Preliminary Results

26 September 2014

Digital Globe Services, Ltd.

(the "Company" and together with its subsidiaries "DGS")

Preliminary Results

Digital Globe Services, Ltd. (AIM: DGS), a leading provider of online customer acquisition solutions for large, consumer-facing organisations, is pleased to announce preliminary unaudited results for the year ended 30 June 2014.1. Comparative data is given for the year ended 30 June 2013 ("FY13").

The audited accounts will be published on 3 October 2014. It is the intention of the Company to hold its AGM on 12 November 2014 and the appropriate notice will be given on or before 28 October 2014. The final dividend will also be proposed at the time of issue of notice of AGM.

Financial highlights:

· 53% increase in revenue to US$38.9 million (FY13: US$25.5 million)

· 46% increase in gross profit to US$14.3 million (FY13: $9.8 million)

· 35% increase in adjusted EBITDA* to $5.4 million (FY13: US$4.0 million)

o Adjusted EBITDA* margin 14% (FY13: 15.7%) reflecting the investment in technology, infrastructure and talent

· Basic earnings per share ("EPS") increased to US 14.1 cents (FY13: loss US 18.0 cents)
(Diluted EPS: FY14: US 13.8 cents; FY13: loss of US 18.0 cents)

*EBITDA is earnings before interest, taxes, depreciation and amortisation. "Adjusted EBITDA" additionally excludes bank facility and other charges, foreign exchange gains or losses, extraordinary items, non-cash Employee Stock Option Plan Charges, warrants, legal costs associated with the EDU acquisition, non-recurring severance and other employee costs and write-back of contingent consideration. A reconciliation is given below.

1See note 1 to the financial statements below for the basis of preparation of the financial information within this RNS

Operational highlights:

· In an operating environment of consolidation and change, DGS is proud to have grown profitable revenue more than 50% in each of the past two years, including with the largest US cable clients

· Continuing revenue diversification: top 5 clients accounted for less than 70% of revenue (FY13: 90%)

· Continued product and service innovation:

o Expansion of customer acquisition tactics beyond paid search to include social media, e-mail campaigns, directories and other online advertising

o Trial of new technology platform for delivery of business customer leads across the US - platform expected to achieve wider adoption across the industry

· Investment in corporate infrastructure, training, technology platform developments and talent, all of which supports further growth

· Continued focus on three pillars of growth: expansion within the existing client base, extension into new geographical markets, and entrance into new industry verticals; highlights included:

o A new two-year deal with largest customer, Comcast

o Launch of two of the largest satellite operators in the Americas

o Entry into US higher education market in November 2013, via accretive acquisition

o Expect to launch a test with an additional large European cable operator in this fiscal year and use this as a springboard to accelerate European expansion

Jeff Cox, CEO of Digital Globe Services,commented:

"This has been a year of exceptional growth, profitability and diversification for DGS as we continue to establish the Company as the leading international provider of outsourced online customer, lead and inquiry acquisition services, delivered via our premier technology platform and contact centres.

"Despite challenging market conditions, which saw the consolidation of our three largest US cable clients and the merging of our four largest competitors, we continued to deliver industry leading results with very robust double digit increases in revenue and profitability.

"The Board and management team remain confident of our continuing ability to deliver strong momentum to our operational and financial performance."

For further information please contact:

Overview of DGS

Founded in 2008 with offices in London, Bermuda, Netherlands, USA and Ireland, DGS is a specialist provider of outsourced online customer acquisition solutions for large, consumer-facing corporations. DGS delivers customers to its clients through optimised paid search, search engine optimization, integrated websites, e-mail, social media and contact centre support, receiving a fee for each customer acquired for its clients.

DGS is seeking to establish itself as the leading international provider of outsourced online customer, lead and inquiry acquisition, services, through its focus on having the premier technology platform in the industry. Paid search refers to the auction process for key search terms that search providers run and in which prospective advertisers, or their agents, compete in order to have their advertising or search results displayed. 

By using its optimising technology platform, dgSMART, and its experience of website management and digital media customer acquisition, efficient contact centre operations and other process expertise, DGS is able to acquire customers and achieve conversion rates that deliver profitable, high quality customers or valuable leads and inquiries to its clients.

DGS employs over 600 staff in Europe, North America and Asia. The Company currently has over 30 direct and indirect client relationships globally, many of which are with companies in the US Fortune 500.

CHAIRMAN AND CHIEF EXECUTIVE REVIEW

This has been a year of exceptional growth, profitability and diversification for DGS as it continues to establish itself as the leading international provider of outsourced online customer, lead and inquiry acquisition services, delivered via its premier technology platform. Trading for the financial year through to 30 June 2014 resulted in significant revenue growth of 53% to US$38.9 million (FY13: US$25.5 million), coupled with 35% growth in adjusted EBITDA to US$5.4 million (FY13: US$4.0 million).1 Operating profit grew by 9.8% to $3.5 million (FY13: $3.2 million).

Despite challenging market conditions, which saw the consolidation of the Group's three largest US cable clients and the merging of the Group's four largest competitors, DGS continued to deliver industry leading results with double digit increases in revenue and profitability from its core portfolio of large US cable companies.

This year also saw Google, the single largest vendor to the Group, adjust its business practices in a manner that led to higher costs for DGS's online advertising. As a result, the Group diversified its customer, lead and inquiry acquisition tactics beyond search engine marketing to include social media, e-mail campaigns, directories and other online advertising and partnerships with companies operating outside of paid search and search engine optimisation. In responding to changes in its vendor ecosystem, core client marketplace and competitive landscape, the Group proved that it is capable of adapting quickly to the competitive dynamics of its environment while achieving strong EBITDA and revenue growth.

Additionally, the Group made further progress in the year towards revenue diversification, with the percentage of overall revenues from the top five customers reducing from approximately 90% in the prior year to less than 70% in the year ended 30 June 2014, in-line with its plan of revenue diversification. The Company will continue to pursue its strategy of expanding its online customer, lead and inquiry acquisition beyond search engine marketing and continued diversification of its geographic and industry revenues.

Although there is some uncertainty around the near-term impacts of the mergers of our largest clients, the Company remains confident of its ability to deliver financial and operational performance in line with its targets.

Accordingly, we would like to acknowledge the significant contributions of our employees, management and Board. Our staff has shown a sustained ability to adapt and thrive in an environment of rapid change, and to significantly grow revenue and EBITDA, while continuing to invest in the business during a time of competitor and client consolidation. The composition of our Board comprises accomplished, senior executives with different skill sets to support and expand management's approach to a dynamic market. As ever, we are grateful to our stakeholders for their continued support of our business as we expand upon our compelling story of a growth stock that pays dividends. As a result of our employees, management and Board contributions, we are optimistic about our ability to continue to grow value for our stakeholders during financial year 2015 and beyond.

1"Digital Globe Services, Ltd is referred to as "DGS", "DGSL" and the "Company" variously in this report whereas the "Group" refers to DGS and its subsidiaries."

Strategic Report & OUtlook

Growth

DGS has seen its relationships with international cable and telecommunications companies deepen and expand. The Company has continued to focus on its three pillars of growth: expansion within the existing client base, extension into new geographical markets, and entrance into new industry verticals.

1. Expansion within the Existing Client Base. With its existing client base, we believe the Company is leading its competitors in organic revenue and market share growth without taking into account merger or acquisition activity. Relationships with our principal clients remain strong, the result of our differentiating focus on acquiring high quality customers for our clients, and consistently seeking out new, innovative tactics to deliver incremental value. This focus will continue to propel us ahead of our competition and allow us to capture increasing value in the marketplace. As an example, in January 2014 we signed a new two-year deal with our largest customer, Comcast, which for the first time earns us recurring fees when customers we acquire on Comcast's behalf maintain service beyond one year.

Additionally, we are aggressively pursuing efforts to build and deepen our existing client relationships by offering them additional services. In the fiscal year, we successfully completed a trial with Comcast and launched a platform and service for delivering business customer leads across the US. This platform is primarily targeted at phone, video and high-speed internet services for the Small and Medium-Sized Business segment. We expect the business leads platform to achieve wider adoption across the industry, expand into a platform for residential service offerings being deployed with e-tailers and retailers, and also form the basis for international expansion of our home services platform business. We expect this to be a growing portion of our revenue base in the second half of the 2015 fiscal year and a larger portion of revenue in the following fiscal year.

Similarly, the Group has developed a services aggregation platform capable of integrating service provider offerings which permits call centers, retailers and e-tailers to enter a prospect's address and deliver all available home services offers for that address. Our platform has the capability to support our clients' needs in managing these customer transactions without the need to integrate more closely the IT systems of large organisations, reducing time to deploy, risk and cost in the process. As this platform scales, the Group increasingly becomes not just a direct provider of new customer acquisition to our core clients, but rather the port of access for a broad ecosystem of customer acquisition businesses.

We are finding that additional innovative services are particularly attractive to those of our clients in transition through the four-way merger, acquisition and divestiture of systems amongst Comcast, Charter, TimeWarnerCable and GreatLand Connections, and through the merger of AT&T and DirectTV As these mergers are completed, it is our belief that the continuing companies will be under pressure to grow revenue by adding new subscribers and additional services to justify the consolidation. The Group intends to be the premier service provider to the evolving industry, recognised for its superior capabilities in driving new subscribers with greater customer lifetime value and an innovation partner in providing platform solutions.

2. Extension into new Geographical Markets. The Company has continued its geographic expansion in the Americas with the launch of two of the largest satellite operators in the Americas. We expect to launch a test with an additional large European cable operator in this fiscal year, and use this as a springboard to accelerate our European expansion.

3. Entrance into New, Relevant Verticals. In November 2013 we entered the US higher education lead generation vertical through the acquisition of the educational business unit of a San Francisco based social media marketing company. The Group has successfully integrated the business unit into a wholly owned subsidiary, DGS Edu, LLC ("Edu"). The integration of the business was successful and we have refocused Edu from being a "volume seller" to a high-value "quality leads provider," consistent with our broader Group approach. We did so by applying the same statistical and analytical approaches to this new business that were in place on our core business. The investment thesis has been proven correct as the Group maintained Edu's revenues and provided a more efficient cost structure thereby increasing adjusted EBITDA and profitability, while positioning the acquired business well for future growth in the US and international higher education markets.

Acquisitions

The Company continues to opportunistically explore acquisition opportunities.

Business Model

The Group's business model remains principally performance-based, where the Group earns revenue from fee-per-customer, lead and inquiry arrangements. Group clients pay a fixed commission for each customer, service, lead or inquiry that the Group successfully acquires on their behalf. As discussed above, the Group has expanded beyond paid search and search engine optimization ("SEO") and into e-mail, social media advertising and relationships with other companies that perform on-line customer acquisition outside of paid search. As Google, the Group's primary vendor, continues to adapt its business model to deliver more revenue through higher Cost-Per-Click, we will continue to ensure our proprietary systems can respond in such a way to ensure the paid search business remains profitable while at the same time continuing to reduce the percentage of the overall cost of goods sold that paid search represents.

Business Risks: Principal Risks and Uncertainties

The key business risks associated with the Group relate to the online customer acquisition industry being fluid in terms of the amount of control our clients exercise over our ability to market using their brands and keywords, the timing of campaigns, target customers changing reactions and buying patterns relating to our sales and marketing campaigns, and the impending mergers between some of our largest clients. In the past we have been able to reduce the impact of these business risks and continue to grow year on year by establishing close relationships with our partners and consistently delivering the highest value customers to them. To adapt to the changing patterns of customer buying and shopping behaviour, we invest heavily into our analytics process and work constantly to optimise our algorithms in response to new data and changes to search engine, and other digital media algorithms. Additionally, we regularly seek out and test new marketing channels, techniques and opportunities to expand our online footprint beyond search engine marketing, ensuring a diversified pool of marketing tactics to drive new customer acquisition.

Business risks relating to our international expansion in Europe will be similar to those in our North American business plus the additional business risks associated with entering any new geographical and national market, including regulatory, compliance, effective scaling and appropriate staffing. We expect to continue to focus our Group culture on being adaptive and nimble in response to any impediments to expanding our business throughout the globe.

We face additional risks this year with TimeWarnerCable be acquired by Comcast, Charter and a newly formed entity. While we experience predictive merger behavior, we are deepening our relationships with the Comcast and Charter, the two acquiring companies who are also two of our top four customers. While there is risk, we believe we are well positioned to grow our overall revenues.

Financial Review

In the financial year ended 30 June 2014, the Group produced revenues of $38.9 million (FY13: $25.5 million) and $5.4 million in adjusted EBITDA (FY13: $4.0 million). The non-cash charge mandated by US GAAP for the Employee Stock Option Plan for the year was $0.78 million. Operating profit grew by 9.8% to $3.5 million (FY13: $3.2 million). The Board was pleased to pay an interim dividend of $1.7million on 1 May 2014 and will announce the next dividend to be paid on or before the Annual General Meeting. The Company expects that it will invest heavily in its technology platform over the next fiscal year and will retain cash appropriate to that investment.

The Company continues to expand its revenue base while carefully managing its costs resulting in continued EBITDA growth of 35% compared with the prior year. As the Company invests in its European market entry and software platform expansion, it expects to incur increased capital expenditures and higher operating expenses in the short term. To meet our rapidly expanding business requirements, the Group's Pakistan subsidiary entered into a new lease for additional space in Karachi, Pakistan expending approximately $0.26 million on the lease and build out. Employee costs associated with the hiring and training of an increase in staff by 50% to scale to a growing client-partner demand will continue. Additionally, the Group opened an office in London to support its European expansion and spent approximately $0.05 million on the build out.

The Group continues to produce strong cash flows and maintained a cash balance of $0.9 million as of 30 June 2014, permitting it to make planned capital investment in further expansion or for acquisitions to support its three pillars of growth. Evidencing its strong and consistent revenues from quality customers, the Group entered into a short term lending facility with an aggregate draw down of $3.5 million as at 30 June 2014. This has helped to support working capital in the business. Accounts receivable increased to $10.3 million as against $5.4 million at the half year (FY2013: $4 million).

Operating Highlights

We operate a diverse, international business spanning the Americas, Asia and Europe. Our drive to keep management layers thin, our executives both highly accountable to performance objectives and close to our operations helps to further our Group objective of excellence as we strive to become and stay the number one customer acquisition partner to our clients. As of 30 June 2014, the Group employed approximately 630 persons in the Americas, Asia and Europe in addition to contractors and consultants.

Call Centres. We use our call centres to qualify and sell prospects products and services from our clients, unless those prospects complete a purchase exclusively on-line including via mobile internet. A significant number of our sales and qualified leads are derived from a prospect calling into a call centre based upon information from websites owned or operated by the Group. During the 2014 financial year, we increased the number of call centre agents by approximately 50%, including both our own employees and those that we outsource to third parties. We maintained, managed or owned call centres in Pakistan, the Philippines and the United States. During the year 2014, we reallocated call centres and call centre management based in Canada and Mexico to our other facilities. Our Group's owned call centres in Lahore and Karachi, Pakistan grew from approximately 300 to over 450 employees. Our Group philosophy is to generate performance-driven compensation for its contact center staff that results in considerably above-market average wage rates. As a result, our retention rate in our Pakistani call centres is exceptionally high, with a minimal voluntary employee turnover of approximately 4% per month. Given the continued leading performance of our Pakistani call centres, we intend to continue to expand our call centre footprint in our Lahore and Karachi centres.

Product and Service Development. During the financial year 2014 we significantly increased resources in our Business Intelligence ("BI"), Analytics and Software Development Teams. We now maintain teams that rapidly build and deploy new websites for micro-targeting prospects and for new clients. We have also focused on hiring software developers to build out our new business services lines and custom software for our clients, and as we continue to improve our core technology platform. As a result, we anticipate our demand for software developers will remain high, especially as we work on custom software development. Similarly, our BI Team continues to excel in its ability to develop and optimise the dgSMART algorithms that generate profitable revenue and has expanded rapidly, including hiring a Chief Scientist who focuses on the algorithm modifications within platform to ensure continuing profitable revenue growth. We also made key strategic hires to support the growth and performance of our acquired education lead generation product and assets.

Summary & Outlook

In the coming year we look forward to aggressively pursuing our three pillars of growth in expanding within the existing client base extending our business into new geographies and entering new, relevant verticals. With the expectation that TimeWarnerCable, the second largest cable operator in the US with $15B in revenues, will cease to exist in its current form, the Group will face a challenge in becoming an even more important partner to fewer, but larger, clients. Although we anticipate the 2015 financial year will see challenges from key existing customers and from new markets, we are confident in the ability of the Group to adapt, to innovate and to maintain its continuing track record of profitable growth.

25 September 2014

Zia Chishti Jeff CoxChairman of the Board Chief Executive Officer

FINANCIAL STATEMENTS

Consolidated Statements of Income

For the year ended 30 June 2014

The accompanying notes are an integral part of these consolidated financial statements.

\* The prior year's Loss Per Share has been restated (see Note 1)

Consolidated Balance Sheets

As at 30 June 2014

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Stockholders' Equity

For the year ended 30 June 2014

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated Statements of Cash Flow

For the year ended 30 June 2014

The accompanying notes are an integral part of these consolidated financial statements.

Notes to consolidated financial statements

30 June 2014

(1) Nature of business - Group and its operations

Digital Globe Services, Ltd. (DGSL or the "Company") was incorporated in Bermuda on 9 November 2012 and admitted to the Alternative Investment Market (AIM) of the London Stock Exchange on 14 February 2013. The registered office of DGSL is located at 27th floor, 21-24 Millbank Tower, Millbank London SWIP 4QP. DGSL serves as a holding company for a global portfolio of companies in the internet based advertising and related technology business. DGSL has subsidiaries in the United States, Cyprus, Netherlands, Ireland and Pakistan. DGSL also owns and maintains the intellectual property (technology, brand name) associated with the business. "The Group" refers to DGSL and its subsidiaries.

The Group is comprised of the Company and following subsidiaries:

* owned indirectly through Digital Globe Services, Inc.

Digital Globe Services, Inc. (DGS, Inc.) - US

Digital Globe Services, LLC was formed on 23 May 2008 as a Delaware (US) based entity and subsequently converted to a corporation (DGS, Inc.) in February, 2011. The company provides a flexible and robust technology platform that enables digital directed marketing support to a variety of clients in the US. The company's major focus has been in the cable industry. The company manages web sales portals for clients in the US and drives consumer visits to these channels through internet based advertising. DGS, Inc. was previously owned by TRG Holdings, LLC (a US based subsidiary of The Resource Group International Limited (TRGIL)). As part of a group reorganisation, TRG Holdings, LLC sold its ownership in DGS, Inc. to TRGIL on 1 December 2012 for a consideration of $127,400. TRGIL transferred the shares in DGS, Inc. to DGSL in exchange for shares of the same value in DGSL. DGSL further transferred those shares to DGS Worldwide Marketing Limited (DGSML) in exchange for shares in DGSML. Assets and liabilities of DGS, Inc. were recognised in the consolidated financial statements at their carrying values (at the date of transfer) as the exchange took place between entities under common control.

Telsat Online, Inc. (Telsat) - US

Telsat Online, LLC was formed by DGS, Inc. in October 2010 as a Delaware (US) based entity. Effective February, 2011, Telsat Online, LLC was converted in to a corporation (Telsat Online, Inc.). Telsat provides the same services as DGS,Inc. to non-cable customers. As part of the Group reorganisation, DGS, Inc. sold its ownership in Telsat to TRGIL on 30 November 2012 for a consideration of $2,600. TRGIL transferred the shares in Telsat to DGSL in exchange for shares of the same value in DGSL. DGSL further transferred those shares to DGSML in exchange for shares in DGSML. Assets and liabilities of Telsat were recognised in the consolidated financial statements at their carrying values (at the date of transfer) as the exchange took place between entities under common control.

DGS Worldwide Marketing Limited (DGSML) - Cyprus

DGSML was incorporated by DGSL in November, 2012. DGSML is engaged in global marketing of DGS, Inc. DGSML also procures back office services for DGS, Inc. under a global services agreement. The operations of DGSML were closed on 26 June 2013 and transferred to DGS BV. Furthermore, the shares in DGS Inc. and Telsat were sold to DGS Worldwide BV (DGSBV) on 1 July 2013 at a value of $1.

DGS (Pvt.) Limited (DGSPL) - Pakistan

DGSPL was incorporated by DGSL in October 2012. DGSPL provides call centre and other back office services to DGSBV under a global services agreement. After the incorporation of DGSPL, all the employees who were in service agreement with TRG (Private) Limited (an associated company at that time) and working on DGS, Inc. business were employed by DGSPL on 1 December 2012.

DGS Worldwide BV (DGSBV) - Netherlands

DGSBV was incorporated by DGSL in June, 2013. DGSBV is engaged in global marketing of DGS, Inc. DGSBV also procures call centre and other back office services for DGS, Inc. under a global services agreement.

DGS Tech, Limited (DGSTL) - Ireland

DGSTL was incorporated by DGSL in June, 2013. DGSTL is engaged in tech services of DGS, Inc. DGSTL also procures other back office services for DGS, Inc. under a global services agreement.

DGS EDU LLC (DGS, EDU) - US

On 31 October 2013, the Group acquired the Education business of Ampush Media. A separate entity was formed (DGS EDU LLC) to acquire the assets and trading business. The details are given in Note 21.

(2) Summary of significant accounting policies

(a) Statement of compliance and basis of presentation

The accompanying consolidated financial statements of the Group have been prepared in conformity with accounting principles generally accepted in the United States of America (US GAAP). The accompanying policies have been applied consistently to all periods presented in the consolidated financial statements. The financial statements comply with Section 404 of the Companies Act (as modified for The Overseas Companies Regulations 2009/1801). The amounts presented are in United States Dollars ($).

Going Concern

The Group is seeking to establish itself as the leading international provider of outsourced online customer acquisition services, through its focus on having the premier technology platform for pricing and procuring paid search advertising on a cost effective basis. The Group's global profile, together with its ability to innovate and diversify, provide it with firm foundations for ongoing success, even in the current challenging environment.

The Group's net income for the year was £3.9 million (2013: loss of £2.7 million). As at 30 June 2014 the Group had net assets of £11.7 million (2013: £7.2 million) and net current assets of £6.8 million (2013: £5.8 million).

In March 2014, an agreement was signed with Eagle Bank in the US, for a $3.5M senior, secured, working capital facility with a borrowing base dependent upon the amount of receivables due to Digital Globe Services, Inc. The interest rate is US Prime with a floor of 5.5% and it is secured by a first priority lien on the receivables and assets of Digital Globe Services Inc. On 11 September 2014, DGS Edu LLC was added as a Borrower under the lending facility with its receivables being added to the Borrowing Base.

The Board has reviewed cash flow forecasts up to and including the period to 31 December 2015. These forecasts take into account revenue which is already contracted and revenue which is expected to occur as a result of ongoing negotiations and business development/marketing initiatives.

At no point during the period, are we expecting the bank to fall in to an overdrawn position. However, as with all businesses, there are particular times of the month/quarter where our working capital requirements are at their peak. The Directors believe there is sufficient cash to pay our liabilities as they fall due. All financial covenants are forecast to be satisfied over the period

The Group is well placed to manage business risk effectively and the Board reviews the Group's performance against budgets and forecasts on a regular basis, to ensure action is taken where needed.

The Directors therefore have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in the preparation of accounts. The principal accounting policies of the Group are set out below.

(b) Principles of consolidation

The consolidated financial statements include the financials of DGSL and its subsidiaries. All significant intercompany balances and transactions have been eliminated on consolidation.

(c) Cash and cash equivalents

The Group maintains bank balances, which, at times, may exceed federally insured limits. Balances are monitored and during the year ended 30 June 2014, there were no instances in which this limit was breached. Cash and cash equivalents include cash in hand and cash at bank with original maturities of less than three months or available on demand.

(d) Revolving line of credit

On 27 March 2014, DGS, Inc. entered into an agreement with EagleBank whereby DGS, Inc. is being granted a revolving line of credit loan facility to be used for working capital and general business purposes. The maximum balance outstanding cannot exceed $3.5 million. The Facility is a senior, secured working capital, demand note with an interest rate of the greater of The Wall Street Journal (WSJ) Prime Rate or 5.5%, due on the earlier of 1 November 2014 or on demand. The Facility may be renewed by mutual agreement of the parties. The Facility is a receivables finance facility secured by a charge over the assets of DGS Inc. The Company is not guaranteeing any payments under the Facility.

Further, on 11 September 2015, a similar agreement was entered into in relation to DGS EDU LLC.

As with any facility, there are a number of standard covenants which must be adhered to, including "reporting" and "financial".

The reporting covenants relate to the submission of signed annual financial statements and submission of quarterly financial statements (management accounts) within 60 days of the close of the fiscal quarter. The Company must also submit a borrowing base certificate, accounts receivable and accounts payable monthly report within 15 days after the end of each calendar month and a compliance certificate, along with quarterly financial statements, stating whether any event of default has occurred.

The financial covenant relates to our cash flow coverage; we are required to maintain a ratio of at least 1.25 : 1, measured quarterly.

(e) Trade accounts receivable

Trade accounts receivable are carried at original invoice amount based upon the installation reports issued by the Group's clients as part of the revenue recognition process. Credit is extended to customers based on an evaluation of a customer's financial condition; collateral has not been required to date. Trade accounts receivable are generally payable within one month of installment by the customer. Trade accounts receivable outstanding longer than the contractual payment terms are considered past due. Management estimates, where applicable, an allowance for doubtful accounts, which adjusts gross trade accounts receivable to its net realisable value. Judgements are made by the Group based on historical trends and future expectations.

The Group writes off trade accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. The Group does not generally charge interest on past due receivables. Management has determined that no allowance for doubtful accounts is necessary at 30 June 2014.

(f) Trade accounts receivable factoring agreement

In May 2012, DGS, Inc. entered into a receivables factoring agreement on a recourse basis whereby all accounts receivable were to be factored, transferred and assigned. The agreement is automatically extended annually. DGS, Inc. received 80 per cent. of the face value of the billed accounts and 80 per cent. of the estimated gross unbilled accounts. Additionally, the accounts were discounted, and deducted from the face value of each account upon collection. The maximum outstanding balance assigned cannot exceed $4,000,000. The interest rates charged vary from 1.75 per cent. (30 days) to 5.25 per cent. (90 days). If the customer does not pay within 90 days then DGS, Inc. is liable to pay to the factoring bank. DGS, Inc. accounts for the accounts receivable factoring agreement as secured borrowing each time an accounts receivable is factored. During the month of April 2013, this factoring arrangement was terminated with the factoring institute and hence nothing is payable to such factoring institute. Since this time, all receivables are collected directly by the Company.

(g) Property and equipment

Property and equipment are recorded at cost less accumulated depreciation and impairment, if any. Depreciation is computed using the straight‑line method based on the estimated useful lives of the assets. The estimated useful lives are 3 years for computer and electrical equipment while this is 5 years for furniture and fixtures.

Expenditure for maintenance, repairs and improvements that do not prolong the useful life of an asset are charged to the statement of income as incurred.

Additions and improvements that substantially extend the useful life of the asset are capitalised. Upon sale or other disposition of assets, the cost and related accumulated depreciation and amortisation are removed from the respective accounts, and the resulting gain or loss, if any, is included in the consolidated statement of income.

The Group evaluates the impairment of property and equipment in accordance with ASC 360, "Property, Plant and Equipment". ASC 360 states that an impairment of long-lived assets has occurred whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured based on net, undiscounted expected cash flows. Assets are considered to be impaired if the net, undiscounted expected cash flows are less than the carrying amount of the assets. Impairment charges are recorded based upon the difference between the carrying value and the fair value of the asset. Based on the assessment of impairment indicators for long-lived assets, the Group did not record any impairment on long-lived assets during the year ended 30 June 2014.

(h) Intangible assets

Intangible assets are stated at cost less accumulated amortisation and impairment in value, if any, and amortised on a straight-line basis over their useful lives. Intangible assets relate to the purchase of a BPO Suite Enterprise Call Centre Management System and the licenses and services associated therewith and are being amortised over a period of 3 years.

As part of the acquisition of the Education business of Ampush Media, customer based intangibles, customer lists, software and intellectual property were acquired, which are amortised over their useful economic lives of 6 years (for customer based intangibles) and 4-5 years (for software) respectively. There is also a non-compete covenant, which is being amortised over the period of the non-compete term i.e. 2 years. During the year, research & development in respect of the development of the on-line platform of DGS EDU LLC has been capitalised; this is being amortised over its useful life of 3 years.

(i) Goodwill

Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognised. Goodwill is reviewed for impairment at least annually. In September 2011, the FASB issued ASU 2011-08, Testing Goodwill for Impairment, which provides an entity the option to perform a qualitative assessment to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount prior to performing the two-step goodwill impairment test. If this is the case, the two-step goodwill impairment test is required. If it is more-likely-than-not that the fair value of a reporting is greater than its carrying amount, the two-step goodwill impairment test is not required. The Company adopted this guidance in 2012.

If the two-step goodwill impairment test is required, first, the fair value of the reporting unit is compared with its carrying amount (including goodwill). If the fair value of the reporting unit is less than its carrying amount, an indication of goodwill impairment exists for the reporting unit and the entity must perform step two of the impairment test (measurement). Under step two, an impairment loss is recognised for any excess of the carrying amount of the reporting unit's goodwill over the implied fair value of that goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation and the residual fair value after this allocation is the implied fair value of the reporting unit goodwill. Fair value of the reporting unit is determined using a discounted cash flow analysis. If the fair value of the reporting unit exceeds its carrying amount, step two does not need to be performed.

Digital Globe Services, Inc.'s goodwill was recorded as a result of a business combination that occurred in prior years. The additional goodwill relates to the acquisition of the Education business of Ampush Media. Goodwill is an asset representing the future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. The Group reviews its recorded goodwill for impairment on an annual basis, or more often if indicators of potential impairment exist, by determining if the carrying value of each reporting unit exceeds its estimated fair value. During the year ended 30 June 2014, the Group performed a qualitative impairment analysis on 10 July 2014, in accordance with ASC 350, 'Intangibles -Goodwill and Other', no impairment indicators were noted in the Group's analysis. Goodwill is considered to be impaired if it is determined that the carrying amount of the net assets of the reporting unit exceeds its fair value.

(j) Use of estimates and judgements

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities in the consolidated financial statements and accompanying notes. Although management believes its estimates, assumptions and judgments are reasonable, they are based upon information presently available. Due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates. Significant estimates include the chargebacks and cancellation rates used in recording receivables and recognising revenue.

(k) Stock options

The Company accounts for stock based compensation under ASC 718, "Compensation - Stock Compensation" ("ASC 718"). ASC 718 requires the measurement and recognition of compensation expense based on estimated fair values for all share-based awards made to employees and directors, including stock options. The Company uses the Black-Scholes Option Pricing Model to determine the fair value of the stock options. The expense for the options is recognised on a straight line basis over the requisite service period (also refer to Note 16).

(l) Income Taxes

The Group recognises deferred tax assets on deductible temporary differences and deferred tax liabilities on taxable temporary differences. Temporary differences are the differences between the reported amount of assets and liabilities and their tax bases. As those differences reverse, they enter into the determination of future taxable income included on the tax return. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax asset will not be realised. Deferred tax assets and liabilities are measured using the enacted tax rates that will apply to taxable income in the periods the deferred tax item is expected to be settled or realised.

Taxable temporary difference relates primarily to amortisation of intangibles and depreciation, whereas deductible temporary difference relates to net operating losses.

The Group recognises the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognised in the financial statements is the largest benefit that has a greater than 50 per cent. likelihood of being realised upon ultimate settlement with the relevant tax authority. Increases or decreases to the unrecognised tax benefits could result from management's belief that a position can or cannot be sustained upon examination based on subsequent information or potential lapse of the applicable statute of limitation for certain tax positions.

The Group may, from time to time, be assessed interest or penalties by major tax jurisdictions. In the event the Group receives an assessment of interest and/or penalties, the interest would be classified as interest expense while the penalties would be classified as operating expense.

Management evaluated the Group's tax positions and concluded that the Group had taken no uncertain tax positions that require adjustment to the consolidated financial statements. The Group is no longer subject to income tax examination by the US federal, state of Colorado or local tax authorities for years before 2008.

(m) Earnings per share

Basic earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed using the weighted average number of common and potentially dilutive shares outstanding during the period. Potentially dilutive shares consist of the incremental common shares issuable upon the exercise of common stock options and warrants. Potentially dilutive shares are excluded from the computation if their effect is antidilutive.

The prior year earnings per share disclosures have been adjusted to properly incorporate the effect of shares held by the company in order to satisfy the future exercise of share options. There are no other effects on the financial statements other than to restate last year's loss per share (basic and diluted) from 0.09 to 0.180 and last year's loss per share before extraordinary items (basic and diluted) from 0.09 to 0.157.

(n) Foreign currency transactions and translation

The functional currency of the Group is the United States (US) dollar. Assets and liabilities denominated in foreign currencies are translated at the rate of exchange prevailing at the balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of transaction. Net gains and losses resulting from foreign exchange transactions are included in the Statement of Income. The effects of exchange rate fluctuations on translating foreign currency assets and liabilities into US dollars are included as part of the accumulated other comprehensive loss component of Stockholders' Equity.

(o) Long-lived assets

Long-lived assets, other than goodwill, are evaluated for impairment when events or changes in the business circumstances indicate that the carrying amount of the assets may not be fully recoverable through projected undiscounted future operating cash flows or appraised values. The Group concluded that there was no evidence of impairment of long-lived assets for the year ended 30 June 2014.

(p) Fair value measurements

The carrying value of cash, accounts receivable, accounts payable and accrued expenses approximates to their fair value due to the relatively short-term nature of these financial instruments. For Intangibles and Warrants refer to Note 7 and Note 15 respectively.

The Company utilises valuation techniques that maximise the use of observable inputs and minimise the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorised in one of the following levels:

· Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.

· Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.

· Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

The following table presents the placement in the fair value hierarchy of assets and liabilities that are measured at fair value on a recurring basis at 30 June 2014 and 2013:

The Company's accounting policy is to recognise transfers between levels of the fair value hierarchy on the date of the event or change in circumstances that caused the transfer. There were no transfers into or out of level 1 for the years ended 30 June 2014 and 2013.

(q) Recent accounting pronouncement

In March 2014, the FASB published ASU 2014-06, Technical Corrections and Improvements Related to Glossary Terms. The amendments in the ASU represent changes to clarify the Master Glossary of the Codification, consolidate multiple instances of the same term into a single definition, or make minor improvements to the Master Glossary that are not expected to result in substantive changes to the application of existing guidance or create a significant administrative cost to most entities. The ASU is effective upon issuance.

In April 2014, the FASB published ASU 2014-08, Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity, to change the criteria for determining which disposals can be presented as discontinued operations and enhanced the related disclosure requirements. ASU 2014-08 is effective in the first quarter of 2015 with calendar year ends, with early adoption permitted for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued.

In May 2014, the FASB published ASU 2014-09, Revenue from Contracts with Customers (Topic 606), to supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of the ASU is to recognise revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing U.S. GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The ASU is effective for annual periods and interim periods within those annual periods beginning after 15 December 2015 using either of two methods: (i) retrospective to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09; or (ii) retrospective with the cumulative effect of initially applying ASU 2014-09 recognised at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09.

In June 2014, the FASB published ASU 2014-11, Transfers and Servicing (Topic 860) - Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures. The amendments in this Update require two accounting changes. First, the amendments in this Update change the accounting for repurchase-to-maturity transactions to secured borrowing accounting. Second, for repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counterparty, which will result in secured borrowing accounting for the repurchase agreement. The accounting changes in this Update are effective for public business entities for the first interim or annual period beginning after December 15, 2014.

In June 2014, the FASB published ASU 2014-12, Compensation - Stock Compensation (Topic 718) Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force). The ASU requires that a performance target that affects vesting and could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in ASC 718, Compensation - Stock Compensation, as it relates to such awards. The ASU is effective for annual periods and interim periods within those annual periods beginning after 15 December 2015 with early adoption permitted using either of two methods: (i) prospective to all awards granted or modified after the effective date; or (ii) retrospective to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter, with the cumulative effect of applying ASU 2014-12 as an adjustment to the opening retained earnings balance as of the beginning of the earliest annual period presented in the financial statements.

The adoption of these standards does not have a material effect on the Group's audited consolidated financial statements.

(r) Revenue recognition

In regards to Digital Globe Services, Inc. and Telsat Online, Inc., revenue is recognised based on actual monthly installations and activation of cable services ordered through Digital Globe Services, Inc. at the end-customers' home address. Once an order is placed through Digital Globe Services, Inc., the order is transferred to the client for activation and installation. The client then schedules the service to be activated at the end-customers' address, and once successfully activated, the data is entered into the client database, which results in the payable to Digital Globe Services, Inc. On a monthly basis, each client reconciles their internal database for all ordered services and determines which activations are deemed payable for that month and sent to Digital Globe Services, Inc. via a monthly payment file. This may include activations from prior months, but are deemed payable after reconciliation. Revenue is then recorded based on the total number of installations recognised in a given month, multiplied by the commission rate as stated in the agreement with the client.

Total installations are reported to Digital Globe Services, Inc. via monthly payment files detailing total installations and total commission value based on final product mix within the month. The payment files provide exact payment information on total commissions earned by Digital Globe Services, Inc. net of chargebacks and cancellations. The revenue of Digital Globe Services, Inc. recorded in the financial year ended 30 June 2014 includes a portion of revenue for the period from 1 April 2009 through 30 September 2013. This includes but is not limited to submitted orders which were deemed to have installed after a given period and hence we were not given credit for, in accordance with the terms of the contract with our largest customer. We engaged an independent audit firm to review the data as part of an audit, as allowed under the terms of the same contract. The auditors determined that up to $1.1M in payments were due to us under the audit. Following negotiations with our largest customer, we agreed on a settlement of $600k and as part of the settlement agreed to continue providing services to them for at least the next eight months without invoking our termination rights. The revenue (which has been agreed as payable by our largest customer) has been recorded in the financial statements for the year ended 30 June 2014.

In regards to DGS EDU LLC, revenue is accrued for and recognised on a monthly basis based on the leads, clicks and data delivered during the month, net of the historical return/disqualification rate, with any adjustments to confirmed invoicing occurring during the proceeding month, with net adjustments generally being less than 1%. The policy is different from that of the core business, on the basis that the revenue is both earned and can be reliably estimatable. Revenue from core business is not deemed to be earned until the service has been installed, due to certain factors existing in those contracts.

The only other revenue is in relation to IP royalty income and back office services provided, which is eliminated on consolidation.

(s) Search engine and lead generation expenses

The Group's most significant operating costs are the click through fees associated with bidding on key words or phrases with various internet search engines. The most significant vendor used is Google Inc. These expenses are recognised on an accruals basis based on the number of click-throughs for the period. The fees charged by the Search Engines vary depending on day and time but typically range from $1.00 to $3.00 per click. Although the Group has entered into service agreements with various Internet search engines, these agreements do not require either party to make a long‑term commitment and can be terminated at any time.

The Group utilises sub-affiliates to assist in developing additional profitable leads for additional volume with the Group's main clients. These third party affiliates run their own marketing campaigns and send their leads to the Group's call centres whereby the Group closes the sale and sends the lead to its clients. Compensation for sub-affiliate leads varies by partner, but typically they are paid a bounty per lead, which, when converted, generate a bounty by the company's clients.

(t) Warrant

Warrants are initially measured at fair value at the measurement date which is the date on which the warrant instruments are made. Subsequently these warrants are re-measured at their fair value at the reporting date with any change being recognised in the consolidated statement of income.

(u) Segment reporting

During the year, the Group acquired the Education business of Ampush Media. A separate entity was formed (DGS EDU LLC) to acquire the assets and trading business. Subsequent to this acquisition, the information being presented to and reviewed by the chief operating decision maker (i.e. the Group's Chief Executive Officer) is divided into two segments: the Education business (EDU) and the company's usual business (INC). These are hence being identified as reportable segments - EDU being the customer acquisition business for the educational institutions (universities); and INC being the customer acquisition business for other customers. The 'DGS INC' segment comprises of communications industry customers as well as the Group's Telsat business which caters for customer outside the communications industry.

The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The segment performance is evaluated based upon Net Income as well as EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation).

The following table presents information of our various segments. No comparative information is being provided as different segments did not exist last year.

Disclosed in the following table is the company's geographical information:

(3) Dividends

During the year ended 30 June 2014, the Group paid dividends of $1,989,129 as follows:

(4) Common Stock

Holders of common stock are entitled to one vote per share, and to receive dividends and, upon liquidation or dissolution, are entitled to receive all assets available for distribution to stockholders. The holders have no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares.

Preferred Stock

The holders of the Series A Preference Shares were entitled to a cumulative annual dividend equal to 8 per cent. of the Series A Liquidation Preference payable in cash. The holders of the Series B Preference Shares were entitled to such dividends as the Board may from time to time declare in pari passu with the holders of Common Shares. As such, the Preference shares constituted a compound instrument, as there are elements of both debt and equity. Given the immaterial nature of the debt element of the Series A Preference shares and the rights attached to the Series B Preference shares being discretionary, these have been treated as equity in their entirety.

On Admission to the Alternative Investment Market (AIM) of the London Stock Exchange on 14 February 2013, the series A preference shares and the series B preference shares were converted into Common Shares on a 1:1 basis.

(5) Cash and cash equivalents

The group has foreign cash and cash equivalent currency balances of $41,030 (2013: $652,816).

(6) Property and equipment

Depreciation for the years ended 30 June 2014 and 2013 amounted to approximately $286,269 and $78,207 respectively.

During the year, DGSPL commenced work on a new site in Karachi, including building and fit out. Capital work in progress incurred as of 30 June 2014 was $261,017 (2013: $128,271 for site in Lahore).

(7) Intangibles

Intangibles consist of the following:

Aggregate amortisation expense for amortising intangible assets was $565,712 and $125,000 for the years ended June 30, 2014 and 2013, respectively. Estimated amortisation expense for the next five years is: $698,474 in 2015, $516,599 in 2016, $328,609 in 2017, $217,833 in 2018, and $217,833 in 2019.

During the year, as part of the acquisition of the Education business of Ampush Media, the Company acquired customer based intangibles, customer lists, software and intellectual property (refer Note 21). There is also a non-compete covenant, which is being amortised over the period of the non-compete term. During the year, research & development in respect of the development of the on-line platform of DGS EDU LLC has been capitalised.

(8) Goodwill

The Company performed its annual goodwill impairment test as of June 30, 2014. The Company performed a qualitative assessment of each reporting unit and determined that it was not more-likely-than-not that the fair value of each reporting unit was less than its carrying amount. As a result, the two-step goodwill impairment test was not required and no impairments of goodwill were recognised in 2014.

The changes in the carrying amount of goodwill for the year ended 2014 and 2013 are as follows:

(9) Income taxes

The tax provision consists of the following:

DGS, Inc. (including its wholly owned subsidiary Telsat online, Inc.) was wholly owned by TRG Holdings, LLC until 30 November 2012. As a part of group re-organisation, DGS, Inc. and Telsat left the US consolidated tax group on 30 November 2012 and started filing separate tax return in the US beginning December 1, 2012. Other entities in the Group file standalone tax returns in their respective jurisdictions.

The U.S. tax provision calculations include DGS, Inc, DGS Edu, LLC. and Telsat Online, Inc. Additionally, included in the provision are DGS Cyprus Limited, DGS Tech (Ireland) and DGS BV (Netherland). DGS Private Limited (Pakistan) is exempt from corporate income tax under Pakistan's tax laws, being an exporter of IT enabled services. DGSL (Bermuda based holding company) became a UK tax resident on 26 June 2013 and files its tax return in the UK.

The Group recognises deferred tax assets on deductible temporary differences and deferred tax liabilities on taxable temporary differences. Temporary differences are the differences between the reported amount of assets and liabilities and their tax bases. As those differences reverse, they enter into the determination of future taxable income included on the tax return. Management has evaluated the Group's tax positions and concluded that the Group had taken no uncertain tax positions that require adjustment to the consolidated financial statements. The Group recognises interest and penalties related to uncertain tax positions in income tax expense. As of 30 June 2014, the Group had no provision for interest or penalties related to uncertain tax positions. The years 2010-2013 are open to examination by the tax authorities.

The following shows the nature and components of Group's deferred tax asset and liabilities:

The valuation allowance for deferred tax assets as of July 1, 2013 was nil (July 1, 2012: nil). The net change in the total valuation allowance was an increase of $347,732 for the year ended June 30, 2014. The valuation allowance at June 30, 2014 was primarily related to net operating losses in DGSL and DGS Tech Limited that, in the judgment of management, are not more-likely-than-not to be realised. In assessing the realisability of deferred tax assets, management considers whether it is more-likely-than-not that some portion or all of the deferred tax assets will not be realised. The ultimate realisation of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities (including the impact of available carryback and carryforward periods), projected future taxable income, and tax-planning strategies in making this assessment. In order to fully realise the deferred tax asset, the Group will need to generate future taxable income of approximately $1.61 million in DGSL and $0.04 million in DGS Tech Limited. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more-likely-than-not that the Group will realise the benefits of these deductible differences, net of the existing valuation allowances at June 30, 2014. The amount of the deferred tax asset considered realisable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced.

At 30 June, 2014, Group's U.S. federal and state net operating loss carry forward for income tax purposes is $0.83 million (2013: $0.38 million) which will begin to expire in 2034. Group's UK net operating loss carry forward for income tax purposes is $1.6 million (2013: Nil). These amounts are based on the income tax returns filed for the year ended 30 June 2013 and estimated amounts for the year ended 30 June 2014.

The income tax provision differs from the amount of income tax determined by applying the statutory tax rate to pretax income, due to the following:

(10) Major customers and credit risk

Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. Financial instruments which potentially expose the Group to concentration of credit risk consist primarily of cash, accounts receivable and accounts payable. The Group's cash is held with US commercial banks.

The following table summarises those non-related party customers with revenue or accounts receivable in excess of 5 per cent of total revenue or total receivables for the twelve months ended 30 June 2014 and 30 June 2013. These concentrations cause risk and may have an impact on the operations of the company.

(11) Related party transactions

The Group has service agreements for call centre and administrative services with subsidiaries of TRG. These agreements are in effect until terminated by either party and specify payments based on services performed. Expenses incurred for the year ended 30 June 2014, under these service agreements totaled $315,174 (2013: $1,895,016) which is included in call centre costs, communication expense and selling, general and administrative costs in the accompanying consolidated statements of income. The total net amounts due from/(due to) these subsidiaries totaled $143,216 at 30 June 2014, (2013: ($112,422)) which is included under assets as related-party receivables, on the accompanying balance sheet.