Innovative Software Direct plc
LSE : ISDP

August 03, 2009 11:51 ET

Re-audited Final Results for the period ended 30 June 2005 and the years ended 30 June 2006 and 2007

3 August 2009
                                     INNOVATIVE SOFTWARE DIRECT PLC
                                                    
                                       ("ISD") or ("the Company")
                                                    
     RE-AUDITED RESULTS FOR THE PERIOD ENDED 30 JUNE 2005 AND THE YEARS ENDED 30 JUNE 2006 AND 2007


The Directors of the Company announce that the Financial Statements for the period ended 30 June 2005 and
the  years ended 30 June 2006 and 2007 have been re-prepared and re-audited after it was discovered  that
the  individual who signed off those audits was not a Registered Auditor and therefore was not  qualified
to  sign the Auditors' Reports. This matter was brought to the attention of the Directors by the previous
auditors. The Directors subsequently appointed Tenon Audit Limited to re-perform the audits.

On 16 June 2008 an announcement was made that the Directors believed that the net assets were unlikely to
change  materially upon re-audit, however due to the lapse in time the Directors have had to take certain
views on the carrying value of investments which although relevant to carry forward at the time when  the
accounts  were  originally prepared, are no longer so justified and the write offs have  been  recognised
when appropriate.

The  following  details are extracted from Innovative Software Direct Plc Consolidated accounts  for  the
period  ended  30 June 2005 and for the years ended 30 June 2006 and 2007 as re-audited  by  Tenon  Audit
Limited  ("Re-audited"  financial  statements) and from the financial statements  originally  audited  by
Morris  Palmer  ("Original" financial statements)for the corresponding periods.  The  "Movement"  in  the
results has been scheduled and where materially different, notes have been given detailing the nature and
quantum  of  the  adjustments.  Other adjustments have been made to the  Original  financial  statements,
however such adjustments were not considered material to give further explanation.


INNOVATIVE SOFTWARE DIRECT PLC

CONSOLIDATED PROFIT & LOSS ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2007
                                                              RE-AUDITED         ORIGINAL        MOVEMENT
                                                                    YEAR             YEAR            YEAR
                                                                   ENDED            ENDED           ENDED
                                                                 30 JUNE          30 JUNE         30 JUNE
                                               Note                 2007             2007            2007
                                                                     GBP              GBP             GBP
                                                                                                         
Turnover                                                           1,340            1,340               -
Cost of sales                                                    (1,490)          (1,490)               -
Gross Profit                                                       (150)            (150)               -
Distribution costs                                               (2,545)          (2,545)               -
Administrative expenses                                        (376,550)        (238,558)       (137,992)
Operating Loss                                                                                           
Excluding exceptional items                      2             (191,745)         (88,495)       (103,250)
Exceptional items                                1             (187,500)        (152,758)        (34,742)
Operating Loss                                                 (379,245)        (241,253)       (137,992)
Interest receivable                                                1,754            1,754               -
Loss on ordinary activities before                                                                       
taxation                                                       (377,491)        (239,499)       (137,992)
Taxation                                                               -                -               -
Loss for the financial year                                    (377,491)        (239,499)       (137,992)
                                                                                            
                                                                                                         
                                                                                                         



CONSOLIDATED BALANCE SHEETS
AS AT 30 JUNE 2007
                                                              RE-AUDITED         ORIGINAL        MOVEMENT
                                                                   AS AT            AS AT           AS AT
                                                                 30 JUNE          30 JUNE         30 JUNE
                                               Note                 2007             2007            2007
                                                                     GBP              GBP             GBP
                                                                                                         
FIXED ASSETS                                                                                             
Intangible assets                                1                     -          176,562       (176,562)
Tangible assets                                                        -            1,287         (1,287)
                                                                                                         
                                                                       -          177,849       (177,849)
                                                                                                         
CURRENT ASSETS                                                                                           
Debtors                                                            4,150           13,479         (9,329)
Cash at bank and in hand                                          80,049           80,049               -
                                                                                                         
                                                                  84,199           93,528         (9,329)
                                                                                                         
CURRENT LIABILITIES                                            (144,254)        (141,748)         (2,506)
                                                                                                         
NET CURRENT LIABILITIES                                         (60,055)         (48,220)        (11,835)
                                                                                                         
TOTAL ASSETS LESS CURRENT                                                                                
(LIABILITIES)/ASSETS                                            (60,055)          129,629       (189,684)
                                                                                                         
CAPITAL AND RESERVES                                                                                     
Called up share capital                          2               203,697          193,280          10,417
Share Premium Account                            2               940,013          656,320         283,693
Share based payments reserve                                      26,246                -          26,246
Profit & Loss Account                                        (1,230,011)        (719,971)       (510,040)
                                                                                                         
SHAREHOLDERS' FUNDS                                             (60,055)          129,629       (189,684)


2007 Notes
        
1       Subsequent  to  30 June 2007, the company re-negotiated a licence agreement with  Zenmetrics  XP.
        However  as  yet no income has been generated from this agreement and the directors have  had  to
        take  a  view on the £187,500 carrying value of this investment which although relevant to  carry
        forward at the time when the accounts were originally prepared, is no longer so justified and the
        write off has been recognised accordingly.
        
        Additionally,  the Original accounts showed an impairment of goodwill of £152,758, which  related
        to the acquisition of I S Direct Limited in 2004. As the Re-audited financial statements impaired
        this  goodwill  to  £nil  in  2005, this write-off was not required in the  Re-audited  Financial
        Statements for 2007.
        
        
2       The Movement reflects predominantly professional fees that were settled by the issue of shares.
        


CONSOLIDATED PROFIT & LOSS ACCOUNTS FOR THE YEAR 30 JUNE 2006
                                                              RE-AUDITED         ORIGINAL        MOVEMENT
                                                                    YEAR             YEAR            YEAR
                                                                   ENDED            ENDED           ENDED
                                                                 30 JUNE          30 JUNE         30 JUNE
                                               Note                 2006             2006            2006
                                                                     GBP              GBP             GBP
                                                                                                         
Turnover                                         1                23,893           41,709        (17,816)
Cost of sales                                                   (13,608)         (28,823)          15,215
Gross Profit                                                      10,285           12,886         (2,601)
Distribution costs                                               (6,182)          (6,182)               -
Administrative expenses                         2,3            (106,412)        (179,623)          73,211
Other operating income                           1                18,343                -          18,343
Operating Loss                                                  (83,966)        (172,919)        (88,953)
Interest receivable                                                   94               94               -
Loss on ordinary activities before                                                                       
taxation                                                        (83,872)        (172,825)        (88,953)
Taxation                                                               -                -               -
Loss for the financial year                                     (83,872)        (172,825)        (88,953)
                                                                                                         
                                                                                                         
                                                                                                         
                                                                                                         


CONSOLIDATED BALANCE SHEETS
AS AT 30 JUNE 2006
                                                              RE-AUDITED         ORIGINAL        MOVEMENT
                                                                   AS AT            AS AT           AS AT
                                                                 30 JUNE          30 JUNE         30 JUNE
                                                Note                2006             2006            2005
                                                                     GBP              GBP             GBP
                                                                                                         
FIXED ASSETS                                                                                             
Intangible assets                                2                     -          152,758       (152,758)
Tangible assets                                                        -            3,862         (3,862)
                                                                                                         
                                                                       -          156,620       (156,620)
                                                                                                         
CURRENT ASSETS                                                                                           
Debtors                                                            1,366           16,341        (14,975)
Cash at bank and in hand                                           5,918            5,918               -
                                                                                                         
                                                                   7,284           22,259        (14,975)
                                                                                                         
CURRENT LIABILITIES                                            (206,041)        (211,101)           5,060
                                                                                                         
NET CURRENT LIABILITIES                                        (198,757)        (188,842)         (9,915)
                                                                                                         
TOTAL ASSETS LESS CURRENT                                                                                
(LIABILITIES)/ASSETS                                           (198,757)         (32,222)       (166,535)
                                                                                                         
CAPITAL AND RESERVES                                                                                     
Called up share capital                                          132,500          132,500               -
Share Premium Account                                            315,750          315,750               -
Profit & Loss Account                                          (647,007)        (480,472)       (166,535)
                                                                                                         
SHAREHOLDERS' FUNDS                                            (198,757)         (32,222)       (166,535)


2006 Notes


1     Rental income of £18,343 from was re-classified as "other income" in the Re-audit.
      
2     The  Goodwill  which  arose on the acquisition of IS Direct PLC was, at the time  of  the  Re-audit
      deemed  to  be of £nil value and thus the amortisation charge of £50,919 reflected in the  Original
      financial statements was written back to administrative expenses and no Intangible asset  was  been
      reflected in the balance sheet.
      
3     Other  adjustments of net £22,292 relate to professional fees which in hindsight have been  brought
      into the correct period and reflect timing differences between 2005 and 2006.



CONSOLIDATED PROFIT & LOSS ACCOUNTS FOR THE PERIOD ENDED 30 JUNE 2005
                                                              RE-AUDITED         ORIGINAL        MOVEMENT
                                                                  PERIOD           PERIOD          PERIOD
                                                                   ENDED            ENDED           ENDED
                                               Note              30 JUNE          30 JUNE         30 JUNE
                                                                    2005             2005            2005
                                                                     GBP              GBP             GBP
                                                                                                         
Turnover                                         1               193,726                -         193,726
Cost of sales                                    1             (102,888)                -       (102,888)
Gross Profit                                     1                90,838                -          90,838
Distribution costs                                                                      -                
Administrative expenses                          1             (652,993)         (84,442)       (568,551)
Operating Loss                                                                                           
Excluding exceptional items                                    (307,559)         (84,442)       (223,117)
Exceptional items                                1             (254,596)                -       (254,596)
Operating Loss                                                 (562,155)         (84,442)       (477,713)
Interest receivable                                                1,399            1,399               -
Interest payable and similar charges                                                                     
                                                                 (2,379)                -         (2,379)
Loss on ordinary activities before                                                          
taxation                                                       (563,135)         (83,043)       (480,092)
Taxation                                                               -                                 
Loss for the financial year                                                                              
                                                               (563,135)         (83,043)       (480,092)
                                                                                                         
                                                                                                         



CONSOLIDATED BALANCE SHEETS
AS AT 30 JUNE 2005
                                                              RE-AUDITED         ORIGINAL        MOVEMENT
                                                                   AS AT            AS AT           AS AT
                                                                 30 JUNE          30 JUNE         30 JUNE
                                               Note                 2005             2005            2005
                                                                     GBP              GBP             GBP
                                                                                                         
FIXED ASSETS                                                                                             
Tangible assets                                  1                 6,437                -           6,437
Investments                                      1                                 62,500        (62,500)
                                                                                                         
                                                                   6,437           62,500        (56,063)
                                                                                                         
CURRENT ASSETS                                                                                           
Stocks                                           1                 7,372                -           7,372
Debtors                                          1                15,641          303,648       (288,007)
Cash at bank and in hand                         1                19,978           19,928              50
                                                                                                         
                                                                  42,991          323,576       (280,585)
                                                                                                         
CURRENT LIABILITIES                             1,2            (164,313)         (20,869)       (143,444)
                                                                                                         
NET CURRENT (LIABILITIES)/ASSETS                                                                         
                                                               (121,322)          302,707       (424,029)
                                                                                                         
TOTAL ASSETS LESS CURRENT                                                                                
(LIABILITIES)/ASSETS                                           (114,885)          365,207       (480,092)
                                                                                                         
CAPITAL AND RESERVES                                                                                     
Called up share capital                                          132,500          132,500               -
Share Premium Account                                            315,750          315,750               -
Share based payments reserve                                           -                -                
Profit & Loss Account                                          (563,135)         (83,043)       (480,092)
                                                                                                         
SHAREHOLDERS' FUNDS                                            (114,885)          365,207       (480,092)



2005 Notes

      
1     The  financial statements for 2005 were prepared on a single entity basis for the purposes  of  the
      Original audit. Upon Re-audit, the Directors prepared consolidated financial statements to  include
      its  subsidiary  undertaking, ISD Direct Limited. With the exception of  the  increase  in  accrued
      audit  costs of £46,833 and the write back of certain creditors of £17,142, the Movement represents
      adjustments required to consolidate the results of ISD and IS Direct Limited.
      
      The  Goodwill  that  would  have  arisen on the acquisition of IS Direct  PLC,  was  calculated  as
      £254,596,  however  at the time of the Re-audit this was deemed to be of £nil  value  and  thus  no
      Intangible  asset has been recognised in the Re-audit and the whole of this amount is  included  in
      exceptional items in the Profit & Loss account.
      
      In the entity accounts, the investment of £62,500 was also written down to £nil upon Re-audit.
      
      
      
2     Upon  Re-audit, accruals of £46,833 were made in respect of fees charged post 31 December 2005  and
      which  were  not  known at the time of the Original audit. Additionally £17,142 of  creditors  were
      written back as these did not become payable.
      
      


Notes to the announcement

1       Full  accounts for the Company for the period ended 30 June 2005 and the years ended 30 June 2006
        and 2007 will be posted to shareholders as soon as is practicable.

2       The  auditors  have  modified the audit reports in relation to going concern in  respect  of  the
        2005,  2006  and 2007. Additionally the audit report for 2005 was qualified on the  grounds  that
        insufficient audit evidence was available for that year due to the loss of source documents  that
        were  mislaid  during  performance of the Original audit. These  reports  have  been  re-produced
        below:




EXTRACTS FOM THE INDEPENDENT AUDITOR'S REPORTS TO THE SHAREHOLDERS OF
INNOVATIVE SOFTWARE DIRECT PLC:


FOR THE YEAR ENDED 30 JUNE 2007

"Emphasis of matter - going concern

In  forming  our  opinion  on the financial statements, which is not qualified, we  have  considered  the
adequacy  of  the  disclosures made in note 1 concerning the company's ability to  continue  as  a  going
concern. The company incurred a net loss of £50,603 and group incurred a net loss of £377,491 during  the
year  ended 30 June 2007 and at that date the company and group had net assets/ (liabilities) of £490,692
and  (£60,055) respectively.  Although the company has the continued support of its shareholders, and the
company  in  turn is continuing to support its subsidiary undertaking, the financial statements  indicate
the  existence of a material uncertainty which could cast doubt about the company and group's ability  to
continue  as a going concern.  The financial statements do not include the adjustments that would  result
if the company was unable to continue as a going concern."


FOR THE YEAR ENDED 30 JUNE 2006

"Basis of opinion

We  conducted  our  audit in accordance with Auditing Standards issued by the Auditing  Practices  Board,
except that the scope of our work was limited as explained below.

An  audit  includes examination, on a test basis, of evidence relevant to the amounts and disclosures  in
the  financial  statements.  It also includes and assessment of the significant estimates  and  judgments
made  by  the  directors  in the preparation of the financial statements, and of whether  the  accounting
policies  are  appropriate  to the circumstances of the Company and the Group, consistently  applied  and
adequately disclosed.

We  planned our audit so as to obtain all the information and explanations which we considered  necessary
in  order  to  provide  us  with  sufficient evidence to give reasonable  assurance  that  the  financial
statements are free from material misstatement, whether caused by fraud of other irregularity or error.

However,  the  evidence  available to us was limited because a significant proportion  of  the  company's
accounting  records  relating to the year ended 30 June 2006 cannot be located.  These  records  comprise
sales invoices in respect of the company's main trading activity, sales invoices relating to other income
and  purchase  invoices  relating  to  the  purchase of  stock  for  resale.   The  financial  statements
consequently  are  based  purely upon the entries made in the nominal ledger  during  the  relevant  time
period.   In  these circumstances we were unable to carry out all the auditing procedures, or obtain  all
the information and explanations we considered necessary.

In  forming our opinion we also evaluated the overall adequacy of the presentation of information in  the
financial statements.

Opinion:  disclaimer on view given by financial statements

Because  of the possible effect of the limitation in evidence available to us, we are unable to  form  an
opinion  as  to whether the financial statements give a true and fair view of the state of the  company's
affairs  as  at  30  June  2006 or of its loss for the year then ended.  In all other  respects,  in  our
opinion:

     *       The financial statements have been properly prepared in accordance with the Companies Act 1985;
         and
     
     *       The information given in the Directors' Report is consistent with the financial statements.

In  respect alone of the limitation on our work arising from the loss of a significant proportion of  the
company's accounting records for the year, and relating to the comparative figures for stock and work  in
progress:

     *       We have not obtained all the information and explanations that we considered necessary for the
         purpose of our audit; and

     *       We were unable to determine whether proper accounting records have been maintained."


Emphasis of matter - going concern

In  forming our opinion on the financial statements, which is qualified under a limitation of  scope,  we
have considered the adequacy of the disclosures made in note 1 concerning the company and group's ability
to  continue as a going concern. The company incurred a net loss of £52,161 and group incurred a net loss
of  £83,872 during the year ended 30 June 2006 and at that date the company and group had net liabilities
of  £440,062  and  £198,757  respectively.  Although  the  company  has  the  continued  support  of  its
shareholders, and the company in turn is continuing to support its subsidiary undertaking, the  financial
statements indicate the existence of a material uncertainty which could cast doubt about the company  and
group's  ability to continue as a going concern. The financial statements do not include the  adjustments
that would result if the company and group were unable to continue as a going concern."



FOR THE PERIOD ENDED 30 JUNE 2005


"Emphasis of matter - going concern

In  forming  our  opinion  of the financial statements, which is not qualified, we  have  considered  the
adequacy  of the disclosures made in note 1 concerning the company and group's ability to continue  as  a
going  concern.  The company incurred a net loss of £474,864 and group incurred a net  loss  of  £563,135
during  the  period  ended 30 June 2005 and at that date the company and group  had  net  liabilities  of
£26,614  and  £114,885 respectively. Although the company has the continued support of its  shareholders,
and  the  company  in turn is continuing to support its subsidiary undertaking, the financial  statements
indicate  the  existence of a material uncertainty which could cast doubt about the company  and  group's
ability  to  continue  as a going concern. The financial statements do not include the  adjustments  that
would result if the company and group were unable to continue as a going concern."




THE DIRECTORS OF ISD ACCEPT RESPONSIBILITY FOR THE CONTENTS OF THIS ANNOUNCEMENT



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