OTC/PINK Breaking Material Events

[Penny Machine]

FDTC - November 6, 2013

Dear Shareholders,

I am pleased to share with you our 2012-2013 unaudited financial year end results. A few highlights from fiscal 2013:

As of August 31, 2012, the South African branch office of the US entity was merged with the South African subsidiary.
Robert Klein, CEO of the South African operation, completed his contract with us early in 2013.
Lenus Le Roux, who has been with the company since early 2008, starting as our Fraud and Compliance Manager and who was then promoted to Operations Manager in late 2008, was appointed, upon Robert’s departure, to Executive Director of our South African subsidiary.
The development of our own platform in South Africa was substantially completed, with the transition from the 3 party licensed platform occurring in September 2013. The value of the new platform, approximately $597,000, was capitalized, with approximately $537,000 of the total allocated as a prior period adjustment. The 2012 financial data in the Consolidated Financial Statement for Fiscal Years Ending August 31, 2013 and 2012 have been revised to reflect the capitalization.
Due to the transition to our own platform in September, 2013, the unamortized balance of approximately $530,000 for the licensed platform was written off.
Cash used for operations decreased approximately $411,000, or 42%, over the prior fiscal year.
Cash from financing decreased $1,045,000, or 70%, over the prior fiscal year.
Our Net Loss of $1,686,000 (including an exceptional item write off of $530,000) was a decrease of approximately $164,000, or 9%. Our gross margin decreased $36,000, or 3%, and our total operating expense decreased $759,000, or 24%, with approximately 66% of the decrease attributable to reduced salaries and associated expense and 13% for general and administrative expense. To note, the 11% decrease in the foreign exchange rate over the past year presents a negative impact on this year’s results as compared to last year. Prior to applying the exchange rate, revenue actually increased approximately $353,400, or 12% and gross margin increased approximately $129,000, or 11%.

Given the many additional features built in to the new platform, an independent review of our business strategy going forward was undertaken in August and discussions are now ongoing that could lead to an investment by a strategic partner based in South Africa. Our own platform will provide supplementary services to both existing and new customers which, in turn, will deliver new revenue streams.

I would like to congratulate our staff on their accomplishments this year, in particular the completion of our own transaction processing platform, and to thank them for their continued hard work and dedication.

Your continued support of our company is sincerely appreciated.

Very truly yours,

Raymond Goldsmith
Chairman & CEO

T + 1 678 805 2500
F + 1 678 805 2501

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