (as defined by the Corporations Act
2001) whether or not that company is in competition
with the Company or any part of its business.
	 
	 	25.7.	 	Each of the covenants in this clause is
considered fair and reasonable by the parties.
	 
	 	25.8.	 	The consideration for the undertakings contained
in this clause is included in the Purchase Price.
	 
	 	25.9.	 	The Vendors and the Guarantors must not procure
another party to do anything that the Vendors and
Guarantors are prohibited from doing under this
agreement.
	 
	 	25.10.	 	Where the Vendors or the Guarantors contravene
clause 25.9, it is deemed to be a breach of the
restraints in this clause 25 and of this
agreement.
	 
	 	25.11.	 	The restrictions and covenants in this clause 25
are only applicable in the geographic area of
Australia.
	 
	 	25.12.	 	The covenants in this clause 25 are in addition
to and not instead of any additional obligation which
may be contained in any contractors agreement or
contract of employment either with the Purchaser or the
Company.
	 
	 	25.13.	 	For the purpose of this clause 25, any reference
to the Vendors includes the Restrained Party.

	26.	 	Confidentiality and announcements

	 	26.1.	 	Each party must keep confidential the existence of
this agreement and all information about the other
party’s Group (as the Group is immediately before
Completion) and about the Company and use the
information only for the purposes contemplated by this
agreement. For the purposes of this agreement,
“confidential information” includes any information of a
party which the other party knows or should know is
confidential to the other party, for as long as it
remains confidential, or would have remained
confidential except for a wrongful disclosure by the
first party.
	 
	 	26.2.	 	None of the parties are required to keep
confidential or to restrict their use of:

	 	26.2.1.	 	Confidential Information that is or becomes
public knowledge other than as a direct or indirect
result of the Confidential Information being disclosed
in breach of this agreement;

19

 

	 	26.2.2.	 	Confidential Information that
that is known to the relevant party
before the date of this agreement
and that is not under any obligation
of confidence or secrecy
	 
	 	26.2.3.	 	information that the parties
agree in writing is not Confidential
Information; and
	 
	 	26.2.4.	 	Confidential Information that
the relevant party finds out from an
unconnected third party which is not
disclosed by the third party in
breach of any obligation of
confidence or secrecy.

	 	26.3.	 	The Purchaser does not have to keep confidential or
restrict its use of confidential information:

	 	26.3.1.	 	about the Company after Completion or before
Completion where there is a legal requirement (including
any rules of a stock exchange) for disclosure; or
	 
	 	26.3.2.	 	that is known to the Purchaser before the date of
this agreement and that is not under any obligation of
confidence.

	 	26.4.	 	The parties may disclose confidential information:

	 	26.4.1.	 	to such employees, professional advisers,
consultants, or officers of its Group as are reasonably
necessary to advise on this agreement, or to facilitate
the Transaction, if the disclosing party procures that
the people to whom the information is disclosed keep it
confidential as if they were that party; or
	 
	 	26.4.2.	 	with the other parties’ written consent; or
	 
	 	26.4.3.	 	to the extent that the disclosure is required:

	 	26.4.3.1.	 	by law or regulation; or
	 
	 	26.4.3.2.	 	by a regulatory or statutory authority; or
	 
	 	26.4.3.3.	 	to make any required filing with, or obtain any
authorisation from, a regulatory body, or a tax
authority; or
	 
	 	26.4.3.4.	 	under any arrangements in place under which
negotiations relating to terms and conditions of
employment are conducted;
or
	 
	 	26.4.3.5.	 	to protect the disclosing party’s interest
in any legal proceedings,

but will use reasonable endeavours to consult the other party and to take
into account any reasonable requests it may have in relation to the disclosure
before making it.

	 	26.5.	 	Each party must supply the other with any
information about itself, its Group or this agreement as
any other may reasonably require for the purposes of
satisfying the requirements of a law or regulation,
regulatory body or securities exchange to which the
requiring party is subject.

20

 

	 	26.6.	 	This clause 26 will continue to have effect following Completion.
	 
	 	26.7.	 	Despite anything to the contrary and following Completion, the Purchaser may
disclose any confidential information concerning the Company, and this agreement as it
deems appropriate except for the individual identity and payments made to the Vendors.

	27.	 	Further assurance
	 
	 	 	Without prejudice to clause 18.6 (Vendors to give Purchaser title), each party will promptly
execute and deliver all such documents, and do all such things, as the other party may (at its
own cost) from time to time reasonably require for the purpose of giving full effect to the provisions of this agreement.
	 
	28.	 	Assignment

	 	28.1.	 	Except as agreed in writing by the parties, no person may assign, or grant
any security interest over, any of its rights under this agreement or any document
referred to in it.

	29.	 	Whole agreement

	 	29.1.	 	This agreement, and any documents referred to in it, constitute the whole
agreement between the parties and supersede any arrangements, understanding or previous
agreement between the parties or any members of the Groups to which the parties belong
relating to the subject matter they cover.
	 
	 	29.2.	 	Each party acknowledges that in entering into this agreement, and any documents
referred to in it, it does not rely on, and shall have no remedy in respect of, any
statement, representation, assurance or warranty of any person other than as
expressly set out in this agreement or those documents.
	 
	 	29.3.	 	Nothing in this clause operates to limit or exclude any liability for fraud.

	30.	 	Variation and waiver

	 	30.1.	 	A variation of this agreement must be in writing and signed by or on behalf of
all parties.
	 
	 	30.2.	 	A waiver of any right under this agreement is only effective if it is in
writing and it applies only to the person to which the waiver is addressed and the
circumstances for which it is given.
	 
	 	30.3.	 	A person that waives a right in relation to one person, or takes or fails to
take any action against that person, does not affect its rights against any other
person.
	 
	 	30.4.	 	Unless specifically provided otherwise, rights arising under this agreement are
cumulative and do not exclude rights provided by law.

21

 

	31.	 	Costs

	 	31.1.	 	Unless otherwise provided, all costs in connection with the negotiation,
preparation, execution and performance of this agreement, and any documents referred to
in it, will be borne by the party that incurred the costs.
	 
	 	31.2.	 	The Purchaser agrees and acknowledges that certain expenses connected with the
preparation of the Disclosure Schedule have been borne by the Company. The Vendors
confirm that the provision of such financial assistance has not materially prejudiced
the Vendors or the creditors of the Company.
	 
	 	31.3.	 	The Purchaser is responsible for the payment of any stamp duty that arises
from its acquisition of shares under this agreement.

	32.	 	Notices

	 	32.1.	 	A notice given under this agreement must be:

	 	32.1.1.	 	in writing in the English language;
	 
	 	32.1.2.	 	sent for the attention of the person, and to the address, or fax number,
given in this clause (or such other address, fax number or person as the party
may notify to the others, such notice to take effect 5 days from the notice
being received); and
	 
	 	32.1.3.	 	delivered personally; or
	 
	 	32.1.4.	 	sent by fax; or
	 
	 	32.1.5.	 	sent by post, recorded delivery or registered post, or if the notice is to
be served by post outside the country from which it is sent by registered
airmail.

	 	32.2.	 	The addresses for service of
notice are:

	 	32.2.1.	 	Purchaser
	 
	 	 	 	For the attention of: Mr Andrew Tyrrell, Finance Director, Pacific Internet
(Australia) Pty Ltd
	 
	 	 	 	Address: Level 1, 1 Southbank Blvd, Southbank 3006
	 
	 	 	 	Fax: 03 9698 4833
	 
	 	 	 	Email: andrew tyrrell@pacific.net.au
	 
	 	 	 	And
	 
	 	 	 	Head of Group Legal / Company Secretary
	 
	 	 	 	Pacific Internet Ltd
	 
	 	 	 	Address: 89 Science Park Drive

               #02-05/06 The Rutherford

               Singapore 118261
	 
	 	 	 	Fax: +65 - 68725912

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	 	32.2.2.	 	Vendors
	 
	 	 	 	For the attention of: Carlos Perez
	 
	 	 	 	Address: Level 6, 97 Pacific Hwy, North Sydney 2060
	 
	 	 	 	Email: carlos.perez@t3.net.au
	 
	 	 	 	And
	 
	 	 	 	Claudio Tropea
	 
	 	 	 	Address: Level 6, 97 Pacific Hwy, North Sydney 2060
	 
	 	 	 	Email: ctropea@mbt.com.au

	 	32.3.	 	A notice is deemed to have been received:

	 	32.3.1.	 	if delivered personally, at the time of delivery;
	 
	 	32.3.2.	 	in the case of fax, at the time of transmission;
	 
	 	32.3.3.	 	in the case of post, recorded delivery or registered post, 48 hours from the
date of posting;
	 
	 	32.3.4.	 	if deemed receipt under the previous paragraphs of this sub-clause is not
within business hours (meaning 9 am to 5.30 pm Monday to Friday on a day that is
not a public holiday in the place of receipt), when business next starts in the
place of receipt.

	 	32.4.	 	To prove service it is sufficient to prove that the notice was transmitted by
fax to the fax number of the party or, in the case of post, that the envelope
containing the notice was properly addressed and posted.

	33.	 	Acknowledgments

	 	33.1.	 	The Purchaser acknowledges receipt of the Due Diligence Material.
	 
	 	33.2.	 	Despite anything to the contrary the receipt of the Due Diligence Material is
not a disclosure against any of the warranties in this Deed.

	34.	 	Interest on payments

	 	34.1.	 	Where a sum is required to be paid under this agreement but is not paid on the
date the parties agreed, the person due to pay the sum must also pay an amount equal
to interest on that sum for the period beginning with that date and ending with the
date the sum is paid.
	 
	 	34.2.	 	The rate of interest will be 2% per annum above the base lending rate for the
time being of Australia & New Zealand Banking Group Limited; it will accrue on a daily
basis and be compounded monthly.
	 
	 	34.3.	 	This clause is without prejudice to any claim for interest under the law.

23

 

	35.	 	Counterparts
	 
	 	 	This agreement may be executed in any number of counterparts, each of which is an original
and which together have the same effect as if each party had signed
the same document.

	36.	 	Severance

	 	36.1.	 	If any provision of this agreement (or part of a provision) is found by any
court or administrative body of competent jurisdiction to be invalid, unenforceable or
illegal, the other provisions will remain in force.
	 
	 	36.2.	 	If any invalid, unenforceable or illegal provision would be valid, enforceable
or legal if some part of it were deleted, the provision will apply with whatever
modification is necessary to give effect to the commercial intention of the parties.

	37.	 	Agreement survives completion
	 
	 	 	This agreement including the warranties (other than obligations that have already been
fully performed) remains in full force after Completion.

	38.	 	Third party rights

	 	38.1.	 	Subject to the following sub-clause, this agreement and the documents referred
to in it are made for the benefit of the parties to them and their successors and
permitted assigns and are not intended to benefit, or be enforceable by, anyone else.
	 
	 	38.2.	 	The rights of the parties to terminate, rescind, or agree to any amendment,
variation, waiver or settlement under, this agreement is not subject to the consent of
any person that is not a party to the agreement.

	39.	 	Governing law and jurisdiction

	 	39.1.	 	This agreement and any disputes or claims arising out of or in connection
with its subject matter are governed by and construed in accordance with the law of
the State of Victoria, Australia.
	 
	 	39.2.	 	The parties irrevocably agree that the courts of the State of Victoria,
Australia have exclusive jurisdiction to settle any dispute or claim that arises out
of or in connection with this agreement.

	40.	 	Interpretation

	 	40.1.	 	Dictionary

	 	 	 
	Accounts

	 	the Company’s Financial Reports contained in schedule 9 which relate to the financial year
ending 30 June 2002, 30 June 2003, 30 June 2004 and 30
June 2005 and the period from 1 July 2005 to 30
September 2005

24

 

	 	 	 
	Accounts Date

	 	30 September 2005
	 
	 	 
	Business

	 	the business conducted by the Company of selling voice and
data transmission products and services as a Carriage Service
Provider (as defined under the Telecommunications Act 1997)
	 
	 	 
	Business Day

	 	Monday to Friday excluding public holidays in the State of
Victoria
	 
	 	 
	Purchaser

	 	is the party identified in clause 2.1
	 
	 	 
	Claim

	 	any claim, notice, demand, action, proceeding, litigation,
investigation, judgment, damage, loss, cost, expense or liability
however arising whether present, unascertained, immediate, future
or contingent, whether based in contract, tort or statute and
whether involving a third party or a party to this agreement
	 
	 	 
	Completion

	 	the Completion of the sale and purchase of the Shares in
accordance with this agreement
	 
	 	 
	Completion Agenda

	 	a document in agreed form identifying the documents and
other items to be delivered by Purchaser and Vendors at Completion
and the business to be conducted at a meeting of the Company held
at Completion.
	 
	 	 
	Company

	 	T3 Communication Partners Pty Ltd ACN 099 374 580 of which
details are set out in Schedule 1.
	 
	 	 
	Contracts

	 	material contracts which the Company has with suppliers and
customers and which are identified in Schedule 12
	 
	 	 
	Control

	 	has the meaning given to it in the Corporations Act 2001
	 
	 	 
	Directors

	 	the directors of the Company from time to time
	 
	 	 
	Disclosure Schedule

	 	Schedule 6 of this agreement.
	 
	 	 
	Disclosures

	 	The disclosures against and qualifications to the Warranties
as set out in the Disclosure Schedule
	 
	 	 
	Due Diligence Material

	 	The information and documents provided to the Purchaser before
the date of this agreement, a list of which appears in Schedule 7
	 
	 	 
	Earn out Period

	 	the 12 month period commencing on the Effective Date
	 
	 	 
	Earn Out Instalment

	 	The element of the Purchase Price to be calculated in accordance
with clause 9
	 
	 	 
	EBIT

	 	earnings before interest and tax
	 
	 	 
	Effective Date

	 	1 October 2005, but if Completion:
	 
	 	 
	 

	 	(a) takes place after 31 October 2005 (but on or before 30 November
2005), the Effective Date becomes 1 November 2005; or
	 
	 	 
	 

	 	(b) takes place after 30 November 2005 (but on or before 15

25

 

	 	 	 
	 

	 	December 2005), the Effective Date becomes 1 December 2005; and
	 
	 	 
	 

	 	(c) does not take place by 15 December 2005, then the parties must
determine and agree on the Effective Date in good faith.
	 
	 	 
	encumbrance

	 	any mortgage, charge, lien, pledge, other security interest or
encumbrance (other than liens arising in the ordinary course of business
by operation of law and title retention in respect of
stock-in-trade).
	 
	 	 
	Escrow Account

	 	as defined in clause 12.4
	 
	 	 
	expert

	 	an accountant agreed by the parties or nominated in accordance with
clause 19.
	 
	 	 
	Financial Report

	 	a Statement of Financial Performance, Statement of Financial
Position and Statement of Cash Flows for the period or date
specified
	 
	 	 
	GST Act

	 	A New Tax System (Goods and Services Tax) Act 1999 (as
amended);
	 
	 	 
	Group

	 	in relation to a corporation, that corporation, and any entity
which is by virtue of Section 50 of the Corporations Act related to it
or to its holding company. Unless the context otherwise requires, the
application of the definition of Group to any company at any time will
apply to the company as it is at that time.
	 
	 	 
	Guarantors

	 	the parties identified in clause 2.3
	 
	 	 
	Initial Instalment

	 	the payments calculated in accordance with clause 7
	 
	 	 
	Intellectual
Property Rights

	 	means patents, utility models, copyright, trade marks, service
marks, trade, business and domain names, rights in trade dress or
get-up, rights in designs, rights in computer software, database rights,
topography rights, moral rights, rights in know-how (including trade
secrets and confidential information) and any other intellectual
property rights, in each case whether registered or unregistered and
including all applications for such rights, and all similar or
equivalent rights or forms of protection in any part of the world, and
includes rights to those items contained in Schedule 4.
	 
	 	 
	interest rate

	 	2% per annum above the base lending rate for the time being of
Australia & New Zealand Banking Group Limited
	 
	 	 
	internal debts

	 	the liabilities identified in clause 18.8
	 
	 	 
	Licensed
Intellectual Property
Rights

	 	Intellectual Property Rights owned by third parties and used by the
Company in connection with its Business under licence (express or
implied)
	 
	 	 
	Key Personnel

	 	Carlos Miguel Perez Sotomayor and Frank Bradicich
	 
	 	 
	Net Assets

	 	As defined by Australian Accounting Standards

26

 

	 	 	 
	Property Lease

	 	The lease of Suites 601A and 601B, Level 6, 97
Pacific Hwy, North Sydney NSW 2060 further details of
which are set out at Schedule 5 to this Agreement
	 
	 	 
	Purchaser

	 	the party identified in clause 2.1
	 
	 	 
	Purchase Price

	 	as defined in clause 6
	 
	 	 
	Purchaser’s Solicitors

	 	Dibbs Abbott Stillman Lawyers,
Level 4, 575 Bourke Street, Melbourne 3000 (Mr Erhan Karabardak)
	 
	 	 
	Registered Intellectual

Property Rights

	 	Intellectual Property Rights owned by the Company
and in relation to which the Company has been
registered as the holder or proprietor with the
appropriate authority
	 
	 	 
	Purchaser

	 	the party identified in clause 2.1
	 
	 	 
	Related Entity

	 	as defined by the Corporations Act 2001
	 
	 	 
	Related Parties

	 	in relation to a person, means that the person
has a relationship with another person of the nature
described in Section 228 of the Corporations
Act
	 
	 	 
	Relevant Proportions

	 	As defined in clause 22
	 
	 	 
	Restrained Party

	 	the party identified in clause 2.4
	 
	 	 
	Review Period

	 	As defined at clause 10
	 
	 	 
	Vendors

	 	all of the parties identified in clause 2.2
	 
	 	 
	Security Deposit

	 	as defined in clause 12.1
	 
	 	 
	Shares

	 	the fully paid share capital (regardless of the
class) of the Company as at that date of this
agreement
	 
	 	 
	Stakeholder

	 	the Purchaser’s Solicitors who holds the
Security Deposit in accordance with clause 12 of
this agreement.
	 
	 	 
	Statement of Cash
Flows

	 	as defined by Australian Accounting Standards
	 
	 	 
	Statement of Financial
Performance

	 	as defined by Australian Accounting Standards
	 
	 	 
	Statement of Financial
Position

	 	as defined by Australian Accounting Standards
	 
	 	 
	Statement of Financial
Position Acquired

	 	as detailed in Schedule 2 (as
at 31 May 2005)
	 
	 	 
	Taxation

	 	all forms of taxation including, in particular,
any charge, tax, duty, levy, impost, withholding or
liability wherever chargeable imposed for support of
national, state, federal, municipal or local
government or

27

 

	 	 	 
	 

	 	any other person in any jurisdiction and
any penalty, fine, surcharge, interest, charges or
costs payable in connection with any such
taxation.
	 
	 	 
	Transaction

	 	the transaction contemplated by this
agreement or any part of that transaction.

	 	 	 
	40.2.

	 	Clause and schedule headings do not affect the interpretation of this agreement.
	 
	 	 
	40.3.

	 	A person includes a corporate or unincorporated body.
	 
	 	 
	40.4.

	 	Words in the singular include the plural and in the plural include the singular.
	 
	 	 
	40.5.

	 	Any undertaking or agreement given by two or more parties is given by them jointly
and severally, unless a contrary intention is stated.
	 
	 	 
	40.6.

	 	A reference to one gender includes a reference to the other gender.
	 
	 	 
	40.7.

	 	A reference to a law is a reference to it as it is in force for the time being
taking account of any amendment, extension, application or re-enactment and includes any
subordinate legislation for the time being in force made under it.
	 
	 	 
	40.8.

	 	Writing or written includes faxes but not e-mail.
	 
	 	 
	40.9.

	 	Documents expressed to be “in agreed form” are documents in the form agreed by the
parties to this agreement and initialled by or on behalf of all of them for
identification.
	 
	 	 
	40.10.

	 	References to monetary amounts are references to such monetary amounts expressed in
the currency of the Commonwealth of Australia.
	 
	 	 
	40.11.

	 	Schedules to this Deed form part of it.
	 
	 	 
	40.12.

	 	References to a “party” or “parties” are references to a party or parties to this
agreement.
	 
	 	 
	40.13.

	 	The headings in this agreement are for convenience only and shall not affect its
interpretation.
	 
	 	 
	40.14.

	 	This agreement is executed as a Deed.

28

 

Execution

Executed as a deed

	 	 	 	 	 	 	 
	Signed sealed and delivered for and on
behalf of Pacific
Internet Pty Ltd ACN 085 213 690

	 	Director	 	/s/ Dennis Muscat
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Dennis Muscat	 	 
	 
	 	 	 	 	 	 
	 

	 	Director/Secretary	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	Signed sealed and delivered
for and on behalf of Cumberland
Properties Pty Ltd ACN 000 126 125

	 	Director	 	/s/ Phil Arnold
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Phil Arnold	 	 
	 
	 	 	 	 	 	 
	 

	 	Director/Secretary	 	/s/ Mark Arnold	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Mark Arnold	 	 

	 	 	 	 	 	 	 	 
	Signed sealed and delivered for
and on behalf of Evogue Pty
Ltd ACN 088 848 739

	 	Director	 	/s/ Claudio Tropea
	 	 
	 

	 	 	 	 	 	 	 
	 

	 	 	 	 	Claudio Tropea	 	 
	 
	 	 	 	 	 	 	 
	 

	/s/ Kristy Ranken	 	Director/Secretary	 	/s/ Claudio Tropea	 	 
	 

	 	 	 	 	 	 	 
	 

	KRISTY RANKEN
72 MALISON ST WYOMING
 ACCOUNTANT	 	 	 	Claudio Tropea	 	 
	 
	Signed sealed and delivered for
and on behalf of Jason Cynthia
Pty Ltd ACN 105 702 903

	 	Director	 	/s/ Frank Bradicich
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	Frank Bradicich	 	 
	 
	 	 	 	 	 	 	 
	 

	/s/ Henry Du	 	Director/Secretary	 	/s/ Frank Bradicich	 	 
	 

	 	 	 	 	 	 
	 

	HENRY DU
5/3-5 Concord Ave, Concord West 
Financial Controller	 	 	 	Frank Bradicich	 	 

29

 

	 	 	 	 	 	 	 
	Signed sealed and delivered for
and on behalf of Teide
Pty Ltd ACN 109 149 484

	 	Director	 	/s/ Carlos Miguel Perez Sotomayor
	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	Carlos Miguel Perez Sotomayor	 
	 
	 	 	 	 	 	 
	Witness

	/s/ Henry Du	 	Director/Secretary	 	/s/ Carlos Miguel Perez Sotomayor	 
	 

	 	 	 	 	 	 
	 

	HENRY DU
 5/3-5 Concord Ave, Concord West
 Financial Controller	 	 	 	Carlos Miguel Perez Sotomayor	 
	 
	Signed sealed and
delivered by Claudio Tropea

	 	 	 	/s/ Claudio Tropea
	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	Claudio Tropea	 
	 
	 	 	 	 	 	 
	 

	 	 	Witness	 	/s/ Kristy Ranken	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	KRISTY RANKEN
72 MALISON ST WYOMING
 ACCOUNTANT	 
	 
	Signed sealed and delivered
by Carlos Miguel Perez Sotomayor

	 	 	 	/s/ Carlos Miguel Perez Sotomayor
	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	Carlos Miguel Perez Sotomayor	 
	 
	 	 	 	 	 	 
	 

	 	 	Witness	 	/s/ Henry Du	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	HENRY DU	 
	 

	 	 	 	 	5/3-5 Concord Ave, Concord West	 
	 

	 	 	 	 	Financial Controller	 
	 
	Signed sealed and delivered
by Frank Bradicich

	 	 	 	/s/ Frank Bradicich
	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	Frank Bradicich	 
	 
	 	 	 	 	 	 
	 

	 	 	Witness	 	/s/ Henry Du	 
	 

	 	 	 	 	 	 
	 

	 	 	 	 	HENRY DU	 
	 

	 	 	 	 	5/3-5 Concord Ave,	 
	 

	 	 	 	 	Concord, Newhampshire	 

30

 

Schedule 1
- Particulars of the Company, Subsidiaries and directors

Part I

The Company

	 	 	 
	Name of Company

	 	T3 Communications Partners Pty Ltd
	 
	 	 
	ACN

	 	099 374 580
	 
	 	 
	Registered office

	 	Suite 601A Level 6, 97 Pacific Hwy, North Sydney 2060
	 
	 	 
	Authorised share capital

	 	10 F Class Shares, and 22107 Ordinary Shares
	 
	 	 
	Issued share capital

	 	10 F Class Shares, and 22107 Ordinary Shares
	 
	 	 
	Type of shares o

	 	Ordinary and F Class
	 
	 	 
	Registered shareholders

	 	Teide Pty Ltd ACN 109 149 484;
	 

	 	Cumberland Properties Pty Ltd ACN 000 126 125;
	 

	 	Evogue Pty Ltd ACN 088 848 739; and
	 

	 	Jason Cynthia Pty Ltd ACN 105 702 903.
	 
	 	 
	Beneficial owner of Shares
(if different)o

	 	Teide Pty Ltd ACN 109 149 484 as trustee for Cumberland
Discretionary Trust;
	 
	 	 
	Directors

	 	Carlos Miguel Perez Sotomayor and Claudio Tropea
	 
	 	 
	Subsidiaries

	 	T3 Rewards Pty Ltd ACN 103 226 946;
	 

	 	T3 Technology Solutions Pty Ltd ACN 099 404 654; and
	 

	 	T3 Communications Pty Ltd ACN 099 127 536;

31

 

Schedule 2 — Statement of Financial Position Acquired

	 	 	 	 	 	 	 	 	 
	Statement of Financial Position Acquire	 	Notes	 	 	$AUD	 
	Cash assets
	 	 	 	 	 	$	1,279,000	 
	Receivables
	 	 	 	 	 	$	1,622,000	 
	Other assets
	 	 	 	 	 	$	114,000	 
	Fixed assets
	 	 	 	 	 	$	273,000	 
	 	 
	Total assets
	 	 	 	 	 	$	3,288,000	 
	 	 
	Payables
	 	 	 	 	 	$	1,369,000	 
	Accruals
	 	 	 	 	 	$	238,000	 
	Provisions (Rewards)
	 	 	 	 	 	$	545,000	 
	Other liabilities
	 	 	 	 	 	$	147,000	 
	Provisions (Tax)
	 	 	 	 	 	$	338,000	 
	 	 
	Total liabilities
	 	 	 	 	 	$	2,637,000	 
	 	 
	Net Assets
	 	 	 	 	 	$	651,000	 
	 	 

32

 

Schedule 3
- Warranties

	1.	 	Power to sell the Company

	 	1.1.	 	The Vendors have the power and authority to enter into and perform
their obligations under this agreement.
	 
	 	1.2.	 	This agreement constitutes (or will constitute when executed) valid,
legal and binding obligations on the Vendors in the terms of the agreement.
	 
	 	1.3.	 	Compliance with the terms of this agreement will not breach or constitute
a default under any of the following:

	 	1.3.1.	 	any provision of the constitution of any of the Vendors who are not natural
persons; or
	 
	 	1.3.2.	 	any agreement or instrument to which a Vendor is a party or by which it is
bound; or
	 
	 	1.3.3.	 	any order, judgment, decree or other restriction applicable to a Vendor.

	2.	 	Shares in the Company

	 	2.1.	 	The Shares constitute 100% of the allotted and issued share capital of the
Company and are fully paid.
	 
	 	2.2.	 	Other than the Subsidiaries, the Company:

	 	2.2.1.	 	does not hold or beneficially own, and has not agreed to acquire, any
securities of any corporation;
	 
	 	2.2.2.	 	has not agreed to become a member of any partnership or unincorporated
association, joint venture or consortium (other than recognised trade
associations); or
	 
	 	2.2.3.	 	does not have outside its country of incorporation any branch or
permanent establishment.

	 	2.3.	 	The Company has not issued or agreed to issue any shares or securities in the
capita! of the Company other than the Shares.
	 
	 	2.4.	 	The Company is not under any obligation to alter the structure of its capital.
	 
	 	2.5.	 	The Vendors’ have no knowledge of any proposal to issue further shares or
securities in the Company pending Completion and will oppose any such issue.
	 
	 	2.6.	 	The Shares are held legally and beneficially by the Vendors and there is no
agreement to alter that shareholding, whether legally or beneficially, other than
expressly contemplated by this agreement.
	 
	 	2.7.	 	No person has the right (actual or contingent) at any time to call for the
allotment, issue, redemption, cancellation, sale or transfer of any share or loan
capital of the

33

 

Company under any option or other agreement or to convert any shares or options or security into share capital or share capita! of a different class.

	 	2.8.	 	No shares in the capital of the Company have been issued and no transfer of shares in the capital of the Company have been registered otherwise than in accordance
with the replaceable rules of the Corporations Act 2001 at the relevant time and from
time to time.
	 
	 	2.9.	 	The Company has not at any time purchased or redeemed or agreed to purchase or
redeem any shares of any class of its share capital or otherwise reduced or agreed to
reduce its issued share capital or any class thereof.
	 
	 	2.10.	 	No commitment has been given to create any Encumbrance affecting the Shares or
any unissued shares or debentures or other unissued securities of the Company.

	3.	 	Constitutional and Corporate Documents

	 	3.1.	 	Copies of the statutory books and registers of the Company disclosed to the
Purchaser or its advisers are true, accurate and complete in all material respects and
copies of all resolutions and agreements required to be annexed or to be incorporated
in those documents.
	 
	 	3.2.	 	All statutory books and registers of the Company have been properly kept and no
notice or allegation that any of them are incorrect or should be rectified has been
received.
	 
	 	3.3.	 	All returns, particulars, resolutions and other documents which the Company is
required by law to file with or delivered to any authority in any jurisdiction
(including, in particular, one responsible for maintaining a register of companies)
have been correctly made up and filed or, as the case may be, delivered.

	4.	 	Accounts

	 	4.1.	 	The Accounts have been prepared in full Compliance with the then current
Australian Accounting Standards and the Corporations Act 2001;
	 
	 	4.2.	 	The Purchaser has entered into this agreement, among other things, on the basis
of the Accounts, which represents the true and accurate position of the Company as at
the date to which the Accounts have been prepared.

	5.	 	Solvency

	 	5.1.	 	A Vendor or the Company has not had:

	 	5.1.1.	 	a liquidator or provisional liquidator appointed;
	 
	 	5.1.2.	 	a receiver, receiver and manager, trustee, controller, official manager or
similar officer appointed;
	 
	 	5.1.3.	 	an administrator appointed whether under Part 5.3A of the Corporations Act
2001 or otherwise; or

34

 

	 	5.1.4.	 	an application made for the appointment of an administrator,
liquidator or provisional liquidator.

	 	5.2.	 	No execution, distress or similar process has been levied upon or against the
Company, the Business, or any assets of a Vendor.
	 
	 	5.3.	 	A Vendor or the Company has not,

	 	5.3.1.	 	entered into or resolved to enter into any scheme of arrangement,
composition, assignment for the benefit of, or other arrangement with its
creditors or any class of creditors; or
	 
	 	5.3.2.	 	proposed or had proposed on its behalf a re-organisation, moratorium, deed of
company arrangement or other administration involving one or more of its
creditors, or its winding or dissolution.

	 	5.4.	 	The Company has not received any demand under Section 459E of
the Corporations Act 2001 which have not been satisfied, or been taken to have failed
to comply with a statutory demand as a result of the operation of Section 459F(1) of
the Corporations Act 2001.
	 
	 	5.5.	 	The Company and each Vendor:

	 	5.5.1.	 	is able to pay its debts as and when they fall;
	 
	 	5.5.2.	 	is not insolvent or presumed to be insolvent under any law; and
	 
	 	5.5.3.	 	is not insolvent under administration as defined in Section 9 of the
Corporations Act 2001 or has not taken any action which could result in
that event.

	 	5.6.	 	A reference to Company in this warranty includes subsidiaries
of the Company.

	6.	 	Business

     Since the Accounts Date:

	 	6.1.	 	the Business has been carried on in accordance with all laws and in the
ordinary and usual course so as to maintain it as a going concern;
	 
	 	6.2.	 	there has been no materially adverse change in the financial position, assets
or liabilities of the Business as compared with the position disclosed as at the
Accounts Date;
	 
	 	6.3.	 	there has been no damage, destruction or loss (whether or not covered by
insurance) that reduces the value of the Business or the Company;
	 
	 	6.4.	 	the Company has maintained and preserved the goodwill of its suppliers,
employees, customers and others having commercial dealings with it;
	 
	 	6.5.	 	Since the Accounts Date the Company has not:

	 	6.5.1.	 	sold, transferred, leased or otherwise disposed of any asset other than at
fair market value; or

35

 

	 	6.5.2.	 	other than in the ordinary course of Business, sold any asset
for a consideration in excess of $100,000.00; or
	 
	 	6.5.3.	 	cancelled or waived or released or discounted in whole or in part any
material debt, suite, demand, claim or right; or
	 
	 	6.5.4.	 	other than in the ordinary course of the Business, purchased, leased,
or otherwise acquired any asset relating to the Business or agreed to do so, for a consideration in
excess of $20,000; or
	 
	 	6.5.5.	 	materially altered or agreed to materially alter the terms of
service of any officer or employee.

	7.	 	Assets

	 	7.1.	 	The Company owns the assets disclosed in the Accounts which are free
from any Encumbrance and are in the possession or under the control of the Company.

	8.	 	Property Lease

	 	8.1.	 	The Vendors have provided to the Purchaser complete and accurate
material particulars of the Property Lease including all options for renewal, the current rent
payable and the dates and conditions of future rent reviews.
	 
	 	8.2.	 	All options of renewal of the Property Lease are valid and
enforceable.
	 
	 	8.3.	 	Each Vendor knows of no reason why the Property Lease should not be
renewed or a fresh lease granted on terms as favourable to the Company as existing terms of the
Property Lease.
	 
	 	8.4.	 	There are no circumstances known to a Vendor that would either entitle
or require a landlord or any other person to exercise any power of entry or possession or which
might restrict or terminate the continued possession or occupation the premises which are the
subject of the Property Lease.
	 
	 	8.5.	 	The Company is not engaged in any negotiation for review of the rent
payable under the Property Lease.

	9.	 	Contracts

	 	9.1.	 	The Vendors have provided to the Purchaser complete and accurate (in
every material respect) descriptions of all of the Contracts.
	 
	 	9.2.	 	The Contracts are all of the business contracts material to the
operation of the Business in the ordinary course.
	 
	 	9.3.	 	Each Contract:

	 	9.3.1.	 	is valid, binding and enforceable against the Company and, to the best of Vendors’
knowledge, information and belief all other parties to it;
	 
	 	9.3.2.	 	is at arm’s length and within the ordinary course of conduct of the Business;

36

 

	 	9.3.3.	 	is being properly performed by the Company and, to the best of the Vendors’
knowledge, information and belief, all other parties to it;
	 
	 	9.3.4.	 	does not entitle any person to a commission, remuneration, royalty or payment of
any nature from the Company calculated by reference to the whole or part of the turnover, profit or
sales of the Company — unless otherwise disclosed in writing to the Purchaser prior to Completion
or included in the accounts;
	 
	 	9.3.5.	 	is not capable of termination because of the sale of the Company, and the
Company has not given or received any notice of termination;

	 	9.4.	 	Each Contract:

	 	9.4.1.	 	is capable of performance by the Company on time without undue or unusual
expenditure or effort; and
	 
	 	9.4.2.	 	to the best of the Vendors’ knowledge, information and belief, is not otherwise
of a nature or magnitude or length which is unusual or unduly onerous.

	 	9.5.	 	All offers, tenders or quotations made by the Company and still
outstanding and capable of acceptance by a third party were made in the ordinary course of business.
	 
	 	9.6.	 	The Company is not, and so far as each Vendor is aware no other party,
is in breach of any obligation or in default of any of the Contracts and there are no facts or circumstances which may result in a breach.

	10.	 	Intellectual Property Rights

	 	10.1.	 	Schedule 4 sets out a complete and accurate list of all Registered
Intellectual Property Rights and Licensed Intellectual Property Rights.
	 
	 	10.2.	 	The Company holds the Registered Intellectual Property Rights
identified in Part 1 of Schedule 4 in its name as the sole legal and beneficial owner, and free of
all Encumbrances and any third party interest.
	 
	 	10.3.	 	Each of the Intellectual Property Rights is valid and enforceable and
not subject to, and there are no pending or threatened proceedings for, in opposition, revocation,
cancellation, rectification or amendment.
	 
	 	10.4.	 	The Company has taken or caused to be taken all necessary steps to
protect and defend the Registered Intellectual Property. Rights including timely renewal of all
Registered Intellectual Property Rights.
	 
	 	10.5.	 	Neither the Intellectual Property Rights nor any product, substance or
other material sold, used or employed by the Company:

	 	10.5.1.	 	to the best of the Vendors’ knowledge, information and belief, infringes the
rights of any other person;

37

 

	 	10.5.2.	 	is the subject of any claims or any pending proceedings for alleged infringements
of intellectual property rights, and the Vendors have not settled any claims or proceedings
alleging such infringement; or
	 
	 	10.5.3.	 	to the best of the Vendors’ knowledge, information and belief, is the subject of
any threatened proceedings for intellectual properly rights.

	 	10.6.	 	There are, to the best of the Vendors’ knowledge, information and
belief, no infringements of the Intellectual Property Rights and the Vendor has not made any claims
or commenced or threatened to commence proceedings or settled any claims or proceedings alleging
infringement.
	 
	 	10.7.	 	With the exception of the Licensed Intellectual Property the Company
does not:

	 	10.7.1.	 	pay or have any requirement to pay any royalty or any other payment to any third
party; or
	 
	 	10.7.2.	 	require the permission or consent of any third party;

	 
	 	   for the use of the Intellectual Property Rights.

	 	10.8.	 	All registration and renewal fees regarding the Intellectual Property
Rights due on or before Completion have been paid in full.
	 
	 	10.9.	 	The Company has not entered into any agreement (whether legally
enforceable or not) for the licensing, or for permitting the use or exploitation of the
intellectual Property Rights which prevents, restricts or otherwise inhibits the freedom of the
Company to use or exploit the Intellectual Property Rights.

	11.	 	Official Investigations

	 	11.1.	 	To the best of the Vendors’ knowledge, information and belief, the
Company is not subject to any official investigation or inquiry and the Vendors are not aware of
any facts which are likely to give rise to any investigation or inquiry.

	12.	 	Litigation

	 	12.1.	 	The Company is not involved in any proceedings in progress or pending, or
aware of any threatened proceedings (unless disclosed prior to Completion), by or against or
concerning the Company or any of its assets.
	 
	 	12.2.	 	There are no unfulfilled or unsatisfied judgments outstanding against the
Company.

	13.	 	Insurance

	 	13.1.	 	Each insurance contract under which the Company is a potential
beneficiary is valid and enforceable and there is no fact or circumstances known to a Vendor which
would lead to any of them being prejudiced.
	 
	 	13.2.	 	There is no claim outstanding under any insurance contract and each
Vendor is not aware of any circumstances likely to give rise to a claim.

38

 

	14.	 	Personnel

	 	14.1.	 	The Vendors have disclosed to the Purchaser complete and accurate
details of:

	 	14.1.1.	 	names, job title and dates of commencement of employment for all
employees, consultants and independent contractors of the Company;
	 
	 	14.1.2.	 	all remuneration other arrangements to pay monies or provide
benefits to employees and consultants of the Company, including any allowance, bonus, commission,
share option, share entitlement and any other benefit provided by the Company or by which the
Company is bound or has agreed to provide (whether now or in the future);
	 
	 	14.1.3.	 	particulars of accrued long service leave, annual leave, sick leave
and rostered days off for all employees and consultants of the Company; and
	 
	 	14.1.4.	 	particulars of any redundancy or severance pay owing by the
Company.

	 	14.2.	 	The Company does not have any:

	 	14.2.1.	 	liability for compensation to ex-employees;
	 
	 	14.2.2.	 	obligation to reinstate or reemploy any ex-employee;
	 
	 	14.2.3.	 	knowledge of grounds for dismissal of any employee, other than
pursuant to a warning letter;
	 
	 	14.2.4.	 	policy, practice, or obligation regarding redundancy payments to
employees which is more generous than the applicable award(s) or legislation;
	 
	 	14.2.5.	 	industrial agreement or enterprise agreement (whether registered or
not) or plans to introduce such agreement, that applies to any employee;
	 
	 	14.2.6.	 	liability to pay any charge under the Training Guarantee Act 1990
and the Vendor has complied with all relevant requirements of such Act.

	15.	 	Superannuation

	 	15.1.	 	The Company does not have any accrued liability, unfunded or contingent
obligations in relation to any superannuation scheme or arrangement.
	 
	 	15.2.	 	The Company has made all occupational superannuation contributions
required under any award or prescribed industrial agreement for its employees and has satisfied all
laws. There is no superannuation guarantee charge or liability accrued or payable for any employees
of the Company (unless disclosed to the Purchaser as at the date of this agreement or included in
the Accounts).
	 
	 	15.3.	 	The Company has provided at least the minimum level of superannuation
support prescribed by the Superannuation Guarantee (Administration) Act 1992 for all employees of
the Company.

39

 

	16.	 	Industrial Relations

	 	16.1.	 	The Company is not a party to any agreement with any trade union or
employee organisation of any kind.
	 
	 	16.2.	 	There are no existing or threatened or pending industrial disputes or
paid claims involving the Company and any of its employees and there are no facts or circumstances
known to the Vendors which are likely to result in such an industrial dispute or pay claim.
	 
	 	16.3.	 	Employees of the Company are not members of any union or subject to any
industrial award or determination.
	 
	 	16.4.	 	The Company has never breached and is not in breach of any industrial
award or determination applicable to the employees of the Company.

	17.	 	Taxation

	 	17.1.	 	The Company has no liabilities in respect of any Taxation assessed,
charged or imposed (or capable of being assessed, charged or imposed) exceeding the amount provided
in the Accounts.
	 
	 	17.2.	 	The only liabilities for Taxation which have arisen since the Accounts
Date are liabilities arising out of normal business and trading
activities of the Company.
	 
	 	17.3.	 	All amounts of any Taxation required by law to be deducted by
the Company from any payment made by the Company for salary or otherwise have been, duly made to Completion.
	 
	 	17.4.	 	The Company has since its incorporation lodged, with appropriate
Government agencies all returns of or in relation to Taxation payable by the Company as and when
these should be lodged and such returns have been (and will be) made in accordance with all
requirements of all relevant legislation.
	 
	 	17.5.	 	There are no outstanding disputes, questions or demands in relation to
the Company, its assets, income or affairs or between the Company and the Commissioner of
Taxation.

	18.	 	Trusts

	 	18.1.	 	The First Vendor (“the Trustee”) has not been removed as Trustee of the
Trust as at Completion.
	 
	 	18.2.	 	The Trustee has not retired or otherwise ceased to act as Trustee of the
Trust as at Completion.
	 
	 	18.3.	 	No new or additional Trustee has been appointed to the Trust.
	 
	 	18.4.	 	If the Trust is a Unit Trust (or similar fixed trust), the Trustee will
not issue new or additional units or shares in the Trust prior to Completion.
	 
	 	18.5.	 	The Trustee is authorised and empowered under the Trust Deed to enter
into this Deed.

40

 

Schedule 4 - Intellectual Property Rights

Part I

Registered Intellectual Property Rights

Trademark Application Number 1060562 for the word ‘T3’ and the associated logo.

NSW business names:

T3 Broadband Reg No.BN97950645;

T3 Digital Reg No.BN97950634;

T3 Mobile Reg No.BN97950625;

T3 Data Reg No.BN97950618;

T3 Wireless Reg No.BN98068244; and

T3 Netphone Reg NO.BN98171704.

Domain names:

www.t3.net.au

www.t3mail.com.au

www.t3dsl.net.au

Part II

Intellectual Property Rights licensed from third parties

Not applicable

Part III

Intellectual Property Rights licensed to third parties

Not applicable

41

 

Schedule 5
- Particulars of Properties

Part I

Freehold properties

(Not applicable)

Part II

Leasehold properties

	 	 	 
	Description of the property

	 	Office
	 

	 	(601A and 601B Level 6, 97-103 Pacific Hwy, North Sydney)
	 

	 	Owner 6/97 Pacific Highway Pty Ltd ACN 111 990 053
	 
	 	 
	Registered/unregistered

	 	Registered No.AB383771C
	 
	 	 
	(and title number)
	 	 
	 
	 	 
	Contractual date of
	 	 
	 
	 	 
	termination of lease

	 	12 January 2008
	 
	 	 
	Occupier

	 	T3 Communications Pty Ltd ACN 099 127 536
	 
	 	 
	Use

	 	Commercial Office

Part III

Other real property

There are no other real property holdings

42

 

Schedule 6
- Disclosure Schedule

	1.	 	General

	 	1.1.	 	The Vendors qualify the Warranties by fully, and fairly disclosing to Purchaser in
this schedule facts and circumstances that are or may be inconsistent with the
Warranties.
	 
	 	1.2.	 	The Purchaser has no Claim in respect of any of the Warranties in relation to any
fact or circumstance disclosed in or under this schedule.

	2.	 	General disclosures

	 	2.1.	 	The matters listed in this paragraph are deemed to be Disclosed:

	 	2.1.1.	 	the contents of this agreement and all things contemplated by or required
to be done by the agreement.
	 
	 	2.1.2.	 	any fact, matter or circumstance which would have been disclosed or
revealed at the date of this Agreement or at a time immediately prior to
Completion by searches of any public register kept by ASIC under the
Corporations Act in relation to the Company or the Vendors or by searches
of any public register kept by any government or governmental, semi-
governmental, administrative or fiscal authority or body, the Trademarks
Office, the High Court of Australia and the New South Wales Registry of
the Federal Court of Australia.

	3.	 	Specific Disclosures
	 
	2.6	 	The Shares held by the First Vendor are held as trustee on behalf of the beneficial owner,
The Cumberland Discretionary Trust.
	 
	2.9	 	The Company’s obligations with regard to its overdraft facility with the Westpac Banking
Corporation are secured by a debenture incorporating a fixed and floating charge over all
of the Company’s assets and undertaking, including, any amounts unpaid on the
Company’s shares (the “Debenture”).
	 
	4.1	 	The Statement of Financial Performance for the month ending 30 September 2005 reflects
two exceptional items being:

	 	1.	 	A payment of $120,000 to Looking Glass Media Pty Ltd, one of the Company’s
dealers, which reflects an agreement made between Looking Glass Media Pty Ltd
and the Company in relation to the consequences of the sale of the Company; and
	 
	 	2.	 	A payment of $225,000 to the Company’s employees as a bonus.

	 
	Neither of these payments impact on the Company’s Net Assets as set out in the
Statement of Financial Position as at 30 September 2005.

43

 

	6.1	 	Please see the Disclosure against Warranty 4.1 in relation to Looking Glass Media Pty
Ltd.
This has not affected the financial position of the Company and the agreement with
Looking Glass Media Pty Ltd remains in place.
	 
	6.3.5	 	The Company has entered into:

	 	1.	 	A new employment contract with Carlos Miguel Perez Sotomayor; and
	 
	 	2.	 	A new consulting contract with the Fourth Vendor.

	 	 	Details of the new contracts have been disclosed to the Purchaser in the Due Diligence
Materials.
	 
	7.1	 	Please see the Disclosure against Warranty 2.9. The Company’s assets are subject to the
Debenture.
	 
	9.3.2	 	The Company entered into the Property lease with 6/97 Pacific Highway Pty Ltd (the
“Landlord”). The Landlord is the trustee of a unit trust, the units of which trust are owned as
to fifty percent by the shareholders of the Third Vendor and as to fifty percent by the First
Vendor as trustee for the Cumberland Discretionary Trust. The Property Lease is on arm’s
length terms.
	 
	9.3.4	 	The Company has the following arrangements in place:

	 	1.	 	The Company pays commissions to those of its employees involved in sales,
telemarketing and account management based on performance. The Company
has dealer agreements in place with Premier Communications Pty Ltd and Looking
Glass Media Pty Ltd. The dealers are remunerated on a commission basis. The
agreements with Premier Communications Pty Ltd and Looking Glass Media Pty
Ltd have been disclosed to the Purchaser in the Due Diligence Materials; and
	 
	 	2.	 	The Company has a discretionary profit distribution programme for its employees
and contractors. The Company’s board of directors may (at its discretion) decide to
distribute to participants in the scheme up to ten percent of net profits after tax in
any months where net profits after tax exceed $25,000. Full time and part time staff
who have been with the company for 12 continuous months are eligible to
participate in the scheme. Any tax or superannuation is deducted from the amounts
to distribution prior to payment to the participants. The distributions made under this
scheme have been disclosed in the Accounts.

	9.3.5	 	The following Contracts, which have been disclosed in the Due Diligence Materials, contain
change of Control clauses:

	 	1.	 	Agreement between the Company and Telstra Corporation Limited;
	 
	 	2.	 	Agreement between the Company and MCI Australia Pty Ltd;
	 
	 	3.	 	Agreement between the Company and Unitel Australia Pty Ltd (RSL Com);
	 
	 	4.	 	Agreement between the Company and Powertel Limited;
	 
	 	5.	 	Agreement between the Company and Personal Broadband Australia Pty Ltd;
	 
	 	6.	 	Agreement between the Company and SPTCom Pty Ltd (Comindico); and

44

 

	 	7.	 	The Property Lease between the Company and 6/97 Pacific Highway Pty Ltd.

	10.2	 	Please see the Disclosure against Warranty 7.1. The Registered Intellectual Property
Rights and (subject to the terms of the relevant licence) the Company’s rights to the
Licensed Intellectual Property rights are subject to the Debenture.
	 
	10.4	 	The Company is aware that a company called T3 Wireless Ventures Pty Ltd was registered
with the Australian Securities and Investment Commission in March 2005. As the name is
very similar to one of the Company registered business names, the Company has met with
T3 Wireless Ventures Pty Ltd in relation to their use of that name. The Company has not
made any claims or commenced or threatened to commence proceedings alleging
infringement of its Intellectual Property Rights.
	 
	10.6	 	Please see the Disclosure against Warranty 10.4.
	 
	12.1	 	Please see the Disclosure against Warranty 10.4
	 
	12.1	 	One of the Company’s clients, Maatouks Law Group (acting by its principal Peter Maatouk)
(“Maatouks”), has threatened legal action against the Company. The Company provided
Maatouks with a 256/64Kbps ADSL service at $59 per month. The threatened claim relates
to the ADSL services being unavailable for the 3 month period of January to March 2005.
The cause of the unavailability of the ADSL services has been identified as being due to a
virus in the Maatouks network which affected its router and therefore all traffic of data
through the router. The Company has documentation from Telstra indicating that the
problem was as a result of “End User’s privately maintained equipment”.
	 
	 	 	The Company provided a goodwill credit to Maatouks of $501.30. On 20 April 2005,
Maatouks offered to settle the threatened claim for a payment of $15,000. The Company’s
management believe that the Company has fulfilled its obligations to Maatouks. The offer
to settle was therefore not accepted and the Company informed Maatouks that it did not
accept liability. On 12 September 2005, an email was received by the Company indicating
that Maatouks was still considering legal action. Notwithstanding the allegations,
Maatouks’ telephony services and equipment continue to be provided through the
Company.
	 
	14.1.1	 	One of the Company’s employees, Cassandra McMahon, is currently on maternity leave.
Ms McMahon is due to return to work in February 2006, however, she has not yet
confirmed that she intends to return to work.

45

 

Schedule 7
- Due Diligence Materials

AT = Andrew Tyrrell Pacific Internet

BC = Barry Calnon Pitcher Partners

EM = Elise Marr Pitcher Partners

JC = Joe Colgan Spectrum Strategy

	 	 	 	 	 	 	 	 	 
	 	 	Date	 	Recipient	 	Category	 	Description
	1

	 	13-Sep-05
	 	AT
	 	Carriers
	 	Carrier Agreements for PBA, Telstra, Powertel, RSL, Comindico, AAPT, MCI
	 
	 	 	 	 	 	 	 	 
	2

	 	13-Sep-05
	 	AT
	 	Financials
	 	Monthly Management Report Jun 05
	 
	 	 	 	 	 	 	 	 
	3

	 	13-Sep-05
	 	AT
	 	Financials
	 	Email of monthly financial report
for 03/04, 04/05 + Jul 05 management reports
	 
	 	 	 	 	 	 	 	 
	4

	 	14-Sep-05
	 	AT
	 	Corporate
	 	Certificate of registration and Name Registrations
	 
	 	 	 	 	 	 	 	 
	5

	 	14-Sep-05
	 	AT
	 	Corporate
	 	T3 Rewards Pty Ltd ASIC Documents
	 
	 	 	 	 	 	 	 	 
	6

	 	14-Sep-05
	 	AT
	 	Corporate
	 	T3 Technology Solutions Pty Ltd ASIC Documents
	 
	 	 	 	 	 	 	 	 
	7

	 	14-Sep-05
	 	AT
	 	Corporate
	 	T3 Communications Pty Ltd ASIC Documents
	 
	 	 	 	 	 	 	 	 
	8

	 	14-Sep-05
	 	AT
	 	Corporate
	 	T3 Communication Partners Pty Ltd ASIC Documents
	 
	 	 	 	 	 	 	 	 
	9

	 	14-Sep-05
	 	AT
	 	Corporate
	 	Original Shareholders Agreement/ Existing Shareholders Agreements
	 
	 	 	 	 	 	 	 	 
	10

	 	14-Sep-05
	 	AT
	 	Corporate
	 	Documents cancelling original loans/ Documents reflecting Evogue Pty Ltd investment
	 
	 	 	 	 	 	 	 	 
	11

	 	14-Sep-05
	 	AT
	 	Leases
	 	Property Leases for: Brisbane, Suite 601A & B, 97 Pacific Highway, North Sydney
	 
	 	 	 	 	 	 	 	 
	12

	 	14-Sep-05
	 	AT
	 	Carriers
	 	Engin
	 
	 	 	 	 	 	 	 	 
	13

	 	14-Sep-05
	 	AT
	 	Dealer
	 	Looking Glass Media Pty Ltd dealer Agreement
	 
	 	 	 	 	 	 	 	 
	14

	 	15-Sep-05
	 	AT
	 	Retailers
	 	Agreements with retailers: Bing Lee; David Jones; Clive
Anthony; Digital City; The Good Guys; Tx Computers; Oriium; PCS
Australia; MobileSelect; Ecom computers
	 
	 	 	 	 	 	 	 	 
	15

	 	15-Sep-05
	 	AT
	 	Carriers
	 	M2
	 
	 	 	 	 	 	 	 	 
	16

	 	15-Sep-05
	 	AT
	 	Carriers
	 	Wholesale carrier rates by carrier
	 
	 	 	 	 	 	 	 	 
	17

	 	16-Sep-05
	 	AT
	 	Customers
	 	Customer agreements - voice applications, dsl, wireless, web
hosting, inbound services, Quarterly Saver, Conferencing, Direct
Debit Authorisation, Credit Card Authorisation, Privacy Agreement,
T3 Terms & Conditions, T3 Rewards Brochure
	 
	 	 	 	 	 	 	 	 
	18

	 	16-Sep-05
	 	AT
	 	Insurance
	 	Copy of product and public liability, Office insurance
	 
	 	 	 	 	 	 	 	 
	19

	 	16-Sep-05
	 	AT
	 	IP
	 	Trade Mark files and applications
	 
	 	 	 	 	 	 	 	 
	20

	 	19-Sep-05
	 	AT
	 	Insurance
	 	Workers Compensation Insurance
	 
	 	 	 	 	 	 	 	 
	21

	 	20-Sep-05
	 	AT
	 	Corporate
	 	Board Papers dated: 30/9/04; 21/10/04; 17/11/04; 22/12/04;
27/1/05; 4/3/05; 1/4/05; 29/4/05; 25/5/05; 27/6/05; 27/7/05;
30/8/05
	 
	 	 	 	 	 	 	 	 
	22

	 	20-Sep-05
	 	AT
	 	Financials
	 	Management Reports for July and August 2005
	 
	 	 	 	 	 	 	 	 
	23

	 	21-Sep-05
	 	AT
	 	Billing
	 	Discussion of Billing and Customer care systems
	 
	 	 	 	 	 	 	 	 
	24

	 	22-Sep-05
	 	AT
	 	Financials
	 	Business Plan until 30 September 2006
	 
	 	 	 	 	 	 	 	 
	25

	 	23-Sep-05
	 	AT
	 	HR
	 	Commission schedule for telemarketers and sales staff
	 
	 	 	 	 	 	 	 	 
	26

	 	23-Sep-05
	 	AT
	 	Billing
	 	Pre Billing check list
	 
	 	 	 	 	 	 	 	 
	27

	 	26-Sep-05
	 	AT
	 	Customers
	 	Distribution of Customers by State; Churn Report
	 
	 	 	 	 	 	 	 	 
	28

	 	27-Sep-05
	 	AT
	 	Corporate
	 	Domain Names Registrations
	 
	 	 	 	 	 	 	 	 
	29

	 	27-Sep-05
	 	BC
	 	Financials
	 	Statuatory Accounts 2003/2004/2005
	 
	 	 	 	 	 	 	 	 
	30

	 	27-Sep-05
	 	BC
	 	Financials
	 	Management Reports with Budgets for T3 Communication Partners
Pty Ltd and the Group 2004/05
	 
	 	 	 	 	 	 	 	 
	31

	 	27-Sep-05
	 	BC
	 	Financials
	 	Management Accounts August 2005

 

 

Schedule 7- Due Diligence Materials

	 	 	 	 	 	 	 	 	 
	 	 	Date	 	Recipient	 	Category	 	Description
	32

	 	27-Sep-05
	 	BC
	 	Financials
	 	Board Papers financial commentaries from July 2004 to Aug 2005
	 
	 	 	 	 	 	 	 	 
	33

	 	27-Sep-05
	 	EM
	 	Financials
	 	Tax Return 03/04; 02/03
	 
	 	 	 	 	 	 	 	 
	34

	 	27-Sep-05
	 	EM
	 	Financials
	 	Annual Payroll Summary 03/04; 04/05
	 
	 	 	 	 	 	 	 	 
	35

	 	27-Sep-05
	 	EM
	 	Financials
	 	Payroll Group Certificates for 04/05
	 
	 	 	 	 	 	 	 	 
	36

	 	27-Sep-05
	 	EM
	 	Financials
	 	BAS Returns monthly from March 04 to Aug 05
	 
	 	 	 	 	 	 	 	 
	37

	 	27-Sep-05
	 	EM
	 	Financials
	 	Consultant Lists and details for 04/05
	 
	 	 	 	 	 	 	 	 
	38

	 	27-Sep-05
	 	EM
	 	Financials
	 	FBT Work papers for 04/05
	 
	 	 	 	 	 	 	 	 
	39

	 	27-Sep-05
	 	EM
	 	Financials
	 	Payroll tax work papers for 04/05
	 
	 	 	 	 	 	 	 	 
	40

	 	27-Sep-05
	 	EM
	 	Financials
	 	Standard Choice Compliance for super
	 
	 	 	 	 	 	 	 	 
	41

	 	27-Sep-05
	 	EM
	 	Financials
	 	ETP calculation and summary for Darren Davey
	 
	 	 	 	 	 	 	 	 
	42

	 	27-Sep-05
	 	EM
	 	Financials
	 	Worker Compensation Worksheet
	 
	 	 	 	 	 	 	 	 
	43

	 	27-Sep-05
	 	EM
	 	Financials
	 	ATO Integrated Client Account Statement
	 
	 	 	 	 	 	 	 	 
	44

	 	27-Sep-05
	 	EM
	 	Financials
	 	ATO Income Tax Account
	 
	 	 	 	 	 	 	 	 
	45

	 	27-Sep-05
	 	EM
	 	Financials
	 	Consolidated Activity Statement
- ATO June 05 Quarter; Sept 05 quarter
	 
	 	 	 	 	 	 	 	 
	46

	 	28-Sep-05
	 	BC
	 	Financials
	 	Collection Methods by Type Aug 05
	 
	 	 	 	 	 	 	 	 
	47

	 	28-Sep-05
	 	BC
	 	Financials
	 	Sample T3 Bill
	 
	 	 	 	 	 	 	 	 
	48

	 	29-Sep-05
	 	EM
	 	Financials
	 	Contractor list 03/04 for payroll
tax reconciliation
	 
	 	 	 	 	 	 	 	 
	49

	 	29-Sep-05
	 	EM
	 	Financials
	 	Commission schedule for telemarketers and sales staff
	 
	 	 	 	 	 	 	 	 
	50

	 	29-Sep-05
	 	EM
	 	Financials
	 	James Han contractor agreement
	 
	 	 	 	 	 	 	 	 
	51

	 	29-Sep-05
	 	EM
	 	Financials
	 	Payroll summary Aug 05
	 
	 	 	 	 	 	 	 	 
	52

	 	29-Sep-05
	 	JC
	 	Customers
	 	Customer List with Start Date emailed
	 
	 	 	 	 	 	 	 	 
	53

	 	29-Sep-05
	 	JC
	 	Customers
	 	Customer contact list - top 100 clients
	 
	 	 	 	 	 	 	 	 
	54

	 	29-Sep-05
	 	BC
	 	Financials
	 	Profit and Loss statement 02/03 for individual companies emailed
	 
	 	 	 	 	 	 	 	 
	55

	 	29-Sep-05
	 	EM
	 	Financials
	 	Income Tax Consolidation - Confirmation Letters
	 
	 	 	 	 	 	 	 	 
	56

	 	29-Sep-05
	 	EM
	 	Financials
	 	Bank Reconciliation and bank statement for month June 05
	 
	 	 	 	 	 	 	 	 
	57

	 	29-Sep-05
	 	EM
	 	Financials
	 	Agred Creditors 30/6/05
	 
	 	 	 	 	 	 	 	 
	58

	 	29-Sep-05
	 	EM
	 	Financials
	 	Balance Sheet reconciliation worksheets June 05
	 
	 	 	 	 	 	 	 	 
	59

	 	29-Sep-05
	 	EM
	 	Financials
	 	For June 05: Aged debtor list; inventory list; rewards balance
reconciliation; tax provision reconciliation - emailed
	 
	 	 	 	 	 	 	 	 
	60

	 	29-Sep-05
	 	BC
	 	Financials
	 	List of clients with 35% T3 Rewards
	 
	 	 	 	 	 	 	 	 
	61

	 	30-Sep-05
	 	AT
	 	Dealer
	 	Premier Communications dealer
agreement emailed
	 
	 	 	 	 	 	 	 	 
	62

	 	30-Sep-05
	 	EM
	 	Financials
	 	Financial Statements 03/04; 04/05 emailed
	 
	 	 	 	 	 	 	 	 
	63

	 	30-Sep-05
	 	EM
	 	Financials
	 	Aged debtor reconciliation file; account receivable reconciliation 30/6/05 spreasheet
	 
	 	 	 	 	 	 	 	 
	64

	 	30-Sep-05
	 	EM
	 	Financials
	 	June 05 Unearned income
reconciliation - email
	 
	 	 	 	 	 	 	 	 
	65

	 	  4-Oct-05
	 	AT
	 	Customers
	 	Customer list with customer names Aug 05
	 
	 	 	 	 	 	 	 	 
	66

	 	  4-Oct-05
	 	AT
	 	Leases
	 	Novated Lease Agreement Carlos Perez
	 
	 	 	 	 	 	 	 	 
	67

	 	  5-Oct-05
	 	BC
	 	Financials
	 	Balance Sheets for 01/02; 02/03 emailed
	 
	 	 	 	 	 	 	 	 
	68

	 	  5-Oct-05
	 	AT
	 	Financials
	 	Responses to Tax Review questions emailed 29/9/05
	 
	 	 	 	 	 	 	 	 
	69

	 	  7-Oct-05
	 	AT
	 	Legal
	 	Sample of Customer Agreements
	 
	 	 	 	 	 	 	 	 
	70

	 	11-Oct-05
	 	AT BC
	 	Financials
	 	Bank account transactions Jul 05 to Sept 05; Churn loss; Aged Creditors
	 
	 	 	 	 	 	 	 	 
	71

	 	12-Oct-05
	 	AT
	 	Financials
	 	Average Revenue per user statistics for T3 Wireless customers
	 
	 	 	 	 	 	 	 	 
	72

	 	12-Oct-05
	 	BC
	 	Financials
	 	Responses to final information request from BC on email dated 12/10/05

 

 

Schedule 9
- Accounts

T3 Communication Partners Pty Ltd

ABN: 69 099 404 654

Group Financial Statements 2001-02

Page 1 of 4

 

Statements of Financial Performance

for the year ended 30 June 2002

	 	 	 	 	 	 	 	 	 
	 	 	Consolidated	 	 	Parent Entity	 
	 	 	2002	 	 	2002	 
	 	 	$’000	 	 	$’000	 
	 
	Voice Revenue
	 	$	9	 	 	$	0	 
	Service & Equipment Revenue
	 	$	0	 	 	$	0	 
	Other Revenue from ordinary activities
	 	$	13	 	 	$	0	 
	 
	Total Revenue from ordinary activities
	 	$	21	 	 	$	0	 
	 
	Cost of Voice Services
	 	($ 	6	)	 	$	0	 
	Cost of Service & Equipment
	 	$	0	 	 	$	0	 
	Other Cost of Sales
	 	($ 	10	)	 	$	0	 
	Employee expenses
	 	($ 	164	)	 	($ 	164	)
	Consultancy expense
	 	($ 	17	)	 	($ 	13	)
	Other expenses from ordinary activities
	 	($ 	57	)	 	($ 	25	)
	Depreciation & amortisation expense
	 	($ 	1	)	 	($ 	1	)
	Borrowing Costs
	 	($ 	15	)	 	($ 	15	)
	 
	Profit (Loss) from ordinary activities before income tax
	 	($ 	249	)	 	($ 	218	)
	Income tax expense (benefit)
	 	 	 	 	 	 	 	 
	 
	Net Profit (Loss) from ordinary activities after income tax
	 	($ 	249	)	 	($ 	218	)
	Net profit attributable to outside equity interests
	 	$	0	 	 	$	0	 
	 
	Net Profit (Loss) attributable to members of T3
Communication Partners Pty Ltd
	 	($ 	249	)	 	($ 	218	)
	 
	Total revenues, expenses and valuation adjustments
attributable to members of T3 Communication Partners
	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 
	Total changes in equity other than those resulting from
transactions with owners as owners
	 	($ 	249	)	 	($ 	218	)
	 

Page 2 of 4

 

Statements of Financial Position

as at 30 June 2003

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Consolidated	 	 	Parent
Entity	 
	 	 	2002	 	$’000	 	2002	 	$’000
	 
	Current Assets
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash assets
	 	 	 	 	 	$	42	 	 	 	 	 	 	$	35	 
	Receivables
	 	 	 	 	 	$	38	 	 	 	 	 	 	$	18	 
	Inventories
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 
	Other
	 	 	 	 	 	$	4	 	 	 	 	 	 	$	0	 
	 
	Total Current Assets
	 	 	 	 	 	$	84	 	 	 	 	 	 	$	53	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Non-Current Assets
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Future Income Tax Benefit
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 
	Receivables
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 
	Property, Plant & Equipment
	 	 	 	 	 	$	29	 	 	 	 	 	 	$	10	 
	Investment
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 
	 
	Total Non-Current Assets
	 	 	 	 	 	$	29	 	 	 	 	 	 	$	10	 
	 
	Total Assets
	 	 	 	 	 	$	113	 	 	 	 	 	 	$	64	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Current Liabilities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Payables
	 	 	 	 	 	$	15	 	 	 	 	 	 	$	3	 
	Provisions
	 	 	 	 	 	$	10	 	 	 	 	 	 	$	0	 
	Current Tax Liabilities
	 	 	 	 	 	$	22	 	 	 	 	 	 	$	25	 
	Provision
for T3 Reward $
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 
	Other Payables
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 
	 
	Total Current Liabilities
	 	 	 	 	 	$	47	 	 	 	 	 	 	$	28	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Non-Current Liabilities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Payables
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 
	Long Term Borrowings
	 	 	 	 	 	$	315	 	 	 	 	 	 	$	254	 
	Provisions
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 
	 
	Total Non-Current Liabilities
	 	 	 	 	 	$	315	 	 	 	 	 	 	$	254	 
	 
	Total Liabilities
	 	 	 	 	 	$	362	 	 	 	 	 	 	$	282	 
	 
	NET ASSETS
	 	 	 	 	 	($	249	)	 	 	 	 	 	($	218	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Equity
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Parent Entity interest
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Contributed equity
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 
	Accumulated Losses
	 	 	 	 	 	($	249	)	 	 	 	 	 	($	218	)
	 
	Total Parent entity interest in equity
	 	 	 	 	 	($	249	)	 	 	 	 	 	($	218	)
	 
	Total outside equity interest
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 
	 
	TOTAL EQUITY
	 	 	 	 	 	($	249	)	 	 	 	 	 	($	218	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

Page 3 of 4

 

Statements of Cashflow

for the year ended 30 June 2002

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Consolidated	 	Parent
Entity
	 	 	2002	 	$’000	 	2002	 	$’000
	 
	Cashflows from Operating Activities

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Receipts from customers
	 	 	 	 	 	$	2	 	 	 	 	 	 	$	0	 
	Payments to suppliers and employees
	 	 	 	 	 	($	212	)	 	 	 	 	 	($	174	)
	Interest received
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 
	Interest Paid
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 
	 
	Net cash inflow (outflow) from
Operating Activities
	 	 	 	 	 	($	210	)	 	 	 	 	 	($	174	)
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cashflows from Investing Activities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Payment for purchase of property, plant and
equipment
	 	 	 	 	 	($	30	)	 	 	 	 	 	($	11	)
	Proceeds from sale of property, plant and equipment
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 
	Payment for Security Deposits & Bonds
	 	 	 	 	 	($	19	)	 	 	 	 	 	($	18	)
	Refund of Security Deposits
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 
	Loans provided to other parties
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net cash outflow from Investing Activities
	 	 	 	 	 	($	49	)	 	 	 	 	 	($	29	)
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cashflows from Financing Activities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Proceeds from issue of Convertible Notes
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 
	Proceeds from Issue of Shares
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 
	Intercompany Loans
	 	 	 	 	 	$	0	 	 	 	 	 	 	($	61	)
	Long Term Borrowings
	 	 	 	 	 	$	300	 	 	 	 	 	 	$	300	 
	increase in capitalised borrowing costs
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net cash outflow from Financing Activities
	 	 	 	 	 	$	300	 	 	 	 	 	 	$	239	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net increase (decrease) in cash held
	 	 	 	 	 	$	42	 	 	 	 	 	 	$	35	 
	Cash at the beginning of the financial year
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 
	 
	Cash at the end of the financial year
	 	 	 	 	 	$	42	 	 	 	 	 	 	$	35	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

Page 4 of 4

 

T3
Communication Partners Pty Ltd

ABN: 69 099 404 654

Group Financial Statements 2002-03

Page 1 of 4

 

Statements of Financial Performance

for the year ended 30 June 2003

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Consolidated	 	Parent
Entity
	 	 	2003	 	2002	 	2003	 	2002
	 	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Voice Revenue
	 	$	700	 	 	$	9	 	 	$	0	 	 	$	0	 
	Service & Equipment Revenue
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	Other Revenue from ordinary activities
	 	$	740	 	 	$	13	 	 	$	441	 	 	$	0	 
	 
	Total Revenue from ordinary activities
	 	$	1,440	 	 	$	21	 	 	$	441	 	 	$	0	 
	 
	Cost of Voice Services
	 	($	416	)	 	($	6	)	 	$	0	 	 	$	0	 
	Cost of Service & Equipment
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	Other Cost of Sales
	 	($	288	)	 	($	10	)	 	($	5	)	 	$	0	 
	Employee expenses
	 	($	467	)	 	($	164	)	 	($	466	)	 	($	164	)
	Consultancy expense
	 	($	169	)	 	($	17	)	 	($	129	)	 	($	13	)
	Other expenses from ordinary activities
	 	($	215	)	 	($	57	)	 	($	27	)	 	($	25	)
	Depreciation & amortisation expense
	 	($	14	)	 	($	1	)	 	($	3	)	 	($	1	)
	Borrowing Costs
	 	$	14	 	 	($	15	)	 	$	15	 	 	($	15	)
	 
	Profit (Loss) from ordinary activities before income tax
	 	($	114	)	 	($	249	)	 	($	175	)	 	($	218	)
	Income tax expense (benefit)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Net Profit (Loss) from ordinary activities after income tax
	 	($	114	)	 	($	249	)	 	($	175	)	 	$	218	 
	Net profit attributable to outside equity interests
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	Net Profit (Loss) attributable to members of
T3 Communication Partners Pty Ltd
	 	($	114	)	 	($	249	)	 	($	175	)	 	($	218	)
	 
	Total revenues, expenses and valuation adjustments
attributable to members of T3 Communication Partners
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total changes in equity other than those resulting
from transactions with owners as owners
	 	($	114	)	 	($	249	)	 	($	175	)	 	($	218	)
	 

Page 2 of 4

 

Statements of Financial Position

as at 30 June 2003

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Consolidated	 	Parent Entity
	 	 	2003	 	2002	 	2003	 	2002
	 	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Current Assets
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash assets
	 	$	151	 	 	$	42	 	 	$	26	 	 	$	35	 
	Receivables
	 	$	267	 	 	$	38	 	 	$	18	 	 	$	18	 
	Inventories
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	Other
	 	$	0	 	 	$	4	 	 	$	0	 	 	$	0	 
	 
	Total Current Assets
	 	$	418	 	 	$	84	 	 	$	44	 	 	$	53	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Non-Current Assets
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Future income Tax Benefit
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	Receivables
	 	$	0	 	 	$	0	 	 	$	168	 	 	$	0	 
	Property, Plant & Equipment
	 	$	30	 	 	$	29	 	 	$	7	 	 	$	10	 
	Investment
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	Total Non-Current Assets
	 	$	30	 	 	$	29	 	 	$	176	 	 	$	10	 
	 
	Total Assets
	 	$	448	 	 	$	113	 	 	$	219	 	 	$	64	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Current Liabilities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Payables
	 	$	147	 	 	$	15	 	 	$	3	 	 	$	3	 
	Provisions
	 	$	15	 	 	$	10	 	 	$	0	 	 	$	0	 
	Current Tax Liabilities
	 	$	63	 	 	$	22	 	 	$	59	 	 	$	25	 
	Provision
for T3 Reward $
	 	$	36	 	 	$	0	 	 	$	0	 	 	$	0	 
	Other Payables
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	Total Current Liabilities
	 	$	261	 	 	$	47	 	 	$	62	 	 	$	28	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Non-Current Liabilities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Payables
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	Long Term Borrowings
	 	$	0	 	 	$	315	 	 	$	0	 	 	$	254	 
	Provisions
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	Total Non-Current Liabilities
	 	$	0	 	 	$	315	 	 	$	0	 	 	$	254	 
	 
	Total Liabilities
	 	$	261	 	 	$	362	 	 	$	62	 	 	$	282	 
	 
	NET ASSETS
	 	$	187	 	 	($	249	)	 	$	157	 	 	($	218	)
	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Equity
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Parent Entity interest
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Contributed equity
	 	$	550	 	 	$	0	 	 	$	550	 	 	$	0	 
	Accumulated Losses
	 	($	363	)	 	($	249	)	 	($	393	)	 	($	218	)
	 
	Total Parent entity interest in equity
	 	$	187	 	 	($	249	)	 	$	157	 	 	($	218	)
	 
	Total outside equity interest
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	TOTAL EQUITY
	 	$	187	 	 	($	249	)	 	$	157	 	 	($	218	)
	 
	 

Page 3 of 4

 

Statements of Cashflow

for the year ended 30 June 2003

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Consolidated	 	Parent Entity
	 	 	2003	 	2002	 	2003	 	2002
	 	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Cashflows from Operating Activities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Receipts from customers
	 	$	771	 	 	$	2	 	 	$	1	 	 	$	0	 
	Payments to suppliers and employees
	 	($	1,328	)	 	($	212	)	 	($	593	)	 	($	174	)
	Interest received
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	Interest Paid
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	Net cash inflow (outflow) from
Operating Activities
	 	($	557	)	 	($	210	)	 	($	592	)	 	($	174	)
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cashflows from Investing Activities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Payment for purchase of property, plant and
equipment
	 	($	12	)	 	($	30	)	 	$	0	 	 	($	11	)
	Proceeds from sale of property, plant and
equipment
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	Payment for Security Deposits & Bonds
	 	($	12	)	 	($	19	)	 	$	0	 	 	($	18	)
	Refund of Security Deposits
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	Loans provided to other parties
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Net cash outflow from Investing Activities
	 	($	23	)	 	($	49	)	 	$	0	 	 	($	29	)
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cashflows from Financing Activities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Proceeds from issue of Convertible Notes
	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	Proceeds from Issue of Shares
	 	$	550	 	 	$	0	 	 	$	550	 	 	$	0	 
	Intercompany Loans
	 	$	0	 	 	 	0	 	 	($	107	)	 	($	61	)
	Long Term Borrowings
	 	$	0	 	 	$	300	 	 	$	0	 	 	$	300	 
	Increase in capitalised borrowing costs
	 	$	140	 	 	$	0	 	 	$	140	 	 	$	0	 
	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net cash outflow from Financing Activities
	 	$	690	 	 	$	300	 	 	$	583	 	 	$	239	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net increase (decrease) in cash held
	 	$	110	 	 	$	42	 	 	($	9	)	 	$	35	 
	Cash at the beginning of the financial year
	 	$	42	 	 	$	0	 	 	$	35	 	 	$	0	 
	Cash at the end of the financial year
	 	$	151	 	 	$	42	 	 	$	26	 	 	$	35	 
	 
	 

Page 4 of 4

 

T3 Communication Partners Pty Ltd

ABN: 69 099 404 654

Group
Financial Statements 2003-2004

Page 1 of 18

 

Contents

	 	 	 	 	 
	Directors’ Report
	 	 	3	 
	 
	 	 	 	 
	Statement of Financial Performance
	 	 	5	 
	 
	 	 	 	 
	Statement of Financial Position
	 	 	6	 
	 
	 	 	 	 
	Statement of Cashflows
	 	 	7	 
	 
	 	 	 	 
	Notes to the Financial Statements
	 	 	8	 

Page 2 of 18

 

DIRECTORS’ REPORT

PRINCIPAL ACTIVITIES

T3 is a carrier service provider of voice and data services to small and medium businesses in
Australia. T3 has developed an exclusive and innovative rewards program for business customers.

REVIEW OF OPERATIONS

This is our first report. As such, we are proud to comment on the terrific financial results
that the T3 Team has generated. In July 2002 group revenue for the month was $18,985, in June 2004
it was $875,035 a growth of 4,500%.

For the
year group revenue grew from $1,439,818 in 2002/03 to $6,122,861 for 2003/04 or 325%. Note
that $440,000 of the revenue in 2002/03 was as a result of an abnormal item (see note 2), adjusting
for that fact, group revenue grew 512%.

In February 2003, T3 reached two milestones, firstly, achieving profits for the month. Since then
T3 has enjoyed strong net profit growth. Net profit after tax grew from negative $114,297 in
2002/03 to positive $132,512 for 2003/04.

Secondly, the first Profit Share payment was distributed to the employees. In 2003, the Board
instituted a Discretionary Profit Share scheme to motivate and align the common goals of
shareholders and employees, recognising and rewarding high performance.

I want to thank our customers and suppliers for their support, but in particular our Team. The T3
Team has been loyal, creative, effective and above all focus on servicing our clients. Each
individual in the T3 Team is the reason for the successful results.

EVENTS SINCE BALANCE DATE

Since June 2004, T3 has become an internet service provider focus on broadband internet, web
hosting, anti spam and anti virus services.

In August 2004, T3 signed a reseller agreement with Personal Broadband Australia to resale iBurst
technology (wireless broadband).

In October 2004, T3 open an office in Brisbane to cater for the Queensland market. Also, the
convertible notes were fully repaid, clearing the balance sheet of any debt.

In December 2004, the Board approved the payment of $75,000 in fully franked dividends.

Page 3 of 18

 

DIVIDENDS

No dividend was declared or paid during 2003/04.

DIRECTORS

Following are the names and details of the directors in office during the financial year and at the
date of this report:

Carlos Perez — Founder and Managing Director

Carlos has degrees in Finance and Economics and a Masters of Business Administration in Finance and
International Business. More than eleven years telecommunication experience in Australia and
overseas includes finance roles within Optus Communications and other major Australian
telecommunications companies. Carlos has international experience having been successfully involved
in eight telecommunication start up operations in eight different countries. He has also had senior
finance roles at other Australian publicly fisted companies.

Claudio Tropea — Non-Executive Director

Claude is a member of the Australian Institute of Chartered Accountants, tax agent and Registered
Company Auditor with the Australian Securities and Investment Commission. He also serves as a
director on the Board of various investment, trading and trustee companies involved in small to
medium sized business in Australia.

As Managing Director of MBT Chartered Accountants Claude brings extensive experience in taxation,
auditing, general financial and business planning advice and management consulting to a broad base
of businesses ranging from small to medium private companies in a number of industry sectors.

SUMMARY

2003/04 was a very successful year for T3. A stronger financial position combined with a
Team that has a “can do” attitude will effectively launch new products, accelerate T3’s geographic
expansion and creatively address any challenges that competition brings in 2004/05.

	 	 	 
	Carlos Perez

	 	Claudio Tropea
	Managing Director

	 	Director
	 
	 	 
	Dated: 30 December 2004
	 	 

Page 4 of 18

 

Statements
of Financial Performance
 for the year ended 30 June 2004

	 	 	 	 	 	       	 	 	 	       	 	 	 	       	 	 	 	       	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2004	 	2003	 	2004	 	2003
	 	 	Notes	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Voice Revenue
	 	 	 	 	 	$	4,496	 	 	$	700	 	 	$	0	 	 	$	0	 
	Service & Equipment Revenue
	 	 	 	 	 	$	1,308	 	 	$	0	 	 	$	0	 	 	$	0	 
	Other Revenue from ordinary activities
	 	 	2	 	 	$	323	 	 	$	740	 	 	$	0	 	 	$	441	 
	 
	Total Revenue from ordinary activities
	 	 	 	 	 	$	6,128	 	 	$	1,440	 	 	$	0	 	 	$	441	 
	 
	Cost of Voice .Services
	 	 	 	 	 	($	2,679	)	 	($	416	)	 	$	0	 	 	$	0	 
	Cost of Service & Equipment
	 	 	 	 	 	($	1,146	)	 	$	0	 	 	$	0	 	 	$	0	 
	Other Cost of Sales
	 	 	 	 	 	($	754	)	 	($	288	)	 	$	0	 	 	($	5	)
	Employee expenses
	 	 	 	 	 	($	654	)	 	($	467	)	 	($	652	)	 	($	466	)
	Consultancy expense
	 	 	 	 	 	($	383	)	 	($	169	)	 	($	358	)	 	($	129	)
	Other expenses from ordinary activities
	 	 	 	 	 	($	441	)	 	($	215	)	 	($	6	)	 	($	27	)
	Depreciation & amortisation expense
	 	 	 	 	 	($	19	)	 	($	14	)	 	($	3	)	 	($	3	)
	Borrowing Costs
	 	 	 	 	 	($	18	)	 	$	14	 	 	($	18	)	 	$	15	 
	 
	Profit (Loss) from ordinary activities before income tax
	 	 	 	 	 	$	34	 	 	($	114	)	 	($	1,038	)	 	($	175	)
	Income tax expense (benefit)
	 	 	3	 	 	($	99	)	 	 	 	 	 	($	429	)	 	 	 	 
	 
	Net Profit (Loss) from ordinary activities after income tax
	 	 	 	 	 	$	133	 	 	($	114	)	 	($	609	)	 	($	175	)
	Net profit attributable to outside equity interests
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	Net
Profit (Loss) attributable to members of T3 Communication Partners Pty Ltd
	 	 	 	 	 	$	133	 	 	($	114	)	 	($	609	)	 	($	175	)
	 
	Total revenues, expenses and valuation adjustments
attributable to members of T3 Communication Partners
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total changes in equity other than those resulting from transactions with owners as owners
	 	 	 	 	 	$	133	 	 	($	114	)	 	($	609	)	 	($	175	)
	 

Page 5 of 18

 

Statements
of Financial Position
 as at 30 June 2004

	 	 	 	 	 	       	 	 	 	       	 	 	 	       	 	 	 	       	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2004	 	2003	 	2004	 	2003
	 	 	Notes	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Current Assets
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash assets
	 	 	 	 	 	$	713	 	 	$	151	 	 	$	26	 	 	$	26	 
	Receivables
	 	 	4	 	 	$	1,281	 	 	$	267	 	 	$	18	 	 	$	18	 
	Inventories
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	Other
	 	 	5	 	 	$	19	 	 	$	0	 	 	$	1	 	 	$	0	 
	 
	Total Current Assets
	 	 	 	 	 	$	2,013	 	 	$	418	 	 	$	45	 	 	$	44	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Non-Current Assets
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Future Income Tax Benefit
	 	 	6	 	 	$	114	 	 	$	0	 	 	$	114	 	 	$	0	 
	Receivables
	 	 	12	 	 	$	0	 	 	$	0	 	 	 	0	 	 	$	168	 
	Property, Plant & Equipment
	 	 	 	 	 	$	15	 	 	$	30	 	 	$	4	 	 	$	7	 
	Investment
	 	 	7	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	Total Non-Current Assets
	 	 	 	 	 	$	130	 	 	$	30	 	 	$	118	 	 	$	176	 
	 
	Total Assets
	 	 	 	 	 	$	2,142	 	 	$	448	 	 	$	163	 	 	$	219	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Current Liabilities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Payables
	 	 	8	 	 	$	1,110	 	 	$	147	 	 	$	1	 	 	$	3	 
	Provisions
	 	 	9	 	 	$	178	 	 	$	15	 	 	$	89	 	 	$	0	 
	Current Tax Liabilities
	 	 	10	 	 	$	54	 	 	$	63	 	 	$	37	 	 	$	59	 
	Provision for T3 Reward $
	 	 	11	 	 	$	261	 	 	$	36	 	 	$	0	 	 	$	0	 
	Other Payables
	 	 	 	 	 	$	7	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	Total Current Liabilities
	 	 	 	 	 	$	1,610	 	 	$	261	 	 	$	127	 	 	$	62	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Non-Current Liabilities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Payables
	 	 	12	 	 	$	0	 	 	$	0	 	 	$	274	 	 	$	0	 
	Long Term Borrowings
	 	 	13	 	 	$	214	 	 	$	0	 	 	$	214	 	 	$	0	 
	Provisions
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	Total Non-Current Liabilities
	 	 	 	 	 	$	214	 	 	$	0	 	 	$	488	 	 	$	0	 
	 
	Total Liabilities
	 	 	 	 	 	$	1,823	 	 	$	261	 	 	$	615	 	 	$	62	 
	 
	NET ASSETS
	 	 	 	 	 	$	319	 	 	$	187	 	 	($	451	)	 	$	157	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Equity
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Parent Entity interest
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Contributed equity
	 	 	14	 	 	$	550	 	 	$	550	 	 	$	550	 	 	$	550	 
	Accumulated Losses
	 	 	15	 	 	($	231	)	 	($	363	)	 	($	1,001	)	 	($	393	)
	 
	Total Parent entity interest in equity
	 	 	 	 	 	$	319	 	 	$	187	 	 	($	451	)	 	$	157	 
	 
	Total outside equity interest
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	TOTAL EQUITY
	 	 	 	 	 	$	319	 	 	$	187	 	 	($	451	)	 	$	157	 
	 

Page 6 of 18

 

Statements
of Cashflow 
for the year ended 30 June 2004

	 	       	 	 	 	       	 	 	 	       	 	 	 	       	 	 	 	       	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2004	 	2003	 	2004	 	2003
	 	 	Notes	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Cashflows
from Operating Activities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Receipts from customers
	 	 	 	 	 	$	5,549	 	 	$	771	 	 	($	1	)	 	$	1	 
	Payments to suppliers and employees
	 	 	 	 	 	($	5,093	)	 	($	1,328	)	 	($	967	)	 	($	593	)
	Interest received
	 	 	 	 	 	$	5	 	 	$	0	 	 	$	0	 	 	$	0	 
	Interest Paid
	 	 	 	 	 	($	18	)	 	$	0	 	 	($	18	)	 	$	0	 
	 
	Net cash inflow (outflow) from
Operating Activities
	 	 	16	(a)	 	$	442	 	 	($	557	)	 	($	986	)	 	($	592	)
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cashflows
from investing Activities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Payment for purchase of property, plant and equipment
	 	 	 	 	 	($	10	)	 	($	12	)	 	$	0	 	 	$	0	 
	Proceeds from sale of property, plant and equipment
	 	 	 	 	 	$	6	 	 	$	0	 	 	$	0	 	 	$	0	 
	Payment for Security Deposits & Bonds
	 	 	 	 	 	($	100	)	 	($	12	)	 	($	0	)	 	$	0	 
	Refund of Security Deposits
	 	 	 	 	 	$	10	 	 	$	0	 	 	$	0	 	 	$	0	 
	Loans provided to other parties
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net cash outflow from Investing Activities
	 	 	 	 	 	($	94	)	 	($	23	)	 	($	0	)	 	$	0	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cashflows from Financing Activities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Proceeds from issue of Convertible Notes
	 	 	 	 	 	$	200	 	 	$	0	 	 	$	200	 	 	$	0	 
	Proceeds from issue of Shares
	 	 	 	 	 	$	0	 	 	$	550	 	 	($	0	)	 	$	550	 
	Intercompany Loans
	 	 	 	 	 	 	 	 	 	 	 	 	 	$	773	 	 	($	107	)
	Increase in capitalised borrowing costs
	 	 	 	 	 	$	14	 	 	$	140	 	 	$	14	 	 	$	140	 
	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net cash outflow from Financing Activities
	 	 	 	 	 	$	214	 	 	$	690	 	 	$	987	 	 	$	583	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net increase (decrease) in cash held
	 	 	 	 	 	$	562	 	 	$	110	 	 	$	1	 	 	($	9	)
	Cash at the beginning of the financial year
	 	 	 	 	 	$	151	 	 	$	42	 	 	$	26	 	 	$	35	 
	 
	Cash at the end of the financial year
	 	 	16	(b)	 	$	713	 	 	$	151	 	 	$	26	 	 	$	26	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

Page 7 of 18

 

Notes to and forming part of the Financial Statements As at 30 June 2004

1. Statement of Significant Accounting Policies

The significant policies which have been adopted in the preparation of this financial report
are:

a) Basis of Accounting

The financial report is a general purpose financial report which has been prepared in accordance
with requirements of the Corporations Act 2001 which includes applicable Accounting Standards. It
has been prepared on the basis of historical costs and does not take into account, except where
stated, changing money values or fair values of non-current assets. The accounting policies have
been consistently applied by the entities included in the consolidated entity and are consistent
with those of the previous financial year, except where indicated.

b) Principles of Consolidation

The consolidated financial statements incorporate the assets and liabilities of all entities
controlled by T3 Communication Partners (parent entity) as at 30 June 2004 and the results of all
controlled entities for the year then ended. T3 Communication Partners Pty Ltd and its controlled
entities together are referred to in this financial report as the consolidated entity. The effects
of all transactions between entities in the consolidated entity are eliminated in full. The
financial statements of subsidiaries are prepared for the same reporting period as the parent
entity, using consistent accounting policies.

c) Revenue Recognition

Amounts disclosed as revenue are net of call rebates, discounts and taxes paid. Revenue is
recognised for the major business activities as follows:

(i) Revenue from the sale of voice traffic is recognised in the period that the customers made the
voice calls.

(ii) Revenue from rendering of a service is recognised upon the delivery of the service to
customers.

(iii) Revenue from annual rewards membership fee is recognised in advance at point of joining
and at each subsequent anniversary date.

(iv) Interest revenue is recognised in the period the interest was earned at the rate applicable to
the financial assets.

d) Receivables

Trade accounts receivable, amounts due from related parties and other receivables represent the
principal amounts due at balance date less provisions for doubtful accounts.

Collectability of
trade debtors is reviewed on an ongoing basis. Debts which are known to be uncollectable are
reviewed and written off twice a year.

Page  8 of 18

 

A provision for doubtful debts is raised progressively at the current rate of 1.0% of
monthly revenue to cover debts that are 90day or more overdue. The rate of provisioning is
reviewed regularly to ensure sufficient cover.

e) Depreciation of Property, Plant & Equipment

Depreciation is calculated on a straight line basis to write off the net cost or revalued amount of
each item of property, plant and equipment over its expected useful life to the consolidated
entity. Estimates of remaining useful lives are made on a regular basis for all assets, with annual
reassessments for major items.

The expected useful lives are as follows:

	 	 	 
	Class
of Fixed Asset
	 	Useful Life
	Plant and office equipment

	 	5 yrs
	Telecommunications equipment

	 	3 yrs
	Computer equipment

	 	3 yrs
	Used Equipments

	 	12 mths

f) Employee benefits

Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating
sick leave expected to be settled within 12 months of the reporting date are recognised in current
provisions in respect of employees’ services up to the reporting date and are measured at the
amounts expected to be paid when the liabilities are settled.

g) Loans and Borrowing Costs

All loans are measured at the principal amount.

Borrowing costs are recognised as expenses in the period in which they are incurred.

Borrowing costs include:

—   interest on Convertible Notes; and

—    interest on bank overdraft, where applicable.

h) Cash

For the purposes of the Statement of Cashflows, cash includes deposits at call with financial
institutions and other highly liquid investments with short periods to maturity which are readily
convertible to cash on hand, net of outstanding bank overdrafts.

i) Earnings per Share

Basic earnings per share

Basic earnings per share is determined by dividing net profit after income tax attributable to
members of the company, excluding any costs of servicing equity other than ordinary shares, by the
weighted average number of ordinary shares outstanding during the financial year, adjusted for
bonus elements in ordinary shares issued during the year.

j) Goods & Services Tax (GST)

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

Page  9 of 18

 

circumstances the GST is recognised as part of the cost of acquisition of the asset or as part
of an item of expense. Receivables and payables in the statement of financial position are shown
inclusive of GST.

k) Trade & Other Payables

Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the
consideration to be paid in the future for goods and services received, whether or not billed to
the consolidated entity.

l) Leases

Leases of fixed assets where substantially all risks and benefits incidental to the ownership
of the asset, but not the legal ownership, are transferred to entities in the economic entity are
classified as finance leases. Finance leases are capitalised, recording an asset and a liability
equal to the present value of the minimum lease payments, including any guaranteed residual values.
Leased assets are depreciated on a straight line basis over the estimated useful lives where it is
likely that the economic entity will obtain ownership of the asset over the term of the lease.
Lease payments are allocated between the reduction of the lease liability and the lease interest
expense for the period.

Rental payments for operating leases, where substantially all the risks and benefits remain with
the lessor, are charged as expenses in the periods which they are incurred.

m) Provision for T3 Reward Dollars

T3 Reward Dollars are earned when the client pays their invoices by the due date. An entry is
raised to book the accrued T3 Reward Dollars only after the rewards are earned. 80% of T3 Reward
Dollars earned is booked as an expense and provisioned as a liabilities. The reason for accruing
only 80% of T3 Reward Dollars is because this is the estimated cost of the goods to T3 to redeem
the T3 rewards dollars. le. The average gross margin of T3 Rewards Dollar redemptions is calculated
as 20%. This is in line with T3’s experience in the past 18 months.

n) Share Capital

Ordinary share capital is recognised at the fair value of the consideration received by the
company.

Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as
a reduction of the share proceeds received.

o) Income Tax

Tax-effect accounting is applied using the liability method whereby income tax is regarded as an
expense and is calculated on the accounting profit after allowing for permanent differences. To the
extent timing differences occur between the time items are recognised in the financial statements
and when items are taken into account in determining taxable income, the net related taxation
benefit or liability, calculated at current tax rates, is disclosed as a future income tax benefit
or a provision for deferred income tax. The net future income tax benefit relating to tax losses
and timing differences is not carried forward as an asset unless the benefit is virtually certain
of being realised.

For income tax purposes, the tax return is prepared using the consolidation method. Entries for
income tax expense are recorded in the individual companies’ Statement of Financial

Page  10 of 18

 

Performance, however, the Future Income Tax Benefit and tax liabilities are recorded in the
Parent company’s Statement of Financial Position.

The income tax expense for the year is calculated using the 30% tax rate.

Page  11 of 18

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Note 2: Other revenue from ordinary activities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2004	 	2003	 	2004	 	2003
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Telstra Other Product Revenue
	 	 	 	 	 	$	192	 	 	$	0	 	 	$	0	 	 	$	0	 
	Annual Reward Membership Fee
	 	 	 	 	 	$	63	 	 	$	9	 	 	$	0	 	 	$	0	 
	Equipment Sales & Rental
	 	 	 	 	 	$	28	 	 	$	289	 	 	$	0	 	 	$	0	 
	T3 Broadband
	 	 	 	 	 	$	32	 	 	$	0	 	 	$	0	 	 	$	0	 
	Miscellaneous Revenue
	 	 	A	 	 	$	3	 	 	$	442	 	 	$	0	 	 	$	441	 
	Interest received
	 	 	 	 	 	$	5	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total
	 	 	 	 	 	$	323	 	 	$	740	 	 	$	0	 	 	$	441	 
	 
	
Note
A: Miscellaneous Revenue

	 
	-   Miscellaneous
revenue for 2003 includes $440K in debt that was forgiven and booked
as revenue.

	 
	Note 3: Income Tax
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2004	 	2003	 	2004	 	2003
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Profit from Ordinary Activities before income tax expense
	 	 	 	 	 	$	34	 	 	($	114	)	 	($	1,038	)	 	($	175	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income Tax calculated at 30% (2003: 30%)
	 	 	 	 	 	$	10	 	 	 	 	 	 	($	311	)	 	 	 	 
	Tax Effect of Permanent Differences:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	- Non-allowable items
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income Tax adjusted for Permanent Differences
	 	 	 	 	 	$	10	 	 	$	0	 	 	($	311	)	 	$	0	 
	Under/ (over) provision from prior year
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income Tax expense/ (benefit) from prior years
	 	 	B	 	 	($	109	)	 	 	 	 	 	($	118	)	 	 	 	 
	 
	 
	Aggregate Income Tax Expense/ (Benefit)
	 	 	 	 	 	($	99	)	 	$	0	 	 	($	429	)	 	$	0	 
	 
	 
	Tax Losses brought forward
	 	 	 	 	 	$	0	 	 	$	278	 	 	$	0	 	 	$	278	 

Note B: Income Tax Expense/ Benefit from Prior Years

Tax Effect Accounting was implemented for the first time in 03/04 financial year

Page 12 of 18

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Note 4: Receivables
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2004	 	2003	 	2004	 	2003
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Cash Deposits & Securities
	 	 	 	 	 	$	120	 	 	$	30	 	 	$	18	 	 	$	18	 
	Trade Debtors
	 	 	 	 	 	$	1,230	 	 	$	248	 	 	$	0	 	 	$	0	 
	Provision for Doubtful Debts
	 	 	 	 	 	($	69	)	 	($	12	)	 	$	0	 	 	$	0	 
	Other Receivables
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total
	 	 	 	 	 	$	1,281	 	 	$	267	 	 	$	18	 	 	$	18	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	a) Movement in provision for doubtful debts
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	- Balance at beginning of year
	 	 	 	 	 	($	12	)	 	$	0	 	 	$	0	 	 	$	0	 
	- Doubtful debt provided for during the year
	 	 	 	 	 	($	72	)	 	($	13	)	 	$	0	 	 	$	0	 
	- Bad Debt written off during year
	 	 	 	 	 	$	15	 	 	$	0	 	 	$	0	 	 	$	0	 
	- Balance at end of year
	 	 	 	 	 	($	69	)	 	($	12	)	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	b) Credit
terms for voice clients are 14 days from
date of invoice issue date (generally by the 12th
of the month).
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Note 5: Other Current Assets
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2004	 	2003	 	2004	 	2003
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Prepayments — Insurance
	 	 	 	 	 	$	1	 	 	$	0	 	 	$	1	 	 	$	0	 
	Prepayment — Dealer Commission
	 	 	 	 	 	$	19	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total
	 	 	 	 	 	$	19	 	 	$	0	 	 	$	1	 	 	$	0	 
	 
	 
	Note 6: Future Income Tax Benefit
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2004	 	2003	 	2004	 	2003
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Rewards Provision
	 	 	 	 	 	$	78	 	 	 	 	 	 	$	78	 	 	 	 	 
	Super accrued
	 	 	 	 	 	$	4	 	 	 	 	 	 	$	4	 	 	 	 	 
	Prov for Doubtful Debt
	 	 	 	 	 	$	21	 	 	 	 	 	 	$	21	 	 	 	 	 
	Provision for Leave
	 	 	 	 	 	$	11	 	 	 	 	 	 	$	11	 	 	 	 	 
	Depreciation timing 02/03
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 	 	 	 	 
	Depreciation timing 03/04
	 	 	 	 	 	($	0	)	 	 	 	 	 	($	0	)	 	 	 	 
	Other
	 	 	 	 	 	$	0	 	 	 	 	 	 	$	0	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total
	 	 	 	 	 	$	114	 	 	$	0	 	 	$	114	 	 	$	0	 
	 

Page 13 of 18

 

 

Note 7: Investments

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Country of	 	% owned
	 	 	Incorporation	 	2004	 	2003
	Parent Entity:
	 	 	 	 	 	 	 	 	 	 	 	 
	- T3 Communication Partners Pty Ltd
	 	Aus	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Subsidiaries:
	 	 	 	 	 	 	 	 	 	 	 	 
	- T3 Communications Pty Ltd
	 	Aus	 	 	100	%	 	 	100	%
	 
	- T3 Technology Solutions Pty Ltd
	 	Aus	 	 	100	%	 	 	100	%
	 
	- T3 Rewards Pty Ltd
	 	Aus	 	 	100	%	 	 	100	%

Note 8: Payables

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2004	 	2003	 	2004	 	2003
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Trade Creditors
	 	 	 	 	 	$	1,110	 	 	$	147	 	 	$	1	 	 	$	3	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total
	 	 	 	 	 	$	1,110	 	 	$	147	 	 	$	1	 	 	$	3	 
	 
	Note 9: Provisions

	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2004	 	2003	 	2004	 	2003
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Accrual Trade Creditors
	 	 	 	 	 	$	127	 	 	$	15	 	 	$	38	 	 	$	0	 
	Accrual Payroll
	 	 	 	 	 	$	15	 	 	$	0	 	 	$	15	 	 	$	0	 
	Provision for Leave
	 	 	 	 	 	$	36	 	 	$	0	 	 	$	36	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total
	 	 	 	 	 	$	178	 	 	$	15	 	 	$	89	 	 	$	0	 
	 

Page 14 of 18

 

 

Note 10: Current Tax Liabilities

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2004	 	2003	 	2004	 	2003
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	GST liabilities
	 	 	 	 	 	$	15	 	 	$	3	 	 	($	2	)	 	($	1	)
	PAYG withholding
	 	 	 	 	 	$	10	 	 	$	20	 	 	$	10	 	 	$	20	 
	Superannuation
	 	 	 	 	 	$	14	 	 	$	37	 	 	$	14	 	 	$	37	 
	Income Tax Payable
	 	 	 	 	 	$	15	 	 	$	0	 	 	$	15	 	 	$	0	 
	Other
	 	 	 	 	 	($	0	)	 	$	3	 	 	$	0	 	 	$	3	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total
	 	 	 	 	 	$	54	 	 	$	63	 	 	$	37	 	 	$	59	 
	 
	Note 11: Provision for T3 Reward $
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2004	 	2003	 	2004	 	2003
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Movement in provision for T3 Rewards
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	- Balance at beginning of year
	 	 	 	 	 	$	36	 	 	$	0	 	 	$	0	 	 	$	0	 
	- Accrued T3 Rewards during the year
	 	 	 	 	 	$	472	 	 	$	43	 	 	$	0	 	 	$	0	 
	- T3 Rewards redeemed during year
	 	 	 	 	 	($	247	)	 	($	7	)	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	- Balance at end of year
	 	 	 	 	 	$	261	 	 	$	36	 	 	$	6	 	 	$	0	 
	 
	Note 12: Non- Current Intercompany Loans
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2004	 	2003	 	2004	 	2003
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Receivables
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	T3 Communications Intercompany
	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 	 	$	95	 
	T3 Technology Intercompany
	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 	 	$	73	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Payables
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	T3 Communications Intercompany
	 	 	 	 	 	 	 	 	 	 	 	 	 	$	249	 	 	$	0	 
	T3 Technology Intercompany
	 	 	 	 	 	 	 	 	 	 	 	 	 	$	25	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	274	 	 	$	168	 
	 

Page 15 of 18

 

 

Note 13: Long Term Borrowings

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2004	 	2003	 	2004	 	2003
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Convertible Notes
	 	 	0	 	 	$	214	 	 	$	0	 	 	$	214	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total
	 	 	 	 	 	$	214	 	 	$	0	 	 	$	214	 	 	$	0	 
	 

Note C:  20 convertible notes with $10,000 face value raised $200,000

- Interest Rate — initial rate of 12% pa calculated daily. Adjusted by the same basis points as
movement in the cash rate set by the Reserve Bank.

- interest was capitalised and added to the principal outstanding up to 15 April 2004. Thereafter,
interest will be paid to note holders on a monthly basis.

- The Convertible Notes expire on 15 January 2005.

Note 14: Contributed Equity

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2004	 	2003	 	2004	 	2003
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Issued and paid up capital
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ordinary shares
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	At the beginning of the reporting period
	 	 	 	 	 	$	550	 	 	$	550	 	 	$	550	 	 	$	550	 
	Movement
	 	 	 	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	At Reporting Date
	 	 	 	 	 	$	550	 	 	$	550	 	 	$	550	 	 	$	550	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Number of Shares (‘000)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ordinary shares

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	At the beginning of the reporting period
	 	 	 	 	 	 	20	 	 	 	20	 	 	 	20	 	 	 	20	 
	Movement
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	At Reporting Date
	 	 	 	 	 	 	20	 	 	 	20	 	 	 	20	 	 	 	20	 
	 

Page 16 of 18

 

 

Note 15: Retained Profits/ (Accumulated Losses)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2004	 	2003	 	2004	 	2003
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Retained Profits/ (Accumulated
Losses) at the beginning of the
financial year
	 	 	 	 	 	($	363	)	 	($	249	)	 	 	($   393	)	 	($	218	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Operating Profit/ (Loss)
	 	 	 	 	 	$	133	 	 	($	114	)	 	 	($   609	)	 	($	175	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Retained Profits/ (Accumulated
Losses) at the end of the financial
year
	 	 	 	 	 	($	231	)	 	($	363	)	 	 	(51,001	)	 	($	393	)
	 

Page 17 of 18

 

 

Note 16: Cash Flow Reconciliation

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2004	 	2003	 	2004	 	2003
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	(a) Reconciliation of Cashflow from Operation
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Activities after Income Tax
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Profit from Ordinary Activities after income tax
	 	 	 	 	 	$	133	 	 	($	114	)	 	($	609	)	 	($	175	)
	Non-cashflows in profit from ordinary activities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	- Depreciation
	 	 	 	 	 	$	19	 	 	$	14	 	 	$	3	 	 	$	3	 
	- Tax expense
	 	 	 	 	 	($	99	)	 	$	0	 	 	($	429	)	 	$	0	 
	- Provision for Doubtful Debt
	 	 	 	 	 	$	72	 	 	$	13	 	 	$	0	 	 	$	0	 
	- Debt forgiven booked as misc revenue
	 	 	 	 	 	$	0	 	 	($	440	)	 	$	0	 	 	($	440	)
	- writeback of interest expense previously
expensed
	 	 	 	 	 	$	0	 	 	($	14	)	 	$	0	 	 	($	15	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Change in assets and liabilities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	- (Incr)/ decr in Receivables
	 	 	 	 	 	($	893	)	 	($	217	)	 	$	0	 	 	$	0	 
	- (Incr)/ decr in Inventories
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	- (Incr)/ decr in Other Current Assets
	 	 	 	 	 	($	19	)	 	($	12	)	 	($	1	)	 	$	0	 
	- (Incr)/ decr in Future Income Tax Benefit
	 	 	 	 	 	($	114	)	 	$	0	 	 	($	15	)	 	$	0	 
	- Incr/ (decr) in Payables
	 	 	 	 	 	$	963	 	 	$	131	 	 	($	3	)	 	$	0	 
	- Incr/ (decr) in Provisions
	 	 	 	 	 	$	163	 	 	$	0	 	 	$	89	 	 	$	0	 
	- Incr/ (decr) in Current Tax liabilities
	 	 	 	 	 	($	9	)	 	$	41	 	 	($	22	)	 	$	34	 
	- Incr/ (decr) in Provision for T3 Reward $
	 	 	 	 	 	$	225	 	 	$	36	 	 	$	0	 	 	$	0	 
	- Incr/ (decr) in Other Payables
	 	 	 	 	 	$	7	 	 	$	6	 	 	$	0	 	 	$	0	 
	- Incr/ (decr) in Deferred Taxes
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Net Cash flow from Operating Activities
	 	 	 	 	 	$	442	 	 	($	557	)	 	($	986	)	 	($	592	)
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(b) Reconciliation of Cash Balance
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash Balance comprises:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash at Bank
	 	 	 	 	 	$	713	 	 	$	151	 	 	$	26	 	 	$	26	 
	Cash Management Account
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Closing bank balance
	 	 	 	 	 	$	713	 	 	$	151	 	 	$	26	 	 	$	26	 
	 

Page 18 of 18

 

 

T3 Communication Partners Pty Ltd

ABN: 69 099 404 654

Group Financial Statements 2004-2005

Page 1 of 18

 

Contents

	 	 	 	 	 
	Directors’ Report 
	 	 	3	 
	 
	 	 	 	 
	Statement of Financial Performance 
	 	 	5	 
	 
	 	 	 	 
	Statement of Financial Position
	 	 	6	 
	 
	 	 	 	 
	Statement of Cashflows
	 	 	7	 
	 
	 	 	 	 
	Notes to the Financial Statements
	 	 	8	 

Page 2 of 18

 

DIRECTORS’ REPORT

PRINCIPAL ACTIVITIES

T3 is a carrier service provider of voice and data services to small and medium businesses in
Australia. T3 has developed an exclusive and innovative rewards program for business customers.
During fiscal year 2004/2005 T3 launched its consumer services through T3 Wireless Broadband.

REVIEW OF OPERATIONS

This is our third full year of operations, and the numbers speak for themselves. Revenue grew
109% to $12.8 million while net profit after tax grew 315% to $553,000. As such, we are proud to
comment on the terrific financial results that the T3 Team has generated.

We have pursued two strategies. One is to continue to focus on the small to medium businesses
(SMB), selling voice and data services, and the second, through T3 Wireless a retail strategy
selling primarily to consumers.

SMB market is currently affected by price pressure, uncertainty over the Telstra sale, substitution
effect from mobiles and new technologies, like voice over the internet (VoIP). T3 is differentiated
by its rewards program and its exceptional service. In addition, we are investing in new
technologies, primarity VoIP to have a high quality product that meets and exceed SMB requirements.
This will ensure future growth.

Retail strategy is driven by T3 Wireless Broadband. Currently T3 sells this product through over 45
retail stores from major retailers including Bing Lee, David Jones, The Good Guys, Digital City,
Clive Anthonys and a few other IT stores. While currently it is the wireless broadband that
drives the sales, we believe that T3 will have the ability to cross-sell other products to both
consumers and the channels of distribution, including a VoIP solution.

Our past achievements and future successes is dependant on our people. We are confident that the
challenges that we are facing will continue to drive us to innovate, create efficiencies and most
importantly maintain our high standard of customer service to our clients. We take this opportunity
to thank the T3 Team, shareholders, customers and suppliers for their efforts in the past 12
months.

EVENTS SINCE BALANCE DATE

In July 2005, Jason Cynthia Pty Ltd and Teide Pty Ltd exercise their options for 1,053
ordinary shares each at a strike price of $1 per ordinary share. In addition, 10 Class F (RPF)
shares were issued to Teide Pty Ltd for $10. RPF, redeemable preference shares do not have voting
rights and no assignment rights.

Page 3 of 18

 

DIVIDENDS

A dividend of $3.75 per ordinary share ($75,000) was declared and paid on 14/12/2004 and
a second dividend of $3.75 per ordinary share ($75,000) was declared and paid on 15/04/2005.

DIRECTORS

Following are the names and details of the directors in office during the financial year and
at the date of this report:

Carlos Perez — Founder and Managing Director

Carlos has degrees in Finance and Economics and a Masters of Business Administration in Finance and
International Business. More than eleven years telecommunication experience in Australia and
overseas includes finance roles within Optus Communications and other major Australian
telecommunications companies. Carlos has international experience having been successfully involved
in eight telecommunication start up operations in eight different countries. He has also had senior
finance roles at other Australian publicly listed companies.

Claudio Tropea — Non-Executive Director

Claude is a member of the Australian Institute of Chartered Accountants, tax agent and Registered
Company Auditor with the Australian Securities and Investment Commission. He also serves as a
director on the Board of various investment, trading and trustee companies involved in small to
medium sized business in Australia.

As Managing Director of MBT Chartered Accountants Claude brings extensive experience in
taxation, auditing, general financial and business planning advice and management consulting to a
broad base of businesses ranging from small to medium private companies in a number of industry
sectors.

SUMMARY

In summary, 2004/05 was a very successful year for T3. A stronger financial position combined
with a Team that has a “can do” attitude will effectively launch new products, accelerate T3’s
geographic expansion and creatively addressing any challenges that competition brings in 2005/06.
We look forward to continuing the success and growth in the coming year.

	 	 	 
	Carlos Perez

	 	Claudio Tropea
	Managing Director

	 	Director
	Dated: 31 August 2005
	 	 

Page 4 of 18

 

Statements
of Financial Performance 

for the
year ended 30 June 2005

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2005	 	2004	 	2005	 	2004
	 	 	Notes	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Voice Revenue
	 	 	 	 	 	$	8,023	 	 	$	4,496	 	 	$	0	 	 	$	0	 
	Service & Equipment Revenue
	 	 	 	 	 	$	3,584	 	 	$	1,308	 	 	$	0	 	 	$	0	 
	Other Revenue from ordinary activities
	 	 	2	 	 	$	1,218	 	 	$	323	 	 	($	0	)	 	$	0	 
	 
	Total Revenue from ordinary activities
	 	 	 	 	 	$	12,825	 	 	$	6,128	 	 	($	0	)	 	$	0	 
	 
	Cost of Voice Services
	 	 	 	 	 	($	4,576	)	 	($	2,679	)	 	$	0	 	 	$	0	 
	Cost of Service & Equipment
	 	 	 	 	 	($	3,182	)	 	($	1,146	)	 	$	0	 	 	$	0	 
	Other Cost of Sales
	 	 	 	 	 	($	1,892	)	 	($	754	)	 	$	0	 	 	$	0	 
	Employee expenses
	 	 	 	 	 	($	1,234	)	 	($	654	)	 	($	1,234	)	 	($	652	)
	Consultancy expense
	 	 	 	 	 	($	366	)	 	($	383	)	 	($	343	)	 	($	358	)
	Other expenses from ordinary activities
	 	 	 	 	 	($	751	)	 	($	441	)	 	($	60	)	 	($	6	)
	Depreciation & amortisation expense
	 	 	 	 	 	($	27	)	 	($	19	)	 	($	3	)	 	($	3	)
	Borrowing Costs
	 	 	 	 	 	($	7	)	 	($	18	)	 	($	7	)	 	($	18	)
	 
	Profit (Loss) from ordinary activities before income tax
	 	 	 	 	 	$	789	 	 	$	34	 	 	($	1,646	)	 	($	1,038	)
	Income tax expense (benefit)
	 	 	3	 	 	$	237	 	 	($	99	)	 	($	494	)	 	($	429	)
	 
	Net Profit (Loss) from ordinary activities after income tax
	 	 	 	 	 	$	553	 	 	$	133	 	 	($	1,152	)	 	($	609	)
	Net profit attributable to outside equity interests
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	Net Profit (Loss) attributable to members of
T3 Communication Partners Pty Ltd
	 	 	 	 	 	$	553	 	 	$	133	 	 	($	1,152	)	 	($	609	)
	 
	Total revenues, expenses and valuation adjustments attributable to
members of T3 Communication Partners
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total changes in equity other than those resulting from transactions
with owners as owners
	 	 	 	 	 	$	553	 	 	$	133	 	 	($	1,152	)	 	($	609	)
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Basic Earnings Per Share ($A)
	 	 	 	 	 	$	27.63	 	 	$	6.63	 	 	 	 	 	 	 	 	 
	 

Page 5 of 18

 

Statements of Financial Position 
as at 30 June 2005

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2005	 	2004	 	2005	 	2004
	 	 	Notes	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Current Assets
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash assets
	 	 	 	 	 	$	1,516	 	 	$	713	 	 	$	5	 	 	$	26	 
	Receivables
	 	 	4	 	 	$	1,642	 	 	$	1,281	 	 	$	39	 	 	$	18	 
	Inventories
	 	 	 	 	 	$	84	 	 	$	0	 	 	$	0	 	 	$	0	 
	Other
	 	 	5	 	 	$	13	 	 	$	19	 	 	$	1	 	 	$	1	 
	 
	Total Current Assets
	 	 	 	 	 	$	3,255	 	 	$	2,013	 	 	$	45	 	 	$	45	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Non-Current Assets
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Future Income Tax Benefit
	 	 	6	 	 	$	220	 	 	$	114	 	 	$	220	 	 	$	114	 
	Receivables
	 	 	12	 	 	$	0	 	 	$	0	 	 	 	0	 	 	 	0	 
	Property, Plant & Equipment
	 	 	 	 	 	$	26	 	 	$	15	 	 	$	1	 	 	$	4	 
	Investment
	 	 	7	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	Total Non-Current Assets
	 	 	 	 	 	$	246	 	 	$	130	 	 	$	222	 	 	$	118	 
	 
	Total Assets
	 	 	 	 	 	$	3,502	 	 	$	2,142	 	 	$	267	 	 	$	163	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Current Liabilities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Payables
	 	 	8	 	 	$	1,617	 	 	$	1,110	 	 	$	1	 	 	$	1	 
	Provisions
	 	 	9	 	 	$	259	 	 	$	178	 	 	$	121	 	 	$	89	 
	Current Tax Liabilities
	 	 	10	 	 	$	377	 	 	$	54	 	 	$	363	 	 	$	37	 
	Provision for T3 Reward $
	 	 	11	 	 	$	521	 	 	$	261	 	 	$	0	 	 	$	0	 
	Other Payables
	 	 	 	 	 	$	6	 	 	$	7	 	 	$	0	 	 	$	0	 
	 
	Total Current Liabilities
	 	 	 	 	 	$	2,780	 	 	$	1,610	 	 	$	485	 	 	$	127	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Non-Current Liabilities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Payables
	 	 	12	 	 	$	0	 	 	$	0	 	 	$	1,535	 	 	$	274	 
	Long Term Borrowings
	 	 	13	 	 	$	0	 	 	$	214	 	 	$	0	 	 	$	214	 
	Provisions
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	Total Non-Current Liabilities
	 	 	 	 	 	$	0	 	 	$	214	 	 	$	1,535	 	 	$	488	 
	 
	Total Liabilities
	 	 	 	 	 	$	2,780	 	 	$	1,823	 	 	$	2,020	 	 	$	615	 
	 
	NET ASSETS
	 	 	 	 	 	$	722	 	 	$	319	 	 	($	1,753	)	 	($	451	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Equity
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Parent Entity interest
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Contributed equity
	 	 	14	 	 	$	550	 	 	$	550	 	 	$	550	 	 	$	550	 
	Retained
Profits/ (Accum Losses)
	 	 	15	 	 	$	172	 	 	($	363	)	 	($	2,304	)	 	($	1,151	)
	 
	Total Parent entity interest in equity
	 	 	 	 	 	$	722	 	 	$	187	 	 	($	1,753	)	 	($	601	)
	 
	Total outside equity interest
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	TOTAL EQUITY
	 	 	 	 	 	$	722	 	 	$	187	 	 	($	1,753	)	 	($	601	)

Page 6 of 18

 

Statements of Cashflow

for the year ended 30 June 2005

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2005	 	2004	 	2005	 	2004
	 	 	Notes	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Cashflows from Operating Activities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Receipts from customers
	 	 	 	 	 	$	13,153	 	 	$	5,549	 	 	($	0	)	 	($	1	)
	Payments to suppliers and employees
	 	 	 	 	 	($	11,995	)	 	($	5,093	)	 	($	1,627	)	 	($	967	)
	Tax Paid
	 	 	 	 	 	($	15	)	 	$	0	 	 	($	15	)	 	$	0	 
	Interest received
	 	 	 	 	 	$	71	 	 	$	5	 	 	$	0	 	 	$	0	 
	Interest Paid
	 	 	 	 	 	($	7	)	 	($	18	)	 	($	7	)	 	($	18	)
	 
	Net cash inflow (outflow) from
Operating Activities
	 	 	16	(a)	 	$	1,206	 	 	$	442	 	 	($	1,649	)	 	($	986	)
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cashflows from Investing Activities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Payment for purchase of property, plant and equipment
	 	 	 	 	 	($	38	)	 	($	10	)	 	($	0	)	 	$	0	 
	Proceeds from sale of property, plant and equipment
	 	 	 	 	 	$	0	 	 	$	6	 	 	$	0	 	 	$	0	 
	Payment for Security Deposits & Bonds
	 	 	 	 	 	($	3	)	 	($	100	)	 	$	0	 	 	($	0	)
	Refund of Security Deposits
	 	 	 	 	 	$	1	 	 	$	10	 	 	$	0	 	 	$	0	 
	Loans provided to other parties
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net cash outflow from Investing Activities
	 	 	 	 	 	($	39	)	 	($	94	)	 	($	0	)	 	($	0	)
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cashflows from Financing Activities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Proceeds from issue of Convertible Notes
	 	 	 	 	 	$	0	 	 	$	200	 	 	$	0	 	 	$	200	 
	Proceeds from issue of Shares
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	($	0	)
	Intercompany Loans
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	1,991	 	 	$	773	 
	Repayment of Borrowings
	 	 	 	 	 	($	214	)	 	$	0	 	 	($	214	)	 	$	0	 
	Increase in capitalised borrowing costs
	 	 	 	 	 	$	0	 	 	$	14	 	 	$	0	 	 	$	14	 
	Dividends Paid
	 	 	 	 	 	($	150	)	 	$	0	 	 	($	150	)	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net cash outflow from Financing Activities
	 	 	 	 	 	($	364	)	 	$	214	 	 	$	1,628	 	 	$	987	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net increase (decrease) in cash held
	 	 	 	 	 	$	803	 	 	$	562	 	 	($	21	)	 	$	1	 
	Cash at the beginning of the financial year
	 	 	 	 	 	$	713	 	 	$	151	 	 	$	26	 	 	$	26	 
	 
	Cash at the end of the financial year
	 	 	16	(b)	 	$	1,516	 	 	$	713	 	 	$	5	 	 	$	26	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

Page 7 of 18

 

Notes
to and forming part of the Financial StatementsAs at 30 June 2005

1. Statement of Significant Accounting Policies

The significant policies that have been adopted in the preparation of this financial report
are:

a) Basis of Accounting

The financial report is a general purpose financial report which has been prepared in accordance
with requirements of the Corporations Act 2001 which includes applicable Accounting Standards. The
financial statements have been prepared on the basis of historical costs and on an accrual basis,
and does not take into account, except where stated, changing money values or fair values of
non-current assets. The accounting policies have been consistently applied by the entities included
in the consolidated entity and are consistent with those of the previous financial year, except
where indicated.

b) Principles of Consolidation

The consolidated financial statements incorporate the assets and liabilities of all entities
controlled by T3 Communication Partners (parent entity) as at 30 June 2005 and the results of all
controlled entities for the year then ended. T3 Communication Partners Pty Ltd and its controlled
entities together are referred to in this financial report as the consolidated entity. The effects
of all transactions between entities in the consolidated entity are eliminated in full. The
financial statements of subsidiaries are prepared for the same reporting period as the parent
entity, using consistent accounting policies.

c) Revenue Recognition

Revenue is recognised when it is probable that future economic benefits will flow to the entity and
these benefits can be measured reliably. Amounts disclosed as revenue are net of call rebates,
discounts and taxes paid. Revenue is recognised for the major business activities as follows:

(i) Revenue from the sale of voice traffic is recognised in the period that the customers made the
voice calls.

(ii) Revenue from Voice Service & Equipment charges is charged one month in advance and is
recognised in the month it is billed to the clients.

(iii) Revenue from data services, including ADSL, Wireless, Premium DSL is charged in advance for
monthly access and arrears for usage and is recognised in the month it is billed.

(iv) Revenue from rendering of a service is recognised upon the delivery of the service to
customers.

(v) Revenue from annual rewards membership fee is recognised in advance at point of joining and at
each subsequent anniversary date.

(vi) Interest revenue is recognised in the period the interest was earned at the rate applicable to
the financial assets.

(vii) Revenue for iBurst wireless modems is recognised in the month that the modem is activated on
the network.

Page 8 of 18

 

d) Receivables

Trade accounts receivable, amounts due from related parties and other receivables represent the
principal amounts due at balance date less provisions for doubtful accounts.

Collectability of trade debtors is reviewed on an ongoing basis. Debts that are known to be
uncollectable are reviewed and written off twice a year.

A provision for doubtful debts is raised progressively at the current rate of 1.0% of monthly
revenue to cover debts that are 90day or more overdue. The rate of provisioning is reviewed
regularly to ensure sufficient cover.

e) Depreciation of Property, Plant & Equipment

Depreciation is calculated on a straight line basis to write off the net cost or revalued amount of
each item of property, plant and equipment over its expected useful life to the consolidated
entity. Estimates of remaining useful lives are made on a regular basis for all assets, with
annual, reassessments for major items.

The expected useful lives are as follows:

	 	 	 	 	 
	       Class of Fixed Asset	 	Useful Life
	Plant and office equipment
	 	3-5 yrs
	Telecommunications equipment
	 	3 yrs
	Computer equipment
	 	3 yrs
	Software
	 	12 mths
	Used Equipments
	 	12 mths

f) Employee benefits

Wages and salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating
sick leave expected to be settled within 12 months of the reporting date are recognised in current
provisions in respect of employees’ services up to the reporting date and are measured at the
amounts expected to be paid when the liabilities are settled.

Long Service Leave

Liabilities for Long Service Leave have not been provided for as all employees have less than 5
years service. Entitlements will only be provided for once employees have at least 5 years of
service.

g) Loans and Borrowing Costs

All loans are measured at the principal amount.

Borrowing costs are recognised as expenses in the period in which they are incurred.

Borrowing costs include:

	—	 	interest on Convertible Notes; and
	 
	—	 	interest on bank overdraft, where applicable.

h) Cash

For the purposes of the Statement of Cashflows, cash includes deposits at call with financial
institutions and other highly liquid investments with short periods to maturity which are readily
convertible to cash on hand, net of outstanding bank overdrafts.

i) Earnings per Share

Page 9 of 18

 

Basic
earnings per share

Basic earnings per share is determined by dividing net profit after income tax attributable
to members of the company, excluding any costs of servicing equity other than ordinary shares, by
the weighted average number of ordinary shares outstanding during the financial year, adjusted for
bonus elements in ordinary shares issued during the year.

j) Goods & Services Tax (GST)

Revenues,
expenses and assets are recognised net of the amount of the GST, except where the amount
of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances the
GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense.
Receivables and payables in the statement of financial position are shown inclusive of GST.

k) Trade & Other Payables

Liabilities for trade creditors and other amounts are carried at cost which is the fair
value of the consideration to be paid in the future for goods and services received, whether or not
billed to the consolidated entity.

l) Leases

Leases of fixed assets where substantially all risks and benefits incidental to the
ownership of the asset, but not the legal ownership, are transferred to entities in the economic
entity are classified as finance leases. Finance leases are capitalised, recording an asset and a
liability equal to the present value of the minimum lease payments, including any guaranteed
residual values. Leased assets are depreciated on a straight line basis over the estimated useful
lives where it is likely that the economic entity will obtain ownership of the asset over the term
of the lease. Lease payments are allocated between the reduction of the lease liability and the
lease interest expense for the period.

Rental payments for operating leases, where substantially all the risks and benefits remain with
the lessor, are charged as expenses in the periods which they are incurred.

m) Provision for T3 Reward Dollars

T3 Reward Dollars are earned when the client pays their invoices by the due date. An entry
is raised to book the accrued T3 Reward Dollars only after the rewards are earned. Up until fiscal
year 2004, 80% of T3 Reward Dollars earned is booked as an expense and provisioned as a
liabilities. The reason for accruing only 80% of T3 Reward Dollars is because this is the estimated
cost of the goods to T3 to redeem the T3 rewards dollars, ie. The average gross margin of T3
Rewards Dollar redemptions is calculated as 20%. Given that in the past 24 months the actual cost
of the goods redeemed is less than 75%, the accrual provision for fiscal year 2005 has been changed
to 75% of the T3 Reward Dollars earned by the customer. The impact for fiscal year 2005 is
approximately $35,000 in reduced accrued costs for the T3 Reward
Dollars.

n) Share Capital

Ordinary share capital is recognised at the fair value of the consideration received by the
company.

Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as
a reduction of the share proceeds received.

o) Income Tax

Page 10 of 18

 

Tax-effect accounting is applied using the liability method whereby income tax is regarded
as an expense and is calculated on the accounting profit after allowing for permanent differences.
To the extent timing differences occur between the time items are recognised in the financial
statements and when items are taken into account in determining taxable income, the net related
taxation benefit or liability, calculated at current tax rates, is disclosed as a future income tax
benefit or a provision for deferred income tax. The net future income tax benefit relating to tax
losses and timing differences is not carried forward as an asset unless the benefit is virtually
certain of being realised.

For income tax purposes, the tax return is prepared using the consolidation method. Entries for
income tax expense are recorded in the individual companies’
Statement of Financial Performance, however, the Future Income Tax Benefit and tax liabilities are recorded in the Parent
company’s Statement of Financial Position.

The income tax expense for the year is calculated using the 30% tax rate.

Page 11 of 18

 

Note 2: Other revenue from ordinary activities

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2005	 	2004	 	2005	 	2004
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Telstra Other Product Revenue
	 	 	 	 	 	$	597	 	 	$	192	 	 	$	0	 	 	$	0	 
	Annual Reward Membership Fee
	 	 	 	 	 	$	70	 	 	$	63	 	 	$	0	 	 	$	0	 
	Equipment Sales & Rental
	 	 	 	 	 	$	15	 	 	$	28	 	 	$	0	 	 	$	0	 
	T3 Broadband
	 	 	 	 	 	$	464	 	 	$	32	 	 	$	0	 	 	$	0	 
	Miscellaneous Revenue
	 	 	 	 	 	$	2	 	 	$	3	 	 	($	0	)	 	$	0	 
	Interest received
	 	 	 	 	 	$	71	 	 	$	5	 	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total
	 	 	 	 	 	$	1,218	 	 	$	323	 	 	($	0	)	 	$	0	 
	 
	 
	
Note 3: Income Tax

	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2005	 	2004	 	2005	 	2004
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Profit from Ordinary Activities before income tax expense
	 	 	 	 	 	$	789	 	 	$	34	 	 	($	1,646	)	 	($	1,038	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Income Tax calculated at 30% (2003: 30%)
	 	 	 	 	 	$	237	 	 	$	10	 	 	($	49	) 	 	($	311	)
	Tax Effect of Permanent Differences:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	- Non-allowable items
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 	 	 	 	 	 	 
	Income Tax adjusted for Permanent Differences
	 	 	 	 	 	$	237	 	 	$	10	 	 	($	494	)	 	($	311	)
	 	 	 	 	 	 	 
	Under/ (over) provision from prior year
	 	 	 	 	 	 	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	(Income Tax expense/ (benefit) from prior years
	 	 	B	 	 	$	0	 	 	($	109	)	 	 	 	 	 	($	118	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Aggregate Income Tax Expense/ (Benefit)
	 	 	 	 	 	$	237	 	 	($	99	)	 	($	494	)	 	($	429	)
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Tax Losses brought forward
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 

Note B: Income Tax Expense/ Benefit from Prior Years

Tax Effect
Accounting was implemented for the first time in 03/04 financial year resulting in the recording of prior years’ income tax benefit in the accounts.

Page 12 of 18

 

Note 4: Receivables

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2005	 	2004	 	2005	 	2004
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Cash Deposits & Securities
	 	 	 	 	 	$	122	 	 	$	120	 	 	$	18	 	 	$	18	 
	Trade Debtors
	 	 	 	 	 	$	1,639	 	 	$	1,230	 	 	$	0	 	 	$	0	 
	Provision for Doubtful Debts
	 	 	 	 	 	($	144	)	 	($	69	)	 	$	0	 	 	$	0	 
	Other Receivables
	 	 	 	 	 	$	25	 	 	$	0	 	 	$	20	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total
	 	 	 	 	 	$	1,642	 	 	$	1,281	 	 	$	39	 	 	$	18	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	a) Movement in provision for doubtful debts
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	- Balance at beginning of year
	 	 	 	 	 	($	69	)	 	($	12	)	 	$	0	 	 	$	0	 
	- Doubtful debt provided for during the year
	 	 	 	 	 	($	127	)	 	($	72	)	 	$	0	 	 	$	0	 
	- Bad Debt written off during year
	 	 	 	 	 	$	53	 	 	$	15	 	 	$	0	 	 	$	0	 
	- Balance
at end of year
	 	 	 	 	 	($	144	)	 	($	69	)	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	b) Credit
term for voice clients is 14 days from date
of invoice issue date (generally by the 8th of the month)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	c) Credit
term for Wireless clients is 7 days from date
of invoice issue date (generally by the 2nd of the month)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Note 5: Other Current
Assets

	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2005	 	2004	 	2005	 	2004
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Prepayments - Insurance
	 	 	 	 	 	$	2	 	 	$	1	 	 	$	1	 	 	$	1	 
	Prepayment - Dealer Commission
	 	 	 	 	 	$	11	 	 	$	19	 	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total
	 	 	 	 	 	$	13	 	 	$	19	 	 	$	1	 	 	$	1	 
	 
	 
	Note 6: Future Income Tax
Benefit

	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2005	 	2004	 	2005	 	2004
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Rewards Provision
	 	 	 	 	 	$	156	 	 	$	78	 	 	$	156	 	 	$	78	 
	Super accrued
	 	 	 	 	 	$	0	 	 	$	4	 	 	$	0	 	 	$	4	 
	Prov for Doubtful Debt
	 	 	 	 	 	$	43	 	 	$	21	 	 	$	43	 	 	$	21	 
	Provision for Leave
	 	 	 	 	 	$	20	 	 	$	11	 	 	$	20	 	 	$	11	 
	Depreciation timing 02/03
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	Depreciation timing 03/04
	 	 	 	 	 	($	0	)	 	($	0	)	 	($	0	)	 	($	0	)
	Other
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total
	 	 	 	 	 	$	220	 	 	$	114	 	 	$	220	 	 	$	114	 
	 

Page 13 of 18

 

Note 7: Investments

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Country of	 	% owned
	 	 	Incorporation	 	2004	 	2003
	 
	Parent Entity:
	 	 	 	 	 	 	 	 	 	 	 	 
	- T3 Communication Partners Pty Ltd
	 	Aus	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Subsidiaries:
	 	 	 	 	 	 	 	 	 	 	 	 
	- T3 Communications Pty Ltd
	 	Aus	 	 	100	%	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	- T3 Technology Solutions Pty Ltd
	 	Aus	 	 	100	%	 	 	100	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	- T3 Rewards Pty Ltd
	 	Aus	 	 	100	%	 	 	100	%
	 

Note 8: Payables

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2005	 	2004	 	2005	 	2004
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Trade Creditors
	 	 	 	 	 	$	1,617	 	 	$	1,110	 	 	$	1	 	 	$	1	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total
	 	 	 	 	 	$	1,617	 	 	$	1,110	 	 	$	1	 	 	$	1	 
	 
	 
	Note 9: Provisions

	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2005	 	2004	 	2005	 	2004
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Accrual Trade Creditors
	 	 	 	 	 	$	99	 	 	$	127	 	 	$	3	 	 	$	38	 
	Accrual Payroll
	 	 	 	 	 	$	50	 	 	$	15	 	 	$	50	 	 	$	15	 
	Provision for Leave
	 	 	 	 	 	$	68	 	 	$	36	 	 	$	68	 	 	$	36	 
	Unearned Income - Wireless Equipment
	 	 	 	 	 	$	42	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total
	 	 	 	 	 	$	259	 	 	$	178	 	 	$	121	 	 	$	89	 
	 

Page 14 of 18

 

Note 10: Current Tax Liabilities

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2005	 	2004	 	2005	 	2004
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	GST liabilities
	 	 	 	 	 	$	10	 	 	$	15	 	 	($	4	)	 	($	2	)
	PAYG withholding
	 	 	 	 	 	$	21	 	 	$	10	 	 	$	21	 	 	$	10	 
	Superannuation
	 	 	 	 	 	$	1	 	 	$	14	 	 	$	1	 	 	$	14	 
	Income Tax Provision
	 	 	 	 	 	$	343	 	 	$	15	 	 	$	343	 	 	$	15	 
	Other
	 	 	 	 	 	$	2	 	 	($	0	)	 	$	2	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total
	 	 	 	 	 	$	377	 	 	$	54	 	 	$	363	 	 	$	37	 
	 
	 
	
Note 11: Provision for T3 Reward
$

	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2005	 	2004	 	2005	 	2004
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Movement in provision for T3 Rewards
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	- Balance at beginning of year
	 	 	 	 	 	$	261	 	 	$	36	 	 	$	0	 	 	$	0	 
	- Accrued T3 Rewards during the year
	 	 	 	 	 	$	917	 	 	$	472	 	 	$	0	 	 	$	0	 
	- T3 Rewards redeemed during year
	 	 	 	 	 	($	657	)	 	($	247	)	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	- Balance at end of year
	 	 	 	 	 	$	521	 	 	$	261	 	 	$	0	 	 	$	0	 
	 
	 
	Note 12: Non- Current Intercompany
Loans

	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2005	 	2004	 	2005	 	2004
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Receivables
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	T3 Communications Intercompany
	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 	 	$	0	 
	T3 Technology Intercompany
	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Payables
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	T3 Communications Intercompany
	 	 	 	 	 	 	 	 	 	 	 	 	 	$	1,422	 	 	$	249	 
	T3 Technology Intercompany
	 	 	 	 	 	 	 	 	 	 	 	 	 	$	113	 	 	$	25	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	1,535	 	 	$	274	 
	 

Page 15 of 18

 

Note 13: Long Term Borrowings

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2005	 	2004	 	2005	 	2004
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Convertible Notes
	 	 	 C	 	 	$	0	 	 	$	214	 	 	$	0	 	 	$	214	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Total
	 	 	 	 	 	$	0	 	 	$	214	 	 	$	0	 	 	$	214	 
	 

			
	Note	 	C: 20 convertible notes with $10,000 face value raised $200,000

			
		 	 - Interest Rate — initial rate of 12% pa calculated daily. Adjusted by the
same basis points as movement in the cash rate set by the Reserve Bank.

			
		 	 - Interest was capitalised and added to the principal outstanding up to 15 April
2004. Thereafter, interest will be paid to note holders on a monthly basis.

			
		 	 - The Convertible Notes expire or 15 January 2005.

			
		 	 - Convertible Notes fully repaid Oct 04

Note
14: Contributed Equity

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2005	 	2004	 	2005	 	2004
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Issued and paid up capital

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ordinary shares
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	At the
beginning of the reporting
period
	 	 	 	 	 	$	550	 	 	$	550	 	 	$	550	 	 	$	550	 
	Movement
	 	 	 	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	At Reporting Date
	 	 	 	 	 	$	550	 	 	$	550	 	 	$	550	 	 	$	550	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Number of Shares (‘000)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Ordinary shares
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	At the beginning of the
reporting period
	 	 	 	 	 	 	20	 	 	 	20	 	 	 	20	 	 	 	20	 
	Movement
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	At Reporting Date
	 	 	 	 	 	 	20	 	 	 	20	 	 	 	20	 	 	 	20	 
	 

Page 16 of 18

 

 

Note 15: Retained Profits/ (Accumulated Losses)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2005	 	2004	 	2005	 	2004
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	Retained
Profits/ (Accumulated Losses) at the
beginning of the financial year
	 	 	 	 	 	($	231	)	 	($	363	)	 	($	1,001	)	 	($	393	)
	Dividends Provided For and paid
	 	 	 	 	 	($	150	)	 	$	0	 	 	($	150	)	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Operating Profit/ (Loss)
	 	 	 	 	 	$	553	 	 	$	133	 	 	($	1,152	)	 	($	609	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Retained Profits/ (Accumulated Losses) at the
end of the financial year
	 	 	 	 	 	$	172	 	 	($231	)	 	($	2,304	)	 	($	1,001	)
	 

Page 17 of 18

 

 

Note
16: Cash Flow Reconciliation

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	2005	 	2004	 	2005	 	2004
	 	 	Note	 	$’000	 	$’000	 	$’000	 	$’000
	 
	(a)
Reconciliation of Cashflow from Operation
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Activities after income Tax
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Profit from Ordinary Activities after income tax
	 	 	 	 	 	$	553	 	 	$	133	 	 	($	1,152	)	 	($	609	)
	Non-cashflows in profit from ordinary activities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	- Depreciation
	 	 	 	 	 	$	27	 	 	$	19	 	 	$	3	 	 	$	3	 
	- Tax expense
	 	 	 	 	 	$	0	 	 	($	99	)	 	($	494	)	 	($	429	)
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Change in assets and liabilities
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	- (Incr)/ decr in Receivables
	 	 	 	 	 	($	410	)	 	($	898	)	 	($	20	)	 	$	0	 
	- Incr/ (decr) in Prov for Doubtful Debts
	 	 	 	 	 	$	75	 	 	$	72	 	 	$	0	 	 	$	0	 
	- (Incr)/ decr in Inventories
	 	 	 	 	 	($	84	)	 	$	0	 	 	$	0	 	 	$	0	 
	- (Incr)/ decr in Other Current Assets
	 	 	 	 	 	($	18	)	 	($	19	)	 	($	1	)	 	($	1	)
	- (Incr)/ decr in Future Income Tax Benefit
	 	 	 	 	 	($	106	)	 	($	114	)	 	$	0	 	 	($	15	)
	- Incr/ (decr) in Payables
	 	 	 	 	 	$	507	 	 	$	963	 	 	$	0	 	 	($	3	)
	- Incr/ (decr) in Provisions
	 	 	 	 	 	$	114	 	 	$	163	 	 	$	23	 	 	$	89	 
	- Incr/ (decr) in Current Tax liabilities
	 	 	 	 	 	$	334	 	 	($	9	)	 	$	5	 	 	($	22	)
	- Incr/ (decr) in Provision for T3 Reward $
	 	 	 	 	 	$	216	 	 	$	225	 	 	$	0	 	 	$	0	 
	- Incr/ (decr) in Other Payables
	 	 	 	 	 	($	2	)	 	$	7	 	 	$	0	 	 	$	0	 
	- Incr/ (decr) in Deferred Taxes
	 	 	 	 	 	$	0	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Net Cash flow from Operating
Activities
	 	 	 	 	 	$	1,206	 	 	$	442	 	 	($	1,636	)	 	($	986	)
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(b) Reconciliation of Cash Balance
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash Balance comprises:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cash at Bank
	 	 	 	 	 	$	512	 	 	$	713	 	 	$	5	 	 	$	26	 
	Cash Management Account
	 	 	 	 	 	$	1,004	 	 	$	0	 	 	$	0	 	 	$	0	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	Closing bank balance
	 	 	 	 	 	$	1,516	 	 	$	713	 	 	$	5	 	 	$	26	 
	 

	(c)	 	Overdraft Facility

	 	 	 
	 	 	An Overdraft Facility was established with Westpac in June 2005 for $300,000

Page 18 of 18

 

 

T3 Communication Partners Pty Ltd

ABN: 69 099 404 654

Group Financial Statements

Quarter ended Sep-05

Page 1 of 4

 

Statements of Financial Performance

for the Quarter ended 30 September 2005

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	Sep 05 Qtr	 	Sep 05 Qtr
	 	 	Notes	 	$’000	 	$’000
	 
	Voice Revenue
	 	 	 	 	 	$	2,191	 	 	$	0	 
	Service & Equipment Revenue
	 	 	 	 	 	$	975	 	 	$	0	 
	Other Revenue from ordinary activities
	 	 	1	 	 	$	713	 	 	$	180	 
	 
	Total Revenue from ordinary activities
	 	 	 	 	 	$	3,880	 	 	$	180	 
	 
	Cost of Voice Services
	 	 	 	 	 	($	1,208	)	 	$	0	 
	Cost of Service & Equipment
	 	 	 	 	 	($	868	)	 	$	0	 
	Other Cost of Sales
	 	 	 	 	 	($	683	)	 	$	0	 
	Employee expenses
	 	 	2	 	 	($	587	)	 	($	586	)
	Consultancy expense
	 	 	3	 	 	($	226	)	 	($	223	)
	Other expenses from ordinary activities
	 	 	 	 	 	($	225	)	 	($	16	)
	Depreciation & amortisation expense
	 	 	 	 	 	($	6	)	 	($	0	)
	Borrowing Costs
	 	 	 	 	 	$	0	 	 	$	0	 
	 
	Profit (Loss) from ordinary activities before income tax
	 	 	 	 	 	$	77	 	 	($	646	)
	Income tax expense (benefit)
	 	 	 	 	 	$	23	 	 	($	194	)
	 
	Net Profit (Loss) from ordinary activities after income tax
	 	 	 	 	 	$	54	 	 	($	452	)
	Net profit attributable to outside equity interests
	 	 	 	 	 	$	0	 	 	$	0	 
	 
	Net Profit (Loss) attributable to members of
T3 Communication Partners Pty Ltd
	 	 	 	 	 	$	54	 	 	($	452	)
	 
	Total revenues, expenses and valuation adjustments
attributable to members of T3 Communication Partners
	 	 	 	 	 	$	0	 	 	$	0	 
	 
	Total changes in equity other than those resulting from
transactions with owners as owners
	 	 	 	 	 	$	54	 	 	($	452)	 
	 

			
	Notes:	 	 
	 
	1)	 	Includes a once off other income of $180,000
	 
	2)	 	Includes a special bonus payment of $225,000
	 
	3)	 	Includes a once off payment of $120,000 to exercise an option with Looking Glass Media

Page 2 of 4

 

Statements
of Financial Position
 as at 30 September 2005

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	Sep 05 Qtr	 	Sep 05 Qtr
	 	 	Notes	 	$’000	 	$’000
	 
	Current Assets
	 	 	 	 	 	 	 	 	 	 	 	 
	Cash assets
	 	 	 	 	 	$	1,460	 	 	$	26	 
	Receivables
	 	 	1	 	 	$	2,027	 	 	$	365	 
	Inventories
	 	 	 	 	 	$	95	 	 	$	0	 
	Other
	 	 	 	 	 	$	10	 	 	$	0	 
	 
	Total Current Assets
	 	 	 	 	 	$	3,592	 	 	$	391	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Non-Current Assets
	 	 	 	 	 	 	 	 	 	 	 	 
	Future Income Tax Benefit
	 	 	 	 	 	$	250	 	 	$	250	 
	Receivables
	 	 	 	 	 	$	0	 	 	 	0	 
	Property, Plant & Equipment
	 	 	 	 	 	$	29	 	 	$	1	 
	Investment
	 	 	 	 	 	$	0	 	 	$	0	 
	 
	Total Non-Current Assets
	 	 	 	 	 	$	279	 	 	$	251	 
	 
	Total Assets
	 	 	 	 	 	$	3,870	 	 	$	642	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Current Liabilities
	 	 	 	 	 	 	 	 	 	 	 	 
	Payables
	 	 	 	 	 	$	1,527	 	 	$	5	 
	Provisions
	 	 	2	 	 	$	685	 	 	$	468	 
	Current Tax Liabilities
	 	 	 	 	 	$	391	 	 	$	366	 
	Provision for T3 Reward $
	 	 	 	 	 	$	540	 	 	$	0	 
	Other Payables
	 	 	 	 	 	$	10	 	 	$	0	 
	 
	Total Current Liabilities
	 	 	 	 	 	$	3,153	 	 	$	838	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Non-Current Liabilities
	 	 	 	 	 	 	 	 	 	 	 	 
	Payables
	 	 	 	 	 	$	0	 	 	$	2,067	 
	Long Term Borrowings
	 	 	 	 	 	$	0	 	 	$	0	 
	Provisions
	 	 	 	 	 	$	0	 	 	$	0	 
	 
	Total Non-Current Liabilities
	 	 	 	 	 	$	0	 	 	$	2,067	 
	 
	Total Liabilities
	 	 	 	 	 	$	3,153	 	 	$	2,906	 
	 
	NET ASSETS
	 	 	 	 	 	$	718	 	 	($	2,264	)
	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Equity
	 	 	 	 	 	 	 	 	 	 	 	 
	Parent Entity interest
	 	 	 	 	 	 	 	 	 	 	 	 
	Contributed equity
	 	 	3	 	 	$	717	 	 	$	717	 
	Retained Profits/ (Accum Losses)
	 	 	 	 	 	$	1	 	 	($	2,981	)
	 
	Total Parent entity interest in equity
	 	 	 	 	 	$	718	 	 	($	2,264	)
	 
	Total outside equity interest
	 	 	 	 	 	$	0	 	 	$	0	 
	 
	TOTAL EQUITY
	 	 	 	 	 	$	718	 	 	($	2,264	)
	 
	 

			
	Notes:	 	 
	 
	1)	 	$345,000 outstanding from Evogue.
	 
	2)	 	Once off payments of $120,000 to Lookingglass Media and $225,000 employee bonus
	 
	3)	 	1 ordinary share was issued to Evoge Pty Ltd as at 30 September 2005 for $165,000

Page 3 of 4

 

Statements of Cashflow

for the Quarter ended 30 September 2005

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Consolidated	 	Parent Entity
	 	 	 	 	 	 	Sep 05 Qtr	 	Sep 05 Qtr
	 	 	Notes	 	$’000	 	$’000
	 
	Cashflows from Operating Activities
	 	 	 	 	 	 	 	 	 	 	 	 
	Receipts from customers
	 	 	 	 	 	$	3,590	 	 	$	180	 
	Payments to suppliers and employees
	 	 	 	 	 	($	3,349	)	 	($	595	)
	Tax Paid
	 	 	 	 	 	($	90	)	 	($	90	)
	Interest received
	 	 	 	 	 	$	25	 	 	$	0	 
	Interest Paid
	 	 	 	 	 	$	0	 	 	$	0	 
	 
	Net cash inflow (outflow) from
Operating Activities
	 	 	 	 	 	$	176	 	 	($	505	)
	 
	 
	Cashflows from Investing Activities
	 	 	 	 	 	 	 	 	 	 	 	 
	Payment for purchase of property, plant and equipment
	 	 	 	 	 	($	9)	 	 	$	0	 
	Proceeds from sale of property, plant and equipment
	 	 	 	 	 	$	0	 	 	$	0	 
	Payment for Security Deposits & Bonds
	 	 	 	 	 	$	0	 	 	$	0	 
	Refund of Security Deposits
	 	 	 	 	 	$	0	 	 	$	0	 
	Loans provided to other parties
	 	 	 	 	 	$	0	 	 	$	0	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Net cash outflow from Investing Activities
	 	 	 	 	 	($	9	)	 	$	0	 
	 
	 
	Cashflows from Financing Activities
	 	 	 	 	 	 	 	 	 	 	 	 
	Proceeds from issue of Convertible Notes
	 	 	 	 	 	$	0	 	 	$	0	 
	Proceeds from Issue of Shares
	 	 	 	 	 	$	2	 	 	$	2	 
	Intercompany Loans
	 	 	 	 	 	$	0	 	 	$	749	 
	Repayment of Borrowings
	 	 	 	 	 	$	0	 	 	$	0	 
	Increase in capitalised borrowing costs
	 	 	 	 	 	$	0	 	 	$	0	 
	Dividends Paid
	 	 	 	 	 	($	225	)	 	($	225	)
	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Net cash outflow from Financing Activities
	 	 	 	 	 	($	223	)	 	$	527	 
	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Net increase (decrease) in cash held
	 	 	 	 	 	($	56	)	 	$	21	 
	Cash at the beginning of the financial year
	 	 	 	 	 	$	1,516	 	 	$	5	 
	 
	Cash at the end of the financial year
	 	 	 	 	 	$	1,460	 	 	$	26	 
	 
	 

Page 4 of 4

 

Schedule 11 — Employees of the Company and salary packages

Salary Table for the Share Sale Agreement

Important
information:

Base Salary is exclusive of superannuation of 9%

Effective 1/10/05. Shows Staff at T3 as of 20/10/05

Remuneration already reflected in the Business Plan provided

Continuance of T3 Discreationary Profit Share Program is assumed

Profit Share column is presented for indicative purposes only

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	Potential Change	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	and date reflected	 	 	 	 	 	 	 	 	 	 
	Name Function	 	 	Start Date	 	 	Position	 	 	in Business Plan	 	 	Base Salary	 	Super	 	Allowance (pa)	 	 	Total
	Carlos Perez	 	 	2-Jan-02	 	 	Managing Director	 	 	 	 	 	New Agreement to be signed	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Frank Bradicich	 	 	1-Nov-02	 	 	Sales - GM - Consultant	 	 	 	 	 	New consultant Agreement has been pul in place	 	 	 	 	 
	Hanna Taktak
	 	 	28-Oct-02	 	 	Snr Sales Executive - Sydney	 	 	 	 	 	$	70.000	 	 	$	6,300	 	 	$	10,400	 	 	 	$	86,700	 
	James Han
	 	 	28-Jan-03	 	 	Snr Sales Executive - Sydney	 	 	 	 	 	$	45,872	 	 	$	4,128	 	 	$	10,400	 	 	 	$	60,400	 
	 
	 	 	 	 	 	 	 	 	 	 	 	$	1,764	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Rahman, Mijanur
	 	 	18-Apr-05	 	 	Telemarketer - Bus Develop Exec	 	 	 	 	 	$	40,000	 	 	$	3,600	 	 	 	 	 	 	 	$	43,600	 
	Shearing, Frederick
	 	 	16-May-05	 	 	Telemarketer - Bus Develop Exec	 	 	 	 	 	$	40,000	 	 	$	3,600	 	 	 	 	 	 	 	$	43,600	 
	Westin, Ron
	 	 	30-May-05	 	 	Telemarketer - Bus Develop Exec	 	 	 	 	 	$	40,000	 	 	$	3,600	 	 	 	 	 	 	 	$	43,600	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Henry Du
	 	 	2-Apr-03	 	 	Head of Operations/ Finance	 	 	 	 	 	$	104,500	 	 	$	9,405	 	 	 	 	 	 	 	$	113,905	 
	Martin Ho
	 	 	1-Mar-04	 	 	Asst Management Accountant	 	 	 	 	 	$	45,000	 	 	$	4,050	 	 	 	 	 	 	 	$	49,050	 
	Kate Holmes
	 	 	24-Feb-03	 	 	Accounts Manager - Operations	 	 	 	 	 	$	45,000	 	 	$	4,050	 	 	 	 	 	 	 	$	49,050	 
	Kim Nguyen
	 	 	August-05	 	 	Accounts Manager - Operations	 	 	 	 	 	$	41,000	 	 	$	3.690	 	 	 	 	 	 	 	$	44,690	 
	Rebecca Clarke
	 	 	6-Sep-04	 	 	Accounts Manager - Operations	 	 	 	 	 	$	54,900	 	 	$	4,941	 	 	 	 	 	 	 	$	59,841	 
	Ben Forsyth
	 	 	12-Jan-04	 	 	Accounts Manager - On Road	 	 	$55k Jan 06	 	 	$	50,000	 	 	$	4,500	 	 	$	10,000	 	 	 	$	64,500	 
	Richard Lam
	 	 	28-Jan-04	 	 	Operations - Provisioning	 	 	 	 	 	$	40,005	 	 	$	3,600	 	 	 	 	 	 	 	$	43,605	 
	Cassandra McMahon
	 	 	17-Feb-03	 	 	Accounts Manager - Operations (on Leave)	 	 	 	 	$	50,000	 	 	$	4,500	 	 	 	 	 	 	 	$	54,500	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Mike Smith
	 	 	6-Jul-04	 	 	Data Manager	 	 	 	 	 	$	80,000	 	 	$	7,200	 	 	$	946	 	 	 	$	88,148	 
	Chris Freeman
	 	 	9-Aug-04	 	 	Data Customer Support	 	 	$40K Dec 05	 	 	$	35,000	 	 	$	3,150	 	 	 	 	 	 	 	$	38,150	 
	Aaron Dixon
	 	 	1-Jan-05	 	 	System Programmer	 	 	$50k Jan 06	 	 	$	40,000	 	 	$	3,600	 	 	 	 	 	 	 	$	43,600	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Gaynor Silsbury
	 	 	16-Jun-03	 	 	Marketing Manager	 	 	$70k Mar 06	 	 	$	65,000	 	 	 	 	 	 	 	 	 	 	 	$	65,000	 
	 

Vacancies in the process of being filled

Junior Management Accountant

Accounts Manager - Operations

50

 

Schedule 12 — Material Contracts

	1.	 	Agreement between the Company and Telstra Corporation Limited;
	 
	2.	 	Agreement between the Company and MCI Australia Pty Ltd;
	 
	3.	 	Agreement between the Company and Unitel Australia Pty Ltd (RSL Com);
	 
	4.	 	Agreement between the Company and Powertel Limited;
	 
	5.	 	Agreement between the Company and AAPT Limited;
	 
	6.	 	Agreement between the Company and Engin Limited;
	 
	7.	 	Agreement between the Company and Personal Broadband Australia Pty Ltd;
	 
	8.	 	Agreement between the Company and SPTCom Pty Ltd (Comindico); and
	 
	9.	 	The Property Lease between the Company and 6/97 Pacific Highway Pty Ltd.

51

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