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8-K/A - FORM 8-K/A - FUND.COM INC.f8k032910a3_fund.htm
EX-99.5 - UNAUDITED FINANCIAL STATEMENTS OF WESTON CAPITAL MANAGEMENT, LLC FOR THE THREE MONTHS ENDED MARCH 31, 2010. - FUND.COM INC.f8k032910a3ex99v_fund.htm
Exhibit 99.6
 
 
WESTON CAPITAL MANAGEMENT, LLC
CONSOLIDATED BALANCE SHEET
MARCH 31, 2009
       
       
ASSETS
     
       
Current Assets
     
Cash
  $ 2,975,509  
Fees Receivable
    3,157,229  
Advances
    939,987  
Prepayments and Deposits
    31,812  
         
Total Current Assets
    7,104,537  
         
Fixed Assets - At Cost
       
Furniture and Equipment
    465,401  
Leasehold Improvements
    77,027  
      542,428  
Less Accumulated Depreciation
    394,911  
         
   Net Book Value of Fixed Assets
    147,517  
         
Goodwill
    6,471,597  
         
TOTAL ASSETS
  $ 13,723,651  
         
LIABILITIES AND PARTNERS' CAPITAL
 
         
Liabilities
       
Accounts Payable
  $ 621,940  
Accrued Expenses
    618,190  
Other Liabilities
    759,660  
         
Total Liabilities
    1,999,790  
         
Partners' Capital
    11,723,861  
         
TOTAL LIABILITIES AND PARTNERS' CAPITAL
  $ 13,723,651  
 
The accompanying notes are an integral part of these financial statements.
 
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WESTON CAPITAL MANAGEMENT, LLC
CONSOLIDATED STATEMENT OF INCOME AND PARTNERS' CAPITAL
THREE MONTHS ENDED MARCH 31, 2009
       
       
       
       
INCOME FROM OPERATIONS
     
       
Fee Revenue
  $ 1,814,032  
Interest and Other Income
    27,274  
Income from Operations
    1,841,306  
         
General and Administrative expenses
    1,829,945  
         
Operating Loss
    11,361  
         
Minority Interest in Subsidiary
    (47,708 )
         
Loss Before Provision for Taxes
    (36,347 )
         
Provision for Taxes
    -  
         
NET LOSS
    (36,347 )
         
Partners' Capital, Beginning
    11,619,313  
         
Minority Interest
    167,040  
         
Contributions
    -  
         
Withdrawals
    -  
         
Change in Translation
    (26,145 )
         
Partners' Capital, End
  $ 11,723,861  
 
The accompanying notes are an integral part of these financial statements.
 
F-2

 
 
WESTON CAPITAL MANAGEMENT, LLC
 
CONSOLIDATED STATEMENT OF CASH FLOWS
 
THREE MONTHS ENDED MARCH 31, 2009
 
       
       
Cash Flows From Operating Activities:
     
Net income
  $ (36,347 )
Adjustments to reconcile net income to net cash used in operating activities
       
   Depreciation
    13,548  
   Minority Interest in Net Income
    47,708  
   Translation Adjustment
    (26,145 )
  (Increase) decrease in assets:
       
     Fees Receivable
    1,637,850  
     Advances
    (9,763 )
   Increase (decrease) in Liabilities:
       
     Accounts Payable
    (2,127,078 )
     Accrued Expenses
    229,442  
     Other Liabilities
    206,182  
Net cash provided (used in) by operating activities
    (64,603 )
Cash Flows From Financing Activities:
       
     Net Cash Received of Minority Interest
    119,333  
Net cash provided (used in) by financing activities
    119,333  
         
         
Net Decrease in Cash
    54,730  
         
Cash, Beginning of Period
    2,920,779  
         
Cash, End of Period
  $ 2,975,509  
         
Supplemental Disclosure of Cash Flow information:
       
  Cash paid during the quarter for:
       
    Taxes
  $ 37,946  
 
The accompanying notes are an integral part of these financial statements.
 
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WESTON CAPITAL MANAGEMENT, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH  31, 2009


1.    ORGANIZATION AND BUSINESS
 
 
The consolidated financial statements of Weston Capital Management, LLC (a Delaware limited liability company (“Weston”)) include its wholly-owned subsidiaries Weston Capital Advisers Ltd. (a UK corporation registered with the Financial Services Authority (“FSA”)), Weston Capital Asset Management, Ltd. (a Bermuda corporation), Weston Capital Asset Management, LLC (a Delaware limited liability company and registered investment advisor), and Weston Financial Services, LLC (a Delaware limited liability company and a broker dealer registered with the National Association of Securities Dealers (“NASD”)) (“collectively, “The Weston Group”).

Included in the financial statements is the interest in three entities Weston Atlas Advisers, Ltd, Weston Atlas Partners, LLC and Weston Partners Advisors, Ltd collectively known as the Partners Fund.

The Weston Capital Group provides investment advisory services as a fund management organization specializing in alternative investments.  It develops multi-manager and single-manager investment fund products; designs customized investment portfolios as well as provide investment management and administrative services.

All material intercompany transactions and balances have been eliminated when consolidated.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
       Advertising

Advertising costs are expensed as incurred.

Advances

Advances primarily represent developmental expenditures made on behalf of new funds.  Advances will be repaid when the funds become operational.

 
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WESTON CAPITAL MANAGEMENT, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2009


2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Revenue Recognition

The Weston Group earns management fees ranging from 1% to 2% per annum of the month-end net assets and quarterly performance-based fees ranging from 10% to 20% of the trading profits, as defined in the respective agreements for Weston sponsored products and other consulting roles.  Performance-based fees for the various product groups are generally paid on the basis of investment profits, as defined in the respective agreements, determined as of each quarterly period.  Fees are subject to rebate arrangements, and revenues are reflected net of those rebates.

The Weston Group earns, for some of the funds it sponsors, an operating expense fee of the difference between 1% of the various Funds’ net assets per annum and the Funds’ ordinary operating expenses if less than 1%.  Net operating expenses earned for the three months ending March 31, 2009 equaled $226,035.

Fixed Assets and Leasehold Improvements

Fixed assets and leasehold improvements are carried at cost.  Depreciation and amortization is computed on a straight-line basis using rates that are consistent with the assets useful life or lease term.
 
Compensated Absences

No accrual has been made for compensated absences since vacations are taken throughout the year, and the amounts are neither easily estimated nor material.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 revenue and expenses during the reporting period.  Actual results could differ from those estimates.

Concentration of Credit Risk
During the year, cash balances in the Bank of New Canaan and Fortis checking account exceeded the amount of $250,000 which is insured by the F.D.I.C.  In accordance with FASB #105 this represents a concentration of credit risk.
 

 
F-5

 
 
WESTON CAPITAL MANAGEMENT, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2009


2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

Goodwill
 
During June 2006, the interest of Brigadier Investments Ltd was purchased for $10,000,000.  Goodwill represents the residual purchase price remaining after allocation of the purchase price, based upon the fair value of assets acquired.  Goodwill and intangible assets deemed to have indefinite lives are not amortized, but are subject to annual impairment test.  Intangible assets deemed to have definite lives are amortized over their estimated useful lives. The Company annually reviews goodwill for recoverability based primarily on a multiple of earnings analysis comparing the fair value to the carrying value.  As required by SFAS No. 142, the Company will assess goodwill annually for impairment and more frequently if impairment indicators are identified during the year.

 3.   INCOME TAXES

Members of limited liability companies treated as partnerships for income tax purposes are responsible for income taxes based upon their respective share of company income.  For the three months ending March 31, 2009,  a net loss was recorded by Weston Capital Advisers, Ltd, and as such no provision for corporate taxes are included in the accompanying financial statements.
 
 
 
 
 
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WESTON CAPITAL MANAGEMENT, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2009


4.    LEASE COMMITMENTS

The Company leases various equipment and office space under noncancelable operating lease arrangements.  The Company does not currently utilize any other off-balance sheet financing arrangements.  The office space leases are generally for terms of one to ten years.  As of March 31, 2009, the Company's total future minimum lease payments under noncancelable operating leases were $839,967 of which $656,083 related to leases of office space.

Rent expense under all operating leases, including both cancelable and noncancelable leases, was $155,661.

Future minimum lease payments under noncancelable operating leases having remaining terms in excess of one year as of March 31, 2009:
 
Years
 
Total
 
       
Remaining 2009
    366,536  
2010
    401,247  
2011     56,070  
2012
    16,114  
         
Total minimum lease payments
  $ 839,967  

5.   MAJOR CLIENT

Included in the fees earned during the three months ending March 31, 2010, were net fees earned from The Wimbledon Fund SPC - Class C shares amounting to $947,287, from WHDN amounting to $304,208, and from The Wimbledon Fund SPC – Class TT shares amounting to $234,733.


 
F-7

 
 


WESTON CAPITAL MANAGEMENT, LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH  31, 2009


6.    RETIREMENT PLANS

a.
The Company has a profit sharing plan covering substantially all of its full time employees. The Company made no annual contributions to the plan for the three months ending March 31, 2009.

b.
The Company has a 401(k) profit sharing plan for all full-time employees upon a short waiting period upon hire. The Company will match employee contributions up to 3%.

7.    CONTINGENCY

Weston has been named as a defendant in a lawsuit pending in the United States District Court, brought by a former employee.  This action was filed on March 21, 2007 pursuant to Title VII of the Civil Rights Act of 1964, as amended, asserting sex and pregnancy discrimination.  Discovery is ongoing in the case and a trial date has not yet been assigned.  Weston is defending the case vigorously and believes that the allegations of this lawsuit are without merit.

8.    SUBSEQUENT EVENT

Weston and Albert Hallac have been named as defendants in a lawsuit pending in the Connecticut Superior Court, brought by a former employee.  This action was filed on or about April 7, 2009.  The complaint alleges a violation of the Connecticut Wage Statute, Breach of Contract and Breach of the Implied Covenant of Good Faith and Fair Dealing.  The Company denies the claims and on May 28, 2009 asserted special defenses and a counterclaim against the former employee.  In the counterclaim, the Company alleges Breach of Contract, Breach of Fiduciary Duty and Negligent Misrepresentation.  Discovery is ongoing in the case and a trial date has not yet been assigned. Weston and Albert Hallac are defending the case vigorously and believe that the allegations of this lawsuit are without merit.
 
 
 
 
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