TGNT 10-Q Quarterly Report April 30, 2013 | Alphaminr
Totaligent, Inc.
ALPHAMINR

TGNT 10-Q Quarter ended April 30, 2013

Balance Sheet
Cash Flow
Income Statement
TOTALIGENT, INC.
10-Q 1 f10q0413_sourcefinancial.htm QUARTERLY REPORT f10q0413_sourcefinancial.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 10-Q
_______________
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2013

or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______to______.
Commission File Number: 033-26828

SOURCE FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Delaware
58-1921737
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
1093 Broxton Avenue Suite 210
Los Angeles, CA 90024
(Address of principal executive offices) (Zip Code)
_______________
(310) 443-9246
(Registrant’s telephone number, including area code)
_______________
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
(Do not check if a smaller reporting company)
o
Smaller reporting company
x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock: As of June 14, 2013, there were 136,964,656 shares of common stock issued and outstanding.
SOURCE FINANCIAL, INC.
FORM 10-Q
April 30, 2013
INDEX
PART I—FINANCIAL INFORMATION
Item 1.
Financial Statements
F-1
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
3
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
9
Item 4.
Control and Procedures
9
PART II—OTHER INFORMATION
Item 1.
Legal Proceedings
10
Item 1A
Risk Factors
10
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
10
Item 3.
Defaults Upon Senior Securities
11
Item 4.
Mine Safety Disclosures
11
Item 5.
Other Information
11
Item 6.
Exhibits
11
SIGNATURES
12

PART I - FINANCIAL INFORMATION

Item 1.     Financial Statements.
Source Financial, Inc.
(Formerly Known as The Wiki Group, Inc.)
Index to Financial Statements
April 30 and January 31, 2013
Page
Number
Report of Independent Registered Public Accounting Firm
Financial Statements:
Balance Sheets as of April 30 and January 31, 2013
F-2
Statements of Operations for the three months ended
April 30, 2013 and 2012
F-3
Statement of Changes in Shareholders' Deficit
for the three months ended April 30, 2013 and year ended January 31, 2013
F-4
Statement of Cash Flows for three months ended
April 30, 2013 and 2012
F-5
Notes to Financial Statements
F-6 to F-9
F-1
Source Financial, Inc.
(Formerly Known as The Wiki Group, Inc.)
Balance Sheets
As of April 30, 2013 and January 31, 2013
April 30,
January 31,
Assets
2013
2013
Current assets:
Cash and cash equivalents
$ 117,285 $ 13,018
Prepaid expenses
6,128 -
Total current assets
123,413 13,018
Fixed assets:
Computer equipment
19,843 19,843
19,843 19,843
Less: accumulated depreciation
(10,077 ) (9,085 )
Fixed assets, net
9,766 10,758
Other assets:
Deposits
1,957 1,957
Domain names
74,970 74,942
Software development costs
98,320 41,117
Deferred payment processing costs
55,000 62,500
Total other assets
230,247 180,516
$ 363,426 $ 204,292
Liabilities and Shareholders' Deficit
Liabilities
Current liabilities:
Accounts payable
$ 3,000 $ 3,000
Accrued expenses
54,684 26,817
Derivative liabilities
5,193 67,613
Convertible notes payables, net of discounts on debt of $22,507 and $24,895
889,545 497,157
Total current liabilities
952,422 594,587
Total liabilities
952,422 594,587
Stockholders' (deficit)
Preferred stock, Series A, at $0.01 par value; 10,000,000 shares authorized;
none issued and outstanding at April 30, 2013 and January 31, 2013
- -
Common stock; at $0.1 par value; 500,000,000 shares authorized;
2,061,637 shares issued and outstanding at April 30, 2013 and
207,664,055 shares (pre-split) issued and outstanding at January 31, 2013
206,125 207,663
Additional paid-in capital
10,101,933 10,100,395
Accumulated deficit
(10,887,216 ) (10,688,515 )
Treasury stock, 98,375 common shares, at cost
(9,838 ) (9,838 )
Total stockholders' deficit
(588,996 ) (390,295 )
Total liabilities and stockholders' deficit
$ 363,426 $ 204,292
The accompanying notes are an integral part of these financial statements.
F-2
Source Financial, Inc.
(Formerly Known as The Wiki Group, Inc.)
Statements of Operations
For the three months ended
April 30,
2013
2012
Revenues
$ 1,993 $ 494
Cost of sales
19,598 880
Gross profit
(17,605 ) (386 )
Selling, general and administrative expenses
233,261 109,853
Research and development costs
- -
Operating expenses
233,261 109,853
Income (loss) from operations
(250,866 ) (110,239 )
Other income (expenses):
Gain (loss) from derivative liabilities
90,821 12,391
Interest expense
(38,656 ) (34,058 )
Total other income (expenses)
52,165 (21,667 )
(Loss) before provision for income taxes
(198,701 ) (131,906 )
Provision for income taxes
- -
Net (loss)
$ (198,701 ) $ (131,906 )
Earnings (Loss) Per Share:
Basic and Fully Diluted
Earnings (loss) per common share
$ (0.10 ) $ (0.25 )
Weighted average common shares outstanding
2,065,266 530,221
The accompanying notes are an integral part of these financial statements.
F-3
Source Financial, Inc.
(Formerly Known as The Wiki Group, Inc.)
Statement of Changes in Stockholders' Deficit
For the Period February 1, 2012 to April 30, 2013
Additional
Preferred Stock
Common Stock
Paid In
Treasury Stock
Accumulated
Shares
Amount
Shares
Amount
Capital
Shares
Amount
Deficit
Total
Balance - February 1, 2012
- $ - 53,080,493 $ 53,080 $ 9,307,760 9,837,500 $ (9,838 ) $ (9,590,644 ) $ (239,642 )
Preferred Stock issued for acquisition of
WikiPay, Inc.
7,992,000 79,920 - - (377,389 ) - - - (297,469 )
Conversion of Preferred Stock into shares of
Common Stock
(7,992,000 ) (79,920 ) 79,920,000 79,920 - - - - -
Shares issued for debt conversions
- - 23,949,399 23,949 592,205 - - - 616,154
Shares issued for services
- - 50,714,163 50,714 577,819 - - - 628,533
Net income (loss)
- - - - - - - (1,097,871 ) (1,097,871 )
Balance - January 31, 2013
- $ - 207,664,055 $ 207,663 $ 10,100,395 9,837,500 $ (9,838 ) $ (10,688,515 ) $ (390,295 )
March 21, 2013: Reverse Stock Split
- - (205,587,414 ) - - (9,739,125 ) - - -
(1 for 100 Shares)
- - 2,076,641 207,663 10,100,395 98,375 (9,838 ) (10,688,515 ) (390,295 )
Rounding for Fractional Shares
from 1 for 100 share split
- - 377 - - - - - -
Balance Post-Split
- - 2,077,018 207,663 10,100,395 98,375 (9,838 ) (10,688,515 ) (390,295 )
Shares returned for cancellation
- - (15,381 ) (1,538 ) 1,538 - - - -
Net income (loss)
- - - - - - - (198,701 ) (198,701 )
Balance - April 30, 2013
- $ - 2,061,637 $ 206,125 $ 10,101,933 98,375 $ (9,838 ) $ (10,887,216 ) $ (588,996 )
The accompanying notes are an integral part of these financial statements.
F-4
Source Financial, Inc.
(Formerly Known as The Wiki Group, Inc.)
Statements of Cash Flows
For the three months ended April 30,
2013
2012
Cash Flows Provided From (Used By) Operating Activities
Net (loss)
$ (198,701 ) $ (131,906 )
Adjustments to reconcile net income (loss) to net cash
provided from (used by) operating activities:
Depreciation and amortization
8,492 8,492
(Gain) loss on derivative liabilities
(90,821 ) (12,391 )
Amortization of discount on convertible debt
30,789 10,748
(Increase) in prepaid expenses
(6,128 ) -
Increase (decrease) in accounts payable
- -
Increase (decrease) in accrued expenses
27,867 23,310
Net cash (used by) operating activities
(228,502 ) (101,747 )
Cash Flows (Used By) Investing Activities
Acquisition of WikiPay, Inc.
- 10,021
Acquistion of domain names
(28 ) -
Software development costs
(57,203 ) -
Payment of deposits
- (1,957 )
Net cash (used by) investing activities
(57,231 ) 8,064
Common stock issued for services, net of cancellations
- 19,800
Repayments of convertible notes payable
- -
Proceeds from issuance of convertible notes payable
390,000 62,000
Net cash provided from financing activities
390,000 81,800
Net increase (decrease) in cash and cash equivalents
104,267 (11,883 )
Cash and cash equivalents, beginning of period
13,018 35,845
Cash and cash equivalents, end of year
$ 117,285 $ 23,962
Supplemental disclosure
Interest paid during the period
$ 38,656 $ 34,058
Non-cash transactions:
Issuance of common stock for debt conversions
$ - $ -
Conversion of accrued interest into common stock
$ - $ -
Common stock issued for SDI agreement
$ - $ -
Preferred stock issued for acquisition of WiKiPay, Inc.
$ - $ 7,920,000
The accompanying notes are an integral part of these financial statements.
F-5
Source Financial, Inc.
(Formerly known as The Wiki Group, Inc.)
Notes to Condensed Financial Statements
April 30, 2013
1.
Basis of Presentation
The accompanying unaudited condensed financial statements of Source Financial, Inc., (formerly known as The Wiki Group, Inc., (referred to as the "Company") have been prepared in accordance with accounting principles generally accepted in the United States of America, pursuant to the rules and regulations of the Securities and Exchange Commission. These financial statements do not include all information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. It is recommended that these interim unaudited condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2013.
In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ended April 30, 2013 is not necessarily indicative of the results which may be expected for any other interim periods or for the year ending January 31, 2014.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

2.
Going Concern Uncertainty

The Company has operated at a loss since 2005.  At April 30, 2013 and January 31, 2013, the Company had accumulated losses of $10,887,216 and $10,688,515, respectively.  These conditions raise substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amount of liabilities that might be necessary should the Company be unable to continue as a going concern.  The Company’s continued existence is dependent upon its ability to generate sufficient cash flows from operations to support its daily operations as well as provide sufficient resources to retire existing liabilities and obligations on a timely basis.

It is the intent of management and significant stockholders to provide sufficient working capital necessary to support and preserve the integrity of the corporate entity.  However, no formal commitments or arrangements to advance or loan funds to the Company or repay any such advances or loans exist.

F-6

Source Financial, Inc.
(Formerly known as The Wiki Group, Inc.)
Notes to Condensed Financial Statements
April 30, 2013
3.
Convertible Notes Payable

The Convertible Notes Payable at April 30, 2013 consists of the following:

A Convertible Note Payable, dated October 31, 2012, due May 2, 2013, Accruing interest at a rate of 12.0%, and is convertible into the Company’s common stock at $1.75 per share
$ 75,000
A Convertible Note Payable, dated November 15, 2012, due May 17, 2013, accruing interest at a rate of 12.0%, and is convertible into the Company’s common stock at $1.75 per share.
$ 412,052
A Convertible Note Payable, dated January 2, 2013, due July 3, 2013, accruing interest at a rate of 12.0%,  and is convertible into the Company’s common stock at $1.75 per share
$ 10,000
A Convertible Note Payable, dated January 17, 2013, due July 19, 2013, accruing interest at a rate of 12.0%,  and is convertible into the Company’s common stock at $1.75 per share
$ 1,000
A Convertible Note Payable, dated January 30, 2013, due August 2, 2013, accruing interest at a rate of 12.0%,  and is convertible into the Company’s common stock at $1.75 per share
$ 24,000
A Convertible Note Payable, dated February 13, 2013, due August 12, 2013, accruing interest at a rate of 12.0%,  and is convertible into the Company’s common stock at $1.75 per share
$ 45,000
A Convertible Note Payable, dated February 21, 2013, due August 20, 2013, accruing interest at a rate of 12.0%,  and is convertible into the Company’s common stock at $1.75 per share
$ 175,000
A Convertible Note Payable, dated April 2, 2013, due October 1, 2013, accruing interest at a rate of 12.0%,  and is convertible into the Company’s common stock at $1.75 per share
$
170,000
Subtotal
$ 912,052
Less: Discount on Convertible Debt
( 22,507 )
Total
$ 889,545
On October 31, 2012, a shareholder signed a “Note Purchase Agreement”, where he agreed to invest up to $600,000 in the company, on an as needed basis.  The conversion price for all notes in conjunction with this agreement, entitle him to convert these notes into the Company’s common stock at $1.75 per share.  Additionally, this agreement stipulates that he would not be able to convert the outstanding balance of these notes into more than 60,000,000 shares of common stock.
F-7
Source Financial, Inc.
(Formerly known as The Wiki Group, Inc.)
Notes to Condensed Financial Statements
April 30, 2013
3.
Convertible notes payable and notes payable (Cont.)
On February 13, 2013 the Company issued the shareholder a convertible note subject to the terms and conditions of the Note Purchase Agreement for $45,000.

On February 21, 2013 the Company issued the shareholder a convertible note subject to the terms and conditions of the Note Purchase Agreement for $175,000.

On April 2, 2013 the Company issued the shareholder a convertible note subject to the terms and conditions of the Note Purchase Agreement for $170,000.

The Company has elected to value the derivative instruments separately at the fair value on the issuance date using the Black-Scholes valuation model and bifurcate the instrument.  The derivative instruments were subsequently re-measured at April 30, 2013 and January 31, 2013.  The Company estimated the fair value of the derivative using the Black-Scholes valuation method with assumptions including: (1) term of 1 year or less; (2) a computed volatility rate from 59% to 185% (3) a discount rate of .06 to .10% and (4) zero dividends. The discount is being amortized over the life of the note using the effective interest method.

At April 30, and January 31, 2013, the Company had accrued interest of $34,684 and $26,817, respectively, under these notes payable.
4.
Rentals Under Operating Leases
The Company leases its offices on a month-to-month lease at $1,957 per month.  During the three months ended April 30, 2013,  the Company incurred rent expense of $5,781.
5.
Capital Stock Transactions

The Company has 10,000,000 shares of Class A, Preferred Stock authorized at a par value of $0.01 and there were no shares issued and outstanding at April 30, 2013 or January 31, 2013.  There are 8,000,000 of the Class A, Preferred Shares are convertible into Common Stock at one share for ten (10) shares of Common Stock. The remaining 2,000,000 authorized Preferred Shares have not been designated.
On February 21, 2013, the majority shareholders and board of directors approved a 1 for 100 Share reverse split of the Company’s common shares.
On February 25, 2013, two former consultants returned 15,381 shares of common stock for cancellation.  These shares were returned to the treasury.  The value of these shares was $35,376.
On April 8, 2013, the Company approved and adopted an Omnibus Incentive Plan, which reserved 2,500,000 shares of the Company's Common Stock.  This plan was implemented  to recognize and provide additional incentive to the Company's associates, directors, consultants, advisors and affiliates to establish sustained growth and financial success of the Company.

F-8
Source Financial, Inc.
(Formerly known as The Wiki Group, Inc.)
Notes to Condensed Financial Statements
April 30, 2013

5.
Capital Stock Transactions (Cont.)

On April 19, 2013, the Company signed a contract with a a business developer to integrate the WikiPay product suite with its Point-of-Sale technology which will be distributed through its bodega network of up to 30,000 US locations.  Upon achievement of certain milestones, the contractor will receive 100,000 Performance Based Stock Options at an exercise price of $2.50 per share.
6.
Basic and Diluted Earnings (Loss) Per Common Share

Basic and diluted earnings (loss) per share for the three months ended April 30, 2013 and 2012 were computed using 2,065,266 and 53,022,051 (Pre-Split) weighted average common shares outstanding, respectively.  The Company did not include potentially dilutive shares issued or outstanding as the effect of those shares as they would have resulted in an anti-dilutive effect.
7.
Subsequent Event
Management has evaluated the subsequent events through the date the financial statements were issued and these included:
On May 9 2013, the Company granted 1,000,000 shares of restricted common stock to its two executive officers.  The Company retains the first right of refusal to purchase these restricted shares ("subject shares") the two executive officers for the share price minus $2.00 ("First Refusal Discount Amount") within three business days of either of the two executive officers notifying the Company of a bona fide offer to buy the subject shares by a third party.

On May 30 2013, the Company entered into a Share Exchange Agreement ( “Exchange Agreement”) with Moneytech Limited, an Australian Corporation (“Moneytech”), Marco Garibaldi, Edward DeFeudis,  Hugh Evans, and the shareholders of Moneytech under which the Company agreed to issue up to 5,300,000 shares of common stock to the shareholders of Moneytech in exchange for their shares of Moneytech (the “Exchange Transaction”).  The consummation of the Exchange Transaction is subject to the acceptance of the Exchange Transaction by shareholders of Moneytech holding not less than 90% of the outstanding shares of Moneytech and certain other conditions customary to the closing of similar transactions.  It is contemplated that the requisite approval of Moneytech shareholders will be obtained by June 15, 2013. Each of the Company and Moneytech has the right to terminate the Exchange Agreement if the Exchange Transaction has not been consummated by June 15, 2013, provided it is not in material default of its obligations under the Exchange Agreement.

On June 4 2013, the Company designated 5,000 Series B Preferred shares with 1,000 votes per share through June 30, 2018.
F-9

Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with the Unaudited Consolidated Financial Statements and Notes thereto appearing elsewhere in this Form 10-Q. The following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934 relating to future events or our future performance. Actual results may materially differ from those projected in the forward-looking statements as a result of certain risks and uncertainties set forth in this prospectus. Although management believes that the assumptions made and expectations reflected in the forward-looking statements are reasonable, there is no assurance that the underlying assumptions will, in fact, prove to be correct or that actual results will not be different from expectations expressed in this report.

USE OF CERTAIN DEFINED TERMS
In this Report, unless otherwise noted or as the context otherwise requires: “the Company,” “Source Financial,” “we,” “us,” and “our” refers to the combined company Source Financial, Inc. and its subsidiaries.
Unless otherwise stated, this Quarterly Report on Form 10-Q does not reflect the Company’s 100:1 reverse stock split that became effective on March 21, 2013.
Our Business

Source Financial, Inc. is a holding company, which owns two subsidiaries; WikiTechnologies, Inc. and Moneytech USA, Inc.
WikiTechnologies, Inc. is a technology company dedicated to making financial transactions simple, secure, social and affordable. WikiTechnologies is comprised of two platforms (i) WikiPay, a simple, low-cost alternative to existing mobile and online payment solutions; and (ii) WikiLoan, a low-cost peer-to-peer lending solution.
WikiPay, a money service business, competes worldwide in the $240 billion annual mobile payments business.  WikiPay is a proprietary fee-based Mobile Peer-to-Peer Payment that allows mobile and online Peer-to-Peer, Business-to-Consumer, Consumer-to-Business and Business-to-Business payments through its website www.wikipay.com and mobile website m.wikipay.com. WikiPay empowers its Users to perform real-time payments, scheduled payments, account inquiries for balance and transaction history, bill payment initiation, notifications and alerts, and transaction security verifications.
WikiPay was created in response to the emerging trends in mobile phone usage, text messaging, banking, electronic payment systems and direct marketing.  The technological convergence of hardware, infrastructure and interface have contributed to making the mobile phone more versatile, powerful and ubiquitous, with more market penetration than any other electronic device in history.  It is projected that by 2013 the U.S. will have a per capita mobile phone penetration of 100 percent.
WikiLoan competes worldwide in the $10 billion annual Peer-to-Peer Lending business.  WikiLoan is a proprietary fee-based Peer-to-Peer Lending Platform that allows people to use the tools on the website to borrow and lend money (from $500 to $25,000) among themselves at rates that make sense to all parties. WikiLoan through it's website, www.wikiloan.com , offers; loan documentation, promissory notes, repayment schedules, email reminders, online account access, and online repayment.
The Company provides Identity and Credit Verification on borrowers and allows lenders to select the types of borrowers they wish to consider for loans. The process of credit, background and identity checks, processing of the loan applications, the tracking of loan payments, and other related functions are handled on an automated basis, which allows the Company to operate with low overhead costs, likely resulting in meaningful operating margins.
3

The initial revenue model consists of primarily fee-based products.  The company recently implemented its first lead generation product and will continue to develop additional revenue streams that include website advertising, credit card and auto loan origination, and other related lead generation opportunities.
We had $1,993 in revenues during the quarter ended April 3, 2013 and $494 in revenues during the quarter ended April 30, 2012. Our expenses during that time incurred general and administrative expenses in the amount of $233,261 and $109,853, respectively. These expenses occurred developing our Web technology and establishing the necessary infrastructure to launch our services.
Our auditors have raised substantial doubt as to our ability to continue as a “Going Concern” as we have generated minimal revenue since 2005 and at April 30, 2013 and January 31, 2012, the Company had accumulated losses of $10,021,536 and $9,590,644, respectively. Our continued existence is dependent on our ability to generate sufficient cash flow from operations to support our daily operations, as well as, to provide sufficient resources to retire existing liabilities and obligations on a timely basis.
On October 31, 2012, a shareholder signed a Note Purchase Agreement, where he agreed to invest up to $600,000 in the company, on an as needed basis.  The conversion price for all notes in conjunction with this agreement, entitle him to convert these notes into the Company’s common stock at $0.0175 per share.  Additionally, this agreement stipulates that he would not be able to convert the outstanding balance of these notes into more than 60,000,000 shares of common stock.
On October 31, 2012, a shareholder signed a “Note Purchase Agreement”, where he agreed to invest up to $600,000 in the company, on an as needed basis.  The conversion price for all notes in conjunction with this agreement, entitle him to convert these notes into the Company’s common stock at $1.75 per share.  Additionally, this agreement stipulates that he would not be able to convert the outstanding balance of these notes into more than 60,000,000 shares of common stock.
On October 31, 2012, the Company issued a shareholder a convertible note subject to the terms and conditions of the Note Purchase Agreement for $75,000.
On November 15, 2012, the shareholder agreed to cancel all non-convertible notes and issue a new convertible promissory note for $412,052 subject to the terms and conditions of the October 31, 2012, Note Purchase Agreement.
On October 31, 2012, a shareholder signed a “Note Purchase Agreement”, where he agreed to invest up to $600,000 in the company, on an as needed basis.  The conversion price for all notes in conjunction with this agreement, entitle him to convert these notes into the Company’s common stock at $1.75 per share.  Additionally, this agreement stipulates that he would not be able to convert the outstanding balance of these notes into more than 60,000,000 shares of common stock.
On February 13, 2013 the Company issued the shareholder a convertible note subject to the terms and conditions of the Note Purchase Agreement for $45,000.
On February 21, 2013 the Company issued the shareholder a convertible note subject to the terms and conditions of the Note Purchase Agreement for $175,000.
On April 2, 2013 the Company issued the shareholder a convertible note subject to the terms and conditions of the Note Purchase Agreement for $170,000.
4
On February 10, 2012, we merged with WikiPay, LLC, a privately held Delaware corporation.  In connection with the merger, 7,992,000 Series A Preferred shares, par value of $0.001, were issued to the former shareholders of WikiPay.
Plan of Operation
Short Term Goals
●
Raise capital to fund operations;
●
Attract high-performing talent; and

●
Execute profitable contracts that grow our bottom-line.

Long Term Goals
●
Build our brand, loyalty, and revenue;
●
Seek partners that allow us to position our technology as an Enabler - we enable mobile phones to access financial services, helping improve the quality of life; and

●
Continuously innovate to deliver value to our customers.
The last few years have been dedicated to building and strengthening the technology platform that is now fully operational and robust. In order to move forward it is critical that we raise capital to fund our operations. Raising capital is our primary goal and we are focusing most of our attention to identify prospective investors and strategic partners.
As we look to grow our business, we will focus heavily on establishing strategic partners that provide us access to large customer bases that align with our target market. We will collaborate with these partners as we execute our marketing strategy and cross sell our products and services.
Establishing a culture recognized for service excellence, attracting high performing team members and executing flawlessly will be the foundation of which we will grow our company.
We are committed to delivering excellent customer service and listening to our customers to determine how we continuously innovate and improve our products.  Our goal is to WOW our customers so they become advocates of our services and refer their friends and family members.  We see every interaction with a customer as an opportunity to differentiate ourselves from our competition. Delivering clear and simple messages will be the core of our communications plan.
Mobile commerce requires a change in customer behavior so it will be advantageous for us to make our offerings as attractive as possible.  Initial plans call for loyalty and reward programs that provide incentives for new users to immediately sign up and use our services. We have an ambitious road map that calls for new solutions that allow users to sign up faster while providing more convenient options to fund their accounts.   We want to always deliver better, faster, and cheaper solutions that our customers value.
If we do not obtain additional funding, we will continue to operate on a reduced budget until such time as more capital is raised. Under this reduced budget, our expenses may be $900,000 for the next 12 months. We believe that we could operate with our current cash on hand while satisfying any shortfall in cash flow with income that will be generated after the launch of our website.
5
If we obtain a large financing in the future, we would accelerate our business plan and hire up to 13 more staff members, increase our office space and operations, and increase our advertising and marketing budget, all of which would directly affect the performance of the company.
Results of Operations

For the three ended April 30, 2013 as compared to April 30, 2012
Revenues
We generated $1,993 in revenues during the three months, respectively, ended April 30, 2013, and $494 during the three, respectively, ended April 30, 2012.

Operating Expenses
Our operating expenses during the three months ended April 30, 2013 were $233,261, respectively, and were $109, in the three ended April 30, 2012.  The operating expenses are only comprised of general and administrative expenses.  The increase in operating expenses in the quarter ended April 30, 2013 versus the quarter ended April 30, 2012 were primarily because of increased expenses incurred in developing our Web technology and establishing the necessary infrastructure to launch our services.

Net Loss
We are currently operating at a loss and we have a net loss of $198,701 for the three months, respectively, ended April 30, 2013. Our auditor has expressed doubt as to whether we will be able to continue to operate as a “going concern” due to the fact that the company has not had significant revenue since 2005 and will need to raise capital to further its operations. We do not expect to be able to satisfy our cash requirements to continue to operate over the next twelve months unless we obtain additional funding or our revenues significantly improve. If the market does not begin to improve, we will need to raise additional funds to continue to operate as a “going concern.” There is no guarantee that we will be able to raise additional funds and if we are unsuccessful in raising the funds, we may be forced to close our business operations.

Liquidity and Capital Resources

As of April 30, 2013, we had cash of $123,413.  However, due to the current instability of the credit market and our limited history with limited revenue, we may require additional funds to continue to operate. We will continue to operate on a reduced budget until such time as more capital is raised.  We have no written agreement to legally insure that funding will be provided for our operations.  Although we have no commitments for capital, other than verbal assurances, we may raise additional funds through:

-
public offerings of equity, securities convertible into equity or debt,

-
private offerings of securities or debt, or other sources.
At this time, we have not identified any sources of additional financing.  While we have entered into a letter of intent with Moneytech Limited, as discussed in the “Subsequent Events” section below, there are no assurances that this deal will be consummated.  Upon developing a trading market for the common stock we intend to seek additional sources of financing through hedge funds and/or licensed broker-dealers, however, given our precarious financial condition and our lack of business, a trading market may not develop in the foreseeable future.

We have no written agreement to legally insure that funding will be provided for our operations. Although we have no commitments for capital, other than verbal assurances, we may attempt to raise additional funds through public offerings of equity, securities convertible into equity or debt, and private offerings of securities or debt, as our previous efforts raised $2,157,000.  Given our history of raising money, there is no guarantee that we will be successful in obtaining funds through public or private offerings in order to fund our operations. Our investors should assume that any additional funding will cause substantial dilution to current stockholders. In addition, we may not be able to raise additional funds on favorable terms, if at all.
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As to the following serious conditions:

1)
As of April 30, 2013, we had cash of $123,413;
2)
We received $50,000 from the sale of a promissory note, $5,000 from a short term non-interest bearing note, and $75,000 from a bridge loan during the quarter ended April 30, 2013;
3)
Our auditor has determined that based on our financial condition there is substantial doubt as to whether we can continue to operate as a going concern.

To date, we have been able to secure $2,287,000 that we raised through several convertible promissory notes over the past four years. We may also rely on sources to borrow funds in the form of loans.

Even if we do not raise additional capital, we believe that we will be able to continue operations for twelve months based on the funding currently provided and revenues that we anticipate generating in the near future. Our investors should assume that any additional funding may cause substantial dilution to current stockholders. In addition, we may not be able to raise additional funds on favorable terms, if at all.

Our auditors have raised substantial doubt as to our ability to continue as a “Going Concern” as we have generated minimal revenue since 2005 and at April 30, 2013 and January 31, 2012, the Company had accumulated losses of $10,021,536 and $9,590,644, respectively. Our continued existence is dependent on our ability to generate sufficient cash flow from operations to support our daily operations, as well as, to provide sufficient resources to retire existing liabilities and obligations on a timely basis.
Notes and Loan Agreements
On August 8, 2012, the Company issued a short-term convertible promissory note for $50,000.  The note accrues interest at 12% per annum and is due on or before February 7, 2013.  The note is convertible into common shares of the Company at a conversion rate equal to 75% of the average closing price of the common stock ten trading days prior to the conversion notice, with a ceiling of $0.10 per share.
On October 4, 2012, the Company issued a short-term note for $5,000.  The note is non-interest bearing and is due on demand.
On April 30, 2013, the Company accepted a Bridge Loan in the amount of $75,000, the terms of which were not finalized prior to the April 30, 2013, Balance Sheet date.
At April 30, 2013 and January 31, 2012, the Company had accrued interest of $148,698 and $27,332, respectively, under these convertible note agreements.

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
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A summary of significant accounting policies is included in Note 1 to the audited financial statements for the year ended January 31, 2012. Management believes that the application of these policies on a consistent basis enables us to provide useful and reliable financial information about our Company's operating results and financial condition.
Recently Issued Accounting Pronouncements

We do not believe that any recently issued accounting pronouncements, if adopted, would have a material effect on the accompanying consolidated financial statements.

Subsequent Events

On May 9 2013, the Company granted 1,000,000 shares of restricted common stock to its two executive officers.  The Company retains the first right of refusal to purchase these restricted shares ("subject shares") the two executive officers for the share price minus $2.00 ("First Refusal Discount Amount") within three business days of either of the two executive officers notifying the Company of a bona fide offer to buy the subject shares by a third party.

Exchange Transaction
As previously disclosed in the Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on June 5, 2013 (the “Current Report”), on May 30, 2013, the Company entered into a Share Exchange Agreement (the “Exchange Agreement”) by and among the Company, Moneytech Limited, an Australian Corporation (“Moneytech”), Marco Garibaldi (“Garibaldi”), Edward DeFeudis (“DeFeudis”) and Hugh Evans (“Evans”), pursuant to which the shareholders of Moneytech (the “Moneytech Shareholders”), will transfer to the Company all of the shares of Moneytech  in exchange for the issuance of up to 5,300,000 shares of the Company’s common stock (the “Exchange Transaction”). Following the Exchange Transaction, Moneytech will be a wholly-owned subsidiary of the Company.
The consummation of the Exchange Transaction is subject to the acceptance of the Exchange Transaction by shareholders of Moneytech holding not less than 90% of the outstanding shares of Moneytech and certain other conditions customary to the closing of similar transactions.  It is contemplated that the requisite approval of Moneytech shareholders will be obtained by June 15, 2013 (the “Closing Date”). Each of the Company and Moneytech has the right to terminate the Exchange Agreement if the Exchange Transaction has not been consummated by June 15, 2013, provided it is not then in material default of its obligations under the Exchange Agreement.
There are currently 4,061,632 shares of common stock outstanding.  The Company anticipates that prior to or at about the time of the consummation of the Share Exchange it will issue or authorize for issuance: (i) 300,000 shares issuable upon exercise of options to be granted to a service provider; (ii) 600,000 shares to be issued in consideration for the cancellation of certain debt currently outstanding; and (iii) 338,368 shares to be issued to certain service providers.  Thus, if the shareholders of Moneytech are issued 5,300,000 shares of Source Stock, upon consummation of the Share Exchange there will be 10,600,000 shares of common stock outstanding on a fully diluted basis, without giving effect to an option for 20,000 shares exercisable at a price of $10.00 per share.
Following the consummation of the Exchange Transaction, the Company will offer a range of innovative financial products and services to businesses and consumers in the United States and Australia through its principal operating subsidiaries, Moneytech USA, Moneytech Australia, and WikiTechnologies.
Series B Preferred Shares
As previously disclosed in the Current Report, on June 4, 2013, the Certificate of Designation (the “Certificate of Designation”) of the Company’s Series B Preferred Stock (“Series B”) was filed with the Delaware Secretary of State. The Certificate of Designation permits any potential holders of the Series B to maintain control over the Company’s Board of Directors.
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Under the terms of the Series B Certificate of Designation authorizing, the holder(s) of the Series B have the right, until June 30, 2018, to (A) elect the majority of the Company’s Board of Directors and (B) vote on all other matters to come before the holders of common stock (the “Common Shareholders ” ) with each vote per Series B Preferred Share equal to 1,000 shares of common stock. After June 30, 2018, the Series B Preferred Shares shall have no voting rights and shall be redeemable by the Company for the sum of one tenth of a cent ($0.001) per Series B Preferred Share.  The Series B Preferred Shares will not have any conversion rights and shall not be entitled to receive any dividends, distributions, or other economic or financial interest in the Company, and in the event of a liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, the holders of Series B Preferred Shares shall be entitled to receive out of the assets of the Company, whether such assets are capital or surplus of any nature, the sum of one tenth of a cent ($0.001) per Series B Preferred Share, after payment to the Common Shareholders and the holders of any other series or class of the equity securities of the Company ranking senior to the common stock.
Item 3.  Quantitative and Qualitative Disclosures About Market Risk
The Company is subject to certain market risks, including changes in interest rates and currency exchange rates. The Company does not undertake any specific actions to limit those exposures.
Item 4.  Controls and Procedures

Disclosure of Controls and Procedures.

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports, filed under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
As required by the SEC Rule 13a-15(b), we carried out an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on the foregoing, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level.

As defined by Auditing Standard No. 5, “An Audit of Internal Control Over Financial Reporting that is Integrated with an Audit of Financial Statements and Related Independence Rule and Conforming Amendments,” established by the Public Company Accounting Oversight Board ("PCAOB"), a material weakness is a deficiency or combination of deficiencies that result in a more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses as of April 30, 2013:
(1)
Lack of an independent audit committee or audit committee financial expert. Although our board of directors serves as the audit committee it has no independent directors These factors are counter to corporate governance practices as defined by the various stock exchanges and may lead to less supervision over management.
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(2)
We do not have sufficient experience from our accounting personnel with the requisite U.S. GAAP public company reporting experience that is necessary for adequate controls and procedures.
(3)
Need for greater integration, oversight, communication and financial reporting of the books and records of our satellite offices.
Our management determined that these deficiencies constituted material weaknesses.
Due to our small size, we were not able to immediately take any action to remediate these material weaknesses. We plan to address the other control deficiencies in the near future. Notwithstanding the assessment that our Internal Controls over Financial Reporting was not effective and that there were material weaknesses identified herein, we believe that our consolidated financial statements contained in this Quarterly Report fairly present our financial position, results of operations and cash flows for the years covered thereby in all material respects.

Changes in Internal Controls over Financial Reporting .

There have been no changes in our internal control over financial reporting that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1.      Legal Proceedings.
We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.
Item 1A.   Risk Factors.

Smaller reporting companies are not required to provide the information required by this item.
Item 2.      Unregistered Sales of Equity Securities and Use of Proceeds.
On October 31, 2012, a shareholder signed a “Note Purchase Agreement”, where he agreed to invest up to $600,000 in the Company, on an as needed basis.  The conversion price for all notes in conjunction with this agreement, entitle him to convert these notes into the Company’s common stock at $1.75 per share.  Additionally, this agreement stipulates that he would not be able to convert the outstanding balance of these notes into more than 60,000,000 shares of common stock.
On February 13, 2013 the Company issued the shareholder a convertible note subject to the terms and conditions of the Note Purchase Agreement for $45,000.
On February 21, 2013 the Company issued the shareholder a convertible note subject to the terms and conditions of the Note Purchase Agreement for $175,000.
On April 2, 2013 the Company issued the shareholder a convertible note subject to the terms and conditions of the Note Purchase Agreement for $170,000.
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The issuances of the notes were exempt from registration, pursuant to Section 4(2) of the Securities Act of 1934, as amended (the “Securities Act”). The securities qualified for exemption under Section 4(2) of the Securities Act since the issuance of the security by us did not involve a public offering. None of the offerings were considered a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of securities offered. We did not undertake an offering in which we sold a high number of securities to a high number of investors. In addition, the shareholders had the necessary investment intent as required by Section 4(2). Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act for this transaction.
Item 3.      Defaults Upon Senior Securities.
None.
I tem 4.      Mine Safety Disclosures.

Not Applicable.
Item 5.      Other Information.
None.
Item 6.      Exhibits
(a)     Exhibits
31.1
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of Sarbanes Oxley Act of 2002
32.1 *
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of 2002
101.INS **
XBRL Instance Document
101.SCH **
XBRL Taxonomy Schema
101.CAL **
XBRL Taxonomy Calculation Linkbase
101.DEF **
XBRL Taxonomy Definition Linkbase
101.LAB **
XBRL Taxonomy Label Linkbase
101.PRE **
XBRL Taxonomy Presentation Linkbase

* In accordance with SEC Release 33-8238, Exhibit 32.1 is being furnished and not filed.

** Furnished herewith. XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SOURCE FINANCIAL, INC.
Date: June 14, 2013
By:
/s/ Edward DeFeudis
Edward DeFeudis
President, Chief Executive Officer and Chief Financial Officer (Duly Authorized Officer, Principle Executive Officer, and Principal Financial Officer)
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